Monthly Financial Report for the Period Ending August 31, 2009

Presented by City Manager James K. Hartmann as a memo to the Honorable Mayor William D. Euille and Members of Council on October 13, 2009.

Download Original Signed Memo (PDF)

NOTE:  Click on the headings below or the "online references" to view more detailed economic, revenue or expenditure data. 

ECONOMIC HIGHLIGHTS: 

• The national recession may be over:  Federal Reserve Board chairman Ben Bernanke recently stated that the recession was “very likely over” and that forecasters agree that “at this point we are in a recovery.”
• Alexandria’s economic outlook brightens:  The local economy is showing signs of improvement.  The unemployment rate dropped for a second straight month to 4.9% in July and a three month trailing average of sales tax collections has been improving since April.
• Recovery in real estate to lag: While year-to-date residential sales through August show the first increase since 2004, the average residential sales price through August is 6.2% less than last year.  The commercial real estate market remains weak and its future uncertain, with declines likely.
• Intergovernmental revenue:   In September, the Governor proposed additional reductions that would reduce intergovernmental aid to the City by over $1.3 million, including over $1.0 million in General Fund expenditures.  As needed, Staff will provide updated reduction estimates on October 13, at the time the Monthly Financial Report is presented.  (Staff presented an updated estimate that proposed reductions by the Commonwealth would reduce aid to the City by $1.6 million, including $1.3 million in General Fund revenues.)

REVENUE HIGHLIGHTS: 

• Year to Date Revenues:  As of August 31, 2009, actual General Fund revenues totaled $19.1 million, which is $0.8 million or 4% below FY 2009 revenues of $19.9 for the same time period last year.
• Charges for services:  Increased revenue in this category reflects increases in ambulance fees and parking meter receipts.
• Use of Money and Property:  Because of low market interest rates, the City earned 0.46% on an annualized basis on its short-term investments during August compared to 2.57% last year.

EXPENDITURE HIGHLIGHTS: 

• Year to Date Expenditures:  As of August 31, 2009, actual General Fund expenditures totaled $66.1 million, a decrease of $8.0 million, or 10.8%, below expenditures for the same period last year.
• Lower personnel costs:  Lower personnel costs in FY 2010 reflect a one-time pay supplement in FY 2009 as well as the impact of fewer Full-Time Equivalents (FTE’s) funded in the FY 2010 Approved budget.
• Non-Departmental Expenditures:  The decrease from the prior year represents a budgeted payment of $5.6 million made to the Other Post-Employment Benefits (OPEB) Trust Fund in July of FY 2009.  For FY 2010, the OPEB payment will be spread throughout the year.

FISCAL YEAR 2009 UNAUDITED CLOSEOUT:

The Finance Department has closed out FY 2009 in preparation for the annual outside audit.  During FY 2010 budget deliberations City Council directed that at least $4.3 million in surplus FY 2009 funds be realized -- $2.3 million from additional revenues primarily due to the increase in the real estate tax rate and at least $2.0 million in additional expenditure savings beyond the $10 million in expenditure reductions implemented in fall of last year.  The City has achieved both of those targets – exceeding, on a pre-audit basis, the revenue projection made in April for FY 2009 by $0.6 million and the expenditure savings target by $1.6 million.   All departments finished the year on budget or with a surplus.  Also, revenue estimates made in February and April proved to be very close to the final results.  Managing our way through the chaotic economic environment of FY 2009 in such a fashion is an accomplishment that is a credit to all departments and the City Council.

This close out means the unreserved fund balance at the end of FY 2009 will be $2.2 million higher than the April projection.  These funds may be made available as designations for FY 2011 CIP needs or the FY 2011 operating budget, or used to increase the undesignated fund balance, or some combination thereof.  City staff will make a recommendation on the use of these funds and other fund balances in the context of the presentation of the FY 2009 Comprehensive Annual Financial Report to be presented to City Council at its November 10th legislative meeting.

ONLINE REFERENCES

• Online Reference 1 – The Economy 
• Online Reference 2 – Comparative Statement of Revenues 
• Online Reference 3 – Comparative Statement of Expenditures