FY14 Budget Kick-off 1
FY 2014 OPERATING BUDGET KICKOFF
Budget and Management Services
December 12, 2012
1
FY14 Budget Kick-off 2
Presentation Overview
• Introduction of Budget Staff • FY 2014 Process • The Budget Picture
– Final FY 2012 year-end numbers – Fiscal and economic history and trends – Updated FY 2013 forecast – Property and Sales
Taxes – FY 2014 Target Base
FY14 Budget Kick-off 3
Budget Staff Chad Balke Andrea Cain Meagan Honnold Nicole Kreiser
Rebecca Linthicum Mark Matthews David McNulty Michelle Venditto
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FY 2014 Process at a Glance
Reduction Options NOT
Required
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SO WHY ARE REDUCTION OPTIONS NOT REQUIRED?
Let’s take a look at some numbers…….
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General Fund – 2012 Summary Operating Results
Original FinalBudget Budget Actual Variance
Revenues and Transfers In 951,996,756$ 952,961,725$ 967,239,936$ 14,278,211$
Expenditures and transfers out (952,100,000) (957,967,453) (950,993,551) (6,973,902)
Fund Balance Appropriated (103,244) (5,005,728) ** -
Revenues and transfers in over expenditures and transfers out 16,246,385
Fund balance at the beginnning of the year 159,451,859
Fund balance at the end of the year 175,698,244
** Budgeted use of fund balance represents encumbrances carried forward from FY 2011.
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General Fund Revenues Variance withFinal Budget -
FavorableOriginal Final Actual (Unfavorable)
Taxes: Property 638,646,000$ 638,646,000$ 645,725,047$ 7,079,047$ Sales 111,580,804 111,868,186 120,834,877 8,966,691 Other 8,530,421 8,530,421 9,880,290 1,349,869 Total taxes 758,757,225 759,044,607 776,440,214 17,395,607 Shared Revenues (federal/state/local) 120,840,010 123,082,348 119,334,660 (3,747,688) Charges for services 66,634,169 65,118,800 65,471,200 352,400 Licenses and Permits 3,048,564 3,048,564 3,413,382 364,818 Other 467,788 467,788 400,410 (67,378) Transfers in 2,249,000 2,199,618 2,180,070 (19,548)
Subtotal before Appropriated Fund Balance 951,996,756 952,961,725 967,239,936 14,278,211
Appropriated Fund Balance 103,244 5,005,728 - (5,005,728)
Total Revenues 952,100,000$ 957,967,453$ 967,239,936$ 9,272,483$
Budgeted Amounts
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General Fund Revenue Variances • Actual revenues in the General Fund exceeded budgeted amounts by
$14.3 million for fiscal year 2012. Variances in tax revenues and intergovernmental revenues comprised the majority of this difference.
• Total taxes were greater than the final budgeted amount by $17.4
million. Tax revenue increases all resulted from improved economic conditions. The increases in tax revenues were partially offset by reduced intergovernmental revenues of $3.7 million. Property taxes increased by $10.4 million over the prior fiscal year.
$7.0 million over amount budgeted for FY 2012. Sales taxes had year over year increase of $6.8 million and were $9
million over budget. Real estate property transfer taxes, included in Other taxes,
increased $1.5 million over the prior year and were $1.35 million more than the budgeted amounts.
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General Fund Expenditures
Variance withBudget vs.
Actual + Encumbrances
FavorableOriginal Final Actual Encumbrances (Unfavorable)
General administration 42,631,726$ 46,753,902$ 44,734,430$ 636,800$ 1,382,672$
Human services 214,143,720 213,405,177 211,029,938 59,360 2,315,879
Education 330,402,642 330,402,642 330,402,642 - -
Community development and cultural 25,709,071 25,794,841 25,224,320 152,137 418,384
Environmental services 7,849,575 7,960,633 7,643,371 14,516 302,746
General services administration 21,496,357 21,561,631 21,081,514 154,765 325,352
Public safety 100,861,909 102,260,311 101,049,020 105,441 1,105,850
Transfers out 209,005,000 209,828,316 209,828,316 -
Total Expenditures 952,100,000$ 957,967,453$ 950,993,551$ 1,123,019$ 5,850,883$
Budgeted Amounts
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General Fund Expenditure Variances • Overall Hiring freeze continued in FY 2013 and accounted
for approximately $1.5 million in additional savings • Human Services: $2.3 million due to under spending in
energy assistance, TANF and CPS client assistance and LME Medicaid payments that were offset by less revenues being drawn down from the state as these are reimbursement based expenditures
• General Administration: – $1 million associated with increase in Revaluation Reserve fund
balance – $250,000 associated with lower health insurance payments
• Public Safety – $750,000 variance due to a slower hiring schedule for the Hammond Road opening than anticipated
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General Fund: Fund Balance Summary
2012 2011Increase
(Decrease)Non-spendable: Inventories/noncurrent receivables 680,079$ 753,870$ (73,791)$ Restricted:Stabilization by State statute 61,577,460 53,231,845 8,345,615 Register of deeds automation 310,538 455,638 (145,100) Committed: - Revaluation reserve 3,468,905 2,628,106 840,799 Working capital 109,629,660 102,279,156 7,350,504 Assigned: Planned expenditures 31,602 103,244 (71,642)
175,698,244 159,451,859 16,246,385
938,520,000 952,100,000 (13,580,000)
18.72% 16.75% 1.97%
Working Capital per financial statements 109,629,660$ 102,279,156$ 7,350,504$
Working Capital as a Percent of Next Year's Budget 11.68% 10.74% 0.94%
General Fund Balance
Subsequent Year's Adopted Budget
Fund Balance as a Percent of Next Year's Budget
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FISCAL AND ECONOMIC HISTORY AND TRENDS
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Budget Changes Since FY 2009
$984.4
$971.2
$953.6
$947.1 $951.2 $952.1
$938.5
FY 2009Adopted: July
2008
FY 2009Amended: Feb.
2009
FY 2010Adopted: July
2009
FY 2010Amended:April 2010
FY 2011Adopted: July
2010
FY 2012Adopted: July
2011
FY 2013Adopted: July
2012
FY 2014 Target:December
2012
(in millions)
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Unemployment Statistics
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 October2012
Wake 4.0% 5.6% 5.3% 4.4% 4.1% 3.6% 3.5% 4.6% 8.4% 8.7% 8.3% 6.8%North Carolina 5.6% 6.6% 6.5% 5.5% 5.3% 4.8% 4.7% 6.2% 10.8% 10.6% 10.5% 8.0%US 4.7% 5.8% 6.0% 5.5% 5.1% 4.6% 4.6% 5.8% 9.3% 9.6% 9.0% 7.5%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
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Year-to-Year % Change in Revenue
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
FY05 to FY06 FY06 to FY07 FY07 to FY08 FY08 to FY09 FY09 to FY10 FY10 to FY11 FY11 to FY12
Perc
ent C
hang
e Ye
ar to
Yea
rWake County General Fund Revenue
ALL GF REVENUES PROPERTY TAXES SALES TAXES
Economic Growth Recession Recent Trends
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Property Value (in millions) FY 2010 FY 2011 FY 2012 FY13 Budget FY13
ProjectionFY14
Estimate
Total Value 111,695.6 112,435.4 112,901.3 113,877.2 114,286.0 116,200.0
% Change 2.5% 0.7% 0.4% 0.9% 1.2% 2.0%
Real Property 102,441.3 103,067.2 104,028.4 105,185.0 105,308.5 107,300.0
% Change 2.9% 0.6% 0.9% 1.1% 1.2% 2.0%Personal Property (non-vehicle) 6,243.6 6,530.2 6,044.8 5,850.0 6,150.0 6,100.0
% Change -2.5% 4.6% -7.4% -3.2% 1.7% 4.1%
Public Service 3,010.7 2,837.9 2,828.1 2,842.2 2,827.5 2,800.0
% Change 0.9% -5.7% -0.3% 0.5% 0.0% -1.5%
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Building Permits
10,497 9,861
5,033
3,203 3,542 3,347
4,468
0
2,000
4,000
6,000
8,000
10,000
12,000
2006 2007 2008 2009 2010 2011 2012
New Residential Building Permits January - November for FY 2006 to FY 2012
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Property Tax Revenue
$430.6 $451.3
$496.6
$559.4
$618.5 $629.0 $635.3 $645.7 $651.8 $666.3
FY 2005(actual)
FY 2006(actual)
FY 2007(actual)
FY 2008(actual)
FY 2009(actual)
FY 2010(actual)
FY 2011(actual)
FY 2012(actual)
FY 2013(projected)
FY 2014(estimate)
(in millions)
Tax Rate Change Property
Reevaluation and Tax Rate Change
Tax Rate Change
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Sales Tax History
-
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
FY10 Actual FY11 Actual FY12 Actual FY13 Budget FY13 Projected FY14 Estimated
Sales Tax State Hold Harmless
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TARGET BASE BUDGET DEVELOPMENT
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FY 2014 Target Base Calculations Starting Point
FY 2013 Adopted Budget – Non-salary and benefits
Minus One-Time FY13 Adopted Costs
Plus Projected FY 2014 Salary and Benefit Amounts
Equals FY 2014 Target before BMS Adjustments
Plus/Minus
BMS Adjustments (including adjustments for inter-departmental charges)
Equals FY 2014 Target Base
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Increases to Target Base Item # FY 13 Adopted Budget 938,520,000
1 Less Prior Year One-Time Costs (2,780,014)
Salary and Benefit Changes:2 Reduction of Vacancy Rates 768,000 3 Annualization of FY13 Pay Increase 1,000,000 4 Increase in Longevity 33,000
Total Salary and Benefit Changes 1,801,000
5Recurring Board Revisions (Human Services with Corresponding revenues) 972,300
6Eliminate Remaining Reprographics Chargebacks in GSA from Base Budget not adjusted through Salary Projection 166,969
7 Hammond Road items coming off warranty 386,066
Annualization of Justice Center (Non-Salary, Non-Fleet)8 GSA 817,105 9 IS 49,549 10 Sheriff 21,270
887,924
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Increases to Target Base (cont’d) 11 Fleet Charges
Lease Rate 92,724 Fuel (does not include a change in rate, consumption changes only) 165,846
Total Fleet Changes 258,570
12 Security Charges (42,241)
13Utility Increases (includes Justice Center and Hammond Road increases) 980,153
14 Building Lease Charges (153,217)
15 Risk Management Charges 516,488
16 Increase in Sales Tax Transfer 1,694,000
Total of Above Items 4,687,998
Unexplained Difference 32,429
FY 14 Target Base 943,240,427
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FY 2014 Preliminary Base FY13 Adopted FY14 Base -
11/30/2012Change Notes
RevenuesProperty Taxes 648,962,083 666,388,530 17,426,447 Sales Taxes 121,137,839 128,526,000 7,388,161 All Other Revenues 168,420,078 170,254,850 1,834,772 Still to be adjusted by departments
Revenues Subtotal 938,520,000 965,169,380 26,649,380
Base Expenditures County Departments 389,025,325 392,051,752 3,026,427 WCPSS 318,341,737 318,341,737 - Wake Tech 16,190,938 16,190,938 - Transfers 214,962,000 216,656,000 1,694,000 Adjusted for Sales Tax TransferBase Expenditures in System 938,520,000 943,240,427 4,720,427 Increase in Property Tax Transfer 5,058,238 5,058,238 15.5/53.4 times increase in Property TaxesProjected Base Expenditures 938,520,000 948,298,665 9,778,665
Surplus - 16,870,715 16,870,715
Items to ConsiderWCPSS ?????Wake Tech ?????Employee Pay ?????Health Insurance ?????Additional $$$$ to Debt and Capital ?????State Unemployment Liability ?????Mental Health ?????Other ?????
Surplus (Gap) TBD
FY14 Budget Kick-off 25
But don’t get too excited…… Still many unknowns: • Economy not settled, Fiscal cliff • Hiring freeze to continue due to vacancies
needed for placement of Behavioral Health employees
• New Governor and Long General Assembly Session
• Possibility of WCPSS school bond in 2013 • Health care reform costs
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Continued Focus for FY14 • Establishment of priorities through strategic
or business plans • Update of Services Matrix • Strong business cases for budget requests • Prioritization of any reductions or expansions
and identification of how these support long-range plans
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Expenditure Adjustments Departments May… Departments May Not…. • Move BMS’s target base budget
between divisions, units, and objects
• Use notes to tell us what happened (very helpful – reduces BMS’s questions)
• Change the bottom line • Make changes to fleet leases,
fuel, utility chargebacks, facility leases, 800 MHz/ CAD and risk management chargebacks (adjusted by BMS)
Revenue Adjustments Departments Should… • Update departmental revenue
estimates based on expected volumes at existing rates
• Submit requests for fee or rate increases via the expansion request form
FY14 Budget Kick-off 28
Operating Budget Calendar Month Day Activity
Dec 12 BUDGET KICKOFF: Special meeting for operating budget kickoff
DecJan
184
PB training for New Users
Jan 18 Departments Enter FY13 Revenue Projections into PB to support Mid-year Projections
Jan 2430
PB Open Lab for Refresher Purposes
Feb 4 Departments submit base requests, expansions, business plans, proposed reductions, contract listings, user fees, budget book text, performance measures, updated service matrices
Feb 15 Board of Commissioners Retreat (Includes mid year review and updated Financial Model)--Materials will be ready one week prior
March / April
Departmental Budget Meetings (CIP & Operating) with David and Joe. Analysts' preliminary analysis complete one week prior to meetings.
May 20 County Manager recommends FY14 Budget to BOC
June 3 Public Hearings
June 10 Budget Work Session with Board of Commissioners
June 17 Adoption of FY14 Budget
FY14 Budget Kick-off 29
Resources can be found at….
FY14 Budget Kick-off 30
Summary • Recent Trends
– Significant Improvement in Property and Sales Tax Growth
– But still many unknowns early in the process
• Reductions Options NOT Required for FY14 • Key Budget Dates
– January 18 – Projection for FY13 Revenues – February 4 – Budget Submissions Due – February 15 – Board of Commissioners Retreat
• Questions???