Good afternoon, everyone.

Welcome back to the budget review committee hearings of the San Diego City Council.

This is our final budget review committee of the budget season, and I want to thank the city clerk and council administration for their professionalism.

The IBA and her team for their expertise and insight, the council president and my council colleagues for their diligence, and of course, uh the public for their time and input.

Um, Clerk, uh please call the roll.

Councilmember Campbell, Councilmember Ward, Councilmember Montgomery, Councilmember Kercy, Councilmember Kate, Councilmember Sherman, Councilmember Moreno, Councilman, Council President Gomez, Council President Pro Tem Bree.

We will now proceed with non-agenda public comment.

Uh, Clerk, please proceed.

There is no uh non-agenda public comment at this time.

Great.

Is there any committee comment?

No.

Any comments from the city attorney, IBA, or mayoral staff.

Okay, clerk, please introduce uh the first item.

Item one is the FY 2019 year-end budget monitoring report.

I believe we'll begin with some opening remarks from COO Chris Michelle.

She'll be here for maybe wonderful.

Okay, thank you.

How much time do you need for this presentation?

15 minutes, thank you.

Good afternoon, Chair Bree and members of the budget review committee.

I'm Tracy McCraner and uh City Comptroller, Finance Director for the City.

To my left is Jeff Peel and Jose Mendoza, also with the Department of Finance.

And we're here to discuss the third quarter report or what we call the fiscal year and report.

The fiscal year 19 year-end budget monitoring report now has nine months of do we have it up there?

Okay, here we go.

Uh this is based on nine months of actual activity.

It includes all the typical uh updates and contents that the first quarter and mid-year do.

But what's new with the year-end report, it's the only time that we're gonna be asking um for authority to uh of the council at the end of the item.

As in previous years, uh we need this authority to maintain budgetary control through the end of the fiscal year.

I would also like to point out that there are two unique items uh included in this report.

The first one can be found on page 54, and it is the acceptance, approval, and expenditure of a grant for TSW, and um we are asking for that authority as part of our year-end authorities.

Uh that is unique.

Uh we'll have members from TSW here if you have any questions on that.

Uh the other item is on page 55, and it's a development services fee noticing requirement.

We are not asking any council approvals or actions at this time, and we also have members from DSD and city attorneys that can help answer questions about that.

So, this is a summary of the 2019 general fund projections.

As you can see, our projected revenue is expected to outpace our projected expenditures for a net projected surplus of 3.4.

I would like to note the current budget, which has the number one footnote.

It reflects council approved appropriation adjustments that we requested as part of the mid-year, so that um the both revenues and expenditures have increased by 11.9 million over the adopted budget, and that is the area that we will focus most of this report on, and Jose and Jeff will talk about variances compared to the current budget.

Um I just wanted to give a comparison to where we thought we would be at the mid-year.

Uh, as a reminder, the mid year had five months of actual activity.

We released that report in January and then came to budget committee and following up with council.

And as you can see, now now with nine months of activity and just three months of projections.

We're pretty much in line with where we were in the mid-year, and I'm happy to report that we have improved not only in the revenue side, but um while we are projecting a deficit position in the expenditures, that uh reduction or uh deficit condition has improved or lowered.

And so we are now projecting an excess equity of 7.4 million, and we'll be going over the details of that.

So I would like to hand it over to Jose Mendoza, and he's going to give the details of these variances.

Uh thank you, Tracy.

So the major contributors causing the variances in these subcategories, starting with the major general fund revenues are as follows.

A 5.7 million increase associated with stronger than projected actual TOT receipts, increases in property tax related to residual RPTF distributions, and increase in interest earnings.

A 1.9 million decrease in departmental revenue associated with the technical accounting adjustment that involves billing the seized asset fund directly as opposed to receiving the reimbursements for neighborhood policing overtime.

I would note that there is a corresponding decrease in overtime associated to this in the police department.

A seven million decrease in personal expenditures, which are due to the following.

One, decreases in salaries as a result of not filling positions as projected, citywide and not incurring expenditures as projected in the fire rescue department.

Two, a decrease in overtime in the police department associated with billing the seized asset fund directly, and also a decrease in patrol staffing back bill.

And three, uh, there are these are partially offset with an increase in fringe benefits associated to SPSP and Medicare.

Lastly, the 3.4 million decrease in non-personnel expenditures are associated with the operations of the bridge shelters, the relocation of the Father Joe's bridge shelter, a transfer to the park improvement fund, and critical equipment and services in the fire rescue department.

So uh in this slide, we'll be discussing significant changes from the current budget for general fund revenue projections.

The 33.1 million is associated to the following: a 5.1 million increase in property taxes due to an increase in the city's estimated redevelopment property trust fund, residual tax sharing revenue as a result of lower enforceable obligations for ROPS, RPTTF tax sharing distribution, and motor vehicle license back though.

A 16.5 million increase associated to sales tax for the delayed distribution of sales tax to the city resulting in delayed collections in fiscal year 2018.