FY 2021-22 Budget
The FY 2021-22 Budget includes a projection of $19.4 million in total revenues for all funds and a budget request of $20.6 million in total expenditures, which consists of $19.5 million in Operating Expenditures, $300,000 in annual Debt Service (Town Hall Certificate of Participation) and $1.1 million in Capital Improvement Projects (22% funded in prior years).
The FY 2021-22 budget development process began with an understanding of the Town's financial health through Mid-Year. This set the foundation for the Town in the budget development. Departments are provided the base budget and are responsible is assessing programs in the new fiscal year with certain assumptions:
- Budget Assumptions: the Budget numbers are developed on modified accrued basis and consistent with historical data and economic trends
- Program Assumptions: Programs above the base operation must align with the 2020-2022 Strategic Plan. The plan and the status update are available at https://www.colma.ca.gov/strategic-plan/
- Economic Assumptions: while the Nation is still in the midst of the COVID-19 pandemic, departments were to develop their programs assuming pre-pandemic levels. Departments were also warn of the need to stay flexible and identify potential program cuts, if needed.
- Other Guiding Documents: The Town of Colma has other guiding documents that impacts the annual budget development, including the Colma Budget Procedures & Reserve Policies and the Unfunded Liabilities Strategies. Specific items included in the FY 2021-22 Budget includes transferring $3.0 million to the Budget Stabilization Reserve and making contribution to the Town’s 115 trusts based on 100% of the actuarially determined contribution.
The following chart shows the budget development timeline for FY 2021-22.
Basis of Budgeting
The budget numbers is developed based on a modified-accrued basis; where revenues are recorded when the amount is known and available, and the expenditures are recorded when the related liability is incurred. Although the sewer enterprise, city facilities enterprise, and the fleet replacement funds are treated as full-accrual in the audited financial statements, for the purposes of the budget development, the modified accrued basis is used for all funds.
Economic Assumptions for FY 2021-22
In the development of the FY 2021-22 Budget, the Town made certain economic assumptions. By May of 2021, the Town felt the COVID crisis is about to turn the corner with positive COVID cases nearing the lower double digits and more Americans were being vaccinated. The Town was hopeful that operations will return to pre-pandemic levels, but the Town was optomistically conservative with the revenue projections.
While the COVID-19 crisis is imminent, the Town is also aware of the future long-term challenges. One of those challenges was reviewing and updating the unfunded liability strategy to prepare for the rise in pension and OPEB liabilities in the future. The Town is also preparing for future economic changes and budgeted for one-time initatives to fund economic development consultants and revenues strategy consultants. Both initiatives were part of the Colma 2020-2022 Strategic Plan.
With General Fund revenues and operations representing the majority of Town's overall operation, the rest of the discuss will only focus on General Fund, with a Townwide snapshot thereafter.
Overall General Fund Budget
For FY 2021-22, the General Fund is projected to receive $17.5 million in revenues, to spend $18.0 million in operations, and to transfer $1.1 million to support capital, debt, and sewer programs. After transfers, the General Fund will need $1.5 million of unassigned reserves.
General Fund Revenues
Since the Shelter-in-Place order was announced in March of 2020, the Town saw a reduction of roughly $5.8 million in revenues. The total FY 2019-20 revenues was $2.8 million less than FY 2018-19 Actuals, and the FY 2020-21 revenues is projected to be $3.1 million less than FY 2018-19 Actuals. The Town originally expected revenues to be less in both years due to the shelter in place order. Below is a brief explanation of how the Covid-19 pandemic impacted the Town's revenues in FY 2020-21 and how the Town expects the largest three revenue sources to recover in FY 2021-22, representing 93% of Total General Fund revenues.
- Sales tax: Pre-Covid, the Town expected to receive $11.4 million in sales tax revenues in FY 2019-20. Due to the Covid-19 pandemic, the Town received $10.5 million in FY 2019-20. We expected the revenue for FY 2020-21 to be similar to FY 2019-20, with a projected budget of $10.4 million. Because of the enactment of the Wayfair decision (https://www.cdtfa.ca.gov/industry/wayfair.htm), the Town will receive $12.0 million in sales tax revenues in FY 2020-21. The Wayfair decision impacted the reporting and remittance requirement for online sales and the revenues are distributed to the Town as use tax, a component of sales tax revenues. The Town expects revenues in FY 2021-22 to be the same as FY 2020-21 Estimated Actual because of potential supply shortage and changing online merchant arrangements.
- Cardroom tax is the Town's second largest general fund revenue source. The Town originally projected to receive $4.3 million in cardroom tax revenues in FY 2019-20. The shelter-in-place order in March dropped the monthly revenues from $350,000 to $17,000, reducing the final FY 2019-20 cardroom tax revenue to $3.3 million. The trend continued in FY 2020-21, where the cardroom facility was closed to the public for a majority of the fiscal year. As the county moved through the California Covid tiers, the Town's cardroom industry began to reopen with limited capacity. Based on the latest estimates, the Town expects to end the fiscal year 2020-21 at $1.8 million. The FY 2021-22 Budget of $3.5 million assumes that the cardroom industry will operate at 80% capacity in the first few months of FY 2021-22 before returning to full capacity.
- Property and other taxes is a relatively stable revenue source. Growth is limited to 2% per year, per Prop 13, but during an economic crisis, property values may reduce per Prop 8 housing valuation relief. In general, property tax impacts are delayed by 2 years, whereas sales tax and cardroom tax revenues can be impacted immediately. Since the Covid-19 pandemic began in FY 2019-20, the Town projected a more conservative number for FY 2021-22 at $787,000.
General Fund Revenue and Expenditure
The General Fund operating deficit for FY 2021-22 is projected to be $451,000. It reflects the difference between the projected General Fund revenues of $17.53 million and the General Fund expenditures budget of $17.98 million. Since the Town's General Fund also supports capital, debt, and sewer operations, the operating deficit of $451,000 does not reflect the full picture.
As stated above, after accounting for General Fund transfers, the net fund deficit is $1.52 million for FY 2021-22. Transfers include $532,000 to the Capital Program (31 & 32), $298,000 to Debt Service (43), and $238,000 to Sewer Operations (81).
General Fund (11) transfers include $3.0 million to fund the Budget Stabilization Reserve (12) per the Town's reserve policy. Fund 11 and Fund 12 are classified as General Fund for reporting purposes and the transfers between Fund 11 and Fund 12 offsets each other.
General Fund Expenditure
General Fund Revenues by Categories Trend
General Fund Tax Revenue Trend
Town-Wide Financial Summary for Fiscal Year
Revenues & Expenditure Summary
Revenues by Categories for All Funds
Expenditure by Categories for All Funds
Inter-Fund Transfers Summary
The General Fund Transfer Out for FY 2021-22 totals $4.07 million with $532,000 to the Capital Program (31 & 32), $298,000 to the Debt Service Fund (43), $238,000 to Sewer Operations, and $3.0 million to the Budget Stabilization Reserve per the Colma Reserve Policy (CAC 4.01.150(d2)).
Expenditure by Department for All Funds
Projected Reserve Balance
The graph below shows reserve balance by fund categories. The default is set on FY 2021-22. You can move the slider below the graph to a different fiscal year. The table below the graph will update with the balances corresponding to the selected fiscal year.
Upon request, this publication will be made available in appropriate alternative formats to persons with disabilities, as required by the Americans with Disabilities Act of 1990. Any person with a disability, who requires a modification or accommodation to view the document, should direct such a request to Pak Lin, Administrative Services Director, at 650-997-8300 or email@example.com Please allow two business days for your request to be processed.