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Home My WebLink About07/17/2018 06C 2018 First Quarter Financial ReportITEM TITLE: SUBMITTED BY: BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDASTATEMENT 1 Item No. 6.C. For Meeting of: July 17, 2018 2018 First Quarter Financial Report Tara Lewis, Financial Services Manager SUMMARY EXPLANATION: The First Quarter Financial Report for 2018 is attached and consists of the following: 1. Summary Narrative 2. Financial Reports • Fund Balance Summary • Revenue and Expenditure Comparison to Budget and Actual Year -to -Date • General Government Revenue Historical Year -to -Date Detail • General Government Expenditure Historical Year -to -Date Detail • Other Funds - Revenue, Expenditure and Fund Balance Summary ITEM BUDGETED: NA STRATEGIC PRIORITY: Public Trust and Accountability APPROVED FOR SUBMITTAL: Acting City Manager STAFF RECOMMENDATION: Accept Report BOARD/COMMITTEE RECOMMENDATION: ATTACHMENTS: Description d 2018 1st Garter Financial Report Upload Date 7/10/2018 Type Coker Memo 2 MEMORANDUM To: The Honorable Mayor and Members of the City Council From: Tara Lewis, Financial Services Manager Date: July 17, 2018 Subject: 2018 First Quarter Financial Report Financial activity for the first quarter of 2018 is as expected. In General Government operational funds, expenditures tend to approximate 25% of the budget while revenues tend to lag behind. Property taxes account for almost a quarter of General Government revenue, but the majority of collections occur in the second and fourth quarters of the year. This timing issue is evident when one reviews first quarter results from the Parks and Recreation fund. Revenues are only at 15% of budget because the majority of Parks revenue comes from Property taxes. (Parks expenditures are also less than one quarter of their budget due to their emphasis on summer and fall programming.) Points of consideration include the looming trade tariff war. Although there is talk of the federal government providing mitigation funding to affected farmers, the potential damage is difficult to quantify. Local agriculture's viewpoint of the economy is uncertain which will undoubtedly impact the City's sales tax revenues in the short term. Another dampening influence on financial expectations is 2018's mild winter. Utility tax revenues, although trending upward due to the lifting of the cap, have been stifled by a mild winter. And now that spring and early summer have given us an extended cool period, second quarter utility taxes are expected to be lackluster as well. One bright star in our revenue anticipation is the recent Supreme Court decision to overturn the 1992 Quill v. North Dakota case. Quill required that a seller have a physical presence in the state before sales tax could be collected. In the recent case of South Dakota v. Wayfair the Court is now allowing states to pass laws requiring sellers without a physical presence in the state to collect sales taxes from customers. Residents of the City of Yakima tend to buy goods online at a rate below the national average. It is too soon to develop a reliable forecast of the impact of this decision. In 2016 a new Governmental Accounting Standards Board (GASB) pronouncement took effect that impacted the way in which the City of Yakima reports its General Fund activities. The City administers two post -employment pension and benefit plans for retired law enforcement officers and firefighters. These plans have no current employees and generally pertain only to retirees who were hired prior to March 1, 1970 and are not covered under state plans. The retired 3 officer's plan has always been part of the General Fund, and the funding source is the general tax revenues of the City. Historically, the retired firefighter's plan was treated as a trust fund in the City Budget and City Financial Reports due to the requirement that property taxes be allocated sufficient to fund it. However, recent consideration that property taxes are allocable based on the City's budget and the obligation is no different than the funding of debt payments and other legal obligations, the plan is now considered by the GASB to be an obligation and activity of General Fund in a manner similar to the officer's plan. Subsequently, the Comprehensive Annual Financial Reports (CAFR) for both 2016 and 2017 have included the firefighter plan in the General Fund. Since the CAFR is the report that external users (including bond rating agencies) employ to analyze the City's financial condition, it is prudent to prepare internal financial reports on the same basis. This inclusion has a small, but minimally beneficial impact on the General Fund Balance as a percentage of expenditures. General Government will continue to be referred to in relation to budgetary reporting. General Government includes the General Fund, the Parks and Recreation Fund, and the Streets and Traffic Fund. 4 CITY-WIDE FUND BALANCE SUMMARY CHANGE IN FUND BALANCE General Fund Parks and Recreation Street & Traffic Operations General Government Subtotal Other Governmental Operating Funds Government Capital Funds Enterprise Operating Funds Enterprise Capital Funds Internal Service Funds Employee Benefit Reserve Risk Management Reserves Debt Service & Agency Funds Total 20% 15% — 10% 5% 0% 16.7% 2018 Beginning Balance As of March 31 2018 2018 Ending Actual Rev. Actual Exp. Balance $ 8,464,925 $ 15,471,422 $ 15,682,962 $ 8,253,385 35,384 823,536 995,841 (136,921) 849,894 632,266 1,295,333 186,827 9,350,203 16,927,224 17,974,136 8,303,291 4,271,223 8,192,825 8,718,071 36,467,706 3,761,058 2,791,913 1,125,894 4,497,420 2,925,493 2,709,074 4,487,642 1,738,834 571,065 9,360,594 12,301,299 12,748,887 8,270,483 1,709,702 1,660,562 36,516,846 1,058,019 677,725 4,141,352 3,394,028 3,364,339 2,821,602 2,121,783 1,990,365 1,257,312 2,341,141 405,564 6,432,997 $ 79,176,313 $ 44,517,523 $ 42,101,717 $ 81,592,119 GENERAL FUND BALANCE PERCENT OF EXPENDITURES 2013 - 2018 Policy Level Fund Balance: 18.2 14.6% 1 2013 2014 $10,071,272 $8,848,302 11.0% 13.0% 2015 2016 $6,887,225 $8,266,909 Target = 16.7% (2 months of Operations) 12.8° 13.2" 1. 2017 2018 Annualized $8,464,924 $8,253,385 Fund Balance Discussion General Government Fund balances tend to be artificially depressed in the first quarter due to lagging Property Tax revenues. Note that even though the General Fund Balance itself increased in 2017 over 2016, it's percentage of expenditures was slightly lower, due to expenditures rising at a higher rate than revenues. In 2017 this phenomenon was due to the catch-up restoration of fund reserves in the Risk Management and Health funds. However, inflationary pressures, particularly in wages continue to challenge the City's efforts to increase its Fund Balance as a percentage of expenditures. More progress is expected in the second quarter as revenues begin to catch up with the timing of expenditures. Finance Year -End Report - 3 5 CITY WIDE REVENUES & EXPENDITURES BY FUND GROUPING General Parks and Recreation Street & Traffic Operations General Government Subtotal Other Government Operating Funds Government Capital Funds Enterprise Operating Funds Enterprise Capital Funds Internal Service Funds Employee Benefit Reserves Risk Management Reserve Debt Service & Agency Funds Total General Parks and Recreation Street & Traffic Operations General Government Subtotal REVENUE COMPARISON (Budget vs. Actual) 2017 2018 Actual as of 3/31 Rec'd 0/0 Annual Amended Budget Actual as of 3/31 Rec'd 0/0 $ 14,385,890 781,133 612,404 15,779,427 1,821,960 11.7% 438,132 2.0% 11,038,251 20.1% 1,422,165 7.6% 1,089,624 17.6% 3,128,827 20.7% 1,950,030 47.8% 2,643,495 34.9% $ 39,311,911 17.4% $ 244,244,924 21.6% 14.1% 7.0% 19.5% $ 69,124,056 5,469,405 5,418,459 $ 15,471,422 823,536 632,266 80,011,920 16,927,224 14,799,720 2,925,493 42,032,139 1,738,834 55,826,645 12,301,299 19,532,463 1,709,702 6,114,371 1,058,019 14,395,290 3,394,028 4,173,141 2,121,783 7,359,235 2,341,141 22.4% 15.1% 11.7% 21.2% 19.8% 4.1% 22.0% 8.8% 17.3% 23.6% 50.8% 31.8% $ 44,517,523 18.2% EXPENDITURE COMPARISON (Budget vs. Actual) Other Government Operating Funds Government Capital Funds Enterprise Operating Funds Enterprise Capital Funds Internal Service Funds Employee Benefit Reserves Risk Management Reserve Debt Service & Agency Funds Total 2017 2018 Actual as of 3/31 $ 15,284,487 1,049,286 1,750,999 18,084,772 0/0 Exp'd 22.8 18.8 20.9 22.4 Annual Amended Budget Actual as of 3/31 2,594,017 16.8 % 889,471 3.2 % 11,869,089 21.0 % 2,379,260 7.4 % (148,074) (2.3)% 3,794,956 23.6 % 2,002,557 51.2 % 396,388 5.2 % $ 41,862,436 16.9 % $ 249,901,212 $ 68,469,838 $ 15,682,962 5,626,305 995,841 5,441,133 1,295,333 79,537,276 17,974,136 14,747,867 2,709,074 38,564,670 571,065 57,555,706 12,748,887 26,658,235 1,660,562 6,424,481 677,725 15,042,112 3,364,339 4,021,304 1,990,365 7,349,561 405,564 0/0 Exp'd 22.9% 17.7% 23.8% 22.6% 18.4% 1.5% 22.2% 6.2% 10.5% 22.4% 49.5% 5.5% $ 42,101,717 16.8% Finance Year -End Report - 4 6 GENERAL GOVERNMENT REVENUE DETAIL GENERAL GOVERNMENT REVENUES 2018 Revenues as of 3/31 Amended Percent General Fund 2016 2017 2018 Budget Rec'd General Sales Tax $ 3,764,550 $ 4,051,702 $ 4,324,326 $ 17,644,612 24.5% Criminal Justice Sales Tax 780,949 810,299 891,971 3,426,346 26.0% Property Tax 994,494 988,484 1,124,576 12,965,390 8.7% Utility & Franchise Taxes 4,199,374 4,435,820 4,531,031 17,914,429 25.3% Charges for Services 2,043,481 2,059,818 2,231,375 9,301,368 24.0% State Shared Revenue 423,390 525,386 592,383 2,319,165 25.5% Other Intergovernmental 160,571 126,604 213,878 797,865 26.8% Fines and Forfeitures 488,465 462,379 457,121 1,790,632 25.5% Other Taxes & Fees 580,119 663,250 674,511 1,601,264 42.1% Licenses and Permits 227,703 215,687 296,941 834,702 35.6% Other Revenue 99,474 46,461 133,307 528,283 25.2% Total General Fund $ 13,762,570 $ 14,385,890 $ 15,471,420 $ 69,124,056 22.4% Parks & Recreation Property Tax 193,853 194,382 227,453 2,822,565 8.1% Charges for Services 182,048 210,417 220,395 855,550 25.8% State Shared Revenue 5,100 5,775 5,958 23,830 25.0% Other Intergovernmental 12,755 6,275 9,334 39,500 23.6% Transfers from other Funds 362,500 326,548 332,093 1,513,060 21.9% Other Revenue 25,407 37,735 28,303 214,900 13.2% Total Parks & Recreation 781,663 781,132 823,536 5,469,405 15.1% Streets Property Tax 242,933 264,614 253,149 3,141,437 8.1% Charges for Services 650 2,250 1,650 545,000 0.3% State Shared Revenue 316,773 306,572 311,827 1,349,812 23.1% Other Intergovernmental 13,956 29,308 61,945 184,210 33.6% Other Taxes & Fees 150,000 -% Other Revenue 16,560 9,661 3,695 48,000 7.7% Total Streets 590,872 612,405 632,266 5,418,459 11.7% Finance Year -End Report - 5 7 GENERAL GOVERNMENT EXPENDITURE DETAIL GENERAL GOVERNMENT EXPENDITURES 2018 Expenditures as of 3/31 Amended Percent 2016 2017 2018 Budget Exp'd Police $ 5,861,358 $ 6,268,270 $ 6,343,341 $ 29,388,534 21.6 % Fire 2,874,826 3,054,086 3,283,718 14,080,858 23.3 % Transfers To Other Funds 1,186,060 1,150,393 1,119,696 3,952,540 28.3 % Information Technology 907,652 967,702 952,896 3,523,653 27.0 % Code Administration 410,726 426,953 397,180 2,007,930 19.8 % Utility Services 339,434 364,196 442,956 1,926,299 23.0 % Legal 355,390 366,815 388,016 1,686,272 23.0 % Financial Services 353,023 384,123 377,936 1,651,963 22.9 % Municipal Court 329,101 336,169 363,584 1,585,265 22.9 % Firemen's Relief/Pension 359,854 325,082 344,077 1,229,483 28.0 % Indigent Defense 232,231 209,004 164,731 1,050,000 15.7 % Police Pension 275,945 249,485 236,308 927,497 25.5 % Engineering 169,761 165,483 170,136 763,825 22.3 % Economic Development 102,159 95,358 169,247 730,903 23.2 % Human Resources 155,116 147,867 105,595 675,267 15.6 % Planning 136,909 130,305 155,313 629,748 24.7 % Purchasing 148,234 122,795 144,361 624,773 23.1 % City Clerk / Records 309,144 105,056 165,903 533,319 31.1 % City Hall Facility 155,348 175,006 101,177 514,138 19.7 % City Management 118,929 95,139 103,298 434,550 23.8 % City Council 113,409 107,515 122,010 262,650 46.5 % Intergovernmental 29,005 30,978 31,483 160,372 19.6 % State Examiner 6,703 130,000 - % Total General Fund 14,923,614 15,284,483 15,682,962 68,469,839 22.9 % Parks & Recreation Fund 1,005,167 1,049,286 995,841 5,626,305 17.7 % Street & Traffic Ops. 1,579,953 1,750,999 1,295,333 5,441,133 23.8 % Total General Government $ 17,508,734 $ 18,084,768 $ 17,974,136 $ 79,537,277 22.6 % Finance Year -End Report - 6 8 OTHER FUNDS DETAIL Fund OTHER GOVERNMENT OPERATING FUNDS 2018 As of March 31 Beginning 2018 2018 Ending Balance Actual Rev. Actual Exp. Balance Economic Development $ 46,065 $ 25,449 $ 20,474 $ 51,040 Neighborhood Development 683,209 444,039 153,700 973,548 Community Relations 708,399 164,438 146,093 726,744 Cemetery 61,431 52,693 63,057 51,067 Emergency Services 106,362 120,183 282,347 (55,802) Public Safety Communication 164,849 863,876 888,556 140,169 Police Grants 873,065 354,183 71,878 1,155,370 PBIA (Park/Bus Impr Area) 99,366 46,196 1,782 143,780 Trolley 20,952 1,275 843 21,384 Front Street Bus Impr Area 155 900 600 455 Cony Center (Tourist Promo) 378,217 201,223 420,996 158,444 Capitol Theatre 28,018 107,111 198,209 (63,080) PFD - Convention Center 815,624 245,054 182,376 878,302 Tourism Promotion Area 79,342 113,491 113,491 79,342 PFD - Capitol Theatre 206,167 185,381 164,673 226,875 Total Other Gov't Oper Funds $ 4,271,221 $ 2,925,492 $ 2,709,075 $ 4,487,638 Fund GOVERNMENTAL CAPITAL FUNDS 2018 As of March 31 Beginning 2018 2018 Ending Balance Actual Rev. Actual Exp. Balance Arterial Street $ 1,523,066 $ 149,443 $ 76,680 $ 1,595,829 Central Bus District Capital 572,172 669,492 24,357 1,217,307 Capitol Theatre Construction 102,791 15,000 117,791 Yakima Redevelopment Area 1,694,125 50,143 37,321 1,706,947 Parks & Recreation Capital 411,326 50,000 58,283 403,043 Fire Capital (1,082,051) 2,309 (1,084,360) Law and Justice Capital 477,133 102,316 90,504 488,945 Public Works Trust Construction 2,131,719 299,756 114,867 2,316,608 REET 2 Capital 596,018 257,532 853,550 Street Capital 256,191 31,402 287,593 Convention Center Cap Impr 933,114 113,750 104,002 942,862 Reserve for Capital Impr 577,221 62,742 514,479 Total Gov't Capital Funds $ 8,192,825 $ 1,738,834 $ 571,065 $ 9,360,594 Finance Year -End Report - 7 Fund 9 ENTERPRISE OPERATING FUNDS 2018 Beginning Balance As of March 31 2018 2018 Actual Rev. Actual Exp. Ending Balance Airport Operating Stormwater Operating Transit Operating Refuse Wastewater Operating Water Operating Irrigation Total Enterprise Oper Funds Fund $ (22,526) $ 784,536 2,925,034 928,298 2,222,606 1,368,975 511,148 321,087 307,064 1,841,033 1,889,144 5,563,641 1,878,246 501,084 $ 336,074 697,028 2,010,755 1,599,747 5,406,480 2,007,662 691,141 $ (37,513) 394,572 2,755,312 1,217,695 2,379,767 1,239,559 321,091 $ 8,718,071 $ 12,301,299 $ 12,748,887 $ 8,270,483 ENTERPRISE CAPITAL FUNDS Airport Capital Stormwater Capital Transit Capital Wastewater Facilities Capital Wastewater Const Capital Wastewater Capital Water Capital Irrigation Capital Total Enterprise Oper Funds Fund 2018 As of March 31 Beginning 2018 Balance Actual Rev. $ 973,423 $ 86,419 4,938,073 266,256 6,367,633 3,600 3,067,165 172,150 8,517,535 725,000 5,325,403 3,932,875 125,375 3,345,599 330,903 2018 Actual Exp. Ending Balance $ 52,416 54,139 1,452,655 $ 1,007,426 5,150,190 6,371,233 3,239,315 7,789,880 12,005 5,313,398 4,058,250 89,348 3,587,154 $ 36,467,706 $ 1,709,703 $ 1,660,563 $ 36,516,846 INTERNAL SERVICE FUNDS 2018 Beginning Balance As of March 31 Equipment Rental Environmental Public Works Admin Total Enterprise Oper Funds 2018 2018 Ending Actual Rev. Actual Exp. Balance $ 2,844,672 $ 716,282 $ 380,759 $ 3,180,195 460,987 40,741 7,055 494,673 455,399 300,996 289,911 466,484 $ 3,761,058 $ 1,058,019 $ 677,725 $ 4,141,352 Finance Year -End Report - 8 Fund 10 EMPLOYEE BENEFIT RESERVES 2018 As of March 31 Beginning 2018 2018 Ending Balance Actual Rev. Actual Exp. Balance Unemployment Comp Rsv $ 150,189 $ 51,794 $ 19,131 $ 182,852 Employees Health Ben Rsv 2,194,903 3,084,081 2,995,328 2,283,656 Worker's Comp Rsv 382,854 257,989 329,816 311,027 Wellness/EAP 63,968 165 20,064 44,069 Total Employee Ben Reserve $ 2,791,914 $ 3,394,029 $ 3,364,339 $ 2,821,604 Fund RISK MANAGEMENT RESERVE 2018 As of March 31 Beginning 2018 2018 Ending Balance Actual Rev. Actual Exp. Balance Risk Management Reserve $ 1,125,894 $ 2,121,783 $ 1,990,365 $ 1,257,312 Fund DEBT SERVICE & AGENCY FUNDS 2018 As of March 31 Beginning 2018 2018 Ending Balance Actual Rev. Actual Exp. Balance GO Bond Redemption LID Guaranty $ - $ $ $ 2002 GO Convention Center 166,150 232,053 398,203 2005 GO Various Bonds 8,734 814,142 94,307 728,569 1996 GO LTD - Convention Center 72,672 63,561 136,233 LID Debt Service Control 38,809 38,809 Total GO Bond Redemption $ 247,556 $ 1,109,756 $ 94,307 $ 1,301,814 Water/Sewer Revenue Bond Redemption Water Rev Bonds & Debt Service $ 581,253 $ - $ (1,833) $ 583,086 WW Rev Bond & 2008 Debt Service 267,982 103,455 (23,135) 394,572 Irrigation Bond Debt Service 176,060 85,671 28,557 233,174 WW Rev Bond Rsv & 2012 Debt Svc 2,557,272 388,300 (39,217) 2,984,789 Total W/S Rev Bond Redemption $ 3,582,567 $ 577,426 $ (35,628) $ 4,195,621 Agency Funds Yakcorps 608,006 346,885 261,121 Cemetery Trust 667,296 7,144 674,440 Total Agency Funds $ 667,296 $ 615,150 $ 346,885 935,561 Finance Year -End Report - 9