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BACKGROUND
<br /> Staff regularly monitors expenditures, cautiously forecasts revenues, and makes
<br /> recommendations to address changes as quickly as possible in order to maintain a
<br /> balanced Budget. The second Midyear Budget report will help staff address expected
<br /> budget variances in a timely manner.
<br /> DISCUSSION
<br /> General Fund Overview
<br /> As described in more detail below, staff recommends decreasing revenue estimates by
<br /> $6,303,398, decreasing expenditure estimates by $1,812,957, reversing the March 3,
<br /> 2020 General Fund surplus allocations to the CIP ($1 million) and R&R funds
<br /> ($980,923) and reducing the original transfer to CIP reserves by $2,409,518. As a result
<br /> of these changes, staff currently anticipates the City's General Fund will be balanced at
<br /> the end FY 2019/20.
<br /> There is considerable uncertainty about the extent to which the Order will affect the
<br /> City's General Fund revenues. For example, it is unclear whether families will register
<br /> their children during April and May for the City's summer programs as they have in
<br /> previous years. Approximately 50 percent of the City's Recreation revenues are derived
<br /> from summer programs. Further, it is unclear the extent to which on-line shopping and
<br /> the associated County pooled sales tax revenues that the City receives will increase
<br /> during the period of the Order. To be conservative, staff assumed pooled sales tax
<br /> revenues do not increase. Finally, based on the Governor's comments, the revised
<br /> revenue estimates assume the Order will be extended from May 3, 2020 through May
<br /> 31, 2020. However, the Order could end May 3, 2020 or be extended past May 31,
<br /> 2020. Either of these two scenarios will affect the actual General Fund revenues. And,
<br /> the state's decision to allow sales tax payment deferrals for small business for up to 12
<br /> months means staff will not know the actual financial impact of the Order until the end of
<br /> FY 2020/21.
<br /> Table 1. General Fund Overview
<br /> FY 2019/20
<br /> FY 2018/19 Adjusted Recommended Mid-Year
<br /> Actual Budget Adjustments Budget
<br /> Revenues $126,031,456 $129,890,618 ($6,303,398) $123,587,220
<br /> Net Transfers (11,577,560) (7,101,355) 3,409,518 (3,691,837)
<br /> Expenditures (113,376,990) (120,029,736) 2,893,880 (117,135,856)
<br /> Difference $1,076,906 $2,759,527 $0 $2,759,527
<br /> General Fund Revenues - Table 2 identifies the total recommended revenue
<br /> decreases of$6.3 million based on revenues expected to be negatively affected by the
<br /> Order. As noted above, the revenue estimates assume the Order will be extended
<br /> through May 31, 2020 for a total of 2.5 months of public serving business closures and
<br /> City facility closures and reduced revenue generating services. Those decreases
<br /> include: Sales Taxes ($3,030,715), Transient Occupancy Tax (TOT) ($1.5 million),
<br /> Recreation Fees ($985,683) and Development Services Fees ($787,000). Each of these
<br /> revenue reductions is discussed in more detail below:
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