COUNTY OF ALBEMARLE

 

EXECUTIVE SUMMARY

 

 

AGENDA TITLE:

FY09 Second Quarter Financial Report

 

SUBJECT/PROPOSAL/REQUEST:

Presentation of the Second Quarter Financial Report for the Six Months Ended December 31, 2008

 

STAFF CONTACT(S):

Messrs. Tucker, Foley, Davis, Wiggans, Walters and Ms. Neitz

 

LEGAL REVIEW:  Yes

 

 

AGENDA DATE:

February 04, 2009

 

ACTION:                INFORMATION:   

 

CONSENT AGENDA:

  ACTION:              INFORMATION:    X

 

ATTACHMENTS:   Yes

 

REVIEWED BY:

 

 

BACKGROUND:

The attached FY 09 Second Quarter Financial Report provides information on the County’s General Fund operations and Fund Balance as of December 31, 2008.  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:

The Department of Finance estimates that General Fund revenues, transfers, and use of fund balance

will be $5.490 million (2.4%) less than appropriations of $225.961 million, an increase of $1.764 million over the previous estimate presented with the FY09 First Quarter Financial Report.  The increase is primarily due to the proposed increase in the 2009 real estate tax rate of 3.2 cents (from 71.0 cents to 74.2 cents) for County operations.  In December 2008, during its review and approval of the Five Year Financial Plan, the Board authorized the County Executive to prepare his proposed FY 10 Budget with a 2009 tax year real estate tax rate of 77.0 cents, an increase of 6.0 cents from the 2008 real estate tax rate.  The increase consisted of two parts.  The first part was a 3.5 cent (5.0 percent) increase in the rate (from 71.0 cents to 74.5 cents) to reflect the 2009 residential effective tax rate.  In other words, residential property was estimated to decrease in value in 2009 by 5.0 percent; therefore, a 5.0 percent increase in the rate would be tax neutral for the average residential property owner.  The second part of the increase was a 2.5 cent increase to fund a lockbox or reserve in case of further revenue shortfalls in FY 10.

 

Actual values for the January, 2009 reassessment are now available and the average residential property decreased in value by 4.5 percent instead of the estimated 5.0 percent.  Therefore, the residential effective tax rate for 2009 is 74.2 cents, an increase of 3.2 cents (4.5%) above the 2008 real estate tax rate.  The remaining 2.5 cent increase to fund the lockbox is not included in the FY 09 revenue projections in this report since the proceeds of this increase would not fund County operations.

 

It is important to remember that any change in the County’s real estate tax rate for the 2009 tax year will impact both the FY09 and FY10 real estate tax revenues.  As previously noted, this report and the revenue estimates included assume a 3.2 cent real estate tax rate increase to 74.2 cents.  Staff estimates the each cent increase in the 2009 real restate tax rate will increase FY09 revenues by $777,645 (including real estate, public service and mobile homes) and FY10 revenues by $1,564,596.

 

The latest indicators show that the US and Virginia economies are continuing to struggle.  Most current indicators are at recession levels, with some at historical lows.  Tight consumer and corporate credit, a struggling labor market, and a slowing global economy will continue to be a drag on growth.  In Virginia, payroll employment growth slowed in November, increasing only 0.1 percent for the month after increasing 0.5 percent on average over the past four months.  The unemployment rate rose from 4.2 percent to 4.6 percent in November; 7.2 percent nationally.  The Virginia Leading Index fell 0.6 percent in November, the seventh decline in the last twelve months.  All three components – auto registrations, building permits, and initial unemployment claims – contributed to the decline.  The leading index fell in all eleven metro areas.  Virginia revenues are now expected to decline 4.0 percent in FY09.

 

Following is a brief revenue analysis for the FY09 fiscal year:

·         Real Estate Tax revenues are estimated to be $1.197 million (1.1%) greater than appropriations, a $2.537 million increase from the previous projection.  The increase is primarily due to the proposed 3.2 cent increase in the 2009 real estate tax rate. 

 

·         Personal Property Tax revenues are estimated to be $1.052 million (4.6%) less than appropriations, a $0.505 million increase from the previous projection.  The increase is due to greater than anticipated 2009 assessed values. 

 

·         Delinquent Property Taxes are estimated to be $0.230 million (26.9%) greater than appropriations, a $0.140 million increase from the previous projection.  New delinquent fees have resulted in improved collections.

 

·         Sales Tax revenues are estimated to be $1.865 million (13.3%) less than appropriations, a $0.050 million decrease from the previous projection.  Revenue projections were prepared anticipating the start of an economic recovery in mid FY09.  Unfortunately that has  not materialized.  Estimated collections will be less than FY08.  The Commonwealth as a whole has also experienced less than prior year collections attributed to current economic conditions.  Housing-related, grocery store, department store and restaurant revenues were flat to negative compared to FY08.  Increased internet sales typically do not generate sales tax revenues.

 

·         Business License, BPOL, revenues are estimated to be $0.611 million (5.8%) less than appropriations, a $0.495 million decrease from the previous projection.  BPOL revenues typically lag behind current revenues and are beginning to be effected by the recession.

 

·         Utility Tax revenues are estimated to be $0.468 million (4.9%) less than appropriations, a $0.359 million decrease from the previous projection.  A major provider discovered that it had been incorrectly remitting sales tax as utility tax.  Additionally, overall weather for the first six months of the fiscal year has been moderate, thereby generating less revenue.

 

·         Other Local Tax revenues are estimated to be $0.869 million (7.1%) less than appropriations, a $0.190 million increase from the previous projection.  Vehicle license tax revenues have increased at the same time as personal property revenues.

 

·         Other Local Revenues are estimated to be $1.801 million (28.5%) less than appropriations, a $0.518 million decrease from the previous projection.  The decrease is primarily due to reduced interest earnings, development fees, and excess Clerk fees.

 

·         State Revenues are estimated to be $0.243 million (1.0%) less than appropriations. a $0.077 million increase from the previous projection.  The increase is due to increased Public Assistance reimbursements.

 

·         Categories with variances of less than $0.100 million have not been analyzed for this report.

 

    1. Expenditures:

The Budget Office estimates that total expenditures, including transfers, will be $5.613 million (2.5%) less than appropriations.  The reduction includes release of the 2008 tax year lockbox, frozen positions, operational savings, and reduced transfers including schools and capital.

 

                                                               i.      Departmental expenditures are expected to total $81.330 million; a 2.4% savings of $1.986 million from Budget: 

·         Administration expenditures are expected to total $10.623 million; a savings of $0.552 million.

·         Judicial expenditures are expected to total $3.851 million; a savings of $0.028 million.

·         Public Safety expenditures are expected to total $29.048 million; a savings of $0.402 million.

·         Public Works expenditures are expected to total $5.000 million, a savings of $0.285 million.

·         Human Services expenditures are expected to total $18.639 million; a savings of $0.222 million.

·         Parks, Rec., and Culture expenditures total $6.277 million; a savings of $0.109 million.

·         Community Development expenditures total $7.892 million; a savings of $0.387 million.

 

                                                             ii.      Non-Department expenditures consisting of the revenue sharing payment, reserves, and refunds are expected to total $14.688 million; a 9.9% savings of $1.614 million from Budget.  The full $1.614 million results from the release of the 2008 lockbox to fund local government operations.

 

                                                            iii.      Transfers are expected to total $124.329 million; a 1.6% savings of $2.014 million from Budget:

·         Transfers to the School Division are expected to total $99.539 million, a 1.7% savings of $1.686 million.

·         Transfers to the Capital and Debt funds are expected to total $24.790 million; a 1.3% savings of $0.328 million.

 

    1. Revenues less Expenditures:

This report indicates that the FY will end with $0.123 million of revenues in excess of expenditures:

·         Revenues and transfers are projected to experience a $5.490 million shortfall which should be offset by $5.613 million in expenditure savings.

 

  1. Attachment B: General Fund Budget Comparison Report:

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

 

                  Revenues:

·         Real Estate Tax, Personal Property Tax, Other Local Taxes and Federal Revenues show positive growth over FY08. 

·         Sales Tax, Business Licenses, Utility Taxes, Food and Beverage Tax, Other Local Revenue, State Revenues, Transfers, and Use of Fund Balance show decreases from FY08.

 

                        Expenditures:

·         Administration, Judicial, Public Safety, Public Works, Human Services, Parks & Culture, Community Development, Non-Departmental, and Education show increases over FY08.

·         Non-School Transfers shows a decrease from FY08.

 

  1. Attachment C: Fund Balance Report:

The report indicates that the County:

·         Had an Audited FY08 Fund Balance of $20.426 million as of June 30, 2008,

·         Appropriated $1.816 million for FY09 projects,

·         Had a remaining June 30, 2008 Fund Balance of $18.610 million,

·         Has not approved any FY09 projects, and

·         Has Projected Unobligated Funds of $18.610 million as of February 04, 2009.

 

  1. Budget Impact:

This Financial Report is based on audited FY08 financial data and the first six months of financial data for FY09.  Staff will utilize this data as the basis for the FY10 Budget.

 

RECOMMENDATIONS:

This report has been prepared for your information.  No action is required.

 

ATTACHMENTS;

A – General Fund Quarterly Financial Report

B – General Fund Budget Comparison Report

C – General Fund Balance Report

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