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REVIEW FISCAL YEAR 2017-18 SECOND QUARTER STRONG COMMUNITIES REVENUES AND EXPENDITURES
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Summary
On November 8, 2016, Stockton’s voters approved Strong Communities, a one-quarter cent special transactions and use tax for the restoration and expansion of library and recreation services. The Strong Communities sales tax went into effect April 1, 2017.
The enacting ordinance (2016-06-07-1212), required a citizen advisory committee be established to review whether expenditures of the funds related to the special sales and use tax were made as represented to Stockton residents in accordance with the ordinance. Part of the committee’s authorized activities is to review copies of revenue and expenditure reports for the Strong Communities Fund. Attached for review by the Measure M Citizens’ Advisory Committee is the second quarter financial report for Fiscal Year (FY) 2017-18 (Attachment A).
Background
On August 21, 2017, the City Council approved (Resolution 2017-08-21-0801) an expenditure plan with revenue and expenditure projections for the 16-year lifespan of the measure. Restoration of library and recreation services is a key element of the expenditure plan that includes increasing library and community center hours evenings and weekends.
As part of the City’s FY 2017-18 budget development process, the Strong Communities budget was approved by City Council on June 20, 2017. Total budgeted revenues are $10.23 million, and the original expenditure budget was $4.27 million. The City Council amended the FY 2017-18 Strong Communities budget on August 21, 2017, to add $154,060 for the micro-library program and local arts initiatives for a total budget of $4.43 million.
The implementation of service restoration requires the addition of staff. Following the passage of the Strong Communities Initiative, the City Council acted to approve 26 new positions for the restoration of Library and Community Center Hours.
Present Situation
As of December 31, 2017, three payments of tax revenues in the amount of $1,945,000 were received for sales occurring July through September 2017 without quarterly true up. With the true up from first quarter the current quarterly revenue budget was $2.6 million. Attached is the State Board of Equalization (BOE) sales tax revenues report for the quarter ended December 31, 2017 (Attachment B). The BOE report dated March 2, 2018 shows full fourth quarter Strong Communities gross revenues of $2,895,517 under add-on code 537. These BOE fourth quarter revenues are not reflected on Attachment A, as the City had not received them from the State by December 31, 2017.
Expenditures during the first six months of the fiscal year were $663,614. With 50% of the year completed, expenditures were 15% of the budget. It is expected that most of the expenditures in FY 2017-18 will occur in the last half of the fiscal year after planning and hiring efforts occur. Of note, approximately $91,000 in library materials were purchased in the first six months causing the library programs line item to slightly exceed half of the budget.
Strong Communities payroll costs for the first six months were $357,618 of the total second quarter expenditures with approximately 55% for Library programs and 45% for Recreation programs. The chart below shows how payroll costs, including full-time and part-time employees, have grown as FY 2017-18 has progressed and as the City has filled more Strong Communities-funded positions. In the second quarter of the fiscal year, Communities Services filled 20 of the 26 Strong Communities positions. The Department will fill the remaining positions in FY 2018-19. The affected employee labor unions have agreed upon the transition of employee work schedules, which was required before the increase in service hours could commence. Increased hours of service start July 2, 2018.
Attachment A - Strong Communities FY 2017-18 Second Quarter Report
Attachment B - Measure M Revenues State Quarterly Report October-December 2017