HomeMy WebLinkAboutAgenda - 11-15-2022; 12-1 - Information Item - Memorandum - Financial Report- First Quarter FY 2022-23 1
ORANGE COUNTY
NORTH CAROLINA
FINANCE and ADMINISTRATIVE SERVICES
Gary Donaldson,CTP,Chief Financial Officer I gdonaldson@orangecountync.gov I PO Box 8181, Hillsborough, NC 27278 1 919.245.2453
INFORMATION ITEM
To: Board of County Commissioners
From: Gary Donaldson, Chief Financial Officer
Date: November 15, 2022
Re: Financial Report- First Quarter FY 2022-23
Please find attached a summary of FY 2022-23 first quarter financial report for the General Fund, Enterprise Funds, and
Special Revenue Funds. It is important to note that key General Fund revenues, Property tax and Sales tax will not have
any material collections activity through the first quarter. Property taxes are due September 1, but collections does not
achieve 90%and higher until late fees and penalties begin to accrue on January 5 of each year. Sales taxes lag by three-
months from the North Carolina Department of Revenue (NCDOR).
Though we have not received any sales tax during the first quarter, the NCDOR reports indicate that the July 2022
collections was 10% higher when compared to July 2021. Sales tax and the other noted Key County Economic indicators
below provide useful year-to-date (YTD) first quarter comparisons in view of recent economists' sentiments on the state
of the U.S. economy.
Table 1: Key County Economy Indicators
FY 2022-23 FY 2021-22
Key County Economic First First
Indicators Quarter Quarter Comments
Includes all Articles 39,40,42, 43 and
Sales Tax%Change 10% 15% 46.
Property Tax Billings
versus Collections 16.1% 15.7% Includes real, personal and motor vehicle.
Excise Stamp
Recordings 736 929 Volume of real estate transfers (mortgages and refinancings).
Permits Issued
County Permits 2754 2419 This includes building, electrical and HVAC permits.
Hillsborough Permits 720 523 This includes building, electrical and HVAC permits.
Unemployment Rate 2.6% 2.8% County rate is the lowest in North Carolina.
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During periods of economic contraction and expansion, some of these metrics tend to be sensitive with economic
performance particularly sales tax, permits and excise stamps (real estate transfers).The FY 2022-23 first quarter metrics
indicate a resilient County economic base consistent with the recent U.S. Gross Domestic Product increase of 2.6%.
However, the County's excise stamps (real estate transfers) has decreased due to a higher interest rate environment,
which has slowed home sales and refinancing.
The American Rescue Plan Act (ARPA)funds has been an integral contributor to the County's economy.Table 2 below
indicates the County's ARPA allocations and project life expenditures from inception through September 30, 2022.
The County submitted its most recent quarterly expenditure report to the U.S.Treasury Department on October 31,2022
showing expenditures of$8.8 million from March 1, 2021 through September 30, 2022.
As indicated below, Housing and Human Services has been the predominant ARPA expenditure to date compromising 82%
of life-to-date expenditures through September 30, 2022. The focus by the Board and Manager on these basic human
rights has added to further stability in the County's economy.
Table 2:American Rescue Plan Act Expenditures to Date
Life to Date September 30, 2022
Spending Plan Categories Total Obligated Expenses
Aging $ 119,229 $ -
Criminal Justice Resources $ 49,751 $ 38,414
Social Services $ 706,550 $ 185,312
Emergency Services $ 2,731,300
Facilities $ 119,936 $ 114,424
ARPA Administration $ 66,886 $ 35,500
Housing $ 10,047,632 $ 7,073,027
Human Rights and Relations $ 61,540 $ 26,556
Broadband Access $ 10,000,000 $ 1,000,000
Tourism,Arts,and Economic
Development $ 486,000 $ 415,083
Unassigned $ 4,450,898
Total $ 28,839,722 $ 8,888,316
The Board approved the first tranche and allocation of$14.4 million on June 15, 2021 and the second tranche and
allocation on December 14, 2021. ARPA funds must be obligated by December 31, 2024, and fully spent by December 31,
2026. The remaining unobligated amount of$4.4 million is slated for a forthcoming budget amendment this fiscal year.
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General Fund Summary
FY 2023 FY 2022 FYs 2023 vs 2022
GENERALFUND Original Budget Revised Budget YTDActual* Percentage YTDActual* Percentage YTD %Variance`
Property Tax $186,165,129 $186,165,129 $30,728,813 16.51% $30,857,615 17.37% -$128,802 -0.86%
Sales&Use Tax $35,616,489 $35,616,489 $0 0.00% $0 0.00% $0 0.00% 1
Licenses and Permits $274,200 $274,200 $630 0.23% $1,715 0.62% -$1,085 -0.39%
Charges for Services $14,029,092 $14,226,117 $3,799,129 26.71% $3,469,142 23.82% $329,987 2.89%0 Z
Intergovernmental $18,428,977 $19,709,211 $1,841,772 9.34% $2,398,857 11.25% -$557,085 -1.91%0 3
Transfers In $76,740 $76,740 $0 0.00% $20,833 0.38% -$20,833 -0.38%
Miscellaneous $910,064 $1,034,971 $219,970 21.25% $228,414 3.20% -$8,444 18.05%
Appropriated Fund Balance $2,608,888 $2,608,888 $0 0.00% $0 0.00% $0 0.00%
Total $258,109,579 $259,711,745 $36,590,314 14.09% $36,976,576 15.16% -$386,262 -1.07%
Community Services $14,690,753 $15,405,671 $3,529,269 22.91% $2,743,247 19.52% $786,022 3.39%
General Government $13,451,262 $13,712,875 $3,310,630 24.14% $2,814,706 27.33% $495,924 -3.19%Q
Public Safety $31,919,210 $32,890,888 $7,479,704 22.74% $5,716,905 19.99% $1,762,799 2.75%
Human Services $43,038,664 $45,306,868 $9,584,186 21.15% $8,036,650 19.56% $1,547,536 1.59%
Education $98,201,672 $98,201,672 $23,615,797 24.05% $22,452,704 23.93% $1,163,093 0.12%
Support Services $12,295,327 $9,681,080 $4,340,273 44.83% $4,305,848 33.43% $34,425 11.40%
Debt Service $38,077,170 $38,077,170 $20,513,496 53.87% $23,697,025 58.94% -$3,183,529 -5.07%
TransfersOut $6,435,521 $6,435,521 $0 0.00% $0 0.00% $0 0.00%
Total $258,109,579 $259,711,745 $72,373,355 27.87%1 $69,767,085 28.83% $2,606,270 -0.96%
Notes:
*-Actual amounts include Encumbrances.
+-Based on percentage.
1-Three-month lag from NC Depatment of Revenue..
2-Includes Register of Deeds,Health Department,Planning and Inspections,Sheriff,and Emergency Services.
3-Timing variance of grant draw downs.
General Fund revenues are 14.1% of budgeted revenues compared with the prior fiscal year at 15.1%. The slight
decline in FY 2022-23 compared to the prior year are timing variances and not due to economic performance.
As indicated in Table 1 above, the underlying drivers of the revenue base remains sound despite inflation and
increased interest rates. The County's 16%fund balance policy provides the working capital to short-term
coverage of expenditures until property taxes and sales tax are collected later in the fiscal year.
General Fund Revenues
• Property Tax collections are 16.5% of the total Property tax budget compared to 17.3% the prior fiscal
year. Real and personal taxes were due September 1 but peak at the end of December tax collections
due to the pending January assessment of penalties and interest.
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• The FY 2022-23 Budget increased the tax rate by 1.25 cents from 81.87 cents to 83.12 cents per $100 of
assessed value. One cent is dedicated to support the current expenses for the school districts which
increased by $4.2 million. The remaining 0.25 cents increase is dedicated to debt service.
• Motor vehicles are 29.7% of the Motor Vehicle budget as compared to 31.5% in the prior fiscal year.
This slight variance is attributed to a timing variance and the higher budgeted amount from the 1.25
cent tax rate increase.
• Motor vehicle taxes are payable on the vehicle renewal date and the tax is based on market value of the
vehicle. The State remits this tax to the County on a monthly basis. FY 2022-23 Motor Vehicles are $3.4
million as compared to $3.3 million the prior fiscal year.
• Sales Tax for Articles 39, 40, 42 and Hold Harmless amounts are recorded in the General Fund. As noted
previously, the three-month lag means no revenue was remitted by NCDOR during the first quarter.
• Charges for services are 26.7% of the budget as compared to 23.8%the prior fiscal year, with the
favorable performance variance attributed to higher cost recovery Emergency Charges approved this
year's budget. The three revenue sources to highlight are:
Emergency Medical Charges. Emergency Medical Charges collections are $1.7 million compared to
$721,435 collected through the first quarter of last year attributed to the FY 2022-23 rate increases.
County rates for transporting were significantly lower than other jurisdictions with Medicare and private
insurance accounting for more than 50% of the rate base.
Excise Stamps (Real Estate Transfers). Excise Stamps have decreased by roughly 50%from $887,801 to
$416,707 this fiscal year. Mortgage rates have more than doubled from 3% last year to 7% this year,
therefore the number of refinancing transactions and real estate transfers decline results in less excise
stamp revenue.
Permits. Permits have increased which provides a good indicator for segments of the construction
industry. Planning and Inspection revenue remain stable at $604,035 through the first quarter of this
fiscal year compared to $555,163 the prior fiscal year.
• Miscellaneous revenue variance of 4.9% of budgeted revenues as compared to 3.2%the prior fiscal. This
category includes donations, investment earnings. FY 2022-23 total of$219,970 compared to $227,000
last year. The largest share represents revenue from facility lease rentals.
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General Fund expenditures are 27.8% of budgeted expenditures as compared to 28.8% the prior fiscal year. All
Functional Leadership teams are within the normal spend rates with no areas of concern.
General Fund Expenditures
• General Government represented 24.1% of total general government as compared to 27.3% the prior
fiscal year.
• Support Services represented 44.8% of total support service as compared to 33.4%the prior fiscal year.
The variance is relates to the classification of the budgeted salary attrition target compared to the prior
fiscal year.
• The remaining Functional Leadership teams are consistent with historical spending rates.
• Education appropriations are 24% of its budget as compared with 23.9%the prior fiscal year. School
appropriations are paid to both School systems by the 15th of each month. The remaining Education
budget includes School Health and Safety Contracts, School Equity Training, Deferred Maintenance,
Durham Tech Current Expense and Recurring Capital.
• Second Quarter debt service represents 53.8% of total debt service as compared to 58.9 % the prior
fiscal year. This variance is due to less principal and interest coming due in the first quarter of the fiscal
year as compared to the latter part of the fiscal year.
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Summary of Other Funds
FY 2023 FY 2022 FYs 2023 vs 2022
OTHER FUNDS Original Budget Revised Budget YTDActual* Percentage YTDActual* Percentage YTD %Variance'
29-Annual Grants Project Fund $159,216 $169,216 $30,268 17.89% $9,063 5.89% $21,205 12.00% 6
33-Housing Fund $4,762,156 $4,967,994 $1,478,136 29.75% $1,314,288 28.40% $163,848 1.35%
35-Emergency Telephone Fund $775,459 $775,459 $64,622 8.33% $126,627 16.67% -$62,005 -8.34% 6
37-Visitor's Bureau Fund $2,201,691 $2,202,871 $547,525 24.86% $374,006 20.64% $173,519 4.22% t
ate, 38-Spay/Neuter Fund $72,350 $72,350 $8,355 11.55% $8,919 11.79% -$564 -0.24%
50-Solid Waste Enterprise Fund $11,797,140 $11,797,140 $1,754,955 14.88% $1,992,462 15.88% -$237,507 -1.00%
53-Sportsplex Fund $4,178,094 $4,178,094 $713,442 17.08% $797,440 21.17% -$83,998 -4.09%0 a
70-Employee Health&Dental Fund $15,395,128 $15,395,128 $2,599,369 16.88% $2,545,792 20.62% $53,577 -3.74%
29-Annual Grants Project Fund $159,216 $169,216 $26,326 15.56% $21,645 14.06% $4,681 1.50%
33-Housing Fund $4,762,156 $4,967,994 $1,369,919 27.57% $1,201,367 25.96% $168,552 1.61%
35-Emergency Telephone Fund $775,459 $775,459 $11,817 1.52% $127,164 16.74% -$115,347 -15.22%0 8
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:0 37-Visitor's Bureau Fund $2,201,691 $2,202,871 $590,186 26.79% $908,372 50.09% -$318,186 -23.30% 9
a 38-Spay/Neuter Fund $72,350 $72,350 $243 0.34% $14,848 19.63% $14,605 19.29%
X 50-Solid Waste Enterprise Fund $11,797,140 $11,797,140 $3,667,701 31.09% $4,212,117 35.58% -$544,416 -4.49%
53-Sportsplex Fund $4,178,094 $4,178,094 $775,772 18.57% $782,561 20.78% -$6,789 -2.21%
70-Employee Health&Dental Fund 1 $15,395,1281 $15,395,128 $2,383,620 15.48%1 $2,965,265 24.02% -$581,645 -8.54%
N otes:
*-Actual amounts include Encumbrances.
+-Based on percentage.
6-Based on timing of receipt of funds.
7-Performance variance attributed to increased occupancy levels.
8-Decline due to Ice Rink revenues because of temporary closure.
9-FY 2022 had a one-time capital outlay expenses.
Sportsplex Fund
Sportsplex revenues are at $73,442 or 17% of budget as compared to $797,440 or 21.7%the prior fiscal year.
This variance is attributed the closure of the Ice Rink during September for repairs. The Ice Rink has now been
re-opened and the fund should end the fiscal year in a breakeven position. A positive note is the full recovery in
Wellness and membership revenue which were impacted during the COVID closure, this is now the second
largest revenue stream after Ice Rink revenues. FY 2022-23 expenditures are $775,772 or 18.5% of budget as
compared to $782,561 or 20.7% of budget indicating a spending rate consistent with historical trends.
Visitors Bureau Fund
Visitors Bureau revenues are 24.8% of budget as compared to 20.6%the prior fiscal year due to the increased
occupancy levels as the travel and tourism sectors returns to levels prior to March 2020. Visitors Bureau
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expenditures are 26.7% of budget as compared to 50%the prior fiscal year. FY 2022-23 revenues are $547,525
and expenditures are $590,186 and now more in line with pre-COVID performance. The prior fiscal year
expenditures included one-time capital outlays. The fund is now in a stable financial position and is expected to
end the fiscal year in a breakeven position without any General Fund support.
Solid Waste Fund
Solid Waste revenues are 14.8% of the total revenues as compared to 15.7% the prior fiscal year. The Solid
Waste program fee of$142 is billed as a line item on the Property Tax bill and peak collections occur by the end
of December. Solid waste expenditures are 31.1% of total expenditures as compared to 35.5% the prior fiscal
year. This fund has exhibited financial resilience and was spared from the impacts other funds experienced at
the peak of the pandemic.
The Key County Economic Indicators referenced on the first page will continue to be monitored for any material
changes as the Federal Reserve continues to tackle inflation through further interest rate increases. The UNC-
Charlotte Economic Forecast below is insightful as well:
https://issuu.com/belkcollege/docs/sep 2022 web 1-3.pptx
Functional Leadership Teams by Department
Community Services -Animal Services, NC Cooperative Extension, DEAPR, Economic Development, Orange
Public Transportation, Planning and Inspections.
General Government- Board of Elections, Clerk to the Board, County Attorney, County Manager, Register of
Deeds and Tax Administration
Public Safety—Courts, Emergency Services, Criminal Justice Resource Department, and Sheriff's Office
Human Services— Department on Aging, Child Support, Housing, Human Rights, and Community Development,
Library, Public Health and Social Services
Support Services-Asset Management Services, Community Relations, Finance, Human Resources, and
Information Technology
cc: Bonnie Hammersley, County Manager
Travis Myren, Deputy County Manager
Department Directors
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