Budget In Brief

A Summary Look at the 2nd Quarter of the FY21-22 Budget

The following report represents the activity through the second (2nd) quarter of the fiscal year in comparison with prior years and budgets. One thing to note is that revenues are not realized on an equal basis amongst the quarters. In fact, most of the revenues are realized during the later half of the fiscal year. As we review the 2nd quarter activity, I encourage readers to keep the above in mind and look more closely at the actual revenues and expenditures on a historical basis as a gauge on whether the City's financial position is on track in meeting its goals and objectives. The comparative charts are presented for the General Fund, the Parks & Tourism Fund and the Stormwater Fund, which are the three major operational funds of the City.

I encourage readers to drill down into any the following charts and graphs which will lead you to the City's transparency portal, where the reader will find budget comparisons and the ability to filter down into more detail of the City's operations.

FY 2022 2nd Quarter Revenues

Overall revenues for the 2nd quarter of $12.1M in comparison with the December 2020 represents an insignificant decrease of $4.9K. The City received $3.3M in the first tranche of American Rescue Plan Act (ARPA) funds and a little over $1M in property tax revenues through the 2nd quarter of fiscal year 2022 which was offset by a decrease in bond proceeds received through the 2nd quarter of fiscal year 2021.

FY 2022 2nd Quarter Expenditures

Overall expenditures for the 2nd quarter of FY 2022 of $12.9M are $5.2M less than the 2nd Quarter of FY 2021. This decrease is a result of capital expenditures and transfers between funds for the Mossy Oaks Stormwater Improvement Project that was in the construction phase last fiscal year but the project has been completed.

FY 2022 2nd Quarter Revenues over (under) Expenditures

The chart summarizes the total revenues less total expenditures for the net change. It is not unusual during the 2nd quarter of each year for the expenditures to be greater than the revenues across all funds as noted when looking at comparative periods in prior years.

Personnel Costs for 2nd Quarter

Personnel costs consist of salary related transactions. Besides the budgeted salary increases of 2%, the City also allowed employees to sell up to 40 hours of vacation back to the City to keep from losing vacation accrued hours above the cap. This added $87K to the salary expenditures in addition to the 2% salary increase and contributed to the 3% increase in personnel costs over the 2nd Quarter fiscal year 2021.

Benefit Costs for 2nd Quarter

Benefits represent approximately 25% of the total personnel costs and are 8% below the prorated budget through the 2nd Quarter of fiscal year 2022.

General Fund Overall

The General Fund is the main operating fund of the City and consists of the activity of public works, fire, police, community & economic develoment, municipal court, city council. city manager, finance, and human resources departments.

Overall the General Fund's revenues are below expenditures, which is not unusual as comparated to historical quarterly activity and appears to be in line with expectations.

General Fund Expenditures by Function

Total general fund expenditures represent 46.6% of the budgeted expenditures for fiscal year 2022 and are about $1M greater than 2nd quarter 2021 but $766K less than 2nd quarter fiscal year 2020. Law enforcement is $173K greater than the prior year due to changes in the allocation of personnel and benefit costs to other funds; general government expenditures are $700K greater than the prior year of which $433K represents property acquisition costs; community and economic development is $76K more than prior year due to increased personnel & benefit costs and contractual services of outsourced staff support to review boards & commissions and public works and streets are $97K more than the prior year as a result of changes to the allocation of personnel and benefit costs between the funds.

General Fund Expenditures by Expense Type

Most of the increases in General Fund Expenditures for 2nd Quarter FY 2022 as compared to 2nd Quarter FY 2021 are the result of $163K in personnel and benefit costs as the allocation of Police and Public Works personnel costs were modified from the prior year to more closely represent level of effort; $342K in operational expenditures and $433K in property acquisition costs as previously discussed.

General Fund Revenue Comparison

General Fund revenues are $1.6M greater in 2nd quarter FY 2022 than 2nd quarter 2021. During FY 2021, property tax bills were mailed out to the citizens late due to delays in the County Auditors office. However during fiscal year 2022, the tax bills they were sent out on-time. This timing difference increased property taxes revenues by about $803K. Licenses and permits increased by $191K compared to last year as development continues to expand in the City and the receipt of $450K state appropriation for cybersecurity.

Parks & Tourism Fund Overall

The Parks & Tourism Fund reports the activity of the public works division on parks, the proportionate share of police services dedicted to protecting tourists, tourism and tourism related activities and the operations of downtown services including parking, marina, waterfront park and other activities related to maintaining a vibrant downtown.

Overall, the parks and tourism fund revenues are greater than expenditures by $505K. This is mostly attributed to increased collections of hospitality and local accommodation taxes as the tourism industry continues to show signs of improvement.

During the onset of COVID in fiscal year 2020, expenditure activity was slowed to ensure the financial viablity of the fund. Salary and benefit costs allocated to the fund were more closely aligned in fiscal year 2022 to match the level of effort of those personnel whose duties cross functions.

Park & Tourism Revenue Comparison

The overall revenues of the fund are about $719K greater than what was reported in the 2nd quarter of fiscal year 2021. Hospitality taxes increased $213K and accommodations taxes increased $278K more than what was reported through the 2nd Quarter of the prior year. Both provide strong economic indicators to the vibrancy of tourism in the City as recovery from the pandemic continues to occur. In addition, through the 2nd Quarter of FY 2022 the City has seen a return of downtown events, including the Shrimp Festival, which led to an increase of $163K in event revenues.

2nd Quarter Expenditures by Function

Parks and Tourism Fund expenditures are $196K greater than the 2nd quarter 2021. The increase is primarily attributed to the City hosting the Shrimp Festival and other downtown events that did not take place in fiscal year 2021 due to the pandemic. These costs are offset by event revenues.

2nd Quarter Expenditures by Expense Type

Parks and Tourism operating expenditures saw the most significant increase of $161K compared to December 2020 due to downtown events such as the Shrimp Festival being held. These events were not held in the prior year due to COVID.

Stormwater Fund Overall

The Stormwater Fund accounts for the operations of the Stormwater division of the Public Works department, overseeing the maintenance of the stormwater system as well as repairs and major enhancements to the system. This fund is supported through stormwater user fees that are applied to property owners annual tax bill.

During fiscal year 2021, stormwater revenue bonds were issued to support the major enhancements to the stormwater system in many of our more prone areas to flooding in the City. The bond proceeds are maintained in the Stormwater Fund and released through transfers to the capital projects fund as project costs are incurred.

2nd Quarter Expenditures

During fiscal year 2021, the City refunded the 2018 general obligation bonds and issued stormwater revenue bonds to continue the major improvements to the stormwater system. That accounts for the reason why the December 2020 quarter expenditures of the fund are significantly greater than the 2nd quarter fiscal year 2022. Actual expenditures for the quarter are $125K more than the prorated budget primarily as a result of bond funds that were transferred to the capital projects fund to cover current period costs to the system improvements.

2nd Quarter Revenues

It is not unusual to see minimal revenues in the stormwater fund during the 2nd quarter, as tax bills for the upcoming tax year were recently issued. Therefore, the revenues planned for the fund are not realized until the 3rd quarter of the fiscal year. The significant decrease in revenues is attributed to $2.6M stormwater bond proceeds received in fiscal year 2021.