HomeMy WebLinkAboutAgenda - 04-21-20; 12-3 - Information Item - Memorandum - Financial Report for Third Quarter of FY 2019-20 1
ORANGE COUNTY
NORTH CAROLINA
FINANCE and ADMINISTRATIVE SERVICES
Gary Donaldson,CTP,Chief Financial Officer I gdonaldson@orangecountync.gov 1 405 Meadowlands Dr.,Hillsborough,NC 27278 1919.245.2453
To: Board of County Commissioners
From: Gary Donaldson, Chief Financial Officer
Date: April 21, 2020
Re: Financial Report for Third Quarter of FY 2019-20
OVERVIEW
This FY 2019-20 third quarter financial report summarizes the coronavirus impact on County finances primarily
sales tax, charges for services and occupancy taxes through March 31, 2020. Based on nine-months of fiscal year
activity the General Fund is still projected to end FY 2019-20 with no use of fund balance; contingent on
adherence to the cost containment measures listed in the Manager's Economic Contingency Plan. Further
General Fund detail is included for additional review.
ECONOMY
U.S. Economists concur that the economy's precipitous decline in employment and consumer spending caused by
COVID-19 has led to a recession which started in the latter first quarter of calendar 2020. The duration of the
economic distress and the negative growth trend is contingent on a protracted pandemic,vaccine and re-opening
of the economy.As a result, the County's long-term financial model has been revised to reflect negative economic
growth for the last four months of FY 2019-20 and through the first six months of FY 2020-21; or V-shape
recovery in comparison to the Great Recession's L-shape recovery. Consumer spending which comprises two-
thirds of Gross Domestic Product is a large determinant of gross sales. Our Economic Development Department
management shared this interactive consumer spending by metro areas Model produced by Impact Data Source
which illustrates the COVID-19 lockdown impact throughout the nation.
March 2020 represents the first month of the COVID-19 pandemic's impact on the economy. Sales tax remittance
from the NC Department of Revenue (NCDOR) represents a 3-month lag which means that March Sales
Transactions will be remitted to local governments in June 2020. The chart below illustrates the 3-month lag
from the sales tax transaction to the County receiving that month's sales tax revenue.
MARCH ( APRIL=Vendor MAY= JUNE 15=
Sale Submits Report NCDOR County
Transactions , L Reconciles Receives$
Orange County Government I www.orangecountync.gov 1919.732.8181
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Table 1 below indicates COVID-19 impacting the last four months of FY 2019-20 due to the necessary public
health restrictions/social distancing and closed economy. The Department of Finance applied a 12%sales tax
decline for the months of March, April, May and June 2020 which is consistent with the percentage declines
experienced during Great Recession FY 2009 in Table 2 below.
TABLE 1-FY 2019-20-PROJECTED 4-MONTH IMPACT FROM COVID-19
Economic Activity Sales Tax Revenue Financial Impact
December March Not Applicable
January April Not Applicable
February May Negligible; minimal social distancing
March June -12%due to COVID-19 economic crisis
April July -12%due to COVID-19 economic crisis
May August -12%due to COVID-19 economic crisis
June Sept -12%due to COVID-19 economic crisis
TABLE 2-GENERAL FUND SALES TAX ARTICLES DURING THE GREAT RECESSION
39 40 42
FY2008 $7,407,395.81 0.7% $5,555,760.05 2.0% $5,517,245.09 2.0%
FY2009 $6,202,897.12 -16.3% $5,047,888.55 -9.1% $5,002,534.31 -9.3%
FY2010 $7,149,075.19 15.3% $4,839,459.49 -4.1% $3,804,507.95 -23.9%
Sales Tax Financial Impact:The General Fund FY 2019-20 sales tax revenue was forecasted at$28.3 million prior to
COVID-19.The pandemic and economic crisis financial impact is forecasted to range from $1 million-$1.4 million
based on four months of sales tax declines at 12%/month.The revised forecast for Articles 39,40 and 42 ranges
from $26.9 million to$27.3 million. One positive sales tax note is NCDOR enforcement of online sales which
curtailed an even larger negative impact from COVID-19.
Revenues-General Fund
General Fund revenue collections through the end of March represents 82.9%of total budget as compared with
80.9% in the prior fiscal year. Property taxes consists of real, personal property and motor vehicles which
represents 97.2%of revenue collections as compared with 98% in the prior fiscal year.There remains three
months of motor vehicle taxes and delinquent collections to meet the budget. Property taxes represents 72%of
the revenue budget and sales tax represents 12%of the revenue budget.
Expenditures-General Fund
General Fund expenditures represent 71.2%of total expenditure as compared with the prior fiscal year of 72.2%.
Expenditures are projected to be within budget primarily attributed to personnel savings and prudent
management of non-personnel expenditures. The Finance Department established a COVID-19 project account to
track pandemic expenditures for eligible FEMA reimbursement. As of March 30, a total amount of$36,659 has
been spent and encumbered by front line departments for medical supplies and social service client needs.
Orange County Government I www.orangecountync.gov 1 919.732.8181
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Other County Funds
The Enterprise Funds and Special Revenue Funds are projected to end the fiscal year consistent with the FY 2019-
20 operating budget as well with the exceptions of the Sportsplex and Visitors Bureau funds which have been
impacted by declining gross sales/revenue due to COVID-19 and the subsequent social distancing and closure of
recreation and lodging facilities.The Sportsplex user fees and Visitors Bureau occupancy taxes are being closely
monitored by Finance staff and subject to cost containment measures to counter the revenue declines from
decreased business activity.
cc: Bonnie Hammersley, County Manager
Enclosures
Orange County Government I www.orangecountync.gov 1 919.732.8181
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ORANGE COUNTY
NORTH CAROLINA
Finance and Administrative Services
FY 2019-20 Third Quarter
FY 2020 FY 2019 FYs 2020 vs 2019
GENERAL FUND Original Budget Revised Budget YTDActual* Percentage YTDActual* Percentage YTD %Variance'
Property Tax $165,153,931 $165,153,931 $160,573,078 97.2% $155,362,363 98.0% $5,210,715 -0.8%�
Sales&Use Tax $25,372,861 $25,372,861 $13,434,121 52.9% $11,648,916 48.3% $1,785,205 4.7%
Licenses and Permits $313,260 $313,260 $131,627 42.0% $142,274 45.5% -$10,647 -3.4%�
Charges for Services $12,704,833 $12,738,515 $8,988,639 70.6% $7,795,825 62.6% $1,192,814 8.0% '
Intergovernmental $18,278,612 $19,110,574 $9,678,552 50.6% $9,308,330 50.3% $370,222 0.4%1&
cc Transfers In $4,034,600 $4,034,600 $0 0.0% $0 0.0% $0 0.0%-
Investment Earnings $415,000 $449,721 $336,883 74.9% $862,916 207.9% -$526,033 -133.0%& 2
Miscellaneous $3,040,769 $3,544,605 $6,017,911 169.8% $907,412 28.2% $5,110,499 141.6%Ob
Appropriated Fund Balance $7,808,006 $9,402,256 $0 0.0% $0 0.0% $0 0.0%-
Total $237,121,872 $240,120,323 $199,160,811 82.9% $186,028,036 80.9% $13,132,775 2.1%*
Community Services $14,421,090 $14,855,941 $10,062,766 67.7% $8,889,108 66.0% $1,173,658 1.8%ob
General Government $10,556,767 $10,827,286 $7,749,597 71.6% $7,592,745 75.5% $156,852 -3.9%0
Public Safety $26,643,096 $27,539,139 $18,739,293 68.0% $17,841,971 69.3% $897,323 -1.3%0
Human Services $40,822,906 $42,270,109 $27,380,870 64.8% $28,111,307 68.9% -$730,437 -4.2%
w Education $93,508,573 $93,508,573 $67,734,927 72.4% $66,256,017 71.8% $1,478,910 0.6%Ob
a
W Support Services $12,465,362 $12,282,198 $8,986,456 73.2% $9,569,180 69.7% -$582,724 3.4%& 3
Debt Service $30,754,428 $30,754,428 $30,207,453 98.2% $27,974,271 93.4% $2,233,182 4.8%ob 4
Transfers Out $7,949,650 $8,082,650 $0 0.0% $0 0.0% $0 0.0%-
Total $237,121,872 $240,120,324 $170,861,362 71.2%1 $166,234,599 72.2%1 $4,626,763
Notes:
*-Actual amounts include Encumbrances.
+-Based on percentage.
1-Higher fee collections at Register of Deeds,Planning and Inspections, and Emergency Services compared to FY 2018-19.
2-Investment earnings reflect a declining interest rate from more than 2%to below 1%.
3-Finance Department is reviewing material variances with affected departments.
4-Based on increased Debt Service payments for School and County projects.
5
ORANGE COUNTY
NORTH CAROLINA
Finance and Administrative Services
FY 2019-20 Third Quarter
FY 2020 FY 2019 FYs 2020 vs 2019
OTHER FUNDS Original Budget Revised Budget YTDActual* Percentage YTDActual* Percentage YTD %Variance'
29-Annual Grants Project Fund $141,464 $163,155 $64,544 39.6% $74,411 35.3% -$9,867 4.3%6 s
30-Multi-Year Grant Projects Fund $129,765 $671,565 $363,624 54.1% $266,052 7.0% $97,572 47.2%& s
32-Multi-Year Community Development Fund $1,724,544 $1,804,544 $385,483 21.4% $220,008 2.8% $165,476 18.5%6 e
33-Housing Fund $4,422,324 $5,171,930 $3,259,182 63.0% $3,560,865 52.9% -$301,683 10.1%* s
e 35-Emergency Telephone Fund $768,078 $782,023 $382,150 48.9% $422,636 28.5% -$40,486 20.3%6 s
37-Visitor's Bureau Fund $1,924,380 $2,368,880 $1,667,877 70.4% $1,575,649 53.1% $92,228 17.3%I6
z 38-Spay/Neuter Fund $71,726 $96,851 $31,586 32.6% $35,742 24.5% -$4,156 8.1%6
50-Solid Waste Enterprise Fund $11,884,383 $12,576,402 $10,425,047 82.9% $9,911,943 75.2% $513,104 7.7%I6
51-Efland Sewer Operating Fund $480 $480 $2,233 465.2% $95,736 38.4% -$93,503 426.8% 7
53-Sportsplex Fund $4,025,654 $4,579,480 $2,925,460 63.9% $2,776,479 43.6% $148,981 20.3%
70-Employee Health&Dental Fund $17,114,072 $17,114,072 $8,757,557 51.2% $8,742,353 32.0% $15,204 19.2%0
29-Annual Grants Project Fund $141,464 $163,155 $127,013 77.8% $127,295 65.3% -$282 12.6%0
30-Multi-Year Grant Projects Fund $129,765 $671,565 $490,657 73.1% $324,677 6.0% $165,980 67.0%1 s
32-Multi-Year Community Development Fund $1,724,544 $1,804,544 $987,146 54.7% $621,250 8.6% $365,896 46.1%1 s
33-Housing Fund $4,422,324 $5,171,930 $3,182,204 61.5% $3,354,323 49.4% -$172,119 12.1%Ob
35-Emergency Telephone Fund $768,078 $782,023 $521,770 66.7% $589,663 47.7% -$67,893 19.0% s
r 37-Visitor's Bureau Fund $1,924,380 $2,368,880 $1,545,995 65.3% $1,314,511 52.2% $231,484 13.0% 9
x 38-Spay/Neuter Fund $71,726 $96,851 $45,731 47.2% $37,893 29.1% $7,838 18.1%Ob
W 50-Solid Waste Enterprise Fund $11,884,383 $12,576,403 $7,225,913 57.5% $6,764,963 55.0% $460,950 2.4%ob
51-Efland Sewer Operating Fund $480 $480 $431 89.8% $191,866 65.8% -$191,435 24.0%
53-SportsplexFund $4,025,654 $4,579,481 $2,417,877 52.8% $2,776,852 63.8% -$358,975 -11.0% 10
70-Employee Health&Dental Fund $17,114,072 $17,114,072 $10,078,381 58.9% $10,562,837 44.1% -$484,456 14.8% "
Notes:
*-Actual amounts include Encumbrances.
+-Based on percentage.
5-Based on timing of receipt of funds.
6-Multi Year Fund budgets only reflect budget authority authorized in current fiscal year.
7-Efland Sewer System operations transferred over the the City of Mebane starting in FY 2019-20.
8-Finance Department is reviewing material variances with affected department.
9-Reflects higher encumbrances for advertising in FY 2019-20.
10-Reflects higher encumbrances for Field House in FY 2018-19.
11-FY 2018-19 included Run Out Claims during the transition from United Health Care to Blue Cross Blue Shield.