HomeMy WebLinkAboutMinutes - Minutes - City Council - Meeting Date: 5/20/2008 *PLEASE NOTE: Since the Glendale City Council does not take formal action at
the Workshops, Workshop minutes are not approved by the City Council.
MINUTES
CITY OF GLENDALE
CITY COUNCIL WORKSHOP
MAY 20, 2008
1:30 P.M.
PRESENT: Mayor Elaine M. Scruggs and Councilmembers Joyce V. Clark,
Steven E. Frate, David M. Goulet, and Yvonne J. Knaack
ABSENT: Vice Mayor Manuel D. Martinez and Councilmember H. Phillip
Lieberman
ALSO PRESENT: Pam Kavanaugh, Assistant City Manager; Craig Tindall, City
Attorney; and Pamela Hanna, City Clerk
1. FISCAL YEAR 2007-08 THIRD QUARTER GENERAL FUND STATUS REPORT
ON REVENUES AND EXPENDITURES
CITY STAFF PRESENTING THIS ITEM: Mr. Horatio, Skeete, Deputy City Manager;
Ms. Sherry M. Schurhammer, Management & Budget Director; and Mr. Raymond H.
Shuey, Chief Financial Officer/Finance Director
This is a request for the City Council to review the Fiscal Year (FY) 2007-08 third
quarter report on General Fund (GF) revenues and expenditures. The third quarter
includes the months of January, February, and March of 2008.
The FY 2007-08 GF third quarter report is consistent with the Council's goal of ensuring
the city's financial stability by conducting timely reviews of expenditures and revenues.
In response to Council requests, staff committed to providing quarterly reports on the
GF beginning with FY 2003-04.
Third Quarter General Fund
The bottom line for the GF through the third quarter of FY 2007-08 is as follows:
o GF revenues are about $3 million or 2% below budget and
o GF expenditures are $12 million or 8.5% below budget.
In the following table, the revenue budget and actuals for the first three quarters of FY
2008 (July 2007 through March 2008) are shown (in 000s).
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Comparison of 3rd Quarter YTD (July through March)
Budget to Actuals, FY 2007-08
The FY 2007-08 GF revenue budget of $188.3 million is $11.2 million (6.3%) more than
FY 2006-07 total GF revenue collections of $177.1 million.
FY 200'7-08 FY 2007-08 FY 200'7-08 Percent
Annual Budget YTD Budget YTD Actuals Over (Under)
Budget
City Sales Tax $67,552 $50,663 $47,525 (6%)
State Income Tax $34,141 $25,606 $25,583
State Sales Tax $24,583 $18,437 $16,712 (9%)
T'=1
State MV In-Lieu $10,862 $8,147 $7,153 (12%)
HURF $16,986 $12,739 $12,408 (2.5%)
Primary Prop Tax $3,888 $2,916 $2,416 (17%)
All Other $30,318 $22,738 $26,397 +16%
Tatar "'' * $188,330 $141,246 $138,194 (2%)
GF revenue receipts through the third quarter of FY 2007-08 are about $3 million (2%)
less than budgeted.
City sales tax collections are $47.5 million. This amount is approximately $3.1 million
(6%) less than budget.
The strongest months for city sales tax collection, based on a 3-year average
expressed in percentages, are December, March, April, May, and June.
State-shared revenue collections are $49.4 million. This amount is approximately $2.7
million (5%) less than budgeted. The three components of state-shared revenue are
shown below:
o State income tax receipts came in as expected through the third quarter of
FY 2007-08;
o State sales tax receipts are $1.7 million (9%) less than expected; and
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o Motor vehicle in-lieu receipts are $994,000 (12%) less than expected.
Approximately 20% of the total revenues collected for the licensing of
vehicles are distributed to incorporated cities and towns. The amount
distributed is based on an incorporated city's population in relation to the
total incorporated population of the county.
HURF revenues are commonly called the gas tax even though there are several other
transportation-related fees that comprise this revenue source. Much of this revenue
source is based on the volume of fuel sold rather than the price of fuel. HURF receipts
are $331,000 (2.5%) less than budget.
The All Other category is doing very well primarily because of increased revenue
receipts for community development fees such as building permits and plan check fees,
strong interest earnings, and better than expected gas and electric franchise fees.
Compared to budget, this category is $3.6 million (16%) ahead.
Below is a table that reflects the revenue to budget comparison for only the third quarter
(January through March) of FY 2008. It shows that the FY 2008 collections for only the
third quarter are about $1.1 million or 2% less than budget for the same time period.
Comparison of 3'd Quarter Only
Budget to Actuals FY 2007-08
FY 2007-08 FI'2007-08 Percent
3rd Quarter Budget 3rd Quarter Actuals Over(Under) Budget
City Sales Tax $16,888 $16,392 (3%)
State Income Tax $8,535 $8,528
State Sales Tax $6,146 $5,671 (7%)
State MV In-Lieu $2,716 $2,205 (18%)
HURF $4,247 $4,210
Primary Prop Tax $972 $322 (67%)
All Other $7,580 $8,669 +14%
F " Total: $47,084 $45,997 (2%)
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In the following table, the revenue actuals for the first three quarters (July through
March) of FY 2008 and FY 2007 are shown. This comparison is important because it
indicates whether revenue collections have grown when compared to the same time
period in the prior fiscal year.
Comparison of 3`d Quarter YTD (July through March)
FY 2006-07 and FY 2007-08
FY 2006-07 FY 2007-08 Percent Change
YTD Actuals YTD Actuals From FY 2006-07
City Sales Tax $48,352 $47,525 (2%)
State Income Tax $20,641 $25,583 +24%
State Sales Tax $17,139 $16,712 (2.5%)
State MV In-Lieu $7,285 $7,153 (2%)
HURF $12,826 $12,408 (3%)
Primary Prop Tax $2,344 $2,416 +3%
All Other $23,191 $26,397 +14 %
Total $131,778 $138,194 + 5%
GF revenue receipts through the third quarter of FY 2007-08 are $6.4 million or 5%
more than the same period last FY.
City sales tax collections are $47.5 million, or about $827,000 or 2% less than the FY
2007 city sales tax receipts of$48.4 million.
State-shared revenue collections are $49.4 million, $4.4 million (10%) ahead of the $45
million collected through the third quarter of last FY. The increase over the same time
period last FY is attributable to increased income tax receipts, which were expected and
planned for in this FY's GF revenue budget.
o State income tax receipts of about $25.6 million are $4.9 million or 24%
more than FY 2007 collections,
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o State sales tax receipts are about $427,000 or 2.5% less than FY 2007
collections through the third quarter, and
o Motor vehicle in-lieu receipts are about $132,000 or 2% less than FY 2007
collections for the same time period.
HURF revenues are about $418,000 or 3% less than FY 2007 receipts.
Revenues for the All Other category are $3.2 million or 14% more than FY 2007
collections.
The following chart reflects the year-to-year comparison for revenue collections, but by
quarter rather than as a total. The chart shows that each quarter in FY 2007-08 has
out-performed each quarter in FY 2006-07.
Actual Revenues
$160,000
$140,000
$120,000 $45,397
$43,324
$100,000
$80,000
$60,000 $47,419 $47,763
$40,000
$20,000 $41 ,035 $44,434
$0
FY 2006-07 FY 2007-08
❑ First Quarter ❑ Second Quarter 0 Third Quarter
The FY 2007-08 third quarter budget expenditures and actuals for the GF operating and
pay-as-you-go (PAYGO) capital expenditures are shown in the following table.
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Comparison of 3`d Quarter YTD (July through March)
Budget to Actuals, FY 2007-08
FY 2007-08 FY 2007-08 FY 2007-08 Amount
Annual Budget YTD Budget YTD Actuals Under/(Over) Budget
GF Salaries/Benefits $118,131 $90,870 $88,028 $2,842
GF Non-Personnel $53,838 $41,414 $37,330 $4,084
GF Debt Service(leases) $2,994 $2,303 $1,383 $920
PAYGO Capital $7,751 $5,962 $1,785 $4,177
TOTAL $182,714 $140,549 $128,526 $12,023
Overall, third quarter actuals were $12 million or 8.5% less than the amount budgeted.
The FY 2007-08 second quarter report on the GF was presented to Council on
February 19, 2008.
This is a status report on the General Fund covering the third quarter of FY 2007-08.
No Council guidance is requested on this report.
Mr. Skeete and Ms. Schurhammer presented a slide presentation on the FY2007-08
third quarter report for GF revenues and expenditures. This is in response to Council's
request for staff to provide quarterly reports on the General Fund.
Mr. Skeete said the report shows a favorable bottom line. While the city was $3 million
or 2% below budget on the revenue side, this situation was more than offset by the $12
million or 8.5% below budget status on the expenditure side. He said the $12 million in
savings is likely to change by the end of the FY once all of the bills have been paid.
Nevertheless, he said the city expects to have some level of expenditure savings by the
end of the FY.
Mr. Skeete said revenues are not growing as fast as we had planned for in the
operating budget. We had planned for 6% growth in overall GF revenues but were
experiencing a more modest growth rate. He assured City Council that executive
management was closely monitoring the city's revenue and expenditures to ensure the
city lives within its means.
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Mr. Shuey explained the slide that provides a year-to-year comparison of revenue
receipts through the third quarter of FY2007-08. The bottom line shows the city's
revenues growing from the receipts received in FY2006-07 primarily as a result of state
income tax revenue, which was expected, and development-related fees. Mr. Shuey
explained the next slide that showed the same information by quarter as a bar chart.
He noted that the graph clearly shows that each quarter in FY2007-08 out-performed
each quarter in FY2006-07.
Ms. Schurhammer addressed the slide showing the current FY's budget to actuals. The
slide shows that GF revenues are about $3.1 million or 2% below budget through the
third quarter. She noted that the budget figures are based on 75% of the total
revenue budget, which history shows is the expected amount for the first nine months
of the FY.
Ms. Schurhammer also addressed the results for the designated sales taxes. She said
they are addressed in the attachment memo that accompanied the council
communication. She said the transportation sales tax is within 3% of the collections
received in FY2006-07. She explained that the public safety sales tax exceeds last
FY's revenue because of the voter-approved rate adjustment that became effective in
November 2007. However, the performance of the public safety sales tax when
compared to budget is different than the transportation because of the exemption of
food for home consumption for the majority of the public safety tax. She noted that the
full half-cent designated for transportation includes food for home consumption
whereas most of the half-cent for public safety excludes groceries. She said it is
common to see consumers spend more on food for home consumption rather than
going out to restaurants or spending money on other retail items when there is an
economic downturn.
Councilmember Clark said she was concerned with the negative sales tax percentage
numbers. She asked Ms. Schurhammer what sort of sales tax numbers were
developed for the FY2008-09 budget. Ms. Schurhammer said a conservative approach
was used to establish the FY2008-09 revenue budget with only very modest growth
expected. Councilmember Clark asked if the city is anticipating revenues equal to what
was collected in FY2006-07. Ms. Schurhammer stated she believes the figure was very
close to last year's collection with only a modest increase for growth, as was predicted
by the Arizona economy experts. She also mentioned the economic stimulus checks
that could possibly create some growth.
Councilmember Clark inquired if staff was predicting a small incremental growth in the
city sales tax and the motor vehicle in-lieu tax figure. Ms. Schurhammer stated they did
anticipate very modest growth in the sales tax, however, not in the motor vehicle in-lieu
tax. She said she expects the motor vehicle in-lieu revenue to remain flat as a result of
declining auto sales because of the slow economy. Councilmember Clark expressed
her concern with staff's prediction that they will see an increase in the city sales tax.
She also asked if they had anticipated a negative impact because of the current
economy on the state income tax revenue, which typically lags two years behind. Ms.
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Schuhammer explained that the state income tax collected reflects income tax revenue
received by the state in FY2006-07, so the city's share of income tax revenue is
expected to grow in FY2008-09.
Mayor Scruggs commented on the good news revealed in this budget cycle. She
stated it was clear that Glendale was in a good position because it has diversified the
city's revenue base over the last several years. She noted that other categories in the
revenue budget have performed strongly, which reflects the tremendous growth
opportunities in the city.
Mayor Scruggs asked Ms. Schurhammer to clarify some information. Ms.
Schurhammer said revenue receipts at the end of the third quarter typically reflect 75%
of the GF's revenue collections for the entire FY. Mayor Scruggs noted that
characteristically, April, May and June are the strongest months for city sales tax. Ms.
Schurhammer agreed.
Councilmember Frate commented that staff has always taken a conservative approach
when estimating, even in the months when sales were high, unlike other cities. He
noted if they continue with the same approach, Glendale will be in good fiscal shape.
He thanked staff for all their work.
Mayor Scruggs commented that the graph charts were extremely clear and very helpful
and informative. She felt good about not adding an additional tax on food for home
consumption for the public safety tax rate adjustment that voters approved in
September 2007. She thanked staff for a great report.
ADJOURNMENT
The meeting was adjourned at 1:55 p.m.
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