Presented as a memo to City Council from City Manager James K. Hartmann on October 12, 2010.
Final revenues and expenditures for FY 2010 will be reported later this fall in the City’s audited Comprehensive Annual Financial Report (CAFR). As discussed at the September 14 City Council meeting, careful fiscal management and oversight for expenditures produced sufficient savings not only to cover a the shortfall in FY 2010 but also to provide $3 million in additional uncommitted savings that can be used for such things as future one-time capital expenses, to build up our reserves for future economic downturns, disasters, or other emergencies, and to help fund FY 2012 operating expenses.
At the October 18, 2010 budget work session, City Staff will provide a preliminary outlook for FY 2011 and FY 2012 revenues under current tax and fee rates.
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- The Great Recession officially ended in June 2009, according to the National Bureau of Economic Research. However, national economic growth continues to be subdued and has slowed recently.
- Alexandria’s economy is relatively strong compared to the national economy. Meals tax and transient lodging receipts are strongly positive compared to last year, while sales tax collections lag.
- Residential real estate market trends are mixed but may provide some strength to assessments. Residential sales volume fell 7.5 percent compared to August 2009 while the average sales price increased 2.8 percent.
- The commercial real estate market remains in the doldrums. The number of commercial property sales continues at low levels, though there have been some apartment sales.
Year-to-Date Revenues: As of August 31, 2010, actual General Fund revenues totaled $20.1 million, which is 5.0 percent greater than FY 2010 revenues for the same period last year. Government accounting principles require that most taxes and intergovernmental revenues received in July and August are counted as revenue for the fiscal year ended June 30, 2010.
- Licenses and Permits: The category decrease is due to the transfer of approximately $.7 million in new construction fees from the General Fund to a special revenue account, where they will be used to cover the cost of Code Enforcement’s New Construction Division, which is now self-financed from permit fees.
Year-to-Date Expenditures: As of August 31, 2010, actual General Fund expenditures totaled $59.6 million, an increase of $6.6 million, or 12.4 percent, above expenditures for the same period last year. Personnel expenditures declined 1.1 percent. Non-personnel spending increased 26.4 percent. For most departments, differences in spending patterns for non personnel this early in the year reflect the timing of bill payments and not necessarily changes in spending patterns. Even though such non-personnel spending is up over last year, it is still below the pace expected under the FY 2011 budget.
- Debt Service: The increase reflects budgeted debt service for bonds issued in June 2009.
- Schools: The City will provide approximately 76 percent of the estimated funds required to operate the City public school system in FY 2011. School expenditure data will be provided by the School administration in next month’s Report, following the first month of school operations.