DISCUSSION
The annual audits of the financial statements of the City and its component units were completed on December 22, 2023. The financial statements were prepared in accordance with all applicable accounting standards in order to conform to Governmental Accounting Standards Board requirements. The independent auditor has issued an unmodified opinion of the City’s financial statements for the fiscal year ended June 30, 2023. An unmodified opinion concludes that the financial statements of the City are presented fairly, in all material respects, in accordance with generally accepted accounting principles.
The audited financials show that for Fiscal Year 2022-23, the City had a positive operating result of $47.3 million due to positive operating results including higher tax revenues and increase in investment income. Total revenues for the year was $321.8 million, which was an increase of $10.3 million from the previous year. Citywide expenses increased by $34.1 million comparing to last year, primarily due to the significant investments in several infrastructure projects, including the Central Cities Navigation Center, the Civic Center Revitalization project and the citywide street improvement program. Total expenses was $274.5 million for the fiscal year ended June 30, 2023.
The General Fund is the primary operating fund of the City. The General Fund accounts for essential municipal services including public safety (police and fire), public works, community planning, economic development, and community and park services. These services are primarily funded by tax revenues and funding is dependent upon revenues collected during the same period the services are provided. For fiscal year ended June 30, 2023, total revenue reported in the General Fund was $178.6 million. This was a decrease of $4.8 million, in comparison to the previous fiscal year, primarily due to the one-time Coronavirus State and Local Fiscal Recovery Funds received in the prior year in the amount of $24.2 million. Total revenue from taxes was $159.9 million; property tax, sales and use tax, and transient occupancy tax generated $152.8 million, or 85.7% of total General Fund revenues. Other taxes, in the amount of $7.1 million, included business license tax, franchise tax, and motor vehicle taxes.
In comparison to the previous year, property tax and transient occupancy tax demonstrated the largest increases. Property tax increased by $5.9 million or 9.5% from the previous year as a direct result of increased housing market activity. Transient occupancy tax had an increase of $4.7 million, this was a 19.9% growth from the prior year. Total transient occupancy tax reached a historical high of $28.1 million as the tourism segment of the City’s economy recovered from the pandemic.
For fiscal year ended June 30, 2023, total General Fund expenditure was $159.5 million, of which the largest expenditure categories are Public safety - Fire at $30.9 million, and Police at $72.5 million. Public safety costs combined for the year ended June 30, 2023 was $103.4 million, representing 64.9% of overall General Fund expenditures for the year.
General Fund concluded the year with a net favorable budget variance of $28.2 million. The variance is primarily due to higher than expected tax revenues and unforeseen one-time proceeds. One-time proceeds in the amount of $6.0 million were from the sale of two City properties. Per City's General Fund Reserve Policy, these one-time revenues generated from non-operating activities outside the City’s normal operations shall be designated and the use of such requires City Council approval. Revenue estimates were developed on a conservative basis in June of 2022 as the COVID pandemic and its impact on the economy caused uncertainty on the City’s major tax revenue bases. However, in Fiscal Year 2022-23, property tax and transient occupancy tax combined generated approximately $9.0 million higher than budget estimates as the economy bounced back stronger than anticipated. The favorable budget variance was consistent with our estimates while developing the adopted fiscal years 2024 and 2025 budget, and was programed to fund for various supplemental requests to address Council established priorities.
Looking at the current year, as of December 31, 2023, revenues in the General Fund are trending as expected. Transient Occupancy Tax is right on target at 50% of the budgeted level; licenses and permits exceeded the budgetary goal due to increased activities. The City's revenue consultants anticipates the top two revenue sources for the City, property tax and sales tax will meet and/or exceed the target at the end of the fiscal year. Expenditure wise, at the end of the first half of the year, we were at 43% of the budgeted level. Staff expect the current fiscal year will end with modest budgetary savings due to vacancies and unspent project funds that will be carried over into future years.
The City strives to develop a budget that accurately aligns available resources and operational needs, as unforeseen situations arise during the year, budget variances are carefully reviewed, analyzed, and programmed to address various community needs.