City of Durham Financial Projections

February 17, 2017

1 www.durhamnc.gov

Content

• Recap FY 2016-17 Budget

• FY 2017-18 Budget Outlook

• FY 2017-18 Budget Development Process

2 www.durhamnc.gov

Recap: FY 2016-17 Budget

3 www.durhamnc.gov

Fiscal Year 2016-17 Budget

Total Budget $404.9 million (Adopted June 20, 2016) • General Fund $181.6 million

• 49% Property Taxes • 34% Sales and Local Taxes

• Debt Service Fund $37.4 million • Water & Sewer Fund $94.1 million • Solid Waste Fund $23.4 million • All other Funds $68.4 million

Property tax rate unchanged at 56.07 (cents per $100) • A penny on the tax rate = $2.749 million • Tax Rate 56.07 (cents per $100)

• GF Operations = 31.81 • includes ½ Penny for Park and Trail Maintenance

• Debt = 13.02 • Solid Waste = 6.13 • Transit = 4.11 • Dedicated housing = 1.00

4 www.durhamnc.gov

Summary of Expenditures – All Funds

5 www.durhamnc.gov

Summary of Revenues– All Funds

6 www.durhamnc.gov

General Fund Expenses by Function

7 www.durhamnc.gov

Public Safety $93,008,429

51.20%

Public Services $46,835,968

25.79%

Administrative & Support

$16,258,954 8.95%

Community Building

$14,818,666 8.16%

Governance & Other

$10,718,329 5.90%

General Fund Revenues by Source

8

Property Taxes $88,713,260

48.84%

Local Taxes $61,367,263

33.79%

All Other $19,551,242

10.76%

State Shared Funding

$12,008,581 6.61%

www.durhamnc.gov

Current Year GF Revenue Status

• Total tax collections ($150M) at 70% • Property tax ($88.7M) at 92% • Sales tax collections ($58.6M) is at

32% after 3 months • Hotel/Motel/Car Rental ($2.7M) at 61%

• Licenses and Permits at 63% • Intergovernmental Revenues at 62% • Charges for Services at 64%

9 www.durhamnc.gov

GF Current Year Property Tax Revenues

10 www.durhamnc.gov

$87.46 $80.46

$87.53

$0

$20

$40

$60

$80

$100

Mill

ions

Adopted YTD EOY Projection

Sales Tax – Budget to Actual FY2010 thru FY2016

11 www.durhamnc.gov

$35.2 $35.0 $36.8

$56.6 $60.2

$18.7

$59.0

$0

$10

$20

$30

$40

$50

$60

$70

2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Mill

ions

Budget Actual EOY Projection

Current Year GF Revenues

12 www.durhamnc.gov

$4.5

$1.4

$2.8

$6.1

$7.6

$1.0 $0.9

$1.7

$6.2

$4.8

$4.0

$1.4

$2.8

$6.2

$7.8

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

Utility Tax Licenses andPermits

Occupancy Tax /Rental Cars

Powell Bill Charges forServices

Mill

ions

Adopted

YTD

EOY Projection

FY 2017-18 Budget Outlook

13 www.durhamnc.gov

State Budget Outlook • GF Revenue Report provided to General

Assembly by Barry Boardman, PHD

• Fiscal Research is the non partisan staff agency for General Assembly

• Report can be found at: http://www.ncleg.net/FiscalResearch/generalfund_outlook/16-17_Outlooks/2017_01_16_January_%20Revenue_%20Outlook.pdf

14 www.durhamnc.gov

FY2016-17 State Revenue Update

General Fund Revenue • Received $10.6B in the first half of the fiscal year

($321.9M above target)

Revenue Sources Exceeding Expectations • Personal Income: $161M or 3.0% above target • Sales Tax: $80M or 2.3% above target • Corporate Income and Franchise: $73M or

14.4% above target

15 www.durhamnc.gov

*Thru 12/31/2016

Sales Tax - Statewide

16

Baseline growth in the first-half of the fiscal year was 4.7%, which is below the projected 4.5% growth rate for the fiscal year. The second quarter improved over the first quarter with growth of 4.9%. Source: Quarterly General Fund Revenue Report NC Fiscal Research Division

www.durhamnc.gov

• The initial forecast estimates that we begin the budget development process with $4.7M deficit.

• We anticipate many new initiative requests from departments.

• We cannot balance the GF budget for FY17-18 (or future years) at current property tax rate.

• GF fund balance is projected to increase - can be used but best practice is to only use it for one-time expenses.

17 www.durhamnc.gov

FY 2017-18 Budget Outlook

FY 2018 GF Multi-Year Revenue Assumptions

• Property Tax – 1.24% Increase • Sales Tax - 6.35% Increase • Occupancy Tax – 7.0% Increase • Utility Franchise Taxes – 2.0% Increase • Charges for Services - 0.9% Increase

18 www.durhamnc.gov

FY 2018 – What’s In • FTEs: Additional costs for 30 new Firefighters for Fire

Station 17, COPS Grant • Pay:

• P4P Sworn Police and Fire, 5% steps with new plan adopted 2/6/17

• Non-sworn, 4.0% (flat from FY17)

• Benefits: • 401K Contributions of 5% in FY18 • Local Government Retirement FY17 increases to 7. 5% from

7.25% • 8% annual health insurance • 7% annual dental insurance

19 www.durhamnc.gov

FY 2018 – What’s In • Streets: $4M in FY18 (+$1M over FY17)

• Deferred Maintenance: $800K in FY18

(+ $100k over FY17)

• Police Take Home Cars: $1.63M

• Google Fiber Installation: $1.5M

20 www.durhamnc.gov

FY 2018 – What’s NOT In

• New requests submitted by departments and Strategic Plan initiatives

• State Budget Reductions (sales tax redistribution unknown)

• Federal Budget Reductions (unknown)

21 www.durhamnc.gov

Multi Year Financial Plan

22 www.durhamnc.gov

Fiscal Year 2017 2018 2019 2020 2021 2022Revenues General Property Taxes 87,455,884$ 91,794,083$ 93,629,063$ 95,501,284$ 99,242,778$ 101,228,438$ Taxes: Prior Year Levy/Interest 1,257,376 1,279,686 1,305,275 1,331,464 1,363,516 1,390,791 Other Local Taxes 61,367,263 65,260,004 68,559,500 72,027,624 75,673,064 79,504,959 State-Shared Revenues 12,008,581 12,125,619 12,244,999 12,366,765 12,490,967 12,617,654 Licenses and Permits 1,382,704 1,385,243 1,387,641 1,390,100 1,391,917 1,393,771 Investment/Rental Income 122,612 122,112 125,772 125,772 125,772 125,772 Charges for Current Services 7,569,473 7,639,320 7,762,999 7,890,351 7,956,703 8,024,383 Intragovernmental Services 1,857,628 1,828,480 1,865,051 1,902,352 1,940,400 1,979,208 Other Revenues 945,260 949,160 945,500 945,500 945,500 945,500 Additional Revenues 7,673,565 3,575,000 1,575,000 - - - Total Revenues 181,640,346$ 185,958,707$ 189,400,800$ 193,481,212$ 201,130,617$ 207,210,476$

AppropriationsPersonal Services 140,467,916$ 151,201,774$ 158,248,739$ 166,402,555$ 175,114,406$ 183,717,594$ Operating 34,177,541 33,689,375 36,524,935 38,584,512 39,413,391 40,983,676 Capital Outlay 872,990 790,470 822,089 854,972 889,170 924,737 Others 969,043 399,043 399,043 399,043 399,043 399,043 Appropriation to Fund Balance - - - - - - Transfers to Other Funds 5,152,856 4,591,749 5,656,337 6,671,654 6,687,737 6,704,624 Total Appropriations 181,640,346$ 190,672,411$ 201,651,143$ 212,912,735$ 222,503,746$ 232,729,673$

Property Taxes Needed 87,455,884$ 96,507,787$ 105,879,406$ 114,932,807$ 120,615,907$ 126,747,635$ Projected Levy 87,455,884 91,794,083 93,629,063 95,501,284 99,242,778 101,228,438 Surplus/(Shortfall) -$ (4,713,704)$ (12,250,343)$ (19,431,523)$ (21,373,129)$ (25,519,197)$

One Cent on Tax Rate Projected 2,749,320$ 2,783,326$ 2,838,965$ 2,895,733$ 2,953,654$ 3,012,751$ Tax Rate (General Fund Only) 0.3181 0.3298 0.3298 0.3298 0.3360 0.3360Additional GF Tax Rate - 0.0169 0.0432 0.0671 0.0724 0.0847 Total GF Tax Rate Equivalent 0.3181 0.3467 0.3730 0.3969 0.4084 0.4207

FY 2017-18 Budget Development Process

23 www.durhamnc.gov

FY 2018 Budget Development • All departments were given a target budget. Departments

were again given a target for both personnel and operating.

• Target budgets represent the FY17 budget plus personnel increases and annualized costs for partially funded items, less one-time additions to FY17 budget.

• Base budgets were not reduced (except for one time additions in FY17).

FY 17 Adopted Budget + Annualized items

- One time costs FY 18 Target

24 www.durhamnc.gov

FY 2018 Budget Development Strategic Plan Alignment • Department Directors utilize both Citywide Strategic

Plan and departmental plan to inform budget requests. • Goal Champions meet with Department Directors to

cast vision on Goal update and discuss related initiative requests.

• New Initiatives prioritized by Goal Teams based on alignment to objectives in Strategic Plan.

• Goal Champions present recommended Goal updates and share important initiatives to accomplishing objectives.

25 www.durhamnc.gov

FY 2018 Budget Development Next Steps • Departmental budgets are due Feb 24th. • New funding requests will be prioritized

based on alignment to objectives in Strategic Plan and performance data.

• Capital Projects will be prioritized in CIP.

26 www.durhamnc.gov

Summary • We are on target to meet current year revenue projections and

exceed target in specific areas.

• We project that all departments will end this fiscal year within budget.

• Revenues are projected based on assumptions in the multi-year financial plan - departments will provide FY18 program revenues with the budget submission.

• Expenditures are projected in multi-year plan - departments will provide FY18 program expenditures and new funding requests with the budget submission.

• At this point, we have $4.7M Budget Gap.

27 www.durhamnc.gov

Questions?

www.durhamnc.gov 28