The Santa Barbara City Council will receive a report on the third quarter of the 2019 fiscal year on Tuesday.
The report, prepared by the Finance Department’s Accounting Division, tracks revenues and expenditures for a nine-month period ending March 31. City staff will recommend financial adjustments for council review.
“These adjustments are the result of new information and/or unanticipated events that occurred since the adoption of the budget in June 2017,” the report reads.
The city’s fiscal year-to-date budget, based on projected revenues, is $74,519,592. Actual revenue through the third quarter is $ 74,232,683. The total annual budget is $109,742,870.
“Because tax revenues are not collected evenly throughout the year, adjusting the year-to-date budget to reflect the unique collection pattern for each type of tax allows for a more meaningful comparison to year-to-date results,” reads the report, which explains tax revenues and franchise tax fees are seasonally adjusted based on a three-year average of collections through the same period.
For other revenue sources, city staff says revenue to date represents 75 percent of the annual budget.
“Unlike tax revenues, these revenues tend to be collected evenly throughout the year.”
Sales tax revenue for the first nine months of the fiscal year is $16,555,637, $104,891 over the city’s budgeted sales tax revenue.
“The California Department of Tax and Fee Administration (CDTFA, the state agency that collects and allocates sales and use taxes) implemented a new software collection system in Fiscal Year 2018. Issues with implementation of that system caused significant delays in distributing sales taxes to local jurisdictions,” reads the report.
Even after adjusting for the late tax revenue, sales taxes are still trending slightly ahead of budget, according to the report.
Additional increased revenue could come in as a result of California’s new tax on online sales by out-of-state vendors, but those revenues may not be felt until the financial year 2020 read the report.
Measure C Sales Tax, the voter approved 1-cent sales tax increase, brought in $16,398,015, $318,237 less than the budgeted revenue.
Staff still expects Measure C revenue to end the fiscal year $230,000 above budget.
Property tax revenue is up $195,757 over the budgeted revenue of $18,331,908. Property tax revenue is expected to end the fiscal year $324,601 over budget.
Utility users’ tax revenues are at $5,337,333, $106,409 below budget. The tax applies to telephone, cable, electric, natural gas, refuse and water services.
City officials say video streaming services and cellphones have cut into cable and landline taxes, but trash and natural gas services have expanded.
At $14,614,280 in revenues, transient occupancy tax is also under budget by $313,822. City staff expects it to end the year at least $200,000 under budget.
“This could be the lingering effects of the Thomas Fire, as travelers may still be reluctant to travel to Santa Barbara,” reads the report, which speculates new flights between Santa Barbara, Sacramento and Salt Lake City could increase tourism.
So far, total general fund expenditures are at $124,375,524 which is $3,149,041 under budget before accounting for encumbrances or “certain appropriations that were carried forward from prior year and contracts or blanket purchase orders that have been executed in the current year but are expected to be used throughout the year,” reads the report.
The City Attorney, City Administrator, Administrative Services and Finance departments are all spending under budget through the third quarter.
The Santa Barbara Police Department’s $32,281,232 in expenditures is 1.8 percent, or $579,430, under budget.
“Salary and Benefit savings due to vacancies in the year with up to ten (10) vacancies for sworn officers have offset higher than anticipated costs of overtime to cover for officers away from work injury and illness as at March 31, 2019,” reads the report. The savings are expected to continue through the end of the fiscal year, but officer absence and expected litigation will cause some future expenses.
The Santa Barbara Fire Department is operating 2.8 percent over budget at around $22.3 million in expenditures. City staff found mutual aid revenues were over budget by $350,000, but the profit was offset by mutual aid expenditures, additional salary and benefit costs.
Several of the city’s enterprise projects saw positive returns by the end of the quarter. The Water, Airport and Waterfront funds are all reporting revenues over the year to date budget.
Solid Waste Fund revenues are at $18,361,025, 4 percent under budget. Waste rates will increase by 12 percent starting July 1. City staff expects around $225,000 in new revenues starting in August.
The City Council meets at 2 p.m. Tuesday in council chambers at City Hall, 735 Anacapa St.