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OFFICE OF THE ALBANY CITY TREASURER DATE: September 4, 2019 TO: Hon. Kathy M. Sheehan Members of the Common Council FROM: Hon. Darius Shahinfar CC: Rachel McEneny, Mike Wheeler RE: 2nd quarter 2019 Performance The following is a summary of the unaudited results for the 2nd Quarter 2019. Overall, fiscal performance was stable and within budgetary expectations for 2019, with the exception of expenditures related to the overtime. Revenue in the second quarter of 2019 totaled almost $117.0 million which was an increase of 13% or almost $13.8M from last year at this time (most of this increase is related to billing NYS $12.0M for the Capital City Funding money in June compared to July last year). Expenses totaled more than $88.3M which was an increase of 4.9% or ($4.1M) compared to the second quarter of 2018. REVENUE (Thousands) JUNE JUNE % JUNE Annual % REVENUE YTD 19 YTD 18 Variance YTD 19 Budget Variance Budget PROPERTY TAX 58,516 58,312 204 0% 58,516 58,250 266 100% SALES/USE TAX 17,905 17,477 428 2% 17,905 34,594 (16,689) 52% PILOTS/19-a 11,904 11,669 235 2% 11,904 19,675 (7,771) 61% OTHER LOCAL SOURCES 896 944 (48) 896 3,092 (2,196) 29% LANDFILL 3,926 2,756 1,170 42% 3,926 6,030 (2,104) 65% OTHER DEPARTMENTS 4,104 3,128 976 31% 4,104 6,948 (2,844) 59% INTER GOVERNMENT 414 232 182 78% 414 532 (118) 78% FINES 2,315 2,663 (348) -13% 2,315 5,346 (3,031) 43% LICENSES AND PERMITS 1,948 2,027 (79) 1,948 3,665 (1,717) 53% STATE AID 12,361 7 12,354 176486% 12,361 29,377 (17,016) 42% SALE P/COMP/LOSS 1,019 104 915 880% 1,019 359 660 284% MISCELLANEOUS 1,647 3,845 (2,198) -57% 1,647 8,647 (7,000) 19% OTHER 31 33 31 1,291 (1,260) 2% TOTAL REVENUE 116,986 103,197 13,789 13% 116,986 177,806 (60,820) 66% ---PAGE BREAK--- 2 The chart above summarizes the City’s sources of revenue through June 30, 2019. 1. Property Tax revenue increased by $204K from last year and is over budget at the end of the first quarter as a result of paying a small number of assessment reductions by the end of the quarter. 2. Sales Tax revenue the second quarter sales tax revenue was higher than last year, totaled almost $18.0M and is exceeding budget at 52% for the year. This is a positive sign indicating the possibility of another over- budget year. 3. PILOTS/19-a revenue was higher than the same period last year. Most of the increase is due to the contracted increases in PILOT payments and earlier shelter rent payments. The largest payment was over $7.0M for the first installment for the19a properties billed to NYS. 4. Other Local sources revenue decreased from the second quarter of 2018. There was a slight decrease in Utility Gross Receipts OTB receipts decreased ($15K) and penalties on property taxes decreased ($27K). 5. Landfill revenue increased 42% compared to the same period last year. Tipping fees increased by almost $754K from commercial customers and government customers and coupon sales increase by $534K. Revenue is higher than budget for the year at 65%. 6. Other Departmental revenue was 31% ($976k) higher than last year at this time. Most of the increase is the result of billing the waste collection fees which were $1.1M more than last year. APD Event Security revenue decreased by almost $110K. 7. Inter-government revenue increased by 78% ($182K) from the same period last year. Most of the increase is related to an increase in interest rates on cash balances. 8. Fines and Forfeitures revenue decreased by 13% ($348K) from last year. The decrease is due to not having the June revenue numbers by the time this report was prepared. 9. Licenses and Permits revenue decreased 4% ($79K) compared to the same period last year. Safety Inspection permits revenue decreased $78K, vacant building registries decreased $25K, taxi medallions decreased $26K and street opening permits decreased $91K. While stabilization and demolition fees increased $105K, occupational licenses increased $17K and electrical permits increased $21K. ---PAGE BREAK--- 3 10. State aid – Increased $12.3M by the end of the first quarter. The increase is the result of billing the State for the Capital City Funding money due to the City. We have received $7m, but are still waiting on $5m. The rest of the revenue for 2019 is primarily from police court security revenue. Most of this revenue in this category is derived from state grants and various state payments. The timing of these payments varies from year to year 11. Sales of Property and Insurance recoveries revenue increased 880% ($915K) compared to the same period last year. Most of the increase ($839K) is related to the sale of the Coeymans property. 12. Miscellaneous revenue decreased 57% ($2.2M) compared to the same time last year. This category is made up of refund of prior year expenses, special events revenue and reimbursements from ACDA. Refund of prior year expenses are made up of fees and charges from last year that are included on the property tax bills. These charges can vary from year to year and adjustments for these charges can vary. 13. Other revenue decreased by $2K 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 JUNE JUNE % Annual % YTD 19 YTD 18 Variance Budget Variance Budget Personal Benefits 38,092,241 37,110,947 981,294 2.6% 77,901,512 (39,809,271) 49% Fringe Benefits 17,120,299 17,161,483 (41,183) -0.2% 36,015,149 (18,894,850) 48% Retirement including est. 6,913,839 6,701,360 212,479 3.2% 14,312,840 (7,399,001) 48% Total Benefits 24,034,139 23,862,843 171,296 0.7% 50,327,989 (26,293,850) 48% Non-Personal Service 26,212,259 23,230,983 2,981,276 12.8% 49,576,637 (23,364,378) 53% Total 88,338,638 84,204,772 4,133,866 4.9% 177,806,138 (89,467,500) 50% Number of weeks in period 26 26 0 52 50% Total disbursements increased by over $4.1M or 4.9% compared to the same period last year. Spending was up in Personal Benefits ($981K), Fringe ---PAGE BREAK--- 4 benefits ($171K) and Non-Personal Services ($3.0M) from 2018. However, overall Personal Service costs are currently below budget for 2019. 1. Salary expense increased by 2.6% compared to the same period last year but was under budget at 49%. Increases in the Fire Department salary and related expenses were responsible for most of the increase in this category. The Fire Department code enforcement stipend $175K was paid in the first quarter this year compared to the 3rd quarter last year and accumulated sick leave pay increased $362K. This category also includes overtime expenses which ended the quarter more than $570K higher than in 2018. 2. Benefits Expenses increased by 0.7% from the second quarter of last year but was below budget for the quarter at 48%. The second quarter saw increases in retirement expenses from NYS which increased ($212K) and retiree health insurance increased ($381K), while employee health insurance decreased ($71k) and worker’s compensation expenses decreased ($314K). 3. Non-Personal Service spending increased by 12.8% or almost $3.0M. Not including encumbrances this category was 53% of budget by the end of this quarter. This category includes utilities, contracted services, supplies, materials, small equipment, consulting fees and debt service. Most of the increase in this category is related to making the first debt service payments on the 2018 bonds which totaled almost $2.2M The second quarter saw increases over last year in the following areas. Stabilizations and demolitions expense increased $295K, gasoline expense increased $139K and motor vehicle repair expense increased $95K. 4. Encumbrances (funds reserved for purchases) decreased by $149K compared to the same period last year. Encumbrances total more than $5.1M at the end of the second quarter. ---PAGE BREAK--- 5 OVERTIME % of Department 2019 2018 Change % 2019 Budget Budget Police (non-reimbursable) 2,539,297 2,403,765 135,532 6% 2,539,297 4,195,090 61% Fire 631,807 324,025 307,782 95% 631,807 439,000 144% Communications 236,097 149,953 86,144 57% 236,097 225,000 105% Parks Maintenance 122,284 115,791 6,493 6% 122,284 185,000 66% Waste Collection 168,846 110,655 58,191 53% 168,846 225,000 75% Landfill 77,868 92,645 (14,777) -16% 77,868 150,000 52% Central Maint. 23,655 31,519 (7,864) -25% 23,655 70,000 34% Street Maintenance 206,616 228,284 (21,668) 206,616 270,000 77% Recreation 4,956 5,006 (50) 4,956 12,000 41% Traffic Engineering 21,534 16,918 4,616 27% 21,534 40,000 54% Capital Hills 12,716 8,031 4,685 58% 12,716 26,000 49% Fleet Maintenance 19,038 15,395 3,643 24% 19,038 18,000 106% Bleeker Stadium 125 210 (85) -40% 125 500 25% Buildings 61,205 53,887 7,318 14% 61,205 92,400 66% DGS Administration 2,747 352 2,395 680% 2,747 3,104 88% Control of Animals 6,259 7,712 (1,453) -19% 6,259 12,000 52% Cultural Affairs 4,216 4,820 (604) -13% 4,216 12,000 35% General Fund 4,139,266 3,568,968 570,298 16% 4,139,266 5,975,094 69% Police (reimbursable) 654,815 682,726 (27,911) 654,815 1,250,000 52% Fire (reimbursable) 0 0 0 0% 0 110,000 0% Traffic Eng. (reimbursable) 0 0 0 0% 0 500 0% Water 246,325 267,269 (20,944) 246,325 502,250 49% Totals 5,040,406 4,518,963 521,443 12% 5,040,406 7,837,844 64% General Fund overtime was over budget (69%) at the end of the second quarter. Excluding the Water Department (for which the City is reimbursed) and reimbursable Police overtime, overtime expense was 16% ($570K) higher than the same period last year. OT is consistently the largest over-budget expense. The Fire department had the biggest increase in overtime payments which were up by almost $308K and at 144% of budget. The majority of departments have higher overtime expenses this year than last year, but the over-budget OT costs are largely offset by vacancy savings. ---PAGE BREAK--- 6 CASH The City’s cash position was 1% higher than forecasted but 60% ($9.0M) less than the same period last year. Most of the decrease is the result of the increase in contractor payments for the Albany Water Board related to the Long- Term Control Plan and less in the amount transferred to City from the AWB to pay these expenses. We expect this to even out over the course of the year. CONCLUSION Thus far, there are no major surprises for 2019, as the City is largely moving forward as expected financially. Although the City saw an increase in overall revenue in the second quarter compared to 2018, most of this increase ($12.0M) is related to billing the State for the Capital City Funding money, $7M of which was paid in July. Expenses were up in the second quarter of 2019 compared to last year, mostly as the result of Fire Department contracted benefit payments, increases in retirement costs, over-budget OT, debt service and demolitions expenses. However, the good news is that Personal Costs are under budget overall. It is imperative to remember, that without the Capital City Funding, the City would be in dire financial straits. Therefore, the City must continue to watch expenses closely and try to control them as much as possible, while continuing to push for revenue increases where it can locally, and at the State level, where a permanent solution for the revenue gap caused by tax exempt properties must be found.