Create an Account - Increase your productivity, customize your experience, and engage in information you care about.
At the October 28 Citrus Heights City Council Meeting, the City’s Finance Division presented updates on three items: a report on 2020-2021 fiscal year results, an update on the first quarter of this fiscal year (2021-2022), and the new ten year financial forecast for the City. To watch the full presentation, click here to view a recording on YouTube.
The City’s two-year budget model continues to provide stability, allowing for flexibility and responsiveness. An example of the City’s adaptive budget is seen in the adjustments made to respond to the pandemic in the 2020-2021 general fund budget.For the last fiscal year, the City budget anticipated general fund revenue would be $30.7 million, and current reports are showing actual operating revenue of $33.8 million. The $3.1 million of unanticipated general fund operating revenue is primarily from under-projecting sales tax revenue during the pandemic. “In June of 2020, when we adjusted the City’s two-year budget to reflect the impacts of the pandemic, we took the advice of experts and reduced anticipated sales tax revenue,” said Bill Zenoni, Interim Administrative Services Director. “In reality, during the pandemic many people stayed home but continued to shop online, so our City saw $13.3 million in sales tax revenue, about $2.2 million more than our prediction.” The City also saw higher-than-anticipated revenue from building permit and plan check fees from the Mitchell Village KB Home neighborhood and other new construction. As a City that is 98 percent built-out, the permit and fee revenue increase is only anticipated to continue through the first portion of fiscal year 2021-2022. In addition, the City received $3.1 million in one-time revenue from the Coronavirus Aid, Relief and Economic Security (CARES) Act ($1.1 million) and from FEMA/CalOES for reimbursement costs for the Great Plates Delivered program, which provided free meals to local at-risk seniors during the height of the pandemic.For expenditures in fiscal year 2020-2021, the City had significant savings in the “salaries and benefits” category, achieved by holding positions vacant in almost all departments. This savings is viewed as unsustainable, as the City looks to hire and fill vacancies, especially in the Police Department.Overall, the City’s total general fund revenue in 2020-2021 was $36.9 million and expenditures were $33.3 million. Thanks to one-time revenue receipts and unsustainable City savings in personnel, the City’s 2020-2021 general fund saw a much-needed surplus of $3.6 million which means the City did not have to draw from its reserve funds or from its line of credit.
As of September 30, the end of the first quarter of fiscal year 2021-2022, the City’s general fund had a total $8.9 million in expenditures, and had only received $3.1 million in revenue. “It is typical for a City budget to have higher expenditures than revenue in the first quarter, because of the timing of when revenue is received,” explained Zenoni. “Without a healthy level of reserves and the surplus from last fiscal year, the City’s general fund would be upside down $5.8 million right now.”Staff still anticipate the City is on track for a balanced budget this year, as the general fund cash balance is anticipated to increase when the City receives its motor vehicle fee revenue and continued sales tax revenue.
As a strategic fiscal planning tool, the City maintains a long-term financial forecast. This forecast is updated periodically to reflect information currently available regarding anticipated future revenues and expenditures. The financial forecast covers a ten year period for the City’s General Fund. Prior to the October 28 meeting, City Council last reviewed the Ten Year Financial Forecast on January 28, 2021. The Ten-Year Financial Forecast was recently updated to include:
One of the major areas of concern for Citrus Heights is funding for street and infrastructure repair and maintenance. At a previous Council meeting, General Services staff presented third-party analysis that the City needs to allocate an additional $12 million per year to bring its streets from an overall F grade to a C grade.The results of the ten year forecast show that with the City’s current general fund reserve policy and expected level of revenue, the City cannot allocate any general fund money to streets until fiscal year 2023-2024, at which point the forecast shows $600,000 of available funding – $11.4 million short of what is projected to be needed. From fiscal year 2024 to 2031, the City’s forecast shows the ability to allocate about $2.5 million per year towards streets, again falling short by nearly $10 million dollars annually.City Council did not take action or amend the budget at the Council meeting, as the Finance Division’s presentation was solely informational.