COUNTY OF ALBEMARLE
End-of-Year FY04 General Fund Preliminary Financial Report
Presentation of the General Fund Preliminary Financial Report for the Fiscal Year ended June 30, 2004
Messrs. Tucker, Wiggans, Breeden, Walters
LEGAL REVIEW: Yes
October 6, 2004
ACTION: X INFORMATION:
The attached End-of-Year Preliminary Financial Report provides information on the County’s General Fund revenues and expenditures and fund balances as of June 30, 2004. Also attached is a bar-chart report that compares the budgeted, appropriated, and actual revenue and expenditure data with actual data from the previous fiscal year as well as a fund balance report that provides a look at the preliminary year-end available balances. The report is “Preliminary” because the data has not been officially audited and there may be changes between this preliminary report and the final audited year-end balances.
4.2 Fund County services in a fair, efficient manner and provide needed county public facilities and infrastructure
($ in millions)
A. Attachment A: General Fund End-of-Year Preliminary Financial Report:
Revenues, excluding Fund Balance and Transfers, totaled $148.684 million, 104.2% of revised appropriated revenues. This exceeds the previous estimate submitted with the March 31, 2004 financial report by $2.256 million. The actual increase over previous projections was primarily due to Real Estate Tax $0.924 million, Sales and Use Tax $0.184 million, Business License $0.564 million, Utility Tax $0.119 million, Other Local Revenue $0.162 million, and State Revenue $0.305 million. These increases were slightly offset by Other Local Taxes which were $0.100 million less than estimate. The national, state, and local economic recovery was slightly stronger than previous forecasts; particularly the fourth quarter when employment finally showed significant growth. However, recent economic data indicate that a slowdown occurred as FY04 ended. Following is a brief revenue analysis for the full fiscal year.
· Real Estate Tax revenues exceeded revised appropriated revenues by $2.707 million, 4.1%. The increase is primarily due to the final 18.7% January 1, 2003 reassessment rate and additional new construction, both of which substantially exceeded the preliminary rates used for budget preparation.
· Personal Property Tax revenues, exclusive of PPTR, exceeded revised appropriated revenues by $0.313 million, 2.4%. The increase was due to new vehicle sales, stabilizing used vehicle sales, and a slight increase in business equipment purchases.
· Sales and Use Tax revenues exceeded revised appropriated revenues by $0.684 million, 6.5%, due to the moderate economic recovery experienced during the fiscal year.
· Business License revenues exceeded revised appropriated revenues by $0.597 million, 8.5%, due to the moderate economic recovery experienced during the fiscal year.
· Utility Tax revenues exceeded revised appropriated revenues by $0.356 million, 5.3%, due to a greater than anticipated increase in cellular receipts offset by a slight decrease in power company receipts. Landline telephone receipts finished relatively stable.
· Meals Tax revenues exceeded revised appropriated revenues by $0.111 million, 2.8%, due to the continued shift from home to convenience food preparation.
· Other Local Tax revenues exceeded revised appropriated revenues by $0.234 million, 2.9%, due to the continued strong real estate market and refinancings fueled by low interest rates.
· Other Local Revenues finished $0.135 million, 3.4%, less than revised appropriated revenues primarily due to decreased investment earnings resulting from the same low interest rates referenced above and reduced project management fees.
· State revenues, inclusive of PPTR, exceeded revised appropriated revenues by $0.927 million, 4.6%, primarily due to greater than anticipated PPTR, ABC profit distributions, and Social Services reimbursements.
· Federal revenues exceeded revised appropriated revenues by $0.132 million, 3.4%, primarily due to the shift in funding from state to federal sources as well as an overall net increase in the reimbursement of Social Services’ operations.
· Use of Other Funds transfers finished $0.127 million, 5.8%, less than revised appropriations primarily due to reduced Housing, Fire Dispatch, and ECC-E911 reimbursements.
Overall General Fund actual expenditures, including transfers, totaled $147.039 million compared to the $148.714 million revised appropriated budget. Spending was $1.675 million, 1.1%, under budget.
· Departmental, excluding education, expenditures were 97.1% of the revised appropriated budget and accounted for savings of $1.566 million, 2.9%. Savings of $0.109 million, 1.4%, were realized in non-departmental items.
· Since the March 31, 2004 financial report, net additional appropriations of $0.176 million were approved by the Board for a total FY04 revised appropriated budget of $148.714 million. The $0.176 million was allocated $0.035 million to Administration, $0.061 million to Public Safety, $0.029 million to Human Development, and $0.051 million to Community Development.
3. Revenues less Expenditures:
· This report indicates that there will be a preliminary total of $7.475 million in unexpended revenues, including fund balance and other fund transfers, at the end of this fiscal year. This is a $3.780 million increase since the March 31, 2004 financial report. It is comprised of increased revenues of $2.256 million, $0.065 million use of fund balance offset by a $0.041 million reduction in other funds transfers, and a $1.499 million decrease in expenditures.
· Preliminary Fund Balance Available as of 07/01/04 was $7.490 million.
· Preliminary Unobligated Funds Available as of 10/06/04 is $4.571 million. This includes FY05 approved appropriations of $2.920 million for Schools, CIP, Commonwealth Attorney, Fire/Rescue, and Bright Stars.
B. Attachment B: Preliminary Annual Budget Comparison Report as of June 30, 2004 ($ in millions):
This bar-chart report illustrates comparisons of revenue and expenditure categories from the prior fiscal year’s actual amounts to current year adopted, revised appropriated, and actual.
· Revenues in all categories except Other Local Revenue show positive growth over last year.
· Expenditures in all categories except Judicial increased over last year or remained the same. The large increase in the Transfer to the School Division resulted from the reduced FY03 transfer due to less than anticipated revenue collections due to weak economic conditions.
C. Attachment C: Preliminary Fund Balance Report as of June 30, 2004 ($ in millions):
This report indicates that based on unaudited preliminary FY04 data, the County General Fund had:
· An audited FY03 fund balance at 06/30/03 of $16.773 million;
· Appropriated $3.757 million in approved projects during FY04 (including $1.130 million in Budgeted Local Government Initiatives and $1.070 million in surplus FY03 fund balances to the Capital Improvements Fund) thus reducing the net 06/30/03 Fund Balance available to $13.015 million;
· Added an additional $7.475 million in preliminary FY04 revenues over expenditures for a Preliminary 06/30/04 Fund Balance of $20.490 million;
· Reserved $13.000 million for cash flow purposes;
· Approved $2.920 million for FY05 appropriations;
· Leaving a projected uncommitted Unobligated Fund Balance of $4.571 million as of 9/1/04.
· Anticipates proposed commitments in FY05 of $0.698 million in uncompleted FY04 projects, undelivered purchase orders and new initiative requests being presented for approval at the Board’s October 6th meeting. The specific requests are explained in a separate Executive Summary entitled FY05 Budget Amendments.
· If proposed commitments are approved, the Board would have an unobligated fund balance of $3.873 million, which could be available for future needs or held as a reserve.
D. Discussion of FY04 Uncommitted Balance:
The Board’s approved carry-over policy allocates 100% of unbudgeted revenues and 60% of departmental expenditure savings (savings after all encumbered amounts are appropriated) to the Fund Balance to meet required cash flow needs with any funds over and above the necessary amount for minimum cash flow to go to the CIP Reserve Fund for future capital needs, capital repairs and maintenance items and/or debt service. The policy further states that the remaining 40% of expenditure savings could be used for other projects at the Board’s discretion and approval. This policy was developed to establish guidelines subject to end-of-year revenues, fund balance needs and other County or Board priorities.
Although FY04 end-of-the-year balances show sufficient revenues and expenditures over the needed cash flow reserve, staff is recommending that all of the unobligated funds of $3.873 not be dispersed to the CIP reserve at this time, but rather be held in the fund balance pending a resolution of the state’s Personal Property legislation.
The 2004 Virginia General Assembly as we all know had a very difficult time balancing the 2004-2006 biennium Budget, which was finally balanced based on several last-minute compromises, including significant changes to the Personal Property Tax Relief (PPTR) Act. Many of the details and the significance of the consequences from the PPTR compromise were unknown at the time. The General Assembly recognized that there would be significant difficulties implementing the PPTR compromise and requested that the Secretary of Finance together with VACO (Virginia Association of Counties) and VML (Virginia Municipal League) study the issue and report back to the 2005 General Assembly with recommendations for implementation. Several working groups of constitutional and finance officers are assisting with the study.
In the course of researching the issues, it became apparent that the State statue prohibited any state PPTR reimbursements or payments for the period January 1, 2006 through June 30, 2006. The impact has been estimated at $240 million statewide with a potential $8 million loss of revenue for the County of Albemarle. This has the potential to significantly impact the FY06 Budget and may require a major infusion of one-time funds to address the shortfall. Additional information will be forwarded to the Board as issues are resolved and recommendations proposed, but at this time the most prudent policy seems to be to hold the FY04 end-of-year available funds in reserve until we know more about the County’s pending revenue shortfall in FY06.
Therefore, staff recommends that the available end-of-the year funds in the amount of $3.873 million be held in fund balance reserve pending a resolution of the state PPTR crisis.
Staff recommendation acceptance of the Preliminary June 30, 2004 End-of-Year Financial Report.
Attachment A: General Fund End-of-Year Preliminary Financial Report
Attachment B: General Fund Annual Budget Comparison Report
Attachment C: General Fund End-of-Year Fund Balance Report
Return to regular agenda