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OFFICE OF THE ALBANY CITY TREASURER DATE: October 27, 2016 TO: Hon. Kathy M. Sheehan Members of the Common Council FROM: Hon. Darius Shahinfar CC: Rachel McEneny RE: 3rd quarter 2016 Performance The following is a summary of the unaudited results for the 3rd Quarter 2016. Our financial situation in the 3rd Quarter remains precarious, but stable in the short term. Our cash position is stable and we are closely monitoring whether a RAN issuance will be necessary in November/December. However, we believe the chances of being forced to issue a RAN for 2016 are diminishing. Revenue in the third quarter of 2016 totaled $124.5 million which was $6 million more than the same period last year at this time. Expenses totaled over $127.3 million and decreased almost 1.5%, about ($1.9 million) compared to the third quarter of 2015. REVENUE (Thousands) Sept Sept % Sept Annual % REVENUE YTD 16 YTD 15 Variance YTD 16 Budget Variance Budget PROPERTY TAX 56,595 56,698 (103) 0% 56,595 56,528 67 100% SALES/USE TAX 24,762 24,487 275 1% 24,762 33,304 (8,542) 74% PILOTS/19-a 16,948 11,680 5,268 45% 16,948 20,470 (3,522) 83% OTHER LOCAL SOURCES 1,769 1,976 (207) -10% 1,769 3,193 (1,424) 55% LANDFILL 8,932 8,756 176 2% 8,932 9,819 (887) 91% OTHER DEPARTMENTS 3,952 2,038 1,914 94% 3,952 6,025 (2,073) 66% INTER GOVERNMENT 175 178 175 245 (70) 71% FINES 3,360 3,077 283 9% 3,360 7,158 (3,798) 47% LICENSES AND PERMITS 2,316 2,446 (130) 2,316 3,629 (1,313) 64% STATE AID 2,440 2,689 (249) 2,440 29,591 (27,151) 8% SALE P/COMP/LOSS 268 185 83 45% 268 394 (126) 68% MISCELLANEOUS 2,871 2,668 203 8% 2,871 9,178 (6,307) 31% OTHER 117 118 117 2,178 (2,061) 5% DEBT RESERVE 0 1,335 (1,335) 100% 0 1,000 (1,000) 0% TOTAL REVENUE 124,505 118,331 6,174 5% 124,505 182,712 (58,207) 68% ---PAGE BREAK--- 2 The chart above summarizes the City’s sources of revenue through September 30, 2016. 1. Property Tax revenue is lower than last year by $103,000 as a result of paying more SCOs compared to the same period last year. It was still over budget at the end of the third quarter despite paying more for assessment reductions by the end of the quarter. This account will be reduced further by SCOs received in the 4th quarter. 2. Sales Tax revenue the third quarter sales tax revenue increased 1% and totaled almost $24.8 million which was $275,000 higher compared to last year at the same time although we are below budget at 74% at the end of the quarter. 3. PILOTS/19-a revenue was 45% 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 $5.3 million higher compared to last year. 4. Other Local sources revenue was actually 10% lower than the third quarter of 2015. Interest and penalties on property taxes was down by $139,000 and utilities gross receipts tax decreased by $76,000. Some of the gross receipts tax decrease in related to receiving payments in early October just after the end of the third quarter. 5. Landfill revenue increased 2% compared to last year at the same time. Tipping fees increased by $223,000 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. Coupon sales also increased by $67,000. Contaminated soil revenue decreased by $99,000. 6. Other Departmental revenue was 94% higher than the same period last year. Most of the increase was the result of the new waste collection fees ($1.8 million). APD Event Security revenue increased by almost $244,000 and EMS and rental registry revenue increased by $120,000. Golf fees and permits and golf cart and range fee information was not available for the quarter while this report was being prepared. 7. Fines and Forfeitures revenue increased by 9% from the third quarter of 2015. Both parking ticket fines and surcharges increased. Traffic court fines were up from last year by $93,000. However, Red Light Camera revenue is not expected to materialize so this budget line will be under at year’s end. September’s parking ticket revenue actuals were not available when this report was prepared. ---PAGE BREAK--- 3 8. Licenses and Permits revenue decreased 5% ($130,000) compared to the same period last year. Safety Inspection permit revenue decreased by $46,000, plumbing permits decreased by $155,000, taxi medallion revenue decreased by $21,000 while street opening revenue increased by $74,000. 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 9% ($249,000). Most of the decrease is related to a decrease in mortgage tax revenue which decreased by $215,000 from the same period last year. 10. Miscellaneous revenue increased 8% ($203,000) compared to the same period last year primarily from recycling revenue which increased by $171,000. This was a new revenue source started in 2015 and there was only $76,000 for the third quarter last year. 11. Other revenue decreased by $1,000 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 Sept Sept % Annual % YTD 16 YTD 15 Variance Budget Variance Budget Personal Benefits 55,725,825 55,091,655 634,171 1.2% 75,494,125 (19,768,300) 74% Fringe Benefits 28,870,653 30,344,781 Retirement Estimate 8,763,678 8,230,657 37,634,331 38,575,438 (941,107) -2.4% 54,860,143 (17,225,812) 69% Non-Personal Service 33,971,715 34,225,147 (253,431) -0.7% 51,526,434 (17,554,719) 66% Use of Debt Reserve 0 1,335,000 (1,335,000) -100.0% 1,000,000 (1,000,000) 0% Total 127,331,871 129,227,239 (1,895,367) -1.5% 182,880,702 (55,548,831) 70% Number of weeks in period 40 39 1 52 77% Total disbursements decreased by $1.9 million or 1.5% compared to the same period last year. Spending was down in Fringe Benefits and in Non- Personal Service while Personal Benefits increased compared to 2015. ---PAGE BREAK--- 4 1. Salary expense increased by 1.2% ($634,000) compared to the same period last year. Most of increase was related the Fire department salary expense which was up by $622K from last year, partially because of OT. Most of the other City departments were level or had lower salary expenses for the quarter, and overall, salary expense is below budget for the year. 2. Benefits Expenses decreased by 2.4% for the quarter. Most of the decrease in this category is related to a decrease in retiree health cost which decreased by $458,000 from the third quarter of 2015. The Police department had a decreased of over $787,000 in workers’ compensation costs from the same time last year. Overall, benefits expense is below budget for the year, but that could change before the end of the year. 3. Non-Personal Service spending decreased by 0.7% ($253,431), and is below budget for the year. 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 third quarter saw many decreases over last year. DGS saw decreases in the following accounts, mostly due to the milder winter: gasoline expense decreased $286,000, motor vehicle repair expense decreased $234,000 and snow removal supplies and expense decreased $433,000. Some of the following had increases from 2015: Demolition expenses increased by $162,000. Police department motor vehicle expenses increased $40,000; Utilities expense increased $163,000 which was mostly due to an increase in street lighting expense; landfill operating expenses increased $337,000. Although we are below budget thus far, costs in this category can be volatile, particularly based on poor weather. 4. Encumbrances (funds reserved for purchases) increased by almost $486,000 compared to the same period last year. Encumbrances total $4.1 million at the end of the third quarter. ---PAGE BREAK--- 5 OVERTIME % of Department 2016 2015 Change % 2016 Budget Budget Police (non-reimbursable) 3,717,580 2,983,522 734,058 25% 3,717,580 4,050,000 92% Fire 781,872 1,617,493 (835,621) -52% 781,872 439,000 178% Communications 162,668 124,159 38,509 31% 162,668 175,000 93% Parks Maintenance 116,614 129,033 (12,419) -10% 116,614 200,000 58% Waste Collection 133,625 138,281 (4,656) 133,625 175,000 76% Landfill 70,514 103,661 (33,147) -32% 70,514 151,000 47% Central Maint. 30,221 61,995 (31,774) -51% 30,221 70,000 43% Street Maintenance 154,868 84,562 70,306 83% 154,868 300,000 52% Street Cleaning 0 100,336 (100,336) -100% 0 0 0% Recreation 10,177 9,901 276 3% 10,177 12,000 85% Traffic Engineering 27,962 28,653 (691) 27,962 45,000 62% Capital Hills 16,377 19,149 (2,772) -14% 16,377 26,000 63% Central Garage 4,754 11,209 (6,455) -58% 4,754 28,000 17% Bleeker Stadium 94 0 94 939900% 94 600 16% Buildings 59,811 30,198 29,613 98% 59,811 50,000 120% DGS Administration 893 410 483 118% 893 5,000 18% Control of Animals 5,608 6,577 (969) -15% 5,608 9,000 62% Special Events 12,578 9,074 3,504 39% 12,578 15,000 84% General Fund 5,306,216 5,458,213 (151,997) 5,306,216 5,750,600 92% Police (reimbursable) 891,127 707,310 183,817 26% 891,127 1,192,658 75% Traffic Eng. (reimbursable) 224 160 64 0% 224 3,000 7% Water 528,123 448,451 79,672 18% 528,123 580,000 91% Totals 6,725,690 6,614,134 111,556 2% 6,725,690 7,526,258 89% General Fund overtime was at 92% of budget at the end of the third quarter. Excluding the Water Department (for which the City is reimbursed) and reimbursable Police overtime, overtime expense was 3% ($151,997) lower than the same period last year. The Police department had the biggest increase in overtime payments which were up by almost $734K resulting in part from OT related to open positions and the Police reimbursable overtime was up $184K in part from increased event detail APD presence. The Fire department decreased by over $835K and posted its lowest 3Q OT since 2012, but ended the quarter at 178% 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 staffing gaps. The majority of departments have lower overtime expenses this year than last year. ---PAGE BREAK--- 6 CASH The City’s cash position was 15% less than forecasted but $1.6 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 collections, landfill and other departmental revenue). However, although revenue is up almost $6.2M from last year, and expenses are lower through the third quarter (1.5% less than last year at this time), these savings and/or revenue increases are not necessarily expected to last or continue. We are cautiously optimistic that the overall reductions in personnel and non-personnel expenditures will hold for the year. We are also cautiously optimistic that a RAN issuance will be unnecessary for 2016. That being said, 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.