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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