HomeMy WebLinkAboutAgenda - 02-21-2023; 12-4 - Information Item - Memorandum - Financial Report - Second 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
MEMORANDUM
To: Board of County Commissioners
From: Gary Donaldson, Chief Financial Officer
Date: February 21, 2023
Re: Financial Report- Second Quarter FY 2022-23
Please find attached a summary of FY 2022-23 second quarter financial report for the General Fund, Enterprise Funds,
and Special Revenue Funds that begins on the third page.
The Key County Economic table below is an update from the first quarter of metrics that provide additional insight on the
local economic base and revenues. The trends remain stable with positive overall tax base metrics.
As the County metrics indicate the two largest General Fund revenue streams of property tax and sales tax are
performing well, and will support General Fund revenues meeting expenditure projections. The higher interest rate
environment has continued to result in less real estate closings, refinancings and subsequent excise stamp recordings.
Key County Economic FY 2022-23 Second FY 2021-22 Second
Indicators Quarter Quarter Comments
Sales Tax%Change 22% 15% Includes all Articles 39,40,42,43 and 46.
Property Tax Billings
versus Collections 96.5% 95.7% Includes real, personal and motorvehicle.
Excise Stamp Recordings 1314 1756 Volume of real estate transfers(mortgages and refinancings).
Permits Issued
County Permits 4780 4354 This includes building,electrical and HVAC permits.
Hillsborough Permits 1216 965 This includes building,electrical and HVAC permits.
Unemployment Rate 2.5% 2.2% County rate is the lowest in North Carolina.
The attached link below to the UNC-Charlotte economic forecast provides additional economic data for reference.
https:Hissuu.com/belkcollege/docs/2022-12-7 economicforecastreport.pptx
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General Fund Summary
FY 2023 FY 2022 FYs 2023 vs 2022
GENERAL FUND Original Revised YTDActual* Percentag Revised YTDActual* Percenta YTD %
Property Tax $186,165,129 $186,165,129 $146,700,101 78.80% $177,661,825 $146,990,678 82.74% -$290,577 -3.94%1
Sales&Use Tax $35,616,489 $35,616,489 $7,412,747 20.81% $28,952,047 $6,180,811 21.35% $1,231,936 -0.54%
d Licenses and Permits $274,200 $274,550 $60,943 22.20% $274,550 $65,602 23.89% -$4,659 -1.70%
v Charges for Services $14,029,092 $14,226,117 $6,857,614 48.20% $12,662,171 $6,642,448 52.46% $215,166 -4.25%z
a Intergovernmental $18,428,977 $20,280,401 $6,948,159 34.26% $20,792,680 $7,196,194 34.61% -$248,035 -0.35%
z Transfers In $76,740 $76,740 $0 0.00% $95,337 $20,833 21.85% -$20,833 -21.85%
Miscellaneous $910,064 $1,046,971 $1,104,704 105.51% $1,441,082 $469,727 32.60% $634,977 72.92%3
Appropriated Fund Balance $2,608,888 $2,735,454 $0 0.00% $7,673,175 $0 0.00% $0 0.00%
Total $258,109,579 $260,421,851 $169,084,268 64.93% $249,552,867 $167,566,293 67.15% $1,517,975 -2.22%
Community Services $14,690,753 $15,481,038 $6,863,070 44.33% $14,216,710 $6,406,185 45.06% $456,885 -0.73%
General Government $13,451,262 $14,049,624 $7,006,631 49.87% $10,380,822 $5,631,617 54.25% $1,375,014 -4.38%4
Public Safety $31,919,210 $33,228,487 $15,861,038 47.73% $28,827,819 $13,331,684 46.25% $2,529,354 1.49%5
v Human Services $43,038,664 $45,994,292 $18,445,162 40.10% $44,008,794 $18,866,868 42.87% -$421,706 -2.77%
a Education $98,201,672 $98,450,310 $47,624,573 48.37% $95,583,514 $45,515,959 47.62% $2,108,614 0.76%
W Support Services $12,295,327 $9,773,135 $8,191,926 83.82% $15,282,833 $8,388,588 54.89% -$196,662 28.93%s
Debt Service $38,077,170 $38,077,170 $22,998,610 60.40% $40,208,373 $24,789,805 61.65% -$1,791,195 -1.25%
Transfers Out $6,435,521 $6,551,001 $0 0.00% $1,044,002 $0 0.00% $0 0.00%
Total $258,109,579 $261,605,057 $126,991,010 48.54% $249,552,8671$122,930,706 49.26%1 $4,060,304 -0.72%
Notes:
*-Actual amounts include Encumbrances.
+-Based on percentage.
1-Property tax actuals is a timing variance;large mortgage escrow payment of$16 million did not transfer until January 10,2023.
2-Charges for Services includes Register of Deeds Excise Fees,EMS Charges and Medicaid revenue.
3-Miscellaneous includes Donations,Leases and Investment Earnings;Investment earnings increased$397K through investment in higher yield securities.
4-General Government increase reflects the reclass of Outside Agencies cost to this category and additional seasonal Election employees and voting precints.
5-Public Safety increase reflects additional personnel and related non-personnel for Emergency Services and Sheriff's Office as approved in the original budget.
6-Reflects allocation of 3%wage increase at beginning of year to departments rather than at the end of fiscal year.
General Fund Revenues
General Fund revenues are 64.9% of budgeted revenues compared to 67.1% the prior fiscal year. The primary
reason for the variance is a property tax timing variance.
• Property Tax collections are 78.8% of the total Property tax budget compared to 82.7%the prior fiscal
year; this represents a timing variance in collections. Two large mortgage escrows transferred $16
million in January instead of December which accounts for the percent variance. Real and personal taxes
were due September 1. Tax collections peak at the end of December due to the January 6th assessment
of interest. 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 to support debt service
expense.
• Motor vehicles taxes which are included in the Property Tax category on the table above are 55.3% of
the Motor Vehicle budget as compared to 57.1% 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.
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• Motor vehicle taxes are payable on the vehicle renewal date and the tax is based on the market value of
the vehicle. The State remits this tax to the County on a monthly basis. FY 2022-23 Motor Vehicles are
$6.3 million as compared to $5.9 million the prior fiscal year.
• Sales Tax for Articles 39, 40, 42 and Hold Harmless amounts are recorded in the General Fund. The
second quarter sales tax are for July, August and September collections due to a three-month lag
detailed further below. The year-to-date sales tax trend remains strong and factors in inflation and
specifically food inflation that is taxable on Articles 39, 40 and 42. NC Department of Revenue (NCDOR)
has indicated that collections yet to be distributed to the County have increased at a rate of 22% over
the prior fiscal year. However it is important to note that later in the fiscal year, NCDOR will issue
taxpayer refund adjustments that may decrease the current percentage growth rate by the end of the
fiscal year.
As illustrated on the flowchart below, there is a three-month lag means from the point the North Carolina
Department of Revenue NCDOR collects the tax and remits each months' receipts to local governments.
SEPTEMBER OCTOBER N NOVEMBER DECEMBER 15
=Sale Vendor = NCDOR =County
Transactions Submits Report Reconciles Receives$
• Charges for services are 48.2% of the budget as compared to 52.4% the prior fiscal year. Three key
revenue sources in this category are Emergency Charges, Register of Deeds Excise Stamps and Building,
Electrical and HVAC Permits.
Emergency Medical Charges. Emergency Medical Charges collections are $2.9 million or 77.6% of budget
as compared to $1.6 million or 54.6%the prior fiscal year. The stronger collections the second quarter
are attributed to the FY 2022-23 rate increases. County rates in the prior fiscal years for transporting
were significantly lower than other jurisdictions with Medicare and private insurance accounting for
more than 50% of the rate base. The strong performance has offset the additional EMS personnel.
Excise Stamps (Real Estate Transfers). Excise Stamps have decreased to $792,259 or 45.3% of the budget
compared to $1.3 million or 98% of the budget through the second quarter in the prior fiscal year.
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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 is indicative of the interest rates inverse
relationship and its impact on 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 $946,063 or 49.8% of the budget through
the second quarter of this fiscal year compared to $907,029 or 52.2% the prior fiscal year.
• Miscellaneous revenue variance of 105.5% of budgeted revenues as compared to 32.6% the prior fiscal.
This category includes donations, investment earnings. This is attributed to increased investment
earnings from prudent cash management emphasizing Safety, Liquidity and Yield in that priority order.
Through the second quarter of this fiscal year investment earnings are $397,742 compared to $2,610
the prior fiscal year. The investment portfolio consist primarily of U.S. Treasuries, Federal Agencies and
Overnight Repurchase Agreements which are all highly rated securities which comply with the North
Carolina Permitted Investments statutes. The higher interest rate environment results in the yield
performance.
General Fund Expenditures
General Fund expenditures are 48.5% of budgeted expenditures as compared to 49.2% the prior fiscal year.
Expenditures are historically straight-lined with no functional leadership team budget are of concern.
• General government represented 49.8% of total general government as compared to 54.2% the prior
fiscal year. This is a timing variance attributed to property casualty and workers compensation premium
being paid in installments as compared to upfront payments in the prior fiscal year.
• Support Services revised budget from $12.2 million to $9.7 million reflects the allocation of the 3% wage
increase to departments. The wage increase was originally budgeted in a non-departmental account.
• The remaining Functional Leadership teams are consistent with historical spending rates.
• Education appropriations are 48.3% of its budget as compared with 47.6% the prior fiscal year. School
appropriations are paid to both School systems by the 151h 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.
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• Second Quarter debt service represents 60.4% of total debt service as compared to 61.6%the prior
fiscal year. Debt service includes payments for Limited Obligation Bonds and General Obligation Bonds.
Summary of Other Funds
FY 2023 FY 2022 FYs 2023 vs 2022
OTHER FUNDS Original Budget Revised Budget YTDActual* Percentage Revised Budget YTDActual* Percentage YTD /Variance'
29-Annual Grants Project Fund $159,216 $179,216 $43,208 24.11% $153,943 $28,704 18.65% $14,504 5.46%
33-Housing Fund $4,762,156 $4,967,994 $2,812,035 56.60% $4,628,077 $2,581,966 55.79% $230,069 0.81%
35-Emergency Telephone Fund $775,459 $775,459 $196,164 25.30% $759,757 $316,568 41.67% -$120,404 -16.37%
c 37-Visitor's Bureau Fund $2,201,691 $2,387,110 $1,299,192 54.43% $1,940,585 $954,387 49.18% $344,805 5.24%
38-Spay/Neuter Fund $72,350 $72,350 $27,147 37.52% $75,651 $31,252 41.31% -$4,105 -3.79%
50-Solid Waste Enterprise Fund $11,797,140 $11,797,140 $8,174,214 69.29% $12,545,384 $9,072,856 72.32% -$898,642 -3.03%
53-Sportsplex Fund $4,178,094 $4,178,094 $1,962,845 46.98% $3,766,562 $1,818,340 48.28% $144,505 -1.30%
70-Employee Health&Dental Fund $15,395,128 $15,395,128 $5,621,984 36.52% $12,343,842 $5,413,528 43.86% $208,456 -7.34%8
29-Annual Grants Project Fund $159,216 $179,216 $63,043 35.18% $153,943 $53,722 34.90% $9,321 0.28%
33-Housing Fund $4,762,156 $4,967,994 $2,774,880 55.86% $4,628,077 $2,413,257 52.14% $361,623 3.71%
35-Emergency Telephone Fund $775,459 $775,459 $220,127 28.39% $759,757 $226,470 29.81% -$6,343 -1.42%
37-Visitor's Bureau Fund $2,201,691 $2,387,110 $1,303,585 54.61% $1,940,585 $1,226,866 63.22% $76,719 -8.61%
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CL 38-Spay/Neuter Fund $72,350 $78,488 $26,777 34.12% $75,651 $24,245 32.05% $2,532 2.07%
W 50-Solid Waste Enterprise Fund $11,797,140 $12,854,134 $6,046,500 47.04% $12,545,384 $5,614,268 44.75% $432,232 2.29%
53-Sportsplex Fund $4,178,094 $4,254,000 $1,909,380 44.88% $3,766,562 $1,474,920 39.16% $434,460 5.73%
70-Employee Health&Dental Fund $15,395,128 $15,395,128 $4,959,918 32.22% $12,343,842 $5,933,475 48.07% -$973,557 -15.85%9
Notes:
*-Actual amounts include Encumbrances.
+-Based on percentage.
7-Reflects rebound in occupancy tax revenues.
8-Reflects additional premium rate adjustment included in the original budget.
9-This is pending a posting of additional expenses from the General Fund to the Health and Dental Fund.
Enterprise Funds
Sportsplex Fund
Sportsplex revenues are at $1.9 million or 46.9% of budget as compared to $1.8 million or 48.2%the prior fiscal
year. The first quarter report referenced the Ice Rink during September for repairs and the potential impact on
revenues given it is the largest revenue stream. This revenue concern is lowered as income statement
performance has returned following the re-opening of the Ice Rink. FY 2022-23 expenditures are $1.9 million or
44.8% of budget as compared to $1.4 million or 39.6% of budget.
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Solid Waste Fund
Solid Waste revenues are $8.1 million or 69.2%74.2% of the budget as compared to $9 million or 72.3% of the
budget in the prior fiscal year. The solid waste program fee of$142 is billed as a line item on the Property Tax
bill. As noted previously, peak collections occur by the end of December. Solid waste expenditures are $6
million or 47% of expenditures as compared to $5.6 million 44.7%the prior fiscal year.
Functional Leadership Teams by Department
Community Services-Animal Services, NC Cooperative Extension, Department of Environment, Agriculture,
Parks and Recreation (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
Thanks to the Budget and Finance Offices for their assistance in the preparation of this report.
cc: Bonnie Hammersley, County Manager
Travis Myren, Deputy County Manager
Department Directors
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