HomeMy WebLinkAboutAgenda 02-17-2026; 12-2 - Information Item - Memorandum - Financial Report - Second Quarter FY 2025-26 1
ORANGE COUNTY
NORTI I CAROLINA
FINANCE and ADMINISTRATIVE SERVICES
Gary Donaldson,CTP,Chief Financial Officer I gdonaldson@orangecountync.gov I PO Box 8181,Hillsborough,NC 272781 919.245.2453
INFORMATION ITEM
To: Board of County Commissioners
From: Gary Donaldson, Chief Financial Officer
Date: February 17, 2026
Re: Financial Report-Second Quarter FY 2025-26
This FY 2025-26 Second Quarter Financial report provides Budget versus Actual comparisons to the prior fiscal
and an update on Federal and State Grant funding. Since the last quarterly report update, Intergovernmental
Revenue, which primarily represents reimbursements for Federal and State grant expenditures, are tracking
consistently with prior fiscal year's reimbursement rates. The impact of the Federal Shutdown represented
timing variances and no permanent cancellation of any major grant programs. The financial performance to date
supports General Fund revenues covering all expenditures without any use of fund balance.
The County normally receives one-third of budgeted Intergovernmental revenues by December 31 each year.
The variance analysis in the table below supports this historical trend. The County dashboard (add link) indicates
the program expenses to date, and FY 2025-26 revenues through December 31, 2025, are 33.2%. Both Medicaid
and Supplemental Nutrition Assistance Program (SNAP) reimbursements are expected to meet budget for this
fiscal year despite timing variances. The County Federal and State Dashboard has been updated to provide
program spending reimbursements through December 31, 2025.
Regarding American Rescue Plan Act (ARPA) spending the County has spent 96.5% of our $28.8 million U.S.
Treasury ARPA allocation ahead of the December 31, 2026, spending deadline.
The economic forecast reports below provide insightful data as well:
UNC Charlotte Economic Forecast
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FY 2026 FY 2025 FYS 2026 vs 2025
GENERALFUND Original Budget Revised Budget YTDActual* Percentage YTDActual* Percentage YTD %Variance*
Property Tax $212,897,374 $212,897,374 $168,240,051 79.02% $158,516,212 79.47% $9,723,839 0.55°
Sales&Use Tax $44,145,403 $44,145,403 $8,250,940 18.69% $7,939,368 17.99 $311,572 0.70°
Licenses and Permits $242,000 $242,000 $46,072 19.04% $57,757 20.93% ($11,685) -1.89%
W Charges for Services $16,005,107 $16,005,107 $6,860,465 42.86% $6,273,293 40.67% $587,172 2.199
aIntergovernmental $22,313,927 $23,149,777 $7,687,098 33.21% $7,051,460 33.37% $635,638 -0.165
y Investment Earnings $1,800,000 $1,800,000 $862,610 47.92% $952,322 30.15% ($89,172) 17.775
oc Transfers In $665,729 $794,990 $0 0.00% $0 0.00% $0 0.00°
Miscellaneous $911,775 $1,068,263 $574,567 53.79% $485,509 73.85% $89,058 -20.060/
Appropriated Fund Balance $7,056,130 $9,235,636 $0 0.00% $0 0.00% $0 0.00°
Total $306,037,445 $309,338,549 $192,521,803 62.69% $181,273,921 61.46% $8,899,744 1.23°
Community Services $16,897,564 $17,388,765 $7,458,215 42.89% $6,692,372 42.60% $765,843 .290/
General Government $13,540,083 $13,999,717 $5,849,091 41.78% $5,569,454 45.59% $279,637 -3.810/
i Public Safety $43,592,203 $43,757,524 $18,707,442 42.75% $17,263,449 47.72% $1,443,993 4.979
Y Human Services $55,590,648 $56,766,345 $23,234,060 40.93% $21,201,741 42.99% $2,032,319 -2.065
Education $116,537,541 $116,574,129 $74,800,529 64.17% $57,167,579 52.95% $17,632,950 11.229
c Support Services $18,002,857 $18,670,324 $10,970,285 58.76% $9,451,473 50.59% $1,518,812 8.179
Lu Debt Service $0 $0 $0 0.00% $0 0.00% $0 0.009
Transfers Out $41,876,549 $42,181,745 $0 0.00% $0 0.00% $0 0.00°
Total $306,037,445 $309,338,549 $141,019,622 45.59% $117,346,068 41.67% $23,673,554 3.92°
General Fund Revenues
General Fund revenues budget versus actuals for this fiscal year are at 62.69% as compared to 61.46% the prior
fiscal year. matching last year's budget versus actual percentage as well. As noted, Federal and State Grant
revenues continues to be closely monitored and coordinated with departments to ensure reimbursable expenses
are timely drawn down within the fiscal year.
• Property Tax collections are 79.02%% of the total Property Tax budget compared to 79.47%% the prior fiscal year.
Real and personal property tax collections will peak by January 5 when penalties and interest begin to accrue on
late payments. The property tax revenue growth reflects a tax rate increase from the revenue neutral rate of 62.64
cents per $100 of assessed value to 63.83 cents per $100 of assessed value. As noted in the first quarter report, the
County included a 3%tax base loss due to appeals. At the end of the second quarter, tax base appeal loss is at
1.25% well within the assessed value adjustment for budgeting purposes. The collection rate assumption of 99.2%
for real property is expected to be achieved as well.
• Motor vehicle taxes are payable on the vehicle renewal date, and the tax is based on market value of the vehicle.
The North Carolina Department of Revenue remits this tax to the County monthly. Registered Motor Vehicle Taxes
become delinquent after 30 days.
• The Sales Tax category is comprised of Article 39 (1% point of sale), Article 40 (.5% State-wide per capita) , Article
42 (.5% point of sale) and Hold Harmless. Article 40 is designed to ensure equitable distribution to counties
regardless of their commercial activity levels.
The FY 2025-26 Budget assumed a 4% growth rate for Article 39 and 42 (point of delivery), and a 3%growth rate
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for Article 40 (State per capita) based on the collections methodology. The table below indicates that County sales
tax are consistent with budget assumptions to date.
Note: Sales Tax has a three-month revenue lag from the NC Department of Revenue (NCDOR) with the first month
of July collections received by local governments by October 15, 2025. The last month of sales tax for FY 2025-26
will be received by September 15, 2026.
Three Months of Collections
FY 2025-26 FY 2024-25 $ Change % Change Collections Basis
Article 39 $ 4,731,529 $ 4,553,960 $177,569 3.9% Point of Sale
Article 40 $ 3,184,212 $ 2,997,558 $186,654 6.2% State Per Capita
Article 42 $ 2,369,503 $ 2,279,686 $ 89,817 3.9% Point of Sale
• Charges for services are 42.86% of the budget as compared to 40.67% in the prior fiscal year. Emergency
Medical Charges, which is the largest budgeted item for these cost recovery fees, has resulted in collections
of $3.1 million or 55.5% of budget compared to the prior year collections of$2.5 million or 48.4% of
budget.
Charges for services category includes Register of Deeds Excise Stamps ($1 per $500 of value) paid on real
estate transactions. In North Carolina, excise stamps are a state tax collected by the Register of Deeds when
real estate is sold and a deed is recorded. This revenue stream is a good indicator of the local economy,
increasing and decreasing with real estate sales activity. FY 2025-26 collections are $741,709 or 57.6% of
budget as compared to the prior fiscal year collections of$623,821 or 48.5% of budget.
• Intergovernmental revenue remains a key category given the legislative risk and Federal Bill HR 1 long-term
implications over the next several fiscal years if there is no General Assembly intervention. As of December
31, 2025, Intergovernmental revenues are at $7.6 million or 33.2% of budget compared to $7 million or
33.3%the prior fiscal year. As noted previously, the percentage lag after six months is consistent with the
historical reimbursement pattern, and not a financial concern. County staff are closely monitoring grant
revenues including HOME revenue, Section 8 vouchers, Medicaid, SNAP and TANF. The County dashboard is
regularly updated to track grant reimbursements' status and legislative impacts.
Note: Finance has worked with Emergency Services to identify $128,920 in Tropical Storm Chantal expenses
for submittal to FEMA for reimbursement. Additional updates will be provided.
• Investment earnings to date are $862,610 or 47.9% of budget as compared to $952,322 or 30.1% of
budget. The budget was reduced in this category reflecting interest rate decreases by the Federal Reserve.
The County's investment policy emphasizes Safety, Liquidity and Yield in that priority order. The portfolio is
within the North Carolina statutory permitted investments.
The yield rate as of December 31, 2025, was 3.71%.compared to 4.34% on December 31, 2024. This
decrease is commensurate with Federal Reserve Board actions. The portfolio composition is indicated below.
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December 31 , 2025
38% ■Overnight Repo
■Term Repo
■Fixed Rate Agencies
■Floating Rate Agencies
■Fixed Rate Treasuries
General Fund Expenditures
General Fund expenditures are 45.5% of budgeted expenditures as compared to 41.6% the prior fiscal year. The
higher overall variance is primarily due to the County advancing the Chapel Hill-Carrboro City School (CHCCS) district
their current expense amounts in the second quarter, as CHCCS awaited their Special Tax District revenues.
There are no budget versus actual compliance issues or concerns. All the Functional Leadership teams' expenditures
are consistent with historical spending rates except Support Services. Support Services includes insurance upfront
payments.
• Education appropriations are 63.5% of its budget as compared with 52.9% the prior fiscal year, again due to
upfront current expense appropriations to CHCCS. The remaining Education budget includes School Health
and Safety Contracts, Durham Tech Current Expense and Recurring Capital.
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Summary of Other Funds
Management is closely monitoring various both Housing Funds (Community Development and Section 8 Voucher)
to ensure timely reimbursements of expenditures.
The Inspection Fund continues to rely on a General Fund subsidy. A fee study is currently underway to address the
General Fund subsidy.
FY 2026 FY 2025 FYs 2026 vs 2025
OTHER FUNDS OriginalBudget Revised Budget YTD Actual* Percentage YTDActual* Percentage YTD %Variance
11-Debt Service Fund $34,758,357 $34,758,357 $205,408 0.59% $202,288 0.59% $3,120 -0%
33-Housing Fund $8,636,500 $8,651,735 $4,706,104 54.39% $3,619,089 47.58% $1,087,015 6.81%
3 35-Emergency Telephone Fund $419,062 $1,793,470 $157,987 8.81% $186,683 42.82% ($28,696) -34.01%
37-Visitor's Bureau Fund $3,321,110 $3,555,697 $1,316,897 37.04% $1,354,818 46.78% ($37,921) -9.74%
cc
44-Inspections Fund $1,685,115 $1,685,115 $1,047,738 62.18% $526,829 29.83% $520,909 32.35%
50-Solid Waste Enterprise Fund $13,695,848 $14,960,367 $8,108,872 54.20% $8,114,170 57.84% ($5,298) -3.64%
53-Sportsplex Fund $5,720,578 $5,742,249 $2,708,096 47.16% $2,765,313 53.03% ($57,217) -5.87%
70-Employee Health&Dental Fund $19,398,408 $19,398,408 $7,154,007 36.87% $6,662,164 36.92% $491,843 -0.07%
11-Debt Service Fund $34,758,357 $34,758,357 $20,989,462 60.39% $20,813,816 60.64% $175,646 .25%
33-Housing Fund $8,636,500 $8,651,735 $4,363,262 50.43% $4,874,027 64.12% ($510,765) -13.69%
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35-Emergency Telephone Fund $419,062 $1,793,470 $509,322 28.39% $95,033 88.46% $414,289 -60.07%
a 37-Visitor's Bureau Fund $3,321,110 $3,555,697 $1,549,128 43.56% $1,645,342 57.74% ($96,214) -14.18%
y 44-Inspections Fund $1,685,115 $1,685,115 $749,675 44.49% $737,077 41.73% $12,598 2.76%
CL
50-Solid Waste Enterprise Fund $13,695,848 $14,960,367 $5,186,864 34.67% $4,913,323 45.85% $273,541 -11.18%
53-Sportsplex Fund $5,720,578 $5,742,249 $2,276,147 39.63% $2,209,245 42.24% $66,902 -2.61%
70-Employee Health&Dental Fund $19,398,408 $19,398,408 $9,781,940 50.43% $9,044,106 37.24% 1 $737,834 13.19%
Sportsplex Fund
Sportsplex revenues are 47.16% compared to 53% the prior fiscal year, this variance is attributed to facility
renovations (Ice Rink and Aquatic Center) which necessitated temporary closures disrupting fee revenue during the
construction period. Expenditures budget versus actuals are 40% of budget as compared to 42.25%the prior fiscal
year. The Sportsplex revenue sources are Ice Rink (35% of budget), Membership and Fitness (26% of budget), Sports
Aquatics (13% of budget), Sports Kidsplex (12% of budget), and Field House (7% of budget). Reserves and
investment income comprise the remaining funding sources. Despite the disruption in revenues, revenues through
the first six months are $2.7 million and expenditures are $2.2 million, which continues the post-Covid recovery and
sound financial performance.
Solid Waste Fund
Solid Waste revenues are 54.2% of the total revenues as compared to 57.8% in the prior fiscal year. The solid waste
program fee of$138 is billed as a line item on the Property Tax bill. The budget includes a fund balance
appropriation of$2,351,917 for pay-as-you go capital requirements. Therefore, the unrestricted net position of the
fund is projected to decrease.
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Visitors Bureau Fund
Visitors Bureau revenues are 37.04% of budget as compared to 46.7% in the prior fiscal year. The revenue versus
expenditure lag is a timing variance, as the advertising budget is primarily paid upfront. The hotel/motel lodging
revenue base has continued to perform well as measured by Gross Lodging revenues, Occupancy rates and Average
Daily Room rates. The County occupancy tax rate is set at 3% on the gross receipts from the rental of any room, and
lodging or similar accommodation in the County subject to sales tax under G.S. 105-164.4(a)(3). Remittances are due
to the Tax Office by the 15th of each month. Revenues lag expenditures by $232,231 however the fund has a
receivable of$200,000 from a new inter-local agreement with the Town of Chapel Hill. This fund receives Eno Mill
annual rental revenue budget of$74,536 has been impacted by facility closure due to Tropical Storm Chantal with
rental revenue of$2,397 through the first six months of this fiscal year.
cc: Travis Myren, County Manager
Cait Fenhagen, Deputy Manager
Department Directors