HomeMy WebLinkAboutAgenda - 12-07-2015 - 8-a - FY2015-16 First Quarter General Fund and Enterprise Funds Financial Report 1
ORANGE COUNTY
BOARD OF COMMISSIONERS
ACTION AGENDA ITEM ABSTRACT
Meeting Date: December 7, 2015
Action Agenda
Item No. 8-a
SUBJECT: FY2015-16 First Quarter General Fund and Enterprise Funds Financial Report
DEPARTMENT: Finance and Administrative PUBLIC HEARING: (Y/N) No
Services
ATTACHMENT(S): INFORMATION CONTACT:
1. Narrative; including Revenue and Gary Donaldson, (919) 245-2453
Expenditure Tables Paul Laughton, (919) 245-2152
2. Revenues and Expenditure Tables
3. North Carolina State University Third
Quarter 2015 Economic Outlook
PURPOSE: To receive a First Quarter General Fund and Enterprise Funds Summary Financial
Report for the period of July 1, 2015 through September 30, 2015.
BACKGROUND: As part of meeting the periodic financial reporting requirements and providing
timely source information in regards to the financial status of the County, staff has developed
financial information related to the FY2015-16 First Quarter General Fund and Enterprise
Funds.
FINANCIAL IMPACT: There is no financial impact with receiving this FY2015-16 First Quarter
Financial Report.
SOCIAL JUSTICE IMPACT: There is no Orange County Social Justice Goal impact associated
with this item.
RECOMMENDATION(S): The Manager recommends that the Board receive the FY 2015-16
First Quarter Financial Report and provide staff with feedback.
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Attachment 1
MEMORANDUM
To: Board of County Commissioners
From: Gary Donaldson, Chief Financial Officer
Date: December 7, 2015
Re: First Quarter FY2015-16 Financial Report-Period Ending September 30, 2015
The First Quarter FY2015-16 report represents the Department of Finance and Administrative Services commitment to
providing important financial reporting to you, the County Manager, and our Residents.
The Major Orange County Operating funds are:
• General Fund
• Enterprise Funds (Solid Waste Fund and Sportsplex Fund)
The quarterly report is presented with a detailed comparison of FY2015-16 Budget versus Actual and FY2014-15 Budget
versus Actual indicating year to date revenues and expenditures performance. The primary goal of this quarterly report is
to communicate a concise financial status of the County's major operating funds.Your input and feedback is appreciated,
as enhancements are made to our quarterly financial reporting.
An Economic Outlook Report by Dr. Michael Walden of NC State University for the period ending September 30, 2015 is
included to complement this quarterly financial report.
General Fund Performance
The FY2015-16 General Fund performance is consistent with historical performance. During the first three months of the
County's fiscal year, expenditures normally exceed revenues due to the timing of Property Tax revenues which are due
September 1. The County's cash flow and ability to cover expenditures during this period is attributed to a strong balance
sheet.
General Fund Revenues
First quarter FY2015-16 General Fund revenues total$24.5 million or 11.8% of budgeted revenues,which is consistent
with 1Q FY2014-15 total of$24.5 million or 12.2% of budgeted revenues. This slight decrease of 0.4%is mostly
attributed to a decrease in Intergovernmental revenue, and more specifically, the timing of the receipt of Lottery Proceeds.
For 1Q FY2015-16, $0 Lottery proceeds were received,while in 1Q FY2014-15, $218,775 was received. Lottery
proceeds of$713,239 were received after September 30; these payments will be indicated in the second quarter report.
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Summary of Major General Fund Revenues
FY2015-16 FY2015-16 YTD% FY2014-15 FY2014-15 YTD%
Category Original Budget Revised Budget YTD Actual Collected Category Original Budget Revised Budget YTD Actual Collected
Property Tax $ 147,551,332 $ 147,551,332 $ 18,746,742 12.7% Property Tax 145,714,650 $ 145,714,650 $18,761,899 12.9%
Local Option Sales Tax 20,652,132 20,652,132 - 0.0% Local Option Sales Tax 19,001,962 19,001,962 - 0.0%
Licenses and Permits 313.000 313.000 1,207 0.4% Licenses and Permits 313.000 313.000 342 0.1%
Charges for Services 10,766,030 10,772,114 2,320,306 21.5% Charges for Services 9,799,005 9,806,153 2,130,084 21.7%
Intergovernmental 15,000,278 15,234,098 3,313,421 21.8% Intergovernmental 13,575,486 13,730,768 3,462,016 25.2%
Transfers from Other Funds 1,052278 1.052.600 - 0.0% Transfers from Other Funds 1.052.600 1.052.600 - 0.0%
Investment Earnings 52,500 52,500 5,656 10.8% Investment Earnings 105,000 105,000 1,620 1.5%
Miscellaneous 737.468 841.121 133.797 15.9% Miscellaneous 798.065 895,224 182.172 20.3%
Fund Balance Appropriatio 10,650,770 10,804,066 - 0.0% Fund Balance Appropriatio 10,068,343 10,150,647 - 0.0%
General Fund Revenues 206,776,110 207,272,963 24,521,129 11.8% General Fund Revenues 200,428,111 200,770,004 `$24,538,133 12.2%
Property Tax Revenues
1Q FY2015-16 Property Tax revenues total$18.7 million or 12.7% of budgeted revenues,which is consistent with 1Q
FY2014-15 total of$18.7 million or 12.9% of budgeted revenues,with actual collections in FY2015-16 less than FY2014-
2015 collections in the first quarter by 515,157. It is important to note that Property Tax revenues are due September 1,
with interest and penalties accruing January 2016. The billing versus collection rate is projected to be in the high 90
percentile by December 31. The tax office annual billing versus collection rate is 99%.Property Tax budgeted revenues
accounts for 71% of the total General Fund revenue budget.
Local Option Sales Tax Revenues
1Q FY2015-16 and 1Q FY2014-15 Sales Tax revenues total$0. This is attributed to the timing of receipts from the North
Carolina Department of Revenue. The local government sales tax distributions in any given month reflect actual sales
made up to three months prior. For example, August collections reflect July vendor sales,which are processed and
allocated in September,with a local government distribution made on or before October 20. The October payment is the
first month's sales tax distribution allocated to the July-June fiscal year. The 2Q FY2015-16 report will include Sales Tax
revenues activity following the North Carolina Department of Revenue computation and distribution to local
governments.
The North Carolina Department of Revenue administers the following monthly disbursement of local option sales taxes
recorded in the County's General Fund:
• Article 39 (one-cent) - authorized in 1971, and is currently allocated on a point of delivery basis.
• Article 40 (half-cent) - authorized in 1983, and is currently allocated on a per capita basis.
• Article 42 (half-cent) - authorized in 1986, and is currently allocated on a point of delivery basis.
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Charges for Services
1Q FY2015-16 Charges for Services total$2.3 million or 21.5% of budgeted revenues, as compared with 1Q FY2014-15
total of$2.1 million or 21.7% of budgeted revenues with actual collections in FY2015-16 exceeding FY2014-15
collections in the first quarter by 5190,222. This source of income is comprised of various departmental fees for services
including Planning and Inspections, Environment, Agriculture,Parks and Recreation, Aging, Sheriff's Office, Emergency
Services, and Register of Deeds. Register of Deeds revenues are approximately 8.1%higher as compared to the first
quarter of FY2014-15, the department has received approximately $100,000 more in revenue as compared to the same
period in FY2014-15. This department has collected approximately 33% of its annual budgeted revenues.
Intergovernmental Revenues
1Q FY2015-16 Intergovernmental revenues total$3.3 million or 21.8% of budgeted revenues, as compared to 1Q
FY2014-15 total of revenues of$3.4 million or 25.2% of budgeted revenues. The variance reflects only a timing variance
of receipts and is not a performance variance. This source of income includes revenue received from the Federal, State,
and other local governments. The Department of Social Services receives 64% of the budgeted revenues.
General Fund Expenditures
1Q FY2015-16 General Fund expenditures total $50.6 million or 24.4% of budgeted expenditures, as compared with 1Q
FY2014-15 total expenditures of$51.3 million or 25.5% of budgeted expenditures,with actual expenditures in FY2015-
16 less than FY2014-15 expenditures by $719,975. This decrease of 1.1%is attributed to the timing of Debt Service
payments,which is $476,415 less in FY2015-16 than in FY2014-15 through the first quarter, and attributed to the timing
of payments to the OPC Area Program and payments to Municipal Library and Recreation partners,which is $510,944
less in FY2015-16 than in FY2014-15 through the first quarter.
Summary of Major General Fund Expenditures
FY2015-16 FY2015-16 YTD% FY2014-15 FY2014-15 YTD
Category Original Budget Revised Budget YTD Actual Expended Category Original Budget Revised Budget YTD Actual Expended
Community Services $ 10,568,530 $ 10,587,536 $ 2 75,045 22.4% Community Services 9,706,823 $ 9,845,009 $ 2,349,670 23.9%
General Government 7,761,418 7,761,418 1,663,298 21.4% General Government 7,052,986 7,148,018 1,843240 25.8%
Public Safety 22,915,823 22,992264 5288,342 23.0% Public Safety 22,021,055 22,167,858 4,89699 22.1%
Human Services 33,941,247 34,073,677 8,497,393 24.9% Human Services 32,016,307 32,223,056 9,232,653 28.7%
Education 78,837,341 78,837,341 19,462,335 24.7% Education 76,847,414 76,847,414 18,964,854 24.7%
Support Services 11,726,879 11,726,879 3,947,885 33.7% Support Services 11,087,403 11,343,016 4,076,750 35.9%
Non-Departmental 41,024,872 41,293,848 9,394,850 22.8% Non-Departmental 41,696,123 41,971,111 9,985,557 23.8%
General Fund Expendituresl Expenditures 206,776,110 1 207,272,963 1$50,629,145 1 24.4% JGeneral Fund Expenditures 1 200,425,111 1 201,545,452 1$51,349,123 25.5%
Please note that the reporting of Budget versus Actual expenditures is reflected by the Functional Leadership
Teams.
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Community Services-Animal Services,NC Cooperative Extension, DEAPR, Economic Development,Planning and
Inspections.
1Q FY2015-16 and 1QFY2014-15 Community Services expenditures amounted to $2.4 million for both quarterly periods
and represented 22.4% and 23.9% of budgeted expenditures,respectively. The 1.5%variance in budgeted expenditures
reflects an increase of$742,527 in the FY2015-16 budget is attributed to additional Orange Public Transportation service
expansion routes and personnel, additional costs in DEAPR related to full year of operational costs of Blackwood Farm
Park, and the planned opening of the Cedar Grove Community Center in Spring 2016, a new position and additional
seasonal personnel costs.
General Government- Board of Elections, Clerk to the Board, County Attorney, County Manager, Register of Deeds
and Tax Administration
1Q FY2015-16 General Government expenditures total 51.6 million or 21.4% of budgeted expenditures, as compared
with 1Q FY2014-15 total of$1.8 million or 25.8% of budgeted expenditures. The Tax Administration Department
expenditures were 4.5% lower due to a decrease in Contract Services.
Public Safety—Courts, Emergency Services, and Sheriff's Office
1Q FY2015-16 Public Safety expenditures total $5.3 million or 23% of budgeted expenditures, as compared with 1Q
FY2014-15 total of$4.9 million or 22.1% of budgeted expenditures. The Department of Emergency Services expenditures
are approximately 1.3%higher than during the first quarter of FY2014-15. This EMS increase is attributed to Personnel
Services accounts (including the Temporary Personnel account). EMS remains within budget and assuming a constant
spending rate, the department is projected to end within budget.
Human Services—Department on Aging, Child Support, Housing, Human Rights, and Community Development,
Library,Public Health and Social Services
1Q FY2015-16 Human Services expenditures total$8.5 million or 24.9% of budgeted expenditures, as compared with 1Q
FY2014-15 total of$9.2 million or 28.7% of budgeted expenditures. The Department of Social Services comprises more
than 50% of the human services budget, and is the primary driver of the first quarter expenditure reduction. The
Department of Social Services expenditures are 3.1%lower than during the first quarter of FY2014-15, due to the transfer
of Drug Treatment and Pre-Trial expenditures to the County Manager's office, 1Q FY2014-15 flood expenditures, and
OPC Area payment timing variance.
Support Services-Asset Management Services, Community Relations, Finance, Human Resources, and Information
Technology
1Q FY2015-16 Support Services expenditures total$3.9 million or 33.7% of budgeted expenditures, as compared with 1Q
FY2014-15 total of$4 million or 35.9% of budgeted expenditures. The year to date rate of expenditures are above the
25% straight-line due to the required Finance and Administrative Service workers compensation,bonds and insurance
payments and Information Technology contract payments.
Education
1Q FY2015-16 Education expenditures total$19.4 million or 24.7% of budgeted expenditures, as compared with 1Q
FY2014-15 total of$18.9 million or 24.7% of budgeted expenditures. The FY2015-16 Education budget was increased by
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$1.9 million over the prior year's budget, and the County has remitted amounts commensurate with the prior year. The
Education expenditures are comprised of Current Expenses to the Chapel Hill-Carrboro City School District and Orange
County School District. Current Expenses of$18.5 million or 25% of budgeted expenditures was remitted to the school
districts in the first quarter; this was $487,583 more than the same period in FY2014-15. The remaining Education budget
pertains to Fair Funding, Recurring Capital, and Other Related County Support specifically support to Durham Technical
College (Orange County campus).
Non-Departmental
1Q FY2015-16 Non-Departmental expenditures total$9.3 million or 22.8% of budgeted expenditures, as compared with
1Q FY2014-15 total of$9.9 million or 23.8% of budgeted expenditures. The first quarter expenditures are 1% lower than
the same period in 1Q FY2014-15 due to the timing of debt service payments.
In summary, 1Q FY2015-16 General Fund Revenues and Expenditures are in line with the adopted FY2015-16 General
Fund Budget.
Enterprise Funds Performance
Solid Waste Fund
1Q FY2015-16 Solid Waste Fund performance is in line with the adopted FY2015-16 budget. First quarter revenues of
$1.6 million or 14.6% of budgeted revenues and expenses are $4.5 million or 40% of budgeted expenses.This compares
with FY2014-15 first quarter revenues of$1.4 million or 11% of budgeted revenues and expenses of$7.3 million or 46%
of budgeted expenses. The FY2014-15 higher expenses are attributed to landfill closure costs.
Sportsplex Fund
1Q FY2015-16 Sportsplex Fund performance is consistent with the adopted FY2015-16 budget. The revenue stream is
comprised of Ice Rink-34% of budgeted revenues, Membership and Fitness-32% of budgeted revenues,with the
remaining revenues comprised primarily of Aquatic and Kidsplex. First quarter revenues of$735,138 or 22.4% of
budgeted revenues and expenses are $942,539 or 27.7% of expenses. This compares with FY2014-15 first quarter
revenues of$776,962 or 20.3% of budgeted revenues and expenses of$1.3 million or 25.9% of budgeted expenses.
Enclosures
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Attachment 2 7
Revenue by Category(1st Quarter)
Summary-General Fund
FY2015-16 FY2014-15
YTD% YTD
Original Budget Revised Budget YTD Actual Collected Original Budget Revised Budget YTD Actual Collected
Property Taxes
Property Taxes 136,413,322 136,413,322 15,524,040 11.4% 135,734,649 135,734,649 15,483,207 11.4%
Motor Vehicles 8,953,010 8,953,010 2,636,852 29.5% 8,102,271 8,102,271 2,655,964 32.8%
Gross Receipts 55,000 55,000 19,758 35.9% 45,000 45,000 21,007 46.7%
Delinquent Taxes 1,150,000 1,150,000 438,362 38.1% 994,130 994,130 422,927 42.5%
Interest on Delinquent Taxes 450,000 450,000 61,069 13.6% 350,000 350,000 93,054 26.6%
Late List Penalties 75,000 75,000 15,568 20.8% 60,000 60,000 31,691 52.8%
Animal Taxes 200,000 200,000 51,092 25.5% 205,000 205,000 54,049 26.4%
Beer and Wine 255,000 255,000 0 0.0% 223,600 223,600 0 0.0%
Property Taxes Total 147,551,332 147,551,332 18,746,742 12.7% 145,714,650 145,714,650 18,761,899 12.9%
Sales Tax
Article 39 One Cent 9,429,650 9,429,650 0 0.0% 8,667,512 8,667,512 0 0.0%
Article 40 Half Cent 6,489,632 6,489,632 0 0.0% 5,994,861 5,994,861 0 0.0%
Article 42 Half Cent 4,732,850 4,732,850 0 0.0% 4,339,589 4,339,589 0 0.0%
Sales Tax Total 20,652,132 20,652,132 0 0.0% 19,001,962 19,001,962 0 0.0%
Licenses and Permits
Privilege License 13,000 13,000 1,207 9.3% 13,000 13,000 342 2.6%
Franchise Fee 300,000 300,000 0 0.0% 300,000 300,000 0 0.0%
Licenses and Permits Total 313,000 313,000 1,207 0.4% 313,000 313,000 342 0.1%
Charges for Services
Aging 67,100 67,100 26,901 40.1% 67,100 68,068 28,504 41.9%
Animal Services 193,100 193,100 51,750 26.8% 197,800 197,800 56,281 28.5%
Asset Management 1,156 1,156 80 6.9% 600 600 0 0.0%
Board Of Elections 54,495 54,495 220 0.4% 100 100 0 0.1%
Child Support 1,100 1,100 375 34.1% 1,100 1,100 584 53.1%
Cooperative Extension 20,000 20,000 1,000 5.0% 20,000 26,180 11,350 43.4%
DEAPR 317,823 317,823 79,164 24.9% 279,858 279,858 79,958 28.6%
Emergency Services 2,490,215 2,490,215 548,668 22.0% 2,240,215 2,240,215 540,502 24.1%
General Revenue 472,798 472,798 0 0.0% 472,798 472,798 0 0.0%
Health 1,588,127 1,594,211 362,835 22.8% 1,364,166 1,364,166 294,498 21.6%
Library 29,850 29,850 6,289 21.1% 29,850 29,850 7,023 23.5%
OPT 114,500 114,500 7,140 6.2% 96,500 96,500 15,603 16.2%
Planning&Inspections 1,065,865 1,065,865 370,637 34.8% 707,330 707,330 281,404 39.8%
Register Of Deeds 1,355,500 1,355,500 446,976 33.0% 1,393,687 1,393,687 346,379 24.9%
Sheriff 2,615,700 2,615,700 400,165 15.3% 2,591,700 2,591,700 420,880 16.2%
Tax 378,701 378,701 18,104 4.8% 336,201 336,201 47,116 14.0%
Charges for Services Total 10,766,030 10,772,114 2,320,306 21.5% 9,799,005 9,806,153 2,130,084 21.7%
Intergovernmental
Aging 532,367 535,185 33,457 6.3% 541,480 546,087 38,338 7.0%
Animal Services 218,218 218,218 500 0.2% 200,493 200,493 62,915 31.4%
Child Support 1,318,075 1,318,075 243,583 18.5% 1,270,000 1,270,000 241,952 19.1%
County Debt Svc-Revs 0 0 0 100.0% 42,991 42,991 0 0.0%
DEAPR 132,838 135,728 0 0.0% 126,717 130,522 3,805 2.9%
Emergency Services 0 1,101 0 0.0% 0 0 0 100.0%
General Revenue 400,000 400,000 100,000 25.0% 400,000 400,000 100,000 25.0%
Health 973,772 1,009,763 211,588 21.0% 871,740 880,690 227,496 25.8%
Information Technologies 19,645 19,645 0 0.0% 19,645 19,645 0 0.0%
Library 100,000 100,000 24,687 24.7% 100,000 100,000 27,735 27.7%
OPC Mental Health 40,000 40,000 7,889 19.7% 40,000 40,000 7,938 19.8%
OPT 844,100 844,100 10,094 1.2% 611,647 611,647 57,209 9.4%
Planning&Inspections 24,024 24,024 0 0.0% 0 0 0 100.0%
Public Safety Non-Dept) 277,731 277,731 69,420 25.0% 277,731 277,731 63,045 22.7%
Lottery Proceeds 0 191,020 0 0.0% 0 137,920 218,775 158.6%
Sheriff 364,469 364,469 32,778 9.0% 184,469 184,469 2,968 1.6%
Social Services 9,709,839 9,709,839 2,579,424 26.6% 8,843,373 8,843,373 2,409,838 27.3%
Tax 45,200 45,200 0 0.0% 45,200 45,200 0 0.0%
Intergovernmental Total 15,000,278 15,234,098 3,313,421 21.8% 13,575,486 13,730,768 3,462,016 25.2%
Transfers from Other Funds
Impact Fees 1,040,000 1,040,000 0 0.0% 1,040,000 1,040,000 0 0.0%
Other 12,600 12,600 0 0.0% 12,600 12,600 0 0.0%
Transfers from Other Funds
Total 1,052,600 1,052,600 0 0.0% 1,052,600 1,052,600 0 0.0%
Investment Earnings Total 52,500 52,500 5,656 10.8% 105,000 105,000 1,620 1.5%
Miscellaneous Total 737,468 841,121 133,797 15.9% 798,065 895,224 182,172 20.3%
Appropriated Fund Balance
Total 10,650,770 10,804,066 0 0.0% 10,068,343 10,150,647 0 0.0%
Total General Fund Revenue 206,776,110 207,272,963 24,521,129 11.8% 200,428,111 200,770,004 24,538,134 12.2%
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Expenditures by Functional Leadership Team (1st Quarter)
Summary-General Fund
FY2015-16 FY2014-15
YTD% YTD%
Original Budget Revised Budget YTD Actual* Expended Original Budget Revised Budget YTD Actual Expended
Community Services
Animal Services 1,958,791 1,958,791 453,401 23.1% 1,884,793 1,897,793 409,580 21.6%
Cooperative Extension 379,843 379,843 70,955 18.7% 367,972 374,152 72,998 19.5%
Department of Environment,
Agriculture,Parks&Recreation 3,464,888 3,483,894 834,407 24.0% 3,177,359 3,235,775 891,368 27.5%
Economic Development 515,575 515,575 121,437 23.6% 511,710 520,276 83,206 16.0%
Planning&Inspections 4,124,325 4,124,325 859,480 20.8% 3,639,881 3,691,906 827,239 22.4%
Recreation Municipal 125,108 125,108 35,365 28.3% 125,108 125,108 65,279 52.2%
Community Services Total 10,568,530 10,587,536 2,375,045 22.4% 9,706,823 9,845,009 2,349,670 23.9%
General Government
Board of County
Commissioners 870,355 870,355 246,679 28.3% 830,578 833,278 252,901 30.4%
Board of Elections 1,063,148 1,063,148 162,097 15.2% 694,173 724,977 197,809 27.3%
County Attorney's Office 551,501 551,501 123,147 22.3% 541,000 541,000 118,145 21.8%
County Manager's Office 856,037 856,037 184,515 21.6% 722,580 722,580 130,407 18.0%
Register of Deeds 924,165 924,165 187,080 20.2% 903,025 903,025 248,345 27.5%
Tax Administration 3,496,212 3,496,212 759,780 21.7% 3,361,630 3,423,158 895,633 26.2%
General Government Total 7,761,418 7,761,418 1,663,298 21.4% 7,052,986 7,148,018 1,843,240 25.8%
Public Safety
Courts 90,655 90,655 20,141 22.2% 81,655 81,655 15,965 19.6%
Emergency Services 10,146,314 10,147,415 2,270,210 22.4% 9,924,769 9,987,078 2,103,160 21.1%
Sheriff 12,678,854 12,754,194 2,997,991 23.5% 12,014,631 12,099,125 2,777,274 23.0%
Public Safety Total 22,915,823 22,992,264 5,288,342 23.0% 22,021,055 22,167,858 4,896,399 22.1%
Human Services
Child Support Services 965,640 965,640 223,228 23.1% 967,092 967,092 216,560 22.4%
Department of Social Services 18,153,438 18,153,438 4,934,477 27.2% 17,196,401 17,269,984 5,237,719 30.3%
Department on Aging 1,996,088 2,056,443 473,182 23.0% 1,896,783 1,990,980 570,551 28.7%
Health Department 8,600,516 8,672,591 1,873,410 21.6% 7,910,226 7,949,195 1,754,798 22.1%
Housing,Human Rights,&
Community Development 218,823 218,823 45,584 20.8% 210,279 210,279 51,631 24.6%
Library Services 2,081,930 2,081,930 465,783 22.4% 1,910,714 1,910,714 438,638 23.0%
Library Municipal 568,839 568,839 142,735 25.1% 568,839 568,839 284,770 50.1%
OPC Area Program 1,355,973 1,355,973 338,993 25.0% 1,355,973 1,355,973 677,987 50.0%
Human Services Total 33,941,247 34,073,677 8,497,393 24.9% 32,016,307 32,223,056 9,232,653 28.7%
Education
Current Expenses 74,097,466 74,097,466 18,524,366 25.0% 72,147,134 72,147,134 18,036,784 25.0%
Fair Funding 988,000 988,000 0 0.0% 988,000 988,000 0 0.0%
Other Related County Support 751,875 751,875 187,969 25.0% 712,280 712,280 178,070 25.0%
Recurring Capital 3,000,000 3,000,000 750,000 25.0% 3,000,000 3,000,000 750,000 25.0%
Education Total 78,837,341 78,837,341 19,462,335 24.7% 76,847,414 76,847,414 18,964,854 24.7%
Support Services
Asset Management Services 4,295,957 4,295,957 1,168,835 27.2% 4,135,662 4,331,917 1,293,433 29.9%
Community Relations 188,716 188,716 43,361 23.0% 186,028 194,618 52,353 26.9%
Finance&Administrative
Services 3,401,850 3,401,850 1,525,263 44.8% 3,364,117 3,368,807 1,631,984 48.4%
Human Resources 945,127 945,127 162,714 17.2% 780,016 785,602 180,220 22.9%
Information Technologies 2,895,229 2,895,229 1,047,711 36.2% 2,621,580 2,662,072 918,760 34.5%
Support Services Total 11,726,879 11,726,879 3,947,885 33.7% 11,087,403 11,343,016 4,076,750 35.9%
Non-Departmental
Culture&Recreation 90,294 90,294 18,739 20.8% 91,374 91,374 20,952 22.9%
Community&Environment 234,425 234,425 158,894 67.8% 219,651 295,959 177,714 60.0%
General Services 1,735,518 1,735,518 494,215 28.5% 1,871,543 1,871,543 514,945 27.5%
Governing&Management 4,046,062 4,046,062 271,719 6.7% 5,105,948 5,124,208 383,830 7.5%
Human Services 2,462,315 2,462,315 257,329 10.5% 2,337,980 2,337,980 225,125 9.6%
Public Safety 401,052 401,052 85,569 21.3% 361,052 361,052 78,191 21.7%
Debt Service 26,913,693 26,913,693 8,108,384 30.1% 26,529,306 26,529,306 8,584,799 32.4%
Transfers to Other Funds 5,141,513 5,410,489 0 0.0% 5,179,269 5,359,689 0 0.0%
Non-Departmental Total 41,024,872 41,293,848 9,394,850 22.8% 41,696,123 41,971,111 9,985,557 23.8%
Total Expenditures 206,776,110 207,272,963 50,629,148 24.4% 200,428,111 201,545,482 51,349,123 25.5%
*YTD Actuals include Encumbrances
9
Revenues and Expenses(1st Quarter)
Summary-Solid Waste Enterprise Fund
FY2015-16 FY2014-15
YTD% YTD%
Original Budget Revised Budget YTD Actual* Expended Original Budget Revised Budget YTD Actual Expended
Revenues
Charges for Services 7,805,439 7,805,439 1,153,850 14.8% 5,264,960 5,264,960 936,470 17.8%
General Govt Revenue 1,840,518 1,840,518 462,351 25.1% 4,459,272 4,459,272 466,493 10.5%
Intergovernmental 353,000 353,000 39,586 11.2% 601,925 601,925 30,878 5.1%
Contribution from Equipment Reserves 1,362,061 1,362,061 0 0.0% 2,696,893 2,696,893 0 0.0%
Revenues Total 11,361,018 11,361,018 1,655,787 14.6% 13,023,050 13,023,050 1,433,841 11.0%
Expenses
Personnel 3,822,663 3,822,663 855,130 22.4% 3,558,815 3,558,815 783,244 22.0%
Operations 5,296,743 5,296,743 2,751,614 51.9% 5,231,847 6,027,104 4,052,124 67.2%
Recurring Capital 1,244,137 1,244,137 940,075 75.6% 3,268,389 5,386,503 2,491,090 46.2%
Contribution to Equipment Reserves 997,475 997,475 0 0.0% 963,999 963,999 0 0.0%
Expenses Total 11,361,018 11,361,018 4,546,819 40.0% 13,023,050 15,936,422 7,326,459 46.0%
*YTD Actuals include Encumbrances
10
Revenues and Expenses(1st Quarter)
Summary-Sportsplex Fund
FY2015-16 FY2014-15
YTD% YTD
Original Budget Revised Budget YTD Actual* Expended Original Budget Revised Budget YTD Actual Expended
Revenues
Charges for Services
Ice Rink 1,115,385 1,115,385 229,805 20.6% 1,126,360 1,126,360 283,986 25.2%
Aquatic 436,000 436,000 126,011 28.9% 327,400 327,400 117,750 36.0%
Kidsplex 384,010 384,010 100,541 26.2% 412,800 412,800 108,717 26.3%
Membership and Fitness 1,051,528 1,051,528 252,833 24.0% 970,300 970,300 233,054 24.0%
Other Income 183,077 183,077 25,948 14.2% 192,950 192,950 33,455 17.3%
Charges for Services Total 3,170,000 3,170,000 735,138 23.2% 3,029,810 3,029,810 776,962 25.6%
Appropriated Fund Balance Total 106,278 106,278 0 0.0% 202,926 427,926 0 0.0%
Transfer from General Fund Total 0 0 0 0.0% 376,450 376,450 0 0.0%
Revenues Total 3,276,278 3,276,278 735,138 22.4% 3,609,186 3,834,186 776,962 20.3%
Expenses
Personnel 1,177,868 1,177,868 271,681 23.1% 1,147,706 1,147,706 236,006 20.6%
Operations 2,098,410 2,098,410 541,863 25.8% 2,041,480 2,063,151 687,214 33.3%
Recurring Capital 0 128,995 128,995 0.0% 420,000 2,024,246 430,246 21.3%
Expenses Total 3,276,278 3,405,273 942,539 27.7% 3,609,186 5,235,103 1,353,467 25.9%
*YTD Actuals include Encumbrances
Attachment 3 11
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A , M3
THE NORTH CAROLINA ECONOMIC OUTLOOK
THIRD QUARTER 2015
Prepared by Dr. Michael L. Walden, William Neal Reynolds Distinguished
Professor, Department of Agricultural and Resource Economics, North Carolina
State University
Contact Methods: phone: 919-515-4671; e-mail: michael Walden cr,ncsu.edu
Executive Summary: Third Quarter of the Recovery
To use a sports analogy, economic recoveries from recessions can be
divided into four quarters. The first quarter occurs with the economy hitting
bottom and finally turning around and generating growth. Negatives become
positives (or, in football terms, negative yardage is turned into positive
yardage). Most measures are still below their pre-recessionary peaks, but the
economy is moving forward. Yet issues persist with jobless rates remaining
high and wage gains non-existent.
Quarter two sees economic gains accelerate to the point that many
measures, most notably employment and aggregate production (GDP) regain
and then exceed their pre-recessionary levels. However, wage and income
growth still lag as lingering large numbers of unemployed workers curtail any
gains in compensation.
The economic game plan really takes shape in the third quarter.
Hiring continues, the ranks of the unemployed shrink, and wage and income
increases begin to occur. Both business and consumer confidence are high
and prospects for the future brighten.
The economic recovery comes to an end in the fourth quarter. Due to
many possible reasons — tight labor markets, rapid inflation, or investment
bubbles — the recovery begins to wind down. The end can come rapidly or
slowly, but whichever way, the economy eventually moves into another
recession.
1
12
The economy is now in the third quarter. The recovery —which is in its
sixth year —will continue. Production,jobs, wages, and incomes will all
improve in 2015, both in the nation and in North Carolina. Unemployment
rates will trend lower, but improvements will be modest as individuals who
previously stopped looking for work— and therefore were not counted as
unemployed by the "headline" jobless rate —will re-enter the labor force.
In the nation, nonfarm payrolls will increase 2.5%, generating 3.6
million jobs. In North Carolina, nonfarm payrolls will also improve by 2.5%,
resulting in 105,000 additional payroll jobs. Wages in both the nation and the
state will begin to accelerate their gains.
Within North Carolina, the fastest growing regions will continue to be
the larger metropolitan areas, particularly those in an arc from the Triangle
west to the Triad and south to Charlotte. Several regions — mainly in the
eastern section of the state - continue to struggle — having very low or negative
job growth.
The Nation: Another Positive Year
The broadest measure of economic activity for the nation — real (inflation-
adjusted) Gross Domestic Product (GDP) - continued climbing in 2014 and early
2015 (Figure 1). Winter storms caused GDP to fall in the first quarter of 2015, but
subsequent monthly data indicate a bounce-back. Aided by continuing modest gas
prices, consumers appear to be lifting their spending.
The employment market followed the pace of GDP. Payroll jobs were
added at a faster pace in 2014, and by early 2015 payroll employment topped 142
million, the highest ever (Figure 2). All measures of the national unemployment
rate —varying by how unemployment is defined - also dropped to post-
recessionary lows (Figure 3).
z
13
Figurel.U.S.Real Gross Domestic Product(2009$trillions)
16.5
16
15.5
15
14.5
14
13.5
13
2007, IV 2009, 11 2015, 1
Source: U.S. Department of Commerce.
Figure 2. National Employment(millions,establishment survey,seasonally-adjusted)
144
142
140
138
136
134
132
130
128
126
124
122
Jan.2008 Feb.2010 May,2015
Source: U.S. Department of Commerce.
3
14
Figure 3. National Unemployment Rates(%)
.8
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2007 2008 2009 21710 21711 2012 2013 2014 2015
"{erg d b e -----U5 5 -w////////////,U 6
Source: U.S. Dept.of Commerce. The"headline"rate excludes as unemployed individuals who have not
looked for a job in the last month. U5 includes such individuals as unemployed,and U6 further adds part-
time workers who cannot find full-time work as being unemployed.
Figure 4. Trends in the Housing Market.
7
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E 3
IIIIIIII 1111111 permits
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1997 2000 2003 2006 2009 2012 2015
Source: National Association of Realtors;U.S. Census; 2015 data are annualized through May.
4
15
However, the nation's labor force participation rate — defined as the
proportion of adults working or actively looking for work — still stayed at 30-year
lows in 2014. The continuing retirement of baby boomers and the increased time
of young adults in post-secondary education are parts of the explanation that are
not troubling. Troubling is inadequate skills possessed by some potential workers.
However, in early 2015 the labor force participation rate made modest gains.
The housing market continued to improve in 2014 and early 2015 (Figure 4),
yet with sales and construction (permits) levels still far below pre-recessionary
highs. The market is ultimately driven by young buyers, and many of the
millennial generation (those born between 1980 and 2004) have not yet shifted to
buying from renting as they stay in school longer and deal with college debt.
There is also continuing concern about the ability of small contractors to obtain
loans.
There is some suggestion the overall inflation rate (including prices of all
consumer goods and services) may be accelerating (Figure 5). It is logical to see
greater price pressures as the economic recovery moves in to its sixth year. Still,
the annualized level in 2015 (2.4%) is moderate and eases worries associated with
potential deflation.
Possibly reflecting higher inflationary expectations, long-term interest rates
edged higher in late 2014 and early 2015 (Figure 6). The trend can also be
interpreted as a positive sign if the increase reflects improved loan demand.
Additionally, as interest rates earned on loans rise, banks will be more motivated to
dip into their substantial reserves and make them available for further lending.
National Outlook: The Recovery Continues
All signs point to another year of economic growth in the nation in 2015.
Although real GDP growth was negative in the first quarter due to weather
conditions, it is predicted that growth will be rigorous enough in the remaining
quarters to result in an annual real GDP growth rate for 2015 of between 2.75%
and 3.0%. If accurate, this would be the strongest improvement in real GDP since
2005.
5
16
Figure 5. Total Inflation Rate at the Retail Level(Consumer Price Index)
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
-0.5
-1
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Source: U.S. Department of Commerce. 2015 is annualized change through May.
Figure 6. Trends in Short-Term and Long-Term Interest Rates(U.S.Treasury Security rates)
4.5 ..
3.5
3
2.5 ..
3 mon.
10 yr.
1.5 ..
0.5 ..
0
�
00 00 00 00 Ql Ql Ql Ql O O O O r1 N N M M M M Ln Ln
O O O O O O O O r-1 r-1 r-1 r-1 r-1 r-1 r-1 r-1 r-1 r-1 r-1 r-1 r-1
N Ln 00 r-1 N Ln 00 r-1 N Ln 00 r-1 N Ln 00 r-1 1.0 r-1 N Ln 00 r-1 N Ln r-1 -1
r-1 r-1 r-1 r-1 r-1 r-1
Source: Board of Governors of the Federal Reserve.
6
17
The key elements behind this growth forecast are job growth, improved
worker wages, the lessening of debt constraints, moderate inflation, and pent-up
demand.
Nonfarm payroll job growth has improved in each year since the job
recovery began in 2010, rising from 1.6% in 2011 to 1.7% in 2012 to 1.8% in 2013
and to 2.3% in 2014. It is expected this trend will continue in 2015, with nonfarm
payroll job growth improving by 2.5%. This will translate into 3.6 million
additional jobs nationwide and will be a major impetus to economic growth during
2015.
Worker wages (earnings per hour) have also been improving at better rates
in recent years. Average nominal worker wages gained only 1.4% in 2013, but
rose 2.1% in 2014 and in the first five months of 2015 are rising at an annual rate
of 2.3%. As job growth accelerates and the pool of unemployed workers shrinks,
wage gains should accelerate, posting an expected 2.5% improvement in 2015.
Combined with the increase in jobs, this gives a powerful boost to consumer
spending power and economic growth.
Households have worked hard to reduce debt levels since the recession.
The ratio of household debt to household disposable income has risen for five
consecutive years. Households now devote only 10% of their disposable income to
debt service, down from 13% prior to the Great Recession. With debt payments
less of a burden, households have more resources to devote to spending.
Although both inflation and long-term interest rates have trended upward,
they are not at levels that will impinge the economic recovery. Also, both are well
below their pre-recessionary levels. It is widely thought the Federal Reserve will
increase the short-term interest rates it controls sometime in late 2015 or early
2016. However, the hike is expected to be contained (0.25 percentage points) and
will signal the Fed's confidence in the economic recovery.
The last generator of continued economic growth in 2015 will be pent-up
demand. The Great Recession and relatively slow recovery motivated many
households to postpone purchasing big-ticket, durable items. For example,
purchases of vehicles and vehicle parts in the nation were up only 2.4% in 2014
from 2007, despite the fact that the number of households increased 6% during the
same period. As households feel more confident about the economy, purchase of
durable products will increase — thereby adding another element of growth to the
economy.
18
Of course, there are always cautions and potential dangers for the economy.
Labor productivity has flattened in recent years. This is a concern because
research shows long-run gains in the economy — and specifically to workers'
standard of living — only occur when labor productivity is improving. The absence
of recent gains in labor productivity suggests potential problems in worker training
and in the skill sets of some workers.
International issues are always "wild cards" for economic forecasts, and in
2015 there is no shortage of international concerns. These include geopolitical
confrontations in eastern Europe (Ukraine), the Middle East (Iraq, ISIS), southeast
Asia (China's expansion in the South China Sea), and northeast Asia (North
Korea). Any of the situations could reach the level of disrupting both the world
and U.S. economies.
There are also issues of economic growth in Europe, China, and Japan
which, with the U.S., compose the bulk of economic activity in the world. Europe
has issues of slow growth and of maintenance of the Euro currency. China's
economic growth has significantly slowed, and some worry of a recession created
by over-investment in real estate. Japan has had a decades' long problem with
slow economic growth and a rapidly aging population. All could have adverse
impacts on the U.S. economy.
North Carolina: Is Progress Stalling?
Like the nation,job growth in North Carolina improved in 2014 (Figure 7)
and the alternative measures of unemployment all declined (Figure 8). But some
worries have begun to emerge.
First, as indicated in Figure 7, payroll job growth in the first five months of
2015 has been running at an annual rate slightly behind 2014. However, the same
pattern is seen at the national level and is, again, likely due to the adverse effects of
the bad winter weather.
Perhaps a more important worry is the performance of real GDP. The gain
in the state's real GDP in 2014 was only little more than half the gain in 2013
(1.4% in 2014 and 2.7% in 2013). Further, North Carolina's 2014 improvement
(1.4%) was substantially under the national increase of 2.2%.
s
19
Figure 7. North Carolina Annual Payroll Job Gains(number)
120000
100000
80000
60000
40000
20000
0
20.10 20.11. 20.12 20.13 20.14 20.15
Source: U.S. Department of Commerce. 2015 is May 2014 to May 2015.
Figure 8.North Carolina Unemployment Rates
15
7
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�tl �Y �A�W �Y I/Y ,•p�tl}' 'V�Y}' I/tl}� `�,S Y}' I/�Y �.7 tl}' I/YY
uuuuuuuuuuuuuuuuuuuuo��e a�'�j�e uuuuuuuuuuuuuuuo���!� �uuuuuuuuuuuuuuuuuuuuo��..��a
Source: U.S.Department of Commerce.
9
20
Fortunately, there is a logical explanation for the state's GDP trends.
Manufacturing is still more dominant in North Carolina than in the nation. The
share of total GDP contributed by manufacturing is 20% in North Carolina and
11% in the nation. Over half of domestic manufacturing output is exported. As
the dollar's international value significantly strengthened in 2014, exports to
foreign buyers stalled. As a result, North Carolina's factories showed no gain in
their value of output in 2014 compared to 2013. This held down North Carolina's
GDP gains in 2014, and did so to a greater extent in North Carolina than in the
nation due to the state's heavier reliance on manufacturing.
A more worrisome trend in North Carolina is the slow pace of wage gains.
In 2013, 2014, and thus far (through May) in 2015, average nominal worker wage
gains in North Carolina have underperformed those in the nation. For example, in
2013, average nominal wages increased 1.4% in the nation but fell I% in North
Carolina. In 2014 U.S. average nominal wages improved 2.1%, yet in North
Carolina the gain was 0.4%. From May 2014 to May 2015, national average
nominal wages are up 2.3% compared to North Carolina's increase of 2.2%. So
the gap has recently narrowed, but it still bears watching.'
North Carolina State and Regional Forecasts
The NCSU Index of North Carolina Leading Economic Indictors is designed
to project the growth path in the state's economy. The Index (Figure 9) shows a
decline (on-trend) since spring, 2014. Hence, the Index correctly forecast the
recent slowing of growth in both real GDP and payroll employment compared to
levels in 2013.
Still, real GDP and nonfarm payrolls will increase for the remainder of 2015.
Real GDP is forecasted to improve by between 2.5% and 2.75%, and nonfarm
payrolls are expected to rise by 2.5% - the same rate as the nation. This will
tranlate to 105,000 additional payroll jobs in the state. The headline
unemployment rate —registering 5.7% in May —will fall to 5.5% by year's end.
The reduction in the headline jobless rate will be cushioned by the return of
"discouraged workers" as the labor market improves.
'The pattern is repeated for per capita disposable income. In 2013 per capita disposable income in the nation
rose 0.3%, but in North Carolina it fell 0.5%. In 2014,the gain in per capita disposable income was 2.9%in the
nation and 2.5%in North Carolina.
10
21
Figure 9. NCSU Index of North Carolina Leading Economic Indicators
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NCSU INDEX OF NORTH CAROLINA LEADING ECONOMIC INDICATORS
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Source: author's calculations.
Table 1 gives the most recent annual payroll job growth rate for North
Carolina's metropolitan areas, the most recent headline unemployment rate (April
2015) for the areas, and the forecasted end-of-the-year headline unemployment rate
(December 2015) for the metropolitan areas. Looking at the job growth rates, the
pattern that has been observed in recent years continues. The fastest job growth
rates are in the larger metropolitan areas (Burlington, Charlotte, Greensboro/High
Point, and Raleigh/Cary), while the slowest growth rate (including negative growth
rates) are in the smaller metro areas and are particularly in the eastern section of
the state (Fayetteville, Goldsboro, Greenville, Jacksonville, New Bern, and Rocky
Mount). Looked at from a large geographic perspective, the most rapid job
growth in North Carolina is occurring in an arc from the Triangle west to the Triad
and south to Charlotte.
11
22
Table 1. End-of-Year Unemployment Rate Forecasts, %(not seasonally-adjusted)
"Headline"Unemployment Rate'
Region 2015 Job Growth' Aril 2015 Forecasted,Dec.2015
Asheville 2.9% 4.1 3.9
Burlington 4.4% 4.7 4.6
Charlotte 3.3% 5.1 4.8
Durham-Chapel Hill 1.5% 4.4 4.0
Fayetteville 0.0% 6.8 6.7
Goldsboro -0.2% 5.6 5.6
Greensboro-High Point 3.5% 5.3 5.2
Greenville 0.0% 5.5 5.5
Hickory 0.9% 5.3 5.3
Jacksonville 1.0% 5.2 5.2
New Bern 0.0% 5.7 5.7
Raleigh-Cary 3.0% 4.3 4.1
Rocky Mount -0.4% 7.9 7.9
Wilmington 1.8% 4.9 4.7
Winston-Salem 1.6% 4.9 4.8
State 2.6% 5.5 5.5
1 May 2014 to May 2015,seasonally-adjusted;znot seasonally-adjusted
Source: U.S. Dept.of Commerce and author's forecasts.
Modest changes are forecasted in the rates as regions with substantial job
growth will likely see a countering increase in their labor force from the re-entry of
discouraged workers. At the end of 2015, it is expected that Asheville, Durham-
Chapel Hill, and Raleigh-Cary will have the lowest state jobless rates.
12