QUARTERLY FINANCIAL REPORT

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1 QUARTERLY FINANCIAL REPORT Page Key Trends... 2 Executive Summary... 3 Economic Indicators... 4 General Fund... 8 Public Safety & Justice Land Use, Housing & Transportation Health & Human Services Investments Activity Indicators Prepared by: Washington County Administrative Office and Department of Support Services Finance Division

2 KEY TRENDS SUMMARY Economic Oregon unemployment Washington County unemployment Residential building activity General Fund Discretionary Revenues Total discretionary revenues Real estate transfer tax Recording fees Lodging tax Fund Balances General Fund Building Services Current Planning Road Fund Investment Income Page 2 of 23

3 Executive Summary Economic data included in this report is as of. The State of Oregon unemployment rate has stabilized at just under 10% in the last quarter of the fiscal year. Nevada had the highest unemployment rate at just over 13% while North Dakota, South Dakota and Nebraska are all below 5.0%. Oregon was the 38 th highest rate in the nation. Washington County s unemployment rate was 7.6% and ranked 5 th amongst the 36 counties in the State. Gilliam County was the lowest rate at 5.9% and Crook County the highest at 15.4%. Total building permit activity is down slightly; for the three months ended, 2,538 permits were issued compared to 2,825 for the same three months in Permit activity is significantly below the 3,549 permits issued in Overall General Fund revenues are slightly higher in than , increasing from $165.7m to $167.7m. Property taxes are the single largest source of discretionary revenue in the General Fund. While other revenue line items have seen more volatile fluctuations, property tax revenue has been increasing, although at a slower rate than in past years. With regards to specific General Fund revenue line items, recording fees and transient lodging tax increased during while the real estate transfer tax declined. For the fiscal year ending, recording fees increased from $2.8m to $2.9m, transient lodging tax increased from $1.6m to $2.0m, and the transfer tax decreased from $2.5m to $2.3m. The ending General Fund balance as a percentage of total revenue at was 19.3%. This is slightly above the projected 19.1% and within the Board mandated policy of 15% 20%. Land Use and Transportation continues to aggressively manage their Special Fund ending balances within the target ranges established by the department in The $0.06 increase in gas tax effective January 1, 2011 is a result of the full implementation of House Bill 2001 that helps fund road projects. Fluctuations in fuel prices and commuter s reactions to those fluctuations contribute to the difficulties the department experiences in keeping the ending fund balances within the targeted ranges. Investment income continues to remain at low levels. The State managed local government investment pool rate of return has been at 0.50% since October 2010, while the County portfolio rate has been a little over 1.0% during the same period. Page 3 of 23

4 Economic Indicators The recession continues to impact State and local economic activity which is well below the levels of the past several years. The Federal Reserve Board of Philadelphia s economic index for Oregon continues to slowly increase and leveled off in June The County s local unemployment rate was 23% below its peak of 9.1% in State of Oregon Economic Index Federal Reserve Bank Oregon Economic Index Index Value Jun-08 Sep-08 FRB OR Economic Index % Change in FRB OR Economic Index Dec-08 Mar-09 Jun-09 Source: Federal Reserve Bank of Philadelphia Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun % 0.5% 0.0% -0.5% -1.0% -1.5% -2.0% % Change in Index Value The left hand axis and the bar graph show the value of the Federal Reserve Board index. The line graph shows the percentage change from the prior month. The Federal Reserve Bank's Oregon economic index is or 4.3% higher than June The variables combined to form a single index are non farm payroll, average hours worked in manufacturing, unemployment rate and wage and salary disbursements deflated by CPI (US city average). State of Oregon Unemployment Unemployment Rate 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% OR Unemployment Rate - Seasonally Adjusted % Change in OR Unemployment Rate Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 Jun-10 Aug-10 Oct-10 Dec-10 Feb-11 Apr-11 Jun % 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% % Change in Rate The left hand axis and the bar graph show the unemployment rate. The right hand axis and the line graph show the percentage change from the prior month. Oregon s unemployment rate for this fiscal year has fluctuated from a low of 9.3% in May 2011 to a high of 10.6% in July Page 4 of 23

5 State of Oregon General Fund Forecast General Fund Revenue ($000) $10,150 $9,150 $8,150 $7,150 $6,150 $5,150 $4,150 $3,150 $2,150 $1,150 $ % % % % % % % % % % OR General Fund Forecast % Change OR GF Revenue % % 8% 6% 4% 2% 0% % Change in GF Revenue -2% -4% -6% -8% -10% The left hand axis and the bar graph show the Oregon General Fund revenue forecast. The right hand axis and the line graph show the percentage change from the prior year. The September 2011 Oregon General Fund forecast calls for a 3.1% increase in revenues for fiscal year State of Oregon Total Non Farm Employment Forecast Total Employment (000) 1,950 1,750 1,550 1,350 1, % 1.6% -0.7% -6.2% -0.8% 1.8% 2.1% 2.3% 2.4% 2.4% 2.2% 1.9% OR Total Non-Farm Employment Forecast % Change in OR Employment % 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% % Change in Employment The left hand axis and the bar graph show total Oregon employment. The right hand axis and the line graph show the percentage change from the prior year. The September 2011 employment forecast calls for an increase in employment for the second consecutive year. Page 5 of 23

6 Washington County Unemployment with Comparisons Unemployment Rate 12% 10% 8% 6% 4% 2% 0% Oregon United States Portland-Vancouver-Beaverton MSA Washington County 7.5% The unemployment rate in Washington County was 7.6% in June 2011, down from 8.3% in December 2010 and below the July 2009 peak of 9.1%. Local unemployment continued to be lower than the State, Portland MSA, and national average over the last six months. Washington County Total Residential Building Permits Year Avg High Low FY 10 / This graph shows the total residential building units permitted in the County by month. Permit numbers continue to set new record lows. A total of 10,869 residential building permits were issued by Washington County jurisdictions in or 321 (3%) more units than in and 5,215 (32%) fewer units than the peak in July Aug Sept Oct Nov Dec Jan Feb March April May June Page 6 of 23

7 Washington County Non Farm Employment Aug Jul Aug # % # % Not Seasonally Adjusted Change from Prior Year Change from Prior Month Total nonfarm employment 235, , ,100 1,800 1% (900) 0% Total private 213, , ,600 2,800 1% (200) 0% Mining and logging % Construction 11,200 11,500 11, % 100 1% Manufacturing 41,400 42,700 42,700 1,300 3% - Durable goods 36,100 37,400 37,400 1,300 4% - Computer and electronic product manufacturing 25,000 26,100 26,200 1,200 5% 100 0% Semiconductor and electronic component mfg. 19,700 20,800 20,900 1,200 6% 100 0% Electronic instrument manufacturing 3,900 3,800 3,800 (100) -3% - Nondurable goods 5,300 5,300 5, Trade, transportation, and utilities 47,000 47,000 46,900 (100) 0% (100) 0% Wholesale Trade 15,800 15,700 15,700 (100) -1% - Retail trade 28,100 28,200 28,100 - (100) 0% Food and beverage stores 5,100 5,000 5,000 (100) -2% - General merchandise stores 6,000 5,900 5,800 (200) -3% (100) -2% Transportation, warehousing, and utilities 3,100 3,100 3, Information 7,900 7,900 7, Financial activities 15,500 15,300 15,300 (200) -1% - Professional and business services 34,700 35,700 35, % (100) 0% Professional and technical services 10,900 10,900 10, Management of companies and enterprises 5,700 5,700 5,600 (100) -2% (100) -2% Administrative and waste services 18,100 19,100 19,100 1,000 6% - Educational and health services 28,500 29,000 28, % (100) 0% Leisure and hospitality 20,300 20,600 20, % (200) -1% Other services 6,900 6,800 6, % Government 21,500 21,200 20,500 (1,000) -5% (700) -3% Federal government 1, (300) -30% (100) -13% State government 2,700 2,600 2,600 (100) -4% - Local government 17,800 17,800 17,200 (600) -3% (600) -3% Local education 10,200 10,400 9,900 (300) -3% (500) -5% Local government excluding educational services 7,600 7,400 7,300 (300) -4% (100) -1% Washington County total non farm employment decreased by 900 jobs in August 2011 compared to July Total employment increased 1,800 jobs or 1% over August The Trade, Transportation and Utilities, Electronics, Financial, Management of Companies and Enterprises, and Government sectors experienced decreases. These were offset by increases in Professional and Business Services, Administrative and Waste Services, Educational and Health Services, and the Leisure and Hospitality businesses. Page 7 of 23

8 General Fund Revenue in Total and by Major Category $25,000,000 $170,000,000 $20,000,000 $150,000,000 $15,000,000 $130,000,000 $10,000,000 $5,000,000 $110,000,000 $90,000, Intergovernmental Licenses, Charges & Fines Cost plan and SIP Other Taxes Total The left axis and bar graphs show General Fund revenues by major category. The right axis and line graphs show property tax revenue and General Fund revenues in total. Investment income, included in Other, has declined 81% from $2.7 million in to $434,000 for Property tax revenue comprises 63% of total General Fund revenues and has steadily increased each year. Recording Fees, Lodging Tax and Real Estate Transfer Tax Revenue $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 Recording Fees Lodging Tax Real Estate Transfer Tax The real estate transfer tax was 7% lower than in fiscal year Lodging tax revenue was 20% higher than prior year due to increased delinquent tax collection efforts. Recording fees were 5% higher than in fiscal year The real estate transfer tax and recording fees are important sources of revenue for the General Fund and while rising from the prior two years they continue to be down significantly from the high. Page 8 of 23

9 Expenditures in Total and by Major Category $100,000,000 $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000, $180,000,000 $170,000,000 $160,000,000 $150,000,000 $140,000,000 $130,000,000 $120,000,000 The actual costs show an increase in spending of 4% over fiscal year Personal Services represent 46% of total General Fund expenditures. Other expenditures include capital outlay, debt service and transfers to other funds; transfers comprise 72% of non Personal Services related expenditures. Personal Services Materials & Supplies Other Total Expenditures Revenues, Expenditures and Fund Balance ($ in 000 s) $45,000 $200,000 $190,000 Ending Fund Balance $35,000 $25,000 $15,000 $5,000 $180,000 $170,000 $160,000 $150,000 $140,000 $130,000 $120,000 Revenues and Expenditures -$5,000 $110, $100,000 Ending Fund Balance Total Revenues Total Expenditures General Fund Balance as a Percentage of Total Revenue 30.0% 25.0% 20.0% 15.0% 26.7% 23.4% 19.0% 20.2% 19.3% 16.6% 14.1% 11.1% 10.0% 5.0% 12.3% 11.2% 0.0% Expenditures continue to outpace revenues and Departments have been asked to spend conservatively. The ending fund balance for fiscal year is 19.3%. Maintaining the General Fund reserves between the Board mandated 15% 20% of ending fund balance in subsequent years provides the County with financial stability as the economy slowly comes out of this recession. Page 9 of 23

10 Public Safety & Justice Public Safety & Justice Revenue in Total and by Major Category Revenues by Major Category $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000, $72,000,000 $70,000,000 $68,000,000 $66,000,000 $64,000,000 $62,000,000 $60,000,000 Taxes Intergovernmental Licenses, Permits & Charges Miscellaneous Transfers In & Interfund Total Total Revenues Total Public Safety & Justice revenues increased 3.2% over Licenses and Permits and Charges for services increased 24.4%, Taxes increased 3.6% and miscellaneous revenues increased 11%. These increases were offset by decreases in Intergovernmental (9.6%) and Transfers (3.8%). Public Safety & Justice Expenditures in Total and by Major Category Expenditures by Category $20,000,000 $15,000,000 $10,000,000 $5,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 Total Expenditures and Personal Services Total expenditures increased 4.2% over This was driven mostly by the increase in Personal Services which makes up 72% of total expenditures Materials & Services Other & Capital Interdepartmental Transfers Personal Services Total Actual Page 10 of 23

11 Land Use & Transportation Gas Tax Revenue $22,000,000 $21,000,000 $20,000,000 $19,000,000 Gas tax revenue increased $3,595,623 or 19.18% in to $22,344,626, up from $18,749,003 in HB 2001, fully implemented in January 2011, increased the gas tax by $0.06 per gallon. $18,000,000 $17,000,000 $16,000,000 $15,000, Building Services Fund Balance 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 Ending Fund Balance Revenues Expenditures Target Level: $5.0 - $7.0 Million The ending fund balance for the Building Services Fund is within the targeted range of $5 7 million. The expenditures exceeded revenues by $1, As a result, the ending fund balance decreased from $7.5 million in to $6 million in ,000, Page 11 of 23

12 Current Planning Fund Balance 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 Ending Fund Balance Revenues Expenditures The Current Planning Fund expenditures exceeded revenues by $151,807. As a result, the ending fund balance decreased from $.75 million in to $0.60 million in Revenues are expected to exceed expenses in ,000 Target Level: $0.5 - $0.7 Million FY (500,000) Road Fund Balance $45,000,000 $40,000,000 $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 Target Range: $8.0 - $11.0 million $5,000, Ending Fund Balance Total Revenues Total Expenditures The Road Fund revenues exceeded expenditures by $1.6 million in fiscal year As a result, the ending fund balance increased from $13.4 million in to $15 million in The ending fund balance is expected to decrease to $10 million at the end of as expenditures are expected to outpace revenues. Page 12 of 23

13 Health & Human Services Expenditures in Total and by Major Category $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 The expenditures increased by $1,129,619 or 1.9% over due in part to the increases in the State Mental Health grant, Medicaid funding and the National Council on Aging grant Personal Services Materials & Services Other Total Actual General Fund Revenues in Total and by Major Category $8,000,000 $15,000,000 $6,000,000 $10,000,000 $4,000,000 $5,000,000 $2,000, Intergovernmental Licenses & Permits Charges for Services Other/Misc Total General Fund org units for Health & Human Services include Public Health, HHS Administration, Animal Services and Veteran Services. The single largest org unit within the General Fund for HHS is Public Health. The majority of Public Health revenue comes from the State. The trend of the line graph follows the increases and decreases in State funding (Intergovernmental). Revenues were up 3% for over Page 13 of 23

14 HHS Revenues in Total and by Major Category $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000, Intergovernmental Other/Misc Total The Human Services Division includes services for persons with developmental disabilities, mental health issues and alcohol/other drug abuse issues. The State provides the majority of the funding for the programs in this fund funding was up 28.7% over Oregon Health Plan Mental Health Fund Annual Revenues $25,000,000 $20,000,000 $15,000,000 $10,000,000 The County receives funds from the Oregon Health Plan (OHP) to provide mental health services to County residents enrolled in the plan. $5,000, Page 14 of 23

15 Washington County Investment Portfolio Balances & Rates of Return $400,000,000 $350,000,000 $300,000,000 $250,000,000 $200,000,000 $150,000,000 $100,000,000 $50,000, % 2.00% 1.50% 1.00% 0.50% 0.00% Jul-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 LGIP Investment Portfolio LGIP Rate Portfolio Rate Excerpts from the quarterly report from Davidson Fixed Income Management (DFIM), Inc., the County s Investment Advisor. Economic Indicators and Composite Economist Outlook: Economic data in the 2 nd quarter showed a very weak jobs number, with a gain of only 18,000 nonfarm works, which is the worst labor report in nine months. Additionally, household employment plunge 445,000 jobs in June, which calculated out to a 9.2% unemployment rate. The economists are still projecting for 2011 unemployment to pencil out below 9% at 8.90%. Composite Economist s Rate Projections: Forecasts this quarter shifted out the Fed rate move from 0.25% to 0.50% from Q to Q The latest projections are that the two year note should be above 1% in the first quarter of STRATEGY FOR THE THIRD QUARTER 2011 AND BEYOND: DFIM is continuing with the same strategy as the fourth quarter of DFIM will keep the portfolio invested at the shorter duration targets to provide value over the shorter overnight pool rates. The focus is on maintaining high quality portfolios that are producing market yields with reduced interest rate risk and credit risk. Page 15 of 23

16 Activity Indicators General Government/Other Recording Transactions Total Transactions 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 4, Recording transactions decreased by 659 (0.64%), from 103,115 in to 102,456 in Total recording transaction volume in remained below the high levels. Real Estate Transfer Transactions Total Transactions 1,200 1,100 1, The total number of real estate transfer transactions decreased by 1,572 (19%), from 8,048 in to 6,476 in Recording transaction volumes in were 2,786 transactions (30%) lower than the high Page 16 of 23

17 Marriage Licenses Issued Total Licenses The total number of marriage licenses issued increased by 35 (1.2%) from 2,936 in to 2,971 in This continues the downward trend from , when marriage licenses totaled 3,166. Washington County Cooperative Library System Items Checked Out Total Items Checked Out 1,200,000 1,100,000 1,000, , , , , , , The total number of items checked out by library patrons increased 1,523,186 or 13.7% from 11,102,003 in to 12,625,189 in Page 17 of 23

18 Public Safety & Justice Sheriff s Office Public Demand Incidents Incidents 5,500 5,000 4,500 4,000 3,500 Total public demand incidents (calls to 911) increased 1.5% from to The number of public demand calls for service is typically highest during the summer months. 3,000 2, Sheriff s Office Officer Initiated Incidents Incidents 10,000 9,000 8,000 7,000 6,000 5,000 Consistent with a renewed emphasis on self initiated activity and its positive impacts on public safety, total officer initiated Sheriff s Office incidents, e.g. traffic stops, increased 1.8% through compared to the same period in , Washington County Jail Bookings Jail Bookings 1,800 1,700 1,600 1,500 1,400 1,300 Total bookings into the Washington County jail increased 0.6% through compared to the same period in Overall trends for the most recent year are comparable to the two previous years. 1,200 1, Page 18 of 23

19 Washington County Jail Forced Release of Inmates Jail Forced Early Releases Forced releases decreased 274 or 96.1% from 285 in to 11 in Justice Court Fine Revenue and Citations $2,500,000 Fines # of Citations $2,000,000 45,000 40,000 35,000 Both the number of citations and fine revenue decreased 4.7% and 6.9%, respectively, in Fine Revenue $1,500,000 $1,000,000 $500,000 30,000 25,000 20,000 15,000 10,000 5,000 Traffic Citations Page 19 of 23

20 Land Use & Transportation Total Building Division Inspections 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 4,144 4,476 4,258 4,085 4,096 3,711 3,798 3,858 3,366 3, Year Avg High Low 2010 / 11 3,556 3,741 The County conducted 46,397 inspections during fiscal year , 749 fewer than fiscal year This is also 31,018 lower than the 10 year high of 77,415 experienced in fiscal year ,000 1,000 0 July Aug Sept Oct Nov Dec Jan Feb March April May June Total Building Division Fee Revenue $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400, Year Avg High Low 2010 / 11 Fee revenue generated during fiscal year was $3,398,727, which was $63,866 higher than fiscal year This is still below the 10 year high of 9,530,565 experienced in fiscal year $200,000 $277,703 $257,798 $262,413 $334,487 July Aug Sept Oct Nov Dec Jan Feb March April May June Page 20 of 23

21 Total Current Planning Fee Revenue (in thousands) Yr Avg High Low 2010 / This graph shows the 10 year average, the historic highs and lows, and current year activities. Current Planning fees are generated from new development case files. Fiscal year saw an increase of $225.6 over levels. This amount remains below the 10 year high of $2,439.2 in JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN Page 21 of 23

22 Health & Human Services Women, Infants and Children Program Participating Caseload Participating Caseload 13,600 13,400 13,200 13,000 12,800 12,600 12,400 12,200 12,856 The total Women, Infants and Children (WIC) program participating caseload decreased slightly (4,116), from 157,999 in to 153,883 in ,000 Excludes walk-in clients Mental Health Indigent Care Program Patients Seen Total Patients Seen 1,100 1, The total number of mental health indigent care program patients (General Fund only) seen declined by 786 (10%) from 7,533 in to 6,747 in Clients served through the 4th quarter of have declined 786 (10%) from the same period in Page 22 of 23

23 Animal Services Adoptions Total Adoptions Animal Services adoptions in were 12 higher than in fiscal year Active Dog Licenses Total Active Licenses 46,000 44,000 42,000 40,000 38,000 36,000 34,000 Animal Services had 43,555 active dog licenses for June 2011, an increase of 237 over prior year. 32,000 30, Solid Waste Franchise Fee Revenue Total Franchise Fees 1,600,000 1,400,000 1,253,923 1,200,000 1,000, , , , , Jul - Sep Oct - Dec Jan - Mar Apr - Jun The County received a total of $1,253,923 in solid waste franchise fee revenue through the 4 th quarter of Fiscal Year is $100,708 higher than but is still lower (13%) than the high of $1,443,439. Page 23 of 23

QUARTERLY FINANCIAL REPORT

QUARTERLY FINANCIAL REPORT Page Key Trends...2 Executive Summary...3 Economic Indicators...4 General Fund...8 Public Safety & Justice...10 Land Use, Housing & Transportation...11 Health & Human Services...14