Responses provided by Jon Locke, Director of Finance:
Slide 6 and other slides note fund balance. Approximately, what is the 25% amount we will need to keep in that fund? Is that the FY24 preliminary number?
The fund balance will need to be approximately $27 million in the General Fund to meet the 25% requirement for FY24. Yes, the fund balance provided for FY24 is the preliminary number based on the estimated revenues and expenses for the remainder of FY23.
There is nothing on this slide that notes the expenditures are for funds in excess of what we need to keep in the fund balance. This is confusing to those who know that the “fund balance” is the city savings account for emergencies. Seeing it on a slide as spendable dollars is jarring.
The fund balance being displayed is not intended to mean it is spendable. In future presentations, we could add a row underneath the total fund balance identifying the 25% fund balance reserved for emergencies. That would provide more clarity to the reader.
Slides 7/8. There is a slide for the May 16 Sales Tax Estimate and another for the Revised Sales Tax Estimate. Revised from what? What is the purpose of the May 16 slide?
Slide 7 was the sales tax estimate provided to City Council at the May 16th Budget Workshop. Since then, more sales tax information has been received and the sales tax numbers for FY23 and FY24 have been revised. The purpose of the slide is to bring the change to City Council’s attention.
Slide 11, why project outlets sales tax revenue increase at 0%?
Sales taxes from outlets are down year to date compared to the prior year and are forecasted to be down at yearend. Slide 10 shows the rolling 12-month average and is good indicator for trends. The decline in outlet sales taxes seems to be stabilizing, which is why they are estimated to be flat in FY24. Outlet sales taxes for the past four years have been FY20 - $8.5 million, FY21 - $8.0 million, FY22 - $8.3 million, and FY23 (forecasted) $8.1 million.
Could we have a copy (again) of our recurring expenses, such as 380 agreements, the conference center, FM110 TIRZ, etc. The same one provided to us this past year.
Attached is the Chapter 380 agreement information that was provided during the budget policy discussion as well as the slides that outlined the TIRZ/TRZ. Is this the information being requested?
Slide 26 – Why is hotel tax expected to go down next FY? Was there a surge in travel after Covid and it’s leveling off? And why would we budget for an increase next year?
Hotel taxes will most likely be up next fiscal year. The Budget Policy requires hotel taxes be budgeted based on conservative trends given the impact COVID-19 had on the hospitality and tourism industry. The amount for FY24 is 3% over FY22 actuals, which is less than what is being forecasted for FY23. There is certainly room to adjust the FY24 estimate, and it still be considered conservative.
Slide 30 – How much can we use in Hotel Tax dollars for historic purposes? What are the rules (heads in beds apply here)?
A bill was passed this legislative session clarifying that not more than 15% of the hotel tax revenue collected may be used for historical restoration and preservation related activities. For the FY24 Budget, we will use the last full fiscal year of hotel tax revenues to determine the 15% cap. The last full year of revenues was FY22 and there was a total of $3.6 million in hotel tax revenue. That makes the 15% cap on historical related activities $533K in FY24.
How much do we use for historic purposes now?
Expenses for the Main Street Program will be approximately $256K in FY24. That leaves $277K that may be allocated for other historical activities. As a placeholder, $50K is included in the FY24 Budget for historical activities that has not been assigned to a particular activity
Slide 34 Community Enhancement Fund
Personnel expenses have gone up since FY22. Are we adding people?
The FY23 Personnel numbers include a 5% increase and the one-time retention incentive. The FY24 Personnel numbers include the increase to implement the compensation study. One position was added at the FY23 mid-year adjustment. The position added was a Horticulturist that was already being paid through a temporary employment agency. The temporary employee is now a regular employee.
Slide 36 – Why is there a $363K shortfall? Slide 34 shows $949.
The ($949) shown on Slide 34 is the ending fund balance with the estimated revenues and expenses. Slide 36 shows the difference between the preliminary FY24 revenues $681,445 and expenses $1,044,810 = ($363,365). Unfortunately, it was just discovered that the Horticulturist position added mid-year FY23 was inadvertently budgeted for the same prorated amount in FY24. Adjusting the position’s salary for the whole year resulted in an additional $42,558, bringing total FY24 expenses to $1,087,368. The estimated shortfall in the Community Enhancement Fund is now $405,923. The proposed $1 increase is estimated to generate $408,058. Attached are Slides 34 and 36 with the revisions.
If we move the 2 code enforcement officers to the general fund, how much does this help this budget?
If the positions were paid from the General Fund, it would shift $152K from the Community Enhancement Fund into the General Fund. There was a total of 82 positions requested by departments in the General Fund. Of the 82 requested positions, 16 are included in the preliminary General Fund budget. Moving two Code Enforcement Officers to the General Fund would result in reducing the number of new positions included in the budget.
Slide 37 – How many Code Enforcement Officers do we have total?
There are 5 Code Officers, plus the Environmental Health and Safety Manager.
To whom do these 2 officers report?
The Environmental Health and Safety Manager in Neighborhood Enhancement.
