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OFFICE OF THE ALBANY CITY TREASURER DATE: August 17, 2018 TO: Hon. Kathy M. Sheehan Members of the Common Council FROM: Hon. Darius Shahinfar CC: Rachel McEneny, Mike Wheeler RE: 2nd quarter 2018 Performance The following is a summary of the unaudited results for the 2nd Quarter 2018. Fiscal performance was stable and within budgetary expectations for 2018, with the exceptions of: expenditures related to the overtime, utilities and contracted services; and revenue from sales tax which is above expectations. Revenue in the second quarter of 2018 totaled $100.7 million which was $13.8M less than the same period last year (most of this decrease is related receiving the $12.5M in Capital City Funding in June last year). Expenses totaled almost $84.2M when an estimate for retirement expense is included which was almost the same as the second quarter of 2017. REVENUE (Thousands) JUNE JUNE % JUNE Annual % REVENUE YTD 18 YTD 17 Variance YTD 18 Budget Variance Budget PROPERTY TAX 58,402 57,602 800 1% 58,402 58,250 152 100% SALES/USE TAX 17,477 16,336 1,141 7% 17,477 33,607 (16,130) 52% PILOTS/19-a 11,480 11,286 194 2% 11,480 21,075 (9,595) 54% OTHER LOCAL SOURCES 943 1,323 (380) -29% 943 3,086 (2,143) 31% LANDFILL 2,756 4,287 (1,531) -36% 2,756 6,002 (3,246) 46% OTHER DEPARTMENTS 3,128 3,081 47 2% 3,128 5,807 (2,679) 54% INTER GOVERNMENT 319 122 197 161% 319 107 212 298% FINES 2,472 2,393 79 3% 2,472 5,371 (2,899) 46% LICENSES AND PERMITS 2,026 2,124 (98) 2,026 3,708 (1,682) 55% STATE AID 7 13,116 (13,109) -100% 7 29,402 (29,395) 0% SALE P/COMP/LOSS 17 65 (48) -74% 17 996 (979) 2% MISCELLANEOUS 1,636 2,442 (806) -33% 1,636 7,995 (6,359) 20% OTHER 33 311 (278) -89% 33 1,519 (1,486) 2% TOTAL REVENUE 100,696 114,488 (13,792) -12% 100,696 176,925 (76,229) 57% The chart above summarizes the City’s sources of revenue through June 30, 2018. ---PAGE BREAK--- 2 1. Property Tax revenue increased by $800K from last year as result of the slight increase in the tax rate and the expansion of the tax base, and is over budget at the end of the second quarter as a result of paying a small number of assessment reductions by the end of the quarter. 2. Sales Tax revenue increased in the second quarter by $1.1M compared to last year this time. Sales tax revenue was over budget at 52% for the year. This is an unexpected boost to revenue and will be helpful should it continue through the end of the year. 3. PILOTS/19-a revenue was higher than the same period last year. They totaled almost $11.5M with most of that coming from NYS. 4. Other Local sources revenue decreased from the second quarter of 2017. The difference from year to year is related to receiving the National Grid gross utilities receipt tax in June last year as compared to receiving it in July this year. 5. Landfill revenue totaled almost $2.8M which was a decrease of 36% compared to the same period last year. Tipping fees decreased by almost $1.5M from commercial customers and coupon sales decrease by $96K. Revenue is also below budget for the year at 46%, but is expected to be at or above budget by the end of the year. 6. Other Departmental revenue was 2% ($47K) higher than last year at this time. There were increases in Rental registries, EMS Ambulatory, and APD Event Security. 7. Intergovernmental revenue increased by 161% ($197K). Most of this increase is related to the increase in interest rates on our invested cash. 8. Fines and Forfeitures revenue increased by 3% ($79K) from last year. Most of the increase is the result of an increase in traffic violations, police court fines, and miscellaneous revenue. 9. Licenses and Permits revenue decreased 5% ($98K) compared to the same period last year. Stabilizations and demolition fees decreased $350K and street opening fees decreased $83K. While safety –inspection permits revenue increased by $222K, parking permit revenue increased by almost $40K and plumbing permits increased $42K. 10. State aid decreased $13.1M which is directly related to receiving the $12.5M in Capital City funding revenue in June last year. (The city has received $9m of the Capital City funding in July towards the 2018 payment, with $3m to be paid at a later date in the year.) Most of the ---PAGE BREAK--- 3 revenue in this category is derived from state grants and various state payments. The timing of these payments varies from year to year. 11. Miscellaneous revenue decreased 33% ($806K) compared to the same time last year. Most of the decrease is related to reducing the revenue in this account for the 2017 demolition and waste collection fees that were added to the 2018 property tax bills. This category is made up of refund of prior year expenses, special events revenue and reimbursements from ACDA. (This is where federal HUD accounting rules require the City to budget for the $3m in ACDA pass through monies, even though neither the revenue nor expenses are realized.) 12. Other revenue decreased by 89% ($278K) compared to the same period last year. The decrease is primarily related to the Safer Grant which ended in 2017. Most of this revenue in this category 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 18 YTD 17 Variance Budget Variance Budget Personal Benefits 37,110,947 36,722,896 388,050 1.1% 75,228,292 (38,117,345) 49% Fringe Benefits 17,161,483 17,581,412 (419,930) 36,678,253 (19,516,770) Retirement including estimate 6,701,360 6,878,043 (176,682) 14,324,103 (7,622,743) Total Benefits 23,862,843 24,459,455 (596,612) -2.4% 51,002,356 (27,139,513) 47% Non-Personal Service 23,208,752 22,996,513 212,239 0.9% 50,694,889 (27,486,137) 46% Total 84,182,541 84,178,864 3,677 0.0% 176,925,537 (92,742,996) 48% Number of weeks in period 26 26 0 52 50% Total disbursements was about the same compared to the same period last year. Spending was down in Fringe Benefits and up in Personnel Benefits and Non-Personal Services compared in the second quarter. 1. Personal Benefits salary expense increased by 1.1% compared to the same period last year. This category was below budget a 49% for the year. The Police Department was up by $498K from last year, Administrative Services increased by $140K, Buildings Department ---PAGE BREAK--- 4 increased by $58K, and the Maintenance of Streets division increased by $198K. The Fire Department decreased by $404K. This category also includes overtime expenses which ended the quarter at almost $120K higher than in 2017 (due in part to the snowstorms). Most of the other City departments were at similar levels or had lower salary expenses for the quarter. 2. Fringe Benefits and Retirement Expenses decreased by 2.4% from the second quarter of last year. This category was below budget for the quarter at 47%. Most of the decrease in this category was attributable to decreases in workers compensation lines which were lower by ($208K) and retiree health insurance lines which decreased by ($368K). 3. Non-Personal Service spending increased by 0.9% or more than $212K. Not including encumbrances this category was at 46% of budget by the end of the second quarter. This category includes utilities, contracted services, supplies, materials, small equipment, consulting fees and debt service. The second quarter saw increases over last year in the following areas. Utilities expenses increased $95K, judgement and claims increased $191K and small and replacement equipment increased $113K. BRC saw demolitions expense decrease $94K and gasoline expense decreased $88K. 4. Encumbrances (funds reserved for purchases) decreased by almost $583K compared to the same period last year. Encumbrances total more than $5.4M at the end of the second quarter. ---PAGE BREAK--- 5 OVERTIME % of Department 2018 2017 Change % 2018 Budget Budget Police (non-reimbursable) 2,403,765 2,338,335 65,430 3% 2,403,765 4,050,000 59% Fire 324,025 369,445 (45,420) -12% 324,025 439,000 74% Communications 149,953 124,410 25,543 21% 149,953 175,000 86% Parks Maintenance 115,791 104,848 10,943 10% 115,791 185,000 63% Waste Collection 110,655 115,498 (4,843) 110,655 175,000 63% Landfill 92,645 96,468 (3,823) 92,645 150,000 62% Central Maint. 31,519 23,722 7,797 33% 31,519 70,000 45% Street Maintenance 228,286 162,698 65,588 40% 228,286 270,000 85% Recreation 5,005 4,811 194 4% 5,005 12,000 42% Traffic Engineering 16,918 19,607 (2,689) -14% 16,918 40,000 42% Capital Hills 8,031 13,896 (5,865) -42% 8,031 26,000 31% Fleet Maintenance 15,395 19,489 (4,094) -21% 15,395 18,000 86% Bleeker Stadium 210 0 [PHONE REDACTED]% 210 500 42% Buildings 53,887 45,057 8,830 20% 53,887 50,000 108% DGS Administration 352 641 (289) -45% 352 2,500 14% Control of Animals 7,712 4,378 3,334 76% 7,712 9,000 86% Cultural Affairs 4,820 5,858 (1,038) -18% 4,820 15,000 32% General Fund 3,568,969 3,449,161 119,808 3% 3,568,969 5,687,000 63% Police (reimbursable) 682,726 575,830 106,896 19% 682,726 1,288,023 53% Traffic Eng. (reimbursable) 0 0 0 0% 0 500 0% Water 267,269 277,976 (10,707) 267,269 490,000 55% Totals 4,518,964 4,302,967 215,997 5% 4,518,964 7,465,523 61% General Fund overtime was over budget at (63%) 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% or almost ($120K) higher than the same period last year. The Street Maintenance - division had the biggest increase in overtime payments which were up by almost $66K. Much of this was related to the additional work related to snow removal in January. The Fire Department decreased by over $45K and posted its lowest 1Q OT since 2012, but ended the quarter at 74% of YTD budget. OT, as expected, was reduced as new recruits filled staffing gaps. The Buildings Department was at 108% of budget by the end of the second quarter. A slight majority of departments have higher overtime expenses this year than last year. ---PAGE BREAK--- 6 CASH The City’s cash position was 10% lower than forecasted and $24.0.M lower than the same period last year. Most of the decrease is the result of the state not paying the Capital City Funding payment. Last year at this time we received a $12.5M payment. Property tax receipts are lower than last year by almost $5.7M due to the County of Albany receiving the corporate tax payments directly instead of the City collecting this cash and reimbursing the County at a later date. In addition we paid Albany County and the City School District over $7.0M in PILOT payments owed from 2017. CONCLUSION The City saw a large decrease (almost $13.8M) in overall revenue in this quarter compared to 2017, mostly the result of the of the State not paying this year’s Capital City Funding money in the second quarter. Expenses were almost level compared to last year at this time. Decreases in worker’s compensation and retiree health insurance expenses helped to hold down costs. Thus far, there are no major surprises for 2018 other than the 3 snow emergencies, and the City is largely moving forward as expected financially. The City will have to 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 remains the goal.