COUNTY OF ALBEMARLE

 

EXECUTIVE SUMMARY

 

 

AGENDA TITLE:

Joint Board Financial Work Session

 

 

SUBJECT/PROPOSAL/REQUEST:

FY08 Financial/Budget information provided to the Board of Supervisors and the School Board

 

 

STAFF CONTACT(S):

Tucker, White, Foley, Davis, Breeden, Vinzant, Neitz

 

 

LEGAL REVIEW:   Yes

 

 

AGENDA DATE:

November 1, 2006

 

ACTION:     X                     INFORMATION: 

 

CONSENT AGENDA:

  ACTION:                          INFORMATION:   

 

 

ATTACHMENTS:   Yes

 

 

REVIEWED BY:

 

 

 

BACKGROUND:

Each November, the Board of Supervisors receives revenue projections from the Department of Finance and OMB for  the upcoming FY08 Budget preparation and work session cycle.  This year it was decided to hold a joint financial work session with the School Board to review the FY08 revenue projections and the allocation of funds to local government and the school division, as well as to review an updated Five-Year Financial Forecast and a preliminary FY08 FY12 Capital Improvements Program as recommended by the CIP Oversight Committee.

 

STRATEGIC PLAN:

Develop a comprehensive strategy/plan for funding future needs.

 

DISCUSSION:

The agenda for the joint financial work session will be as follows:

 

 

Attached for your review prior to the meeting are two items: Attachment A: FY08 Projected Revenues; Attachment B: FY08 Allocation of New Revenues to Local Government and the School Division

 

Attachment A - FY08 Projected Revenues

 

Overall FY08 revenues, transfers, and use of fund balance are projected to increase $22.1 million dollars, or 11.07%, over the FY07 budget. The revenue increases are summarized as follows:

         Property Taxes increase $18.6 million, 15.17%;

         Other Local Taxes increase $2.5 million, 5.99%;

         Other Local Revenues increase $0.5 million, 10.95%;

         State and Federal Revenues increase $0.9 million, 3.03%; and

         Transfers increase $0.3 million, 9.44%.

There is no anticipated use of fund balance.

 

Real Estate Tax:

FY08 Real Estate Tax revenues are estimated to exceed FY07 budgeted revenues by $15.9 million, 15.82%. These revenue estimates include the second half of the 2007 reassessment and the first half of the estimated 2008 assessment. Tax Year 2008 is the first year for annual reassessments.  It is currently projected that the 2008 tax year reassessment rate will be 5.0%. This, combined with the 22.5% reassessment increase from the 2007 tax year reassessment, leads to a 15.82% increase in the 2008 fiscal year.

 

Personal Property Tax, including Personal Property Tax Relief (PPTR):

Personal Property Tax revenues are estimated to exceed FY07 budgeted revenues by $2.817 million, 8.91%. FY08 Personal Property Tax consists of the second cycle 2007 and first cycle 2008 tax bills. Vehicles are assessed using the average loan value published in the January National Automotive Dealers Association (NADA) book. Because the Personal Property Tax Relief (PPTR) payment from the state is now held flat at $14,960,670 and the fleet continues to increase in value, the personal property tax percentage increase will continue to grow.

 

Sales Tax:

Sales Tax revenues are estimated to exceed FY07 budgeted revenues by $0.900 million, 6.52%. Sales tax revenues are generated from the one percent local option sales tax rate added to the state general sales tax rate.  Albemarle sales tax revenues have consistently increased annually. Sales tax receipts increase as new commercial and retail businesses expand. 

 

Business License Fees:

Business License Fees are estimated to exceed FY07 budgeted revenues by $0.559 million, 6.12%. Business License Fees are directly related to the strength of business activity as well as the growth of commercial establishments. 

 

Decal Fees:

Decal Fees are estimated to exceed FY07 budgeted revenues by $0.175 million, 8.33%. Motor vehicle license registration revenue historically varies directly with population increases and the corresponding change in vehicle base.  FY07 revenues are estimated to increase based on an increase in population and a slight additional vehicle base increase.  However, localities throughout Virginia are eliminating decals and long-term revenue consequences are unclear. 

 

Food and Beverages Tax:

Food and Beverages Tax revenues are estimated to exceed FY07 budgeted revenues by $0.300 million, 5.83% due to the continued shift from home prepared to convenience food preparation.

 

Other Local Revenue:

Other local revenues are estimated to exceed FY07 budgeted revenues by $0.537 million, 10.95%. The largest increases in this category are for interest on bank deposits ($0.275 million increase) and police and sheriff charges for services ($95,600 increase).

 

State Revenue, excluding PPTR:

State revenues are estimated to be $35,785 less than FY07 budgeted revenues, due primarily to a reduction in ABC profits and wine tax.

 

Federal Revenue:

Federal revenues are estimated to exceed FY07 budgeted revenues by $0.441 million. This increase is primarily due to the continuing shift of reimbursement for Social Services expenses from state to federal sources.

 

Other Revenue Categories:

Public service tax, mobile home tax, machinery and tools tax, delinquent tax, motor vehicle licenses, transient occupancy tax, and other miscellaneous revenues are estimated to show a net minor increase over FY07 budgeted revenues.

 

Transfers:

This line reflects transfers from other funds, such as the E-911, Tourism, and other funds, into the General Fund to support applicable general government program operations.

 

Fund Balance:

There is no anticipated use of fund balance at this time.

 

Attachment B FY08 Allocation of New Revenues to the Capital Program, Local Government and the School Division

Based on the revenue estimates provided by the Department of Finance, the next step in the budget process is the preliminary allocation of new local tax revenues. Attachment B shows how the $20.996 million in new local tax revenues will be allocated between capital projects and debt service payments, committed non-departmental expenditures, and then to general government and school operations on a 40/60 basis.

 

The total increase for capital outlay and debt service is $2.999 million, an increase of 12.99% over FY07, resulting in a total transfer of $26.088 million. This amount is determined by increasing the base allocation by the overall revenue growth rate for local government and schools, projected to be 9.07%. In addition, there is a capital transfer amount based on 2 cents of the projected real property tax revenue ($3.208 million) and the one-half of a percentage point of the projected overall net revenue growth earmarked for capital projects ($0.963 million).

 

Once new local tax revenue has been allocated to revenue sharing, capital outlay and debt service, and committed non-departmental expenditures have been removed, $14.919 million remains to split between local government and school operations. This equates to an $8.951 million increase in the school transfer, for a total transfer of $100.117 million. The remaining $5.968 million in new revenue is allocated to local government operations.

 

RECOMMENDATIONS:

Staff recommends that the Board approve the preliminary FY08 allocation of local revenues to the Capital Improvement Program in accordance with the guidelines recommended by the financial advisors and to the School Division and General Government funds for operating costs.

 

ATTACHMENTS

Attachment A - FY08 Estimated Revenues

Attachment B - FY08 Allocation of New Revenues

Return to regular agenda