Monthly Financial Report for the Period Ending April 30, 2012
Presented to City Council by City Manager Rashad M. Young on June 13, 2012.
Download Original Signed Memo
NOTE: Click on the headings below or the "online references" to view more detailed economic, revenue or expenditure data. Click on any highlighted bullet or text to view additional information, including charts and memos.
New home sales and the strength of the housing market recovery – The March new home sales report from the U.S. Census Bureau showed an increase of 7.5 percent in the number of new home sales from March 2011. Additionally, nationally sales for January, February, and March are up about 17 percent from the weakest three month period during the housing downturn.
However, distressed home sales continue to account for a large portion of home sales (40 percent in March) according to the National Association of Realtors (NAR). Additionally, distressed home sales sold for approximately 20 percent less than other home sales according to NAR. The high number of distressed home sales along with the relatively low sales point continues to dampen the overall health of the national housing market by keeping sale prices down and discouraging development as developers cannot compete with the lowered rate of return. This has created what is being called the “distressing” gap, or the difference between new and existing home sales. The most recent Standard and Poor's Rating Services' estimates that the time it will take to clear the supply of distressed homes on the U.S. market is now about 46 months. This is slightly lower than the S&P forecast from the previous quarter.
Below is a graph showing the "distressing” gap between existing home sales (left axis) and new home sales (right axis) through March 2012.
New Residential Construction Permits – In March the City received 41 new single family residential (one and two family units) construction permits. This brings the fiscal year to date total of single family permits to 112. Through March 2012 the annual total number of new residential permits is 173 with 112 coming from single family and 61 from multi family. Through March 2011, the annual total number of new residential permits was 62 with 34 coming from single family and 28 from multi family. This equates to a year over year increase of 179 percent in total residential permits from March 2011 to March 2012. Of the 41 new single family permits issued in March, 27 are from Potomac Yard while the other 14 are from development on Alfred Street between Madison and Montgomery. By comparison, total residential permits nationally increased 4.5 percent from February 2012 to March 2012 and 30.1 percent from March 2011 to March 2012.
GDP update – The GDP report was weaker than expected with 2.2 percent real GDP growth annualized (projections were for 2.5 percent growth). Personal consumption expenditures increased at a 2.9 percent annual rate, and residential investment (residential investment includes construction of new single and multifamily structures, residential remodeling, production of manufactured homes, and brokers’ fees) increased at a 19.1 percent annual rate. The relatively mild winter likely boosted personal consumption and residential investment; however, residential investment as a percent of GDP (2.4 percent) is still near record lows. In previous post-war recessions residential investment bounced back quickly, typically within one quarter, but this time due to the excess supply of existing vacant housing units, residential investment has dragged for 11 quarters.
Year-to-Date Revenues: As of April 30, 2012, ten months into the fiscal year, actual General Fund revenues totaled $359.1 million, which is four percent higher than FY 2011 for the same period. Most of this increase is related to the budgeted real estate and personal property taxes (discussed below), which have increased four percent and nine percent, respectively, over last year. This report includes the April re-estimates described in Budget Memo #48, which anticipated an additional $1.7 million in revenues above those previously budgeted.
- Personal Property Taxes/Motor Vehicle License: The FY 2012 vehicle assessments included 5,000 more cars than the FY 2011 billing. The resulting increase in revenue of approximately $3.0 million has already been included in the FY 2013 Approved Budget. Based on current collections, staff projects FY 2012 revenues to be at least $37.2 million, an increase of $0.3 million over the April projection.
- Consumer Utility Taxes: The decrease in these taxes is primarily due to the relatively mild winter.
- Communication Taxes: The decrease in these taxes is primarily attributable to a one time refund issued to a large wireless provider that 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 $0.3 million.
- Recordation Tax: The increase in this tax is primarily the result of the sale and refinancing of a few large commercial properties. Based on current collections, primarily for residential refinancings, staff projects collections will be approximately $4.8 million, an increase of $0.7 million above the April projection.
- Revenue from Federal Government: The increase in Federal revenue primarily represents the timing of payments for the Federal Prisoner Per Diem.
- Other Local Taxes: The decrease of 31 percent in other local taxes is primarily a result of the variable timing of quarterly payments.
- Charges for Service: The increase in charges for services is primarily the result of a budgeted increase in meter fees (to $1.75/hour) implemented with the installation of the new multi-space meters midway through FY 2011. In addition, planning permit fees also show increased activity for FY 2012. Based on collections to date, staff projects charges for services will be at least $15.6 million, an increase of $0.6 million over the April projections.
Year-to-Date Expenditures: As of April 30, 2012, actual General Fund expenditures totaled $404.4 million, an increase of $20.1 million, or five percent, above expenditures for the same period last year. The revised budget reflects amounts that were appropriated in the supplemental appropriation ordinances approved in November and April, including bond refunding in April. Personnel expenditures remain on par with last year. These personnel expenditures are higher than last year by three percent but match the percent of payrolls completed, which is 83 percent. Non-personnel spending increased seven percent but is only 53.5 percent of the budget so far. For many departments, differences in spending patterns 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.
- Emergency Communications: The increase is primarily attributable to overtime costs that have occurred while the department continues to increase staffing to appropriate levels.
- Health: Increased expenditures reflect a timing difference in payments made to the Commonwealth of Virginia for contract health services.
- Community and Human Services: Increased expenditures are the result of a significant increase in Comprehensive Services Act costs in the third quarter, due to an increase in the department’s caseload.
- Debt Service: The increase reflects budgeted debt service for new bonds issued in June 2010 and July 2011 and refunded bonds in April 2012. 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, which makes certain expenditures eligible for federal reimbursement. Staff continues to work with FEMA and insurance adjustors on the reimbursement requests. Though no reimbursements have been received yet, $0.3 million has been approved for the earthquake only for costs directly associated with the event. The City is responsible for other repairs made at the same time, such as resealing or adding chimney caps. The Tropical Storm Lee cost estimate includes $2.34 million to $3.55 million in damages to the Holmes Run sewer. City Council committed fund balances to offset any costs not reimbursed by FEMA and insurance filings. Initial reviews of the projects indicate that most of the cost is for sanitary sewer work that is not eligible for reimbursement since the projects currently being considered would move these sewer lines from their pre-disaster location.
Additional costs are included in the General Fund expenditures relating to the February line of duty death incident, which resulted in the death of Alexandria Paramedic Joshua Weismann.
|Tropical Storm Lee
||$2.34 - $3.55million
||Declaration could reduce some costs.
||Declaration could reduce to between $0.3 and $0.4 million.
||$0.3 million approved to date.
|9/11 Terrorist Preparation
||All City cost.
|February Line of Duty Death Incident (Fire paramedic)
||City expenses included in the General Fund.
- 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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