Question # 50: Please provide a summary of revenue re-estimates and technical adjustments for add/delete and recommendations for use of additional revenues.

Page updated on Apr 9, 2021 at 6:14 PM

Question:

Please provide a summary of revenue re-estimates and technical adjustments for add/delete and recommendations for use of additional revenues.  (Morgan Routt)


Response:

City of Alexandria, Virginia

MEMORANDUM

DATE:              APRIL 8, 2021

TO:                  THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL

FROM:            MARK B. JINKS, CITY MANAGER

SUBJECT:      FY 2022 REVENUE RE-ESTIMATE, TECHNICAL ADJUSTMENTS FOR ADD/DELETE, AND RECOMMENDATIONS FOR USE OF ADDITIONAL REVENUES

The purpose of this memorandum is to inform City Council of the technical budget adjustments proposed by staff as part of the add/delete process, as well as use of the additional revenues identified during this technical adjustment. This presents the final revenue and expenditure update before the add/delete process.

The sum of revenue re-estimate and technical adjustment expenditure changes provides a net General Fund gain of $2,935,552.

RECOMMENDATION FOR USE OF THE ADDITIONAL REVENUES:

  1. Fund the one-time City employee bonus equal to 1% of an employee’s annual compensation at a General Fund cost of $1.7 million,
  2. Increase the affordable housing contributions by $1.0 million,
  3. Add one Electric Vehicle Navigator position at a cost of $140,000 recommended by the recently released Electric Vehicle Charging Infrastructure Readiness Strategy, and
  4. Increase the General Fund contingent reserve by $102,949.

It should be noted that the one-time 1% employee bonus and the increased affordable housing contributions were included as options in the upper end budget scenario included in the FY 2022 budget document. If Council were interested in approving the above four recommendations, then an add/delete would need to be drafted and submitted.

The major changes from the proposed budget are reflected in the chart below and discussed on the following pages.

General Fund
Revenues
Revenue Re-estimates  $                   2,566,034
Total Revenue Adjustments  $                   2,566,034
Expenditures
City-wide Kaiser health insurance premium reduction  $                    (205,000)
DCHS Summer Youth Employment to new minimum wage  $                       75,000
DECC radio broadcast/antenna rent and utilities  $                       25,000
Housing affordable housing meals tax dedication  $                     353,000
Non-Departmental cash capital transfer to CIP  $                    (353,000)
Non-Departmental community policing board contingency  $                    (211,134)
Sheriff's Office Adult Detention Center food services  $                       57,000
Transit Services DASH operating transfer  $                   1,292,277
Transit Services WMATA operating subsidy  $                 (1,292,277)
Transit Services VRE operating contribution  $                    (110,384)
Total Expenditure Adjustments  $                    (369,518)
Net General Fund Position  $                   2,935,552

 

FY 2022 General Fund Revenue Estimates ($ in Millions)
Revenue Source Proposed Budget April Estimate Difference
Consumer Utility Taxes – Collections are expected to decrease 2.4% compared to the proposed budget, based on FY 2021 actuals to date  $              12.05  $              11.76  $              (0.29)
Business License Tax – Increase of 12.3% compared to the proposed budget, based on FY 2021 actuals to date  $              29.96  $              33.66  $                3.70
  Transient Lodging Taxes – Revenue decrease of 22.6% based on FY 2021 actuals to date and projected trajectory of recovery to pre-pandemic base level  $                8.40  $                6.50  $              (1.90)
Restaurant Meals Tax - Revenue increase of 9.7% compared to the proposed budget, based on FY 2021 actuals to date and projected trajectory of recovery to pre-pandemic base level  $              18.22  $              19.98  $                1.76
Communications Sales Tax - Revenue is expected to decrease by 6.0% compared to the proposed budget, based on FY 2021 actuals to date  $                8.08  $                7.60  $              (0.48)
Taxi Fees - Decrease of 8.7% compared to the proposed budget, based on FY 2021 actuals to date and projected recovery trajectory  $                0.23  $                0.21  $              (0.02)
Fire Prevention Permit Fee – Increase of 5.1% compared to the proposed budget, based on FY 2021 actuals to date  $                0.26  $                0.27  $                0.01
Red Light Violations – Decrease of 24.4% compared to the proposed budget, based on FY 2021 actuals to date  $                0.82  $                0.62  $              (0.20)
State Revenue - Increase of 0.1% compared to the proposed budget, based on FY2021 actuals to date and proposed Virginia Budget Bill FY 2020-2022 (HB1800)  $              48.24  $              48.30  $                0.06
Clerk Fees - Increase of 4.1% compared to the proposed budget, based on FY 2021 actuals to date  $                0.29  $                0.30  $                0.01
Parking Garage Fees - Increase of 3.7% compared to the proposed budget, based on FY 2021 actuals to date and projected recovery trajectory  $                2.29  $                2.38  $                0.09
Interest on General Fund Investment - Decrease of 13.6% compared to the proposed budget, based on FY 2021 actuals to date and projected interest forecast  $                1.26  $                1.08  $              (0.18)
Total      $                2.56


General Fund Revenue Changes

Annually, at the beginning of April, City staff re-estimates current fiscal year and subsequent fiscal year revenues based on additional months of collection data. The result of those projections shows an overall increase of $2,566,034 compared to the amount estimated in the City Manager’s Proposed Budget.

The table below includes the FY 2022 revenue estimation changes from February to April. Most of these changes reflect higher than anticipated business license and restaurant meals tax collections through March 2021. 

Changes from February General Fund Revenue Estimates  FY 2022
Consumer Utility Taxes  $                                  (292,000)
Business License Taxes  $                                3,700,000
Transient Lodging Taxes  $                               (1,900,000)
Restaurant Meals Taxes  $                                1,765,000
Communications Sales Taxes  $                                  (484,000)
Licenses, Permits & Fees  $                                     (7,000)
Fines & Forfeitures  $                                  (200,000)
State Revenue  $                                     57,950
Charges for Services  $                                     11,917
Use of Money and Property  $                                    (85,833)
Total  $                                2,566,034

The revenue re-estimates described in detail below reflect current tax rates and revenue policies continued or already reflected in the FY 2022 Proposed Budget.  

The FY 2022 revenue estimates in the FY 2022 Proposed Budget were based on revenue collections and trends through December 2020. The latest estimates are based on revenue collections through March 2021, with exceptions as noted below. Based on actual receipts and trends through March, the FY 2022 revenue estimates have been changed as detailed below. These technical revenue adjustments will be reflected on the preliminary and final Add/Delete lists.

General Fund Expenditure Changes

The following FY 2022 expenditure budget changes summarized in the table on page one were identified too late to include in the proposed budget or were identified after the proposed budget was released. 

Expenditures
City-wide employee health insurance premiums  $                (205,000)
DCHS Summer Youth Employment minimum wage  $                   75,000
DECC rent and utilities  $                   25,000
Housing affordable housing meals tax dedication  $                  353,000
Non-Departmental cash capital transfer to CIP  $                (353,000)
Non-Departmental community policing contingency  $                (211,134)
Sheriff's Office Adult Detention Center food services  $                   57,000
Transit Services DASH operating transfer  $               1,292,277
Transit Services WMATA operating subsidy  $             (1,292,277)
Transit Services VRE operating contribution  $                (110,384)
Total Expenditure Adjustments  $                (369,518)

City-wide employee health insurance premiums: Staff received notice of a 2.65% reduction in Kaiser Permanente health insurance premiums too late to include as savings in the FY 2022 proposed budget. City Council and employees were notified of the premium reduction in the City Manager’s proposed budget presentation and employee town hall presentations. This recommended reduction will adjust the final FY 2022 adopted General Fund budget to include the employer contribution savings of $205,000.  

DCHS Summer Youth Employment minimum wage: In its 2021 legislative session, the State General Assembly passed a bill increasing the minimum wage from $7.25 per hour to $9.50 effective May 1, 2021. This increase will have no impact on most City employees and contracts as the City’s living wage rate is $15.00, however, it will increase the wage paid to youth employed by the City through the Department of Community and Human Services (DCHS) Summer Youth Employment program. This recommended adjustment will increase the DCHS Summer Youth Employment budget by $75,000 to fund the new rate. More information on this adjustment can be found in response to Budget Question #08 posted on the City’s budget website at: https://www.alexandriava.gov/budget/info/FY22Memos/  

DECC rent and utilities: In FY 2021, the DECC radio broadcast and antenna space lease expired and is being renewed. The new agreement was finalized after the FY 2022 budget was proposed. This recommended adjustment would add $25,000 to the DECC budget for rent and utilities costs.

Housing meals tax dedication and Non-Departmental cash capital transfer: One percent of the City’s five percent restaurant meals tax rate is dedicated for affordable housing. Prior to the COVID-19 pandemic, this source was expected to provide over $5 million in revenue for affordable housing. The pandemic’s impact on restaurants significantly reduced this amount, so the City supplemented the difference with General Fund cash capital to keep the affordable housing contribution whole. In the April revenue re-estimate, the budget for meals tax FY 2022 revenue was increased by $1,765,000 based on higher than anticipated receipts to date in FY 2021. The one percent share of that increase is $353,000, and the General Fund transfer of dedicated meals tax funding to the affordable housing fund is increased by that amount. Because the City was supplementing the transfer to maintain its fully funding, the unrestricted General Fund cash capital transfer to the CIP is reduced by the same amount.  

Non-Departmental community policing board contingency: The FY 2022 proposed budget includes a Non-Departmental contingent reserve of $600,000 for potential costs associated with community policing initiatives. The State provided funding to localities in January for “retention, recruitment and criminal justice reform.” The City’s share was $211,134. Staff’s intent is to carry those funds over into FY 2022 to use to fund part of the cost to implement community policing review board initiative, thereby reducing the FY 2022 budgeted contingency by the same amount.  

Sheriff’s Office Adult Detention Center food services contract: In FY 2021, the Sheriff’s Office’s contract for inmate food services expired and was rebid. The new contract was awarded too late to include the increased cost in the FY 2022 proposed budget. This recommended adjustment will add $57,000 to the Sheriff’s Office budget to fully fund the FY 2022 cost of the new contract.

Transit Services DASH operating transfer and WMATA operating subsidy: The FY 2022 proposed budget for DASH includes the use of $1,292,277 in CRRSAA federal funding awarded in December 2020 as a WMATA pass-through credit. In the proposed budget, staff anticipated receiving the credit from WMATA and transferring it to DASH in FY 2021 and budgeted it as DASH use of fund balance in FY 2022. WMATA subsequently informed the City the credit would occur in FY 2022. The City’s General Fund transfer is recommended to be increased through technical adjustments with an offsetting reduction in the City’s General Fund WMATA operating subsidy due to the credit. The planned use of DASH fund balance will be replaced with the increased transfer from the General Fund in the non-General Fund adjustments section.

Transit Services Virginia Railway Express (VRE) operating contribution: Due to the fiscal pressures placed upon local governments by the COVID-19 pandemic, the VRE Operations Board elected to use a portion of its federal pandemic relief funding through the CARES Act, CRRSAA, and ARPA to reduce its member jurisdictions’ contributions in FY 2022. This recommended reduction reflects the City’s savings of $110,384. 

Non-General Fund Revenue & Expenditure Changes

The following FY 2022 non-General Fund revenue and expenditure changes were identified after the proposed budget was released and are recommended as technical adjustments in the final approved budget.

Non-General Fund Adjustments
Revenue  Expenditures
Code Administration permit fee fund use of fund balance  $      (100,000)  $                -  
Code Administration permit fee fund cash capital transfer  $                -    $      (100,000)
T&ES NVTA 30% revenue  $        840,000  $                -  
T&ES NVTA 30% DASH service expansion contingency  $                -    $        615,000
T&ES NVTA 30% cash capital transfer for transit grant match  $                -    $         75,000
T&ES NVTA 30% cash capital transfer for CIP staffing  $                -    $        150,000
T&ES stormwater utility fund fee revenue  $      (199,000)  $                -  
T&ES stormwater utility fund staffing costs  $                -    $      (199,000)
DPI stormwater utility fund fee revenue  $        199,000  $                -  
DPI stormwater utility fund cash capital transfer  $                -    $        199,000
Transit Subsidies DASH fund use of fund balance  $   (1,292,277)  $                -  
Transit Subsidies DASH fund transfer from the General Fund  $     1,292,277  $                -  
Total Adjustments  $        740,000  $        740,000

Code Administration permit plan system CIP project funding: The FY 2022 proposed operating budget includes a $100,000 transfer of permit fee revenue to the CIP to fund the permit plan system project. Staff has determined there is sufficient funding within the project to eliminate the capital project transfer in FY 2022 and subsequent years and recommends eliminating this cash capital transfer. Further detail is included in the CIP section of this document.

 NVTA 30% transportation funding: In its 2021 legislative session, the General Assembly passed HB 1414 which includes changes to State transportation funding, the amount and timing of which were unknown at the time the City’s proposed budget was released. The Northern Virginia Transportation Authority (NVTA) has since estimated the impact of the legislation to be an $840,000 annual increase in NVTA 30% funds available to the City (70% of NVTA funding is designated for regional projects and 30% is provided directly to jurisdictions). This technical adjustment is recommended to increase the NVTA 30% revenue budget by $840,000 of which $615,000 would be retained in the operating budget as a contingency for potential New DASH Network system improvements pending approval of State grant funding and the remainder would be transferred to the CIP to fund a one-time transit strategic plan CIP grant match and ongoing CIP transportation project staffing costs. Further detail is included in the CIP section of this document.

Stormwater management staffing transfer to the CIP: The Proposed FY 2022 – FY 2031 CIP budget added two full-time employees (FTEs) to the Department of Project Implementation (DPI) to work on stormwater capacity and maintenance capital projects, funded solely through Stormwater Utility (SWU) Funds. This brought DPI’s stormwater project management position count to 6.2 FTEs. A further assessment determined the need to reallocate one FTE that had been added to the Transportation & Environmental Services (T&ES) department in the proposed FY 2022 operating budget to DPI for stormwater capital projects. This would bring DPI’s stormwater project management positions count to 7.2 FTEs in the approved budget. This technical adjustment would reduce the T&ES stormwater utility fund operating budget by a $199,000 and one FTE and budget them in DPI in the CIP. Further detail is included in the CIP section of this document.

Transit Services DASH revenue budget: The FY 2022 proposed budget for DASH includes the use of $1,292,277 in CRRSAA federal funding awarded in December 2020 as a WMATA pass-through credit. In the proposed budget, staff anticipated receiving the credit from WMATA and transferring it to DASH in FY 2021 and budgeted it as DASH use of fund balance in FY 2022. WMATA subsequently informed the City the credit would occur in FY 2022. The City’s General Fund transfer is recommended to be increased through technical adjustments with an offsetting reduction in the City’s General Fund WMATA operating subsidy due to the credit. The planned use of DASH fund balance is recommended to be replaced with the increased transfer from the General Fund within the DASH fund revenue budget.

FY 2022 – FY 2031 Capital Improvement Program (CIP) Revenue & Expenditure Changes

The following CIP project changes were identified after the proposed FY 2022 – 2031 CIP was released and are recommended as technical adjustments in the final approved FY 2022 – 2031 CIP.

Capital Project Funds
Technical Adjustment FY 2022 FY 2022 - 2031
NVTA 30%: transit strategic plan grant match  $            75,000  $            75,000
NVTA 30%: capital project funded staffing  $          150,000  $       1,500,000
Transit strategic plan grant  $            75,000  $            75,000
Parking technologies CMAQ/RSTP project funding  $         (243,196)  $         (243,196)
DASH electronic fare payment project RSTP funding  $         (350,000)  $         (350,000)
Stormwater management staffing  $          199,000  $       2,471,000
Municipal fiber project costs  $      (3,200,000)  $      (3,200,000)
Permit processing system costs  $         (100,000)  $      (1,500,000)
Total Expenditure Adjustments  $      (3,394,196)  $      (1,172,196)


Transportation

NVTA 30% Plan 

Proposed FY 2022  Change  Adjusted FY 2022 
$6,300,000  +225,000  $6,525,000 
 
Proposed FY 2022 – FY 2031  Change  Adjusted FY 2022 – FY 2031 
$71,551,000  +$1,575,000  $73,126,000 

At time the Proposed budget was developed, staff recommended excluding anticipated revenue associated with the NVTD Transfer/I-81 that was slated to become available NVTA funds based on the General Assembly’s Chapter 1230/House Bill 1414, as staff was unsure of the timing and amounts for when those funds would start being received. Staff now has a better understanding of the timing for when these funds will be received and staff is recommending increasing the FY 2022 – FY 2031 NVTA 30% plan to align with forecasting provided by NVTA. For FY 2022, NVTA 30% funding available would total $7.14 million, and increase of $840,000 over the proposed budget. Staff is recommending a portion of that revenue be used to fund the following capital project expenditures: 

• Technical Assistance Grant to Support the Development of a Transit Strategic Plan in Alexandria ($75,000) 
• Transit Capital Grant-Funded Staffing Contingency ($150,000) 

Technical Assistance Grant to Support the Development of a Transit Strategic Plan in Alexandria

Proposed FY 2022  City Funding Change  Non-City Funding Change  Adjusted FY 2022 
$0  $0  +$150,000  $150,000 
       
Proposed FY 2022 – FY 2031  Change  Non-City Funding Change  Adjusted FY 2022 – FY 2031 
$0  $0  +$150,000  $150,000 

The City of Alexandria was awarded a grant in December 2020 to acquire the services of a contractor who can assist the City in developing a transit strategic plan as required by the Virginia Department of Rail and Public Transportation. This plan is required to be submitted by local transit agencies every five years. Originally this plan was required to be finished by June 2022, but the impacts of the Covid-19 pandemic on transit have been so great that all transit jurisdictions in the Commonwealth who were required to finish this plan by the end of FY 2022 are permitted to finish it by the end of FY 2023. Thus, in FY 2022, the City hopes to determine a contractor that will assist Alexandria in developing the plan. Work on the plan will begin in FY 2022 and commence in FY 2023. The grant totals $150,000, of which 50% must come from a local match. For the local match, staff has recommended the use of NVTA 30% funds. As discussed in the operating section of this memo, staff is recommending updating the NVTA 30% spending plan to better align with the revenue forecast provided by NVTA. Of the $840,000 increase in FY 2022 NVTA 30% revenue, staff is recommending using $75,000 of this to provide the local match to this grant. 

Transit Capital Grant-Funded Staffing Contingency 

Proposed FY 2022  City Funding Change  Non-City Funding Change  Adjusted FY 2022 
$0  $0  +$150,000  $150,000 
       
Proposed FY 2022 – FY 2031  Change  Non-City Funding Change  Adjusted FY 2022 – FY 2031 
$0  $0  +$1,500,000  $1,500,000 

Transportation & Environmental Services currently has 3.6 capital project funded FTEs that are funded through reimbursements from state and federal grants awarded for public transit projects. Since implementation of these reimbursement funded positions, the City has experienced that not all employee related benefit costs are able to be reimbursed by the project grants. For example, employee specific costs related to holiday pay, sick leave, the City's wellness program, standard benefits, and short and long-term disability are not considered acceptable costs for reimbursement by the grantor. Several grantors have identified cost allowability to program staffers but only for hours worked to advance a project. Staff is recommending allocating $150,000 of NVTA 30% funding to help assist with these non-reimbursable costs. This technical adjustment would provide an ongoing funding stream to absorb these non-reimbursable employee costs. As discussed in the operating section of this memo, staff is recommending updating the NVTA 30% spending plan to better align with the revenue forecast provided by NVTA. Of the $840,000 increase in FY 2022 NVTA 30% revenue, staff is recommending using $150,000 of this for non-reimbursable cost for grant-funded positions. 

Citywide Parking – Parking Technologies (CMAQ/RSTP Reduction) 

Proposed FY 2022  Change  Adjusted FY 2022 
$450,000  $-243,196  $206,804 
 
Proposed FY 2022 – FY 2031  Change  Adjusted FY 2022 – FY 2031 
$700,000  $243,196  $456,804 

Subsequent to the presentation of the Proposed FY 2022 – FY 2031 CIP, staff was informed that the Virginia Department of Transportation (VDOT) had made updates to its CMAQ/RSTP plan and the revenue growth assumptions in that plan have resulted in a reduced availability of funds for jurisdictional projects. Over the six-year plan, this results in a reduction of $2.8 million for Alexandria. To address the $243,196 gap that results in FY 2022, staff are recommending reducing the Parking Technologies project to correspond with the grant reduction. FY 2023 - 2026 will be reevaluated as part of the FY 2023 development process, as more information comes available on the availability of CMAQ/RSTP funds and how the State plans to factor in federal aid for the recently passed American Rescue Plan (ARP). 

Stormwater Management 

Stormwater Ops to Capital Positions with Grade Increases 

Proposed FY 2022  Change  Adjusted FY 2022 
$886,000  +$199,000  $1,085,000 
 
Proposed FY 2022 – FY 2031  Change  Adjusted FY 2022 – FY 2031 
$11,176,000  +$2,471,000  $13,647,000 

The Proposed FY 2022 – FY 2031 CIP budget added two full-time employees (FTEs) to the Department of Project Implementation (DPI) to work on stormwater capacity and maintenance capital projects, funded solely through Stormwater Utility (SWU) Funds. This brought DPI’s stormwater project management position count to 6.2 FTEs. A further needs assessment has determined to reallocate one FTE originally recommended to be added to the Transportation & Environmental Services (T&ES) department in the Proposed FY 2022 Operating Budget to DPI for stormwater capital projects. This would bring DPI’s stormwater project management positions count to 7.2 FTEs in the Approved budget. 

IT Plan 

Municipal Fiber 

Proposed FY 2022  Change  Adjusted FY 2022 
$14,553,000  -$3,200,000  $11,353,000 
 
Proposed FY 2022 – FY 2031  Change  Adjusted FY 2022 – FY 2031 
$16,317,000  -$3,200,000  $13,117,000 

The Municipal Fiber project was re-advertised via an Invitation to Bid (ITB) in November 2020, and by the January 2021 deadline, the City had received six bid responses.  After review by City staff of bid documents, a vendor was identified as the lowest bid meeting the requirements of the ITB and recommended awarding the contract to that vendor. The bid provided by the contract was lower than what was originally budgeted in the Proposed FY 2022 – FY 2031 CIP, and the project budget can be reduced accordingly. This reduction will reduce the City’s use of borrowing in FY 2022, however will not have a debt service impact until FY 2023. 

Permit Processing 

Proposed FY 2022  Change  Adjusted FY 2022 
$100,000  -$100,000  $0 
 
Proposed FY 2022 – FY 2031  Change  Adjusted FY 2022 – FY 2031 
$1,500,000  -$1,500,000  $0 

Subsequent to the presentation of the City Manager’s Proposed FY 2022 – FY 2031 CIP, staff from stakeholder departments involved in the implementation and operation of the City’s land development and permit process management system, APEX, determined that the project has sufficient available balances (approximately $949,000 as of March 2021) from prior capital appropriations to address upgrade requirements and vendor support services for the foreseeable future. Staff recommended reducing both the proposed FY 2022 capital budget appropriation of $100,000 and the planned FY 2023 – FY 2031 project expenditures. The Permit Processing project is funded through use from the Special Revenue Code Fund and will not have a General Fund impact. A corresponding technical adjustment item can also be found in the operating budget section of this memo, which reduces the Code Fund operating budget transfer to CIP by $100,000. 

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