Financial projections - City of Durham, NC 2017 budget retreat

1. City of Durham
Financial Projections
February 17, 2017
1www.durhamnc.gov

2. Content
• Recap FY 2016-17 Budget
• FY 2017-18 Budget Outlook
• FY 2017-18 Budget Development Process
2www.durhamnc.gov

3. Recap: FY 2016-17 Budget
3www.durhamnc.gov

4. Fiscal Year 2016-17 Budget
Total Budget $404.9 million (Adopted June 20, 2016)
• General Fund $181.6 million
• 49% Property Taxes
• 34% Sales and Local Taxes
• Debt Service Fund $37.4 million
• Water & Sewer Fund $94.1 million
• Solid Waste Fund $23.4 million
• All other Funds $68.4 million
Property tax rate unchanged at 56.07 (cents per $100)
• A penny on the tax rate = $2.749 million
• Tax Rate 56.07 (cents per $100)
• GF Operations = 31.81
• includes ½ Penny for Park and Trail Maintenance
• Debt = 13.02
• Solid Waste = 6.13
• Transit = 4.11
• Dedicated housing = 1.00
4www.durhamnc.gov

5. Summary of Expenditures – All
Funds
5www.durhamnc.gov

6. Summary of Revenues– All Funds
6www.durhamnc.gov

7. General Fund Expenses by
Function
7www.durhamnc.gov
Public Safety
$93,008,429
51.20%
Public Services
$46,835,968
25.79%
Administrative
& Support
$16,258,954
8.95%
Community
Building
$14,818,666
8.16%
Governance
& Other
$10,718,329
5.90%

8. General Fund Revenues by
Source
8
Property Taxes
$88,713,260
48.84%
Local Taxes
$61,367,263
33.79%
All Other
$19,551,242
10.76%
State Shared
Funding
$12,008,581
6.61%
www.durhamnc.gov

9. Current Year GF Revenue Status
• Total tax collections ($150M) at 70%
• Property tax ($88.7M) at 92%
• Sales tax collections ($58.6M) is at
32% after 3 months
• Hotel/Motel/Car Rental ($2.7M) at 61%
• Licenses and Permits at 63%
• Intergovernmental Revenues at 62%
• Charges for Services at 64%
9www.durhamnc.gov

10. GF Current Year
Property Tax Revenues
10www.durhamnc.gov
$87.46
$80.46
$87.53
$0
$20
$40
$60
$80
$100
Millions
Adopted YTD EOY Projection

11. Sales Tax – Budget to Actual
FY2010 thru FY2016
11www.durhamnc.gov
$35.2 $35.0
$36.8
$56.6
$60.2
$18.7
$59.0
$0
$10
$20
$30
$40
$50
$60
$70
2011-12 2012-13 2013-14 2014-15 2015-16 2016-17
Millions
Budget Actual EOY Projection

12. Current Year GF Revenues
12www.durhamnc.gov
$4.5
$1.4
$2.8
$6.1
$7.6
$1.0 $0.9
$1.7
$6.2
$4.8
$4.0
$1.4
$2.8
$6.2
$7.8
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
Utility Tax Licenses and
Permits
Occupancy Tax /
Rental Cars
Powell Bill Charges for
Services
Millions
Adopted
YTD
EOY Projection

13. FY 2017-18 Budget Outlook
13www.durhamnc.gov

14. State Budget Outlook
• GF Revenue Report provided to General
Assembly by Barry Boardman, PHD
• Fiscal Research is the non partisan staff
agency for General Assembly
• Report can be found at:
http://www.ncleg.net/FiscalResearch/generalfund_outlook/16-
17_Outlooks/2017_01_16_January_%20Revenue_%20Outlook.pdf
14www.durhamnc.gov

15. FY2016-17 State Revenue Update
General Fund Revenue
• Received $10.6B in the first half of the fiscal year
($321.9M above target)
Revenue Sources Exceeding Expectations
• Personal Income: $161M or 3.0% above target
• Sales Tax: $80M or 2.3% above target
• Corporate Income and Franchise: $73M or
14.4% above target
15www.durhamnc.gov
*Thru 12/31/2016

16. Sales Tax - Statewide
16
Baseline growth in the first-half of the fiscal year was 4.7%, which is
below the projected 4.5% growth rate for the fiscal year. The second
quarter improved over the first quarter with growth of 4.9%.
Source: Quarterly General Fund Revenue Report NC Fiscal Research Division
www.durhamnc.gov

17. • The initial forecast estimates that we begin the
budget development process with $4.7M deficit.
• We anticipate many new initiative requests from
departments.
• We cannot balance the GF budget for FY17-18 (or
future years) at current property tax rate.
• GF fund balance is projected to increase - can be
used but best practice is to only use it for one-time
expenses.
17www.durhamnc.gov
FY 2017-18 Budget Outlook

18. FY 2018 GF Multi-Year Revenue
Assumptions
• Property Tax – 1.24% Increase
• Sales Tax - 6.35% Increase
• Occupancy Tax – 7.0% Increase
• Utility Franchise Taxes – 2.0% Increase
• Charges for Services - 0.9% Increase
18www.durhamnc.gov

19. FY 2018 – What’s In
• FTEs: Additional costs for 30 new Firefighters for Fire
Station 17, COPS Grant
• Pay:
• P4P Sworn Police and Fire, 5% steps with new plan adopted
2/6/17
• Non-sworn, 4.0% (flat from FY17)
• Benefits:
• 401K Contributions of 5% in FY18
• Local Government Retirement FY17 increases to 7. 5% from
7.25%
• 8% annual health insurance
• 7% annual dental insurance
19www.durhamnc.gov

20. FY 2018 – What’s In
• Streets: $4M in FY18 (+$1M over FY17)
• Deferred Maintenance: $800K in FY18
(+ $100k over FY17)
• Police Take Home Cars: $1.63M
• Google Fiber Installation: $1.5M
20www.durhamnc.gov

21. FY 2018 – What’s NOT In
• New requests submitted by departments
and Strategic Plan initiatives
• State Budget Reductions (sales tax
redistribution unknown)
• Federal Budget Reductions (unknown)
21www.durhamnc.gov

22. Multi Year Financial Plan
22www.durhamnc.gov
Fiscal Year 2017 2018 2019 2020 2021 2022
Revenues
General Property Taxes 87,455,884$ 91,794,083$ 93,629,063$ 95,501,284$ 99,242,778$ 101,228,438$
Taxes: Prior Year Levy/Interest 1,257,376 1,279,686 1,305,275 1,331,464 1,363,516 1,390,791
Other Local Taxes 61,367,263 65,260,004 68,559,500 72,027,624 75,673,064 79,504,959
State-Shared Revenues 12,008,581 12,125,619 12,244,999 12,366,765 12,490,967 12,617,654
Licenses and Permits 1,382,704 1,385,243 1,387,641 1,390,100 1,391,917 1,393,771
Investment/Rental Income 122,612 122,112 125,772 125,772 125,772 125,772
Charges for Current Services 7,569,473 7,639,320 7,762,999 7,890,351 7,956,703 8,024,383
Intragovernmental Services 1,857,628 1,828,480 1,865,051 1,902,352 1,940,400 1,979,208
Other Revenues 945,260 949,160 945,500 945,500 945,500 945,500
Additional Revenues 7,673,565 3,575,000 1,575,000 - - -
Total Revenues 181,640,346$ 185,958,707$ 189,400,800$ 193,481,212$ 201,130,617$ 207,210,476$
Appropriations
Personal Services 140,467,916$ 151,201,774$ 158,248,739$ 166,402,555$ 175,114,406$ 183,717,594$
Operating 34,177,541 33,689,375 36,524,935 38,584,512 39,413,391 40,983,676
Capital Outlay 872,990 790,470 822,089 854,972 889,170 924,737
Others 969,043 399,043 399,043 399,043 399,043 399,043
Appropriation to Fund Balance - - - - - -
Transfers to Other Funds 5,152,856 4,591,749 5,656,337 6,671,654 6,687,737 6,704,624
Total Appropriations 181,640,346$ 190,672,411$ 201,651,143$ 212,912,735$ 222,503,746$ 232,729,673$
Property Taxes Needed 87,455,884$ 96,507,787$ 105,879,406$ 114,932,807$ 120,615,907$ 126,747,635$
Projected Levy 87,455,884 91,794,083 93,629,063 95,501,284 99,242,778 101,228,438
Surplus/(Shortfall) -$ (4,713,704)$ (12,250,343)$ (19,431,523)$ (21,373,129)$ (25,519,197)$
One Cent on Tax Rate Projected 2,749,320$ 2,783,326$ 2,838,965$ 2,895,733$ 2,953,654$ 3,012,751$
Tax Rate (General Fund Only) 0.3181 0.3298 0.3298 0.3298 0.3360 0.3360
Additional GF Tax Rate - 0.0169 0.0432 0.0671 0.0724 0.0847
Total GF Tax Rate Equivalent 0.3181 0.3467 0.3730 0.3969 0.4084 0.4207

23. FY 2017-18 Budget
Development Process
23www.durhamnc.gov

24. FY 2018 Budget Development
• All departments were given a target budget. Departments
were again given a target for both personnel and operating.
• Target budgets represent the FY17 budget plus personnel
increases and annualized costs for partially funded items,
less one-time additions to FY17 budget.
• Base budgets were not reduced (except for one time
additions in FY17).
FY 17 Adopted Budget
+ Annualized items
- One time costs
FY 18 Target
24www.durhamnc.gov

25. FY 2018 Budget Development
Strategic Plan Alignment
• Department Directors utilize both Citywide Strategic
Plan and departmental plan to inform budget requests.
• Goal Champions meet with Department Directors to
cast vision on Goal update and discuss related
initiative requests.
• New Initiatives prioritized by Goal Teams based on
alignment to objectives in Strategic Plan.
• Goal Champions present recommended Goal updates
and share important initiatives to accomplishing
objectives.
25www.durhamnc.gov

26. FY 2018 Budget Development
Next Steps
• Departmental budgets are due Feb 24th.
• New funding requests will be prioritized
based on alignment to objectives in
Strategic Plan and performance data.
• Capital Projects will be prioritized in CIP.
26www.durhamnc.gov

27. Summary
• We are on target to meet current year revenue projections and
exceed target in specific areas.
• We project that all departments will end this fiscal year within
budget.
• Revenues are projected based on assumptions in the multi-
year financial plan - departments will provide FY18 program
revenues with the budget submission.
• Expenditures are projected in multi-year plan - departments
will provide FY18 program expenditures and new funding
requests with the budget submission.
• At this point, we have $4.7M Budget Gap.
27www.durhamnc.gov

28. Questions?
www.durhamnc.gov 28