Quarterly Financial Report 3rd Quarter Ending March 31, 2018

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1 Quarterly Financial Report 3rd Quarter Ending March 31, 2018 OVERVIEW This financial report summarizes the City s financial position for the fiscal year through the third quarter ending March 31, 2018 for the General Fund, Construction Services Fund, Sewer Fund, Golf Fund, and Workers' Compensation Fund. The purpose of this report is to provide City Council, City Management, and the San Mateo community an update on the City s fiscal status based on the most recent financial information available. GENERAL FUND SUMMARY The tables presented in this report include budget-to-actual comparisons between the current fiscal year and the previous fiscal year to show results of the third quarter of each year as compared to the adjusted budget as it stood on March 31st of each year. A year-over-year comparison is also presented to show results of the third quarter of the current year as compared to the previous year. Major differences in budget-to-actual and year-over-year comparisons are explained in this report. Revenues Property tax, sales tax, property transfer tax, and transient occupancy tax are the City s major tax revenues, and they account for nearly 80% of total General Fund revenues. The table below shows third quarter budget-to-actual revenues for fiscal years and. ADJUSTED ADJUSTED Property Tax 49,186,975 32,725, % 52,697,054 34,588, % Sales Tax - Local 1% 19,593,169 10,864, % 19,264,370 11,421, % Sales Tax - 1/4% Measure L/S 5,460,944 2,850, % 5,567,661 2,992, % Property Transfer Tax 8,250,000 7,783, % 8,500,000 7,180, % Transient Occupancy Tax 7,240,385 4,719, % 7,272,611 4,678, % Business License Tax 5,652,219 3,778, % 5,765,263 3,824, % Franchises 3,162,196 1,342, % 3,225,440 1,316, % Recreation Service Charges 3,663,761 3,765, % 3,790,458 3,735, % Permits, Fees, and Fines 3,351,001 1,916, % 2,697,896 2,084, % Intergovernmental 2,098,959 1,596, % 2,086,047 1,929, % Interest and Miscellaneous 1,148,511 1,998, % 1,794,406 2,224, % Transfers In - In Lieu Charges 4,254,811 3,153, % 4,285,722 3,149, % Transfers In - Gas Tax 1,517,500 1,138, % 1,517,500 1,138, % Total Revenues 114,580,431 77,633, % 118,464,428 80,262, % Overall, revenues through the first three quarters of fiscal year are 3.4% above the same period for fiscal year. The following table shows year-over-year comparison of revenues received through the third quarter, with a brief discussion of major variances presented.

2 % CHANGE Property Tax 32,725,282 34,588, % Sales Tax - Local 1% 10,864,836 11,421, % Sales Tax - 1/4% Measure L/S 2,850,244 2,992, % Property Transfer Tax 7,783,876 7,180,709 (7.7%) Transient Occupancy Tax 4,719,909 4,678,337 (0.9%) Business License Tax 3,778,285 3,824, % Property transfer tax is down 7.7% over last year. This is due to a few large commercial transactions that ocurred in fiscal year. This revenue source can vary significantly, as collections are dependent on property values and transaction volume. Current year property transfer tax collections for through the third quarter are at 84.5% of budget and are expected to exceed revenue estimates by year-end, as a continued reflection of market conditions. Franchises 1,342,434 1,316,308 (1.9%) Recreation Service Charges 3,765,917 3,735,895 (0.8%) Intergovernmental revenues are up 20.9% over Permits, Fees, and Fines 1,916,544 2,084, % last year, primarily because the City is currently Intergovernmental 1,596,169 1,929, % receiving more revenue from Foster City for shared Interest and Miscellaneous 1,998,989 2,224, % fire protection services. This is due to the change Transfers In - In Lieu Charges 3,153,074 3,149,104 (0.1%) in composition of shared personnel, in which more Transfers In - Gas Tax 1,138,125 1,138, % personnel from San Mateo are being shared this year Total Revenues 77,633,684 80,262, % over last year. Additionally, the City did not receive payment for automated traffic enforcement services from the City of Millbrae until the fourth quarter of fiscal year, but payment was received during the third quarter of the current fiscal year, contributing further to the increase in intergovernmental revenues. Interest and miscellaneous revenues are up 11.3% over last year, primarily due to higher interest on investment collected this year. This is a reflection of the economy and the increased size of the City s investment portfolio. Expenditures The table to the right shows budget-to-actual expenditures for the first nine months of fiscal year. Through the third quarter, or 75%, of the current fiscal year, General Fund expenditures are tracking to expectations at 72.2% of budget. ADJUSTED City Attorney 1,525, , % City Clerk 849, , % City Council 380, , % City Manager 2,373,444 1,241, % Community Development 2,537,878 1,911, % Finance 3,411,534 2,167, % Fire Department expenditures are tracking higher at 79.3%, primarily due to deployments, personnel being out on workers' compensation, and additional expenditures related to the formation of the JPA. Fire deployments, which are reimbursable events, were sent out during the first two quarters of the current fiscal year to assist with various natural disasters in and outside the State. Secondly, a higher than expected number of fire personnel are out on workers' compensation, which has required a backfill on Fire Human Resources Information Technology Library Parks and Recreation Police Public Works Non-Departmental Total Expenditures 23,271,560 1,761,229 3,890,831 6,860,853 14,814,795 39,435,132 7,070,520 12,334, ,517,298 18,444,196 1,158,417 2,636,932 4,928,267 10,974,902 29,009,185 4,749,520 8,113,292 87,068, % 65.8% 67.8% 71.8% 74.1% 73.6% 67.2% 65.8% 72.2% overtime. Also in the current fiscal year, additional costs have been incurred as the Fire Department is exploring the formation of a JPA with the cities of Foster City and Belmont. With these expenditures exceeding what had been budgeted, City staff will be bringing the Fire Department s budget to City Council later this year for additional appropriation to account for these changes. The Parks and Recreation Department, although tracking slightly below 75%, is expected to go over its budgeted expenditures for this current fiscal year. During the current fiscal year, water rates were increased significantly, impacting the cost of operations in the Parks Division. City staff will request additional appropriation from the City Council later this fiscal year to

3 address the water rate increases. Through the third quarter, expenditures for the City Council are tracking at 74.7% of budget. Near the end of the third quarter, the City celebrated its 50th anniversary with its adopted 101st Airborne unit ( Operation Eagle Visit ), welcoming veterans and troops with various events and a parade in downtown. The total cost of the weekend of festivities ended up being higher than expected, so staff will be requesting an additional appropriation for the City Council s budget for fiscal year. Included in the current fiscal year s budget for the City Clerk s Office are estimated costs provided by the County related to the November 2017 election. Although the departmental expenditures are tracking below 75%, expenditures through the third quarter did not include costs for this election, which are nearly three times more than the original estimates. Staff is currently working with the County to see if adjustments can be made to lower fees, but staff will request to increase the City Clerk Department s budget for fiscal year to ensure the full election cost is accounted for. OTHER FUNDS In addition to the General Fund, this report summarizes the City s third quarter financial position for the Construction Services Fund, Sewer Fund, Golf Fund, and Workers Compensation Fund. The tables below show budget-to-actual revenues and expenditures for fiscal years and as it stood on March 31st. Construction Services Fund ADJUSTED ADJUSTED Revenues 6,099,540 9,653, % 6,589,558 8,536, % Expenditures 6,087,846 3,883, % 6,969,617 4,201, % Through the third quarter of the current fiscal year, the Construction Services Fund revenues are tracking at 129.5% of budget estimates while expenditures are at 60.3% of budget. Permit and plan check fees collected this year are well above historical averages, primarily due to several large developments including Bay Meadows, Station Park Green, the Franklin Templeton expansion, and the Atria Hillsdale Renovation. Many projects for fees collected this fiscal year are currently underway with planning applications under review, and as applications are approved, permit fees will be remitted. Fees collected will be used for services over time to fully process existing projects. A list of current project and plan updates is posted on the City s website:

4 Sewer Fund ADJUSTED ADJUSTED Revenues 25,208,513 19,710, % 25,861,419 30,843, % Expenses 23,722,769 15,399, % 25,810,757 16,008, % Transfer Out to CIP 174,085,028 3,269, % 74,937,914 9,827, % Through the third quarter, Sewer Fund operating expenses are tracking at 62% of budget, and revenues are at 119.3% of budget. Sewer service charge, a major source of Sewer Fund revenues, are up 33% over last year as a result of the 36% rate increase implemented this fiscal year to ensure appropriate funding is available for projects in the Clean Water Program. Transfers out of the Sewer Fund are up significantly this year over last year, as expected, reflecting the acceleration for projects in the Clean Water Program. Golf Fund ADJUSTED ADJUSTED Revenues 2,644,200 1,511, % 2,294,911 1,651, % Expenses 3,161,677 2,033, % 3,052,107 2,093, % Transfers In 450, , % 450, , % Through the third quarter of the current fiscal year, Golf Fund revenues are tracking at 72% of budget, while expenses are tracking at 68.6% of budget. Golf fees, the primary revenue source for the Golf Fund, are up 12.5% over last year through the first nine months of the fiscal year. Despite the increased collection of Golf fees, total revenues into the Golf Fund are not expected to be sufficient to cover its expenses, which include approximately $675,000 in debt service payments. A $450,000 contribution from the General Fund has been budgeted this year, and with the expectation that the Golf Fund will continue to need General Fund support, the golf operation will move to the General Fund starting fiscal year Workers' Compensation Fund ADJUSTED ADJUSTED Revenues 2,619,757 1,878, % 2,723,935 2,402, % Expenses 2,262,085 2,367, % 2,115,035 2,113, % Through the third quarter of the current fiscal year, Workers Compensation Fund expenses are already at 99.9% of the annual budget. Claims expenses, the majority of budgeted expenses in the Workers Compensation Fund, are already at 110.2% of budget and well above historical averages. This is the second consecutive year with high claims experience, causing the fund to go to a negative fund balance. To address this, collections into the fund were increased and are up 27.9% through the third quarter of this fiscal year over last year. Updated collections will be incorporated into the budget. QUARTERLY FINANCIAL REPORT

5 QUARTERLY FINANCIAL REPORT