COUNTY OF ALBEMARLE
FY05 Updated Revenue Projection Update
Update on FY05 Revenue Projections and Budget Guidance
Mr. Tucker, Ms. White, Mr. Breeden, Mr. Walters
AGENDA DATE: ITEM NUMBER:
February 4, 2004
ACTION: X INFORMATION:
Each January, the Department of Finance updates the preliminary revenue projections for the current and upcoming fiscal years. These updated revenue estimates are an additional step in the budget preparation process and revise the basis of the recommended budget proposals to come before the Board of Supervisors next March. In October 2003, Fiscal Year 2005 General Fund revenues were projected to be $158,221,997 or a $13.4 million dollar increase (9.2%) over the FY04 budget. The most recent January revenue projection indicates that total General Fund revenues are estimated to be $159,578,455, a $14.7 million dollar increase (10.2%) over FY04 budgeted. This change reflects a $1.356 million dollar increase over the October projection.
The attached chart (Attachment A) shows the changes in the FY05 revenue projections (Column C-B) since October, as well as the revised projected revenue increases (Columns C-A) over the FY04 budget. Highlights of those changes are:
Local revenues, including PPTR, account for a $14.1 mllion dollar increase (10.7%) over the FY04 budget.
State and Federal revenues, excluding PPTR, account for a $0.705 million dollar increase (6.5%) over the FY04 budget.
Real Estate revenues are projected to increase by $10 million (15.4%) over FY04, which is a slight increase of $0.623 million since October, primarily due to new construction as well as an increase in the anticipated reassessment rate from15% to 16%. The January reassessment is currently anticipated to be in the range of 15% to 20%, so 16% still reflects a fairly conservative estimate at this point. On the national and state levels, real estate value increases have begun to slow down. Locally, we are still experiencing a very active market. The FY05 estimate is based on the current $0.76 tax rate.
The state reimbursement rate continues to be set by The General Assembly at 70% of the first $20,000 of assessed values for calendar years 2003 and 2004. Although the rate has not been set for FY05, the Governorís Budget proposes increasing reimbursements to 77.5% for 2005, 85% for 2006, 92.5% for 2007, and 100% for 2008
Public Service Tax
Revenue is estimated to increase $0.190 million (10.2%), which includes a slight increase of $0.130 million over the October 2003 preliminary projections, due to increased railroad traffic.
Mobile Home Tax
Mobile Home Tax revenues are estimated to be approximately the same.
Machinery and Tools Tax
Machinery and Tools Tax revenues are estimated to decrease $0.234 million (24.9%), due to plant closings and relocations over the last several years.
Prior Year Collections and Fees
Revenues are estimated to increase $0.317 million (22.4%), due to augmented compliance efforts and improved economic conditions, although they have decreased slightly by $0.049 million since the October projection.
Local Sales Tax revenues are estimated to increase by $0.950 million (9.0%), which is a $0.266 million increase over the October 2003 projection. The projected increase is due to improved economic conditions, which are expected to continue.
Business License Fees
Business License Fees are estimated to increase $0.341 million ( 4.9%) over the FY04 budget primarily due to strength in the retail merchants and home improvement/repair sectors of local business activity. This projection is up slightly since the October projection by $0.078 million.
Motor vehicle license revenues are estimated to be approximately the same.
Utility Taxes are estimated to increase over the FY04 budget by $0.302 million ( 4.5%) up slightly from the October projection by $0.059 million. The projected increase is primarily due to continued expansion and reliance on cellular service by both business and residential customers.
Meals Tax revenues are estimated to increase $0.162 million (4.1%) due to the continued shift from home consumption to outside prepared meals.
Other Local Tax Sources
The remaining local tax sources (i.e., recordation, transient occupancy, and miscellaneous local taxes) are estimated to increase by $0.30 million (13.6%). The increase is primarily due to continued strong real estate purchase and refinancing activities.
Other Local Revenue
The $0.189 million (4.8%) decrease in the Other Local Revenue category has been revised slightly upward by
$0.106 million over the October projection. This net revenue decrease is impacted by several items. Interest income is estimated to decrease $0.24 million (68.1%) on County funds deposited in banks due to low interest rates and cash balances as well as a $0.150 million (100.0%) decrease in rent from the Wachovia Building. These decreases are somewhat offset by net increases from various recovered costs, service fees, and traffic fines.
State Revenues(excluding PPTR)
State revenues, excluding PPTR, are estimated to increase by $0.501 million (7.1%) primarily due to increased distributions from ABC profits, Social Services reimbursements, and additional 599 law enforcement funding. This estimate reflects an additional $0.365 million in revenues since the October projection, primarily in the Social Services reimbursement revenues.
Federal revenues are estimated to increase $0.204 million (5.3%) primarily due to increased Social Services reimbursements and new Department of Justice COPS grants. These revenues have decreased slightly since the October projection by $0.093 million.
Transfer revenues are estimated to decrease $0.67 million (3.0%). This line reflects transfers from other funds, such as the E-911 Fund, the Tourism Fund, and others, where they were originally reported as revenues into the General Fund to support applicable general government program operations.
Revised Allocation of New Local Tax Revenue between General Government and the School Division
Attachment B is provided to point out two things: one, the change in local tax revenues since the October projection (both the October and January local tax estimates have been revised to reflect a $0.74 cent tax rate, as requested by the Board); two, the distribution of those revenues between the school division and local government based on the 60/40 split.
The change in local tax revenues over the October projection shows an increase of $0.980 million with an annual increase of $11.9 million over the FY04 budget after the $8 million revenue sharing payment is transferred to the City. After subtracting the transfers to the capital and debt service funds, approximately $10.324 million is available for general government and school division operations based on the revised January projections.
Of the $0.980 million increase from the October to January projections, the school division will receive an additional $587,942 and general government will receive an additional $391,961. As shown in the yellow box, this reflects an increase of $6.194 million for the school division and $4.130 million for general government.
Staff recommends that the Board accept the updated FY05 Revenue Projections and approve the revised allocation of the increased local tax revenues between general government and the school division.
View Attachment A
View Attachment B
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