okay what's the first order of business let's see is there anyone here for a public comment for an item not on the agenda okay we'll go to item one thank you mister dominguez in mister friedman my name is bob samara i'm the finance director and we're here to review with you the status of revenues and expenditures really in relation to the budget so just kind of icon in terms of context we come to the finance committee every quarter so for the quarter into september thirty december st march st and then june thirty and we the point the purpose is to give you a sense of how we're doing relative to the budget most of the discussion is really on the revenue side because when we adopt a budget you know we the revenues are really important because they tell us so much we have to spend and so knowing whether we are on track or not is important so we've spent a lot of time talking about revenues and on the expenditure side we don't spend too much time other than to tell you we're kind of in line with expectations we we aren't allowed to go over budget on in terms of expenditures but what's been budgeted so for example in the general fund each department is has its budget we can't expend more than that legally if we see that we're  gonna maybe exceed budget will come to you early on and give you sort of a warning about that and if appropriate will come to you and ask for an increase to the budget to cover any unexpected cost or any overruns we're seen and so as part of this presentation today you'll see some some of that going have you review the adjustments were recommending to the budget so um the way we start is we will look at the general fund first and i know that we spent a fair amount of time on revenues at the budget work recently so we'll spend too much time on them but i want to just to point out sort of the variances that we think are important and i will apologize in advance in that i'm sort of pinch hitting for julie nemeth our treasurer manager who would normally give this report so i'm not as familiar with it some of the smaller revenues  we'll talk about some of the proposed budget adjustments and we will ask somebody indicated to present this to the city council we'll just have a give an abbreviated version of this report so starting with general fund revenues this is kind of a recap of all the revenues or most of the revenues in the general fund and the major categories are taxes it's most of the revenues other revenues and then fees and charges and i'll go into some of these in more detail just point out that that in all the for the revenues that the first column of number does not represent the total budget for the year it's what we call the year to date budget and for taxes what we do is we do a three year average to see what do we typically get for looking at individual sort of revenues the starting with sales taxes you could see that the st through december st were slightly ahead of budget we received about eleven point two million dollars so far that's two quarters of payments we get monthly payments which are just estimates or advances during there in each of the quarters and then at the end of the quarter we get it trude up and we're always three months behind so even though we've gotten sort of essentially two quarters of payments when we troop the books at the end of the year that first quarter we'll actually we accrue to the prior year the first quarter that came in on a cash basis was down two seven percent and the second quarter was at one three percent and overall it's sort of trending with budget we do think however by the end of the year we'll be below budget primarily because of the impacts of the of the fire and the one hundred and one closure we could be as much as two hundred to three hundred thousand dollars below budget but we won't know until that number those numbers come in we'll see the first indication of that in march when we get the core the revenues for the quarter ended december st which pick up december property tax revenues you can see are actually well above budget we expect to be closer to six hundred thousand dollars above budget by the end of the year this is information we get from the county in october of each year so five months ago we got the data from the county telling us at least what they secured and unsecured portions were going to be which is about ninety four five percent of the total and based on what they've told us we know where we're gonna essentially end the year the reason we're gonna be above budget this year is primarily because we did so well last year last year we exceeded our expectations our expectations last year is what we build this year's budget on it so when we do better then we have less to grow so for example we budgeted a five and a half percent growth this year because we did so well last year that raised the base we only need about a three percent growth to meet budget and that differential is about six hundred thousand dollars we're not projecting at this point to exceed our growth of five and a half percent then we'll be expected we're just we just have a higher base that's helping us this year uut you can see we're slightly you had a budget this year it includes a number of sectors so it's it's natural gas it's all the various telephones like landlines that prepaid wireless cellular it includes water includes refuse natural gas electricity some are up some are down so it's a kind of a mixed bag most of that increase this year or at least a trend toward the positive it comes from the fact that we are seeing higher than expected revenues on the water side so water revenues are subject to you to their users taxes at six percent and we're trending higher than expected and mister thomas chesky will get into that discussion when we get into the water  toti it's just slightly i had a budget but i bring it up because obviously we've had some impacts but we prior to the fire and prior to the debris flow we are trending pretty close to budget and then we saw a twenty five percent decline in december which is not reflected in these numbers but we also then saw in january a flip of that we had a nineteen percent increase in january so they virtually offset each other except for about twenty five thousand dollars so yeah we have december was we lost two hundred and twenty five zero january made up for that by about two hundred thousand dollars so we're still you know down by twenty five but released nominal dollars at this point so we expect by the end of the year to be to be meeting budget which is which is good and in fact we're hearing that the month of february is going to likely be very strong so that could also help and you could see i just point out in the green that we are below budget or at least below last year and this is primarily because of the fact that we are phased on vacation rentals but otherwise we are you know we are up othe revenues license and permits this is primarily your the related to animal licenses this is the biggest chunk of that revenue about two thirds of that and animal licenses are just up and down there they're not very consistent from year to year so the fact that we're trending down this year is just that that's just the nature of the beast in the last three years we've been up and down so we just hard to predict but we kind of keep the budget fairly state level from year to year so we have one person dedicated to training that other person which it takes a number of months so that's impacting revenues but otherwise they're pretty close to budget and then the last one or not the last one but at least one of the largest you'll see is an intergovernmental that primarily includes almost entirely includes mutual aid revenues we get when fire department responds to fires in the across the state we budgeted this year about six hundred thousand dollars week and we expect to be in somewhere in the order of one point four one point five million dollars so it's a big variance we've really already received one two million dollars through december st so it's a it's a big number obviously that's going to pay for the fact that we do incur substantial mana overtime costs in responding to these fires so it it does cover those overtime costs there is sort of a profit built in to that because we are able to charge for the use of equipment and some administrations so we always whenever we respond to these we typically see somewhere around a ten or fifteen percent profit margin if you will relative to our direct costs and you'll see this when we get into the expenditure side miss thomashefsky we'll talk about the fire department you'll see how that we are well above budget because of that and then looking at fees and charges just highlight a few community development you can see they're trending ahead of budget at the mid year what's interesting is that you know when you look at the two primary divisions of planning division and building divisions planning division is actually down there about thirty eight percent of budget and mid year whereas building is about fifty six percent of budget the plan on the planning side they it's not that they have less activity they just have smaller projects that they're working on so the dollars are  smaller they are working in some larger projects now but those fees were paid last year so we're not seeing the benefit this year on the building side a lot of activity where the ad use so we're seeing more revenues we're expecting just on that category to be about four hundred thousand dollars ahead of budget we're expecting to be about three hundred thousand below budget on the planning side so still netting to the positive parks recreation this is really just a timing thing that's a very seasonal revenue that they get because of all the camps going on in this summer primarily in july through september so this will normalize by the end of the year and we expect to hit budget public works they are below budget on the revenues this is primarily because of staffing the revenues that in our in the public works department in the general fund are from the engineering division and they charge out their work to capital projects and when they're down staff their revenues are down as well and then lastly reimbursements this is really just a timing thing we record most of these charges these are inter fund charges we won't record most of those at the end of the year so again it's a timing thing by the end of the year we zero was the actual miss years five hundred and seventy thousand so there's what was going on last year in the library that or is it or is it this year that's off which one is it yeah i'm gonna have to get back to you on that i don't know the answer to that that's a good question so we receive half b for this year we received it by december and last fiscal year we did not we had we didn't receive it until i believe it was january or february so that's the big difference good afternoon committee members as mister samaria stated i'm jennifer thomashefsky and i am the accounting manager for the finance department i'm first going to apologize as i've been fighting a cold and i can't stop coughing so i'm gonna apologize ahead of time okay so in this first slide this is the general fund expenditures listed out by department and the main takeaway with this slide is that we see at mid year we have about a one point two million dollar savings compared to the year to date budget which is also based on a three year trend as well and the the reason i want to i wanted to to point this out is when we look at where we ended the year the last couple years we've seen at year end that gap in the last two years was about a seven million dollar gap and then a four million million dollar gap last year and the main reason for that was there was a across the board there were several vacancies throughout the general fund departments and i wanted to point that out that there still are several vacancies but we can see that that number that gap is shrinking specifically with regard to the police department they ended the year last year with about a two million two million dollar surplus or shouldn't say surplus a savings compared to the budget and the lion's share of that was related to salary savings whereas right now at mid year we see that they're slightly over and the main reason that they're over at mid year is a lot of those positions have now been filled and in the beat in the first few months of the year they have more of their overtime costs for special events such as fiesta and th of july so we see that that's know more in line with the budget and those special events costs should be less in the second half so staff will be monitoring this but we're not seeing those big savings we do still see that public works parks library community development they still have vacancies and there are still savings there but they're much smaller so that gap is closing and then lastly i just wanted to point out that with fire we actually see that they're  over there year to date budget by a little over a million dollars and as mister sumar eo stated with the mutual aid activities this is solely related to mutual aid activity so the department budgets very conservative because it's hard to predict what the fire seasons are going to look like from year to year so they tend to keep those budgets low and then in the fourth quarter we bring back an item to both your committee into council to true up those mutual aid activities so we see the costs are up here but we do know that those revenues are also coming and substantially higher as well on the on that fire question so is there any reimbursements from federal on these when we when we provide mutual aid because i know a lot of times a lot east coast's are reimbursed through fema or whatnot but are these just because we're providing the aid we don't get any of that reimbursement we do get reimbursement i believe it's a state statewide agreements so the money we get for our costs won't come from de fema or cali gas they'll come from cal fire all the other non fire costs will come from so again just to recap on this slide we are still below budget at year to date but we do need to be monitoring that throughout the last two quarters of the year so the next section of my presentation relates to the enterprise funds and i've broken these out into two separate slides this first slide being solid waste water wastewater and downtown parking so first for solid waste we see that revenues are below budget by about seven hundred and sixty one thousand and that the expenses are down about eight hundred and thirty six thousand the the revenues are below budget this is based on when the budgets were prepared there was an estimate and assumption of about a five point three percent rate increase and this related to the resource recovery act i'm sorry the resource recovery project subsequent to the budget being set it was determined that that that rate increase would be reduced down to two point one percent to account for the tipping fees with the delays in the resource recovery project and as you see here this is the main impact to that i believe it's my understanding that by year end the lost revenues will be absorbed by the solid waste reserves on the expenditure side we see the savings really this is relating to timing to timing differences there there's a biannual payment that's made for a household hazardous waste and green waste twice a year which is not yet included in this number and in addition marb marburg is late on their billings so there's only five months worth of costs there as well so in the water fund we see about a four million dollar surplus and revenues three million of this relates to increased water water services so water charges the main driver here  is when the rape models were set they make certain assumptions of revenues coming in at the different tiers and what they're seeing is revenues are coming in at the higher tier three which is more expensive so that's the majority of the water increases there there's also been two reimbursements from now i'm gonna have to see omb which is cachuma operation maintenance board and kazuma conservation release board for prior year reimbursement of operating expenses so that's the main reason for the four million dollar overage at mid year on the expenditure side we see about two point nine million dollar savings and the largest single item here relates to the desalination facility at the beginning the first few months of the year the facility was operating intermittently i the project completed and they were working out the bugs with with the plant that has now been resolved and they don't anticipate additional savings because of that but that's the single largest item their closer towards your end there will also be additional savings of about two million for the debt service payment which was delayed to fiscal year nineteen and that's about another savings of two months to a little less than two million dollars so on the wastewater fund i just there there's a couple items that are causing this to be slightly below budget there are going to be certain costs that just happening haven't happened yet will happen in the second half of the year there's some cleaning costs and some other contracts that have not yet occurred and then there's also that some of the savings relates to conservative budgeting which i believe staff are working on for next year's budget but the main thing i wanted to point out here is that we see a large variance from the actual  six months last year and the main the main reason here it looks as though they're spending more but really this is the result of one time capital out the transfers which skew those percentages quite a bit so and then just downtown parking they're showing about two hundred fifty six thousand revenue loss this is almost all related to the thomas fire they were closed for ten days and then they were open and not charging up through christmas and usually in december this is one of their largest months for collecting revenues can you tell us in layman's term what a capital outlay transfer is please those are usually so you have when when we're budgeting our costs we look at the costs for operations and then we look at capital costs so operations are your routine cost you see year to year when you're managing an operating budget whereas capital outlay those could be you know for special projects they could be transfers for it really it's its one time cost one time costs mostly project related so we're just transferring these funds to another account correct the operating fund fund the water capital fund where those capital costs are incurred to that so for all our enterprise funds we sort of maintain a capital fund that's separate from the operating fund because when you start mixing projects at a multi er life with an operating budget that's the annual in nature it gets confusing and it's harder to track budget to actual comparisons so we so the way we fund our capital program is the operating fund will transfer monies over to the capital fund from revenues or from reserves and then we'll account for those projects in this capital fund that could seed one year  and those transfers sometimes will go you know per month per year but sometimes we'll just do a lump sum transfer and i think with it was indicated here is that the variance here is caused by the fact that we had a bigger one time transfer at the beginning of the year and so that's what's causing variance leave some last year great thank you so that's it for the first slide and we're gonna we're also going to see the same percentage variance on the airport fund as well so here we see that there's a slight savings on the airport expenditures and most of that is salary vacancy related but i did want to also point out we see a large percentage swing here as well and that's for the exact same purpose there was about a one point two million dollar transfer that created the majority that shows that that it appears that they're spending more than they were last year but again that's capital and in nature and we see that fairly often i on the gulf on the in the gulf fund i just wanted to quickly point out we see about a hundred and twenty thousand dollar say their revenue deficit at mid year and when when we in finance calculate what that year to date budget is we look big picture total revenues and we look at a three year trend where as the department goes in and they get very granular and look at each account and you know they do a much more thorough projection of what the cost will be and then also what their year to date budget would be and in this case golf staff believed that that one hundred and twenty thousand is probably more conservative it's probably closer to about seventy eight zero and when you're comparing revenues in the first three min the in the first five months actually revenues were tracking fairly close to budget and actually higher than they were coming in last year but in december obviously when the thomas fire hit they the the gulf fund took about about a fifty seven thousand dollar loss because of the thomas fire so that's the majority of what we're seeing up here staff also project that that gap is going to continue to close and be somewhere closer to about the fifty thousand mark by by year end and then on the expenditure side we see about a hundred and eighty thousand dollar saving and there's actually two things going on here so back in seventeen when the city entered into a contract with the new management company to manage them and operations of the golf course there  were several golf staff that were moved to the general fund the decision was made to move those positions over to the general fund and then the golf fund was contributing to help pay for their additional costs until i think some of them retired until and then a few others were actually placed into permanent positions at the end of seventeen the last two positions were placed into full time positions which no longer requires the general fund to be making that annual i'm sorry the golf fund to be making that that annual contribution to the general fund to help offset those additional labor costs so that's about half of that savings and then the other half relates to the management contract itself because there's a one month delay and they're billing back to the city so at mid year there were only five months worth of costs in it th that we're seeing here so that's it for the enterprise funds and then last i have three slides to go through with you for the proposed budget adjustments in this first slide this relates to the central library the the library received several donations and contributions from various organizations and these adjustments allow them to recognize those donations and to utilize those towards the various programs listed so again i'm not going to go through all the details of these these are listed in the packet just when it adds something just for the benefit of consumer freedm the budget authority to do so so if you know the money's in the bank we have to come to council to get approval for to increase their budget in order to have the authority to spend those dollars and you can see it's sort of a balanced entry because we're not suggesting using reserves for the increase appropriations it's being funded from an increase in revenues or a tweak all estimated revenue so the budget is still balanced but it gives them the authority to spend those dollars so on the second slide i just wanted to point out a couple of these budget adjustments so each year at the end of the year staff look at the the actual revenues this is what we call the revenue th estimated surplus reserves so we budget expecting to have a certain amount of reserves available at the end of the year but then when the years actually over and we look at the actual revenues and expenditures that were that occurred we we take this each year to counsel and counsel determines an amount of that to be transferred to capital to fund future capital outlay so in this year this last year i believe it was back in october we brought this to both your committee and to council and the estimate was about a one point six million dollar surplus to be transferred a hundred percent to capital outlay subsequent to that there were a couple items that that subsequently went to council to to use part of that funding and so this is the net amount and so we see this is a little less in a few years prior we had suspended that policy in an allocated only twenty five percent to capital because we are below policy with our reserves and but the idea is when we're at policy reserves that we would transfer twenty five or fifty percent t another fifty percent to maintain reserves this past year we actually got to a point where we exceeded our policy reserves for the first time in ten years we were always below or are at so we were somewhere around  e six million dollars above policy at the end of last year and so council directed us to transfer all that money that extra money we had above policy to capital to fund our capital program again to augment that program that inial program we typically put about a million four into our capital program each year out of the general fund so anytime we have extra money like the surplus it really helps us to fund things like playground equipment and restrooms and things like that so this is the million dollars net of that one point six  so then the last item i i just wanted to quickly touch on is originally the fire department had planned to start their st fire academy in fiscal year nineteen that's now been moved up to the second half of this year because of that staff are requesting the appropriation authority to fund the fire academy the the money was originally budgeted are programmed for fiscal year nineteen as part of those reserves that would have been that that we're transferring up above but they want to utilize that sooner and they are also anticipating that there will be sufficient additional mutual aid revenues this year that will offset some of those costs so again we will be bringing this back at fourth quarter to true up all that mutual aid activity so this last slide this this first item this is the other half of the surplus so the the budget adjustment we just saw on the last slide that coming out of the general fund in here we see it coming into the capital outlay fund and then the last item this relates to the water capital fund in in this case staff are requesting that three hundred and fifty thousand dollars be transferred from the cater treatment plant equipment rehabilitation project and it's my understanding that that projects either almost done or nearly done and staff have identified savings in that project to be used for the southcoast booster station project in this case this booster station is a critical component of the water supply and as the project was originally expected or they had they had originally thought they would repair specific equipment and upon further review it's been determined that that equipment has actually passed its useful life so if they were to repair it they'd still have to replace it anyway so in this case they're asking to go ahead and replace that equipment and i did want to also note that there is a joint powers agreement with montecito and carpinteria valley water our water district and that eighty percent of the costs towards this will be reimbursed so that concludes my portion of the presentation and just to recap we ask that you accept the interim financial statements and approve the budget of the proposed budget adjustments and we open it up for questions do you have any questions any public comm