compared to fy 2014 adopted - loudoun county, virginia

Date of Meeting: January 14, 2014

#15 BOARD OF SUPERVISORS

FINANCE/GOVERNMENT SERVICES & OPERATIONS COMMITTEE

INFORMATION ITEM

SUBJECT: FY 2015 Fiscal Guidance Update

ELECTION DISTRICT: Countywide

STAFF CONTACTS: Tim Hemstreet, County Administrator

Ben Mays, CFO/Director, Management and Financial Services

Erin McLellan, Budget Officer, MFS

BACKGROUND: Preliminary fiscal guidance was received from the Board of Supervisors in

September. At that time, the Board directed that the County Administrator prepare a FY 2015

Proposed Fiscal Plan with a base budget at the equalized homeowner’s tax rate and to prepare an

option for a budget two cents below the equalized homeowner’s rate. The Board further directed

that two cents of the tax rate be dedicated to transportation, as was done in FY 2014; and that

staff consider the Board’s priority of transportation in developing the FY 2015 budget.

Updated Revenue Estimates for FY 2015

Throughout the Fall, the County’s internal Revenue Committee has revised revenue estimates for

FY 2015. These revisions include updating the forecast on the portfolio of real property that is

managed by the Commissioner of Revenue. Further refinements to revenue estimates after

production of the proposed budget will be brought to the Board during its March budget work

sessions. Highlights of the major revisions so far are described below.

Real Property Portfolio: December estimates are similar to the projections provided in

September, which indicated an increase in revaluation of existing properties in the

portfolio. Unlike last year, when values increased slightly, revaluations are significantly

higher. When revaluation increases year over year, the equalized homeowner’s tax rate

declines. Therefore, the current estimate for the equalized homeowner’s tax rate is

$1.155. The overall equalized tax rate is $1.17, inclusive of all real property

classifications. Staff again notes that these numbers are still preliminary. The

portfolio is still undergoing refinement and will not be final until the end of January and

after the County Administrator has presented his proposed fiscal plan.

Other County Revenues: Local tax funding estimates have increased since September.

The increases are due largely to projected growth in the personal property categories

(including vehicles and computers), and in sales taxes. Revenue projections related to

development activity (e.g., permit fees) have also increased.


January 14, 2014

Local Tax Funding Requirements for Debt and Capital funds: These requirements

were originally projected to increase by $26.1M over FY 2014. These requirements have

been refined since September and it does not appear there will be an increase over FY

2014. The need for local tax funding forecasted in these categories can be met through

use of General Fund balance and Debt Service fund balance. The proposed Capital

Improvements Program (CIP) for FY 2015 being developed by the County Administrator

adheres to the Board’s adopted debt policies and includes the equivalent of two cents in

cash funding for transportation projects. If the Board chooses, FY 2013 General Fund

balance can be appropriately used to offset local tax funding required for the Capital

Projects Fund. Options will be discussed with the Board during budget work sessions.

Also, increases in debt-service funding will be addressed through use of Debt Service

Fund balance—mitigating the need for an increase in local tax funding.

State Education Funding: Effects of the state budget are not completely known at this

time. Staff does know that while the County’s Composite Index1 improved, the County

lost $7.0M and $7.2M in Cost of Competing funding for FY 2015 and in FY 2016

respectively. The Superintendent’s January 7th proposed budget estimates state revenue

at $278.4M, an increase of $20.3M over FY 2014, as shown in Table 1 below.

Table 1. LCPS SUPERINTENDENT’S PROPOSED BUDGET

COMPARED TO FY 2014 ADOPTED

Proposed Budget

FY 2014

Adopted (millions, $)

FY 2015

Superintendent’s

Proposed (millions, $)

Beginning balance 10.0 10.0

Federal Revenue 14.3 14.7

State Revenue 258.1 278.4

Other Revenue 7.6 8.1

County Transfer (including OPEB) 553.6 641.2

Total Estimated Revenue 843.6 952.4

Table 2. ESTIMATED LCPS SHORTFALL

Transfer Components FY 2015 Estimate

FY 2014 County Transfer 553.6

FY 2015 LCPS Share of New Local Revenue 31.2

Current Estimated County Transfer 584.8

Superintendent’s Proposed County Transfer 641.2

Estimated LCPS Shortfall (56.4)

1 The Composite Index determines a school division’s education costs fundamental to the state’s Standards of

Quality and their ability to pay those costs—thereby indicating the amount of funding the state will provide.


January 14, 2014

The County Administrator will be bringing forward a proposed budget for County Government

Operations, Capital and Debt Service that is balanced at the equalized homeowner’s tax rate of

$1.155. However, there is an estimated LCPS budget shortfall of $56.4M against the

Superintendent’s Proposed Budget, as shown in Table 2. This amount may change if the School

Board makes adjustments to the Superintendent’s Proposal during the month of January.

Revenue estimates provided to the Superintendent in October (Attachment 1) are based on the

preliminary fiscal guidance and were projected to provide nearly $3.0M in new local revenue

(after paying for projected debt and capital local tax funding needs). Current revenue estimates

indicate approximately $31.2M in new local revenue would be provided to the schools. The new

local revenue provided to the schools will generally not be affected by transfers to the Debt

Service Fund or Capital Projects Fund. Table 3 shows the estimated General Fund Shortfall, as

was presented to the Board in September, and an estimate updated with current figures.

Table 3. ESTIMATED GENERAL FUND SHORTFALL

Anticipated Expenditure Increases September

Estimate (millions, $)

January

Estimate (millions, $)

Schools/County CIP-CAPP-Debt Service Needs (26.1) 0

County compensation (pay & benefits) (7.0) (6.0)

County base growth & enhancements (9.2) (18.8)

Schools Estimated LTF increase (67.7) (87.5)

Subtotal Anticipated Expense Increases (110.0) (112.3)

Anticipated Revenue Increases

Real Property Taxes 23.4 22.0

Personal Property , Sales, Utility and Other Local Taxes 7.2 25.3

Local Tax Funding Subtotal 30.6 47.3

Other County Revenue (BPOL, Permit Fees, etc.) 0.7 8.6

Subtotal Anticipated Revenue Increases 31.3 55.9

Shortfall with Anticipated Revenues* (78.7) (56.4)

ISSUES: The County Administrator is preparing a FY 2015 Proposed Fiscal Plan that will meet

the preliminary fiscal guidance of the Board of Supervisors. The budget will reflect an emphasis

on valuing existing employees and protecting vital public safety and social safety-net services,

while addressing the Board’s priorities. The preparation of a final Fiscal Plan will be impacted

by many issues. Three of the most important issues are summarized below.

Unfunded Requests Although, the County Administrator can deliver a County

Government operations budget that will be balanced at the homeowner’s equalized tax

rate and meet the Board’s guidance, there are approximately $4.9M of unfunded

enhancement requests that will not be accomplished under the current guidance. These

requests are at a level of importance that they would have been included in the County


January 14, 2014

Administrator’s Proposed Fiscal Plan, if it had been possible within the Board’s

guidance.

Overall Equalized Tax Rate vs. Homeowner’s Equalized Tax Rate: It should be

noted that while the homeowner’s equalized tax rate is currently estimated at $1.155, the

overall equalized tax rate is estimated at $1.17. An overall equalized tax rate of $1.17

would produce approximately $9.5M in additional local tax revenue, while remaining

$0.035 below the current real property tax rate. In addition, this rate would make

available a portion of the FY 2013 General Fund Balance set aside by the Board in case

of a tax rate reduction. This portion of General Fund Balance (roughly $3 M) could be

used to pay for one time expenditures.

School Funding Shortfall: The gap between revenues available to the School System

under the preliminary fiscal guidance and the amount included in the Superintendent’s

Proposed Budget remains a significant issue.

Timing: There are also several timing issues that will affect the budget process that the

Board should also be aware of:

o Finalization of Tax Base: The Commissioner of Revenue finalizes the portfolio

of taxable properties that is used for tax billing purposes in late January. Staff will

not be able to identify the true revenue impacts until the portfolio is finalized,

residential property revaluations are completed, and new estimates for the January

1, 2015 assessment are calculated.

o Schools Budget: The School Board plans to complete its review of the budget

around January 23rd. If that timeline can be met, county staff will include any

updated numbers in the budget documents and advertisements.

o General Assembly Action: The General Assembly will be deliberating over the

state Budget through February and Early March. The State Budget may not be

finalized until April or perhaps May.

ATTACHMENTS:

1. Letter to Superintendent Dr. Edgar B. Hatrick III from County Administrator Tim

Hemstreet, dated 10/9/2013.

2. 9/18/2013 Board of Supervisors Business Meeting, Item 12g: FY 2015 Preliminary Fiscal

Guidance. Copy Teste and Item.

Loudoun County, Virginia www.loudoun.gov Office of the County Administrator 1 Harrison Street, S.E., MSC #2, 5th Floor, P.O. Box 7000, Leesburg, VA 20177-7000 Telephone (703) 777-0200 • Fax (703) 777-0325 • [email protected]

October 9, 2013 Dr. Edgar B. Hatrick III Superintendent Loudoun County Public Schools 21000 Education Court Ashburn, VA 20148 RE: Loudoun County Board of Supervisors Preliminary FY 2015 Fiscal Guidance Dear Dr. Hatrick: At the Board of Supervisors September 18, 2013 business meeting, the Board provided me with preliminary fiscal guidance direction regarding the preparation of the Proposed FY 2015 Fiscal Plan. They directed that I should prepare the budget assuming the equalized homeowner’s tax rate, continue to dedicate two cents of the tax rate to transportation in the Capital Improvements Program, and consider the Board’s transportation priority when building the budget. Additionally, the Board directed that I also prepare an option for a budget at two cents below the equalized homeowner’s tax rate and that the reduction should be split between the County Government and LCPS according to the current budget ratio. The FY 2015 local tax funding transfer amount of $556,589,306 is preliminary and subject to future change. It should be noted that the next County Revenue Committee meeting is tentatively scheduled for October 23. We are seeing continued growth in the real property portfolio over FY 2014 and there may be potential continued growth in other local revenue as well. We are, however, closely monitoring the situation with the federal government, sequestration and other issues that could affect revenue, including the actions of the General Assembly. The projected local tax transfer amount to LCPS under each fiscal guidance scenario is shown in the table below. Budget Item Description Equalized Rate ($1.16) Equalized minus $0.02 School Operating Fund Transfer $541,615,482 $541,615,482 School OPEB Fund Transfer $12,000,000 $12,000,000 66% of Additional LTF $2,973,824 - LTF Reduction at $0.02 ($6,240,422/penny) - ($8,237,357)

Total Local Tax Funding Transfer $556,589,306 $545,378,125

ATTACHMENT 1

Board of Supervisor’s Preliminary FY 2015 Fiscal Guidance October 9, 2013 Page Two Should you have any questions regarding the Board’s direction, please feel free to contact me. Sincerely, Tim Hemstreet County Administrator

Cc: Board of Supervisors Ben Mays, Director, Management & Financial Services Penny Newquist, Deputy CFO, Management & Financial Services Erin McLellan, Budget Officer, Management & Financial Services E. Leigh Burden, Asst. Superintendent for Business and Financial Services, LCPS

ATTACHMENT 1

1/14/2014 FGSOC Item 15 - ATTACHMENT 2

Date of Meeting: September 18, 2013

#12g

BOARD OF SUPERVISORS

ACTION ITEM

SUBJECT: FINANCE/GOVERNMENT SERVICES AND OPERATION

COMMITTEE REPORT: FY 2015 Preliminary Fiscal

Guidance

ELECTION DISTRICT: Countywide

CRITICAL ACTION DATE: September 18, 2013

STAFF CONTACTS: Tim Hemstreet, County Administrator

Ben Mays, CFO/Director, Management & Financial Services

Erin McLellan, Budget Officer, Management & Financial

Services

RECOMMENDATIONS:

Committee: On September 10, the Finance/Government Services and Operation Committee

voted 5-0 to recommend that the Board of Supervisors direct the County Administrator to

prepare a Proposed FY 2015 Fiscal Plan with a base budget at the equalized homeowner’s tax

rate, and to prepare an option for a budget two cents below the equalized tax rate. The

Committee further recommended that the Board of Supervisors direct the County Administrator

to prepare a Proposed FY 2015 Fiscal Plan that dedicates two cents to transportation, as was

done during the FY 2014 budget; and that staff consider the Board’s priority of transportation in

developing the FY 2015 budget.

Staff: Staff recommends that the Board of Supervisors provide preliminary fiscal guidance to

serve as a guide to the County Administrator and the Loudoun County School Board in preparing

the FY 2015 Budget proposals.

BACKGROUND: For the past four fiscal years, the Finance/Government Services and

Operations (FGSO) Committee and the Board of Supervisors have provided the County

Administrator with fiscal guidance for the preparation of the Administrator’s Proposed Fiscal

Plan (budget). Final fiscal guidance is typically proposed by the FGSO Committee in December

and then confirmed by the full Board in January. This final guidance will occur after the year-

end closeout; following revisions to the financial outlook, based on additional Revenue

Committee review and updated figures on real property valuations.


Board of Supervisors

September 18, 2013

Page 2

FY 2014 Fiscal Guidance

The preliminary fiscal guidance for FY 2014 from the Board of Supervisors required that: 1) the

proposed FY 2014 fiscal plan be developed based on the equalized homeowner’s tax rate; 2) that

guidance be provided to the Loudoun County Public Schools (LCPS) that would lower the local

transfer amount to LCPS in order to provide an additional tax reduction of three cents ($0.03)

below the equalized tax rate; 3) that the County Administrator prepare a budget which shows two

cents ($0.02) of the tax rate dedicated for transportation purposes; and 4) that the County

Administrator be directed to proceed with a Request for Proposal for the purpose of studying the

feasibility and policy options of implementing emergency medical service transport fees.

At the January 16, 2013 Board meeting, the Board revised its fiscal guidance and the County

Administrator was directed to:

1. Prepare a budget, inclusive of all needs, using the equalized homeowner’s tax rate, and

2. Study the possibility of implementing EMS transport billing.

For FY 2014, the Board of Supervisors began budget deliberations at the proposed level, which

represented a tax rate of $1.23 per $100 of taxable value. A summary of the final results of

budget adoption for FY 2014 are:

Adopted tax rate of $1.205 is 1.9 cents (per $100) below the final equalized

homeowner’s tax rate of $1.224.

Adopted tax rate is three cents ($0.03) lower than the FY 2013 rate.

Average residential tax bill declined by approximately 1.4 percent or about $69 for the

year because the average residential property assessment increased by about one percent,

Average commercial tax bill declined by approximately 0.9 percent due to a 1.6 percent

increase in the average commercial property assessment, coupled with the decrease in tax

rate.

Personal property tax rate remained unchanged at $4.20 per $100.

ISSUES: A summary of the issues impacting the FY 2015 budget are summarized below. The

FY 2015 Budget challenges and issues are put into context with an overview of the state of the

world, national and local economies and their expected impacts on the FY 2015 budget process.

Then, a preliminary outlook is given on the shortfall expected in the General Fund for FY 2015,

based on an equalized homeowner’s tax rate and current revenue and expenditure forecasts.

FY 2015 Budget Challenges and Issues

Although the economic recovery continues, there still remain unknown economic factors that

must be taken into consideration at this early point in the budget planning process for FY 2015.

Some of the key unknown factors are addressed below and include the world economy, U.S.

economy, and local economy.



September 18, 2013

Page 3

World Economy: Overall, the global economy has weaknesses.

Europe continues to have high unemployment levels.

The Euro-zone economy may be nearing the end of its recession, with prospects for weak

growth in the near future.

In Asia, China is taking steps to curb credit. China’s growth is also slowing as are the

other “BRIC” countries (Brazil, Russia, India and China).

U.S. Economy: The national economy shows more signs of slow improvements, but issues

remain.

Housing Market: Home price gains that began in 2012 have continued. Average days on

the market continued to drop in July to an average of 29 days, which is 45% lower than

July 2012 and 6.5% lower than June 2013. Median sale price rose to $420,000 in July

which is an increase of 9.3% since July 2012. However, home price appreciation is

expected to moderate, as more houses become available for sale and as interest rates rise.

Labor Market: The national unemployment rate was 7.4% in July, down from a peak of

10% during the recession. Overall, expectations are for the unemployment rate to

continue to fall, and be below 7% by mid to late 2014. Some economists expect slower

job creation for the balance of 2013, with government policies (such as sequestration) and

the state of the global economy slowing momentum.

Investment Markets: The bond and stock markets have shown volatility, as a result of

investor concerns related to the Federal Reserve’s plans to begin winding down its bond-

buying program. A concern of bond investors is the outlook for higher interest rates.

State Budget Policy: There are a significant number of unknowns regarding state budget

policy related to the revenue estimates for both the County and Loudoun County Public

Schools (LCPS). The biggest unknown is if education revenue from the Commonwealth

will keep pace with student population growth.

Local Economy: The local economy remains healthy, with the impact of sequestration not

strongly felt to date. Highlights of the economic environment in Loudoun County are

summarized below.

Unemployment: The county’s unemployment rate continues to rank among the lowest in

Virginia and nationwide. July 2013 unemployment rates were 4.5% in Loudoun, as

compared to 5.5% in Virginia and 7.4% nationally.

Residential Market: Residential building permits totaled 3,872 in 2012, the highest level

since 2005. Through June 2013, Loudoun has issued more residential building permits

than were issued for the entire year in 2008, 2009, or 2010. This level of permitting is

34% ahead of the January through June 2012 level. Sales of housing units have also

increased, accompanied by increased sales prices.



September 18, 2013

Page 4

Property Values: Valuations for residential real and personal property in the County are

increasing, a trend that has continued since 2011. Commercial property is also exhibiting

substantial growth, with over $800 million added to the commercial real property base

during the past two years alone, with $240 million in additional business personal

property over the same time period.

Although the local economy is stronger when compared to the rest of the nation, staff has

identified several challenges the County may face in FY 2015. The key challenge will be to

maintain service levels as the area continues to grow, while identifying new revenue resources

that are not burdensome on taxpayers. Expenditure requirements in FY 2015 are anticipated to

grow along with service demands, due to more residents, students and facility operating costs.

Anticipated demands and base budget adjustment requirements for FY 2015 include:

Loudoun County Public Schools (LCPS): Data obtained from the LCPS web site projects

another 2,000 students for FY 2015, with an overall growth pattern that is anticipated to

continue. Unfortunately, this upcoming year is the biennial reset of the State’s education

aid formula and there is great uncertainty over whether state aid will grow commensurate

with the expected increase in student population.

General Government: It is still too early to quantify potential departmental requests, but

some conditions are already evident. Maintaining County services at existing levels, with

additional customers and increases in base costs, will require additional funding, as will

continuation of the Boards’ pay-for-performance compensation system.

Continuation of Planned Infrastructure Projects: Expenditure requirements for funding

the approved Capital Improvement Program (CIP), Capital Asset Preservation Program,

and Debt Service needs may also require a funding increase.

Two-Year Rolling Budget: Following the desire of the Board to implement a multi-year budget,

staff is preparing to produce a Two-Year Rolling Budget for the Proposed FY 2015 Fiscal Plan.

The Proposed Fiscal Plan will contain an additional set of data at the Department and Program

level for projected FY 2016 revenues and expenditures. The purpose of the additional projected

year is to assist the Board in policy decisions during the budget development process by

providing additional context and by showing effects of policy decisions on a longer time horizon.

Due to the continued rapid growth of the County and the somewhat volatile nature of real

property revenues, local tax revenue will not be shown for FY 2016 as any projections may be

subject to extreme change year over year.

Preliminary Outlook—FY 2015 General Fund Shortfall

Review of preliminary revenue and expenditure trends indicate another challenging budget

process, as a result of both school and general population increases. Some enhancements will

need to be considered in order to maintain service levels, but specific requests are unknown at

this time. Table 1 provides a very preliminary outlook of the General Fund in FY 2015, assuming

an equalized homeowner’s tax rate, as suggested by the FGSO Committee at their July

meeting.



September 18, 2013

Page 5

Table 1. ESTIMATED GENERAL FUND SHORTFALL

(AT THE PROJECTED EQUALIZED HOMEOWNER’S TAX RATE)

Anticipated Expenditure Increases Amount

(millions, $)

Schools/County CIP-CAPP-Debt Service Needs (26.1)

County compensation (pay & benefits) (7.0)

County base growth & enhancements (9.2)

Schools Estimated LTF increase (pg. 41 of LCPS Appropriated Budgets) (67.7)

Subtotal Anticipated Expense Increases (110.0)

Anticipated Revenue Increases

Real Property Taxes 23.4

Personal Property , Sales, Utility and Other Local Taxes 7.2

Local Tax Funding Subtotal 30.6

Other County Revenue (BPOL, Permit Fees, etc.) 0.7

Subtotal Anticipated Revenue Increases 31.3

Shortfall with Anticipated Revenues* (78.7)

*Please note all numbers contained in the chart above are subject to change as the revenue picture becomes

clearer.

Highlights of the data in the preceding table include the following:

Revenue policy: It should be noted that estimated tax rates and shortfalls are subject to

change, based on revised property assessment figures. Preliminary numbers are generally

conservative and no new fees are included in the current estimates. The increase in

residential revaluations based on current assessment projections means a larger tax

decrease would be required in FY 2015 to yield the equalized homeowner’s tax rate than

has been required in the last several years. Please note that the table above estimates

new revenue based on the equalized homeowner’s tax rate, however, if the current

real property rate were applied, an additional $23.4 million would be generated in

real property revenue, bringing the shortfall to roughly $51.4 million. Major revenue

issues that are yet to be determined include:

o Use of Fund Balance for one time expenditures: The reduction in the shortfall

shown in the table assumes no use of one-time revenues. The process of closing

and auditing the books for fiscal year 2013 is underway. As was the case in

FY 2012, we anticipate an FY 2013 fund balance above and beyond the 10%

operating contingency required to be set aside per the Board’s existing Fiscal

Policy. The audited fund balance figures and proposed fund balance uses is

scheduled for discussion by the FGSO Committee in December.



September 18, 2013

Page 6

Expenditures: Additional enhancements may need to be considered to maintain service

levels, but requests are unknown at this time. The $9.2 million figure for county needs is

an estimate, primarily based on projected growth.

Schools shortfall: New revenues for the schools are estimated at $20.2 million, based on

shared revenue increases and the current split ratio. With an increased local tax transfer

and OPEB need estimated at $67.7 million, the estimated shortfall would be $47.5

million. The State’s Composite Index will be adjusted this year to determine LCPS state

funding. Staff will know further details of state revenue for schools in November.

Estimates on school shortfall figures in the scenario discussed above are based on the

estimated local tax transfer increase found in the FY 2015 Projection from page 41 of the

LCPS FY 2014 Appropriated Budgets document and are subject to substantial revision.

ALTERNATIVES: The Board may wish to change its guidance or add additional conditions.

DRAFT MOTIONS:

1. I move the recommendation of the Finance/Government Services and Operations

Committee that the Board of Supervisors direct the County Administrator to prepare a

Proposed FY 2015 Fiscal Plan with a base budget at the equalized homeowner’s tax rate,

and to prepare an option for a budget two cents below the equalized tax rate. I further

move that the Board of Supervisors direct the County Administrator to prepare a

Proposed FY 2015 Fiscal Plan that dedicates two cents to transportation, as was done

during the FY 2014 budget; and that staff consider the Board’s priority of transportation

in developing the FY 2015 budget.

OR

2. I move the Board of Supervisors direct the County Administrator to prepare a Proposed

FY 2015 Fiscal Plan .

(alternatives and/or budget options)

OR

3. I move an alternate motion.

ATTACHMENTS:

1. Presentation: FY 2015 Preliminary Fiscal Guidance. Finance/Government Services &

Operations Committee, 9/10/2013.

2. Handout: Comparative Data on Jurisdictions Using Multi-Year Budgeting.

Finance/Government Services & Operations Committee, 9/10/2013.


Presented to the Finance/Government Services and Operations Committee

September 10, 2013

ATTACHMENT 11/14/2014 FGSOC Item 15 - ATTACHMENT 2

September 10, 2013

• FY 2015 Fiscal Guidance Preliminary Concepts

• Fiscal Factors and Issues – World, U.S. and Local Economy

– Sequestration

– State Issues

– Ongoing Growth and Budget Impacts

• FY 2015 Preliminary Outlook – Estimated Rough Shortfall

• 2 Year Rolling Budget


September 10, 2013

• FGSO Discussion:

– Prepare budget using equalized homeowner’s tax rate

• Other Board concerns

– Prepare budget that includes a second year


September 10, 2013

• Europe outlook weak

• “BRIC” countries growth slowing

• Sequestration effects still not strongly felt

• National unemployment rate continues to drop

• Housing price gains continuing

• Bond and stock market volatility related to Fed Reserve wind down of bond buying


Change in Real U.S. GDP

September 10, 2013

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0


September 10, 2013

• Lower Unemployment – 4.5% Loudoun; 5.5% Virginia

• Growth in Real Property Portfolio (TY) – 6.6% overall during 2013

– 4.8% overall during 2014

• Growth in Service Population – Population: +10,203 or 2.9%

– Additional students: 2,000


Median Existing Single Family Home Price, National Association of Realtors

September 10, 2013

0

50

100

150

200

250

300

350

400

450

500

03 04 05 06 07 08 09 10 11 12 13


Loudoun County Permit Trend

September 10, 2013

As of end of July 2013, YTD permits already

surpassed 3,000

Residential Building Permits Issued for New Units by Type

September 10, 2013

Department of Planning


September 10, 2013

Department of Planning


September 10, 2013

• Core Service Increases due to Expanding Population • Continued Pay-for-Performance Implementation • School Funding Needs

– Estimated 2,000 new students – 3 new schools opening

• Opening of New/Expansion County Facilities • Transportation

• State Budget Policy Issues – Aid for Education – New governor will take office


September 10, 2013

FY 2015 Estimated New Revenues (millions $) based on $1.16 Real Property Taxes 23.4 Personal Prop.; Sales Taxes; Utility Taxes; Other Local Taxes 7.2 Local Tax Funding 30.6 Other Revenue (BPOL, Permit, Fees, etc.) 0.7

TOTAL NEW REVENUE ESTIMATE = 31.3

Note: The numbers contained in this presentation are preliminary draft numbers that are subject to change.


September 10, 2013

FY 2015 Estimated Shortfall (millions $) based on $1.16 New Revenue 31.3 Less Compensation @ 3% (7.0) Less Rough Estimate of Base Budget Increases (8.9) FY 2015 Enhancements -- FY 2015 Facilities Opening (0.3) Schools (67.7) Capital and Debt (26.1)

CURRENT ESTIMATED SHORTFALL * = (78.7) * Excludes vacancy savings

Note: The numbers contained in this presentation are preliminary draft numbers that are subject to change


September 10, 2013

• Projected year of revenues and expenditures in departments/programs; no local tax revenue

• Can allow for greater emphasis of program/dept. needs

• Shows fuller impact of enhancements and operating impacts of facility openings

• Encourages more strategic thought process in budget development


September 10, 2013

QUESTIONS?


ATTACHMENT 2

Comparitive Data on Jurisdicdtions Using Multi Year Budgeting

Budget Office 9/10/13

Jurisdiction Budget Type Development Projections/Forecasting Strategic Planning/Preparation Amendment Process Misc. 1 Chesterfield County, VA FORMERLY-Two-year (Biennial)

Budget- DISCONTINUED BEGINNING WITH FY 15

2 year budget developed but full budget process required each year due to growing population and changing needs and resource availability

Projections done at beginning of 2 year process but updated on a yearly basis. Tax revenue forecasts for out year were not reliable due to growth and rapid change.

Strategic planning focus has been revamped over last 2 years and beginning in FY 15 will align directly with budget. Department and county needs will be tied to strategic goals for inclusion in budget.

Full budget process was completed each year.

County will be budgeting annually and focusing on strategic planning and algining each budget and budget issues with strategic focus areas. Staff time will be spent adding additional value and strategic alignment to budget as opposed to creating a second year that will require a full budget process the next year.

2 Town of Leesburg, VA Two-year (Biennial) Budget Budget developed for two years, but council adopts one year at a time. At the beginning of the biennium the council adopts the first year and adopts the plan for the second year. During the second year the council adopts the second year budget.

Revenue is projected for two years and updated in the second year if needed.

A sustainability plan is in place and helps to align budget and council goals. Council has adopted Strategic Focus areas; department goals and measures are aligned with these areas.

The second year of the budget is conducted as a "by exception process". Amendments are limited. The council adopts the second year with an abbreviated council process.

Budget documents are produced for both years of the two year cycle to conform with GFOA award requirements.

3 Hillsborough County, Florida

Two-year (Biennial) Budget While Florida Statutes require a minimal annual process to adopt the budget, nothing prohibits local governments from developing a budget plan for a second year.

Traditional Operating Budget calculated per traditional methodology reflected elsewhere in the budget document which includes personal services, operating and maintenance, and grant only.

The County Administrator's recommended FY 14 & FY 15 Budget is the first biennial budget that is based heavily on business plans developed by all departments under the County Administrator. Business plans were developed to help better align departmental strategies and goals with the overall County strategic goals and objectives, and to allow greater tie-in between the County Strategic Plan and departmental budgets. These business plans are expected to be living documents, and will be updated as appropriate.

Major reconciling adjustments between statutory and traditional operating budget calculations.

Dept. pages included the following in reference to year two of rolling budget: "FY 15 is budgeted at continuation level".

4 Santa Barbara, CA Two-year (Biennial) Budget City Council approves a two-year financial plan at the beginning of each two-year cycle; and consistent with City Charter requirements, the City Council adopts an operating and capital bduget each year.

Finance department updates the revenue projections for year two of the two-year financial plan. Year two recommendations are revised if necessary.

Budget preparation and analysis will be for two years, occurring in the fiscal year immediately proceeding the two-year cycle.

Mid-cycle adjustments are managed as mid-year adjustments are; that is, outside of the budget development process, but subject to City Council approval.




Jurisdiction Budget Type Development Projections/Forecasting Strategic Planning/Preparation Amendment Process Misc. 5 Westminster, CO Two-year (Biennial) Budget Funding for departments maintained

at first year levels, unless of a known change in level of services, new projects, health care costs, other adjustments, etc.

Both 2013 and 2014 budgets were prepared separately for each fiscal year, and adopted simultaneously in October of 2012.

The City Council holds a Strategic Planning Retreat that provides specific guidance for the two-year budget document emphasizing long range planning, effective program management and fiscal responsibility. Furthermore, City Council and Staff conduct a core services review, along with a level of service analysis for selected business units as appropriate.

If additional revenue is available in the "off year" of the budget development process, City Council may elect to hold a public meeting to solicit additional citizen requests.

6 Fort Collins, CO Two-year (Biennial) Budget Even though the budget is adopted for a two-year term, the State and City Charter require that prior to each fiscal year; an appropriation ordinance must be adopted to authorize budgeted expenditures for the coming fiscal year.

A budget execption process is conducted during the first fiscal year of the adopted budget term. Revenue & expenditure projections for the budget term are reviewed in July and if need be, adjusted. Budget highlights section includes information on assumptiones used to develop base budgets for both years.

Utilizes the Budgeting for Outcomes process.

Generally two opportunities during the fiscal year for supplemental additions to the annual appropriation approved by Council. First is usually adopted in March/April to re-appropriate funds from the previous years' ending balance for projects or obligations that were approved but not completed during the year. The second opportunity in the 2nd half of the year is used to fine-tune the current fiscal year for previously unforeseen events. In addition, if revenue is received during the fiscal year from a source that was not anticipated at the time of the budget adoption, Council may appropriate that unanticipated revenue for expenditure when received anytime during the year.




Jurisdiction Budget Type Development Projections/Forecasting Strategic Planning/Preparation Amendment Process Misc. 7 Oakland, CA Two-year (Biennial) Budget City's budget is adopted for a 24-

month period, appropropriations are divided into two one-year spending plans.

During the second year of the two-year cycle, the Mayor and Council conduct a midcycle budget review to address variances in estimated revenues, estimated expenditures, and other changes to the City's financial condition.

Planning for the FY 2013-2015 Budget began with the production and publication of the City's Five-Year Financial Forecast in fall 2012. The Controller's Office then creates a "baseline budget", which is a draft two-year budget that estimates revenues and expenditures if the City maintains current staffing, programs, & policies. The Controller's Office works with the departments to create the baseline budget, taking into account the latest economic projections and information on likely expenditure increases.

Toward the end of the first year of the two-year cycle, the Mayor and Council conduct a mid-cycle budget review to address variances in estimated revenues, estimate expenditures, and other changes to the City's financial condition. The Council can make amendments to the budget throughout the two-year period.

City projecting revenues to increase by about 2-3% per year and expenses to increase by 4-5% per year.

8 Union City, CA Two-year (Bi-Annual) Budget Approportiations limit determined by State of California. Process begins 5 months before final proposed budget is submitted to the City Council for consideration and ends with publishin of the approved budget document.

Additional health care costs, retirement costs, and negotiated labor contracts must incoproarte 2nd year projections. Benefits costs that rely on state calculations must be gathered and applied. Idenitifcation of lost or expiring revenue sources and new revenue sources.

Great effort is put forth to ensure that the process is well-thought out, all departments understand the process, budget requests and projections are carefully analyzed, proper input is received from all affected parties (e.g. community, Council, departments heads, division supervisors, employees, etc.) and that a sounds fiscal plan is developed.

Periodically during a fiscal year, amendments to the budget, if any, are brought before the City Council for approval. Typically, budget amendments occur when unanticipated events result in the City's depletion of appropriations for a given service. An amendment may also be adopted to change the mix of service delivery. Furthermore, an amendment request may be adopted for additional appropriations from reserves or simply an internal transfer of appropriations from one appropriation category to another.




Jurisdiction Budget Type Development Projections/Forecasting Strategic Planning/Preparation Amendment Process Misc. 9 Berkeley, CA Two-year (Biennial) Budget Focus on long-term health by the City

by adopting a two-year budget and conducting multi-year planning.

For FY 14 & 15 departments were asked to provide City Manager with 2% recurring General Fund reductions. Proposed reduction solutions should be recurring , and the entire reduction be taken in FY 2014, so that the solutions will also eliminate the projected deficit in FY 2015.

City Council establishes budget policies which guide the development of the City's budget. These policies have been established to help manage financial pressures to address growing demands upon City resources, while preserving long-term fiscal flexibility. *Focusing on long-term fiscal health of the City by adopting a two-year budget and conducting multi-year planning*.

Projected revenues and expenses for FY 2014 & FY 2015 based on fiscal trends experienced in first two quarters of FY 2013. Assumptions include: no additional federal or state cuts; no funding for new programs; no increased funding for capital improvement programs; no further decreases in revenue; no cost of living increases.

10 Paso Robles, CA Two-year Operating Budget & Four Year Financial Plan

Fiscal Policy calls for a balanced budget within the context of the four year financial plan. Development and use of a Four Year Plan provides the Council, staff and public to view the impact of current spending decisions upon future available resources. Staff is currently refining a 10-year Financial Plan.

Near-term deficits are forecast, but General Fund is projected to essentially balance over the five year period ending June 30, 2015. The forecast is not certain as there are risks of: 1. Protracted recovery and/or 2. Double-dip recession and/or 3. future State appropriotion of local funds and/or 4. New State and/or Federal program or regulatory (spending) mandates.

Every two years the City Council adopts goals to guide City financial planning and progress toward strategic objectives. Goal development is the result of City Councilmember suggestions and public input. Top goals are broad imperatives, that will include many of the more narrowly tailored goals. Consolidation should occur when applicable.

Council to hold a minimum of two formal financial updates each fiscal year in order to review and adjust the proposed four-year financial plan.

11 San Francisco, CA Two-Year Rolling Budget In even-numbered years, the Mayor issues a fixed 2-Year Proposed Budget for enterprise departments. Each year, the Mayor issues a Rolling 2-Year Proposed Budget for non-enterprise departments. General Fund Departments are currently on a rolling two-year budget. The FY 2013-14 budget is updated from the previously adopted FY13 & FY14 budget, and the FY 2014-15 budget will be revisited during the FY15 & FY16 budget cycle.

A joint report is issued annually on the City's financial condition for the next three fiscal years from the Controller, the Mayor's budget analyst and the budget analyst for the Board of Supervisor's. The City Charter requires the plan to forecast expenditures and revenues during the five-year period, propose actions to balance revenues and expenditures during each year of the plan, and discuss strategic goals and corresponding resources for City departments.

The mayor's office and controller's office issue budget instructions setting the overall direction for the budget of next fiscal year.

In each odd-numbered year, the City publishes a 5 year financial plan that forecasts expenditures and revenues in future years and proposes steps to reach a balanced budget. In each even-numbered year, the City publishes a 5 year financial plan update with an updated estimated summary budget for the remaining four years of the City's five-year financial plan.

*The California State Constitution requires state and local governments to annually adopt an appropriations limit (a tax revenue limit). The limit may be adjusted annually by a factor comprised of the change in population combined with


compared to fy 2014 adopted - loudoun county, virginia

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