Presented to City Council by City Manager Rashad M. Young on August 12, 2014.
Click here to download the original signed memo.
NOTE: Click on the headings below or the "online references" to view more detailed economic, revenue or expenditure data.
This report includes the highlights of the City’s financial condition and provides fiscal year (FY) 2014 financial information on revenues and expenditures of the General Fund for the period ending June 30, 2014. These results are un-audited. Final revenues and expenditures for FY 2014 will be reported later this year in the City’s audited Comprehensive Annual Financial Report (CAFR). The CAFR will reflect additional revenues received and FY 2014 disbursements made through the end of summer that are attributable to FY 2014. Detailed economic, revenue and expenditure charts are also available from the City of Alexandria website at alexandriava.gov/FinancialReports.
FY 2014 revenues through June 30 equaled approximately $599.6 million, not including refunding bond proceeds, or about 97.3 percent of the revised budgeted amount, however not all revenues associated with FY 2014 had been received through June 30. By comparison, in FY 2013 revenues through June 30 equaled approximately $578.1 million, not including refunding bond proceeds, or 99.4 percent of the revised budgeted amount. Categories experiencing shortfalls relative to the budget include Sales Taxes, Recordation Taxes, Transient Lodging Taxes and Federal Government Revenue for reasons explained in the following Revenue Highlights section. FY 2014 expenditures through June 30 totaled approximately 87.6 percent of the revised budgeted amount. By comparison, in FY 2013 expenditures through June 30 equaled 88.3 percent of the revised budgeted amount. As of June 30, there remained some pending additional expenditures that are still being processed. Overall, revenues (not including bond refinancing) of $599.6 million exceeded expenditures (not including bond refinancing) of $556.2 million by $43.4 million; however, City cash match transfers to the special revenue fund have not yet been finalized as of the date of this report. In FY 2013, cash match transfers were $7.3 million through June 30 but were $38.9 million for the entire year. In FY 2014, cash match transfers were $5.9 million through June 30. The revised budget is $43.7 million; however, we do not anticipate any significant savings in this area for FY 2014.
Year-to-Date Revenues: The City’s revenues continue to fall short of budgeted levels. As of June 30, 2014, actual General Fund revenues totaled $618.3 million, which is approximately $20.9 million, or 3.5 percent, more than the report for the same period last year. There is a total annual budgeted increase of 6.3 percent or $36.9 million compared to last year. Of that projected growth, 65 percent is from real estate taxes and 35 percent is from other revenues. The City has set aside $1 million in fund balance to compensate for potential short-term revenue reductions related to sequestration, which we are likely to utilize. Current revenue estimates were taken into consideration when building the revenue estimates for the FY 2015 budget.
The Commonwealth of Virginia has announced that it is expecting a $300 million revenue shortfall in FY 2014. In FY 2015, this will result in a reduction of approximately $215,000 in State aid to the City, which for FY 2015 is budgeted at approximately $65 million in All Funds Revenue, including $46 million in General Fund Revenue. There is additional budgeted revenue of $38 million in state aid to the Schools.
Below is additional detail for revenues that are showing a variance compared to last year’s collections:
- Sales Tax: Sales tax revenues of $21.0 million through June 30 are flat when compared to FY 2013 but $6.3 million below budget in FY 2014 due to slower than anticipated growth.
- Recordation Tax: Recordation Tax collections have fallen by approximately 25 percent or $1.3 million compared to last year’s collections. Since the number and average value of residential property sales have increased, the decrease is primarily attributable to the decreased activity in the commercial portion of Alexandria’s real estate market. The FY 2014 budget anticipated an increase of $0.5 million, or 10.2 percent, above budgeted FY 2013 revenues.
- Transient Lodging Taxes: Year-to-date Transient Lodging Tax collections decreased by approximately 7.8 percent or $0.8 million compared to the previous fiscal year. This is due to decreased rates of occupancy and lower room rates across the City. According to Smith Travel Research, via ACVA, Alexandria’s occupancy rate decreased from 69.2 percent in FY 2013 to 68.9 percent in FY 2014, while the average daily room rate decreased from approximately $141 in FY 2013 to around $137 in FY 2014 or about 2.8 percent. The decreases have affected all Northern Virginia jurisdictions and are most likely related to sequestration, the government shutdown in October, and a very cold winter that made people less likely to travel. In addition, the Hawthorne Suites Hotel, which contained 185 rooms, or around 4 percent of the City’s total hotel rooms, closed in October. The closure of the Hawthorne Suites may have slightly increased the occupancy rate from what it otherwise would have been by reducing the total number of hotel rooms available in Alexandria, but the available data is not detailed enough for the City to confirm this.
- Federal Government Revenue: FY 2014 revenue through June 30 is $1.0 million, or 11.3 percent, less than collections through June 30 in FY 2014 due mainly to a reduction in federal prisoners and reduced indirect cost reimbursements from the federal government. The FY 2014 revenue re-estimate in the FY 2015 proposed budget included a $0.5 million reduction in anticipated federal revenues.
Year-to-Date Expenditures: As of June 30, 2014, actual General Fund expenditures totaled $574.7 million, an increase of $10.9 million, or approximately 1.9 percent, compared to expenditures for the same period last year. Citywide, expenditures are tracking below the budget. Staff has been closely monitoring vacancies and other expenditures to keep expenditure levels below budgeted amounts.
A few of the largest variances are explained below:
- Position vacancies filled: The increase in year-to-date expenditures in Management and Budget, Human Resources, and the Department of Code Administration reflect the filling of budgeted positions that were vacant for some period of time in FY 2013.
- Emergency & Customer Communications: The increase of 13.3 percent in the Department of Emergency & Customer Communications’ expenditures is mostly due to the transfer of expenditures and budget for maintenance and infrastructure costs of the City’s radio system that were previously budgeted as non-departmental expenditures.
- Transit Subsidies: The increase in expenditures is mostly due to the timing of the payments to WMATA. A mix of funding sources is used to pay for the WMATA contribution. This year, the General Fund contribution was used prior to the other funding sources, most notably the Northern Virginia Transportation Commission.
- Non-Departmental/Snow Emergencies: For FY 2014, the City budgeted $0.84 million in non-departmental funds for snow emergency costs. For FY 2014, the City expended approximately $0.9 million in non-departmental funds and an additional $0.3 million in T&ES, $0.2 million in General Services, and $0.2 million in RPCA in unbudgeted snow related expenditures. In addition, the City also incurred public safety closure costs associated with the snow events. These include approximately $.02 million in DECC, $0.2 million in Police, $0.2 million in Fire, and $0.08 million in the Sheriff’s Office. The total cost to the City for FY 2014 snow events is approximately $2.1 million.
- Cash Capital: FY 2014 cash capital expenditures are $4.5 million less than FY 2013 due to the use of prior year CIP savings to fund projects in FY 2014, which resulted in a need for less General Fund support than budgeted.
- Cash Match (Transportation/DCHS/and Transfers to the Special Revenue/Capital Projects Funds): As part of the City’s Memorandum of Agreement with the NVTA for receiving 30% of the new transportation revenues received by the Authority, the City has established a new fund for transportation and deposited $11.6 million into that fund. Through June 30, only $5.8 million in other special revenue transfers have been processed since the transfers are made once grants are “closed out” for the fiscal year and the amount of cash match needed is tabulated. Once the year end close out is complete, it is not expected that any significant savings will be realized in this area.
There were no contingent reserves released during the month of June.
The report is available online at:
ONLINE REFERENCES (ATTACHMENTS):
- Attachment 1:
Comparative Statement of Revenues
- Attachment 2:
Comparative Statement of Expenditures
- Attachment 3:
Contingent Reserves Report