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HE CITY OF ATTACHMENT I .,_ ...r Quarterly Financial Report I nn 1'L-EfC141\TOIN\10 Operating Budget First Quarter 2010/11FY As of September 30, 2010 Current Financial Condition This report summarizes the City's overall financial position for the three months ending September 30, 2010 (First Quarter) of the 2010 /11FY. The City's financial condition at the end of the First Quarter is stable and revenues are projected to improve slightly during 2010 /2011FY over and above what was projected in the 2010 /11FY Midterm Budget adopted by Council on June 1, 2010. At this time it is anticipated that revenue estimates will need to be adjusted upward to reflect a slight upturn in the economy for property tax and hotel /motel taxes during the Midyear Budget Review that will be presented to Council in March 2011. General Fund With 25% of the fiscal year completed, 5.6% of budgeted revenues have been received and 19.1% of budgeted expenditures have been realized. The reason that only 5.6% of revenues have been realized is the timing of the receipt of revenues. Certain tax revenues, such as sales tax, that were received in the First Quarter were actually earned in the fourth quarter of the 2009 /10FY and were accrued back to the 2009 /10FY to the period when that revenue was earned. Also, the first property tax payment received in the First Quarter includes only the unsecured property tax. The majority of property tax revenues will be received in December and April. Other taxes that consist mainly of hotel /motel taxes that are earned in the First Quarter are not due and payable to the City from the hotels until October 31 and therefore, are not reflected in First Quarter receipts. Franchise fees are similar in that the utilities (garbage, cable and telecommunication providers) pay their franchise fees quarterly to the City and the First Quarter fees are not due until October 31, 2010. Finally, interest income earned in the First Quarter reflects the maturity of investments that had premiums associated with the investments (paid at the time the investments were purchased). The City recognizes the premium paid on investments at maturity of the security rather than amortizing premiums over the life of the investment. This practice is distorting the amount of interest income realized in the First Quarter. However, interest income will probably have to be reduced at the Midyear Budget Review due to the City earning a lower than anticipated interest rate on the reinvestment of its funds. Table 1 presents the revenue received in the First Quarter by major revenue category followed by an outlook on the condition of those revenues.