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REVIEW FISCAL YEAR 2022-23 FOURTH QUARTER MEASURES A AND B REVENUES AND EXPENDITURES
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RECOMMENDATION
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Summary
City Ordinance 2013-07-09-1601, Section 19-Citizen Oversight stipulates the Measure A Citizens’ Advisory Committee: “Shall meet at least annually to review the expenditure of revenues generated by the tax imposed by this Ordinance and make recommendations to the City Council regarding those expenditures.”
Section 7 of the Committee’s bylaws (Informational Materials) also states: “At least quarterly, financial reports including proposed Budgets and Actuals with detailed supporting schedules will be sent to each Committee member. The reports will show revenue generated by Measure A, detailed line-item expenditures as presented in the annual budget relative to Measure B (public safety), and all other uses of remaining Measure A funds and State Board of Equalization reports.”
Attached for review by the Measure A Citizens’ Advisory Committee is the fourth quarterly financial reports for Fiscal Year (FY) 2022-23.
The FY 2022-23 Amended Budget, as shown on Attachment A, includes encumbrance rollovers from FY 2021-22 and Council approved budget amendments include an increase of $1.4 million for labor contracts approved after adoption of the annual budget. Measure A funded Police Department and Office of Violence Prevention (OVP) expenditures in the Amended Budget totaled approximately $34.3 million, an increase of $2,473,911 from the adopted budget.
Total revenues included in the FY 2022-23 Amended Budget are approximately $42.1 million. Measure A transaction and use tax revenues received as of June 30, 2023 totaled $49,703,488, reflecting twelve (12) monthly payments for sales transactions occurring between July 2022 and June 2023. Attachment B shows the California Department of Tax and Fee Administration Sales Tax Revenues Report that indicates gross receipts in the following amounts:
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Quarter Ended September 30, 2022 |
$ 12,383,458 |
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Quarter Ended December 31, 2022 |
12,753,814 |
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Quarter Ended March 31, 2023 |
11,145,195 |
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Quarter Ended June 30, 2023 |
11,682,167 |
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Total |
47,964,634 |
The variance between the two totals is due to a $1.7 million accrual/reversal between periods advised by the City’s tax consultants for generally accepted accounting principles (GAAP) reporting on the ACFR. In the previous year, there was an equal but opposite variance for an effect of zero dollars between the two years.
Expenditures through year-end totaled approximately $31.9 million, or 93% of the Amended Budget. The Police Department expended approximately $30.8 million, and OVP spent $1,105,064. Combined salary and benefit costs for Police sworn and non-sworn positions were at 95% of the budget, including the budgeted vacancy savings.
Most Police Department expenditure categories were under budget at the end of the year. Other supplies (vests, batons, flashlights, and ammunition, etc.) are under budget as a result of expenditure timing. Budget utilization for fuel is 20% over budget, due to an unpredictable cost-per-unit. Other supplies are utilizing only 40% of the budget due to timing. Inventory is kept, and supplies are ordered as needed throughout the year. Measure A funded training, or other expenses, has utilized 100% of the amended budget. Training costs are cyclical and primarily consist of Police Academy costs based on the number of trainees and timing of classes.
OVP expended $1,105,064 through the end of the end of FY 2022-23, which was 84% of the OVP Measure A funded budget. OVP salary and benefit expenses were 84% of the budget, primarily due to vacancies. Consistent with the Police Department, fuel is over budget due to an unpredictably high per-unit price. Utilization of other services, and other supplies and expenses appear to be under budget, due to staffing shortages causing delays in utilizing resources and processing expenditures.
The Marshall Plan expenses through the end of the year have utilized 64% of the FY 2022-23 Measure A tax revenues, 1% under the Measure B advisement. This ratio is due to cost savings due to diligent resource management and vacancies, as well as total revenue coming in unpredictably high at 18% over budget.
This quarterly report includes $317,668 in annual audit and tax collection expenses related to Measure A revenues; $22,499 is related to the performance audit. General Fund Services and Reserves display a surplus of $17.5 million, because revenues exceeded expenses at the end of the year. Consistent with the Amended Budget, year-end revenues exceeded expenses by year end. The General Fund Services and Reserve dollars are required to fund vital city services and will maintain service levels through the next economic downturn. The contribution Measure A makes to reserves would assist in continuing Police and OVP services in the next economic downturn. The Police Department made up over half (53% or $149 million) of the $283 million in FY 2022-23 budgeted General Fund expenditures that this net increase will contribute to.
Attachment A - Measure A and B FY 2022-23 4th Quarter Report
Attachment B - Measure A CFDTA Quarterly Revenue Report