Full Text
OFFICE OF THE ALBANY CITY TREASURER DATE: June 7, 2016 TO: Hon. Kathy M. Sheehan Members of the Common Council FROM: Hon. Darius Shahinfar CC: Rachel McEneny RE: Updated 4th quarter YTD 2015 Performance The 2015 year-end financial position of the City of Albany remains tenuous. Accumulated positive budget performances were overshadowed by 2 major revenue shortfalls (the Coeymans sale and RLC revenue). $4.7m of our fund balance was used ($2.7m more than budgeted) leaving the City little margin to adjust to unbudgeted decreases in revenues and increases in costs in the future. A bright spot was the increase in sales tax receipts, exceeding budget by nearly $900k, indicating robust economic activity in Albany County. Additionally, landfill, intergovernmental, mortgage tax and license/permit revenue exceeded budget expectations, and debt service, salary, benefits and non-personnel spending were all below budget for the year. On the downside, fine and departmental revenue were below budget, the Coeymans sale has yet to transpire, Police and Fire OT costs were higher than budgeted and retiree health insurance and workers’ comp costs were greater than budgeted. The use of the Fund Balance, retirement amortization and year-to-year state assistance to make up for the revenue shortfall underscores that the City’s finances remain structurally imbalanced. Essentially the City is operating at approximately a $12-14 million loss year-to-year, a loss that has only been mitigated over the past several years by State assistance (“spin-up”, amortization, FRB revenue) and whatever operating savings can be found. If continued, the City will not have adequate reserves to address unanticipated and/or emergency needs in 2016, and possibly no reserves to utilize in future budgets. Thus, while our fiscal situation for 2015 is under budget overall, major challenges with our structural imbalance remain in both the short and long term that must be addressed. ---PAGE BREAK--- 2 REVENUE (Thousands) Dec Dec % Dec Annual % REVENUE YTD 15 YTD 14 Variance YTD 15 Budget Variance Budget PROPERTY TAX 56,706 55,798 908 2% 56,706 56,528 178 100% SALES/USE TAX 32,864 32,303 561 2% 32,864 31,973 891 103% PILOTS/19-a 20,770 19,475 1,295 7% 20,770 20,990 (220) 99% OTHER LOCAL SOURCES 3,175 3,386 (211) 3,175 3,333 (158) 95% LANDFILL 12,548 11,798 750 6% 12,548 12,077 471 104% OTHER DEPARTMENTS 2,793 2,734 59 2% 2,793 3,622 (829) 77% INTER GOVERNMENT 286 250 36 14% 286 117 169 244% FINES 4,335 4,055 280 7% 4,335 7,049 (2,714) 61% LICENSES AND PERMITS 3,317 2,851 466 16% 3,317 3,004 313 110% STATE AID 17,218 17,092 126 1% 17,218 17,374 (156) 99% SALE P/COMP/LOSS 364 349 15 4% 364 5,404 (5,040) 7% MISCELLANEOUS 8,325 5,536 2,789 50% 8,325 13,041 (4,716) 64% OTHER 387 3,206 (2,819) -88% 387 532 (145) 73% DEBT RESERVE 1,500 500 1,000 200% 1,500 1,500 0 100% TOTAL REVENUE 164,588 159,333 5,255 3% 164,588 176,544 (11,956) 93% The chart above summarizes the City’s sources of revenue for the year. Overall, revenue totaled almost $164.6 million which is an increase of 3.0% ($5.3 million) compared to 2014. Expenses (including debt service paid with debt reserve funds) totaled over $169.3 million and increased 0.2% ($348,000) compared to the previous year. The City’s funds have decreased by more than $4.7 million which was about $2.7 million more than anticipated although this is a dramatic improvement compared to the almost $10 million budgeted decrease in 2014. 1. Property Tax revenue increased by $908,000 as a result of the tax levy increase under the tax cap and was over budget by $178,000 as a result of a lower amount of assessment reductions. 2. Sales Tax revenue for year increased 2% from 2014 and totaled almost $32.9 million which was 103% or $891,000 higher than budgeted. The increase in economic activity is reflected by this additional income. 3. PILOTS/19-a revenue was 7% higher compared to last year resulting mostly from the payment of the voluntary PILOTS. However, this item was under budget due largely to the settlement of the 677 Broadway PILOT. 4. Other Local Sources revenue decreased by 6% from last year. Most of this decrease is the result of a decrease in Gross Receipts Tax revenue ($200k) resulting from decreased electricity and cable TV costs and usage. ---PAGE BREAK--- 3 5. Landfill revenue increased 6% ($750,000) compared to 2014. Landfill revenue was 104% and $471,000 higher than budget. Almost all of the increase was from contaminated soil revenue which increased by $602,000. Methane gas sales also increased $74,000 and coupon sales increased by $282,000 from last year. Tipping fees were lower by $283,000 from commercial and municipal customers combined. 6. Other Departmental revenue was 2% higher than last year but only 77% and $829,000 under budget. While there were many increases from last year the majority of departmental revenues came in below budget. Safety inspection fees decreased $35,000, rental registries decreased almost $25,000, EMS ambulatory revenue increased by $100,000 and golf course revenue increased by $18,000. 7. Inter- Governmental revenue increased by 14% ($36,000) from 2014. Most of the increase was related to the computer aided dispatch fees ($120,000) from the Tri-county program. Sales of equipment and vehicles decreased by $79,000 from last year and the City’s interest earnings decreased $9,277 due to low interest rates. 8. Fines and Forfeitures revenue increased by 7% from last year. Both parking ticket and parking ticket surcharges combined for an increase of $361,000. Police court fines decreased by $81,000. This revenue category was 61% or $2.7 million under budget. Most of this is related to red light ticket revenue that was not realized and parking ticket revenue that was under budget for the year. 9. Licenses and Permits revenue increased 16% ($466,000) compared to 2014 and ended the year at 10% ($313,000) over budget. The increase is from demolition fees that are recognized as revenue when they are invoiced to the property owner instead of waiting for them to be added to the property tax bills. Plumbing permit revenue increased by almost $116,000 while safety inspections permit revenue decreased $354,000. 10. State aid was 1% higher compared to 2014 and just below budget at 99%. Mortgage tax increased by $435,000 (signifying an increase in home sales and refinancings). The rest of the revenue in this group is made up of state grants that can vary from year to year. 11. Sale of Property and Compensation for Loss revenue increased by 4% but ended the year at 7% and $5.0 million under budget. The budget shortfall is directly related to the delay from the State in the sale of the Coeymans property. This also resulted in the City issuing $6.0M in revenue anticipation notes to prevent the City from running out of operating cash by the end of the year and the beginning of 2016. ---PAGE BREAK--- 4 12. Miscellaneous revenue increased 50% ($2.7M) compared to last year. This is directly related to the $3.9M received from the State FRB. However, this category ended the year at only 64% of budget and $4.7M under budget. Some reimbursement revenue from ACDA did not happen. Most revenue in this category is budget neutral because without the revenue, the expenses related to these revenues are not realized. 13. Other revenue decreased 88% ($2.8M) compared to 2014. The majority of the decrease was related to Federal Grants received for the police department. There was a COPS Technology grant and a COPS hiring grant that combined provided $2.6M more in revenue for 2014 compared to 2015. The budget anticipated the reduction in this category which ended the year $145,000 below budget. DISBURSEMENTS Category/Account Dec Dec % Annual % YTD 15 YTD 14 Variance Budget Variance Budget Personal Benefits 74,635,769 74,965,728 (329,959) -0.4% 74,676,031 (40,262) 100% Fringe Benefits 49,913,963 48,056,693 1,857,270 3.9% 51,808,658 (1,894,695) 96% Non-Personal Service 43,283,828 45,462,992 (2,179,164) -4.8% 52,059,417 (8,775,589) 83% Use of Debt Reserve 1,500,000 500,000 1,000,000 200.0% 0 1,500,000 0% Total 169,333,560 168,985,413 348,147 0.2% 178,544,106 (9,210,546) 95% Number of weeks in period 52 52 0 52 100% Total disbursements increased by 0.2% compared to last year to just over $169.3 million (including debt service paid from debt reserve fund) and ended the year at only 95% of budget ($9.2 million under budget). Spending decreased in Personal Benefits by $330,000 and Non-Personal Service decreased by almost $2.2 million while Fringe Benefits increased by over $1.8 million compared to 2014. All the categories combined resulted in an increase in total expenses of almost $348,000 when you include debt expense paid from the debt reserve fund. This exceeded overall budgeted expectations despite variations in individual expense and revenue budget lines. ---PAGE BREAK--- 5 1. Salary expense decreased by -0.4% compared to 2014 and $40,000 below budget. Salary expenses are level or lower in most of the departments except for Police and Fire which came in above budget due to increased overtime expenses. Additionally, AFD had approximately $2m added to their salary line by the contract settlement and retirement payouts, masking budgetary savings in regular salaries. 2. Benefits Expenses increased by 3.9% compared to 2014, but ended the year at 96% of budget and $1.9 million below budget. The active employee’s health insurance expense increased by $1.1 million compared to last year although it was $1.8 million under budget. Retiree health insurance expense increased by $230,000 compared to 2014 and was at 147% of budget and $3.3 million over budget. The Police Department worker’s compensation expenses came in $685,000 higher than last year and $805,000 over budget. POMCO Group the City’s third party worker’s compensation administrator has been clearing up prior open claims. The reason this category ended the year under budget was mostly related to the combined Police Department‘s and Fire Department’s retirement expenses, which were $3.9 million under budget. 3. Non-Personal Service spending decreased by -4.8% or by almost $2.2 million compared to last year and was 83% ($8.8 million) under budget. This category includes utilities, contracted services, supplies, materials, small equipment, consulting fees and debt service. Most departments were under budget for the year. DGS saw decreases in snow removal supplies and expense of $111,000.The City’s utilities expenses decreased by $680,000 from last year and finished the year at 85% and $906,000 under budget. Gasoline expense decreased by $856,000 and ended the year at 59% and $790,000 under budget. Some of the decreases in these expenses are related to the mild winter weather. Contracted services increased by $534,000 from 2014 but ended the year $4.3 million under budget which was only 52% of budget. Most of the contracted services savings are related to ACDA expenses that were not realized. Debt expense was $160,000 lower than last year and almost $1.3 million under budget. Some of this savings is related to the bond refunding in 2015. ---PAGE BREAK--- 6 OVERTIME % of Department 2015 2014 Change % 2015 Budget Budget Police (non-reimbursable) 4,331,149 4,163,588 167,561 4% 4,331,149 3,961,400 109% Fire 1,975,296 1,906,826 68,470 4% 1,975,296 750,000 263% Communications 179,209 177,194 2,015 1% 179,209 175,000 102% Parks Maintenance 160,706 215,952 (55,246) -26% 160,706 200,000 80% Waste Collection 182,774 208,177 (25,403) -12% 182,774 197,000 93% Landfill 133,726 167,780 (34,054) -20% 133,726 151,000 89% Central Maint. 78,118 75,479 2,639 3% 82,000 82,000 100% Street Maintenance 106,148 106,484 (336) 0% 106,148 150,000 71% Street Cleaning 112,837 157,128 (44,291) -28% 112,837 150,000 75% Recreation 14,195 5,175 9,020 174% 14,195 12,000 118% Traffic Engineering 37,421 21,126 16,295 77% 40,925 40,925 100% Capital Hills 22,640 25,952 (3,312) -13% 22,640 26,000 87% Central Garage 12,944 19,865 (6,921) -35% 12,944 28,000 46% Bleeker Stadium 42 75 (33) -44% 42 600 7% Buildings 37,096 47,781 (10,685) -22% 37,096 50,000 74% Control of Animals 9,132 7,699 1,433 19% 9,132 9,000 101% Special Events 9,401 10,439 (1,038) -10% 9,401 20,000 47% General Fund 7,402,834 7,316,720 86,114 1% 7,410,220 6,002,925 123% Police (reimbursable) 1,038,718 1,121,664 (82,946) 1,038,718 1,248,161 83% Traffic Eng. (reimbursable) 160 446 (286) 0% 160 0 100% Water 580,725 643,727 (63,002) -10% 580,725 585,000 99% Totals 9,022,437 9,082,557 (60,120) 9,029,823 7,836,086 115% General Fund overtime was 123% of budget at the end of 2015. Excluding reimbursable overtime, overtime expense was 1% ($86,114) higher than last year. AFD had the biggest increase in overtime (due to 23 open positions) at 263% of budget ($1.2 million over budget), and dollar-wise was $68,000 higher than last year. Police overtime was higher by $167,561 or 4% compared to last year and they exceeded their budget by Many of the departments had lower overtime expenses this year and came in under budget compared to last year except for those mentioned and the others indicated on the list. ---PAGE BREAK--- 7 CASH The City’s cash position was at an expected operating level. The delay in the Coeyman’s property sale ($5.0M) and the lower than anticipated red light revenue required the City to issue a $6.0 million revenue anticipation note. Without these funds the City would have ended the year with no money to pay bills or make payroll going into 2016. CONCLUSION Revenue increased in 2015 by 3% ($5.3 million) but was below budget at 93%. Expenses increased from last year by $348,000 but finished below budget at 95% ($9.2 million) below budget. While this sounds good, expenses still exceeded revenues by almost $4.7 million. This resulted in the City using $4.7 million of fund balance which was $2.7 million more than anticipated in the budget. The delay of the sale by the State of the Coeymans property for $5M and the shortfall in red light ticket revenue were the primary reasons for the additional deficit to the fund balance. 2016 will be challenging for the City to do all it can to maintain a positive fund balance.