COUNTY OF ALBEMARLE

 

EXECUTIVE SUMMARY

 

 

AGENDA TITLE:

FY06 End-of-Year Preliminary Financial Report

 

 

SUBJECT/PROPOSAL/REQUEST:

Presentation of the Preliminary Financial Report for the Fiscal Year Ended June 30, 2006

 

 

STAFF CONTACT(S):

Messrs. Tucker, Davis, Wiggans, Walters,  Breeden, Ms. White

 

 

LEGAL REVIEW:   Yes

 

 

AGENDA DATE:

October 4, 2006

 

ACTION:     X                          INFORMATION: 

 

CONSENT AGENDA:

  ACTION:                                INFORMATION: 

 

 

ATTACHMENTS:   Yes

 

 

REVIEWED BY:

 

 

 

BACKGROUND:

The attached Preliminary Financial Report provides information on the County’s General Fund operations and Fund Balance as of June 30, 2006.  The financial report includes a bar chart that compares current fiscal year revenue and expenditure data with data from the previous fiscal year.

 

 

STRATEGIC PLAN:

Goal 5:  Fund the County’s future needs.

 

 

DISCUSSION:

($ in Millions)

  1. Attachment A: General Fund Financial Report:
    1. Revenues:

Revenues, excluding Transfers and Fund Balance Appropriations, total $182.052 million, exceeding revised appropriations (herein after “Budget”) by $8.923 million, 5.2%.  This exceeds the previous estimate submitted with the March 31, 2006 financial report by $1.787 million.  Combined with the use of $2.127 million in transfers from other funds and $6.052 million in fund balance, Revenues, Transfers, and Use of Fund Balance total $190.231 million, exceeding Budget by $8.977, 5.0%.  Following is a brief revenue analysis for the fiscal year:

·         Real Estate Tax revenues total $87.444 million, exceeding budget by $1.455 million, 1.7%, a $0.491 million increase from the March financial report.  Second half 2005 revenues exceeded budget by $2.257 million while first half 2006 revenues are $0.802 million less than budget.  The FY06 Budget had been prepared based on a conservative 17.5% 2005 reassessment estimate, although the final reassessment rate was 27.2%, 23.3% after adjustment for increased land use values.  The conservative rate was used in anticipation of a market slowdown that is just now beginning to materialize.  Year 2005 new construction tax bills of $0.834 million increased $0.212 million over 2004 new construction tax bills of $0.622 million.  Year 2006 new construction tax bills of $0.617 million are $0.217, million less than 2005.  The first half 2006 collection rate of 98.1% has decreased from the 2005 first half tax collection rate of $99.5%.  The decreases in new construction, collection rates, and market value appreciation will be reflected in the FY08 Budget.

·         Personal Property Tax revenues total $15.349 million, exceeding budget by $1.238 million, 8.8%, a $0.450 increase from the March financial report. The excess is attributed to continued unanticipated dealer incentives and the strong regional economy experienced over the past year.  The 2006 increase is also attributed to a shift in payment responsibility from the state to individual taxpayers as the flat state PPTR payments result in less tax relief for individual taxpayers.  The tax relief percentage was 70% for 2005, 66% for 2006, and estimated to be 62% for 2007.

·         Sales Tax revenues total $13.311 million, exceeding budget by $0.811 million, 6.5%.  The increase is due to the continued strong regional economy with additional businesses operating in new commercial facilities.  The Virginia Department of Taxation estimates that 20% of sales tax revenues are related to construction and real estate activities.  A slowdown in these markets will impact future sales tax revenues.

·         Business License revenues total $9.372 million, exceeding budget by $1.164 million, 14.2%, a $0.388 million increase from the March financial report.  This increase reflects actual June receipts.  Business license revenues are directly correlated with sales tax revenues.  As with sales tax, the increase is due to the strong regional economy.  At the time the Budget was prepared, it was anticipated that the economy would experience a greater slowdown than actually materialized.

·         Meals Tax revenues total $5.050 million, exceeding budget by $0.450 million, 9.8%, a $0.100 million increase from the March financial report.  The increase is attributed to the continued growth in convenience food preparation as evident by the increased number of food business establishments. 

·         Other Local Tax revenues total $10.416 million, exceeding budget by $2.093 million, 25.2%, a $0.221 million increase from the March financial report.  Public Service revenues exceed budget by $0.405 million due to increased assessments which are prepared by the State Corporation Commission and the Virginia Department of Taxation.  Clerk fees exceed budget by $1.564 million due to unanticipated recordation and seller’s tax collections resulting from the active real estate market.

·         Other Local Revenues total $5.311 million, exceeding budget by $0.801 million, 17.8%, a $0.267 million increase from the March financial report.  Development related fees and permits exceed budget by $0.160 million due to construction activity.  Interest exceeds budget by $0.350 million due to increased cash balances and higher interest rates.  Excess fees of the Clerk exceed budget by $0.242 million due to increased Court docket activity.  Police and Sheriff Service fees exceed budget by $0.160 million due to increased community usage.  These fees are offset by increased overtime expenses incurred providing security services.

·         State revenues total $23.473 million, exceeding budget by $1.116 million, 5.0%, a $0.257 million decrease from the March financial report.  PPTR revenues exceed budget by $0.794 million due to vehicle purchases as well as a one-time $0.393 million acceleration of cash flow resulting from the new state payment schedule.  The County will now receive $14.961 million in PPTR payments from the state each year.  EMS and Fire Service revenues will exceed budget by $0.309 million due to the current year receipt of prior year reimbursements.

·         Federal revenues total $4.179 million and will be $0.203 million, 4.6%, less than budget.  Public Assistance revenues will be $0.100 million less than budget due to decreased reimbursements.  Law Enforcement grant receipts are $0.111 million less than budget due to decreased activity.   The Department of Justice COPS program revenues of $0.100 million will be received and recognized in FY07.  The COPS in Schools program ended in December at $0.011 less than budget.

·         Use of Other Funds total $2.127 million, exceeding budget by $0.054 million, 2.6%, a $0.279 million increase from the March financial report.

 

    1. Expenditures:

Expenditures, including transfers, total $178.700 million, a $2.553 million, 1.4%, savings from budget.

·         Departmental expenditures were 96.3% of budget, resulting in savings of $2.404 million, 3.7%. After reappropriations of   $0.888 million for ongoing projects and outstanding purchase orders, approved by the Board at the September 6, 2006 board meeting and the proposed $0.355 million additional reappropriation for ongoing projects, the net savings for departmental budgets would be $1.161 million or 1.8% less than budget.

·         General Fund educational expenditures were 100.0% of budget. Preliminary numbers indicate that the School Division will have $3.265 million in FY06 fund balance, $0.538 million of which was anticipated and budgeted in the School’s FY07 budget leaving an unallocated balance of $2.727 million.

·         Non-departmental expenditures were 98.9% of budget, resulting in savings of $0.111 million, 1.1%.

·         Transfers were 99.8% of budget, resulting in savings of $0.039 million, 1.4%.

·         Appropriations increased $2.622 million since the March 31, 2006 financial report (see attachment C, Fund Balance Report, for approved appropriation details)

                       

    1. Revised Revenues less Expenditures Appropriations:

·         This report indicates that there will be a total of $11.531 million (rounded) in unexpended revenues, transfers, and use of fund balance at the end of the fiscal year.  This is a $4.621 million increase since the March 31, 2006 financial report.  The $11.531 million is comprised of:

1.       Revenues and transfers exceeding budget by $8.977 million, and

2.       Expenditure savings of $2.553 million.  Expenditure savings are not estimated for interim quarterly financial reports.

·         Preliminary Fund Balance available July 1, 2006 after cash flow and proposed FY06 commitments of $0.472 million is $11.621 million

·         Preliminary Unobligated Funds available as of October 04, 2006 is $10.195 million.  The Unobligated Funds Available was derived by reducing the Preliminary Fund Balance by:

1.       Approved FY06 Budgeted initiatives of $0.538 million,

2.       Reappropriated FY06 purchase orders of $0.284 million, and

3.       Reappropriated FY06 uncompleted projects of $0.604 million.

·         Preliminary Projected Unobligated Funds of $0.376 million.  The Projected Unobligated Funds Available was derived by reducing Unobligated Funds Available by:

1.       Proposed additional FY06 $0.355 million reappropriation of uncompleted projects, and

2.       Requested FY06 carryover funds for new initiatives of $0.239 million,

3.       Proposed transfer of excess revenues and expenditures savings of $9.225 million to the CIP Reserve Fund.  

 

 

  1. Attachment B: General Fund Budget Comparison Report:

The bar chart report tracks changes in revenues and expenditures over time.

·         Revenues in all categories except use of Fund Balance show positive growth over last year.  Use of Fund Balance has declined from last year.

·         Expenditures in all categories show increases over last year.

 

 

  1. Attachment C: Fund Balance Report:

The report indicates that the County:

·         Has an audited FY05 Fund Balance of $19.615 million at June 30, 2005,

·         Appropriated $6.052 million for FY06 projects,

·         Has a remaining FY05 Fund Balance of $13.563 million at June 30, 2006,

·         Estimated Revenues in Excess of Expenditures of $11.531 million

·         Reserved $13.000 million for cash flow purposes,

·         Subsequently approved $1.426 million for FY07 projects,

·         Has proposed commitments of $10.291 million,

·         Has Projected Unobligated Funds of $0.376 million.

 

 

  1. Discussion of FY06 Unobligated Balance:

The Board’s approved policy allocates 100% of unbudgeted revenues and 60% of departmental expenditure savings (after all current year committed amounts from fund balance are appropriated and a sufficient cash flow amount has been established) 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 may be used for other projects at the Board’s discretion and approval.  The policy was developed to establish guidelines for the use of end-of-year revenues and expenditure savings.

 

The amount to transfer to the CIP Reserve Fund is determined as follows (amounts in millions):

 

Surplus Revenues                                                                      $8.977

Less:    FY07 Approved Appropriations                                        (0.538)

Remaining Revenues                                                                  $8.439

 

Expenditure Savings                                                                   $2.553

Less:    Reappropriated FY06 purchase orders                            (0.284)

            Reappropriated FY06 uncompleted projects                     (0.604)

            Proposed FY06 uncompleted projects                              (0.355)

Remaining Expenditure Savings                                                  $1.310

 

 

The amount to be transferred to the CIP Reserve Fund is $9.225 million which is composed of the $8.439 million remaining revenues and $0.786 million (60% of the remaining expenditure savings of $1.310 million.  This is a preliminary estimate that will be finalized when the fiscal year audit is completed.

 

 

RECOMMENDATION:

Staff recommends acceptance of the Preliminary June 30, 2006 End-of-Year Financial Report.

 

 

ATTACHMENTS

A – General Fund Preliminary General Fund Financial Report

B – General Fund Preliminary General Fund Budget Comparison Report

C – General Fund Preliminary General Fund Balance Report

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