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HomeMy WebLinkAbout04/05/2016 08 2015 Year-End Budget Revenue & Expenditure ReportITEM TITLE: SUBMITTED BY: BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDASTATEMENT Item No. 8. For Meeting of: April 5, 2016 2015 Year -End Budget Revenue & Expenditure Report Jeff Cutter, Interim City Manager Cindy Epperson, Finance Director SUMMARY EXPLANATION: As previously projected, actual 2015 citywide budget performance has produced a stable revenue position, and was effectively managed so that overall departmental expenditures have again been restrained below authorized budget levels. The major exception was in the General Government (i.e. tax -supported) funds which used reserves of about $2.25 million which came from a combination of a downturn in revenues of both sales and utility taxes, coupled with unbudgeted expenditures hitting late in the year -- i.e. a snow event requiring extensive overtime and contractor expenses for plowing, the prior City Manager's severance package, a large medical claim for an inmate housed at the Yakima County jail, and December medical claims being more than double a typical month. A budget reduction plan is presented to Council in a separate agenda item to address the potential General Government revenue shortfall in 2016 and to begin to rebuild reserves. In total, across all funds, the City collected $188.5 million and expended $184.2 million, netting an increase in total reserve balances for all funds of $4.3 million. General Government operating reserve balance is $7.2 million at the end of 2015, which is 10.2% of 2015 revenues. This is below the recommended minimum of 16.7%, although if the Tiger Mart property sales are considered, the percentage increases to 12.5%. Total 2015 actual expenditure for all funds was $184.2 million compared to the 2015 amended budget of $223.1 million -- $38.9 million or 21.1% less than the City Council's authorized appropriation level, primarily due to deferred spending for major Capital Improvement Projects which are, or will be re -budgeted for in 2016. All other funds ended 2015 with fund balances at expected levels. Conclusion: Given the current state of the local and national economy, the state of the worldwide affairs and the related potential impacts to all government entities, City management has taken a conservative approach to budgeting revenues and continue to maintain controls on expenditures. Even though General Government revenues fell short of budget estimates primarily because of the drought year, other funds performed as expected. Overall, the 2015 year-end fiscal position reflects that the City of Yakima was able to effectively manage its economic environment. We will continue to monitor revenues and expenditures in 2016 to ensure that General Government lives within its means. ITEM BUDGETED: NA STRATEGIC PRIORITY: Public Trust and Accountability APPROVED FOR SUBMITTAL: fi - ;' , Interim City Manager STAFF RECOMMENDATION: Accept Report BOARD/COMMITTEE RECOMMENDATION: ATTACHMENTS: Description Upload Date D 2015 Year End Re,enue & Expenditure 3/31/2016 Type Cover Memo MEMORANDUM March 31, 2016 TO: The Honorable Mayor and Members of the City Council FROM: Jeff Cutter, Interim City Manager Cindy Epperson, Director of Finance & Budget SUBJECT: 2015 Year -End Budget Revenue & Expenditure Report We are submitting for your review the City of Yakima's 2015 year-end actual results compared to budgeted Revenue and Expenditure Report for all city funds. Balances shown are subject to final adjustments made as a result of the year-end closing process, which will not be officially concluded until the State Auditor's work is completed this summer. Overall, Citywide 2015 budget performance has produced a stable revenue position, while departmental expenditures have been restrained below authorized budget levels. However, General Government operations used fund balance of about $2.2 million which came from a combination of a downturn in revenues for both Sales and Utility taxes coupled with unbudgeted expenditures hitting late in the year - i.e. a snow event requiring extensive overtime and contractor expenses for plowing, the prior City Manager's severance package, and a large medical claim for an inmate housed at the Yakima County jail. Total revenue for all funds is $188.5 million, while total expended is $184.2 million, adding $4.3 million to citywide reserve balances. This report is summarized by type of fund, and reported by functional type, in the following order: ➢ Performance at a Glance - Financial Monitoring System ➢ City -Wide Overview ➢ General Fund Revenue Analysis ➢ General Fund Expenditure Analysis ➢ Other Funds Analysis ➢ Top 10 Capital Project ➢ Exhibits - Fund detail that supports the summaries: • Exhibit I - Other Operating/Enterprise Funds • Exhibit II - Capital Improvement Funds • Exhibit III - Reserve and Other Funds • Exhibit IV - Bond Redemption Funds Yakima.6826.1.FIN_Report_4th_Qrtr_2015.docx 1 of 17 PERFORMANCE AT A GLANCE General Fund Revenues Expenditures Fund Balance Other Funds Top 10 Capital Projects Exhibits Operating/Enterprise Funds (1) Capital Funds (1) Reserve, Trust & Agency Funds (1) Bond Redemption Funds (1) STATUS PAGE NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL Legend: Revenues exceed budget >5%, Expenditures below budget >5% Revenues exceed budget <5%, Expenditures below budget <5% Revenues below budget between 3-5% Revenues below budget >5% (1) These funds are graded on a net Revenue measurement. 2-6 2/6-7 8-9 10-11 12 13 14 15 16 POSITIVE NORMAL WARNING NEGATIVE Yakima.6826.1.FIN_Report_4th_Qrtr_2015.docx 2 of 17 CITY WIDE OVERVIEW REVENUE COMPARISON (Budget vs. Actual - 100% of year) General Parks and Recreation Street & Traffic Operations General Government Subtotal Operating/Enterprise Funds Capital Funds G.O. Bond Redemption Funds Utility Revenue Bond Redemption Funds Employee Benefit Reserves Operating Reserves Trust and Agency Funds Total General Parks and Recreation Street & Traffic Operations General Government Subtotal 2014 2015 Percent Actual Rec'd $ 58,245,180 4,501,236 4,636,264 67,382,680 68,707,753 43,785,457 2,972,439 2,146,286 11, 794, 788 3,433,827 21,126 $ 200,244,356 100.0% 100.1% 100.1% 100.0% 103.2% 75.4% 64.2% 100.0% 99.9% 102.2% 91.1% 93.5% Amended Budget $ 61,333,941 5,479,455 4,718,610 71,532,006 Percent Actual Rec'd 73,994,292 41,424,129 4,700,411 2,134,280 12,509,688 3,684,000 14,500 $ 209,993,306 EXPENDITURE COMPARISON (Budget vs. Actual - 100% of year) Operating/Enterprise Funds Capital Funds G.O. Bond Redemption Funds Utility Revenue Bond Redemption Funds Employee Benefit Reserves Operating Reserves Trust and Agency Funds Total 2014 $ 59,421,492 5,552,839 5,292,707 70,267,038 69,153,806 26,036,173 4,467,355 2,134, 280 12,549,170 3,891,570 27,709 $188,527,101 2015 96.9% 101.3% 112.2% 98.2% 93.5% 62.9% 95.0% 100.0% 100.3% 105.6% 191.1% 89.8% Percent Amended Actual Spent Budget $ 61,281,678 5,445,527 5,076,756 71,803,961 $ 59,501,582 4,553,121 4,800,608 68,855,311 65,324,114 41,326,091 3,207,820 2,292,267 13,143,628 4,107,152 12,000 $198,268,383 99.9% 99.9% 99.6% 99.9% 93.3% 57.7% 64.5% 100.0% 98.6% 91.1% 108.4% 84.1% 75,990,172 51,851,807 4,709,429 2,132,155 12,865,239 3,715,631 12,000 $ 223,080,394 Percent Actual Spent $ 61,410,787 100.2% 5,554,286 102.0% 5,549,823 109.3% 72,514,896 101.0% 70,831,014 16,729,680 4,464,443 2,132,154 13,238,415 4,256,921 12,000 $184,179,523 93.2% 32.3% 94.8% 100.0% 102.9% 114.6% 100.0% 82.6% Yakima.6826.1.FIN_Report_4th_Qrtr_2015.docx 3 of 17 GENERAL GOVERNMENT REVENUE ANALYSIS GENERAL GOVERNMENT REVENUES 2015 Revenues through 12/31 Amended Percent 2013 2014 2015 Budget Receipted Status General Sales Tax $14,462,963 $15,461,201 $ 15,770,269 $16,020,000 98.4% Crim. Justice Sales Tax 2,922,211 3,103,814 3,260,050 3,205,350 101.7% Property Tax 15,696,436 16,016,029 16,444,895 16,336,390 100.7% Utility & Franchise Taxes 14,719,274 15,848,483 15,689,913 16,783,695 93.5% Charges for Services 6,016,642 6,684,115 8,262,371 8,154,483 101.3% State Shared Revenue 2,701,780 2,648,633 2,849,681 2,836,880 100.5% Other Intergovernmental 1,367,881 1,370,523 1,612,009 1,629,520 98.9% Fines and Forfeitures 1,603,138 1,578,124 1,589,710 1,645,110 96.6% Other Taxes 1,462,506 1,453,227 1,554,728 1,429,000 108.8% Transfers from other Funds 1,327,401 1,413,706 1,449,559 1,450,000 100.0% Licenses and Permits 817,750 865,334 872,276 857,900 101.7% Other Revenue 415,338 703,152 838,526 1,157,178 72.5% Total Revenue 63,513,320 67,146,341 70,193,987 71,505,506 98.2% Beginning Fund Balance 10,908,094 10,883,753 9,412,400 9,412,400 Total Resources $74,421,414 $78,030,094 $ 79,606,387 $80,917,906 98.4% NORMAL NORMAL NORMAL WARNING NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL Sales Tax — The fourth quarter actuals dropped below the 4th quarter of 2014, so that the City ended 2015 only 2.0% ahead of 2014. The 2015 budget was set assuming a 3.6% growth rate, which seemed reasonable assuming the prior 3 years experienced a growth rate of between 6.9 and 7.2%. The prior growth was driven primarily by good volume, quality and market conditions for the areas agricultural commodities, and corresponding increases in construction activity. A drought was declared in spring of 2015, and the ripple effect of that reality in our agricultural community contributed to the sales tax reduction. The Criminal Justice Sales Tax experienced similar results. However, this revenue is allocated among the operating and capital funds based on need, and growth was allocated to General Fund. Property Tax — This source grew by about 2.7% year over year, which represents a 1% increase in the base levy, and new construction of about 1.1%, improvement in Yakima County's collection rate, and a re -allocation from the Firefighters' Pension Fund. The property tax levy is usually slightly higher than originally budgeted (we don't know the final levy until after the budget is adopted each year). Also, we discount our budget estimates for uncollected amounts. For this year, we built in about a 2.5% collection delay, however, Yakima County experienced an uncollected rate of only 2.0% at year end. This revenue is also shared with the Firefighters' Pension Fund, and lower expenses in that fund allowed a re- allocation into General Fund. Utility Taxes and Franchise Fees — As noted in previous quarterly reports, this major revenue source fell off from 2014, with the actuals coming in below 2014 actual by $158,570 , and below the 2015 budget by $1,093,782. Contributing factors for this reduction include the mild weather conditions through the first three months of the year, compared to severe cold weather in the prior year. The drought alert also slowed Yakima.6826.1.FIN_Report_4th_Qrtr_2015.docx 4 of 17 water (and therefore wastewater) usage. Telephone taxes continue to decline, with the migration away from land lines and cell phone "talking" minutes to data usage (i.e. texting) which is not currently taxable. Charges for Services — The new Union Gap contract for fire services of $1.2 million is included in this category which is the major reason it is up by 23.6% over the prior year. This category slightly exceeded the 2015 budget by 1.3%. Other Intergovernmental — The contract for School Resource Officers (SRO) make up a little less than half of this category, and this revenue came in about $25,000 below the budget estimate because the Yakima School District discontinued paying for a Sergeant in the new school year contract which started in the City's 4th quarter, resulting in the 2015 actual being slightly below (1.1%) budget. Overall, this category demonstrated an increase of 17.6% over 2014, primarily because of a full -year of the SAFER (i.e. Firefighter hiring) grant, and the implementation of the Fly Yakima grant. Fines and Forfeitures — With the implementation of the new indigent defense case volume directive, the City's Prosecutor's Office started a Pre -filing Diversion Program and a Charging Unit, both designed to reduce filed cases. These programs have been successful in lowering the caseload for indigent purposes, but this also potentially reduces the revenue generated by tickets. After posting a 6% increase in 2013, this category experienced a slight decline in 2014, and remained relatively flat in 2015. Other Taxes — This category consists primarily of Business Licenses and Gambling Taxes, bolstered by the recovering economy. There is also a bump in the Business License revenue because of the timing of the billing - 2016 renewals went out in early December, and we received more renewals coming back to be receipted in December than in prior years. Transfers from Other Funds — The majority of this category consists of the three and one-half percent of the utility tax on Water, Wastewater, and Refuse which is designated by Council for Parks and Recreation operations. These taxes are all receipted into the General Fund, and the transfer is then made from General Fund to Parks and Recreation. This one line approximated the 2015 budget. Licenses and Permits —Generally, the construction segment of our local economy is recovering from the recession. The budget was conservatively estimated so 2015 actual slightly exceeded budget. This category is a good indicator of future construction -related sales tax. Other Revenue — Interest earnings is the primary component, and rates remained low throughout 2015. This is one area that has not yet recovered from the recession. The budget also included an estimate of $400,000 for the sale of a Tiger Mart property, which was in process in 2015 but not completed until 2016, leaving this category below budget by about that same amount. Overall, total General Government revenue demonstrated growth of $3,047,646 or 4.5% over 2014 actual. New revenues to the General Fund (i.e. the Union Gap fire contract and the firefighter hiring and air service grants) account for over $1,370,000 of this increase. If these are removed from the calculation, the increase in existing revenue was about 2.5%, which is less than anticipated - this same calculation resulted in growth in 2014 of 4.8%. Therefore, 2015 revenues were below the amended budget by $1,311,519 or 1.9%, contributing to the use of reserves. The 2016 estimates are being reduced to take into consideration the lower bases on major revenues, and a proposal for maintain a balanced budget is going to City Council under separate cover. Yakima.6826.1.FIN_Report_4th_Qrtr_2015.docx 5 of 17 GENERAL GOVERNMENT REVENUES - By Month 2013 2014 2015 Jan $ 4,451,264 $ 4,775,515 $ 4,497,985 Feb 4,267,636 4,770,901 4,721,588 Mar 4,896,583 4,984,701 5,504,709 Apr 9,758,283 10,717,557 11,332,602 May 4,733,408 4,573,329 4,855,896 Jun 4,168,515 4,307,587 3,922,536 Jul 3,962,439 4,304,052 4,604,158 Aug 3,798,660 4,290,971 4,636,646 Sep 4,758,660 5,180,804 5,084,171 Oct 10,070,031 9,891,373 10,623,480 Nov 4,006,410 4,395,161 4,782,114 Dec 4,641,432 5,190,725 5,701,153 $63,513,321 $67,382,676 $70,267,038 $10,000,000 $7,500,000 $5,000,000 $2,500,000 $- Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec ■ 2013 ■ 2014 ■ 2015 GENERAL GOVERNMENT REVENUES - Cumulative By Month $60,000,000 $40,000,000 $20,000,000 2013 2014 2015 Jan $ 4,451,264 $ 4,775,515 $ 4,497,985 Feb 8,718,900 9,546,416 9,219,573 Mar 13,615,483 14,531,117 14,724,282 Apr 23,373,766 25,248,674 26,056,884 May 28,107,174 29,822,003 30,912,780 Jun 32,275,689 34,129,590 34,835,316 Jul 36,238,128 38,433,642 39,439,474 Aug 40,036,788 42,724,613 44,076,120 Sep 44,795,448 47,905,417 49,160,291 Oct 54,865,479 57,796,790 59,783,771 Nov 58,871,889 62,191,951 64,565,885 Dec 63,513,321 67,382,676 70,267,038 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Yakima.6826.1.FIN_Report_4th_Qrtr_2015.docx 6 of 17 GENERAL GOVERNMENT EXPENDITURE ANALYSIS GENERAL GOVERNMENT EXPENDITURES 2015 Expenditures through 12/31 Amended Percent 2013 2014 2015 Budget Spent Police $25,923,174 $26,377,103 $26,445,263 $26,868,918 98.4% Fire 9,709,330 10,395,013 12,171,410 12,059,718 100.9% Information Technology 2,298,015 2,849,321 3,087,092 3,062,977 100.8% Code Administration 1,381,740 2,621,485 1,626,019 1,682,327 96.7% Financial Services 1,461,274 1,502,372 1,532,581 1,605,263 95.5% Utility Services 1,313,058 1,477,078 1,518,454 1,555,520 97.6% Legal 1,247,205 1,368,033 1,467,922 1,525,072 96.3% Municipal Court 1,330,831 1,288,302 1,346,861 1,395,989 96.5% Police Pension 1,344,773 1,193,161 1,038,660 1,167,200 89.0% Indigent Defense 541,656 604,480 910,981 1,000,500 91.1% Engineering 654,156 798,763 809,739 890,530 90.9% Economic Development 503,185 456,317 781,085 702,329 111.2% Human Resources 442,846 527,703 649,024 682,303 95.1% Purchasing 549,153 559,928 610,041 654,699 93.2% Planning 517,298 452,903 535,201 581,384 92.1% Records / City Clerk 437,577 581,099 533,284 592,904 89.9% City Manager 366,983 386,675 504,402 389,578 129.5% City Hall Facility 360,378 399,719 504,382 523,868 96.3% City Council 286,511 293,237 280,678 286,735 97.9% Intergovernmental 260,749 251,047 180,054 174,989 102.9% State Examiner 103,729 109,905 127,429 110,000 115.8% Transfers To Other Funds 3,019,305 5,007,938 4,750,225 4,793,875 99.1% Position Vacancy Savings (1,025,000) 0.0% Total General Fund 54,052,926 59,501,582 61,410,787 61,281,678 100.2% NORMAL Status NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL Parks & Recreation Fund 4,261,347 4,553,121 5,554,286 5,445,527 102.0% Street & Traffic Ops. 5,225,208 4,800,608 5,549,823 5,076,756 109.3% Total General Government $63,539,481 $68,855,311 $72,514,896 $71,803,961 101.0% Total General Government Fund Expenditures - 1.0% above budget NORMAL NORMAL NORMAL NORMAL Position Vacancy Savings - Shown for fund total purposes only - no "actual" is charged here. Even while General Government revenue were slowing, there were a series of events taking place that created budget overages in all three Funds. Throughout the year, several unbudgeted initiatives went forward, such as improvements to Tahoma Cemetery roads; the Main Street Program donation; contribuitions to the Yakima and Hispanic Chambers of Commerce; extended hours ofoperation at both Lions and Franklin pools; and outside legal support exceeding savings from a position vacancy. However, even with these events in process, the 3rd quarter 2015 report showed total expenditures below 75% in these funds, with the overall total being 73.1% spent to date, or 1.9% below the expected 75%. Yakima.6826.1.FIN_Report_4th_Qrtr_2015. docx 7 of 17 When the year-end estimate for 2015 expenditures were forecast as part of the 2016 budget development process, we thought we would still end the year slightly below the expenditure budget. Unfortunately, the City then experienced some "late hits" to expenditures including the previous City Manager's serverance package; a snow event requiring extensive overtime and contractor expenses for plowing; a large medical claim for an inmate housed at the Yakima County jail; and an extremely high medical claims month in December, requiring additional contributions or "premiums" from all operating funds. All of these combined to cause all three General Government operating funds to overspend their budgets. Divisions overspending their budget include: Fire was overspent by $111,692 or 0.9% primarily because of an extremely hot summer and related active fire season requiring excessive overtime. Information Technology exceeded the budget by $24,115 or 0.8% primarily because the lease on the high-speed copying machine expired, and it was much less expensive over time to purchase than lease a replacement. The new machine cost about $58,000. Economic Development was over their 2015 budget by $78,756 or 11.2%, primarily because the donation of $123,333 to the Main Street Program was not added to the budget. City Manager was overspent by $114,824 or 29.5% primarily due to the severance package for the prior City Manager which was paid out in December. Parks and Recreation overspent their 2015 budget by $108,759 or 2.0% primarily in the areas of staffing for the aquatics programs due to extended hours of operation at both Franklin and Lions pools, and additional water costs related to the extremely hot summer. Streets and Traffic Engineering exceeded the budget by $473,067 or 9.3%. The primary reasons relate to a snow event in December that required plowing, and costs relating to Equipment Rental maintaining an aging fleet that was strained during the snow season. Since General Government is about 68% staffing, events affecting total payroll have a significant impact on budgets. Position vacancies can start being an "overage" because of the cashout of earned accrued leave balances, but then can produce savings when the position is vacant for any length of time. Most variances in individual divisions are the result of position vacancies. Since minor variances can cause high percentage fluctuations in the smaller budgets, and major overages were one-time events, designations for all individual divisions are maintained as "normal". Yakima.6826.1.FIN_Report_4th_Qrtr_2015.docx 8 of 17 FUND BALANCES CHANGE IN FUND BALANCE 01/01/15 12/31/15 Beginning 2015 2015 Ending Balance Actual Rev. Actual Exp. Balance General $ 7,873,757 $ 59,421,492 $ 61,410,787 $ 5,884,462 Parks and Recreation 530,607 5,552,839 5,554,286 529,160 Street & Traffic Operations 1,008,036 5,292,707 5,549,823 750,920 General Government Subtotal 9,412,400 70,267,038 72,514,896 7,164,542 Operating/Enterprise Funds 21,908,529 69,153,806 70,831,014 20,231,321 Capital Funds 25,956,489 26,036,173 16,729,680 35,262,982 G.O. Bond Redemption Funds 263,772 4,467,355 4,464,443 266,684 Utility Revenue Bond Redemption Funds 1,703,230 2,134,280 2,132,154 1,705,356 Employee Benefit Reserves 4,551,365 12,549,170 13,238,415 3,862,120 Operating Reserves 1,065,467 3,891,570 4,256,921 700,116 Trust and Agency Funds 632,022 27,709 12,000 647,731 Total $65,493,274 $188,527,101 $184,179,523 $69,840,852 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $(2,000,000) $(4,000,000) FUND BALANCES Change from Prior Year (23.9%) (7.7%) (20.2%) 35.9% 0.3% General Operating & Capital Reserve, Bond Government Enterprise Funds Trust & Redemption Funds Agency Funds Funds Yakima.6826.1.FIN_Report_4th_Qrtr_2015.docx 9 of 17 FUND BALANCE ANALYSIS The 2015 actual results of expenditures and revenues netted an overall increase in total City fund balances of $4,347,578. General Government used about $2.25 million of its beginning fund balance, because of a combination of a flattening of revenue growth, and overspending the expenditure budget. These conditions have been explained earlier in this report. Overall, General Government funds ended 2015 with a balance of $7.2 million or about 10.2% of the 2015 revenue budget. The 60 day or 16.7% target is about $11.7 million. A portion of the $4.5 million shortfall will be replenished as the Tiger Mart properties purchased in 2014 for $1.1 million for environmental remediation are resold. Two properties are being sold in early 2016, bringing over $800,000 back into General Fund. If the other 2 properties return similar amounts, the shortfall would be reduced to $2.9 million, and the reserve calculation would be 12.5%. Staff is reviewing the 2016 budget to look at places to save money, both to ensure that we stay balanced in 2016 and to begin to rebuild reserves. Operating and Enterprise funds reduced the ending fund balance by $1,677,208. About $1.2 million was spent in the Public Safety Communications fund to accomplish the move of the Center. An interfund loan of $720,000 has been committed to provide operating cash flow. Stormwater operations transferred about half of its beginning fund balance or $700,000 to the capital fund, which still leaves the ending balance well above the recommended minimum level. The Airport Operating fund is still making some critical investments in deferred maintenance, and even though it added to its fund balance, it ended the year with only $46,313 or 4.2% of the total operating budget, and is continuing to invest in its facilities and rebuild reserves in 2016. The City has committed to an interfund loan if cash balances warrant that. The Refuse Fund used about $50,000 and ended the year well below the recommended minimum with only $223,000 or 3.8% of budget. A rate adjustment was approved at the end of 2015, so this fund is expected to rebuild its reserve balance over time. All other funds in this category ended the year as expected. Capital Funds added a net of $9.3 million of beginning reserves, with Parks and Recreation Fund adding about $3.5 million as we have unspent bond proceeds for the soccer complex at year end. Wastewater added about $5.6 million to its capital reserves, as they are reviewing/designing the next major capital improvement projects. All other major capital funds ended the year as expected. As discussed earlier, the Employee Benefit funds had a difficult year, so that even though there were additional contributions to the Employees' Health Benefit Reserve Fund, that balance was still reduced by $540,000, bringing the ending balance to $1,538,335 which is still below the State Risk Manager's minimum guidelines. The rates were increased by an average of 5.5% for 2016, to cover the cost of the program and start to rebuild reserves. The Risk Management fund used about $293,000 of reserve balance, with the ending balance being $663,475, although the current outstanding litigation issues will likely need more than this amount. Rates were increased by 10% in 2016 to address the needs of this fund. Should the settlement for the Voting Rights Act case of about $1.8 million be paid out, an interfund loan could be made to this fund to be paid back over 3-5 years. This balance will be monitored for adequacy throughout the year. In the Bond Redemption funds payments were made as expected, and fund balances were virtually unchanged. At the end of 2014 all Revenue Bonds are in compliance with required bond covenants. Yakima.6826.1.FIN_Report_4th_Qrtr_2015.docx 10 of 17 OTHER FUNDS ANALYSIS Operating/Enterprise Funds Capital Funds Reserve, Trust & Agency Funds Bond Redemption Funds Total Revenue Beginning Fund Balance Total Resources Operating/Enterprise Funds Capital Funds Reserve, Trust & Agency Funds Bond Redemption Funds Total Expenditures OTHER FUNDS REVENUES Revenues through 12/31 2013 2014 2015 2015 Amended Percent Budget Rec'd Status $ 65,588,762 45,304,346 18,745,200 5,653,528 135,291,836 48,629,514 $183,921,350 $ 68,707,753 43, 785,457 15,249,741 5,118, 725 132,861,676 51,022,832 $183,884,508 $ 69,153,806 26,036,173 16,468,449 6,601,635 118,260,063 56,080,874 $174,340,937 OTHER FUNDS EXPENDITURES Revenues through 12/31 2013 2014 $ 73,994,292 93.5% 41,424,129 62.9% 16,208,188 101.6% 6,834,691 96.6% 138,461,300 85.4% 56,080,874 $194,542,174 89.6% NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL 2015 Amended Percent 2015 Budget Rec'd Status $ 64,474,200 44,099,580 16,951,108 5,795,450 $131,320,338 $ 65,324,114 41,326,091 17, 262, 780 5,500,087 $129,413,072 $ 70,831,014 16, 729,680 17,507,336 6,596,597 $111,664,627 $ 75,990,172 51,851,807 16,592,870 6,841,584 $151,276,433 93.2% 32.3% 105.5% 96.4% 73.8% NORMAL NORMAL NORMAL NORMAL NORMAL Year end results generally performed as expected. Variances in capital funds are related to timing, which is why they are getting a Normal status. Because actual revenues were close to expenditures in all major categories, they all maintained a "normal" designation. Funds Under Budget by more than 5% ➢ The Neighborhood Development amended budget includes both the "new" HUD grant and the obligated carryover from prior year. The unspent funding at the end of 2015 is included in the encumbrance ordinance, which will add about $1.9 million to their 2016 budget. ➢ In the remaining Operating/Enterprise funds, most budgets over $1 million were within 5% of total budget. The Public Safety Communications Fund was under spent by $447,000 or 9.9% because of position vacancies coupled with the timing of budgeted expenditures for the new communications center. The Transit Fund is under budget by $610,000, primarily because of the drop in fuel prices. Equipment Rental Fund is also the beneficiary of the lower fuel prices. The Environmental Fund was under spent by $282,000 or 18.1% because of the timing of the clean-up projects related to the Tiger Oil properties. Yakima.6826.1.FIN_Report_4th_Qrtr_2015.docx 11 of 17 ➢ Capital Fund budgets include the full project, and are not expected to be 100% completed in the current year. In total, these funds are below budget by about $35.1 million. Of the top 10 capital projects budgeted in 2015, only 1 was substantially completed (the LIFT area round -about at Fair Avenue), and 9 were in various stages of completion and were either rebudgeted or will require a non -lapsing appropriation to carry forward the project budget into 2016. About $10.1 million of the total variance comes from the timing of Airport capital improvements. Parks Capital projects including the SOZO soccer complex and renovation of Randall Park of about $4.4 million will be carried forward into 2016. Wastewater has several projects which were underspent by $4.2 million, including piping in the Speedway/Race Street of $1.8 million. A listing of the top ten budgeted projects and their year end expenses follow. ➢ Bond Redemption Funds ended the year as expected. Funds Over Budget ➢ Reserve Funds consist primarily of Employee Benefit Funds and the Risk Management Fund. Both the Health Benefit and Worker's Compensation self-insured funds require administrative budget adjustments because the actual exceeded the original adopted budget. The Health Benefit Fund spent about $737,000 more than the original budget. Risk Management continues to have challenges, spending $541,000 more than originally estimated - the 2016 budget includes a 10% increase in contributions from the operating funds. • Water and Irrigation Funds both slightly exceeded their budget, because revenues came in above budget so that the transfer to their respective capital funds were increased above the original budget. Both of these funds still maintained an operating fund balance above the targeted minimum. ➢ Real Estate Excise Tax 2 (REET 2) slightly exceeded budget by about $5,000 because the Public Works Trust Fund loan related to the underpass project was finalized, and the final debt service payment exceeded the original estimate. It should be noted that this fund transferred funds to the Central Business District (CBD) Capital Fund to fund the preliminary engineering of the Downtown Plaza. These funds were anticipated to be matched for this project, and the CBD Fund has a negative fund balance of about $23,000 because of the timing of the engineering project. The donation that was committed to fund half of the engineering project has been postponed pending Council's decision on the plaza. If Council chooses to finance the preliminary engineering this is the fund that would be replenished. Yakima.6826.1.FIN_Report_4th_Qrtr_2015.docx 12 of 17 TOP 10 BUDGETED CAPITAL PROJECTS Project Number/Description Total Actual 2015 2015 Dept Budget Expended Funding Source Expected Completion 2376 Airport -Alpha Taxiway Construction 2402 LIFT Area Roundabout Fair Avenue AP $10,090,644 $ 547,128 FAA Grant Passenger Facility Charges FY2015/16 LF 2,600,000 2,544,420 LIFT Sales tax credit, County FY 2015 SIED loan & grant, local match 74,960 Charges for Services - Charges for Services 123,733 Charges for Services 2365 Beech St Interceptor Phase III WW 1,800,000 TBD N 1st St Revitalization - Stormwater SW 1,790,000 2335 Modifications to Water Treatment W 1,408,580 Plant Intake 2391 N 1st St Revitalization - W 1,360,000 Water Main Replacement 2390 N 1st St Revitalization Phase II n/a Transit Bus Replacement (on order) n/a Fire ladder truck replacement (on order) 2414 Randall Park improvements Department Legend: AP - Airport LF - LIFT Area WW - Wastewater Capital SW - Stormwater W - Water Capital - Charges for Services ST 1,315,000 528,342 Street Capital Reserves TR 1,290,000 F 1,150,000 - Transit Sales Tax - Fire Capital Reserves, State local lease program PK 900,000 12,152 RCO Grant, Parks Capital, community donations $23,704,224 ST - Street Improvement TR - Transit F - Fire Capital PK - Parks Capital FY2015/16 FY2015/16 FY 2016 FY2015/16 FY2015/16 FY 2016 FY 2016 FY 2016 Yakima.6826.1.FIN_Report_4th_Qrtr_2015.docx 13 of 17 EXHIBITS Exhibit I OTHER OPERATING/ENTERPRISE FUNDS Actual Revenues Appropriations Ending Beg Bal Amended Actual % Amended Actual % Balance Fund 01/01/15 Budget Revenue Rec'd Budget Exp Exp'd 12/31/15 Economic Development $ 85,432 $ 222,000 $ 239,172 107.7% $ 260,766 $ 248,183 95.2% $ 76,421 Neighborhood Development 830,030 3,368,256 1,475,163 43.8% 3,373,107 1,408,139 41.7% 897,054 Community Relations 603,473 596,600 688,511 115.4% 674,823 634,153 94.0% 657,831 Cemetery 56,376 264,950 262,339 99.0% 291,709 281,178 96.4% 37,537 Emergency Services 208,306 1,290,026 1,300,116 100.8% 1,312,692 1,305,260 99.4% 203,162 Public Safety Communicatic 871,526 4,095,799 2,827,007 69.0% 4,506,862 4,059,802 90.1% (361,269) Police Grants 174,736 484,000 500,221 103.4% 475,296 303,579 63.9% 371,378 P.B.I.A. (Parking &Bus Impr; 12,408 197,840 196,621 99.4% 202,172 199,062 98.5% 9,967 Trolley 97,884 293,624 229,616 78.2% 368,961 254,321 68.9% 73,179 Front Street Bus Impr Area 6,099 3,735 4,936 132.2% 7,000 3,221 46.0% 7,814 Cony Center (Tourist Promo 540,514 1,674,250 1,598,632 95.5% 1,620,704 1,610,885 99.4% 528,261 Capitol Theatre 27,259 405,250 405,836 100.1% 407,290 406,528 99.8% 26,567 PFD- Convention Center 421,225 816,750 832,091 101.9% 748,220 738,730 98.7% 514,586 Tourism Promotion Area 79,626 687,000 659,117 95.9% 687,000 657,921 95.8% 80,822 PFD- Capitol Theatre 176,423 618,700 630,405 101.9% 640,220 639,918 100.0% 166,910 Airport Operating 8,539 1,108,889 1,060,127 95.6% 1,102,006 1,022,353 92.8% 46,313 Stormwater Operating 1,420,735 2,151,000 2,269,200 105.5% 3,353,229 2,980,262 88.9% 709,673 Transit Operating 1,923,362 8,519,226 8,036,893 94.3% 8,615,247 8,005,242 92.9% 1,955,013 Refuse 283,037 5,834,599 5,770,978 98.9% 5,877,188 5,830,965 99.2% 223,050 Wastewater Operating 4,179,204 22,431,302 22,604,458 100.8% 21,901,186 21,886,793 99.9% 4,896,869 Water Operating 3,605,526 8,876,000 9,101,863 102.5% 9,347,579 9,385,180 100.4% 3,322,209 Irrigation 854,274 1,766,200 1,864,021 105.5% 1,795,875 1,802,284 100.4% 916,011 Equipment Rental 4,305,656 5,612,858 4,266,394 76.0% 5,697,917 4,749,623 83.4% 3,822,427 Environmental 627,146 1,560,000 1,213,867 77.8% 1,557,950 1,275,733 81.9% 565,280 Public Works Admin. 509,733 1,115,438 1,116,222 100.1% 1,165,173 1,141,699 98.0% 484,256 Total Other Operating Funds $ 21,908,529 $ 73,994,292 $ 69,153,806 93.5% $ 75,990,172 $ 70,831,014 93.2% $ 20,231,321 Yakima.6826.1.FIN_Report_4th_Qrtr_2015.docx 14 of 17 Fund Exhibit II CAPITAL IMPROVEMENT FUNDS Actual Revenues Appropriations Ending Beg Bal Amended Actual % Amended Actual % Balance 01/01/15 Budget Revenue Rec'd Budget Exp Exp'd 12/31/15 Arterial Street $ 1,367,587 $ 3,922,269 $ 1,736,663 44.3% $ 4,026,490 $ 1,822,375 45.3% $ 1,281,875 Central Bus District Capital 116,226 826,220 426,591 n/a 891,000 566,050 63.5% (23,233) Capitol Theatre Construction 144,473 71,927 121,927 n/a 190,000 17,649 n/a 248,751 Yakima Redevelopment Area 2,668,747 1,900,000 1,124,617 59.2% 3,500,000 3,092,240 88.3% 701,124 Parks and Recreation Capital 253,224 6,750,000 6,133,009 n/a 6,962,211 2,575,977 37.0% 3,810,256 Fire Capital 1,097,851 1,963,500 159,250 8.1% 2,942,501 1,220,178 41.5% 36,923 Law and Justice Capital 574,249 554,886 600,393 108.2% 702,243 434,337 61.8% 740,305 Public Works Trust Constr 750,742 836,449 1,063,518 127.1% 1,028,084 642,784 62.5% 1,171,476 REET 2 Capital 551,438 752,000 979,070 130.2% 1,172,787 1,177,547 100.4% 352,961 Street Capital 931,057 20,811 97,581 468.9% 900,238 934,473 n/a 94,165 Convention Center Cap Impr 636,676 229,500 275,111 119.9% 549,790 326,762 59.4% 585,025 Reserve for Capital Impr 2,403,431 50,000 477,220 954.4% 3,745,000 1,263,603 33.7% 1,617,048 Airport Capital 633,020 12,776,500 709,658 5.6% 12,539,721 547,128 4.4% 795,550 Stormwater Capital 1,930,823 940,000 1,272,568 135.4% 2,025,000 158,484 7.8% 3,044,907 Transit Capital 2,309,367 1,868,507 2,209,722 118.3% 1,749,000 54,217 3.1% 4,464,872 Wastewater Capital 4,845,013 5,781,500 6,064,217 104.9% 4,690,000 488,462 10.4% 10,420,768 Water Capital 3,672,214 750,000 1,158,181 154.4% 2,670,000 473,012 17.7% 4,357,383 Irrigation Capital 1,070,351 1,430,060 1,426,877 99.8% 1,567,742 934,402 59.6% 1,562,826 Total Capital Impr Funds $ 25,956,489 $ 41,424,129 $ 26,036,173 62.9% $ 51,851,807 $ 16,729,680 32.3% $ 35,262,982 Yakima.6826.1.FIN_Report_4th_Qrtr_2015.docx 15 of 17 Fund Exhibit III RESERVE AND OTHER FUNDS Actual Revenues Appropriations Ending Beg Bal Amended Actual % Amended Actual % Balance 01/01/15 Budget Revenue Rec'd Budget Exp Exp'd 12/31/15 Employee Benefit Reserves Unemployment Comp Res $ 435,945 $ 197,000 $ 201,962 102.5% $ 323,177 $ 196,662 60.9% $ 441,245 Employees Health Ben Res 2,077,874 9,823,850 9,943,484 101.2% 9,745,849 10,483,023 107.6% 1,538,335 Worker's Compensation Res 880,288 1,033,000 1,098,004 106.3% 1,241,131 1,242,787 100.1% 735,505 Wellness/EAP 182,715 175,000 40,000 22.9% 174,800 95,530 54.7% 127,185 Firemens' Relief and Pension 974,543 1,280,838 1,265,720 98.8% 1,380,282 1,220,413 88.4% 1,019,850 Total Employee Ben Reserve $ 4,551,365 $12,509,688 $12,549,170 100.3% $12,865,239 $13,238,415 102.9% $ 3,862,120 Operating Reserves Capitol Theatre Reserve $ 108,568 $ - $ - n/a $ 71,927 $ 71,927 100.0% $ 36,641 Risk Management Reserve 956,899 3,684,000 3,891,570 105.6% 3,643,704 4,184,994 114.9% 663,475 Total Operating Reserve $ 1,065,467 $ 3,684,000 $ 3,891,570 105.6% $ 3,715,631 $ 4,256,921 114.6% $ 700,116 Trust and Agency Funds Cemetery Trust Total Other Funds $ 632,022 $ 14,500 $ 27,709 191.1% $ 12,000 $ 12,000 100.0% $ 647,731 $ 632,022 $ 14,500 $ 27,709 191.1% $ 12,000 $ 12,000 100.0% $ 647,731 Yakima.6826.1.FIN_Report_4th_Qrtr_2015.docx 16 of 17 Fund Exhibit IV BOND REDEMPTIONS FUNDS Actual Revenues Appropriations Ending Beg Bal Amended Actual % Amended Actual % Balance 01/01/15 Budget Revenue Rec'd Budget Exp Exp'd 12/31/15 GO Bond Redemption LID Guaranty $ 25,264 $ 50 $ 65 130.0% $ - $ - n/a $ 25,329 2002 GO Convention Center 161,795 1,016,422 1,027,846 101.1% 1,026,050 1,026,050 100.0% 163,591 2005 GO Various Bonds 8,733 3,010,189 3,010,189 100.0% 3,010,189 3,010,188 100.0% 8,734 1996 GO LTD- Conv Center 67,965 428,750 429,255 100.1% 428,190 428,190 100.0% 69,030 LID Debt Service Control 15 245,000 - 0.0% 245,000 15 0.0% - Total G.O. Bond Redemption $ 263,772 $ 4,700,411 $ 4,467,355 95.0% $ 4,709,429 $ 4,464,443 94.8% $ 266,684 Water/Sewer Revenue Bond Redemption 1997 Water Rev Bond Res $ 358,989 $ 400 $ 400 100.0% $ $ - n/a $ 359,389 1996 Revenue Bond Reserve 149,163 700 700 100.0% - - n/a 149,863 1997 Water Revenue Bonds 6,966 237,725 237,725 100.0% 237,700 237,700 100.0% 6,991 2008 Water/Sewer Rev Bond 2 411,413 411,413 100.0% 411,413 411,413 100.0% 2 Water/Sewer Rev Bond Res 897,333 1,000 1,000 100.0% - - n/a 898,333 2003 Irrigation Bond Red 34,812 317,742 317,742 100.0% 317,742 317,741 100.0% 34,813 2003 Wastewater Bond Red 255,965 1,165,300 1,165,300 100.0% 1,165,300 1,165,300 100.0% 255,965 Total W/S Rev Bond Red $ 1,703,230 $ 2,134,280 $ 2,134,280 100.0% $ 2,132,155 $ 2,132,154 100.0% $ 1,705,356 Yakima.6826.1.FIN_Report_4th_Qrtr_2015.docx 17 of 17 Distributed at the Meeting - GENERAL GOVERNMENT REVENUE ANALYSIS General Sales Tax Crim Justice Sales Tax Property Tax Utility & Franchise Taxes Charges for Services State Shared Revenue Other Intergovernmental Fines and Forfeitures Other Taxes Transfers from other Func Licenses and Permits Other Revenue Total Revenue Beginning Fund Balance Total Resources GENERAL GOVERNMENT REVENUES Revenues through 12/31 CoMec 2015 Amended Percent 2013 2014 2015 Budget Receipted Status $ 14,462,963 $15,461,201 $ 15,770,269 $16,020,000 98 4% 2,922,211 3,103,814 3,260,050 3,205,350 101 7% 15,696,436 16,016,029 16,444,895 16,336,390 100 7% 14,719,274 15,848,483 15,689,913 16,783,695 93 5% 6,016,642 6,684,115 8,262,371 8,154,483 101 3% 2,701,780 2,648,633 2,849,681 2,836,880 100 5% 1,367,881 1,370,523 1,612,009 1,629,520 98.9% 1,603,138 1,578,124 1,589,710 1,645,110 96.6% 1,462,506 1,453,227 1,554,728 1,429,000 108.8% 1,327,401 1,413,706 1,449,559 1,450,000 100.0% 817,750 865,334 872,276 857,900 101 7% 415,338 939,491 911,577 1,183,678 77 0% 63,513,320 67,382,680 70,267,038 71,532,006 98 2% 10,908,094 10,883,753 9,412,400 9,412,400 $ 74,421,414 $ 78,266,433 $ 79,679,438 $ 80,944,406 98 4% NORMAL NORMAL NORMAL WARNING NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL NORMAL Sales Tax — The fourth quarter actuals dropped below the 4th quarter of 2014, so that the City ended 2015 only 2 0% ahead of 2014. The 2015 budget was set assuming a 3.6% growth rate, which seemed reasonable assuming the pnor 3 years expenenced a growth rate of between 6 9 and 7 2% The prior growth was driven primarily by good volume, quality and market conditions for the areas agricultural commodities, and corresponding increases in construction activity A drought was declared in spring of 2015, and the ripple effect of that reality in our agricultural community contributed to the sales tax reduction. The Cnminal Justice Sales Tax expenenced similar results. However, this revenue is allocated among the operating and capital funds based on need, and growth was allocated to General Fund. Property Tax — This source grew by about 2 7% year over year, which represents a 1% increase in the base levy, and new construction of about 1.1%, improvement in Yakima County's collection rate, and a re -allocation from the Firefighters' Pension Fund The property tax levy is usually slightly higher than originally budgeted (we don't know the final levy until after the budget is adopted each year) Also, we discount our budget estimates for uncollected amounts For this year, we built in about a 2.5% collection delay, however, Yakima County experienced an uncollected rate of only 2.0% at year end. This revenue is also shared with the Firefighters' Pension Fund, and lower expenses in that fund allowed a re- allocation into General Fund Utility Taxes and Franchise Fees — As noted in previous quarterly reports, this major revenue source fell off from 2014, with the actuals coming in below 2014 actual by $158,570 , and below the 2015 budget by $1,093,782 Contributing factors for this reduction include the mild weather conditions through the first three months of the year, compared to severe cold weather m the prior year. The drought alert also slowed water (and therefore wastewater) usage Telephone taxes continue to decline, with the migration away from land lines and cell phone "talking" minutes to data usage (i.e. text ng) which is not currently taxable FIN Report 4th Qrtr 2015 docx 4 of 17 Charges for Services - The new Union Gap contract for fire services of $1 2 million is included in this category which is the major reason it is up by 23.6% over the prior year. This category slightly exceeded the 2015 budget by 1 3% Other Intergovernmental - The contract for School Resource Officers (SRO) make up a little less than half of this category, and this revenue came in about $25,000 below the budget estimate because the Yakima School District discontinued paying for a Sergeant in the new school year contract which started in the City's 4th quarter, resulting in the 2015 actual being slightly below (1 1%) budget Overall, this category demonstrated an increase of 17.6% over 2014, primarily because of a full -year of the SAFER (i.e. Firefighter hiring) grant, and the implementation of the Fly Yakima grant Fines and Forfeitures - With the implementation of the new indigent defense case volume directive, the City's Prosecutor's Office started a Pre -filing Diversion Program and a Charging Unit, both designed to reduce filed cases. These programs have been successful in lowering the caseload for indigent purposes, but this also potentially reduces the revenue generated by tickets After posting a 6% increase in 2013, this category experienced a slight decline in 2014, and remained relatively flat in 2015. Other Taxes - This category consists primarily of Business Licenses and Gambling Taxes, bolstered by the recovering economy. There is also a bump in the Business License revenue because of the timing of the billing - 2016 renewals went out in early December, and we received more renewals coming back to be receipted in December than in prior years. Transfers from Other Funds - The majority of this category consists of the three and one-half percent of the utility tax on Water, Wastewater, and Refuse which is designated by Council for Parks and Recreation operations. These taxes are all receipted into the General Fund, and the transfer is then made from General Fund to Parks and Recreation This one line approximated the 2015 budget Licenses and Permits -Generally, the construction segment of our local economy is recovering from the recession The budget was conservatively estimated so 2015 actual slightly exceeded budget This category is a good indicator of future construction -related sales tax. Other Revenue - Interest earnings is the primary component, and rates remained low throughout 2015 This is one area that has not yet recovered from the recession. The budget also included an estimate of $400,000 for the sale of a Tiger Mart property, which was in process in 2015 but not completed until 2016, leaving this category below budget by about that same amount. Overall, total General Government revenue demonstrated growth of $2,884,358 or 4 3% over 2014 actual New revenues to the General Fund (i e the Union Gap fire contract and the firefighter hiring and air service grants) account for over $1,370,000 of this increase. If these are removed from the calculation, the increase in existing revenue was about 2 2%, which is less than anticipated - this same calculation resulted in growth in 2014 of 4.8%. Therefore, 2015 revenues were below the amended budget by $1,264,968 or 1 8%, contributing to the use of reserves The 2016 estimates are being reduced to take into consideration the lower bases on major revenues, and a proposal to maintain a balanced budget is going to City Council under separate cover FIN Report 4th Qrtr 2015.docx 5 of 17