No preview available
HomeMy WebLinkAbout111808 Five Year ForecastFive Year Forecast Fiscal Years 2010 through 2014 November 18, 2008 The FY 2010 Deficit – CitySchools $ 38.3$ 42.9 Total Deficit:$ 81.2 Currently – Real Estate taxes expected to be $22.2 million under budget ? Personal Property taxes may miss budget by $16.5 million ? Business Licenses may be $4.7 million short ? State revenues are estimated to be $17.5 million less than the FY ? 2010 budget reflects DeKalb County, Tennessee The October 10, 2008 departments told to plan cuts Atlanta Journal PhiladelphiaCouncil panel gets earful on issues layoff notices to 237 workers Budget shortfall for Elsewhere – Georgia May Have To Cut $40 Million To Balance Budget. budget shortfall 2009 national struggle Associated Press By Catherine Lucey Philadelphia Daily NewsOctober 22, 2008 - Nearly half given reprieve until at least mid - Constitution Budget Shortfall Forces Norfolk November 10, 2008 of Jobs Facing $24M shortfall, By Erik Schelzig © Pilot Va. By Tim Craig (11/11, - The Virginian To Cut Hundreds Wednesday, October 15, 2008 Washington Post Loudoun County s budget shortfall worse than By Harry Minium at Last updated 12:26 a.m. PT Tagami October 10, 2008 ABC 7 News Faces Major Budget Shortfall September 18, 2008 ) reports, King County looks for budget cuts PhoenixAnalysts place budget shortfall (October 22, 2008) GREGORY ROBERTS Oregon higher than expected has $21 million budget shortfall. Governor grappling with $534 million budget shortfall ’ San Francisco San Francisco Chronicle By Paul Davenport/Associated Press Tri-State Online October 30, 2008 Fairfax I REPORTER Associated Press Anne Arundel County (October 14, 2008) reports Orders Cost County Executive Predicts $58.2 Million Shortfall By expected October 21, 2008 Wyatt Buchanan, - Capital Online P By Amy Gardner and - Saving Steps, Proposes Furlough The Washington Post Staff Writers Arlington County Prince William County Wednesday, October 15, 2008; Page B01 Sandhya Daily Press.com October 14, 2008 Somashekhar braces for bigger budget shortfall October 23, 2008 Tucsonexpects its budget shortfall to reach $51M. WTOPnews.com The Arizona Daily Star(October 18, 2008) reports Forecasting in Turbulence: History provides limited guidance ? Unprecedented involvement by the Federal ? Government in financial markets Municipal and State budgets across the ? country are struggling –we are not alone Ongoing wars –impact on Military ? deployments & spending Forecasting in Turbulence–Seek Advice: Leading Economists ? Regional City Managers ? Regional Budget and Finance Directors ? Experts in the field ? Research; Research; Research ? Model of the Economy . . . Improving Declining 2009 2012 What We “Know”– Regionally residential housing value may continue to ? decline by 3 to 5% Homeowners have become used to using their homes as ? an “ATM” Sales will be weak at least through 2009 ? Businesses will continue to struggle ? Inflation should remain low –deflation may be the norm ? Demand for City and School services increase as the ? economy worsens Housing – Foreclosures 1,400 1,200 1,000 800 600 400 200 0 Appreciation 19981999200020012002200320042005200620072008 16.0% Annual Total 11.0% Source: Commissioner of Revenue *2008 is through September of current year 6.0% 1.0% -4.0% 198119841987199019931996199920022005200820112014 Real Estate Tax Revenue – Foreclosures remain low 3.7% ? $540 at less than 1/2% of total homes $530 3.2% $520 Return to normal growth ? 2.2% Millions $510 -3.0% of 3-5% not expected 0% $500 until last two years of forecast $490 $480 A 3% drop in ? $470 assessments means a 200920102011201220132014 loss of $22.2 million Comprises 28.1% of total revenue at 89¢rate ? Car Registrations – 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% 1993199419951996199719981999200020012002200320042005200620072008 Source: Virginia Automobile Dealers Association Personal Property Tax Revenues – SUVs and Light trucks ? $145 $140 are losing value $135 $130 Millions Downsizing of vehicles ? $125 $120 $115 New car purchases ? $110 are declining $105 $100 200920102011201220132014 2010 expected to be ? $16.5 million under Comprises 7.3% of total revenue at $3.70 rate ? budget Consumer Confidence – 120.0 105.0 90.0 75.0 60.0 45.0 30.0 Jan-90Jan-94Jan-96Jan-00Jan-04Jan-06 Jan-92Jan-98Jan-02Jan-08 Source: The Conference Board Sales & BPOL Tax Revenues – Tied closely to ? $140 economy and $120 consumer decisions $100 Millions Consumer confidence $80 ? continues to decline $60 $40 Credit markets are ? $20 restricting options for businesses $0 200920102011201220132014 SalesBPOL FY 2010 may be down ? by $6.2 million from Comprise 5.6% of total revenues ? budget estimate State & Federal Revenues – The majority of these ? $800 revenues relate directly to $700 School or Human Service $600 programs $500 Millions $400 $300 Forecast projects a 3.4% ? $200 decline for FY 2010, but it $100 could be much worse $0 200920102011201220132014 State budget is due on ? StateFederal December 17 th Comprises 28% of the total budget revenues ? Impact on Taxpayer – Virginia Beach Taxes and Fees20092010 Real Estate$ 2,912.08$ 2,766.48 Personal Property (2 vehicles)244.11193.40 Electric Utility36.0036.00 Natural Gas Utility36.0036.00 Telecommunications70.6870.68 Water Utility36.0036.00 Restaurant Meals251.48260.03 Admissions25.6926.64 Vehicle Decal (2 vehicles)52.0052.00 Storm Water Utility73.3780.67 Residential Refuse 0.000.00 Total Impact$ 3,737.41$ 3,557.90 Variance:$ -179.51 Year to Year Change in Total Revenues 10.0% 9.4% 8.0% 6.0% 5.1% 3.0% 4.0% 3.0% 2.4% 1.8% 2.1% 2.0% -0.2% 0.0% -2.0% FY07FY08FY09FY10FY11FY12FY13FY14 The Split between City and Schools – Formula provides 51.3% to Schools and 48.7% to ? the City of: Real Estate ? Personal Property ? General Sales ? Utility Taxes ? Virginia Telecommunications (with exception of E911) ? Business License ? Cable Franchise ? School Expenditure Assumptions for Next 5 Years – Student enrollment continues to decline over the forecast periodby an average of 668 ? students and actually begins to increase in the year 2015 Staffing levels adjusted based on student Average Daily Membership ? Assumes no changes in components of State Funding ? Assumes RSF is maintained at current percentage split ? All current educational programs continue –no changes ? Compensation increases at 3.5% per year ? Partial baseline funding each year for school bus and vehicle replacements plus repair and ? maintenance and major equipment baselines have been maintained, including the CIP Health and VRS costs increase at approximately rate of inflation ? Assumes periodic increases of 2-6% for utilities costs ? Assumes fuel costs average increase of 9% per year ? School Forecast – $1,100 ExpendituresRevenues $1,000 -$42.9 { million $900 Millions $800 $700 $600 $500 200920102011201220132014 City Expenditure Assumptions for Next 5 Years – Non-formula revenues for the City are tied directly to the economy and ? are being impacted accordingly All current programs continue through the forecast ? No additional staff except for new facilities ? Compensation increases at 2.5% each year ? VRS and Health Insurance cost remain at 2009 levels ? Operating costs including energy increase by only 2% each year -this ? will require increases in efficiency Funding for replacement vehicles and equipment are at reduced levels ? through the forecast period City Forecast Over Next 5 Years – $1,100 ExpendituresRevenues $1,000 -$38.3 { million $900 Millions $800 $700 $600 $500 200920102011201220132014 BudgetBudget City and School Deficits Combined – 200920102011201220132014 $0 -$20 -$40 Millions -$60 -$80 -$100 -$120 CitySchool Threats to This Forecast – Length and severity of economic downturn ? State budget ? Energy and other cost drivers ? Maintenance/replacement of infrastructure ? Changes in Military spending ? Options to Balance FY 2010 – Reprioritize/reduce/eliminate programs and services ? Revisit long-term program financing strategies (open space; TGIF; ? major projects) to align funding with program need Scale back pay and benefits ? Look at scaling back CIP and reducing pay-as-you-go funding ? Use fund balances in various funds to provide bridge funding to ? programs/CIP Examine revenue options ? Work with General Assembly members to avoid deepening the impact ? on local community services, to increase flexibility, and reducethe impact Conclusions – Given the turbulence in the economy, from ? housing to stimulus packages, there is the potential for a wide range of discussions on the assumptions of this forecast. Change the assumptions and you change the forecast. However, all trends are pointing to lower revenues and rising costs. The question is how much ... and what do we do about it. We will have a balanced budget for FY 2010! ? Although hard choices lay ahead.