Monthly Financial Report for the Period Ending November 30, 2011
Presented to City Council by City Manager Rashad M. Young on January 10, 2012.
Download Original Signed Memo
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- National unemployment rate falls to 8.6 percent; State and Local remain mostly flat. The November national unemployment rate fell to its lowest level since March of 2009. This is a decrease of 1.2 percent from the previous year’s November report. In another positive development, the October figure of nonfarm payroll gains was revised upward from 80,000 to 100,000 while September was also revised upward from 158,000 to 210,000. While this is positive, it is important to note that unemployment still remains higher than pre-recession levels.
Unemployment rates at the State and local levels remain relatively unchanged from October 2010 with the State declining by 0.3 percent while the local rate has increased by 0.1 percent. Though the local unemployment level remains far below the national average we still remain heavily tied to federal government jobs. Government employment continues to be one of the few areas that is trending downward.
- City Office Vacancy remains higher. As reported in last month's financial report, the City's office vacancy rate as of the end of the third quarter 2011 was 13.6 percent or 2 percent above the prior year. This occurred while Northern Virginia's office vacancy rate dropped from 12.7 percent to 12.4 percent over the last year and the overall Washington, D.C. Metropolitan Area office vacancy rate dropped from 11.6 percent to 11.2 percent.
- Governor’s Proposed Biennial Budget Highlights:
- Local Aid to the State: The Governor has proposed reducing the local give-back to the State program by $10 million in FY 2013, and $15 million in FY 2014, so that the statewide give-back total will be $50 million in the first year and $45 million in the second. While this is good news because the City’s payment will be reduced by approximately $200,000 in FY 2013 and $250,000 in FY 2014, it does mean that the City will still have to pay the Commonwealth approximately $1 million each year of the biennium.
- Virginia Retirement System: The Governor did not propose full funding of the VRS actuary's recommendation for teachers and State employees. He modified it with one change that will lower the contribution in the short run: the governor proposes using an investment return rate of 8 percent (the actuary had proposed 7 percent; the City assumes 7.5 percent or lower). This will reduce the contribution that would have been required of the Alexandria City Public Schools had the actuary’s specific recommendation been approved by the Governor.
- Transportation Funding: The Governor has proposed several changes which will divert money from the General Fund and redirect it to transportation. The City has opposed such diversions in the past, since they reduce funds available for other programs paid for by the State general fund. The most notable proposal is to increase the portion of sales tax revenues going to transportation. Sales tax revenues normally help fund the costs of State general fund programs, such as education and mental health.
- ACPS Funding: Proposed funding for Alexandria Schools is $32.8 million in FY 2013, and $33.7 in FY 2014. The Governor has proposed eliminating or reducing several K-12 items that are normally funded (inflation for non-personal costs; Project Discovery; cost of competing funds for non-instructional staff in Northern Virginia; aid related to federal revenue). State budget staff said that at least some of the reductions to local funds were made so that the State could pay its VRS contributions.
- Health Department: The Governor has proposed the elimination of State funding for the City’s teen pregnancy initiative ($65,000), reduced funding for Alexandria Neighborhood Health Services ($35,000 reduction), and a restructuring of dental services, which may reduce the availability of these services to children now served through the Alexandria Health Department.
- Other Reductions: Other reductions are proposed in funding for community corrections, child advocacy centers, certain recipients of Comprehensive Services Act services, litter prevention grants, and aid to local libraries. As staff reviews the budget documents, we expect to find additional reductions.
Year-to-Date Revenues: As of November 30, 2011, five months into the fiscal year, actual General Fund revenues totaled $263.8 million, which is 4.2 percent higher than FY 2011 for the same period. Most of this increase is related to real estate and personal property taxes.
- Communication Taxes: The decrease is primarily attributable to a one-time refund issued to a large wireless provider who collected taxes on data services for various wireless devices used by their customers. The total amount of the refund including interest was $12.9 million, and the City's share was $334,000.
- Business License Taxes: The decrease of 50 percent is a result of the variable timing of payments.
- Other Local Taxes: The decrease of 63 percent is a result of the variable timing of quarterly payments.
- Personal Property Taxes/Motor Vehicle License: The FY 2012 vehicle assessments included 5,000 more cars than the FY 2011 billing. This increased revenue of about $1 million has been considered in the early estimates of FY 2013 budget revenues.
- Licenses and Permits: The increase is related to the issuance of temporary no parking sign permits.
Year-to-Date Expenditures: As of November 30, 2011, actual General Fund expenditures totaled $196.7 million, an increase of $8.7 million, or 4.7 percent, above expenditures for the same period last year. The revised budget reflects amounts that were appropriated in the supplemental appropriation ordinance approved in November. Personnel expenditures remain on par with last year. These personnel expenditures are just slightly higher than the budget, primarily because turnover savings are deducted from the budget on the first day of the fiscal year while the savings are realized during the year. Non-personnel spending increased 6.1 percent. For most departments, differences in spending patterns for non-personnel this early in the year reflect the timing of bill payments and not necessarily changes in spending patterns. We are, and will continue to be, closely monitoring and controlling these expenditures to be at or below budget.
- Registrar: The increase reflects expenditures for the August primary election.
- Fire Department: As discussed during several City Council legislative meetings and during the FY 2012 budget process, the Fire Department has a continuing need to utilize overtime to maintain minimum staffing levels on frontline Fire and EMS units when firefighters and medics use leave and to fill vacancies from attrition. The new Fire recruit class hired in 2011 has started to reduce costs from the prior year. Another recruit class is now underway that will continue to reduce the need for overtime late in FY 2012. Even with these changes, the Fire Department is currently projected to be over the current FY 2012 budget as adopted by City Council. OMB and Fire staff will continue to monitor overtime and other expenditures and revise the projections as needed.
- Health: The decrease reflects the timing of bills received from the Commonwealth for services provided.
- Debt Service: The increase reflects budgeted debt service for new bonds issued in June 2009 and June 2010. A portion of the interest cost ($1.2 million) is reimbursed from the federal government as part of the Build America Bonds program.
- Non- Departmental: General Fund expenditures do not include the costs for several emergencies shown in the following table. The City has been included in the Presidential declarations for Hurricane Irene and Tropical Storm Lee, which makes certain expenditures eligible for federal reimbursement. Staff is currently working with FEMA on the reimbursement requests. The Tropical Storm Lee cost estimate includes $2.79 million to $3.36 million in damages to the Holmes Run sewer that are believed to have resulted from the storm.
|Tropical Storm Lee
||$2.98 - $3.55million
||Declaration could reduce some costs.
||Declaration could reduce to between $0.2 and $0.3 million.
|9/11 Terrorist Preparation
- Schools: The City will provide approximately 75 percent of the estimated funds required to operate the City public school system in FY 2012.
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