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HomeMy WebLinkAboutFiscal EntitiesFiscal Entities Presenter: Dan Emerson ▪FY24-25 Proposed Budget Presentation Budget Committee Meeting | May 20, 2024 FY 25 Proposed Flow of Funds Prior and current years unallocated TRT remainder Prior, current, and future years remaining general fund General Fund Funds GF departmental operations and all other county operations and departments that may need subsidies or facing financial instability. Remainder after expenditures goes to Capital Reserve TRT Funds departmental operations and some external County projects. In the Proposed FY25 budget remaining unallocated TRT funds are being transferred to the Capital Reserve Capital Reserve Consolidates available funds after expenditures from the GF and TRT and uses the funds for capital maintenance and minimal space additions. General Fund Overview •The General Fund (GF) is made up of departments (DA, Clerk, Assessor, Veterans, Tax, Property Management, Medical Examiner) and transfers out to other departments to support their operations •The largest transfers are to Health Services (~$7.2M) and Community Justice Juvenile (~$8.1M) •The major source of revenue for the General Fund is property taxes, but it is also supported through various smaller grants and Clerk’s office fees •Departmental expenditures are the greatest cost to the fund The Role of the General Fund •The General Fund is the chief operating fund for Deschutes County •General Fund revenues are the primary support for operational funds facing short term financial instability •If the General Fund does not have adequate reserves the County cannot support; •Current service levels •Capital maintenance •Future capital construction •Insufficient General Funds means the County has a structural imbalance, whereby expenditures are greater than resources and the County would need to cut to balance the budget •For these reasons, the General Fund is the cornerstone of Deschutes County finances, its fiscal health reflects the financial stability of the County and its operations FY 24-25 General Fund Budget Details •Vast majority of funding is from Property Tax •5.2% budgeted assessed value (AV) growth •State Grants budget is down $400K from FY24 •Multiple pressures on General Fund Resources 24-25 RESOURCESAll Other 2% Beginning Working Capital 23% Charges for Services 2% Federal Government Payments 2% Interest Revenue 1% Property Taxes 64% State Government Payments 6% FY 24-25 General Fund Budget Details •Personnel Services increased 11% year over year •Transfers Out to Capital Reserve budget is $2.6M, approximately $1.5M less than forecasted in FY24 •Sustained High Inflation •New Max Bargaining COLA •Increases in Health Insurance Rates 24-25 REQUIREMENTSContingency 21% Materials and Services 15% Personnel Services 31% Transfers Out 33% FY 24-25 General Funds Fiscal Issues •Forecasted structural imbalance •Capital and maintenance needs •Compensation philosophy •PERS •Debt service •Federal and State budget uncertainty •Expenditure Pressures •High inflation •Wage growth •Operational growth •Revenue Pressures •$700K+ decline in Clerk’s revenue since FY22 •$140K+ decline in Property Management revenue Short-term Fiscal Issues Long-term Fiscal Issues General Fund Forecast •Projected 5.2% year over year property tax increase (.6% above the 25-year average for urban areas in Oregon) •Personnel assumptions are based on COLA, wage structure, and benefits estimates •M&S/ISF assumptions are based on historical rates •Despite levying the maximum tax rate, the gap between revenues and expenditures is decreasing dramatically •Expenditures are projected to surpass revenues in FY27 $30,000,000 $35,000,000 $40,000,000 $45,000,000 $50,000,000 $55,000,000 $60,000,000 FY22 Actual FY23 Actual FY24 Projected FY25 FY26 FY27 FY28 FY29 GF Revenue vs GF Expenditures GF Revenues GF Expenditures General Fund Forecast (continued) •We believe the forecast is optimistic •No special requests are included •Service levels are remaining constant in future years •Departments have indicated they may need funding more than forecasted to balance in future years •The General Fund forecast and the Proposed FY25 budget does not include the following • Fiscal impacts of the salary study • The Housing Trust Fund • New Courthouse operating expenses • Fiscal impacts of rank choice voting General Fund Operations Surplus •Available General Funds at end of year represent revenue over expenditures •Transferred to the General Reserve (Fund 060) •Historically used for capital maintenance and projects •Projected to decline rapidly due to max COLA’s and operational growth •Forecasted to be depleted by FY27 when expenditures surpass revenues within the GF 7,069,320 4,983,197 4,430,707 2,655,363 1,347,338 - - - - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 FY22 Actual FY23 Actual FY24 Actual FY25 FY26 FY27 FY28 FY29 GF Surplus Transfer Projection General Fund Operations Forecast •By FY27 operational expenditure growth surpasses all GF revenue and the County takes on ~$750K of unfunded operations. •By FY29 that unfunded number has grown to ~$5.6M •Critical to ensure that the GF continues to have available funds so operations continue at current service levels Operations outpace maxed GF revenue $- $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 $120,000,000 General Fund Balance General Fund Balance GF Revenues GF Expenditures Contingency Policy Minimum Current Challenges and Future Initiatives •Continue to advance the long-term forecast and provide fiscal decision- making tools to the BOCC •Prepare an estimated General Fund budget in the fall to analyze departmental growth capacity for FY26 •At historical expenditure rate GF fails to pay for operations in FY27 •Long-term funding and fiscal stability •Space for some departments is stretched to capacity Challenges Future Initiatives General Fund Next Steps •Evaluate several fiscal options •Reduced or flat growth budgeting •Decreased or elimination of transfers for capital needs •Reprioritizing services •Decreasing or removing the Environmental Health fee subsidy •ARPA dollars being used to reimburse eligible GF expenditures •Any combination of options Prudent financial planning and forecasting has placed the County in a strong position to plan for the current and next fiscal year as we continue providing core services to the community GF Operational Budget Decisions •The District Attorney’s Office is requesting $224,635 for a Deputy District Attorney •The District Attorney’s Office is requesting $24,000 for Axon Enterprise software •Adult Parole and Probation is requesting $100,000 for motel rooms for individuals on supervision Transient Room Tax Transient room tax (TRT) predominantly funds tourism promotion/facilities and the provision of general government services. TRT is highly variable and difficult to forecast. TRT is broken up into three taxes: •6% (5% 1975, 1% 1980) •80% unallocated, has been used to support internal operations and recently Sunriver, Mt. Bachelor and the Deschutes Trails Coalition for various projects •20% allocated to tourism promotion through Visit Central Oregon •1% (1988) •Fully allocated to Visit Central Oregon •New 1% (2014) •70% allocated to Fair and Expo for marketing and tourism •30% unallocated, historically used to support Fair and Expo capital maintenance requirements Transient Room Tax Forecast •Assumes 2.0% revenue and variable expenditure growth by department •The forecast anticipates ~$1M per year in unallocated TRT surplus being transferred to the Capital Reserve (Fund 060) annually •$30M in debt service payments for the courthouse expansion is funded from TRT dollars •The County’s first priority is to pay debt service •Decreased TRT revenues or increased expenditures jeopardizes the County's ability to fund internal services •TRT funds are also necessary for capital expansion •Funds are also used for capital maintenance which is budgeted at $650K in FY25 and growing in future years $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 $18,000,000 $20,000,000 TRT Forecast VCO (net) Fair & Expo 615 (net) Fair 616 RV Park 618 Current Grants and Contributions New Grants and Contributions Sheriff 255 Environmental Health Justice Court Community Development Admin Fee (net of interest) - 7% Admin Fee (net of interest) - 1% Fair & Expo Reserve 617 Capital Reserve Debt Service Revenue FY 24-25 TRT Fiscal Issues •Highly variable, difficult to forecast •Fund may not be able to support debt service as well as continue to transfer remaining funds to the Capital Reserve •Expenditure Pressures •Inflation increasing internal operational costs •External requests for funding with contracting resources •Revenue Pressures •Down 3% year over year Short-term Fiscal Issues Long-term Fiscal Issues TRT Operational Budget Decisions •The Sheriff’s Office is requesting a one-time $700,000 increase in TRT in FY25 from $3,651,787 to $4,351,787 to support contingency levels and begin saving for implementation of the Public Safety Campus Master Plan •The Sheriff’s Office is requesting an on-going flat 3% increase in discretionary TRT to fund services ($109,553 in FY25). FY 25 Proposed Flow of Funds Prior and current years unallocated TRT remainder Prior, current, and future years remaining general fund General Fund Funds GF departmental operations and all other county operations and departments that may need subsidies or facing financial instability. Remainder after expenditures goes to Capital Reserve TRT Funds departmental operations and some external County projects. In the Proposed FY25 budget remaining unallocated TRT funds are being transferred to the Capital Reserve Capital Reserve Consolidates available funds after expenditures from the GF and TRT and uses the funds for capital maintenance and minimal space additions. Capital Reserve (Fund 060) Overview •The Capital Reserve, (Fund 060) is the County’s reserve and is funded by the remaining revenues after expenditures in both the General Fund and Transient Room Tax (FY25) •The Capital Reserve is an aggregation of the vast majority of the County’s discretionary funds and represents our ability to maintain current service levels as well as capital needs. FY 24-25 Capital Reserve Budget Details •County reserve balance ~$14.4M •FY25 GF transfer to Capital Reserve is $1.5M less than projected •Prior years TRT was a FY23 budget decision to help pay courthouse debt service •At historical expenditure rate, the reserve will no longer receive GF by FY27 24-25 RESOURCES $5,808,482 $4,931,529 $2,655,363 $1,021,670 $- $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 FY25 General Reserve by Funding Source Prior Years GF Prior Years TRT FY25 GF FY25 TRT Capital Reserve Revenues and Expenditures by Year Annual revenue estimates based on GF and TRT long-term forecasts Reduction in revenue in FY27 is the depletion of GF surplus District Attorney expansion in FY26 Placeholder for Clerk’s space in FY27 and FY28 Expenditures beyond FY28 are only capital maintenance (no capital expansion) Capital Reserve Balance Forecast Based on the previous forecast this slide presents the estimated balance of the Capital Reserve $8.8M in FY44 Does not factor in any new capital outlay/expansion after FY28 Does not factor in any operational subsidies to the GF as early as FY27 Does not include any future external TRT commitments that would reduce revenue inflows Does not include any new or significant increases in internal TRT expenditures Capital Reserve Balance Given Different Scenarios FY 24-25 General Reserve Fiscal Issues •At historical expenditure rate, would not receive any additional GF by FY27 •Does not allow for a major capital project after FY28 •Balance is too low to fund any new operations or subsidize the GF •Expenditure Pressures •High Inflation •Capital maintenance needs •Capital expansion needs •Revenue Pressures •Decreasing year over year remaining GF transfers to Reserves •Decreasing TRT revenues Short-term Fiscal Issues Long-term Fiscal Issues PERS Reserve (Fund 135) Overview •The PERS Reserve is made up of available resources from previous years charges to County operating funds and departments for partial payment of future PERS charges resulting from increases in the PERS rates •PERS rates increased in FY24 (first year of biennial cycle) •Increased rates had a ~$1.75M impact on the FY24 budget •The PERS Reserve is healthy and has ~$5M for future pay down American Rescue Plan Act (Fund 200) This fund is the largest pass through of federal funds to state and local governments ever The County has allocated all $38,399,353 of ARPA funds The County has expended $29,598,712 of ARPA funds $- $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $9,000,000 $10,000,000 ARPA Allocations ARPA Expenditures Questions? 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