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VII.3. Finance Update; Bishop CITY OF HOPKINS Memorandum To: Honorable Mayor and Council Members Mike Mornson, City Manager From: Nick Bishop, Finance Director Date: June16, 2020 Subject: Finance Update _____________________________________________________________________ Attached is a presentation covering updated 2020 budget projections after COVID-19. If you have any questions in advance please contact me. A full presentation will be given at the council meeting. Finance 2020 Budget Projections after COVID-19 Second Update June 16, 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 Revised Tax Distribution Schedule First Half Payments received by City on 7/30 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, except as noted 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) Revenue Assumptions - Changes Activity Center Open virtually through end of Summer Building closed until further notice Rental Inspection Program Suspended through end of Summer On-Sale Liquor License Fees Three month refund approved General Fund Revenue (Minor Impact) 2019 Actual (Unaudited)2020 Budget Amount % of Budget Property Taxes 11,736,624 12,479,305 12,479,305 Delinquent Taxes (118,388) - (249,586) Other Taxes (Delinqent Collections, Penalties)96,449 87,800 86,044 98% Intergovernmental 1,332,771 1,352,946 1,352,946 100% Charges for Services 433,855 251,050 174,423 69% Court Fines & Forfeitures 157,940 188,250 177,234 94% Licenses 116,934 105,615 76,618 73% Penalties 21,915 9,800 7,758 79% Permits 697,030 471,400 467,642 99% Miscellaneous 385,692 415,550 309,474 74% Total General Fund Revenue 14,860,821 15,361,716 14,881,858 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 433,854.52 251,050.00 161,401.00 64% Court Fines & Forfeitures 157,940.38 188,250.00 155,203.00 82% Licenses 116,934.13 105,615.00 54,890.00 52% Penalties 21,915.00 9,800.00 6,125.00 63% Permits 697,029.54 471,400.00 420,052.00 89% Miscellaneous 385,691.66 415,550.00 308,541.00 74% Total General Fund Revenue 14,860,821.18 15,361,716.00 14,272,236.70 93% 2020 Projection - Major Impact 94% General Fund Revenue Estimate of Revenue shortfall range Minor Impact -$479,858 Major Impact -$1,089,479 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 Reduction 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 General Fund Expenditures Have identified $500,000 of reductions in the general fund Early Retirement Incentive Program Additional Expenditures Emergency Protective Measures Eligible for Grants or Reimbursements Work From Home Expenditures Minimal compared to overall budget Arts Center - Revenue Open on a limited basis beginning May 21st Virtual/Social Media Presence Rescheduled 5 of 5 regularly funded concerts In 2020 or 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 and marketing Delay of capital projects Arts Center - Projection Budgeted to reduce deficit position by $60,000 Projecting a reduction to the deficit of $20,000 No change from last projection Pavilion - Revenue Open on a limited capacity basis Renters are showing interest in using facility Dry floor rental reduced (summer) Facility rentals, meeting rooms and party room rentals reduced Pavilion - Expenses Staff reductions Cost savings from reduced utilities Pavilion - Projection Projected to lose $45,000 –no change from last projection Main revenue generator is ice season, scheduled to begin on September 3rd Depot - Revenue Open since April 25th for take out orders Weekend sales are average Weekday sales have decreased Depot Partners continue to participate through lease levy and operating contributions Reduced rents and cover charges Depot – Expenditures Eliminated Lead Barista Position (before COVID) All part time staff furloughed on March 16th Reduced hours of operation Reduced staffing during open hours Depot Projection Projected loss of $20,000 Utility Funds Water Revenue up 12.45% compared to 2019 (rates increased 9% on 1/1/2020) Sewer Revenue up 1.1% (rates increased 4.1% on 1/1/2020) Utility Funds Refuse Revenues are Flat No rate increase in 2020 Storm Sewer Revenues are Flat No rate increase in 2020 Next Steps July 21st -City Council Meeting Update on 2020 Budget Projections Preliminary 2021 Budgets for General Fund, Arts Center, Depot and Pavilion Next Steps August 17th -Virtual Town Hall 2021 Budget Engagement Session Focus on Preliminary 2021 General Fund, Arts Center, Depot and Pavilion Budgets