FY st Quarter General Revenue Update. Prince William County - Finance Department

Transcription

1 FY st Quarter General Revenue Update Prince William County - Finance Department November 13, 2015

2 This Report Prepared By: Finance Department One County Complex Court Prince William, VA (703) Michelle L. Attreed Director of Finance Timothy M. Leclerc Deputy Finance Director Steve Ferlotti Tax Administration Division Chief Allison C. Lindner Real Estate Assessments Division Chief B. Allen Scarbrough Treasury Management Division Chief Lillie Jo Krest Susan Rodeheaver Bill Vaughan Kerem Oner Mark Hinman 1

3 FY st Quarter General Revenue Update Prince William County - Finance Department In summary, the FY st Quarter revenue update reflects a general revenue surplus of $3.4 million with a projected forecast accuracy of 99.7%. Section 2.09 of the Principles of Sound Financial Management requires quarterly updates to the Board of County Supervisors (BOCS) within 45 days of the end of each quarter on the County s General Fund budget and trends with revenue projections through the end of the year. The general revenue estimate included in the Budget was $887,533,090. As of the first quarter, general revenues are expected to produce a surplus of $3.4 million from the adopted FY 2016 budget by June 30, 2016 as follows: Prior Year Fiscal Year 2016 $ change % change Category of FY 2015 Q1 from from General Revenues Year-End Adopted* Revised Adopted Adopted Real Property Taxes $560,755,793 $587,001,570 $587,001,570 $0 0.00% Personal Property Taxes 154,094, ,550, ,950,000 $4,400, % Sales Tax 59,708,982 60,280,000 60,280,000 $0 0.00% Consumer Utility Tax 13,974,213 13,940,000 13,940,000 $0 0.00% Communications Tax 18,070,352 18,600,000 17,800,000 -$800, % BPOL Tax 24,744,036 25,024,520 25,024,520 $0 0.00% Investment Income 6,036,382 6,342,000 6,342,000 $0 0.00% All Other 18,812,892 18,795,000 18,606,000 -$189, % Total General Revenues $856,196,836 $887,533,090 $890,944,090 $3,411, % 2

4 Revenues At-A-Glance Changes from the are as follows: A $4,400,000 surplus in Personal Property tax revenue is expected as a result of increases in new taxable business tangible property (mainly from data centers) as well as robust car sales and falling gas prices. Data centers are one particularly strong growth sector and one of the County s targeted industries. The County s Economic Development Office has been very successful in attracting these projects which adds revenue from commercial development. REAL PROPERTY PERSONAL PROPERTY $ $ $ SALES TAX $60.28 $60.28 $59.71 $ $ $ CONSUMER UTILITY TAX $13.94 $13.94 $ $4.4M

5 A Communications Tax revenue shortfall of $800,000 is projected for FY Despite housing growth, this revenue source has decreased over the last two fiscal years as landline usage has decreased. COMMUNICATIONS TAX BPOL TAX $17.80 $25.02 $18.60 $25.02 $18.07 $ $800k INVESTMENT INCOME $6.34 $6.34 $ ALL OTHER REVENUE $18.61 $18.80 $ $189k A shortfall of $189,000 in the all other revenue category is projected for FY 2016 in the Transient Occupancy Tax category. All major FY 2016 scheduled tourism events have concluded without the corresponding bump in revenues. It is also important to note that the FY 2016 Business, Professional and Occupational License (BPOL) Tax revenue adopted budget includes a provision for the reduction in revenues in anticipation of the amendment to the County Ordinance to increase the license requirement threshold from $250,000 to $300,000 in gross receipts. Looking Ahead Economy At-A-Glance 4 The chart that follows on the next two pages identifies some of the key indicators for the U.S., National, Regional and Local economies and shows trends year-over-year (Y-O-Y). A green symbol stands for a positive trend, a yellow symbol signals a cautionary or neutral trend and a red symbol represents a negative trend.

6 Indicator 9/30/2015 9/30/2014 Explanation Inflation 0.0% 1.7% Reflects purchasing power per unit of money Trend (Y-O-Y) GDP (Gross Domestic Product) +1.5% (Q3 2015) +3.5% (Q3 2014) Indicator of the overall health of the U.S. economy Stock Market: S&P 500 1, (9/30/15) 1, (9/30/14) Indicator of the overall health of the U.S. stock Dow Jones 16, (9/30/15) 17, (9/30/14) Indicator of the overall health of the U.S. stock Federal Funds Rate 0.07% (9/30/15) 0.07% (9/30/14) Indicator of return on investments Unemployment Rate: National State Region Prince William County Employment (net job gains): National State Region 5.1% 4.3% 3.3% 3.8% +1.36M (+0.9%) (YTD Sept 2015) +47,678 (+1.3%) (Y-O-Y Q1 2015) (+1.1%) (Y-O-Y Q1 2015) 5.9% 5.2% 4.2% 4.7% +1.94M (+1.3%) (YTD Sept 2014) -2,473 (-0.1%) (Y-O-Y Q1 2014) -9,747 (-0.8%) (Y-O-Y Q1 2014) U.S. job VA job NoVA job Indicator of overall health PWC of job U.S. economy, businesses & job VA economy, businesses & job NoVA economy, businesses & job Prince William County +5,120 (+4.4%) (Y-O-Y Q1 2015) +1,477 (+1.3%) (Y-O-Y Q1 2014) PWC economy, businesses & job ## Employment Establishments: State 243,911 (+5.2%) (Q1 2015) 231,803 (-0.5%) (Q1 2014) VA economy, businesses & job Region 73,552 (+4.6%) (Q1 2015) 70,340 (-0.6%) (Q1 2014) NoVA economy, businesses & job 5 Prince William County 8,415 (+5.8%) (Q1 2015) 7,957 (+0.9%) (Q1 2014) PWC economy, businesses & job

7 Indicator 9/30/2015 9/30/2014 Explanation National Retail Sales +0.1% (M-O-M Sept 2015) -0.1% (M-O-M Sept 2014) of U.S. economy Trend (Y-O-Y) Sales Tax Growth: State -5.1% (FYTD Sept 2015) +4.6% (FYTD Sept 2014) of VA economy Prince William County +4.4% (Y-O-Y Aug 2015) +1.1% (Y-O-Y Aug 2014) of PWC economy State Revenue Collections +2.4% (FYTD Sept 2015) +6.7% (FYTD Sept 2014) of VA economy 6 National Automobile Sales Commercial Vacancy Rates: Region Prince William County $18.2M (Sep 2015) 11.2% (Q3 2015) 6.9% (Q3 2015) National, State, and Local Trends $16.4M (Sep 2014) 11.3% (Q3 2014) 7.1% (Q3 2014) Indicator of consumer purchasing power NoVA businesses and commercial PWC businesses and commercial National - During the third quarter of calendar 2015, the national economy exhibited mixed signals: troubling signs in manufacturing, factory production, and wholesale and business inventories. Consumers appear to have curtailed non-auto-related spending activity during the quarter, despite savings at the gas pump. Total vehicle purchases, however, are still projected to finish the year as the strongest since Job creation and unemployment are trending in the right direction, although the weak labor participation rate may serve to overstate the strength of the trend. Unemployment across the nation in September 2015 stood at 5.1%, compared to 5.9% one year earlier. The stock continued generally on an upward path while corporate earnings were mixed. Real Gross Domestic Product (GDP) is the broadest measure of economic activity in the United States and is a reliable indication of the overall strength and performance of the national economy. Most economists agree that the latest recession/contraction began in the first quarter 2008, and, by accepted definitions, ended during the third quarter 2009, with a 2.2% expansion (quarter-over-quarter). Slow to moderate growth has proceeded since, with general improvement in 2013 and GDP for the four quarters of 2014 was as follows: -2.1%, 4.6%, 5.0% and 2.2% signs of an expanding economy fueled by continued consumer activity. The 1st Quarter 2015, however, was a muted 0.6%, while the 2nd Quarter 2015 GDP was reported at a more robust 3. 9%. The preliminary estimate for the 3rd Quarter of calendar 2015 is 1.5%. State - The Virginia economy, in some areas, is performing somewhat better than expectations for fiscal Unemployment across the Commonwealth was reported at 4.3% in September 2015, compared to 5.2% one year earlier. The Commonwealth s September 2015 revenue collections increased 9.7% percent and on a fiscal year-to-date basis, total revenue

8 collections rose 2.4%, ahead of the State s forecast of a 0.1% decline all positive indicators of an improving, albeit modestly, State economy. Receipts of individual withholdings and nonwithholding taxes drove most of the gain in September, signaling improving employment. Despite current caution about the challenges and risks associated with federal activity in Virginia, the expectations are for continued economic growth during 2015, albeit at a slower pace. Local - The Prince William County economy appears, for the most part, to be healthy and the primary back drop that frames this outlook (relatively low gas prices, low interest rates, improving job, and affordable housing relative to neighboring counties) is not expected to change dramatically over the near term. While the residential real estate appears to have leveled off in terms of average sold price and number of sales, foreclosures are continuing on a downward pace, approaching levels recorded before the real estate downturn. Unemployment in the County continued to improve over the quarter and is still well below the national rate. Latest at-place employment data from the Virginia Employment Commission (1st Quarter 2015) indicate growth, year-over-year, in establishments, employment and average weekly wages in the County. The Prince William County commercial inventory, still elevated in terms of historic vacancy rates, improved from one year earlier, and remains the lowest in the region. The Prince William economy appears, despite a recent plateau in the housing, to be healthy, with expectations of continued growth as fiscal 2016 progresses. Prince Wiliam County Real Estate Market At-A-Glance The chart below presents some of the key indicators for the local real estate and shows trends year-over-year (Y-O-Y). A green symbol stands for a positive trend, a yellow symbol signals a cautionary or neutral trend and a red symbol represents a negative trend. Indicator 9/30/2015 9/30/2014 Explanation Average Sales Price (MRIS) $340,117 $337,325 of housing Trend (Y-O-Y) # of Homes Sold YTD 5,406 (Q3 2015) Average # of Days on Market 51 # of Occupancy Permits Issued 2,104 (2014) 4,767 (Q3 2014) 49 1,643 (2013) of housing of housing of housing Ratio of Homes on the Market to Homes Sold of housing Residential Sales Activity - Sales data through September 30, 2015, has the average residential sales price at month s end at $340,117 according to the Metropolitan Regional Information Systems (MRIS). The number of sales for September totaled 576, an increase of 18% from September Average days on the stood at 51 in September. Going forward we 7

9 expect flat to modestly rising residential prices. Because of the relative values of existing inventory, new home construction should also remain at current modest levels. Commercial Sector In September 2015, according to Costar Realty Group (Costar), the County s commercial inventory included 44.8 million square feet (sq. ft.) of space in 1,975 buildings, with 3.11 million sq. ft. of vacant space a vacancy rate of 6.9%. Vacancy rates moved lower in all categories since September Total vacancy across all categories in September 2015 was 6.9%, a decrease of 36,085 sq. ft. since September 2014, when the total vacancy rate was 7.1%. Total vacant space has declined by 908,023 sq. ft. since September 2011, when the total vacancy rate was 9.4%. Among a group with unusually divergent commercial vacancy trends, the County has the lowest vacancy rate when compared with surrounding jurisdictions. The commercial real estate industry has been focused on subs where investors and landlords are expressing angst over softening demand. Perhaps for that reason, few have tracked that Prince William County has the lowest vacancy rate of all the jurisdictions we track and that, with the exception of 2013, demand has been positive in Prince William every single year over the last ten. Rob Hartley, Colliers International Director of Research; Virginia Business; Nov. 9,

10 9