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OFFICE OF THE ALBANY CITY TREASURER DATE: October 3, 2016 TO: Hon. Kathy M. Sheehan Members of the Common Council FROM: Hon. Darius Shahinfar CC: Rachel McEneny RE: 2nd quarter 2016 Performance The following is a summary of the unaudited results for the 2nd Quarter 2016. Our financial situation in the 2d Quarter remains precarious, but stable in the short term. (Early indications are that it continued to be so through the 3rd Quarter as well.) Our cash position is currently stable and we are closely monitoring whether a RAN issuance will be necessary in November/December. Revenue in the second quarter of 2016 totaled $105.7 million which was almost $15K more than the same period last year at this time. Expenses totaled over $80.3 million and decreased almost 1.1%, about ($0.9 million) compared to the first quarter of 2015. REVENUE (Thousands) JUNE JUNE % JUNE Annual % REVENUE YTD 16 YTD 15 Variance YTD 16 Budget Variance Budget PROPERTY TAX 56,600 56,771 (171) 0% 56,600 56,528 72 100% SALES/USE TAX 16,362 16,220 142 1% 16,362 33,304 (16,942) 49% PILOTS/19-a 16,914 4,108 12,806 312% 16,914 20,470 (3,556) 83% OTHER LOCAL SOURCES 1,042 713 329 46% 1,042 3,193 (2,151) 33% LANDFILL 6,144 5,510 634 12% 6,144 9,793 (3,649) 63% OTHER DEPARTMENTS 2,028 1,054 974 92% 2,028 6,051 (4,023) 34% INTER GOVERNMENT 114 101 13 13% 114 245 (131) 47% FINES 2,481 1,988 493 25% 2,481 7,138 (4,657) 35% LICENSES AND PERMITS 1,285 1,696 (411) -24% 1,285 3,359 (2,074) 38% STATE AID 499 530 (31) 499 29,450 (28,951) 2% SALE P/COMP/LOSS 175 157 18 11% 175 394 (219) 44% MISCELLANEOUS 2,011 1,932 79 4% 2,011 9,143 (7,132) 22% OTHER 43 73 (30) -41% 43 2,223 (2,180) 2% TOTAL REVENUE 105,698 90,853 14,845 16% 105,698 181,291 (75,593) 58% ---PAGE BREAK--- 2 The chart above summarizes the City’s sources of revenue through June 30, 2016. 1. Property Tax revenue is lower than last year by $171,000 as a result of paying more SCOs compared to the same period last year. It was still over budget at the end of the second quarter despite paying more for assessment reductions by the end of the quarter. It is likely this will be reduced further by SCOs this year. 2. Sales Tax revenue the first quarter sales tax revenue increased 1% and totaled $16.4 million which was $142,000 higher compared to last year at the same time although we are below budget at 49% for the second quarter. 3. PILOTS/19-a revenue was 312% higher than the same period last year from receiving half of the $12.5 million in additional 19-a funds for 2016. PILOT revenue was $12.8 million higher compared to last year. Last year we did not receive the 19-a payment until July. 4. Other Local sources revenue was actually lower than the second quarter of 2015. The chart shows the amount 46% higher but that is due to City receiving a second quarter payment of $335,000 from National Grid in July last year. 5. Landfill revenue increased 12% compared to the second quarter of 2015. Tipping fees increased by $545,000 from commercial and municipal customers resulting from increased spot market fees, rather than lower, large volume fees, which is simultaneously increasing revenue while decreasing waste inflow. Contaminated soil revenue increased by $78,000. 6. Other Departmental revenue was 92% higher than the same period last year. Most of the increase was the result of the new waste collection fees ($685,000). APD Event Security revenue increased by almost $188,000 and EMS Ambulatory revenue increased by $104,000. 7. Fines and Forfeitures revenue increased by 25% from the second quarter of 2015. Both parking ticket fines and surcharges combined for an increase of $328,000. Traffic court fines were up from last year by $49,000. However, Red Light Camera revenue is not expected to materialize so this budget line will be under at year’s end. 8. Licenses and Permits revenue decreased 24% ($411,000) compared to the same period last year. Safety Inspection permit revenue decreased by $157,000, demolition fees decreased by $270,000, plumbing permits decreased by $89,000, taxi medallion revenue decreased by $24,000 ---PAGE BREAK--- 3 while street opening revenue increased by $112,000. The decreases are mostly the timing of revenue collection and are expected to increase during the second half of the year. 9. State aid decreased by 6% ($31,000). 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 increased 4% ($79,000) compared to the same period last year primarily from recycling revenue which totaled almost $247,000. This was a new revenue source started in 2015 and there was only $76,000 for the second quarter last year. 11. Other revenue decreased by $30,000 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 16 YTD 15 Variance Budget Variance Budget Personal Benefits 7100-7199 35,466,279 35,089,893 376,387 1.1% 75,510,925 (40,044,646) 47% Fringe Benefits 7801-7863 19,867,067 21,479,425 Retirement Estimate 4,381,839 4,115,329 24,248,906 25,594,754 (1,345,847) -5.3% 54,988,343 (30,739,437) 44% Non-Personal Service 7210-7701 20,632,675 20,552,676 79,999 0.4% 50,916,642 (30,283,968) 41% Total 80,347,860 81,237,322 (889,462) -1.1% 181,415,910 (101,068,050) 44% Number of weeks in period 26 26 0 52 50% Total disbursements decreased by $889,000 or 1.1% compared to the same period last year. Spending was down in Fringe Benefits but increased in Non- Personal Service and in Personal Benefits compared to 2015. 1. Salary expense increased by 1.1% compared to the same period last year. Most of increase was related the Fire department salary expense which was up by $726K from last year. The Maintenance of Streets department increased by $553K which was related to the consolidation of ---PAGE BREAK--- 4 Street Cleaning department into this department. Most of the other City departments were level or had lower salary expenses for the quarter. This category also includes overtime expenses which ended the quarter $97K lower than in 2015. 2. Benefits Expenses decreased by 5.3% for the quarter. Most of the decrease in this category is related to a decrease in retiree health cost which decreased by $1.2 million from second quarter of 2015. The Police department had a decreased of over $553K in workers’ compensation costs from the same time last year. 3. Non-Personal Service spending increased by 0.4% or just over $80,000. This category includes utilities, contracted services, supplies, materials, small equipment, consulting fees and debt service. While the second quarter had a small increase from last year the second quarter saw many decreases over last year in the following areas. DGS saw decreases in the following accounts, mostly due to the milder winter: gasoline expense decreased $173,000, motor vehicle repair expense decreased $102,000 and snow removal supplies and expense decreased $420,000. Demolition expenses also decreased by $162,000. Some of the following had increases from 2015: Police department motor vehicle expenses increased $72,000; Utilities expense increased almost $60,000; and Debt service increased by the budgeted $627,000 which was related to paying off the capital lease in 2015 and an increase in principal payments on the some of the older bonds. 5. Encumbrances (funds reserved for purchases) increased by almost $8,000 or almost 0.2% compared to the same period last year. Encumbrances total $5.2 million at the end of the second quarter. ---PAGE BREAK--- 5 OVERTIME % of Department 2016 2015 Change % 2016 Budget Budget Police (non-reimbursable) 2,166,647 1,835,147 331,500 18% 2,166,647 4,050,000 53% Fire 508,689 824,181 (315,492) -38% 508,689 439,000 116% Communications 95,247 65,680 29,567 45% 95,247 175,000 54% Parks Maintenance 71,163 92,213 (21,050) -23% 71,163 200,000 36% Waste Collection 89,174 106,715 (17,541) -16% 89,174 175,000 51% Landfill 58,780 93,688 (34,908) -37% 58,780 151,000 39% Central Maint. 16,702 38,197 (21,495) -56% 16,702 70,000 24% Street Maintenance 94,503 65,700 28,803 44% 94,503 300,000 32% Street Cleaning 0 81,141 (81,141) -100% 0 0 0% Recreation 7,290 5,135 2,155 42% 7,290 12,000 61% Traffic Engineering 18,607 19,072 (465) 18,607 45,000 41% Capital Hills 8,047 10,777 (2,730) -25% 8,047 26,000 31% Central Garage 3,484 9,312 (5,828) -63% 3,484 28,000 12% Bleeker Stadium 0 0 0 0% 0 600 0% Buildings 31,319 21,998 9,321 42% 31,319 50,000 63% DGS Administration 701 371 330 89% 701 5,000 14% Control of Animals 3,107 3,378 (271) 3,107 9,000 35% Special Events 6,778 5,231 1,547 30% 6,778 15,000 45% General Fund 3,180,238 3,277,936 (97,698) 3,180,238 5,750,600 55% Police (reimbursable) 586,159 468,795 117,364 25% 586,159 1,192,658 49% Traffic Eng. (reimbursable) 224 160 64 0% 224 3,000 7% Water 330,839 304,246 26,593 9% 330,839 580,000 57% Totals 4,097,460 4,051,137 46,323 1% 4,097,460 7,526,258 54% General Fund overtime was at 55% of budget at the end of the second quarter. Excluding the Water Department (for which the City is reimbursed) and reimbursable Police overtime, overtime expense was 3% ($97,698) lower than the same period last year. The Police department had the biggest increase in overtime payments which were up by almost $331K resulting in part from OT related to open positions and in part from increased event detail APD presence. The Fire department decreased by over $315K and posted its lowest 2Q OT since 2012, but ended the quarter at 116% of budget as a result of decreasing their budget by $311,000 from 2015. Much of the OT remains due to the training of new recruits, and $25k is reimbursable. OT is expected to be reduced going forward as new recruits fill ---PAGE BREAK--- 6 staffing gaps. The majority of departments have lower overtime expenses this year than last year. CASH The City’s cash position was 5% more than forecasted and $7.8 million higher than the same period last year. Most of the increase is the result of NYS providing half of the additional $12.5 million in 19-a money to the City in the second quarter. The balance of the 19-a money is due in the fourth quarter. CONCLUSION It is a positive sign that many smaller efforts to increase revenue are being successfully implemented (parking tickets, landfill and other departmental revenue). However, although revenue is up $14.8M from last year, and expenses decreased in the second quarter (1.1% or over $889,000 lower than last year at this time, and only 47% of 2016 budgeted expenses), these savings and/or revenue increases are not necessarily expected to last or continue. The City will have to continue to find other savings and revenue sources in order to offset decreases to the fund balance related to increases in salaries and associated expenses, as well as other revenue declines and cost increases.