By Dale Martin
May 22, 2020
While a preponderance of recent (and understandable) government efforts have been focused upon responding to the Covid-19 virus, other governmental functions continue. At this time of year, significant staff effort is devoted to the preparation of next year’s budget.
Before looking ahead, let me offer a glimpse to where the City stands financially for the current year. Please recognize that the City’s budget year runs from October 1 through September 30 (which is different than the State’s budget year [July 1 through June 30] which is obviously different than the calendar year [January 1 through December 31]). Given the budget calendar, we are now approximately 58% into the current budget year.
At the second regular City Commission meeting each month, Ms. Pauline Testagrose, City Comptroller, provides to the City Commission a financial report based upon the completion of the previous month. This report (and other financial information) is available to the general public as part of the scheduled meeting’s agenda. Agendas for all meetings, not only City Commission meetings, are available for review or download through the City’s web site. If interested, you can set up an alert to be notified when any agenda is published. All agendas are published one week before the scheduled meeting date.
Ms. Testagrose’s April financial information was presented to the City Commission at the City Commission meeting this week. As indicated earlier, we are at a point one month past halfway through the budget year (58%), so an approximate indicator of the financial status is how do revenues and expenditures compare to that 58% threshold (recognizing that this is not perfect due to the timing of certain revenues and expenditures, but it is a general indicator). Since the City’s primary operating account is referred to as the General Fund, this discussion will focus on that Fund.
Through the month of April, General Fund revenues sit at 81% collected of the budgeted collections. The overwhelming amount of General Fund revenues are derived from property taxes, of which over 95% have been collected. Sales, gasoline, and other taxes, while slightly below the 58% mark, are in-line with similar revenues collected at this same point last year. The City’s revenues remain very stable for the current year.
As for expenditures, General Fund expenditures sit at only 47% for the year, a difference of over 10% from the 58% benchmark. Half of the departments funded through the General Fund have yet to reach the 50% expenditure threshold in relation to their budget. Expenditures for services, personnel, equipment, and projects will proceed cautiously as budgeted.
The notable difference in the relationship between revenues and expenditures is not unique to this year. An independent financial review (in addition to the required audit) last year confirmed that the City has historically conservatively budgeted General Fund revenues and expenditures, with revenues actually received at about 106% and funds actually spent at about 96% of the actual budget. This has resulted in a strong reserve of funds for the City that can be utilized for a variety of purposes, including financial emergencies.
With the City solidly positioned for the remainder of this fiscal year, the efforts of City staff have begun to shift toward next year. The uncertainty of many things for the next year resonates across nearly every facet of life, so what, beyond professional experience, does City staff have to lean on for general guidance as the budget process begins?
Several professional financial resources, from private and government perspectives, are available. The City’s external financial advisor shares various market indicators with staff. A monthly summary report from Bloomberg (of seventy economists) indicates that following the significant economic downturn of the second quarter this year, the third quarter (and beyond) is anticipated to have a strong recovery. The State’s Office of Demographic Research predicts a statewide increase of taxable value of 6.4%. Within the City, preliminary estimates of the increase in taxable value will likely significantly exceed that State estimate. The aforementioned uncertainty may lead to slight delays in the presentation of State figures and estimates this year in an effort to enhance reliability and confidence in the budget figures presented to local governments.
The City’s Annual Budget Calendar indicates several key dates for consideration: Jul 20- presentation of the proposed budget to the City Commission (publicly presented at the July 21 City Commission meeting); July 28- adoption of the proposed millage rate; early August (dates yet to be established)- budget workshops; September 8- first of two required public hearings on the proposed budget; September 22- second of two required public hearings on the proposed budget and formal consideration to approve the budget; October 1- start of fiscal year.
As more information about the budget becomes available, I will share that information.
Finally, while you enjoy the long holiday weekend, please take time to remember the reason for the holiday- the servicemen and servicewomen who gave their lives in defense and support of our freedoms and way of life. Thank you.