HomeMy WebLinkAbout3. 2014 Mid-Year Review & Update of the 2015 Budget Forecast 08/12/2014Ik Mount Prospect
Village of Mount Prospect
Mount Prospect, Illinois
INTEROFFICE MEMORANDUM
TO: MICHAEL E. JANONIS, VILLAGE MANAGER
FROM: FINANCE DIRECTOR
DATE AUGUST 7, 2014
SUBJECT: 2014 MID -YEAR REVIEW AND UPDATE OF THE 2015 BUDGET
FORECAST
Each year, the Finance Department holds a joint workshop with the Village Board and Finance
Commission earlier in the year to present a first- quarter review that includes a wrap -up of the
prior year's activity and insight into early trends for the current fiscal year. The Finance
Department also prepares for the Village Board and Finance Commission a mid -year review of
the financial status of the current year's budget and a forecast for the upcoming year. This
practice provides a solid foundation for preparation of the upcoming annual budget.
This memorandum is intended to supplement the June 30, 2014 financial reports that were
submitted to the Village Board previously. The sole focus of this memorandum is on the
General Fund, since it is the main operating fund of the Village.
It should be pointed out that current estimates of revenues and expenditures for 2014 are fluid
and may change during the remaining six months of the fiscal year.
2014 MID -YEAR REVIEW
GENERALFUND
The 2014 General Fund as approved by the Village Board in December 2013 was balanced and
totaled $45,814,066. The General Fund budget was amended in March to account for carry-
over items from the prior year's budget and unanticipated expenses. Adjustments to General
Fund expenses were made in various areas totaling $201,648 bringing total General Fund
expenditures to $46,015,714. No adjustments have been made to revenues at this time. The
amended budget currently reflects a deficit of $201,648.
As part of the mid -year review, we looked at all revenue and expenditure accounts to determine
if any material variances were likely. We now expect total General Fund revenues to come in at
$46,381,566, an increase of $567,500 over the amended budget. Total expenditures are
expected to come in at $46,283,714. Taking into consideration adjusted revenues and
expenses; the General Fund is now showing a surplus of $97,852. Exhibit I presents a
summary of our current projections of revenues and expenditures, with a comparison to the
amended budget.
Mid -Year Budget Review
August 7, 2014
Page 2
General Fund Revenues:
General Fund revenues at June 30, 2010 were $17,968,286. This accounts for 39.2% of the
amended budget and 38.7% of the current estimate. Being below 50% at mid -year is not a
concern as receipt of several significant revenue sources by the Village lag one to three months.
These revenue sources include sales tax, income tax, utility taxes and other intergovernmental
revenues. State income taxes and the real estate transfer tax continue to rebound from recent
lows. The State telecommunication tax, which accounts for almost 6% of the General Fund
budget, has steadily declined over the past three years. It is anticipated that this revenue
source will fall $700,000 below the original budget amount of $2.6 million.
General Fund Revenue Collections as a Percent of Annual
Budget
100%
75%
d
U 50%
d 25%
0%
Revenue Type
Ise
lo
The preceding chart illustrates the percent of revenues received by the Village in several
categories as of June 30. The current year -end estimate for revenues is approximately 1.2%
above the amended budget.
Property tax revenues (for both the general and pension allocation) of $7,390,527 are running
at 50.4% of budget. This is typical in that the first allotment of taxes received is 55% of the prior
year receipts while the second allotment, which comes in later in the year, captures the levy
increase approved in the current tax year. Our year -end estimate is at the amended budget
amount. The average collection rate for property taxes since levy year 2003 is 98.2 %.
Revenues classified as "Other Taxes" include sources such as the one - quarter cent home rule
sales tax, food and beverage tax, real estate transfer tax, hotel /motel tax, telecommunications
tax and the electric and gas utility taxes. In total, revenue collections from "Other Taxes" came
to $2,811,168 as of June 30, which is 34.1 % of annual budget. Again, this is a category where
there is a lag in receipt of two of the more significant revenues (home -rule sales tax and
telecommunications tax).
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Mid -Year Budget Review
August 7, 2014
Page 3
The Village's home rule sales tax is tracking the prior year through the first six months of the
year (three months of receipts). Receipts from the home rule sales tax are expected to come in
at budget by years end.
Receipts from the real estate transfer tax have grown as a result of an improving housing
market. Several large property transfers have taken place during the first six months of the
year. While transfer tax receipts continue to be off from their high level point in 2005, projected
receipts for this tax are expected to total $800,000.
Telecommunication taxes have declined in the past several years, most recently during 2013
and 2014. Through June 30, revenues from this source are 5.5% below prior year levels. Year-
end projections are expected to come in short of budget by $700,000 continuing the downward
trend.
Collections from licenses and permit fees totaled $943,828, or 58.2% of the $1.6 million
budget. Vehicle license revenue of $315,254 is at 92.4% of budget, which is expected given the
timing for selling the 2014 -2015 vehicle sticker. Activity for this revenue is coming in as
expected. No changes were made to year -end estimates for this category of revenues.
Intergovernmental revenues totaled $5,482,101 as of June 30, which is 30.3% of the $18.1
million annual budget. Intergovernmental revenues in the General Fund include the local share
of the state sales tax, state income tax, use tax, replacement tax and other miscellaneous state
and federal grants.
Sales tax collections, which make up approximately 63% of the "Intergovernmental" category,
are at $2,909,927. This represents 25.6% of budget. The current projection for this revenue is
$12,500,000. Year -to -date collections are running ahead original projections and have been
adjusted upward $1.1 million.
Receipts from the State's distribution of the state income tax totaled $1,855,025 at June 30.
This is up 6.8% from the same period last year. Income taxes received since June 30 have not
kept pace with the prior year. We currently expect income taxes to come in at budget by year
end.
Revenue from Fines totaled $234,621 for the first six months. This represents 47.8% of the
$491,000 budgeted for the year. We expect this revenue to come in slightly below budget for
2014 ($440,000).
Investment income totaled $2,419 for the first six months, representing 11.0% of the $22,500
projected for the year. Significantly lower rates paid for short-term investments have caused the
amount budgeted for this revenue item to drop from over $400,000 in the early 2000's to where
it is today. The year -end estimate has been lowered $12,500 to $10,000.
Other Revenue, consisting of reimbursements and other revenues, totaled $398,896 as of June
30. This is 34.3% of the $1,164,500 budgeted for the year. We expect these revenues to come
in slightly above budget for 2014 due to an insurance reimbursement for sprinkler flood damage.
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Mid -Year Budget Review
August 7, 2014
Page 4
General Fund Expenditures:
The amended 2014 budget totals $46,015,714. As of June 30 the Village had recorded
expenditures of $21,455,181. This represents 46.6% of budget and is consistent with previous
years. All of the departments are below the benchmark 50 %. The expense category "Other"
includes expenses related to the sprinkler flood which skewed the mid -year figures for this item.
The following chart illustrates General Fund expenditures as a percentage of annual budget at
June 30.
General Fund Expenditures
as a Percent of Annual Budget
Public Representation
Manager's Office
Television Services
E Clerk's Office
R
L
Amended Budget
o
L
Finance
IL
$40,697,094
�c
Comm. Dev.
2010
Human Services
Q.
2011
°1
O
Police
Fire
Public Works
Other
For the past several years, total General Fund expenditures have come in anywhere from one
to three percent under budget. The chart below shows budget to actual expenditures since
2009. A 1.0% savings in expenditures for 2014 amounts to over $460,000. Savings can be
used to offset shortfalls in revenue, reduce or eliminate a programmed budget deficit or cover
an unanticipated expenditures that may occur during the year. If neither of these conditions
exists, the savings go toward maintaining the General Fund fund balance.
Year
Amended Budget
Actual Expenditures
Variance
2009
$40,697,094
$40,571,714
0.30%
1.98%
2010
$40,961,030
$40,043,801
2011
$41,975,978
$40
2.83%
2012
$42,585,149
$41,858,267
1.71%
2013
$45,693,626
$44,516,038
2.58%
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Mid -Year Budget Review
August 7, 2014
Page 5
2015 FORECAST
The 2014 Annual Budget included a forecast budget for the year 2015 for each operating and
capital project fund. The purpose of this portion of this memorandum is to bring forward any
material variances in revenues /expenditures now expected for the year 2015.
GENERALFUND
Exhibit II has been prepared to compare the original forecast numbers to our most recent
estimates. The original forecast budget showed an operating deficit of $596,285 on revenues of
$46,788,664 and expenditures totaling $47,384,949. Our more recent estimates now project a
surplus of $262,715. Sales taxes are projected to come in above the forecast budget while the
telecommunication tax is projected to come in below than forecast. Adjustments made to
various revenue sources for licenses, fees, charges for service and fines /forfeits also
contributed to the higher than forecast revenues. Revenues are now projected to come in at
47,647,664. This is $859,000 above the original forecast budget.
General Fund Revenues:
Below is an explanation of significant variances from the original budget forecast for 2015.
The forecast for the state sales tax was increased $1.3 million based on prior year estimates.
Prior projections anticipated lower growth over the two -year period 2014 -2015.
The forecast for the Telecommunication Tax was decreased by $700,000 based on prior year
estimates. The number of phone lines assessed this tax has steadily declined over the past
several years. As such, no growth is anticipated from 2014 to 2015.
General Fund Expenditures:
At this time we are expecting expenditures for 2015 to remain consistent with the original
forecast. The forecast budget reflects increases to contractual and commodities accounts of
2.0% from 2014 levels. This will be the starting point for departmental budgets. Any deviation
above the forecast amount will need to include justifications for the increase.
As mentioned earlier in this memo, the mid -year review and budget forecast update are
intended to provide a foundation for preparation of the annual budget. Moving forward staff will
incorporate directives and suggestions from the Village Board and Finance Commission for their
2015 budget proposals. Departmental review of proposed budgets begins in early September.
Review of the 2015 proposed budget before the Finance Commission and Village Board will
occur in October and November. Final approval is set for December.
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Mid -Year Budget Review
August 7, 2014
Page 6
BUDGET CALENDAR
Exhibit III included with this memo is the 2015 budget calendar as presented in the current 2014
budget document. We will anticipate moving forward with the 2015 budget process according to
this calendar.
David O. Erb
Finance Director
Copy: Michael E. Janonis, Village Manager
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Exhibit I
Village of Mount Prospect, Illinois
General Fund - Revenues and Expenditures
2014 Budget - Mid -Year Review
Expenditures
Public Representation
(a)
(b)
(c)
(d)
(e)
Village Manager's Office
2,817,368
2,633,208
1,212,928
2,833,208
Budget
Television Services Division
169,139
2014
YTD Actual
2014
Variance -
Village Clerk's Office
2013
Amended
01/01/14-
Current
Favorable
Finance Department
Actual
Budget
6/30/2014
Estimate
(Unfavorable)
Revenues:
2,023,299
2,332,932
992,479
2,332,932
0
Property Taxes
12,734,443
14,674,466
7,390,527
14,674,466
0
Sales Taxes - ROT Portion
12,342,154
11,360,000
2,909,927
12,500,000
1,140,000
Sales Taxes - HMR Portion
1,285,012
1,346,000
277,209
1,346,000
0
Food and Beverage Tax
719,190
725,000
351,716
725,000
0
Real Estate Transfer Tax
853,617
800,000
413,326
800,000
0
Telecommunications Tax
2,168,091
2,600,000
540,848
1,900,000
(700,000)
Other Utility Taxes
1,723,621
1,792,000
946,590
1,860,000
68,000
Other Taxes
221,281
255,500
102,145
250,000
(5,500)
Vehicle Licenses
1,399,010
340,000
314,254
340,000
0
Other Licenses, Permits, Fees
2,050,366
2,004,000
808,908
2,004,000
0
State Income Tax
5,161,051
5,275,000
1,855,025
5,275,000
0
Other Intergovernmental
1,510,449
1,448,100
717,149
1,448,100
0
Charges for Services
1,631,445
1,516,000
704,728
1,516,000
0
Fines and Forfeits
439,405
491,000
234,621
440,000
(51,000)
Investment Income
6,567
22,500
2,419
10,000
(12,500)
Other Revenue
787,701
1,164,500
398,896
1,293,000
128,500
Total Revenues
45,033,402
45,814,066
17,968,286
46,381,566
567,500
Expenditures
Public Representation
550,880
626,321
276,746
626,321
0
Village Manager's Office
2,817,368
2,633,208
1,212,928
2,833,208
(200 „000)
Television Services Division
169,139
181,176
88,398
181,176
0
Village Clerk's Office
198,945
219,574
95,809
219,574
0
Finance Department
1,843,581
1,846,374
860,012
1,846,374
0
Community Development Dept.
2,023,299
2,332,932
992,479
2,332,932
0
Human Services Dept.
1,061,125
1,086,836
509,241
1,086,836
0
Police Department
15,783,922
16,535,251
7,697,028
16,535,251
0
Fire Department
12,678,982
12,879,787
6,072,914
12,879,787
0
Public Works Department
7,137,785
7,520,954
3,538,556
7,520,954
0
Emergency Events
204,860
107,000
87,919
175,000
(68,000)
Miscellaneous
46,150
46,301
23,150
46,301
0
Total Expenditures
44,516,036
46,015,714
21,455,181
46,283,714
(268,000)
Excess of Revenues over Expend.
517,366
(201,648)
(3,486,894)
97,852
299,500
Other Financing Sources/Uses
Transfers In
0
0
0
0
0
Transfers Out
0
0
0
0
0
Total Other Financing Uses
0
0
0
0
0
Excess of Revenues over Expend.
and Other Financing Uses:
517,366
(201,648)
(3,486,894)
97,852
299,500
Notes
A
B
C
C
E
F
1 of 2 Mid -Year Review - 2014.xlsx
Exhibit
Village of Mount Prospect, Illinois
General Fund - Revenues and Expenditures
2014 Budget - Mid -Year Review
Notes
A The upward trend in the state portion sales tax has continued into 2014. The projection is based on only 3
months of receipts since there is a 3 -month lag in receiving the money from the State (standard lag time for this
revenue source). Receipts are tracking 5.3% over the prior year through the first 3 months. Year -end receipts
are expected to come in $1,140,000, or 1.3% higher than the amended budget and 10.0% higher than the PY.
B The telecommunication tax saw a significant drop during 2013. The original budget for that year was $2.9
million. The actual amount received was just under $2.2 million. The downward trend continues with the
revenue source into the current year. The estimate for 2014 was reduced further from the Q1 estimate (from
$400,000 to $700,000) based on our revised projection. There is also a need to rebate approximately $112,000
as a result of a class action lawsuit against a large telecommunications carrier (AT &T Mobility).
C The positive variance in other revenue was due to an insurance reimbursement for sprinkler flood damage that
occurred in January 2014. The amount received from insurance after the $25,000 deductible was $128,000.
Expenses related to the incident were adjusted accordingly.
D General Counsel legal fees are expected to come in over the amended budget for 2014 by the variance amount.
E Emergency events consist of the sprinkler flood mentioned in Note C. An initial budget amendment of $107,000
was done in March. An additional amendment of approximately $68,000 is expected after all expenses related
to the event are paid.
F Overall, revenues are anticipated to come in $567,500 over the amended budget while expenses are assumed
to come in $268,000 above the budgeted amount. The General Fund had shown a deficit of $201,648 after
amendment #1. Taking into consideration the adjustment in total revenues and expenses, the General Fund is
now anticipating a surplus of $97,852.
2 of 2 Mid -Year Review - 2014.xlsx
Exhibit II
Village of Mount Prospect, Illinois
General Fund - Revenues and Expenditures
2015 Forecast
Expenditures
Public Representation
(a)
(b)
(c)
(d)
(e)
Village Manager's Office
2,833,208
2014
2,816,709
2015 Forecast
0.00
Television Services Division
181,176
Current
Original
Current
Increase
Percent
219,574
224,654
Projections
Forecast
Forecast
(Decrease)
Change
Notes
Revenues:
0
0.00
Community Development Dept.
2,332,932
2,338,585
2,338,585
Property Taxes
14,674,466
15,757,664
15,757,664
0
0.00
0
Sales Taxes - ROT Portion
12,500,000
11,500,000
12,750,000
1,250,000
10.87
A
Sales Taxes - HMR Portion
1,346,000
1,406,000
1,406,000
0
0.00
Public Works Department
Food and Beverage Tax
725,000
730,000
750,000
20,000
2.74
175,000
Real Estate Transfer Tax
800,000
815,000
840,000
25,000
3.07
46,456
Telecommunications Tax
1,900,000
2,600,000
1,900,000
(700,000)
(26.92)
B
Other Utility Taxes
1,860,000
1,820,000
1,860,000
40,000
2.20
859,000
Other Taxes
250,000
256,000
256,000
0
0.00
Vehicle Licenses
340,000
0
0
0
0.00
C
Other Licenses, Permits, Fees
2,004,000
2,008,000
2,100,000
92,000
4.58
D
State Income Tax
5,275,000
5,430,000
5,430,000
0
0.00
Other Intergovernmental
1,448,100
1,494,000
1,494,000
0
0.00
262,715
Charges for Services
1,516,000
1,527,000
1,600,000
73,000
4.78
D
Fines and Forfeits
440,000
491,000
550,000
59,000
12.02
D
Investment Income
10,000
22,500
22,500
0
0.00
Other Revenue
1,293,000
931,500
931,500
0
0.00
Total Revenues
46,381,566
46,788,664
47,647,664
859,000
1.84
Expenditures
Public Representation
626,321
625,622
625,622
0
0.00
Village Manager's Office
2,833,208
2,816,709
2,816,709
0
0.00
Television Services Division
181,176
189,087
189,087
0
0.00
Village Clerk's Office
219,574
224,654
224,654
0
0.00
Finance Department
1,846,374
1,886,141
1,886,141
0
0.00
Community Development Dept.
2,332,932
2,338,585
2,338,585
0
0.00
Human Services Dept.
1,086,836
1,109,629
1,109,629
0
0.00
Police Department
16,535,251
17,056,841
17,056,841
0
0.00
Fire Department
12,879,787
13,309,021
13,309,021
0
0.00
Public Works Department
7,520,954
7,782,204
7,782,204
0
0.00
Emergency Events
175,000
0
0
0
0.00
Miscellaneous
46,301
46,456
46,456
0
0.00
Total Expenditures
46,283,714
47,384,949
47,384,949
0
0.00 E
Excess of Revenues over Expend.
97,852
(596,285)_
262,715
859,000
Other Financing Sources/Uses
Transfers In
0
0
0
0
Transfers Out
0
0
0
0
Total Other Financing Uses
0
0
0
0
Excess of Revenues over Expend.
and Other Financing Uses:
97,852
(596,285)
262,715
859,000
F
1 of 2 General Fund Forecast 2015 - Mid - Year.xlsx
Exhibit II
Village of Mount Prospect, Illinois
General Fund - Revenues and Expenditures
2015 Forecast
Notes
A Projection based on 2014 estimate. Projection includes a 2.0% increase from the prior year. The increase is
due to an overall positive trend in this revenue source.
B Projection based on 2014 estimate. No growth is expected in the telecommunication tax for 2015.
C The final portion of vehicle sticker revenue is to be reallocated to the Street Improvement Construction Fund in
2015. The reallocation is being done as part of the long -term funding plan for the street improvement program.
Approximately, $1.0 million was reallocated during 2014.
D The increase to these three revenue categories is the result of adjustments made to various license charges
and fees done in the Summer of 2014. The adjustments were done to cover the cost of providing the service
and bring them in line with neighboring communities.
E Typically annual savings from the annual budget range from 1 -2 %. To be conservative, no assumption were
made for the 2015 forecast. If the Village were to come in 1.0% below budget there would be a savings of
$473,850.
F The current 2015 Forecast Budget shows a surplus of $262,715, the result of higher projected revenues totaling
$859,000. The Forecast Budget had originally shown a deficit of $596,285. The budget process for 2015 has
started with departmental meetings to review budget requests scheduled for the first week in September. The
Proposed 2015 Budget is expected to be delivered to the VB on October 10th.
2 of 2 General Fund Forecast 2015 - Mid - Year.xlsx
Exhibit III
VILLAGE OF MOUNT PROSPECT, ILLINOIS
BUDGET CALENDAR
2014 and 2015
2014
DATE
ACTION
2015
DATE
3/1/13
Capital Improvement Plan (CIP) Worksheets forwarded to Department Directors
3/7/14
3/15/13
Completed Computer CIP Worksheets returned to Finance Department
3/21/14
3/29/13
Remaining CIP Worksheets returned to Finance Department
4/4/14
4/23/13
Prior Year Budget Wrap -up and Preliminary Q1 Review
4/22/14
5/7/13
Department CIP reviews with Village Manger and Finance Director
5/6/14
to 5/9/13
to 5/8/14
5/17/13
Complete Proposed CIP Amounts
5/23/14
6/14/13
Deliver Proposed CIP to Village Board and Finance Commission
6/13/14
6/27/13
Review Proposed CIP with Finance Commission
6/26/14
7/9/13
Committee of the Whole - CIP Review Session
7/8/14
7/16/13
Acceptance of Proposed CIP at Village Board Meeting
7/15/14
7/10/13
Budget Kickoff Meeting - Access to Logos.NET Budget Software
7/16/14
8/13/13
Committee of the Whole - Mid -Year Budget Review and Pre - Budget Workshop
8/12/14
8/16/13
CIP available for distribution
8/15/14
8/9/13
Completed Departmental Budgets Advanced to Level 3 - Finance
8/15/14
8/9/13
Revenue Estimates completed by Finance Department
8/15/14
9/3/13
Personnel Budget Review
9/2/14
Exhibit III
VILLAGE OF MOUNT PROSPECT, ILLINOIS
BUDGET CALENDAR
2014 and 2015
2014
DATE
ACTION
2015
DATE
9/6/13
Preliminary Budget Review - VMO and Finance
9/5/14
9/10/13
Department Budget reviews with Village Manager and Finance Director
9/9/14
to 9/12/13
Committee of the Whole - First Budget Hearing (7:00pm - 10:00pm)
to 9/11/14
9/20/13
Complete Proposed Budget Amounts
9/19/14
10/11/13
Deliver Proposed Budget to Village Board and Finance Commission
10/10/14
10/11/13
Proposed Budget available for public inspection at the Village Clerk's Office and the
10/10/14
11/26/13
the Mount Prospect Public Library
11/25/14
10/17/13
Review of Proposed Budget with the Finance Commission
10/16/14
10/24/13
10/23/14
10/31/13
10/30/14
10/22/13
Committee of the Whole - First Budget Hearing (7:00pm - 10:00pm)
10/28/14
Overview, Departmental Presentations
11/12/13
Committee of the Whole - Second Budget Hearing (7:00pm - 10:00pm)
11/11/14
Departmental Presentations
11/26/13
Committee of the Whole - Third Budget Hearing (7:00pm - 10:00pm)
11/25/14
If Necessary
12/3/13
Truth in Taxation Public Hearing
12/2/14
12/3/13
First Reading of Proposed Budget Ordinance at Village Board Meeting
12/2/14
12/17/13
Public Hearing and Second Reading of Proposed Budget Ordinance at Village Board
12/16/14
Board Meeting
1/17/14
Approved Budget available for distribution
1/16/15