06-08-2020 Council Packet - Laserfiche WebLink

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To: Mayor and Council From: Ron Olson, Finance Director Subject: Budget Update Date: June 8, 2020 Attachments: 1. Revenue Summary 2. Revenue Detail 3. Revenue Graphs/Tables 4. Expenditure Summary 5. Expenditure Detail 6. Vendor Listing The first quarter General Fund year to date budget to actual comparisons are included with this memo. They are as of the end of March which represents 25% of the year. Revenues are currently at 16.12% of budget with expenditures at 21.55% of budget. General Fund Revenues The low revenue percentage is normal for the first quarter. The timing of revenue streams account for the low revenue percentage for the quarter. The first property tax receipts, representing 51.3% of the budget, will not be received until June. Various state grants (Other Governmental) will also not be received until later in the year. For comparison purposes, 2019 1st quarter revenues were at 17.51%. The year ended with revenues exceeding the budget. A revenue graph is included to illustrate the typically low 1st quarter revenues. Because of the Covid19 pandemic and economic shutdown, some of the City’s revenue streams are being impacted. Earlier this spring, Hennepin County announced that property taxpayers would not be penalized for payments made after May 15th, if they were paid by July 15th. Taxes collected in escrow by mortgage companies are not eligible for the penalty waiver, nor are properties that owed more than $50,000 in property tax. The City will receive 70% of the taxes received by May 15th on June 19th. This will tell us how collections through the normal due date have been going, but we will not receive the full 1st half settlement until July 30th. Tax collections for the year normally rage between 98 and 99%. In 2008 – 2010, during the housing market crash, first year collections dropped to 97% of budget. If we experience a similar drop in collections, we will lose $150,000 in current year tax collections. It is likely, that just like in 2008-2010, the City would eventually collect 100% of the levy. However, a significant reduction in current year collections will impact current year cash flow. The other revenue source the can vary from year to year are the building related revenues (permits, plan review, variances). While the first quarter revenues for these categories were normal and on target for the year, the April and May numbers were significantly lower that previous years. Depending on how quickly the economy come back, we are at risk of not meeting budget for these revenues.