Monthly Financial Report - August 2015

The Monthly Financial Report for August, 2015.

Page updated on Oct 26, 2015 at 12:58 PM

Presented by City Manager Mark Jinks on October 13, 2015.

Click here to download the original memo.

Report Summary

FY 2015: As discussed in the prior Monthly Financial Reports, revenues for FY 2015 were projected to be near and potentially even under the budgeted revenue amounts. Revenues for FY 2015 which totaled $638.9 million did come in under revenue projections, but only by $0.2 million.  Expenditures were also under budget and enabled the City not to have to spend $2.4 million in fund balance that had been budgeted to be expended in FY 2015.  This coupled with favorable expenditure experience enabled the City to not draw on fund balance for operating expenses, and to not have the spendable fund balance dip below the City’s 10% floor policy guideline.  The under expenditure is comprised in large part by salary and benefit monies that were not expended as a result of vacancies that have become harder to fill, as well as savings due to fewer employees choosing the City as their health insurance carrier, and enrollment by City employees in lower cost plans.  Increased NVTC funds contributed to a lower WMATA cost to the City’s General Fund, and a shift in bond issuance structure resulted in debt service savings. The under expenditure of the approved FY 2015 budget also enabled there to be a designation of $7.0 million in the General Fund fund balance towards the upcoming FY 2017 to  FY 2026 Capital Improvement Program.

FY 2016: At this time in FY 2016, the City’s revenue and expenditures are not noticeably different than the same time period last year.  As of August 31, 2015, General Fund revenues totaled $34.0 million, an increase of $12.0 million or 54.7% above the revenues collected at the same time in FY 2015. After adjusting to exclude $10.6 million debt proceeds received through the bond refinancing, the City received $1.4 million or 6.2% more revenue in this fiscal year than last year at the same time. 

As of August 31, 2015, General Fund expenditures totaled $99.9 million, an increase of $8.9 million over the same time period for FY 2015.  After adjusting for expenditures related to the bond refinancing, which will save the City some $1.255 million over the next 13 years. the City spent 0.8% less of its budgeted expenditures compared to the percentage of total expenditures expended at this time in FY 2015. Personnel expenditures are 2.1% more than FY 2015, whereas non-personnel expenditures are 2.7% lower than FY 2015. 

The economic indicators highlighted in this month’s report are personal property tax billing, residential property sales volume, and median sales value. Additional economic, revenue, and expenditure charts are also available on the City of Alexandria website at: alexandriava.gov/FinancialReports. Attached are General Fund revenue and expenditure tables.

Revenues

As of August 31, 2015, General Fund revenues totaled $34.0 million, an increase of $12.0 million or 54.7% above the revenues collected at the same time in FY 2015. The increase in revenue is due to refunding bond proceeds, which are used to purchase the refunded bonds listed on Attachment 2 of the comparative statement of expenditures and transfers by function. The budget for the refunding bond proceeds has not been appropriated and will be appropriated in October. After adjusting for the bond refinancing, the City received $1.4 million or 6.2% more revenue in this fiscal year than last year at the same time. Through the first two months of FY 2016, there are no significant variances when compared to FY 2015, but several categories are detailed in the table below.  

FY15 and FY16 Monthly Revenues - August 2015

August YTD Revenues - August 2015

NOTE: Revenue charts exclude refunding bonds proceeds so that revenues can be compared accurately year to year.

Revenue Variances in Detail

Revenue Variances in Detail - August 2015

Expenditures

As of August 31, 2015, General Fund expenditures totaled $99.9 million, an increase of $8.9 million, or 1.6%, of budgeted expenditures. The City spent $46.2 million dollars during the month of August, but $10.7 million was spent on refunding bond expenses for which the budget has not yet been appropriated. As attachment 2 indicates, the City has spent 1.6% more of the budgeted expenditures compared to the percentage of total expenditures expended at this time in FY 2015, but this variance is skewed by the timing of the accounting for refunding bond expenses.  Adjusting for the refunding bond expenses, the City has spent 0.8% less of its budgeted expenditures compared to the percentage of total expenditures expended at this time FY 2015.  Expenditures are adjusted for the refunding bond expenses so that expenditures can be compared year to year. Personnel expenditures are 2.1% more than FY 2015 , whereas non-personnel expenditures are 2.7% lower than FY 2015. The charts below compare the current fiscal year percent of budget expended to last year’s percent of total expenditures expended for non-personnel, personnel, and total expenditures.


FY16 vs FY15 YTD Expenditures - August 2015 

Percent of budget expended is 0.1% lower than in FY15, excluding refunding bond expenses.

YTD Personnel Expenditures - August 2015

At this point in the fiscal year, the City YTD personnel costs are 2.1% higher than this month last year. These costs will be consistently higher than FY15 due to an additional 3.4% of payrolls processed in FY16.

YTD Non-Personnel Expenditures - August 2015

YTD non-personnel expenditures are 2.7% lower than this point in FY15, excluding refunding bond expenditures.

NOTE: Refunding bond expenditures are not included in charts so that expenditures can be compared year to year.


Economic Indicators

Personal Property Tax Billing

The monthly financial reports for FY 2016 will focus on key segments of the City’s tax base and fees along with quarterly reviews of revenues and expenditures. The segments will include:

October: Personal Property tax collections and Real Estate tax relief

November:  Business and Commercial sector review to include office vacancy rates, # of businesses, commercial building permits

January: Sales Tax, Transient Lodging and Meal Sales Tax

February: Utility taxes, Consumption Tax and Telecommunications Tax

March: Business License Tax

April: Charges for Services and Fines and Forfeitures

This month’s financial report examines the personal property tax billing process, residential property sales volume and median sales value.

The vehicle personal property tax billing for calendar year 2015, reflected assessments totaling $1.1 billion and included just under 111,000 bills.  The assessed value increased by $32.6 million or 0.3%.  It should be noted that the number of bills mailed only increased by 65 when compared to calendar year 2014.  The makeup of the City’s vehicle population changed slightly between 2014 and 2015, a 4.0% increase in the number of SUVs, a 2.9% decrease in the number of motorcycles, a 3.0% decline in the number of pickup trucks  and a 2.2% increase in the number of Jeeps.  According to a recent article in the Wall Street Journal on September 1, 2015, there is a national increase in truck and SUV sales, with August 2015 SUV sales up 2.5% compared to August 2014 .  Decreases in fuel prices have historically spurred increased sales in heavier, less fuel efficient vehicles.   

In 2004, in response to revenue constraints, the General Assembly limited the amount of Personal Property Tax Relief for the entire State at $950 million and Alexandria’s portion was frozen at $23.6 million.  In 2013, City Council passed an ordinance that adopted a four-tiered structure to distribute the relief across the City’s vehicle owners, equitably.  The most significant portion of relief is provided to owners of vehicles valued under $20,000.  Personal Property Tax Relief, according to the Virginia State Code, can only be applied on the first $20,000 of the assessed value for qualifying vehicles.  As the price of vehicles rises, more of the burden of personal property tax is borne by the taxpayer instead of the State.  With a fixed reimbursement from the State, all vehicle owners, including those whose vehicles are valued below $20,000, will see a declining portion of tax relief.  In tax year 2015, the tax assessed for vehicle personal property is approximately $52.6 million, of which $23.6 million is due from the state and $29.0 million is due from the taxpayer.  This equates to $1.3 million, a 4.8% increase in the total tax due from the taxpayer for vehicle personal property taxes.  Due to the four-tiered approach established by City Council that provides varying levels of relief depending on the value of the vehicle, the increase in personal property tax will vary for each taxpayer. 

Business Personal Property tax assessments have increased by less than one percent, including both  tax returns that have been completed and returned to us by the taxpayer and those tax returns that we have estimated because we have not received any information from business owners who have previous been responsible for business personal property taxes.  Business personal property taxes are assessed on the furniture, fixtures, machinery, tools, computers and manufacturing equipment used by businesses.  If an existing business fails to file a tax return with the City, the City sends a “statutory” tax bill based on prior year information.  Once the City receives a completed, or “signed” tax return, the tax bill is adjusted to the current information.  Of the total tax assessed on all 5,494 business accounts, $2.9 million includes statutory assessments and late filing fees. A total of 4,253  Business Personal Property tax returns were filed with the City by existing businesses in 2015 with a total tax due of $14.9 million.  The total assessed value of the equipment reflected in the signed accounts is $313.3 million, a 1.3% decrease in the assessed value compared to FY 2015.  The total assessed value of the equipment reflected in the signed accounts is $313.3 million, a 1.3% decrease in the assessed value compared to FY 2015.  Furniture and fixtures represents 78% of the total assessed value of business equipment on the signed returns and increased by 3.2% compared to tax year 2014.  Conversely, computers and peripherals represents 17% of the total assessment and declined by 15.6% compared to the prior year.

 Economic Indicator Chart - August 2015

All personal property tax is due on October 5.  Throughout the months of September and October, staff will be processing payments for the second largest source of general fund revenue for the City (real property tax revenue being the largest).  As mentioned, the Monthly Financial Report as of October 2015, presented to City Council in early December, staff will be reporting on the revenue collections from personal property compared to both the budgeted amount and the amount collected for the same period last year.

Alexandria Residential Property Sales Volume and Median Sales Value

According to data from Metropolitan Regional Information Systems (MRIS) and the City’s Department of Real Estate Assessments, the three-month trailing average number of residential properties sold in June 2015 increased by 8.2% when compared to May 2015 but decreased by 2.4% when compared to June 2014.  The median sales price in June 2015 increased by 2.1% when compared to May 2015 and increased by 6.4% when compared to June 2014.

Residential Property Sales Volume - Aug 2015

Residential Property Median Sales Value - Aug 2015

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