At last night’s city council meeting, the City of Los Alamitos presented its financial results for the fiscal year ending 6/30/09 and for the first quarter of the current year. Although revenues continue to fall, the general fund had a surplus last year and is expected to be balanced for the year ending 6/30/10. But, reflecting the recession, sales taxes are 17.3% less than the previous year and the drop off is expected to continue.
For all of last fiscal year, total general fund revenues were $11.3 million, down 2.7% from the $11.6 million of the previous year. The largest single decrease was in Sales taxes which fell by $520,918, or 17.3 %, from the $3.0 million collected in the 2007/2008 fiscal year.
The city lowered the budget expectations for sales taxes in the middle of last year and even that was not enough. The total sales taxes collected for last year missed the lowered budget by $204,159. The city report states “With the further decline in the economy, this revenue source did not meet the amended projection at year end. The City’s sales tax revenue is highly dependent on sales in the building/construction and business/industry categories, which showed significant declines in the current fiscal year. This revenue category is expected to decline even further in the upcoming fiscal year.”
But, sales taxes for the first quarter of the new year are actually much better than last year’s first quarter. Nevertheless, Nita McKay, Assistant City Manager and the executive responsible for the city’s financial services, still expects sales taxes for the whole year to be short of last year’s depressed level. The apparent increase for the current quarter does not represent any improvement in actual sales taxes. The increase is only the result of an adjustment to the state’s estimates for amounts booked last year. According to McKay, sales tax for this year’s first quarter “is a lot higher than last year because the state underestimated what we were going to get. We just received the October payment last week. It’s down about 20%.” That rate of decline, however, is not expected to continue throughout all of this fiscal year. The current official projection calls for sales taxes to be $58,648 less than last year.
Even though general fund revenues were down, lower expenditures kept the city in the black for the year ending 6/30/09. Total general fund expenditures were 9% below the previous year; a savings of $1.2 million. According to the city’s report “The majority of this decrease is because the prior fiscal year included several one-time transfers to other funds. The one-time transfers included $377,730 to the Garage Fund to compensate for the deferral of several years’ replacement charges, $267,000 to the Technology Replacement Fund for the new financial software and new GIS software licensing, and $121,000 to the Rivers and Mountains Conservancy Fund for the Coyote Creek Park project. Additionally, because of the decline in General Fund revenues, numerous budget reductions were approved by the City Council in February 2009. These budget adjustments totaled $560,000.”
For the current year, which ends on 6/30/10, the city expects to end the year with a balanced budget. Even though first quarter revenues are 3.7% below last year’s numbers and business license fees are expected to be considerably less than last year because of advance payments, in total, revenues and expenses are on track. the city report states “the General Fund is projected to complete the fiscal year in balance.” The city will do a full mid year budget update early next year.
