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OFFICE OF THE ALBANY CITY TREASURER DATE: October 22, 2019 TO: Hon. Kathy M. Sheehan Members of the Common Council FROM: Hon. Darius Shahinfar CC: Rachel McEneny, Mike Wheeler RE: 3rd quarter 2019 Performance The following is a summary of the unaudited results for the 3rd 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 third quarter of 2019 totaled almost $144.9 million which was an increase of 8% or more than $11.0M from last year at this time (most of this increase is related to billing the second half of the NYS 19a PILOT in July compared to October last year). Expenses totaled more than $128.7M which was a decrease of 0.1% compared to 2018 (including the amount used from the debt reserve last year). REVENUE (Thousands) SEPT SEPT % SEPT Annual % REVENUE YTD 19 YTD 18 Variance YTD 19 Budget Variance Budget PROPERTY TAX 58,496 58,292 204 0% 58,496 58,250 246 100% SALES/USE TAX 27,357 26,380 977 4% 27,357 34,594 (7,237) 79% PILOTS/19-a 20,673 11,726 8,947 76% 20,673 19,675 998 105% OTHER LOCAL SOURCES 1,673 1,776 (103) 1,673 3,092 (1,419) 54% LANDFILL 5,898 4,638 1,260 27% 5,898 6,030 (132) 98% OTHER DEPARTMENTS 5,090 4,373 717 16% 5,090 6,948 (1,858) 73% INTER GOVERNMENT 506 315 191 61% 506 532 (26) 95% FINES 3,407 3,764 (357) 3,407 5,347 (1,940) 64% LICENSES AND PERMITS 3,357 3,192 165 5% 3,357 4,378 (1,021) 77% STATE AID 14,765 14,493 272 2% 14,765 29,479 (14,714) 50% SALE P/COMP/LOSS 1,160 178 982 552% 1,160 395 765 294% MISCELLANEOUS 2,431 3,691 (1,260) -34% 2,431 8,647 (6,216) 28% OTHER 106 56 50 89% 106 1,597 (1,491) 7% DEBT RESERVE 0 1,000 (1,000) 100% 0 1,000 (1,000) 0% TOTAL REVENUE 144,919 133,874 11,045 8% 144,919 179,964 (35,045) 81% The chart above summarizes the City’s sources of revenue through September 30, 2019. ---PAGE BREAK--- 2 1. Property Tax revenue increased by $204K from last year and is at 100% of budget at the end of the third quarter as a result of paying a small number of assessment reductions by the end of the quarter. 2. Sales Tax revenue the third quarter sales tax revenue was 4% higher than last year totaled almost $27.4M and is exceeding budget at 79% 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 billing the State for the second installment of the 19- a PILOT payments in July this year compared to October last year. 4. Other Local sources revenue decreased from the third quarter of 2018. There was a slight decrease in Utility Gross Receipts ($22K), OTB receipts decreased ($24K) and penalties on property taxes decreased ($52K). 5. Landfill revenue increased 27% compared to the same period last year. Tipping fees increased by almost ($1.1M) from commercial customers and government customers and coupon sales increase by ($352K). The sale of methane gas decreased by ($87K). Revenue is higher than budget for the year at 98%. 6. Other Departmental revenue was 16% ($717K) higher than last year at this time. Most of the increase is the result of billing the waste collection fees which were $944K more than last year. APD Event Security revenue decreased by almost $149K. 7. Inter-government revenue increased by 61% ($191K) 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 9% ($357K) from last year. Most of the decrease is due to not having the June parking ticket revenue numbers by the time this report was prepared. 9. Licenses and Permits revenue increased 5% ($165K) compared to the same period last year. Plumbing permit fees increased ($58K), safety inspection permits revenue increased ($16K), street opening permits increased ($117K), occupational licenses increased ($18K) and electrical permits increased ($37K). While stabilization and demolition fees decreased ($44K) and taxi medallions decreased ($28K). ---PAGE BREAK--- 3 10. State aid – Increased 2% ($272K) by the end of the quarter. The majority of the increase is related to an increase in mortgage tax revenue which increased by ($106K) and a police department GIVE grant which increased by ($187K) from 2018. 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. With the increases in mortgage taxes as well as building fees, it is an indication of increased property sales and property improvements. 11. Sales of Property and Insurance recoveries revenue increased 552% ($982K) 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 34% ($1.3M) 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 increased by ($50K) compared to the same period last year. The increase is related a police department US DOJ COPS – LEAD grant. 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 SEPT SEPT % Annual % YTD 19 YTD 18 Variance Budget Variance Budget Personal Benefits 58,781,930 57,512,964 1,268,966 2.2% 77,916,112 (19,134,182) 75% Fringe Benefits 26,389,178 25,385,244 1,003,934 4.0% 36,016,649 (9,627,471) 73% Retirement including est. 10,506,557 10,514,014 (7,457) -0.1% 14,312,840 (3,806,283) 73% Total Benefits 36,895,735 35,899,258 996,477 2.8% 50,329,489 (13,433,754) 73% Use of Debt Reserve 0 1,000,000 (1,000,000) -100.0% 1,000,000 (1,000,000) 0% Non-Personal Service 33,054,543 35,437,185 (2,382,642) -6.7% 50,718,000 (17,663,457) 65% Total 128,732,208 129,849,408 (117,200) -0.1% 178,963,601 (50,231,393) 72% Number of weeks in period 39 39 0 52 75% ---PAGE BREAK--- 4 Total disbursements decreased by $117K or 0.1% compared to the same period last year. Spending was up in Personal Benefits ($1.3M) and in Fringe Benefits ($996K) while Non-Personal Services decreased ($2.4M) from 2018. However, overall Personal Service costs are currently at budget for 2019 while Fringe Benefits and Non-Personal Services are below budget. Overall expenses are below budget through the third quarter. 1. Salary expense increased by 2.2% or almost $1.3M compared to the same period last year and was at budget at 75%. 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 payments were ($177K) more than the 3rd quarter last year and accumulated sick leave pay increased ($331K). This category also includes overtime expenses which ended the quarter more than ($764K) higher than in 2018. 2. Benefits Expenses increased by 2.8% or ($996K) from the third quarter of last year but was below budget for the quarter at 73%. The third quarter saw increases in retiree health insurance of almost while employee health insurance decreased ($16K) and worker’s compensation expenses decreased ($263K). 3. Non-Personal Service spending decreased by 6.7% or almost $2.4M. Not including encumbrances this category was 69% 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 decrease in this category is related a decrease in debt expense of ($2.4M) from paying off the 2012 and the 2015 refunding bonds in 2018. 4. Encumbrances (funds reserved for purchases) increased by $303K compared to the same period last year. Encumbrances total more than $4.1M at the end of the third quarter. ---PAGE BREAK--- 5 OVERTIME % of Department 2019 2018 Change % 2019 Budget Budget Police (non-reimbursable) 4,100,486 3,884,222 216,264 6% 4,100,486 4,195,090 98% Fire 1,004,895 671,114 333,781 50% 1,004,895 439,000 229% Communications 361,321 248,468 112,853 45% 361,321 225,000 161% Parks Maintenance 181,565 165,902 15,663 9% 181,565 185,000 98% Waste Collection 271,477 179,336 92,141 51% 271,477 225,000 121% Landfill 92,230 111,617 (19,387) -17% 92,230 150,000 61% Central Maint. 35,617 45,432 (9,815) -22% 35,617 70,000 51% Street Maintenance 296,323 302,021 (5,698) 296,323 270,000 110% Recreation 12,291 10,099 2,192 22% 12,291 12,000 102% Traffic Engineering 32,843 27,969 4,874 17% 32,843 40,000 82% Capital Hills 20,286 14,006 6,280 45% 20,286 26,000 78% Fleet Maintenance 23,322 16,321 7,001 43% 23,322 25,000 93% Bleeker / Facility Operations 125 210 (85) -40% 125 500 25% Buildings 101,598 91,985 9,613 10% 101,598 92,400 110% DGS Administration 2,747 694 2,053 296% 2,747 3,104 88% Control of Animals 10,769 13,105 (2,336) -18% 10,769 12,000 90% Cultural Affairs 7,123 8,362 (1,239) -15% 7,123 12,000 59% General Fund 6,555,018 5,790,863 764,155 13% 6,555,018 5,982,094 110% Police (reimbursable) 1,059,494 1,035,937 23,557 2% 1,059,494 1,250,000 85% Fire (reimbursable) 0 0 0 0% 0 110,000 0% Traffic Eng. (reimbursable) 0 0 0 0% 0 500 0% Water 373,788 418,530 (44,742) -11% 373,788 502,250 74% Totals 7,988,300 7,245,330 742,970 10% 7,988,300 7,844,844 102% General Fund overtime was over budget (110%) at the end of the third quarter. Excluding the Water Department (for which the City is reimbursed) and reimbursable Police overtime, overtime expense was 13% ($764K) 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 $334K and over budget at 229%. 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, demonstrated by the fact that the City is at 75% of personnel service costs with 75% of the year complete. ---PAGE BREAK--- 6 CASH The City’s cash position was as forecasted ($18.6M) and 40% ($7.4M) more than the same period last year. Most of the increase is the result of an increase in the amount transferred to City from the AWB to pay expenses related to the long term control plan. 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 third quarter compared to 2018, most of this increase ($7.7M) is related to billing the State for the second installment of the 19-a PILOT. Even though there were increases in personal and fringe benefit expenses overall expenses were down in the third quarter of 2019 compared to last year, mostly as the result of paying off some of the refunding bonds. 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 ---PAGE BREAK--- 7 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.