GOVERNMENTAL FUNDS OVERVIEW Fiscal Year Recommended Budget

Transcription

1 GOVERNMENTAL FUNDS OVERVIEW Fiscal Year Recommended Budget COUNTY OPERATING BUDGET For fiscal year , the Chief Administrative Officer recommends a total spending plan of $448.3 million for all governmental funds. Of this total, $32.7 million are recommended operating transfers between funds. The majority of these transfers, $22.3 million, are from the new Public Safety and Health and Human Services Realignment Fund to the operating department budgets. An additional $4.4 million in transfers from the General Fund to support expenditures in Special Revenue, Debt Service and Capital Projects Funds is included in this total along with a variety of transfers from special revenue funds to other governmental funds such as the Capital Projects Fund. How Total Spending Is Allocated Figure 1 illustrates recommended spending among major program areas. Health and human services, including public health, mental health, and public assistance, account for 51% of the total budget. Public protection services; including law enforcement, jail and juvenile hall operations, probation, prosecution of criminals and fire protection account for 26%. Public ways and facilities, including road and bridge construction and maintenance, as well as transit services, account for 10% of the total budget. Appropriations for general government services, such as Human Resources, Auditor-Controller, Assessor, Treasurer, County Counsel, and Administration departments account for 10%, with the remainder allocated to the Library; Farm, Home and 4-H; other recreation and education services; debt service and contingencies. Public Assistance 34% Figure 1 Appropriations by Category $448,308,352 Education and Recreation 1% Health and Sanitation 17% Contingencies 1% General Government 10% Public Ways and Facilities 10% Debt Service 1% Public Protection 26% 25

2 Projected Revenue for Fiscal Year Among the most important assumptions underlying the Recommended Budget are its revenue projections. Anticipated revenues for fiscal year total $424.3 million. These revenues are deposited into either the General Fund, or into a variety of other governmental funds including Special Revenue Funds, the Debt Service Fund and the Capital Projects Fund. Without operating transfers between funds which causes double counting, the Recommended Budget revenue total would be $391.6 million for all governmental funds. Balancing the recommended expenditure plan requires the use of anticipated revenues, an estimated $12.3 million of available fund balance carryover from the General Fund, $1 million of General Fund restricted reserves and $12.7 million of restricted reserves in other governmental funds. Total resources (the sum of revenues, available fund balance carryover and use of reserves) are approximately $450.3 million. Revenues that are deposited into the General Fund support a wide variety of services and programs for Butte County residents, including law enforcement, fire protection, jail and juvenile hall operations, prosecution of criminals, tax collection, building inspection, property assessment, agricultural regulations, and several essential support services. Revenues deposited into Special Revenue, Capital Projects and Debt Service Funds are limited to specific purposes, such as health and human services, public works and transit, welfare programs, child support services, debt repayment and capital projects. Operating transfers to these funds partially support their funding requirements. For example, operating transfers to the Capital Projects Fund help to fund some capital projects and operating transfer from the General Fund to the Public Health and Behavioral Health funds are required to meet the County s required maintenance of effort. Additional transfers between departments are made to account for the exchange of services between County departments in providing a cooperative service delivery system. Figures 2 and 3 provide two alternative perspectives on anticipated revenues in fiscal year Figure 2 illustrates the various types of County revenue. State and federal sources are expected to provide 66% of the County s revenues while property tax revenue accounts for 11%, local sales tax accounts for 1% and charges for services account for 7%. The balance comes from miscellaneous revenues, such as interest earnings, licenses and permits, fines, forfeitures and penalties. As shown in Figure 3, County general purpose revenue is estimated to make up only 18%, or $76.3 million of the total amount of anticipated County revenue projected for fiscal year [This space intentionally left blank] 26

3 Figure 2 Sources of Revenue By Type $424,342,108 Charges for Services 7% State 38% Other 13% Property Tax 11% Other Governmental 2% Federal 28% Local Sales Tax 1% Figure 3 Sources of Revenue General Purpose vs. Non-General Purpose $424,342,108 Other Revenue $348,026,494 82% General Purpose Revenue $76,315,614 18% 27

4 GENERAL PURPOSE REVENUE - SOURCES General purpose revenue is used to fund County services and programs, including required maintenance of effort (MOE), matching funds and unfunded State mandates. As shown below in Table 1, the largest source of general purpose revenue is property tax, which is projected to account for approximately $45 million or 59% of total general purpose revenue. Public safety sales tax (from Proposition 172) is the second largest revenue source and accounts for over $14 million, or 19%, of total general purpose revenues. Chico area redevelopment agency pass-through of property taxes (5%), local share of sales taxes (5%) and the tobacco lawsuit settlement funds (3%) also account for large portions of general purpose revenue. The remaining general purpose revenue is made up of various unrestricted State subventions, interest earnings and miscellaneous revenues. It is important to note that the Public Safety Sales Tax can only be received if the County funds public safety programs at the required MOE level. The Recommended Budget not only meets the MOE level but exceeds it by over $36 million. Table 1 County General Purpose Revenue (GPR) Recommended Fiscal Year Property Tax 44,970,100 Proposition 172 Sales Tax for Public Safety 14,158,000 Redevelopment - Chico 4,155,000 Local Sales Tax 3,660,390 Tobacco Settlement Funds 2,000,000 Fines, Forfeitures, Penalties 1,188,724 Other Taxes 1,049,000 Teeter Plan Proceeds 1,200,000 Treasury Interest 1,036,000 PG & E Franchise 935,000 State Stabilization Funds 631,000 Cable TV Franchise 601,000 Open Space Act (Williamson Act) 240,000 Homeowners Property Tax Exemption 185,000 Other Miscellaneous Revenue 118,000 Motor Vehicle Revenue 95,000 Federal Revenues 65,000 Other Intergovernmental Revenue 19,400 Other Use of Money & Property 7,000 Business License 2,000 Total $76,315,614 Property Tax Property tax revenue is the largest single component of general purpose revenue. The County retains approximately 22% of all property tax revenues collected in the County. These tax receipts are used to support a wide variety of programs. The effects of the economic downturn, after reversing years of strong growth, continue to linger over Butte County in the form of relatively flat property tax revenues. 28

5 A slight reduction in total property tax revenue receipts is projected for fiscal year Figure 4, below, shows property tax revenues over a five year period. Millions 50.0 Figure 4 Butte County Property Tax Revenue Est Est. Sales Tax State law levies taxes on the purchase of most tangible goods in the State. The State collects the sales tax and distributes the local portion to the jurisdiction where the purchase was made. Therefore, if the sale occurred within an incorporated city, that city would receive the local portion of the sales tax. If the sale occurred within the unincorporated portion of the County, then the County receives the local portion of the tax. It should be noted however, that this arrangement is sometimes modified by tax sharing agreements between jurisdictions. Figure 5 shows the changes in sales tax revenues for a five-year period. Actual revenues for fiscal year increased somewhat, but are expected to decrease slightly in fiscal years and The projected decrease is due in part to the allocation of, in lieu sales and use tax which the County receives from the State in lieu of some of our traditional local sales tax revenues. The in lieu of sales and use tax funds are estimates for the current year and adjustments to true up prior year estimates. In fiscal year a negative adjustment is anticipated. Without this and other adjustments sales tax revenues would be projected to increase somewhat in Millions 4.5 Figure 5 Butte County Local Sales Tax Revenue Est Est. 29

6 Available Fund Balance Butte County s budget relies on a significant available fund balance carryover in the General Fund. Available fund balance carryover occurs when prior year Appropriation for Contingencies go unspent, prior year revenues come in higher than budgeted, prior year expenditures are lower than budgeted and/or adjustments are made to available fund balance based on corrections to prior year financial statements. Available fund balance carryover can fluctuate significantly from year-to-year depending on the use of contingencies, revenue receipts, departmental savings and other adjustments. Over the past five years available fund balance carryover in the General Fund has ranged from $9 million in fiscal year to $17.6 million in fiscal year The estimated available fund balance carryover for fiscal year in the General Fund is $12.3 million. This is neither conservative nor optimistic, but represents the best estimate given the information available at the time the Recommended Budget was prepared. The estimate assumes that there will be approximately $800,000 in unspent Appropriation for Contingencies at year end, County departments will accrue approximately $8.8 million in general fund savings, general purpose revenues will exceed budget by $1.4 million, and there will be an additional $1.3 million in other adjustments. The actual beginning available fund balance in the General Fund will not be known until sometime in August 2012 when the fiscal year accounting is finalized and the books are closed. If the actual available fund balance is less than estimated, it is recommend that the fiscal year General Fund Contingency be reduced to make up the difference. If the actual available fund balance is greater than estimated, it is recommend that the fiscal year General Fund Contingency be increased by that amount. Trends in Discretionary Resources The total discretionary resources available for the fiscal year Recommended Budget are $88.6 million, comprised of an estimated $12.3 million in available fund balance carryover in the General Fund and $76.3 million in general purpose revenue. Overall discretionary resources available for the fiscal year Recommended Budget decreased by 6% from the fiscal year Adopted Budget, which is attributed to a decrease in available fund balance carryover due primarily to the creation of a $5,000,000 General Reserve in fiscal year The General Reserve continues to exist so those funds are no longer considered part of available fund balance. GENERAL PURPOSE REVENUE AND AVAILABLE FUND BALANCE - USES Discretionary Resources Must First Be Used To Meet Mandates When State and federal mandates are placed upon the County with inadequate revenues, the County utilizes local general purpose revenue to meet these mandates. This results in a shift of local control over discretionary resources to the State and federal governments, and a decrease in the amount available to fund local priorities. After funding the mandates, the remaining general purpose revenue can be used for public safety and other public service demands. Table 2 on the following page shows the recommended allocation of general purpose revenue for fiscal year

7 Table 2 Allocation of General Purpose Revenue & General Fund Available Fund Balance Fiscal Year Recommended Budget Recommended Fiscal Year Allocation Department/Use of GPR Administration 1,582,752 Agriculture 843,723 Appropriation for Contingencies 3,500,000 Assessor 2,274,927 Auditor-Controller 211,538 Behavioral Health 285,189 Board of Supervisors 2,328,506 Child Support Services - Clerk-Recorder 1,506,647 County Counsel (74,589) Development Services 1,764,677 District Attorney 7,917,374 Employment & Social Services 2,065,344 Farm, Home and 4-H 280,587 Fire 14,018,991 General Services 1,618,316 Human Resources 69,059 Information Systems 566,636 Library 2,381,637 Miscellaneous budgets 277,881 Non-Departmental budgets 6,656,643 Probation 10,116,963 Public Health 724,304 Public Works 520,310 Sheriff-Coroner 26,350,072 Treasurer-Tax Collector 502,584 Water & Resource Conservation 325,543 Total 88,615,614 Indirect use of general purpose revenue by support service departments, including the Auditor- Controller, County Counsel, General Services, Human Resources, Information Systems, Treasurer-Tax Collector, and Administration are not included in Table 2 since they are already included in the costs for operating departments they support. If these costs were included in the Table 2, then the use of general purpose revenue related to support service departments would be double counted. Most support service department costs are allocated to other departments based on the State Controller approved Countywide Cost Allocation Plan. Historically, approximately 40-45% of support service department costs are allocated to general purpose revenue supported functions and the remainder to federal, State and fee supported functions. 31

8 Approximately $6.9 million of the County s general purpose revenue is allocated to miscellaneous and other non-departmental budget units, including Grand Jury, Debt Service, Table A Water, Community Action Agency, Unallocated A-87 Costs, Public Defender, LAFCo, and the County Share of Trial Courts budget. Most of these expenditures are unfunded State mandates or other obligations without an alternative funding source. For fiscal year , the Chief Administrative Officer recommends a General Fund Appropriation for Contingencies of $3.5 million. When combined with the existing $5 million General Reserve the recommended General Fund Contingencies and the General Reserve total 6.5% of total recommended expenditures in the General Fund. Contingencies are used to address urgent and unanticipated needs during the course of the fiscal year. The General Reserve helps to ensure the County has adequate cash flow to provide working capital, ensure sufficient liquidity to pay bills, and help to maintain a high credit rating. 32