Financial review committee recommends quarterly report after staff cites strong FY22 revenues, ARPA aid and proposed pension set-aside

The Financial Review Committee on Sept. 13 received the quarterly financial report for the year ending June 30, 2022, and voted to recommend the document to the City Council.

Finance staff told the committee that the city finished FY22 with revenues about $6,000,000 above budget and expenditures about $3,200,000 below budget, driven by record transient-occupancy tax and strong sales-tax receipts. Staff also reported the city received the second half of its ARPA allocation, telling the committee that the city ‘‘received total 8,000,000, and for fiscal year 22, we received the last half, so 4,000,000,’’ which contributed to the surplus, according to the staff presentation.

Staff said the city’s unassigned fund balance was ‘‘about 13,000,000’’ in their presentation and that after required council reserves (7% of budget) the city had what staff described as a surplus (staff later said ‘‘about 10,500,000’’ after required reserves). Given economic uncertainty, staff recommended increasing reserves by another 3 percent.

Committee members asked for line-item detail on the drivers of the expenditure underrun. Staff pointed to personnel vacancies, lower-than-budgeted professional services and operating costs, carryover contract work and higher building-permit revenue as primary contributors. One member summarized the change as being the result of ‘‘a lot of little things, moderate chunks that kind of add up,’’ per the committee discussion.

On transportation funding, staff explained a cash-flow timing issue for project B funds from OCTA for the city’s free trolley program and recommended a short-term loan to the coastal transit fund to keep it solvent until grant disbursements arrive; staff cited a figure of ‘‘500’’ and later said ‘‘we’re recommending 550’’ during the presentation. The transcript does not unambiguously specify units for those figures.

Staff further described approximately $580,000 in carryover budget adjustments and proposed placing roughly $4,100,000 into the community investment account, which staff said would bring that account from just over $11,000,000 to ‘‘probably…14,000,000’’ after the transfer.

After discussion, Member (speaker 5) moved to recommend the quarterly financial report to City Council; the motion was seconded and the secretary called the vote. The motion passed with the vote tally recorded in the meeting transcript as ‘‘This motion passes by a vote of 4 0 1 with Chair Musko absent.’’

The committee asked staff to return with more detail at the next meetings, including a line-by-line breakdown of carryovers and a clearer accounting of reserve calculations. The item will next appear before the City Council as the committee’s recommendation to receive and file.

The meeting notice and staff materials stated the council would consider the recommended carryover and budget adjustments at the next council meeting.