FY 2012 General Fund 5-Year Forecast · 2017-05-24 · November 9, 2010. Multnomah County Budget Office –Page #2 ... % Change in Portland S&P/Case-Shiller Index Price Index/Median

FY 2012 General Fund 5-Year Forecast Presentation to the Board of County Commissioners

Multnomah County Budget OfficeNovember 9, 2010

Multnomah County Budget Office – Page #2

Introduction Some Better News…

BIT

FY 2011 Revenues

Economic Overview FY 2012 General Fund 5-Year Forecast

FY 2012 Forecast

5-Year Outlook

Revenues

Expenditure AssumptionsAssumptionsCost DriversCPI/COLA

FY 2012 One-Time-Only Funds Forecast Risks & Issues Summary & Questions


Some Better News…

BIT Collections Fiscal Year‐to‐Date Through October

FY 08 FY 09 FY 10 FY 11FY 11 vs. FY 08

FY 11 vs. FY 10

Quarterly 9,953,262 8,998,390 6,769,017 7,827,270 ‐21.4% 15.6%Yearly 3,012,871 3,282,278 3,529,173 2,205,929 ‐26.8% ‐37.5%Refund/Interest 580,529 579,433 1,127,342 865,622 49.1% ‐23.2%NSF Check 5,077 6,685 46,554 46,632 818.5% 0.2%Total 12,380,526 11,694,551 9,124,294 9,120,946 ‐26.3% 0.0%

Actual or Budget 65,650,000 42,900,000 44,150,000 42,263,000 Budget46,500,000 Forecast


FY 2011 Revenue Review

Adopted 1

October Forecast Change Note

Property Taxes 228,530,991 (377,023) Actual AV 2.64% vs. budgeted 2.75%; Actual Compression 2.93% vs. Budget of 3.25%; Increase Discount/Delinq from 5.5% to 5.88% for Comcast Reserve

Business Income Taxes 42,263,000 4,237,000 FY 2010 4.46% higher than forecast; FY 2010 Actual to FY 2011 Revised = 5.3% increase; Net increase = 10%

Motor Vehicle Rental Taxes 17,847,854 (185,285)US Marshal 6,519,700 0State Shared Video Lottery 4,095,000 0 Liquor 2,889,150 0 Cigarette 748,329 (33,574) Amusement 175,000 0Recording Fees/CAFFA Grant 7,750,000 0Indirect Departmental 9,832,672 0 Central Indirect/Svc Reimburse 6,241,385 0All Other 22,278,997 0

FY 10 Revenue Adjustments 2 349,172,078 3,641,118 % of Revenue 1.04%

1. Excludes BWC and ITAX Revenue.2. Not adjusted for revenue adjustments directly offset by expenditure changes.


Economic Overview A stabilized, but fragile economy with anemic growth.

GDP – Five quarters of growth

2010 Q2 = 1.7% and Q3 = 2.0%

Slower growth than end of 2009/beginning of 2010… Inventory rebuilding and stimulus increases have largely played out.

Insufficient growth to draw down unemployment rates

Labor Markets

Weekly Unemployment Claims – 4-week moving average @ 456,750, which is down from 600,000 plus, bit still near peak levels seen in the last two recession.

Housing

New starts @ annual rate of 610,000 (vs. record low of 477,000 and peak of 2 million plus)

Industrial production & transportation

Growth, but still depressed… utilization rate @ 74.7%, which is 5.9% percentage points below average from 1972 to 2009.

Excess capacity with weak demand (70% of Americans believe we are still in a recession and consumer debt has declined by $812 billion as of 6/30/2010 from its peak of $11.7 trillion).

Forecast continues to assume a fragile recovery with anemic growth that will be protracted and uneven.


Economic OverviewOregon & Multnomah County Unemployment Rates

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Oregon Multnomah (Not Seasonally Adjusted)

For September 2010Oregon 10.6%

Multnomah 9.6%

For September 2009Oregon 11.0%

Multnomah 10.4%


Economic Overview


Economic Overview


Economic OverviewMonthly Year-Over-Year % Change

Based on S&P/Case-Shiller Home Price Index Thru August 2010

-40.0%

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Portland Las Vegas San Diego S.F. Seattle


Economic Overview% Change in Portland S&P/Case-Shiller House Price Index and

Index to Median Household Income (Thru August)

-20.0%

-15.0%

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% Change in Portland S&P/Case-Shiller Index Price Index/Median Income

A flat line means a stable house price to household

income. This is also a measure of affordability.

As house prices rapidly rise, a larger % of household income is

required for the same house. Affordability falls.

This provides an indication of where house prices should be

relative to income and how house prices may change in

the future.


Economic OverviewDefault Filings in Multnomah County & Year-Over-Year % Change (Thru October)

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# of Filings % Change (YoY)


Economic OverviewYear-Over-Year Change in Passengers & Freight at PDX (Thru September)

-30.0%

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Change in Domestic Deplaned Passengers Change in Total Enplaned & Deplaned Air Freight

Oil hits $147 per barrel

Recession 'officially' starts

December 2007

September 2008 Financial

Markets Freeze

Why these trends are important1. Freight indicator of economy & business income tax2. MV tax correlated with air travel3. Property tax from aircraft4. Transient lodging tax Recession

'Ends' Summer of 2009


Economic Overview

From FedViews, Economic Research Dept, S.F. Federal Reserve, October 14, 2010

Japan: 1989 to 1999

U.S.: 2004 to 2015


FY 2012 General Fund Forecast

The forecast continues to assume a protracted and uneven recovery.

Unemployment will remain high, inflation low, and property values will continue to drift downwards.

The FY 2012 ongoing gap between revenues and expenditures is estimated to be $5.33 million (roughly a 1.5% gap).

The forecasted gap is less than previously forecast due to:1. Higher BIT revenues ($48.8 million vs. $43.9 million)

2. Lower personnel cost growth (3.71% vs 5.50%) due to smaller medical/dental increases and PERS.


5-Year General Fund Outlook

After FY 2012, the operating deficit ranges between $3 million to $4.2 million, or roughly 1% of revenues.

The total 5-year gap is equal to 4.61% of expenditures.

FY Expenditures Revenues Deficit Amount

Deficit is this % of GF

Expenditures

Gap Growth From Prior

YearEnding Fund Balance

FY 2012 362,941,220 357,610,939 5,330,281 1.47% 5,330,281 44,784,309FY 2013 379,541,445 370,363,099 9,178,346 2.42% 3,848,065 35,605,963FY 2014 397,433,730 384,017,193 13,416,537 3.38% 4,238,191 22,189,426FY 2015 415,381,153 398,971,251 16,409,902 3.95% 2,993,365 5,779,524FY 2016 434,385,115 414,377,513 20,007,602 4.61% 3,597,700 (14,228,078)

Note: Revenues/Expenditures do not include reserves.

Forecasted General Fund Expenditures, Revenues, and Balance


General Fund Revenue ForecastMajor General Fund Revenue Sources 1

Adopted FY 2011

Forecast FY

2011 2Forecast FY

2012Forecast FY

2013Forecast FY

2014Forecast FY

2015Forecast FY

2016

Property Taxes 228,530,991 228,153,968 233,404,887 241,555,302 250,821,340 259,714,968 268,696,598Business Income Taxes 42,263,000 46,500,000 48,825,000 51,266,250 53,829,563 58,135,928 62,786,802Motor Vehicle Rental Taxes 17,847,854 17,662,569 18,280,759 19,377,604 19,958,933 20,557,701 21,174,432US Marshal 6,519,700 6,519,700 6,615,996 6,811,475 7,012,820 7,220,204 7,433,810Recording Fees/CAFFA Grant 7,750,000 7,750,000 8,475,000 8,958,750 9,035,925 9,114,644 9,194,936State Shared 7,907,479 7,873,905 8,829,609 9,157,061 9,525,903 9,748,138 9,976,813Indirect & Service Reimbrs. 16,074,057 16,074,057 16,464,697 16,940,004 17,430,429 17,936,453 18,458,577

326,893,081 330,534,199 340,895,948 354,066,446 367,614,913 382,428,036 397,721,968

% of Total Revenue 94.6% 94.7% 95.3% 95.6% 95.7% 95.9% 96.0%

All Other General Fund 18,637,879 18,637,879 16,714,991 16,296,653 16,402,280 16,543,215 16,655,545

Total 345,530,960 349,172,078 357,610,939 370,363,099 384,017,193 398,971,251 414,377,513

% Change in Ongoing Revenue 1.05% 2.42% 3.57% 3.69% 3.89% 3.86%

AV Growth 2.75% 2.64% 2.85% 3.25% 3.50% 3.50% 3.50%Compression 3.25% 2.93% 3.45% 3.60% 3.30% 3.25% 3.25%BIT Growth 0.00% 10.03% 5.00% 5.00% 5.00% 8.00% 8.00%

1. Excludes BWC and ITAX Revenue.

2. Not adjusted for revenue adjustments directly offset by expenditure changes.


5-Year General Fund ForecastAnnual BIT Collections

(FY 2000 to FY 2010 Actuals; FY 2011 Budget; FY 2011 to FY 2016 Forecast)

8%

5%5%5%

8%

5%

-7% 21%

3%-36%

14%13%

40%

14%-1%

-11%-12%

$10

$20

$30

$40

$50

$60

$70

FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

$'s

in M

illio

ns

-40%

-30%

-20%

-10%

0%

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% C

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Ann

ual R

even

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Regular BIT @ 1.45% Annual Growth Rate

Budget/Forecast


5-Year General Fund ForecastMultnomah County AV, RMV, and Compression

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RMV AV Library Compression General Fund Compression

Library Local Option Compression increases from 15.63% to 21.55%.

Compression loss increases from $7.7 million to $10.8 million


Expenditure Assumptions

Programs (and cash transfers) funded on a one-time-only basis in FY 2011 that are not continued in FY 2012:

One‐Time‐Only, Carry Over, and Annualizations

Offer/Activity 10011B ‐ Comprehensive Family Economic Security (OTO) 97,120 10019 ‐ Multnomah County Schools (ITAX) 140,000 10031B ‐ NACo Conference Fundraising (OTO) 750,000 25056B ‐ Ops Costs for Crisis Assess & Treat. Cntr (Pt. Yr) ‐ Annualize 200,000 25120 ‐ Homeless Family Shelter System (CA/PA) 15,000 25124 ‐ East County Homeless Outreach (OTO) 75,000 25147 ‐ Child and Family Hunger Relief (OTO) 186,043 40029B ‐ Rockwood Health Clinic Start‐up Support (3‐Yr decreasing support) 222,897 50018 ‐ GRIT ‐ Youth Thrift Shop (OTO) 50,000 50032B ‐ Employment Trns Services for Gang Members (OTO) 50,000 60018 ‐ Property and Laundry (CA) 172,900 72056 ‐ Central Human Resources Admin (CA) 17,000 72021 ‐ FRM ‐ ITAX 70,000

Cash Transfers and Earmarks

Offer/Activity 95000 ‐ Cash Transfer to Library for Materials Movement Project 800,000 95000 ‐ Facilities for limited duration position (OTO) 120,000 95000 ‐ Capital Improvement Fund for Yeon Testing (OTO) 150,000 95000 ‐ Financed Projects Fund for A&T System 4,500,000 Earmark ‐ Pet Adoption Center 75,000 Earmark ‐ Non‐Profit Hotel (was 25121) 413,507 Earmark ‐ Backpack Program (was 25147) 48,957 Earmark ‐ Executive/Management Class Comp Study was (72061) 200,000 Earmark ‐ MH Peer Club House & Strengthening Families (25065 & 25087) 388,300 Earmark ‐ Working Smart Imitative (was 10033) 217,907



Cost Drivers for FY 2012

Cost Notes (for the General Fund only)

A 1% increase in base pay = approximately $1.8 million

A 7% increase in medical/dental rates = approximately $1.8 million

A 1% (of base pay) increase in PERS rates = $1.3 million

Inflation 1.50% Second Half Portland CPI‐W

Labor Costs 3.71% (Prior assumption was 5.5%)

COLA 1.58% Dependent on Unit & Contract Status (2% floor or 1.5%)Step/Merit 1.69% average all units before policy directionMedical/Dental 4.50% was assumed to increase by 8%PERS 0.00% was planned to increase 1% of base payRetiree Medical 0.25%Liability/Unemployment/Admin 0.35%

Materials and Services 1.50%

Internal Services 3.71%



CPI - Urban Wage Earners & Clerical WorkersPortland-Salem

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Note: U.S. City Average for same index (reported monthly)

trending at roughly 1.4% for second half.



Few annualized or new costs for FY 2012

East County Court – No debt payment in FY 2011; have assumed $750,000 in debt payments for FY 2012 and part-year (net) operating costs of $260,000.

Crisis Assessment and Treatment Center – FY 2012 forecast assumes operating gap of $1.1 million covered by County General Fund.

If City of Portland covers half of gap, the General Fund operating deficit would be lower.

Personnel costs have NOT been adjusted for Management COLA/Merit freeze. (Estimated to reduce FY 2012 costs by $1.1 million)

Reserves & Contingencies

General Fund Reserve – 10% of ‘Corporate’ Revenues

BIT Reserve – 10% of BIT Revenues

General Fund Contingency - $1.25 million


OTO Resources

OTO sources 1 OTO Spending & Net Available for FY 2012

BWC (above FY 11 Adopted Budget) 11,838,019 Available… 20,229,137

Property Tax 1,439,403 0.64% Less…BIT 1,887,000 4.46% Add to General Fund Reserve to maintain @ 10% 1,217,798MVRT (264,415) ‐1.52% Roll‐over BIT Reserve 4,000,000

Departmental Underspending 2, 3 8,500,000 2.64% Add to BIT Reserve to set @ 10% 882,500ITAX (not yet transferred) 664,458 ITAX 664,458Other Revenue/Expenses (388,427) 6,764,756

East County Court Debt Service (no FY 2011 payment) 750,000 Net Available 13,464,381BIT Reserve (assuming not needed in FY 2011) 4,000,000Revenue Forecast Changes for FY 2011 (current year) 3,641,118

OTO Sources 20,229,137

1. Assumes the General Fund Contingency and all Board Earmarks are fully spent in FY 2011 and departments spend their full appropriation.2. Less Planned Carryover, Partially adjusted for revenue/expenditure offsets.3. FY 2011 Adopted Budget assumed no departmental underspending.


Forecast Risks & Issues

Economy weakens and recovery falters

BIT

Property Tax Compression

Inflation & CPI

FY 12 Labor cost impacts

Long-term impacts on economy, labor costs, and property values

Limited Federal Reserve (monetary) policy tools left & little political will for further fiscal stimulus

External shocks & ability to respond (i.e., European debt)

State of Oregon budgetary impacts

Financial

Economic

Internal/local issues (& uncertainties)

Open Labor Contracts

Retiree Benefits Liability

Health Care and Health Costs


Summary

FY 2011 General Fund ongoing revenues up by 1% or $3.6 million vs. Adopted Budget – driven by increased BIT forecast.

FY 2012 operating deficit of $5.33 million (1.5%).

FY 2013 to FY 2016 – annual operating deficit grows $3 million to $4.2 million per year or 1.0% of revenues.

Total 5-year gap is $20.0 million or 4.8% of revenue.

Any one year within forecast error.

OTO resources for FY 2012 of $13.5 million.

Major risks to revenue & cost estimates… many that are outside our influence.

Questions?

More Info: www.co.multnomah.or.us/budget

http://www.co.multnomah.or.us/budget

Documents

FY 2012 General Fund 5-Year Forecast · 2017-05-24 · November 9, 2010. Multnomah County Budget Office –Page #2 ... % Change in Portland S&P/Case-Shiller Index Price Index/Median