now that we're at the end of the year and we're closing the books we can give you much more final numbers how the year end did not what we think is going to do and all that the numbers aren't completely you know they're not one hundred percent audited we are gonna have the auditors come out soon and so they are subject to some change we don't expect they're going to change much but because of that we kind of qualify these numbers saying that the preliminary we will be coming back to you in december when the capper is completed and you we do this every year as you know we have our auditors come out and talk about their process and we give you the final numbers and at that point we also share with you final reserve calculations how did we end the year relative to reserves we have a sense of it now but there are a lot of moving parts that could change those reserves between now and december so we i don't want to give you a number until we got that wrapped up so today we're going to give you a our preliminary review and report on how we think we ended the year for fiscal year two thousand and eighteen as usual we'll start off with the revenues and the general fund and then expenditures and then we move on to enterprise funds we also have attached to the report the budget adjustments and we will go through just a few of those not all those or we're gonna go through them pretty quickly and then we're gonna make a similar report to coun report for both revenues and expenditures she's new to it so she asked me to ask you to be patient and then i also wanted just to note you all know that marketing pursue is now our accounting manager he'll be starting on october one we're will be going through the presentation today as part of that presentation i will be going through the general fund revenues the general fund expenditures the enterprise funds and the highlights of the proposed budget adjustments so this shows our taxes other revenues and fees and charges and the main takeaway on this slide is that what we're looking at here is a surplus of about one one million at year end in our revenues and we will go through these in more detail on the on the next few slides but i did want to put some context to this and that that one point one million is not taking into consideration the anticipated year invariants when we take that into consideration it actually becomes a one two million dollar deficit and just to refresh your memory that anticipated year invariance is a budgeting tool that we use to adjust for to account for potential expense expenditure savings that were budgeting into our annual budget so this next slide is a little bit more detail on the tax revenues so in total we see that tax revenues ended the year about seven hundred and fifty zero below budget now i'll go through a few of the highlights on this so when we get to sales tax we see sales tax end of the year about one  four million below budget when we developed the fiscal year eighteen budget it in that budget was built in about a one five percent growth estimate  know that there's been a closure of a major retail store we've had vacancies in the downtown area just the overall trend away from brick and mortar stores to online sales and we also have the impacts of the thomas fire that account for this when what we see in that in the estimate of the one point five percent for the budget what actually happened is about a two and a half percent decline compared to last year so that's where we see this four percent swing one other item that we wanted to point out that's included in this number in january the state they took away some of the responsibilities of the board of equalization and created a new agency the california department of tax and fee administration and we were recently notified that there was a glitch in their system and with that glitch what that equates to is about two hundred thousand dollars that we should have collected that we didn't collect we we've estimated that number and we don't know when exactly we're going to be getting it but that does that is included in this one point four million because we didn't know enough about it and when we're going to going to receive it to accrue it so that is included in here as well music next measure c so as you're aware measure c went into effect april st this year we budgeted about five five million and what we see is about a four three million are about four three million so far which results in about a one two million dollar deficit we believe about half a million of this about five hundred zero of this is related to that just that general downward trend in sales tax the other seven hundred zero is a little bit more unclear we believe that it may be just the fact that it takes time for vendors to implement their local vendors to implement their that additional one percent in their collections and their accounting systems so as those vendors file their tax returns and the state processes those for compliance or non compliance they will pursue that additional one percent and over time that number will will gradually collect additional that would technically be fiscal year eighteen revenues as well again we just don't know how much and when that's going to happen so on to property taxes we actually see property taxes have gone up about two three million and when the fiscal year eighteen budget was developed there was an assumption of about a five and a half percent growth in in the budget and what we see and when we the number here is ten and a half percent but about eight and a half percent of that is due to those increases in assessed property values so we budgeted five and a half percent it's coming in about eight and a half percent we also have one property that was previously in the redevelopment agency that was sold that accounts for that other two percent so it was a one time amount the last item i wanted to point out on this slide is the t ot revenue so this is a combination of a couple things so hotel revenues are on a steady increase of about one point six percent however those are that is okay that's offset by the the decision to curtail the short term vacation rentals just a follow up question on these revenues so the property tax that ten and a half percent that's the variance that's not the actual increase year to year that that is the the change from last year to this year it is an increase or the actual of this thirty four million that's ten percent more than it was last year or correct okay and if you look back at the previous years are we seeing you said the estimate was about a five percent growth yeah i think the last couple years it was tracking between four five percent i don't have oh maybe we do have those numbers so it has it been an abnormally high increase to last year or maybe abnormals not the right accounting term higher than the previous year seventy six percent and we just you know relatively conservatively budget about five and a half years and have been budgeting five and a half percent growth per year and so fy eighteen is ten five percent and the real growth is about eight and a half percent as this thomashefsky indicated about two percent of is that one time revenue from the sale of the rda property which we had a piece of that for those proceeds okay and then thank you for that and then the t ot i didn't understand your what did you say about the short term rental revenue basically we're not collecting for much of this short term vacation rentals anymore so that's part of the deficit it's offset by the increases in the hotel collections so the lack of revenue was more than we anticipated in terms of the short term rental correct we're still collecting it in the zones where there's legal lawful short term rentals okay thank you okay so the next section is other revenues and this is comprised of business licenses fines and forfeitures franchise fees and so on in total we see that there's actually a surplus at year end of about two point one percent i just wanted to highlight a the main driver there this three million is almost entirely fire mutual aid revenue and we budget very conservatively on mutual aid activities because that can shift so greatly from year to year but we did have a high fire year this year we will also see this on the expenditure side the impacts to the fire expenditure budgets as well and then we also have a budget adjustment regarding this at the end the last item i wanted to point out is miscellaneous we're also going to be looking at this on another slide and there's one more thing i just wanted to point out it's not a  large dollar amount impact but we did collect about a hundred and sixty thousand and unbudgeted cannabis application fees and so that's where you see the actuals so much higher than where it was compared to last year so that's it for other revenues general fund fees and service charges this is broken out by departments and i really just wanted to highlight a couple of these so community community development actually ended the year about a hundred and seventy two thousand over budgeted levels this is just due to a moderate increase in general permit activity whereas on the public works and in the public works department we see a deficit of about four hundred and twenty thousand this is relating to engineering services or the engineering division the engineers in this division charge out to capital projects and there were several vacancies  we also see some salary savings that offset these reductions in revenues as well so in total fees and charges ended the year slightly below budget by a little less than three hundred thousand  on this last slide we have miscellaneous revenues and i did want to highlight a change from last year last year we see that this was about four point two million compared to one four and miscellaneous revenues and the main driver here was the two five million that was received from planes all american for the settlement for the refugio oil spill and really the only other item i wanted to point out is the operating transfers in so we see these ended the year about seven hundred and seventy five thousand below budget these are mainly opera our transfers in from other departments for budgeted loan reimbursements one of the bigger ones being the  project there was enough revenues generated by the departments that they didn't need the loans therefore they didn't need to reimburse to the general fund so that's what we're seeing here so that's it for the general fund revenues and th next slide will go much quicker so this is the general fund expenditures we see general fund expenditures into the year with about a three million dollar savings compared to budget and though really the only one i wanted to point out is for fire this is listed by department we see that fire was actually over by about two four million so as i was explaining in the revenue side the mutual aid activity this is the offset to that this is the increased overtime cost for firefighters for mutual aid activity there were also some minimum staffing and some unbudgeted vacation cash outs in here but the vast majority of this is related to mutual aid so the main takeaway here with the general fund revenues and expenditures is what does that mean so we've added a couple slides in here that i'm going to hand it back over to mister samar eo to go through what what the impacts to the general fund look like at this point okay so at the risk of complicating things i'm gonna go back to one of the original slides to give you some kind of perspective on how revenues did so you could see that before we factor in the anticipated year invariance shows the surplus of one one million dollars between between budget and actual that number is artificially or i should say inflated by the fact that we that includes mutual aid revenues of three million dollars in that number most of that or a good portion of that is offset by increased costs but that number is really skewing this year end result if we were not to have you know any mutual aid revenues at all that number would be a much would be a negative two million dollar number and that's something to keep in mind even though you know you're really going to be seen on a first subsequent schedule that the very bottom line number one one because we do treat the  essentially we're seeing taxes being not performing well for a number of reasons and some other revenues not doing well but really the taxes is the big deal but property taxes is the exception to that and it's helping to offset a lot of those decreases we're seeing in bed taxes and sales taxes so it's really you know save the day for us and we're hoping to see continued growth in property taxes what we don't know is what's happening with sales tax and bed tax in the future sales tax is a much bigger issue we you know with the economic forces bed tax is more of a local issue and we'll have to see how the tourists respond to what happened in december january and to what extent they're going to be to returning back and you know where we see the kind of growth we would expect on a given year four percent instead of three or two percent or a decline someone who just kind of give you that context before i get into the other stuff so this is yeah this is kind of a recap if you kind of try to combine revenues and expenditures from a budgetary perspective and our preliminary results it's confusing because it's a two dimensional approach but essentially when we talk about okay how do we when all the dust settles we have a budget we know what we thought we were going to do but what the end of the day essentially expenditures exceeded revenues by two six million dollars that theoretically on a normal basis and i'll explain why it's not the case here but a normal basis that's what would impact our reserve balances that would fall to reserves our reserves in total to be lowered by that amount so as we looked at to the details of this what we find is that this two six million dollars on just on an actual basis is driven by the fact that we did have a deficit as miss thomashefsky indicated we had a deficit on our measure see revenues in that we only brought in four three or so but we budgeted five five and in fact transferred five and a half million dollars to our measure c capital fund one approach would have been to say well since we're short one point t revenues and we should we should shorten how much we're transferring to diminish the capital fund the problem is we've already budgeted those monies we've started two projects for its primarily streets so it's hard to undo that money so what we'll do is then this year nineteen we're gonna have to make adjustments to what's budgeted in nineteen to lower it to repay the general fund for the one two million dollar shortfall we go on the revenue side does that make sense so even though it's it's six reflects that we know we're gonna essentially get that back by transferring that much less in nineteen then what we get we're gonna have to make that up so the general fund will be restored by the one two million dollars so it's not a true use to reserves there's just sort of a timing thing so we're not disrupting projects that are already been contracted and you know start under way so that brings us to kind of a year invariance of a more real number of one four million dollars but then as we look more closely we we find that our policy as you know says that any year end surplus path goes to  skills to capital in two thousand and seventeen we when we really wanted to make sure we had fully funded reserves which we decided that when we had fully funded reserves we had excess reserves at one point for that we said let's just send it all to capital we don't need  any percent to fall down and reserves we're fully funded were good so the one point four was an excess that we had and said send it all to capital well we didn't do that until eighteen so the surplus was seventeen we did we closed the book so we didn't get a final number until eighteen so  transferred that money on in eighteen from reserves but it's from not policy reserves but from surplus reserves it just shows they used to resource here it doesn't talk to you talk about what pocket it came from but just to be clear that the one forty is really coming from surplus reserves not policy reserves so at the end of the day and that's true of the one hundred and eighty eight there was one hundred eighty eight thousand dollars that we budgeted from reserves this year but it came from designated reserves for a police station fuel tank project they ran in terms of the impact of policy reserves with a surplus of hundred and seventy nine thousand dollars so we will be adding to our reserves the policy reserves of one hundred and seventy nine when all said and done because of these the way this  what that means for what are probably what our status our reserves are i don't know because as you know the one part of the calculation we have to make for in determining what our reserve requirements are is what's the next year's budget looking like and as you know it every year generally grows and so our reserve requirements grow for every four million dollars of budgetary growth we have a million dollar additional requirement for our policy reserves that's twenty five percent and we've talked about that in the past that we generally need about a million dollars of surplus each year just to stay even with our reserve requirements so i know we're gonna end up have you had he one hundred and seventy nine i just don't know what that growth is that a million is it less i know there are some things that could help add to our reserves that are that as part of our urine adjustments one for example is we have these m lab employee mortgage loan assistance program loans that are still outstanding we still have you know a few million dollars left on those to the extent those get repaid or a refinance or fully paid off we those become available reserves because even though they're part of our assets we don't count those as being available because they're short because they're long term loans so things like that could help you know essentially we are going to need a million dollars more for to maintain policy reserve status fully funded status i just can't tell you where we're gonna be but i'll be able to tell you that in december once we close the books and have them audited and new our reserve calculations with these moving parts that effect that number prior year it's money we will we will get it's an estimate but it's money we'll get it's likely this year nineteen but not sure not exactly you know guaranteed but something to think about this can help us for a nineteen and then we did have some mutually cost in the police department this is kind of a new thing for us you typically see that in fire but we had an agreement with the county for reimbursement of cost that we incurred the police department responding to these emergencies and we are expecting to get four hundred thousand dollars back to us again because we aren't expecting them by september thirty we can tack room as prior revenue but they are going to come in in nineteen is revenue on unbudgeted revenue so just one to give you a full picture of kind of how we end of the year if you look at the bottom line number is suggesting we have a two  six million dollar deficit in which we do but and that we're going to consume that much in reserve but when you look at the details you'll see that it's most of that is going to kept fund our capital fund from from prior surpluses and then the measure c is really deficit another big deficit that we're going to be we get reimbursed in a sense from our from that next year unfortunately just means less revenue for red measures d projects that's the downside of course but come up in terms of balancing our general fund we will get that back any questions on indians i know it's a lot to kind of take in councilmember dominguez thank you the so the number the amended budget number in slide fourteen the two point eight six nine deficit i'm comparing that to the two point six two two so trying to make some good news or optimism out of this so the actual deficit is a little bit lower than we expected after we amended the budget is that fair to say or no so you're comparing the two point six minor you look up at the screen the two point six two which number two in slide fourteen under the amended budget we were anticipating a two point eight so as i said when you start looking at this two dimensional he gets a little more cop what this slide here she is to undo the impacts of measure c that depth secret by measures c and undo the fact that we transferred money above surplus to the capital fund so you just kind of look at just straight what what was the urine results in terms of what potentially could be the impact on our true policy reserves this shows you that it's really a surplus of one hundred and seventy nine not a lot of money in comparing it to the budget the budget is is suggest that what did we plan on terms of using reserves and that plan which includes things like carry overs which complicates things and other things like that and some true uses of reserves that we did better than that on a budget to actual basis that this the column in the middle when i say once thirty nine it's really speaking to what's gonna be the bottom line impact to our reserve balances no other one is just budget to actual comparison so hopefully that helps it does and the label here amended budget does that refer to after the council made whenever amendments we made in the death between last june and this june yes so the adopted budget is always balanced on july one that that then this year we did have some some budgeted use reserves we did for example the big one was you know august of seventeen i believe we came to council and budgeted about one three one point four million dollars for additional legal  let's see what was i gonna ask and the encumbrance figure the one million forty seven these are amounts were committed to paying but we haven't paid them out yet either because we don't have the bills or for whatever reason but these are kind of like account payable figures these are these are executed purchase orders executed contracts that we have a legal obligation to pay but they haven't gone to the point where we recognize the method expenditure they'll be expenditures in nineteen but because we want to make sure that we you know we truly count for how much money we have available in terms of reserve spendable reserves we have to set those aside and we do that every year and this is because we should put aside a million dollars even though we haven't expended that yet or recognize that it is expenditure we need to set it aside so we're not budgeting the use of those funds okay thank you sure i just want to sort of understand what's at the end of the day we we have a two eighty six nine deficit but then you factor out the the measure c that's going to come from the next year and the encumbrances so what's the total  are we our total estimated and that's what this is here so in term if you measure in terms of what we believe is going to be the impact to our our policy reserves it's the one seventy nine the the other uses of reserves that make up the two six million dollars is our amounts that relate to measure c which we're going to get back in nineteen and then the transfer of surplus reserves that we had a seventeen that we didn't get to until eighteen so again that to me is not a policy reserve issue it's just we had a surplus and we didn't get to that until nine until eighteen so that what's the true bottom line impact to our policy reserves is at one hundred and seventy nine which is a slight increase does it mean that we're no fully funded because we have to we have to recognize that reserve requirements go up and what about for the full that is that's the one seventy nine is yeah you know it's amazing i i just want to be at that's right billion dollars and we ended up with the one hundred and seventy nine store plus okay thank you for clarifying that  hey we'll turn it over to enterprise jennifer okay so the next two slides we're going to be looking at some of the interpret well all of the enterprise funds this first slide we have solid waste water wastewater in downtown parking i'm just going to touch on some of the larger variances so with solid waste we see that revenues ended the year about one five million with a one five million deficit and the the cause for this was the decrease in the in the approved budget the budgeted  rates the rate increase for fiscal year eighteen from five three percent to two point one percent and the reason that this decision was made was to remove the impacts of the tipping fees from the delays in the t so this decision was made in like in june the budget was really kind of wrapped up so the budget assumed that we would be passed on the full typically increases to the ratepayers and what was decision was made in june we didn't amend the budget so the revenues reflected a little bit deceiving and that about a million of this is going to be carried forward into fiscal year nineteen it's a timing difference for delays in two invoices that we didn't receive until too late to post  eighteen so those in and those are for the hazardous waste program so those will be carried over and bent on the water fund we see a surplus of about five four million and this is consistent with what how we've presented these in mid year and third quarter we've seen that the increase continuing with the with the water sales what what we're seeing is that the sales are coming in at the higher cost tiers than what what was budgeted into using the rate model to develop the budget and then in addition to  that customers are using more water also included in this is a little less than a million for reimbursements from c omb and ccrb these are one time reimbursements for prior year water operating costs on the expenditure side we see a savings of about eleven point six million there's several factors going on here i'm going to touch on some of the highlights so as part of this over three million of this relates to the operation of the desalination plant of of that three million approximately one and a half to two million will be paid to ide which is the contractor that operates the plant and again that's a timing issue there's some discussions going on between staff and id as to the amounts so i think they're trying to determine that at this point also coops i'm sorry did i got a little trigger happy there huh also included in that is about two million of debt service with the delays in the the completion of the plant the first debt service payment was shifted from fiscal year eighteen to fiscal year nineteen and then also included in this is about one six million in savings for water purchases which are also coming in below estimates and about one million dollar salary savings the rest is spread among several line items within the services and supplies but and some of those will be also carried forward into fiscal year nineteen that's it for the water fund next i wanted to touch on waste water wastewater ended the year about two one million below budget some of this is salary savings much of these are also spread among various line items and will t i believe it's about nine hundred thousand give or take okay thank you oh and i did also want to point out i apologize on the waste water we do see a big shift about a little less than or a little over four million compared to last year this is not related to operations  capital and capitals project based and that can fluctuate significantly from year to year so on this last slide we see airport gulf fund and waterfront and i'm going to quickly skip over airport and point out waterfront as well because the two have similar stories so both of these have savings about half a million or so from salaries and the rest what we've seen is some project delays some maintenance projects that were turned over to capital projects and then the rest spread across services and supplies so i didn't want have to say that twice but it's the same story for both of those and that's it for the enterprise funds and unless you have any questions i'll go on to the budget adjustments and i am going to skip over some of these i've put slides of all of them up but i i'm only going to touch on some of the highlights so this is just some true up for year end that we have a lot of in fourth quarter we do a lot of truing up against budget between funds we do corrections some small grant awards and that's what you're seeing here on this next slide i did want to highlight for fire so as we talked about in the general fund revenues and expenditures where revenues were over budget by about three million and the expenditures were up as well this budget adjustment is a request to increase the revenues and appropriations for those mutual aid activities and also increase for some of the minimum staffing and vacation payouts as well and that's it on this slide these again are some small grant awards and some clean up for some completed projects and this next slide is some small grant awards and on this next slide i did want to point out these two so this first budget adjustment relates to water operating fund and the water additional cost that were being incurred and as a temporary cash flow the water operating fund transferred about twelve million and was two separate transfers but this is the total of those and now that those amendments have been approved and awarded this is just to transfer that cash back this middle section is similar we've brought a couple of these to your committee in the past before but at the be early stages of the desalination project before we created the srf loan fund there were costs that were incurred in the drought fund some in the operating fund and some in the capital fund however when those receipt when the receipts of the reimbursements were received they were brought into the srf loan fund staff's been working really hard to reconcile all that  and in doing so we found another one point one million that needed to be aligned to where those costs were incurred so that's what you're seeing here it's it's a cleanup item it's just a rather large one so this next adjustment this is for the golf operating fund and the golf capital fund in this case there were two there were two projects that had budget savings and staff determined the best use of that would be to pay down the general fund loan to save on future interest payments to help strengthen the cash flows for the gulf fund so that's what you're seeing here and then this last one this is true up it's another cleanup item just to align costs with the waterfront operating fund and the waterfront capital fund for some small projects within the marina one and this is just  cleanup item so that's that's it for the budget adjustments and with that that completes our presentation and i just like to to recap that we request that you accept the interim financial statements for fourth quarter and approve the second we've been seconded any other questions or comments all those in favor say aye aye opposed none and abstain none the matter is approved and we are adjourned thank you very much f