CITY OF TACOMA FINANCIAL OVERVIEW

Transcription

1 CITY OF TACOMA FINANCIAL OVERVIEW JUNE 19, 2013 FIRST MEETING Andy Cherullo, Finance Director Tadd Wille, Budget Officer 1 OVERVIEW Economic Conditions City of Tacoma Budget Structure General Fund Fiscal Outlook ( ) 2

2 ECONOMIC CONDITIONS 3 ECONOMIC OVERVIEW Although there are positive economic signs, the effects of the 2008 recession still lingering and impacting Tacoma 2008 recession directly impacted all of the City s major revenue sources - Property, Sales, Utility, B&O Recovery has been slow Recent Economic Data is Encouraging: Housing market has had 6-8 months of positive news (prices up, permitting up) Job Growth is occurring in most sectors, but slowly 2013 retail sales showing positive signs However, risks remain that could impact recovery. 4

3 NATIONAL PERCENT JOB LOSS IN POST WWII RECESSIONS 5 WASHINGTON STATE JOB LOSSES NOT YET BACK TO 2007 LEVELS Source: SWM & Employment Security Department seasonally adjusted non-farm employment. Totals may differ slightly due to rounding. 6

4 UNEMPLOYMENT RATE Source: US Bureau of Labor Statistics 7 MEDIAN HOME PRICES 8

5 TACOMA - NUMBER OF BUILDING PERMITS ISSUED Source: City of Tacoma 9 WASHINGTON STATE AVERAGE GAS PRICES 10

6 PERSONAL INCOME Source: 11 TACOMA EXPORTS 16,000,000,000 14,000,000,000 China United Kingdom Australia Exports out of Tacoma (Dollars) 12,000,000,000 10,000,000,000 8,000,000,000 6,000,000,000 4,000,000,000 2,000,000,000 Canada Japan Germany Hong Kong Mexico South Korea United Arab Emirates Canada Japan China ITA International Trade Administration US Dept of Commerce 12

7 WHAT S IT ALL MEAN? Q: Why are we talking about home prices, unemployment, gas prices, personal income, exports? A: These metrics impact Consumer and Business Confidence which impacts Tacoma s major revenue sources Property, Sales, Utility, B&O. If consumers are confident, they will spend money on food, cars, entertainment, homes, home repair and improvement, major appliances, services, etc. If businesses see demand, they will hire more people, manufacture, order and/or ship more products, provide more services, etc. 13 ECONOMIC OUTLOOK & RISKS Upside: Economic recovery continues, but at slow pace, Many signs of positive changes Unemployment falling and job creation growing (slowly) Consumer & business confidence rising (but volatile) Housing market showing recovery - median prices recovering, permitting is up from historic lows Tacoma has a diverse economic base Downside Risks: Global outlook European Debt Crisis, India & China, Middle East turmoil (oil shocks) US Outlook If Europe falls deeper into a recession or China slows their economy too quickly, it will impact US. Also, political stalemate in Washington D.C. will add to uncertainty WA State Outlook largely dependent on Global and US as they rise/fall so does WA Tacoma still has large inventory of foreclosures that need to clear the market 14

8 BUDGET STRUCTURE 15 CITY OF TACOMA BUDGET STRUCTURE City of Tacoma Tacoma Public Utilities (TPU) General Government Water Power Rail Fleet, Low Income Assistance, Self Insurance Environ. Services (ES) Capital, Debt, & Enterprise Special Revenue, Trust, and Internal Services General Fund 16

9 CITY OF TACOMA BUDGET STRUCTURE ADOPTED BUDGET (MILLIONS) City of Tacoma $2,773.0 TPU 40% General Government 60% $1,120.6 $1,652.4 Water - $153.7, 6% Rail- $51.2, 2% Other- $30.2, 1% Debt, Capital, Enterprise- $121.7, 4% General Fund - $396.7, 14% Power - $885.5, 32% ES- $386.67, 14% Trust, Internal Services, Special Revenue- $748.5, 27% $0 $500 $1,000 $1,500 $2,000 $2, ADOPTED BUDGET Other Revenues $39.6, 10% Utility Tax $90.1, 23% Neighborhood & Community Services, $14.9, 4% Library, $22.4, 6% Public Works, $22.3, 5% Other Services $103.7, 26% Business Tax $83.0, 21% Police Protection $143.4, 36% Fire Protection $90.0, 23% Property Tax $103.7, 26% Sales Tax $80.3, 20% Adopted Budget: $396,658,357 All dollar values are in millions. 18

10 GENERAL FUND FISCAL OUTLOOK ( ) 19 GENERAL FUND FORECAST (IN MILLIONS) $270 $260 $250 $240 $230 $220 $210 $200 $190 $180 $10.1M $16.2M $17.9M $20.2M $ Actuals Forecast Revenues Expenditures 20

11 GENERAL FUND FORECAST (In Millions) 2013 Budget 2014 Budget 2015 Projection 2016 Projection 2017 Projection 2018 Projection Revenues $195.3 $201.3 $206.0 $210.8 $215.7 $220.8 Expenditures $190.5 $202.8 $216.1 $227.0 $233.6 $241.0 Ending Balance $4.8 ($1.4) ($10.1) ($16.2) ($17.9) ($20.2) Biennial Ending Balance $3.4 M ($26.3M) ($38.1M) 21 $60 GENERAL FUND REVENUE BY SOURCE (IN MILLIONS) $50 $40 $30 $20 $10 $ Actuals Forecast Property Tax Utility (GET) Tax Sales Tax Business Taxes All Other Revenues 22

12 REVENUE ASSUMPTIONS IN FORECAST Revenue Source Projected Yearly Increases Property Tax 1.75% Sales Tax 3.03% B&O Tax 1.6% Utility Tax 4.0% Other Flat or small increases COMPONENTS OF GENERAL FUND EXPENDITURES (IN MILLIONS) Actuals Forecast Salaries and Wages M&O Fixed Costs Transfers Other/Non Dept 24

13 EXPENDITURE ASSUMPTIONS IN FORECAST Reflects funding to provide today s level of recurring City services Fully funds expiring COPS (15 FTE) and SAFER (37 FTE) Grants ($12 M in ) Assumes fixed cost annual increases of 3% and Maintenance and Operation annual increases of 1% Assumes salary increases based on historical averages and contractual requirements Health benefits increases based on Mercer Consulting projections (between 7-8%) 25 OTHER CONSIDERATIONS Reserve Contribution Recent bond downgrades quoted below average levels of reserves In July, City Staff will recommend to City Council that the reserve policy be set at 15%-20% of General Fund yearly expenditures Deferred Maintenance and Other Expenses Fleet Replacement Fund Contribution Facilities Maintenance IT Procurement and Replacement EMS Contribution Affordable Care Act impact 26

14 GENERAL FUND FORECAST (IN MILLIONS) $270 $260 $250 $240 $230 $220 $210 $200 $190 $180 $ Actuals Forecast Revenues Base Expenditures Base Expenditures with Contribution to Reserves $45.9M $26.9M $24.3M $20.9M Base Expenditures with Other Expenses 27 SUMMARY 28

15 SUMMARY Economic Conditions Although there are positive economic signs, the effects of the 2008 recession still lingering and impacting Tacoma, and risks remain that could impact recovery City of Tacoma Budget Structure Overall City budget is $2.7 billion, but focus of the Task Force is on the General Fund portion of revenues and spending General Fund Fiscal Outlook ( ) Projected expenditure growth is greater than projected revenue growth (structural deficit) 29 CITY OF TACOMA FINANCIAL OVERVIEW 30