Presented to City Council by City Manager Rashad M. Young on April 10, 2012.
NOTE: Click on the headings below or the "online references" to view more detailed economic, revenue or expenditure data. Click on any highlighted bullet or text to view additional information, including charts and memos.
- Holiday Retail Sales – Alexandria retail sales in November ($2.0 million) were up 7.2 percent from the previous year, while December sales ($2.3 million) were up 2.6 percent from the previous year. National retail sales (including autos, gas, and food services) were up 4.4 percent in November and 4.6 percent in December. According to the National Retail Federation (NRF) national retail sales (excluding autos, gas, and food services) as reported by the U.S. Department of Commerce were up 4.1 percent for the holiday season, beating the NRF projection of a 3.8 percent increase. January retail sales also continued to increase over the previous year on both the local (7.3 percent) and national (4.6 percent) level.
- New Commercial Construction – With an increase of $13.4 million in January, the sum of New Commercial Construction for fiscal year 2012 is now at $30.1 million. With this jump, construction has surpassed the fiscal year 2011 total of $22.5 million and the FY 2010 total of $22.9 million. However, the average commercial construction was $114.3 million from fiscal year 2005 through 2009. To reach pre-recession levels, commercial construction will need to realize substantially higher growth in the last half of the fiscal year. While over the past seven years the majority of growth has generally come in the last half of the fiscal year due to the lingering economic concerns, it is difficult to project where commercial construction will finish this year. The chart below shows the value of new commercial construction over the past seven fiscal years.
- Consumer Price Index – The consumer price index (CPI) rose 0.4 percent from January to February. The CPI-Core measure, which excludes the more volatile food and energy costs, rose only 0.1 percent. The difference shows the effect of rising fuel prices, which account for roughly 80 percent of the increase in the February non-core CPI. This latest increase follows the increase of 0.2 percent in non-core CPI from December 2011 to January 2012. As reported in Bloomberg.com most Federal Reserve policy makers believe the increase in fuel costs will be temporary and see little risk that inflation will grow out of control.
Year-to-Date Revenues: As of February 29, 2012, eight months into the fiscal year, actual General Fund revenues totaled $319.0 million, which is six percent higher than FY 2011 for the same period. Most of this increase is related to real estate and personal property taxes. The FY 2013 Proposed Budget contains a revised estimate for FY 2012 revenues. That estimate shows a revenue surplus of $7.5 million or 1.3 percent compared to the original FY 2012 budget estimate of General Fund revenues of $566.9 million, primarily due to the increase in real property revenues (resulting from higher assessments than previously forecast).
- Personal Property Taxes/Motor Vehicle License: The FY 2012 vehicle assessments included 5,000 more cars than the FY 2011 billing. The resulting increase in revenue of approximately $1.0 million already has been included in the estimates for FY 2013 budget revenues.
- Communication Taxes: The decrease in these taxes is primarily attributable to a one time refund issued to a large wireless provider who collected taxes on data services for various wireless devices used by their customers. The total amount of the refund including interest was $12.9 million, and the City’s share was $0.3 million. The remaining decrease represents the timing of payments from several providers.
- Business License Taxes: The City’s business license tax is due March 1, 2012, but not all collections are included in this report. Collections-to-date in the amount of $17.3 million represent a difference in the timing for payments made by businesses (i.e. paid in late February). Collections, while higher than in FY 2011, are still being tabulated. No conclusions about current year collections will be available until the tabulation is complete.
- Recordation Tax: The increase in this tax is primarily the result of the sale and refinancing of a few large commercial properties. Staff will continue to monitor these collections and make adjustments as necessary in the April revenue re-estimate.
- Revenue from Federal Government: The decrease in Federal revenue primarily represents the timing of payments for the Federal Prisoner Per Diem.
- Other Local Taxes: The decrease of 25 percent in other local taxes is a result of the variable timing of quarterly payments for vehicle rental taxes.
- Charges for Service: The increase in charges for services is the result of a budgeted increase in meter fees (to $1.75/hour) implemented with the installation of the new multi-space meters midway through FY 2011.
Year-to-Date Expenditures: As of February 29, 2012, actual General Fund expenditures totaled $329.8 million, an increase of $21.7 million, or 7.0 percent, above expenditures for the same period last year. The revised budget reflects amounts that were appropriated in the supplemental appropriation ordinance approved in November. Personnel expenditures remain on par with last year. These personnel expenditures are just slightly higher than the budget, primarily because turnover savings are deducted from the budget on the first day of the fiscal year while the savings are realized during the year and February included three pay periods. Non-personnel spending increased 6.1 percent. For many departments, differences in spending patterns reflect the timing of bill payments and not necessarily changes in spending patterns. We are, and will continue to be, closely monitoring and controlling these expenditures to be at or below budget.
- Fire Department: As discussed during several City Council Legislative meetings and during the FY 2012 budget process, the Fire Department has a continuing need to utilize overtime to maintain minimum staffing levels on frontline Fire and EMS units when firefighters and medics use leave and to fill vacancies from attrition. The new Fire recruit class hired in 2011 has started to reduce costs from the prior year. Another recruit class is now underway that will continue to reduce the need for overtime late in FY 2012. Even with these changes, the Fire Department is currently projected to be over the current FY 2012 budget as adopted by City Council. OMB and Fire staff will continue to monitor overtime and other expenditures and revise the projections as needed.
- Transportation & Environmental Services: Increased expenditures are primarily related to increased fuel costs and the ability to complete some paving and patching projects earlier in the fiscal year. Staff will monitor these activities and revise the projections as needed.
- Historic Resources: Increased expenditures reflect the timing of payments for the Ft. Ward Archeology Study and Civil War Sesquicentennial initiatives. Staff will monitor these activities and revise the projections as needed.
- Debt Service: The increase reflects budgeted debt service for new bonds issued in June 2010 and July 2011. A portion of the interest cost ($1.2 million) is reimbursed from the federal government as part of the Build America Bonds program.
- Non- Departmental: General Fund expenditures do not include the costs for several emergencies shown in the following table. The City has been included in the Presidential declarations for Hurricane Irene and Tropical Storm Lee, which makes certain expenditures eligible for federal reimbursement. Staff continues to work with FEMA and insurance adjustors on the reimbursement requests, though no reimbursements have been received yet. The Tropical Storm Lee cost estimate includes $2.79 million to $3.36 million in damages to the Holmes Run sewer that are believed to have resulted from the storm. City Council committed fund balances to offset any costs not reimbursed by the FEMA. Additional costs are included in the General Fund expenditures relating to the line of duty death incident. These costs and related donations will be updated in the March report.
|Tropical Storm Lee||$2.68 - $3.55million||Declaration could reduce some costs.|
|Hurricane Irene||$0.76 million||Declaration could reduce to between $0.3 and $0.4 million.|
|9/11 Terrorist Preparation||$0.02 million|
|February Line of Duty Death Incident (Fire paramedic)||$0.30 million||Expenses included in the General Fund.|
- Schools: The City will provide approximately 75 percent of the estimated funds required to operate the City public school system in FY 2012.