March 11,2016 Steven Giachetti: Director of Revenue Estimation - PowerPoint PPT Presentation

District of Columbia Economy and Revenue Forecast "What's in Store for the FY 2016 DC Budget?" Presentation to the DC Fiscal Policy Institute March 11,2016 Steven Giachetti: Director of Revenue Estimation Office of the Chief Financial Officer 1

Current State of the District’s Economy District of Columbia Labor Markets & Employment Personal Income The District’s per capita personal income was 151.7%   The District’s resident employment in December of the U.S. average in 2014 2015 was 10,132 (2.9%) more than the same period last year, measured by the 3-month moving average In the quarter ended September 2015, the District‘s  personal income grew by 4.8% and estimated wages  The unemployment rate was 6.6% in December of District residents grew by 5.2%, as compared to 2015, down from the high of 10.4% in 2011 same period one year earlier  December 2015 wage and salary employment in the  Most of the wage increase was due to growth in the District was up by 9,667 (1.3%) from one year earlier, private sector, but federal government wages also measured by the 3-month moving average increased 4.7% in September 2015 over the prior year District Employment and Unemployment District Per Capita Personal Income (in thousands) ($ in billions) 380 12% $72,000 359.1 $69,838 10% $70,000 341.8 348.0 $68,973 360 $68,606 $67,359 8% $68,000 340 332.0 $66,000 6% 315.2 320 $63,741 4% $64,000 300 2% $62,000 $60,000 280 0% 2010 2011 2012 2013 2014 2011 2012 2013 2014 2015 Per Capita Personal Income DC Resident Employment Unemployment Rate Source: U.S. Department of Labor, Bureau of Labor Statistics, U.S. Department of Commerce, U.S. Census Bureau, Bureau of Economic Analysis 2

Jobs in DC: Year-over-year change (December 2015) District of Columbia 3,600 Health 3,133 Other Business services 2,567 Organizations 1,200 Other Professional and technical 900 Legal services 833 Federal government 700 Finance 467 Other private 467 Employment services 433 Food service 233 Construction 133 Amusement and recreation 67 Information -67 Wholesale trade -200 Retail trade -467 Accomodations -733 Personal and miscellaneous ser. -800 Local government -2,800 Education -4,000 -3,000 -2,000 -1,000 0 1,000 2,000 3,000 4,000 3

Current State of the District’s Economy (Continued) District of Columbia Home prices rose by more than 5 percent in 2015, the average home price in DC is now nearly $800,000 $786,003 9,000 $800,000 $748,023 $750,000 8,000 $708,410 $700,000 $654,874 7,000 $650,000 $592,070 6,000 $600,000 5,000 $550,000 2011 2012 2013 2014 2015 Number of Home Sales Average Home Sale Prices Source: 4

Current State of the District’s Economy (Continued) District of Columbia The District’s population has been growing at one of the fastest rates in the Nation. There were more than 1,000 new residents per month in the District in 2015 690,000 672,228 659,836 660,000 649,540 635,342 630,000 620,472 600,000 570,000 2011 2012 2013 2014 2015 Source: 5

Outlook and Risks District of Columbia Economy : Generally stable national and local economic environment—annual real GDP growth has been about 2.5% for the past two years, and the Blue Chip and other forecasts expect this to continue for FY 2016 and FY 2017. Capital Markets : The early 2016 decline in the stock market, reversing gains of the previous year, underscores how volatile capital markets can be. This volatility can cause large fluctuations in capital gains and deed transactions revenues. $400,000,000 Capital Gains Tax Revenue $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000,000 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 6

District of Columbia Revenue from real property transfer taxes reached and an all time high in 2015, but this source of revenue is extremely volatile Total Real Property Transfer Tax Revenue $600,000,000 $500,000,000 $400,000,000 $300,000,000 $200,000,000 $100,000,000 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Summary of February 2016 Revenue Estimate District of Columbia February 2016 Revenue Estimate Compared to Previous Estimate Actual Estimate Projected Local Source, General Fund Revenue Estimate ($M) FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Net Local Fund Revenue (after enacted tax policy changes) 6,904,2 6,898.0 7,126.2 7,353.1 7,586.8 7,818.1 Revenue change from previous year Amount (6.2) 228.2 226.9 233.6 231.4 Percent -0.1% 3.3% 3.2% 3.2% 3.0% *FY 15 Revenue included extraordinary one time revenue from record deed transfer taxes, capital gains, and a $73 million online travel settlement FY 16 also includes the revenue impact of previously triggered tax policy changes. 8

Revenue Estimates for FY 2016-FY 2017 , District of Columbia Taxes 000s Revenue Source FY 16 FY 17 Total Property (net) $2,406,419 $2,515,879 Growth 7.1% 4.5% Total Sales (net) $1,141,740 $1,191,753 Growth -1.4% 4.4% Total Income $2,277,908 $2,358,136 Growth -1.6% 3.5% Total Gross Receipts (net) $250,835 $247,800 Growth 0.2% -1.2% Total Other Taxes (net) $344,037 $350,884 Growth -25.3% 2.0% TOTAL NON-TAX $422,082 $422,779 Growth 1.3% 0.2% Lottery $55,000 $55,500 Growth -1.1% 0.9% TOTAL REVENUE NET OF DEDICATED TAXES $6,898,020 $7,142,732 Growth -0.1% 3.5% 9