General Fund Section — SUMMARY OF FINANCIAL RESULTS -April

CASH BALANCE

  1. Chart 1 illustrates a positive YTD variance of $6,164,819 between revenue ($14,85,812) and expenses ($8,685,993).

 

REVENUE

  1. Chart 2 shows a YTD increase in revenue of $3,951,778 or 36.26%. Income tax collections are $11,843,659 year-to-date, which is a 35.68% increase from 2023. 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 2023 and all previous years dating back to 2020, as shown. The growth since 2020 (and prior years) can be attributed to general business expansion and increasing development in the City. In 2021, total income tax revenue increased drastically from historical collections which was a combination of continued growth in withholding and significant increases related to net profits and individual tax estimates, despite continued economic uncertainty coming out of the 2020-2021 global pandemic (COVID). Withholding for New Albany remained stable through 2022 as a result of increased construction withholding related to economic development projects cushioning the overall decrease in withholding for companies within the New Albany Business Park. The decrease in withholding for these companies resulted from several companies shifting to hybrid and work-from-home models for employment. In addition, a large employer left the business park in 2022. The former growth seen in withholding in 2021 resumed for 2023, and projections for withholding in 2024 anticipate its continuation. In total, actual 2023 income tax collections surpassed 2022 collections by an astonishing $5.6 million or 20.7% and exceeded previous year’s collections in all categories. With the first four months of collections far exceeding previous YTD collections back to 2020 (and prior), although early, 2024 appears to follow the continued growth path of previous years. Income tax revenues will be monitored and projections for 2024 and beyond will continue to be adjusted as the city realizes the effect of the growth of the business park and substantial withholding from construction companies contributing to that growth.
  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. 1. YTD expenses excluding transfers and advances are 8.85% higher than last year. The increase in 2023 was largely due to seeing a full year of increased operations related to Intel choosing New Albany for its new microchip manufacturing plant in early 2022 and the management of necessary related infrastructure improvements. A total of 19 new positions were filled from June of 2022 through the end of 2023 which is consistent with the overall increase in expense operations during that time. Additional positions are planned for 2024, with ten of these already filled,  and personnel costs are projected to increase. The operating & contract services category includes expenses for professional services related to economic development, planning, inspection fees, legal fees and other costs that may have a one- time expense or project-driven costs. In recent years, the General fund has not been used for direct capital outlay expenses and no such expenses are planned for the General Fund in 2024. The General Fund provides for capital expense by transferring funds to the appropriate capital projects funds.

  2. The adopted appropriations as amended are reflected in the 2024 budget amounts. There have been no amendments to the adopted budget thus far. The General Fund has utilized 23.49% of the appropriations to date for 2024.

 

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. In 2023, approximately $13 million in transfers and $3 million in advances from the General fund were planned after mid year appropriation amendments. The final amounts transferred and advanced from the General fund were $7.6 million and $3.0 million, respectively, after a $5 million transfer to capital was postponed to 2024. The current budget for 2024 includes total transfers of  approximately $9.4 million.

General Fund Section — REVENUE

CHART 2: General Fund—Revenue


2024 Analysis

In total, revenues have increased by 36.26% year-to-date from 2023.  Income taxes, which comprise 79.75% of total revenue for 2024, have increased by 35.68%.  Service Charges have decreased by 31.07% while Hotel Taxes and Intergovernmental  have increased by 10.21% and 157.88%, respectively. When revenues were initially projected for 2023 and beyond, the City had anticipated that income tax could be negatively impacted as a result of the economic climate at the time. Fortunately, a significant negative impact has not been realized and the City has sufficient reserves to cushion a significant downturn in the in revenue should it be realized in the near future as it relates to potential refunds or effects on net profits as prior years’ tax return filings begin. 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. The first four months of collections recorded for 2024 show a considerable increase over the previous years’. However, it is too soon to predict whether that trend will continue and affect overall collections for 2024.

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. YTD withholding and net profits are significantly higher than the previous years while individual income taxes decreased slightly, yet remain strong.  With an overall YTD increase in total collections of 35.68% from 2023, collections continue to show growth. The overall collections YTD for 2024 represent an astonishing 67.94% increase from 2020 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 2021—2023.  The additional charts can be used to compare the YTD 2024, YTD 2023 and FY 2023 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. Over the last several years, Net Profits and Individual collections have grown to represent larger portions of income tax collections. Due to the nature of those collections fluctuating and being significantly vulnerable to the overall economy,  the portion of income tax they represent could also fluctuate accordingly.

General Fund Section — EXPENSE

CHART 6: General Fund Expenditures by Category

This graph shows the YTD operating expenditures in the General Fund, comparing amounts with YTD for 2023, the 2024 and 2023 budgeted amounts, and the actual expenditures for both 2023 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 2023 Actual and 2024 Budget represent a continuation of that trend. Capital outlay expenditures are no longer included in the General Fund. The General fund supports capital expenses by transferring funds to the appropriate capital projects funds. 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.

All Funds Summary