[PPT] - FY 2014 OPERATING BUDGET KICKOFF Budget and Management Services PowerPoint Presentation

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FY14 Budget Kick-off 1

FY 2014 OPERATING BUDGET KICKOFF

Budget and Management Services December 12, 2012

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FY14 Budget Kick-off 2

Presentation Overview

Introduction of Budget Staff
FY 2014 Process
The Budget Picture

– Final FY 2012 year-end numbers – Fiscal and economic history and trends – Updated FY 2013 forecast – Property and Sales Taxes – FY 2014 Target Base

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FY14 Budget Kick-off 3

Budget Staff

Chad Balke Andrea Cain Meagan Honnold Nicole Kreiser Rebecca Linthicum Mark Matthews David McNulty Michelle Venditto

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FY 2014 Process at a Glance

Reduction Options NOT Required

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SO WHY ARE REDUCTION OPTIONS NOT REQUIRED?

Let’s take a look at some numbers…….

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FY14 Budget Kick-off 6

General Fund – 2012 Summary Operating Results

Original Final Budget Budget Actual Variance Revenues and Transfers In 951,996,756 $ 952,961,725 $ 967,239,936 $ 14,278,211 $ Expenditures and transfers out (952,100,000) (957,967,453) (950,993,551) (6,973,902) Fund Balance Appropriated (103,244) (5,005,728) **

Revenues and transfers in
ver expenditures and

transfers out 16,246,385 Fund balance at the beginnning

f the year

159,451,859 Fund balance at the end of the year 175,698,244 ** Budgeted use of fund balance represents encumbrances carried forward from FY 2011.

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General Fund Revenues

Variance with Final Budget - Favorable Original Final Actual (Unfavorable) Taxes: Property 638,646,000 $ 638,646,000 $ 645,725,047 $ 7,079,047 $ Sales 111,580,804 111,868,186 120,834,877 8,966,691 Other 8,530,421 8,530,421 9,880,290 1,349,869 Total taxes 758,757,225 759,044,607 776,440,214 17,395,607 Shared Revenues (federal/state/local) 120,840,010 123,082,348 119,334,660 (3,747,688) Charges for services 66,634,169 65,118,800 65,471,200 352,400 Licenses and Permits 3,048,564 3,048,564 3,413,382 364,818 Other 467,788 467,788 400,410 (67,378) Transfers in 2,249,000 2,199,618 2,180,070 (19,548) Subtotal before Appropriated Fund Balance 951,996,756 952,961,725 967,239,936 14,278,211 Appropriated Fund Balance 103,244 5,005,728

(5,005,728)

Total Revenues 952,100,000 $ 957,967,453 $ 967,239,936 $ 9,272,483 $ Budgeted Amounts

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General Fund Revenue Variances

Actual revenues in the General Fund exceeded budgeted amounts by

$14.3 million for fiscal year 2012. Variances in tax revenues and intergovernmental revenues comprised the majority of this difference.

Total taxes were greater than the final budgeted amount by $17.4
million. Tax revenue increases all resulted from improved economic
conditions. The increases in tax revenues were partially offset by

reduced intergovernmental revenues of $3.7 million.

Property taxes increased by $10.4 million over the prior fiscal year.

$7.0 million over amount budgeted for FY 2012.

Sales taxes had year over year increase of $6.8 million and were $9

million over budget.

Real estate property transfer taxes, included in Other taxes,

increased $1.5 million over the prior year and were $1.35 million more than the budgeted amounts.

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General Fund Expenditures

Variance with Budget vs. Actual + Encumbrances Favorable Original Final Actual Encumbrances (Unfavorable) General administration 42,631,726 $ 46,753,902 $ 44,734,430 $ 636,800 $ 1,382,672 $ Human services 214,143,720 213,405,177 211,029,938 59,360 2,315,879 Education 330,402,642 330,402,642 330,402,642

Community development

and cultural 25,709,071 25,794,841 25,224,320 152,137 418,384 Environmental services 7,849,575 7,960,633 7,643,371 14,516 302,746 General services administration 21,496,357 21,561,631 21,081,514 154,765 325,352 Public safety 100,861,909 102,260,311 101,049,020 105,441 1,105,850 Transfers out 209,005,000 209,828,316 209,828,316

Total Expenditures

952,100,000 $ 957,967,453 $ 950,993,551 $ 1,123,019 $ 5,850,883 $ Budgeted Amounts

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General Fund Expenditure Variances

Overall Hiring freeze continued in FY 2013 and accounted

for approximately $1.5 million in additional savings

Human Services: $2.3 million due to under spending in

energy assistance, TANF and CPS client assistance and LME Medicaid payments that were offset by less revenues being drawn down from the state as these are reimbursement based expenditures

General Administration:

– $1 million associated with increase in Revaluation Reserve fund balance – $250,000 associated with lower health insurance payments

Public Safety – $750,000 variance due to a slower hiring

schedule for the Hammond Road opening than anticipated

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General Fund: Fund Balance Summary

2012 2011 Increase (Decrease) Non-spendable: Inventories/noncurrent receivables 680,079 $ 753,870 $ (73,791) $ Restricted: Stabilization by State statute 61,577,460 53,231,845 8,345,615 Register of deeds automation 310,538 455,638 (145,100) Committed:

Revaluation reserve

3,468,905 2,628,106 840,799 Working capital 109,629,660 102,279,156 7,350,504 Assigned: Planned expenditures 31,602 103,244 (71,642) 175,698,244 159,451,859 16,246,385 938,520,000 952,100,000 (13,580,000) 18.72% 16.75% 1.97% Working Capital per financial statements 109,629,660 $ 102,279,156 $ 7,350,504 $ Working Capital as a Percent of Next Year's Budget 11.68% 10.74% 0.94% General Fund Balance Subsequent Year's Adopted Budget Fund Balance as a Percent of Next Year's Budget

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FISCAL AND ECONOMIC HISTORY AND TRENDS

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Budget Changes Since FY 2009

$984.4 $971.2 $953.6 $947.1 $951.2 $952.1 $938.5 FY 2009 Adopted: July 2008 FY 2009 Amended: Feb. 2009 FY 2010 Adopted: July 2009 FY 2010 Amended: April 2010 FY 2011 Adopted: July 2010 FY 2012 Adopted: July 2011 FY 2013 Adopted: July 2012 FY 2014 Target: December 2012

(in millions)

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Unemployment Statistics

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 October 2012 Wake 4.0% 5.6% 5.3% 4.4% 4.1% 3.6% 3.5% 4.6% 8.4% 8.7% 8.3% 6.8% North Carolina 5.6% 6.6% 6.5% 5.5% 5.3% 4.8% 4.7% 6.2% 10.8% 10.6% 10.5% 8.0% US 4.7% 5.8% 6.0% 5.5% 5.1% 4.6% 4.6% 5.8% 9.3% 9.6% 9.0% 7.5% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%

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Year-to-Year % Change in Revenue

25.0%
20.0%
15.0%
10.0%
5.0%

0.0% 5.0% 10.0% 15.0% FY05 to FY06 FY06 to FY07 FY07 to FY08 FY08 to FY09 FY09 to FY10 FY10 to FY11 FY11 to FY12 Percent Change Year to Year

Wake County General Fund Revenue

ALL GF REVENUES PROPERTY TAXES SALES TAXES

Economic Growth Recession Recent Trends

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Property Value (in millions)

FY 2010 FY 2011 FY 2012 FY13 Budget FY13 Projection FY14 Estimate Total Value 111,695.6 112,435.4 112,901.3 113,877.2 114,286.0 116,200.0 % Change 2.5% 0.7% 0.4% 0.9% 1.2% 2.0% Real Property 102,441.3 103,067.2 104,028.4 105,185.0 105,308.5 107,300.0 % Change 2.9% 0.6% 0.9% 1.1% 1.2% 2.0% Personal Property (non- vehicle) 6,243.6 6,530.2 6,044.8 5,850.0 6,150.0 6,100.0 % Change

2.5%

4.6%

7.4%
3.2%

1.7% 4.1% Public Service 3,010.7 2,837.9 2,828.1 2,842.2 2,827.5 2,800.0 % Change 0.9%

5.7%
0.3%

0.5% 0.0%

1.5%

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Building Permits

10,497 9,861 5,033 3,203 3,542 3,347 4,468 2,000 4,000 6,000 8,000 10,000 12,000 2006 2007 2008 2009 2010 2011 2012

New Residential Building Permits January - November for FY 2006 to FY 2012

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Property Tax Revenue

$430.6 $451.3 $496.6 $559.4 $618.5 $629.0 $635.3 $645.7 $651.8 $666.3 FY 2005 (actual) FY 2006 (actual) FY 2007 (actual) FY 2008 (actual) FY 2009 (actual) FY 2010 (actual) FY 2011 (actual) FY 2012 (actual) FY 2013 (projected) FY 2014 (estimate)

(in millions)

Tax Rate Change Property Reevaluation and Tax Rate Change Tax Rate Change

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Sales Tax History

20,000,000

40,000,000 60,000,000 80,000,000 100,000,000 120,000,000 140,000,000 FY10 Actual FY11 Actual FY12 Actual FY13 Budget FY13 Projected FY14 Estimated Sales Tax State Hold Harmless

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TARGET BASE BUDGET DEVELOPMENT

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FY 2014 Target Base Calculations

Starting Point FY 2013 Adopted Budget – Non-salary and benefits Minus One-Time FY13 Adopted Costs Plus Projected FY 2014 Salary and Benefit Amounts Equals FY 2014 Target before BMS Adjustments Plus/Minus BMS Adjustments (including adjustments for inter-departmental charges) Equals FY 2014 Target Base

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Increases to Target Base

Item # FY 13 Adopted Budget 938,520,000 1 Less Prior Year One-Time Costs (2,780,014) Salary and Benefit Changes: 2 Reduction of Vacancy Rates 768,000 3 Annualization of FY13 Pay Increase 1,000,000 4 Increase in Longevity 33,000 Total Salary and Benefit Changes 1,801,000 5 Recurring Board Revisions (Human Services with Corresponding revenues) 972,300 6 Eliminate Remaining Reprographics Chargebacks in GSA from Base Budget not adjusted through Salary Projection 166,969 7 Hammond Road items coming off warranty 386,066 Annualization of Justice Center (Non-Salary, Non-Fleet) 8 GSA 817,105 9 IS 49,549 10 Sheriff 21,270 887,924

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Increases to Target Base (cont’d)

11 Fleet Charges Lease Rate 92,724 Fuel (does not include a change in rate, consumption changes only) 165,846 Total Fleet Changes 258,570 12 Security Charges (42,241) 13 Utility Increases (includes Justice Center and Hammond Road increases) 980,153 14 Building Lease Charges (153,217) 15 Risk Management Charges 516,488 16 Increase in Sales Tax Transfer 1,694,000 Total of Above Items 4,687,998 Unexplained Difference 32,429 FY 14 Target Base 943,240,427

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FY 2014 Preliminary Base

FY13 Adopted FY14 Base - 11/30/2012 Change Notes Revenues Property Taxes 648,962,083 666,388,530 17,426,447 Sales Taxes 121,137,839 128,526,000 7,388,161 All Other Revenues 168,420,078 170,254,850 1,834,772 Still to be adjusted by departments Revenues Subtotal 938,520,000 965,169,380 26,649,380 Base Expenditures County Departments 389,025,325 392,051,752 3,026,427 WCPSS 318,341,737 318,341,737

Wake Tech

16,190,938 16,190,938

Transfers

214,962,000 216,656,000 1,694,000 Adjusted for Sales Tax Transfer Base Expenditures in System 938,520,000 943,240,427 4,720,427 Increase in Property Tax Transfer 5,058,238 5,058,238 15.5/53.4 times increase in Property Taxes Projected Base Expenditures 938,520,000 948,298,665 9,778,665 Surplus

16,870,715

16,870,715 Items to Consider WCPSS ????? Wake Tech ????? Employee Pay ????? Health Insurance ????? Additional $$$$ to Debt and Capital ????? State Unemployment Liability ????? Mental Health ????? Other ????? Surplus (Gap) TBD

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But don’t get too excited……

Still many unknowns:

Economy not settled, Fiscal cliff
Hiring freeze to continue due to vacancies

needed for placement of Behavioral Health employees

New Governor and Long General Assembly

Session

Possibility of WCPSS school bond in 2013
Health care reform costs

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Continued Focus for FY14

Establishment of priorities through strategic
r business plans
Update of Services Matrix
Strong business cases for budget requests
Prioritization of any reductions or expansions

and identification of how these support long- range plans

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Expenditure Adjustments

Departments May…  Departments May Not….

Move BMS’s target base budget

between divisions, units, and

bjects
Use notes to tell us what

happened (very helpful – reduces BMS’s questions)

Change the bottom line
Make changes to fleet leases,

fuel, utility chargebacks, facility leases, 800 MHz/ CAD and risk management chargebacks (adjusted by BMS)

Revenue Adjustments

Departments Should…

Update departmental revenue

estimates based on expected volumes at existing rates

Submit requests for fee or rate

increases via the expansion request form

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Operating Budget Calendar

Month Day Activity Dec 12 BUDGET KICKOFF: Special meeting for operating budget kickoff Dec Jan 18 4 PB training for New Users Jan 18 Departments Enter FY13 Revenue Projections into PB to support Mid-year Projections Jan 24 30 PB Open Lab for Refresher Purposes Feb 4 Departments submit base requests, expansions, business plans, proposed reductions, contract listings, user fees, budget book text, performance measures, updated service matrices Feb 15 Board of Commissioners Retreat (Includes mid year review and updated Financial Model)--Materials will be ready one week prior March / April Departmental Budget Meetings (CIP & Operating) with David and Joe. Analysts' preliminary analysis complete one week prior to meetings. May 20 County Manager recommends FY14 Budget to BOC June 3 Public Hearings June 10 Budget Work Session with Board of Commissioners June 17 Adoption of FY14 Budget

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Resources can be found at….

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Summary

Recent Trends

– Significant Improvement in Property and Sales Tax Growth – But still many unknowns early in the process

Reductions Options NOT Required for FY14
Key Budget Dates

– January 18 – Projection for FY13 Revenues – February 4 – Budget Submissions Due – February 15 – Board of Commissioners Retreat

Questions???