HomeMy WebLinkAboutIR 9197 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9197
To the Mayor and Members of the City Council February 23, 2010
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• SUBJECT: December FY2010 — Sales Tax Update
We typically provide you a comprehensive Informal Report on sales tax collections when those
results are available from the State Comptroller. This report has abbreviated sales tax
information but more insight on other pertinent financial matters.
Below you will see our sales tax results for the month of December.
City of Fort Worth
Monthly Collections
FY10 vs. FY09
December December Unfavorable
FY2010 FY2009 Var % Var
Sales Tax 10,727,895 10,754,008
Revenue ($26,113) (0.2%)
The City collected approximately the same amount in sales tax revenue as in December last
year. This is a slight improvement as October and November collections were significantly less
than the prior year. Through the first three months of the fiscal year, however, the collections
have been 5% less than the FY2010 budget.
In your packet, you will receive the first Financial Management report for the fiscal year.
Preliminary forecasts indicate that along with the reduction in sales tax revenue, the declines in
other revenues will create a budget shortfall in the current fiscal year. That shortfall could
range from $10M - $12M. The options to closing the gap include 1) implementing a hiring
freeze 2) postponing non civil service vehicle purchases 3) imposing additional furlough days
and 4) accessing the General Fund fund balance. According to our Financial Management
Policy Statements, upon completion of the annual audit, any unreserved or excess fund
balance should be designated to cover expenditures. Staff will develop a recommendation to
address the current year budget gap for your consideration during the March 9th budget
workshop.
Additionally, the City continues to conduct negotiations with the Firefighter Association
("Association"). Recently, the Association raised several questions regarding City finances
and reserves. This I provides the following chart depicting the reserve balances to assist
with your understanding of the City's response to those questions.
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ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No 9197
To the Mayor and Members of the City Council February 23, 2010
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SUBJECT: December FY2010 — Sales Tax Update
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Fund Balance Comparison
FY2008 CAFR
Reserve Fund Balance Reserve Undesignated
Requirement FY2008 CAFR Requirement Unreserved
General Fund 10% $ 56,971,405 $ 51,227,414 $ 5,743,991
Retirement Fund n/a $ 19,426 $ - $ 19,426
Culture and Tourism Fund 10% $ 13,501,043 $ 1,210,762 $ 12,290,281
Risk Management Fund 25% $ 10,964,060 $ 1,368,049 $ 9,596,011
Worker's Comp Fund 25% $ 12,224,997 $ 2,971,444 $ 9,253,553
Health Insurance Fund 25% $ 23,219,308 $ 17,066,449 $ 6,152,859
Unemployment Fund 25% $ 732,865 $ 83,991 $ 648,874
Equipment Notes n/a $ (11,362,952) $ - $ (11,362,952)
Total $ 106,270,152 $ 73,928,109 $ 32,342,043
The total Fund Balance for these funds is slightly higher than $106,000,000. According to the
various Council authorized reserve requirements, we have designated almost $74,000,000 as
reserves for the potential claims, obligations or economic shortfalls of City operations. The
remaining $32,000,000 constitutes the undesignated, unreserved balance.
While this amount does exceed the reserve requirements, that balance is merely a snapshot of
a point in time and does not consider the real and quantifiable demands on these funds over
the next several years. From a strategic perspective, the undesignated fund balances are
actually inadequate to address all the City's needs. Looking to next fiscal year, we are
preliminarily anticipating a $30M budget gap. This gap does not include the pending cost of
moving almost 250 sworn officers from the Crime Control Prevention District Fund to the
General Fund. There are also significant facility improvements planned for Will Rogers and the
Convention Center. There is a 5 year plan to complete these needed projects. The City's
healthcare and pension obligations continue to soar and we have not developed a long range
plan to address those needs. The City Manager has appointed two committees who are
meeting to develop recommendations as part of the 2011 budget process. For the foreseeable
future, we anticipate an increase in our unemployment claims due to the prolonged recession.
Additionally, we have discussed the potential of building an on site health clinic and fitness
center.
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No 9197
To the Mayor and Members of the City Council February 23, 2010
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• SUBJECT: December FY2010 — Sales Tax Update
In summary, the cost of these and other critical efforts exceed our undesignated, unreserved
fund balance. We will continue our discussions regarding these essential needs over the next
several months.
If you have any questions, please call Horatio Porter, Budget Officer, at 817.392.2379.
Dale A. Fi a er, P.El/
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS