Loading...
HomeMy WebLinkAboutFiscal EntitiesFiscal Entities Presenter: Dan Emerson ▪FY23-24 Proposed Budget Presentation Budget Committee Meeting | May 23, 2023 FY 24 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 General Reserve TRT Funds departmental operations and some external County projects. In FY23 remaining unallocated TRT went to the General Reserve for Courthouse and County maintenance/capital, approximately 700k in FY24 proposed to General Reserve General Reserve Consolidates available funds after expenditures from the GF and TRT and uses the funds for debt service on courthouse ($65M), capital maintenance, minimal space additions and future years operational expenses 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 (~$6.8M) and Community Justice Juvenile (~$6.8M) •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 •Future Debt Service •Capital maintenance •Insufficient General Funds mean 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, it’s fiscal health reflects the financial stability of the County and it’s operations. FY 23-24 General Fund Budget Details •Vast majority of funding is from Property Tax •4.9% budgeted assessed value (AV) growth •Lower projected AV growth due to declines in permitting and construction •Charges for services budgeted nearly $1M less than FY23 •State Grants budgeted down $500k from FY23. •Multiple pressures on General Fund Resources 23-24 RESOURCESAll Other 1% Beginning Working Capital 25% Charges for Services 2% Federal Government Payments 1% Interest Revenue 1% Property Taxes 64% State Government Payments 6% FY 23-24 General Fund Budget Details •Personnel Services increased 8% year over year •Budgeted Transfer Out to GF reserve of $3.2M, approximately $3M less than forecasted in FY23 •Inflation •Higher Actuals to Budget •Less AV growth •Nearly $1.7M less in other revenue. 23-24 REQUIREMENTS Contingency 21% Materials and Services 12% Personnel Services 32% Transfers Out 35% FY 23-24 General Funds Fiscal Issues •Compensation philosophy •PERS •Debt service •Future capital and maintenance needs •Potential declining AV growth •Federal and State budget uncertainty •Expenditure Pressures •Inflation •Wage growth •Operational growth •Revenue Pressures •$1M+ decline in Clerk’s revenue •$500,000 decline in assessors revenue •Lower than historical AV growth Short-term Fiscal Issues Long-term Fiscal Issues General Fund Forecast •Assumptions are based on historical growth and expenditure rates •Projected 4.9% year over year property tax increase (.3% above the 25-year average for urban areas in Oregon) •Despite a projected maximum tax levy increase the gap between revenues and expenditures is decreasing dramatically $38,000,000 $48,000,000 $58,000,000 $68,000,000 $78,000,000 $88,000,000 $98,000,000 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 FY35 General Fund Revenue vs. Expenditure Forecast GF Revenues GF Expenditures - 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 Available General Funds at End of Year Without a max tax levy General Fund Operations •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 •The full tax levy will not substantially slow the long-term decrease in available general funds $(200,000,000) $(150,000,000) $(100,000,000) $(50,000,000) $- $50,000,000 $100,000,000 $150,000,000 $200,000,000 FY 17 FY 19 FY 21 FY 23 FY 25 FY 27 FY 29 FY 31 FY 33 FY 35 FY 37 FY 39 FY 41 FY 43 FY 45 FY 47 General Fund Year over Year Balance Beginning Working Capital Revenue Expenditures GF Contingency Minimum Level General Fund Operations Forecast •By FY35 operational expenditure growth surpasses all GF revenue and the County takes on ~$700k of unfunded operations in FY36 •By FY39 that unfunded number has grown to +$5M •Critical to ensure that the GF continues to have available funds so operations continue at current service levels Operations outpace maxed GF revenue County reserve would need to subsidize operations and could not pay Courthouse debt Current Challenges and Future Initiatives •Continue to advance the long term forecast and provide fiscal decision making tools to the BOCC •Prepare a priority list with funding possibilities to the BOCC for operational and capital initiatives •At historical expenditure rate it fails to pay for operations in FY33 •Long Term funding and fiscal stability •Space for some departments is stretched to capacity Challenges Future Initiatives General Fund Budget Decisions Due to short and long-term pressures on the General Fund and the need to cover future operations and debt service costs the budget committee may consider the below budget decisions •Levy the full County tax rate at $1.2783 per $1,000 assessed value (additional $1.8M in revenue) •Policy whereby General Fund allocations are held in the General Fund reserve and transferred only when needed by the department, funds are subsequently returned if unspent (potentially additional +$1M/per year) 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 2.5% revenue and expenditure growth •Unallocated internal operations include transfer to Sheriff’s Office, Health Services, Justice Court and Administrative costs •TRT does not cover debt in the early years and will need to be covered by available general reserve •When TRT revenue surpasses expenditures, the GF is projected to have no available funds •At this juncture TRT would need to cover other costs usually associated with available general reserve such as capital maintenance and operations $- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 FY35 FY36 FY37 FY38 FY39 FY40 FY41 FY42 FY43 FY44 FY45 TRT Forecast Unallocated Internal Operations Visit Central Oregon Sunriver and Mt. Bachelor Debt Service Fair and Expo Fair and Expo Unallocated Revenue As TRT eclipses expenditures, the GF dips below contingency levels and fails to pay maintenance and capital FY 23-24 TRT Fiscal Issues •Highly variable, difficult to forecast •Fund is not able to support debt service as well as capital maintenance usually covered by the General Reserve or operational assistance to the GF. •Expenditure Pressures •Inflation increasing internal operational costs •Future expense through FY25 •Revenue Pressures •Down over 8% December through March year over year •Down 31% April over April Short-term Fiscal Issues Long-term Fiscal Issues TRT Operational Budget Decisions •The Sheriff’s Office is requesting a $500,000 increase in TRT in FY24 from $3,651,787 to $4,151,787 to support on-going operations •Additional TRT budget decisions focused on allocation of funds to courthouse debt service and future operations will be presented at the end of the General Reserve presentation FY 24 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 General Reserve TRT Funds departmental operations and some external County projects. In FY23 remaining unallocated TRT went to the General Reserve for Courthouse and County maintenance/capital, approximately 700k in FY24 proposed to General Reserve General Reserve Consolidates available funds after expenditures from the GF and TRT and uses the funds for debt service on courthouse ($65M), capital maintenance, minimal space additions and future years operational expenses General Reserve (Fund 060) Overview •The General 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 (FY23) •The General Reserve is an aggregation of the vast majority of the County’s available funds and represents our ability to maintain current service levels as well as capital needs and debt service •Fund 060 will fund the debt service on the courthouse expansion (~$65M over 20 years) by potentially accumulating remaining flexible resources from across the County (GF, TRT, LATCF, ARPA, PILT) •Many of the FY24 budget decisions will focus on how, and if, the budget committee wants to allocate different funding sources to the reserve for a variety of courthouse debt service options and future operational stability FY 23-24 General Reserve Budget Details •County reserve balance ~$9M •Formerly ~$12M balance of prior years GF •Nearly $3M less budgeted in FY24 of GF than projected at this time last year •Prior years TRT was an FY23 budget decision to help pay courthouse debt service •At historical expenditure rate the Reserve will no longer receive GF by FY33 23-24 RESOURCES $1,513,789 $3,521,987 $3,236,065 $723,720 $- $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 FY24 General Reserve by Funding Source Prior Years GF Prior Years TRT FY24 GF FY24 TRT General Reserve vs. Long Term Forecasted Expenditures (not including GF operational shortage) Overlay of cumulative funds vs. cumulative expenditures General Reserve fails to meet debt service obligations and minimal capital needs in FY38 even with annual transfers of all remaining TRT, GF, and LATCF funds. This does not include the GF unfunded operations after FY34 Without other revenue sources or a decrease in operational growth, debt and capital needs are not met $- $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100,000,000 $120,000,000 $140,000,000 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 FY35 FY36 FY37 FY38 FY39 FY40 FY41 FY42 FY43 FY44 FY45 General Reserve vs. Forecasted Expenditures All available funds Forecasted expenditures FY 23-24 General Reserve Fiscal Issues •At historical expenditure rate would not receive anymore GF by FY33 •Fails to meet courthouse debt service obligations with current revenues of GF, TRT and even LATCF funds •Fails to sustain capital maintenance needs and minimal space needs. •Expenditure Pressures •Inflation •Courthouse debt service •Capital maintenance needs •Revenue Pressures •Decreasing year over year remaining GF transfers to Reserves Short-term Fiscal Issues Long-term Fiscal Issues General Reserve (Fund 060) Budget Decisions Due to the forecast projecting the County cannot continue at the historical rate of expenditure and support future operations, courthouse debt service, and minimal maintenance and space needs the budget committee may consider the following budget decisions. General Reserve (Fund 060) Budget Decisions •Pay down the Courthouse expansion debt service •Paying more upfront for the courthouse saves the County money in the long- term •The County can save approximately ~$6.2M in interest cost if we pay down the debt service by $10M in FY24 •Still fail to meet debt service obligations in FY42 at historical expenditure levels (4 years longer that without an initial buy down of debt service) A decision is needed on buying down the debt service, and if so, how much would the budget committee would like to buy down the rate? General Reserve (Fund 060) Budget Decisions •Whether for buying down the debt service or for future debt payments the General Reserve is projected to need more funds than the current balance + all future years of GF or TRT •The Reserve will also need additional funds for basic capital maintenance, minimal space needs, and potential operational support. •Below are budget decisions relating to allocating additional funds to the General Reserve for these purposes •Allocate $8 million out of the $9 million General Reserve balance (Fund 060) for buy down •Allocate $4.6 million in Local Assistance and Tribal Consistency Funds to the General Reserve •Allocate remaining FY24 Unallocated Transient Room Tax (estimated $700,000) to General Reserve like the County did in FY23 •Allocate all ARPA interest (estimated $320,000) to the General Reserve General Reserve (Fund 060) Budget Decisions Cont. •$1.9M of TRT in principal and cost of issuance expenditures are reserved in FY24 that could be allocated to buy down of debt service •Transfer $2M of previously transferred General Fund from Fund 090 -Project Development and Debt Reserve (Property) to Fund 060 –General Reserve. •Transfer any unbudgeted Payment in Lieu of Taxes (estimated at $800,000) from Road to Fund 060 – General Reserve. •Transfer unallocated 30% of 1% of Transient Room Tax to Fund 060 –General Reserve (Estimated at $462,119). This has historically been transferred to Fund 617 (Fair & Expo Reserve). Fair & Expo is already transferring $300,00 from Fund 615 to Fund 617 (Fair & Expo Reserve). •BOCC consideration of allocating ARPA funds for internal eligible costs. FY 24 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 General Reserve TRT Funds departmental operations and some external County projects. In FY23 remaining unallocated TRT went to the General Reserve for Courthouse and County maintenance/capital, approximately 700k in FY24 proposed to General Reserve General Reserve Consolidates available funds after expenditures from the GF and TRT and uses the funds for debt service on courthouse ($65M), capital maintenance, minimal space additions and future years operational expenses FY 24 Budget Decision Flow of Funds Current years unallocated TRT ~$700k and 30% unallocated of the 1% ~$460k Prior, current, and future years remaining general fund General Fund TRT General Reserve Consolidates all available funds and uses the funds for debt service on courthouse ($65M), capital maintenance, minimal space additions and future years operational expenses LATCF $4.6 million ARPA $320k in interest Property Mgmt. ~$2 million of former GF’s that were transferred to Property for building and land acquisitionPILT ~$800k 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 ~$4.7M 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 •Deschutes County received an ARPA award of $38.4 million dollars •The Board of County Commissioners has allocated nearly $38M of the $38.4M in American Rescue Plan Act funds. •Of the $38M allocated ~$28M has been spent •The County expects ~$400k in returned ARPA funds due to projects being completed under budget American Rescue Plan Act (Fund 200) $- $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 Total ARPA Obligations ARPA (Fund 200) Budget Decisions •Allocate all ARPA interest (estimated $320,000) to the General Reserve •BOCC consideration of allocating ARPA funds for internal eligible costs. Thank you