General Fund Section — SUMMARY OF FINANCIAL RESULTS November

CASH BALANCE

  1. Chart 1 illustrates a positive YTD variance of $8,945,936 between revenue ($34,399,899) and expenses ($25,4553,963).

REVENUE

  1. Chart 2 shows a YTD increase in revenue of $6,171,598 or 21.86%. Income tax collections are $27,943,290 year-to-date, which is a 18.86% increase from 2022. Chart 3 provides a monthly illustration of these collections.
  2. Chart 4 breaks down income tax collections by type. Typically, withholdings are the best indicator of income tax stability. YTD withholdings in the General fund are higher than 2022 and all previous years dating back to 2019. The growth from 2019 to 2020 can be attributed to general business expansion and increasing development in the City. In 2021, income tax increased drastically which is a combination of continued growth in withholding and significant increases related to net profits and individual tax estimates. Overall, 2022 collections were similar to 2021, with a noted decrease in withholding of approximately $615,000 or 3.4%. An increase in construction withholding, due to several new economic development projects, helped to cushion the overall decrease resulting from the effects of hybrid and work-from-home trends along with a large employer leaving the business park. Collections in 2023 are expected to be similar to 2022, with only a moderate increase anticipated. May collection of income tax came in at an unprecedented level and was largely due to the distribution including a significant net profit collection which accounted for approximately 25% of the month’s receipts. June thru September receipts were more in line with historical trends. In preparation for the City’s Capital Budget Workshop in September and the commencement of the 2024 Annual Budget review, the income tax projections were reviewed and updated to reflect new estimations to complete 2023. Revenues will continue to be monitored for the remainder of the year and beyond as the local business landscape responds to economic factors and employees continue to operate in both hybrid and work-from-home environments.
  3. Chart 5 provides additional insight into income tax collections by type. The pie chart entitled ‘Normal’ shows the historical average breakdown of income tax collections for the prior three years.

EXPENSE

  1. YTD expenses excluding transfers and advances are 18.03% higher than last year with the differences attributed to both the personal services and the operating & contract services categories. The increase is largely due to increased operations related to Intel choosing New Albany for its new microchip manufacturing plant and the management of necessary related infrastructure improvements. A total of 15 new positions were filled in 2022 and, to date, 4 additional positions in 2023 which is consistent with the overall increase in expense operations. No capital outlay expenses are planned for the General Fund in 2023.
  2. The adopted appropriations as amended are reflected in the 2023 budget amounts. The General Fund has utilized 62.53% of the appropriations to date for 2023 Final amendment of the 2023 budget amounts will be included on the December report.

General Fund Section — CASH BALANCE

CHART 1: General Fund—Revenue, Expenses, and Carryover

Historically, the City has maintained a positive variance between revenue and expenses, which has allowed it to maintain a target carryover balance of at least 60% of annual revenue as established, based upon a sensitivity analysis previously conducted. For budgetary purposes, the City also maintains a target reserve of 65% of the adopted operating budget in the General fund, which is predominately funded by income tax revenue. During 2018, and again in 2021, the City made significant transfers and advances to various funds totaling $7.5 million and $12 million, respectively, which was in excess of this target reserve; therefore, expenses did exceed revenue. However, the carryover balance remained consistent and even exceeded previous years with the exception of 2018. The City Council has been able to redirect additional surplus dollars to the Infrastructure Replacement, Severance Liability, and Capital Equipment Replacement funds to address the long-term needs of the city, as well as other Capital funds to subsidize current capital projects. In 2019, an additional $2.5 million was transferred after review of the 2018 ending fund balance. Similar transfers were evaluated in April 2020 to redirect funds exceeding the 65% target reserve for the year ending 2019, however, due to the COVID-19 pandemic, those transfers were delayed until the effects on current revenues were evaluated. After careful evaluation, it was determined the General fund was able to transfer $8,000,000 in 2021 to the Capital Improvements fund and advance $4,000,000 to certain Tax Increment Financing funds to repay high interest infrastructure loans, all while maintaining the target reserve. Additionally, in May of 2022, the General fund was able to transfer and advance a total of $3,000,000 to the Debt Service, Blacklick TIF, and Economic Development NACA funds to contribute toward the early partial redemption and refunding of the 2012 Refunding Bonds and full redemption of the 2013 Refunding Bonds previously outstanding. Approximately $13 million in transfers and $3 million in advances from the General fund are planned for 2023 after mid year appropriation amendments, and will be made as funding is necessary. The reserve of 65% was put into place to help sustain operations at times of economic uncertainty, and has proven to be successful.

General Fund Section — REVENUE

CHART 2: General Fund—Revenue


2023 Analysis

In total, revenues have increased by 21.86% year-to-date from 2022. Income taxes, which comprise 81.23% of total revenue for 2023, have increased by 18.86%. Hotel Taxes have increased by 4.68% while Intergovernmental and Service Charges have increased by 10.56% and 3.82%, respectively. Due to the current economic climate, the City had anticipated that income tax could be negatively impacted and fortunately, a significant negative impact has not been realized. The City has sufficient reserves to cushion a significant downturn in this revenue should it be realized in the near future. A decrease in revenue has been anticipated as it relates to potential refunds or effects on net profit as prior years’ tax return filings continue, however a significant estimated payment of net profits that was made has helped to soften the potential negative impact. Revenue is continually monitored and changes to appropriations are adjusted as needed to ensure spending is in line with available resources.







CHART 3: General Fund Income Tax Revenue (All Types) - Monthly

Each line represents a year of Income Tax collections. The points along each line represent the individual months of collections. 2020’s late spike is representative of the moving of the tax filing date from April 15 to July 15 to file 2019 taxes. For 2021, the 2020 filing date moved from April 15 to May 17 which further affected the timing of receipts. Filing dates returned to normal in 2022, which is reflected in the chart above excluding the significant spike in revenue in May of 2023. This spike is the result of a single significant net profits tax estimated payment received during that time.


CHART 4: General Fund Total Income Tax Collections by Type

This graph shows the YTD income tax in the General Fund for the last five years. Withholdings are the most important income tax performance indicator. Increased payroll deductions are indications of job, wage, and economic growth. The area of caution relating to income tax performance is Net Profits, which are volatile and similar in nature to company stock performance. Also, changes in legislation regarding Net Profit taxes (option to file with the State and Net Loss carry-forward provisions) could present some uncertainty relative to the stability of this source of income tax. Yearly net profits are higher than the previous year which is attributed to significant months of collections in April and May as the filing deadline passed, while individual income taxes remain strong. With an overall YTD increase in total collections of 18.86% from 2022, collections continue to show growth. The overall collections YTD for 2023 represent an astonishing 52.62% increase from 2019 collections.




CHART 5: General Fund Total Income Tax Distribution

Additional Data can be found in Appendix A: General Fund YTD Revenue Analysis


The pie chart titled ‘Normal’ shows the historical average breakdown of Income Tax collections for years 2020—2022. The additional charts can be used to compare the YTD 2023, YTD 2022 and FY 2022 totals to the normal percentages. The timing of receipts can skew the data, especially in the early part of the year as tax filings are submitted.

General Fund Section — EXPENSE

CHART 6: General Fund Expenditures by Category




This graph shows the YTD operating and capital expenditures in the General Fund, comparing amounts with YTD for 2022, the 2023 budgeted amounts, and the actual expenditures for both 2021 and 2022. Personal services are the greatest expense among these categories. Expenditures for personal services have continuously grown over the last three years. This is primarily due to three factors: 1) the addition of new positions to serve the community and accommodate New Albany’s ongoing growth; 2) movement along steps of pay grades; and, 3) general cost of living increases. Expenditures for Operating & Contract Services were expected to increase significantly beginning in 2022 to accommodate new economic development projects, and the 2023 total is showing a continuation of that trend. Capital outlay expenditures within the General Fund are minimal. The primary capital items that have previously been included in the General Fund are continued fiber connections, miscellaneous furnishings, and information technology related equipment which now utilize a different funding source when available.

All Funds Summary