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VII.2. First Quarter Financial Report; Bishop CITY OF HOPKINS Memorandum To: Honorable Mayor and Council Members Mike Mornson, City Manager From: Nick Bishop, Finance Director Date: May 19, 2020 Subject: First Quarter Financial Report _____________________________________________________________________ Attached is the presentation covering first quarter financial results, 2020 budget projections after COVID-19 and the results of the 2021 Budget Survey. If you have any questions in advance please contact me. A full presentation will be given at the council meeting. Finance 2020 1st Quarter Financial Report Prepared by Finance Department General Fund Overview At the end of the 1st quarter Revenues are at 23.80% Expenditures are at 21.45% General Fund Revenues % of Budget Actual Budget Taxes 12,567,105$ 3,145,067$ 25.03% Intergovernmental 1,352,946 219,227 16.20% Licenses, Permits & Fines 775,065 148,154 19.12% Charges for Services 251,250 54,590 21.73% Miscellaneous 415,350 88,999 21.43% Total Revenues 15,361,716$ 3,656,037$ 23.80% General Fund Expenditures % of Budget Actual Budget General Government 2,481,743$ 669,691$ 26.98% Community Services 863,252 176,240 20.42% Public Safety 7,460,272 1,609,159 21.57% Public Works 3,442,841 620,671 18.03% Recreation 783,082 92,866 11.86% Urban Development 330,525 57,949 17.53% Total Expenditures 15,361,715$ 3,226,576$ 21.00% Special Revenue Funds Revenues % of Budget Actual Budget Chemical Assessment 65,000$ 16,250$ 25.00% Economic Development 467,951 115,747 24.73% Parking 154,524 70,361 45.53% Communications 238,014 57,160 24.02% Depot Coffee House 307,412 55,850 18.17% Art Center 1,185,836 244,164 20.59% Special Revenue Funds Expenditures % of Budget Actual Budget Chemical Assessment 65,000$ 18,780$ 28.89% Economic Development 430,345 64,235 14.93% Parking 150,690 31,630 20.99% Communications 238,656 37,465 15.70% Depot Coffee House 307,412 53,691 17.47% Art Center 1,125,836 231,177 20.53% Special Revenue Funds Financial Position Change Ending In Fund Fund Revenues Expenses Balance Balance Chemical Assessment 16,250$ 18,780$ (2,530)$ (26,386)$ Economic Development 115,747 64,235 51,512 4,356,670 Parking 70,361 31,630 38,731 146,967 Communications 57,160 37,465 19,694 350,625 Depot Coffee House 55,850 53,691 2,159 (60,422) Art Center 244,164 231,177 12,987 (1,143,090) Enterprise Funds Revenues % of Budget Actual Budget Water 2,256,004$ 467,586$ 20.73% Sewer 3,052,340 595,297 19.50% Refuse 1,006,206 239,850 23.84% Storm Sewer 793,532 203,670 25.67% Pavilion 781,500 226,271 28.95% Enterprise Funds Expenses % of Budget Actual Budget Water 2,235,099$ 441,038$ 19.73% Sewer 3,025,741 598,896 19.79% Refuse 1,008,049 168,020 16.67% Storm Sewer 621,945 121,347 19.51% Pavilion 702,256 281,432 40.08% Enterprise Funds Financial Position All funds include depreciation expense Net Income Revenues Expenses (Loss) Water 467,586$ 441,038$ 26,548$ Sewer 595,297$ 598,896$ (3,598)$ Refuse 239,850$ 168,020$ 71,830$ Storm Sewer 203,670$ 121,347$ 82,323$ Pavilion 226,271$ 281,432$ (55,161)$ 2020 Budget Projections after COVID-19 May 19, 2020 2020 Budget Projections Known Revenue will decline in 2020 City must rebalance its 2020 Budget Unknown Severity of decline Length of recovery Revenue Assumptions Losses of program and rental revenue Facility closures Delayed or cancelled events/programming Reluctance to participate in group activities Reduced licenses, permits and charges for services Rental Licensing, Special Events, Liquor Licenses, Business Licenses Revenue Assumptions Property Tax Collections Deadline for first half tax payments extended from May 15 to July 15 of eligible taxpayers Will have better information at end of July or early August 2019 Tax Collections were 98.99% Revenue Assumptions Scenario 1 (Minor Impact) Tax collections at 98%, decreased by 1% from 2019 results Full amount of LGA collected 5 months of lost revenue in affected categories Revenue Assumptions Scenario 2 (Major Impact) Tax collections at 94%, decreased by 5% from 2019 results Full amount of LGA collected 9 months of lost revenue in affected categories (through end of 2020) General Fund Revenue (Minor Impact) 2019 Actual (Unaudited)2020 Budget Amount % of Budget Property Taxes 11,736,624.00 12,479,305.00 12,479,305.00 Delinquent Taxes (118,388.00) - (249,586.10) Other Taxes (Delinqent Collections, Penalties)96,448.94 87,800.00 86,044.00 98% Intergovernmental 1,332,771.01 1,352,946.00 1,352,946.00 100% Charges for Services 433,854.52 251,050.00 192,652.00 77% Court Fines & Forfeitures 157,940.38 188,250.00 177,234.38 94% Licenses 116,934.13 105,615.00 95,976.88 91% Penalties 21,915.00 9,800.00 7,758.33 79% Permits 697,029.54 471,400.00 467,642.00 99% Miscellaneous 385,691.66 415,550.00 328,324.00 79% Total General Fund Revenue 14,860,821.18 15,361,716.00 14,938,296.48 97% 2020 Projection - Minor Impact 98% General Fund Revenue (Major Impact) 2019 Actual (Unaudited)2020 Budget Amount % of Budget Property Taxes 11,736,624.00 12,479,305.00 12,479,305.00 Delinquent Taxes (118,388.00) - (748,758.30) Other Taxes (Delinqent Collections, Penalties)96,448.94 87,800.00 82,532.00 94% Intergovernmental 1,332,771.01 1,352,946.00 1,352,946.00 100% Charges for Services 433,854.52 251,050.00 144,246.00 57% Court Fines & Forfeitures 157,940.38 188,250.00 155,203.13 82% Licenses 116,934.13 105,615.00 74,540.25 71% Penalties 21,915.00 9,800.00 6,125.00 63% Permits 697,029.54 471,400.00 420,052.00 89% Miscellaneous 385,691.66 415,550.00 324,203.00 78% Total General Fund Revenue 14,860,821.18 15,361,716.00 14,290,394.08 93% 2020 Projection - Major Impact 94% General Fund Revenue Estimate of Revenue shortfall range Minor Impact -$423,420 Major Impact -$1,071,322 General Fund Expenditures Have identified $500,000 of reductions in the general fund Elimination of budget items such as training or travel Delay when filling vacant positions Reduced services at Activity Center General Fund Expenditures Have identified $500,000 of reductions in the general fund Reduced hiring of part time seasonal help Deferring smaller maintenance projects Reductions in Forestry, will not plant trees unless funded by grant Additional Expenditures Emergency Protective Measures Eligible for Grants or Reimbursements Work From Home Expenditures Minimal compared to overall budget Arts Center - Revenue Projecting a closure through July Loss of rental revenue, fundraising, memberships and art sales Rescheduled 5 of 5 regularly funded concerts 4 in 2020 and 1 in 2021 Cancelled grant funded concert State Arts Board will cover administrative expenses, City will return remaining amount Arts Center - Revenue Stages Theater Company and Hopkins School District will continue leases Art Center - Reduced Expenditures Staffing reductions Elimination of budget items such as supplies, marketing and training Delay of capital projects Arts Center - Projection Budgeted to reduce deficit position by $60,000 Projecting a reduction to the deficit of $20,000 or ability to redeploy that amount to another fund Pavilion - Revenue Projecting a Closure through July Turf season cancelled March 16 through mid- May (Soccer & Lacrosse) Dry floor rental reduced (summer) Facility rentals, meeting rooms and party room rentals reduced Hopkins School District will continue lease Pavilion - Expenses Staff reductions Cost savings from reduced utilities Pavilion - Projection Projected to lose $45,000 Main revenue generator is ice season, scheduled to begin on September 3rd Depot - Revenue Depot was closed March 16th through April 24th Reopened on April 25th for Takeout Depot Partners will continue support (Hopkins School District, Three Rivers Park District, Minnetonka & Hopkins) Depot - Expenditures Part time staff was furloughed during closure Reductions for concession supplies and utilities Depot - Projection Still reviewing results based on operating a takeout only model Utility Funds Minimal Information Available One month of water and sewer consumption shows a 6% increase same period in 2019 Refuse and Storm Sewer revenues are flat Waived Penalties on Utility Bills Budgeted at $4,500 per month Next Steps Continue to evaluate effect COVID-19 will have on 2020 Budget Results of 2021 Budget Survey May 19, 2020 Budget Survey - Overview Responses from February 23 to May 1st Limitations COVID-19 may have changed how individuals responded Not a statistically accurate sample Some security, but a determined individual could complete multiple times Budget Survey - Overview 351 Responses 90% were residents 36% involved in community over 21 years Budget Survey - Results 69% Agree or Strongly Agree with the City’s Mission and Vision 64% Agree or Strongly Agree with the City’s prioritization of Roads & Street Reconstruction 69% Rated the quality of City services Good or Excellent Budget Survey - Results Top 5 Valued services Police Protection –87% Snow & Ice Removal –83% Fire Protection –82% Street Maintenance –76% Parks –73% Budget Survey - Results Bottom 5 Valued Services Hopkins Pavilion –21% Depot Youth Programming –23% Recreation Programming –29% Activity Center –30% Forestry –36% Budget Survey - Results Mid-Valued Services Elections –38% Arts Center –39% Planning & Economic Development –40% Street Reconstruction –51% Budget Survey - Results “Each year the City Council must make difficult decisions to balance the budget. The main options they consider are increasing revenue (taxes) or reducing the current services provided. What option should City Council consider when balancing the 2021 Budget?” Responses varied Next Steps Begin Preparing 2021 Budget