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OFFICE OF THE ALBANY CITY TREASURER DATE: May 28, 2015 TO: Hon. Kathy M. Sheehan Members of the Common Council FROM: Hon. Darius Shahinfar CC: Ismat Alam RE: 1st quarter 2015 Performance The following is a summary of the unaudited results for the 1st Quarter 2015. Revenue in the first quarter of 2015 totaled $74.1 million which was about the same compared to last year at this time. Expenses totaled over $34 million and decreased almost 5.3% ($1.9 million) compared to the first quarter of 2014. While this is good news, and we are cautiously optimistic about further good news on sales tax revenue increases as well as energy and other variable cost decreases, these savings are expected to be fleeting due to several realized and/or anticipated added expenses or revenue shortfalls in: The Fire Department (arbitration award), the Landfill, fine revenue and possibly Police Dispatchers. REVENUE (Thousands) MAR MAR % MAR Annual % REVENUE YTD 15 YTD 14 Variance YTD 15 Budget Variance Budget PROPERTY TAX 56,770 55,940 830 1% 56,770 56,528 242 100% SALES/USE TAX 7,890 7,720 170 2% 7,890 31,973 (24,083) 25% PILOTS/19-a 3,770 3,558 212 6% 3,770 19,490 (15,720) 19% OTHER LOCAL SOURCES 448 466 (18) 448 4,833 (4,385) 9% LANDFILL 2,124 2,229 (105) 2,124 12,077 (9,953) 18% OTHER DEPARTMENTS 407 417 (10) 407 3,506 (3,099) 12% INTER GOVERNMENT 57 42 15 36% 57 117 (60) 49% FINES 933 1,029 (96) 933 7,048 (6,115) 13% LICENSES AND PERMITS 556 878 (322) -37% 556 2,290 (1,734) 24% STATE AID 0 46 (46) -100% 0 17,295 (17,295) 0% SALE P/COMP/LOSS 48 20 28 140% 48 5,404 (5,356) 1% MISCELLANEOUS 1,141 1,575 (434) -28% 1,141 12,954 (11,813) 9% OTHER 2 2 0 0% 2 1,769 (1,767) 0% TOTAL REVENUE 74,146 73,922 224 0% 74,146 175,284 (101,138) 42% ---PAGE BREAK--- 2 The chart above summarizes the City’s sources of revenue through March 31, 2015. 1. Property Tax revenue increased by $830,000 as a result of the tax levy increase under the tax cap, but it was under (over?) budget by $242,000 as a result of assessment reductions. ($58K or 242?) 2. Sales Tax revenue the first quarter sales tax revenue increased 2% and totaled $7.9 million which was $170,000 higher compared to last year at the same time. While we are on budget at 25% for the first quarter, should this increase continue quarter to quarter, it would lead to greater than budgeted annualized revenue. 3. PILOTS/19-a revenue was 6% higher than the same period last year. Most of the increase is due to receiving payments earlier this year than last year. The increase is primarily due to the City receiving its first voluntary PILOT payment. 4. Other Local sources revenue was 4% lower than the first quarter of 2014. Utilities gross receipts and OTB receipts both ended the quarter lower than last year. 5. Landfill revenue decreased 5% compared to the first quarter of 2014. Tipping fees decreased by almost $248,000 from commercial and municipal customers. This was offset by increases in landfill permits, coupon sales, contaminated soil and methane gas sales which combined for a $144,000 increase. The recent loss of a large landfill client could lead to a drop in revenue in the range of $1.2 to $2.0 million by the end of the year. 6. Other Departmental revenue was 2% lower than the same period last year. Most of the decrease was the result of decreases in rental registries which was down $32,000 and towing fees which decreased almost $21,000. These decreases were offset by APD Event Security revenue which increased by almost $33,000 and EMS Ambulatory revenue increased by $23,000. 7. Fines and Forfeitures revenue decreased by 9% from the first quarter of 2014. Both parking ticket fines and surcharges combined for a decrease of $89,000. While ticket revenue has been increasing back to the levels of last year, budgeted red light camera ticket revenue is expected to be approximately $1 million lower than budgeted. 8. Licenses and Permits revenue decreased 37% ($322,000) compared to the same period last year. Safety Inspection permit revenue decreased by ---PAGE BREAK--- 3 $274,000, vacant building fees decreased by $21,000 and parking permit revenue decreased by $21,000. 9. State aid in the first quarter of 2014 was below $1000. Most of this revenue is derived from state grants and various state payments. The timing of these payments varies from year to year. 10. Miscellaneous revenue decreased 28% ($434,000) compared to the same period last year primarily as a result of a decrease in delinquent debris and demolition charges levied onto 2015 property tax bills which decreased $250,000. The total decrease is masked by Tulip Festival revenue decreasing $68,000, because the event is expected to at least break even. Also the Albany Parking Authority, which prior to 2015 reimbursed the City for the PSO salaries and benefits, was lower by $77,000. This decrease is offset by the transfer of the PSO employees and related expenses to the APA. 11. Other revenue was even compared to the same period last year. Most of this revenue is derived from federal government grants and the timing of these payments varies from one year to the next. DISBURSEMENTS Category/Account MAR MAR % Annual % YTD 15 YTD 14 Variance Budget Variance Budget Personal Benefits 7100-7199 17,564,128 18,508,375 (944,247) -5.1% 74,327,904 (56,763,776) 24% Fringe Benefits 7801-7863 11,468,360 10,839,014 629,346 5.8% 51,931,793 (40,463,433) 22% Non-Personal Service 7210-7701 4,972,777 6,547,577 (1,574,800) -24.1% 51,061,505 (46,088,728) 10% Total 34,005,265 35,894,966 (1,889,701) -5.3% 177,321,202 (143,315,937) 19% Number of weeks in period 13 13 0 52 25% Total disbursements decreased by $1.9 million or 5.3% compared to the same period last year. Spending was down in Personal Benefits and Non- Personal Service but increased in Fringe Benefits compared to 2014. ---PAGE BREAK--- 4 1. Salary expense decreased by -5.1% compared to the same period last year. Salary expenses are level or lower in most of the departments compared to the first quarter of 2014. The Police department was lower by over $300K and the Fire department was lower by $164K from last year .This category also includes overtime expenses which ended the quarter $245K less than in 2014. This overall reduction is somewhat illusory because of the number of buyouts in the first quarter of 2014 that raised expenses last year, and the number of unfilled positions this year in Police and Fire which either have been, or are expected to be filled shortly. Additionally, the recent arbitration award to the Firefighters for retroactive pay of $1.2 million was not included in the budget. Therefore, further savings of this magnitude on payroll are not expected this year. 2. Benefits Expenses increased by 5.8% for the first quarter of 2015. Most of the increase in this category is attributable to the Police department which increased by over $500K from 2014. The biggest increase was in the workers compensation lines which combined increased by over $382,000. Employee health insurance also increased by over $300K from the same time last year. The premiums charged by alone increased by over Overall even with these increases this category is below budget for the year. 3. Non-Personal Service spending decreased by 24.1% or just over $1.5 million. This category includes utilities, contracted services, supplies, materials, small equipment, consulting fees and debt service. The first quarter saw decreases over last year in the following areas. DGS saw decreases in the following accounts: gasoline expense decreased $158,000, motor vehicle repair expense decreased $107,000 and snow removal supplies and expense decreased $52,000.The City’s utilities expenses decreased by $396,000 with street lighting making up most of the decrease at $258,000 less than the same period last year. 5. Encumbrances (funds reserved for purchases) increased by $0.5 million or almost 8% compared to the same period last year. Encumbrances total $5.9 million at the end of the first quarter. ---PAGE BREAK--- 5 OVERTIME % of Department 2015 2014 Change % 2015 Budget Budget Police (non-reimbursable) 755,596 867,055 (111,459) -13% 755,596 3,950,000 19% Fire 357,004 382,352 (25,348) 357,004 750,000 48% Communications 26,820 42,693 (15,873) -37% 26,820 175,000 15% Parks Maintenance 60,630 97,581 (36,951) -38% 60,630 200,000 30% Waste Collection 73,643 81,159 (7,516) 73,643 175,000 42% Landfill 69,018 79,940 (10,922) -14% 69,018 151,000 46% Central Maint. 17,620 18,278 (658) 17,620 70,000 25% Street Maintenance 45,104 59,141 (14,037) -24% 45,104 150,000 30% Street Cleaning 62,915 81,550 (18,635) -23% 62,915 150,000 42% Recreation 2,792 0 2,792 27919900% 2,792 12,000 23% Traffic Engineering 8,105 6,777 1,328 20% 8,105 40,925 20% Capital Hills 6,324 7,654 (1,330) -17% 6,324 26,000 24% Central Garage 8,002 13,933 (5,931) -43% 8,002 28,000 29% Bleeker Stadium 0 0 0 0% 0 600 0% Buildings 11,253 11,862 (609) 11,253 50,000 23% Control of Animals 1,592 1,397 195 14% 1,592 9,000 18% Special Events 382 0 [PHONE REDACTED]% 382 20,000 2% General Fund 1,506,800 1,751,372 (244,572) -14% 1,506,800 5,957,525 25% Police (reimbursable) 205,759 215,224 (9,465) 205,759 1,248,161 16% Traffic Eng. (reimbursable) 0 0 0 0% 0 0 100% Water 175,958 205,305 (29,347) -14% 175,958 580,000 30% Totals 1,888,517 2,171,901 (283,384) -13% 1,888,517 7,785,686 24% General Fund overtime was at 25% of budget at the end of the first quarter. Excluding the Water Department (for which the City is reimbursed) and reimbursable Police overtime, overtime expense was 14% ($244,572) lower than the same period last year, and overall is on budget for the year. Recreation had the biggest increase in overtime expense percentage wise and dollar wise at $2,792 over last year. Police overtime was lower by 13% compared to the same period last year and finished the quarter at 19% of budget. The majority of departments have lower overtime expenses this year than last year. ---PAGE BREAK--- 6 CASH JAN FEB MAR Receipts $75,143 $15,290 $14,056 Disbursements $(22,525) $(12,846) $(13,187) Cash on Hand $58,703 $61,147 $62,035 $(40,000) $(20,000) $20,000 $40,000 $60,000 $80,000 $100,000 Cash Flow (In Thousands) Receipts Disbursements Cash on Hand The City’s cash position was 5% more than forecasted but $5.5 million lower than the same period last year. Most of the decrease is the result of the County of Albany collecting the corporate taxes directly in 2015. Last year the City received these payments. CONCLUSION Although revenue is almost identical to last year, and expenses were controlled in the first quarter (5.3% or almost $1.9 million lower than last year at this time; only 19% of 2015 budgeted expenses), these savings are not expected to last or continue. Most of the first quarter savings will be used for the fire fighters retro pay and their current year salary increase. Therefore, the City will have to find other savings in order to offset the additional decrease to the fund balance related to this expense, as well as other expected revenue declines and cost increases.