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REVIEW FISCAL YEAR 2017-18 THIRD QUARTER STRONG COMMUNITIES REVENUES AND EXPENDITURES
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Summary
On November 8, 2016, Stockton’s voters approved Strong Communities, a ¼ 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 third 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 March 31, 2018, the City received seven tax revenue payments of $6,188,043
for sales occurring July through December 2017 plus a monthly advance for January of 2018. Without the January advance, six months of revenues were $5.5 million. Attached is the State Board of Equalization (BOE) sales tax revenues report for the quarter ended March 31, 2018 (Attachment B). The State report dated May 3, 2018, shows first quarter Strong Communities gross revenues of $2,474,348 under add-on code 537. These first quarter revenues are not reflected in Attachment A, as the City had not received them from the State by March 31, 2018.
Expenditures through the third quarter of the fiscal year were $1,578,601. With 75% of the year completed, expenditures are 36% of the budget. It was expected that most of the expenditures in FY 2017-18 would occur in the last half of the fiscal year after planning and hiring efforts took place. Accordingly, expenses paid between January and March were $914,987 compared to $663,614 in the first six months of the fiscal year. The third quarter expenditures include two quarterly payments to the State for tax collection services totaling $105,480.
Strong Communities payroll costs for the first nine months were $774,300 of the total third quarter expenditures with approximately 51% for Library programs and 49% 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. By the end of the third quarter, Communities Services filled 25 of the 26 Strong Communities positions. The Department will fill the remaining position in FY 2018-19. The affected employee labor unions agreed to the requisite changes in employee work schedules, which was required before the increase in service hours could commence. The City subsequently increased hours of service July 2, 2018.
Attachment A - Strong Communities FY 2017-18 Budget Update - Third Quarter
Attachment B - Measure M Revenues BOE Quarterly Report January - March 2018