expenditure report - vi...2nd quarter revenue & expenditure report fiscal year 2020 6 corporate...

FISCAL YEAR 2020

2nd QUARTER REVENUE &

EXPENDITURE REPORT

OFFICE OF MANAGEMENT & BUDGET

U.S. VIRGIN ISLANDS

2nd QUARTER REVENUE & EXPENDITURE REPORT FISCAL YEAR 2020

1

UNITED STATES VIRGIN ISLANDS

FISCAL YEAR 2020

2nd QUARTER REVENUE & EXPENDITURE REPORT

June 8, 2020


2

Table of Contents

Content and Purpose ............................................................................................................ Error! Bookmark not defined.

Timeframe and Limitations .................................................................................................. Error! Bookmark not defined.

Summary of major revenue categories of General Fund ..................................................... Error! Bookmark not defined.

Real Property ........................................................................................................................................................................... 4

Individual Income ................................................................................................................................................................... 4

Corporate Income ................................................................................................................................................................... 6

Trade and Excise ..................................................................................................................................................................... 7

Gross Receipts ......................................................................................................................................................................... 8

Expenditures ........................................................................................................................................................................... 9

Salaries .................................................................................................................................................................................... 9

Fringe Benefits ...................................................................................................................................................................... 10

Other Services ....................................................................................................................................................................... 11

Capital Projects ..................................................................................................................................................................... 11

Summary ............................................................................................................................................................................... 13


3

Content and Purpose

This quarterly report contains an overview of the Territory’s actual collection of General Fund revenues and expenditures

for the second quarter of FY 2020, as compared to FY 2019. This report will highlight any notable trends. This report will

not show the full impact of the economic consequences imposed by the COVID-19 pandemic.

The purpose of this quarterly public report on the Territory’s revenues is twofold. Firstly, it ensures that the Territory is

consistently monitoring its revenues and expenditures to allow for proactive responses to unanticipated changes or

emerging trends. Secondly, these reports lend credibility to the Government’s efforts at increasing transparency of the

Territory’s finances. It is the Office of Management and Budget’s (OMB) belief that the government is accountable to its

taxpayers to use revenues collected in an efficient and effective manner. These reports provide taxpayers with the

information they need to hold the government to this standard.

While the impact of COVID-19 on the pace of overall collections is undeniable, the effects were not realized until middle to

late March 2020. This should be considered when digesting the information presented. This second quarterly report will

focus entirely on the performance of the major revenue and expenditure categories for the General Fund. For all other

major funds, a listing of the fund balance and legislative authority establishing those funds can be found in the Budget

Book published on OMB’s website. Subsequent iteration of the report will endeavor to include analysis of collections

beyond the General Fund and a comparable exploration of the Territory’s expenditures from said funds.

Timeframe and Limitations

The information provided in this report are the most accurate available as of the date of composition. Furthermore, the

report does not purport to be audited financial statements and as such, the numbers are preliminary and subject to

change. The information provided here are not final. For final numbers, please refer to the Financial Audit Report from the

Department of Finance.

With respect to revenues, OMB regularly monitors and adjusts revenue projections based on monthly collections and other

developments that may affect the Territory’s revenue to more accurately present the financial position of the Territory. As

a result, OMB develops and updates revenue projections every month. These projections reflect historical patterns,

seasonality, and other known factors that may affect certain revenue streams. To that end, OMB has engaged the services

of Moody’s Analytics to aid in the preparation of revenue forecasting.

Summary of major revenue categories of General Fund

The major revenue categories explored here are Real Property, Individual Income, Corporate Income, Excise Tax and Gross

Receipts. These revenue streams have historically been the most significant contributors to the General Fund. Revenues

outside operating income is considered to the extent they provide a complete picture of the Territory’s General Fund

collections; specifically, the transfers to the General Fund.


4

REAL PROPERTY

An analysis performed by Moody’s Analytics found that in analyzing Real Property Tax collections for forecasting, there

was little impact on this revenue source from COVID-19. Moody’s attributed that to the stability of property tax collections

and lagged relationship between market valuation and assessed valuation. Nonetheless, compared to FY 2019, Real

Property Tax collections in FY 2020 second quarter increased 35%. In FY 2020, collections were up in both the STT/STJ and

the STX district when compared to FY 2019, by 39% and 29% respectively. One factor that might be influencing these higher

collections in Real Property Tax is the amnesty program that began in January of FY2020. However, at this point, no

investigation has been done to confirm this assumption.

2,167,349

3,002,402

1,173,116

1,509,298

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

FY 2019 FY 2020

St. Thomas/St. John St. Croix

2,167,349

1,173,116

3,002,402

1,509,298

-

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000


FY 2019 FY 2020


5

INDIVIDUAL INCOME

Individual Income collections increased 10% in second quarter FY 2020 compared to second quarter FY2019. However, this

increased collection has be buoyed by positive second quarter collections in the STX district compared to FY2019; a 33%

increase. During the second quarter, the STT/STJ district saw a 3% reduction in collections compared to the same period

in FY2019. Nonetheless, as the impact of COVID-19 becomes more apparent, Individual Income is expected to experience

further decline. As unemployment continues to increase there is a reasonable expectation that Withholding Tax will also

decrease, thus reducing Individual Income collections. According to Moody’s Analytics, FY2020 collections should see a 2%

reduction in collections, followed by a more meaningful contraction of approximately 8% in FY2021.

57,651,880 55,857,707

31,483,463

41,824,029

-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

FY 2019 FY 2020


57,651,880

31,483,463

55,857,707

41,824,029

-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000


FY 2019 FY 2020


6

CORPORATE INCOME

The second quarter performance for Corporate Income has been positive. There was an overall 39% increase in Corporate

Income collections compared to the same period in FY 2019. However, the STT/STJ district saw a 31% reduction in second

quarter collections in FY 2020 compared to first quarter FY2019. On the contrary, there was increased collections in the STX

district. On STX, Corporate Income increased by 273% in the second quarter FY2020 versus the same point in FY2019.

Nonetheless, Moody’s Analytics is projecting a double-digit decline in FY2020 and a more modest decline in FY2021 due to

the impact of COVID-19. This is due to the immediate decline in economic activities.

6,229,105

4,325,161

1,841,211

6,862,755

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

FY 2019 FY 2020


6,229,105

1,841,211

4,325,161

6,862,755

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000


FY 2019 FY 2020


7

TRADE AND EXCISE

The collection of Trade and Excise Tax continues to be halted. Therefore, not surprisingly, second quarter FY 2020 reveals

a 49% reduction compared to FY 2019. This indicates that this tax category continues to decline even further. It has been

estimated that approximately $64 million has been lost since the halt imposed by the courts.

394,021 390,599

227,877

(70,656) (100,000)

-

100,000

200,000

300,000

400,000

500,000

FY 2019 FY 2020


394,021

227,877

390,599

(70,656) (100,000)

-

100,000

200,000

300,000

400,000

500,000


FY 2019 FY 2020


8

GROSS RECEIPTS

The second quarter collections for Gross Receipts (GRT) in FY 2020 has increased 7% compared to FY 2019. However, the

near-term collections in this category will be significantly impacted due to COVID-19. Furthermore, the need to get projects

started in the STT/STJ district is evidenced by the reduced collection of GRT in that district. An initial look at collections in

the STT/STJ district would seem to suggest concerning signs. For instance, compared to FY 2019, FY2020 GRT collections

decreased by 10%. However, adding context would reveal that from FY2011 to FY2018, GRT in the STT/STJ district had an

average annual growth rate of 4%. However, in FY2019 GRT increased 30% verses FY2018. Once projects get started, we

should see increased collections in GRT in the STT/STJ district. However, as we exhaust funds for disaster recovery, GRT

may revert to a more normal growth rate. While collections on STX increased by 52% in second quarter FY 2020 compared

to FY 2019, the average annual growth rate from FY2011 to FY2018 was merely 2%. Nonetheless, FY2020 second quarter

STX collections is sustained by the increase level of non-residential construction happening on the island. Prior to FY2019,

the single largest increase in GRT in STT/STJ was 10% in FY2011 vs FY2010 and 24% in STX for FY2018 vs FY2017. However,

in FY2019 both districts increased by 30% and 49% respectively.

47,925,129

43,312,762

17,683,822

26,824,948

-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

FY 2019 FY 2020

St. Thomas/St.John St. Croix

47,925,129

17,683,822

43,312,762

26,824,948

-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

St. Thomas/St.John St. Croix

FY 2019 FY 2020


9

EXPENDITURES

The expenditures presented in this report reflect amounts appropriated for General Fund. This report examines the

Lapsing portion of the General Fund. In subsequent reports, efforts will be made to include the Non-Lapsing element of

the General Fund. The expenditures are analyzed by budget category based on the applicable function of government.

While inferences can be made regarding the trajectory of expenditures based on the data presented, expenditures are

cyclical and therefore fluctuate. Also, while salaries are a bit more predictable and therefore more suitable to determine

effects, caution is still advised given the preliminary nature of the data.

SALARIES

Actual salaries across all function of government increased 5.8% for first quarter FY2020 compared to FY2019’s first quarter.

The most significant increase of 22.8% occurred in Transportation & Facilities. Other notable increases included; Culture

and Recreation at 14.8%, Health and Human Services at 9.8%, Public Safety at 5.7%, General Government at 5.3%, and

Education at 3.7%. However, upon comparing the Actuals to the Revised Budget for this category, for first quarter FY2020,

a 17.5% reduction in salaries is revealed. General Government was the lone function to see an increase in salaries when

comparing Actuals to Revised Budget.

GENERALGOVERNMENT

HEALTH AND HUMANSERVICES

TRANSPORTATIONAND FACILITIES

PUBLIC SAFETY EDUCATIONCULTURE ANDRECREATION

2019 21,860,123 7,919,150 1,366,516 21,179,553 28,530,554 1,218,790

2020 22,171,138 8,580,079 1,596,701 20,031,694 26,901,258 1,386,705

21,860,123

7,919,150

1,366,516

21,179,553

28,530,554

1,218,790

22,171,138

8,580,079

1,596,701

20,031,694

26,901,258

1,386,705

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

2019 2020

GENERALGOVERNMENT




1st Quarter 15,805,795 6,521,748 1,190,539 16,371,104 19,265,637 977,518

2nd Quarter 22,171,138 8,580,079 1,596,701 20,031,694 26,901,258 1,386,705

15,805,795

6,521,748

1,190,539

16,371,104

19,265,637

977,518

22,171,138

8,580,079

1,596,701

20,031,694

26,901,258

1,386,705

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

1st Quarter 2nd Quarter


10

FRINGE BENEFITS

Fringe Benefits increased by 7.1% in second quarter FY2020 compared to second quarter FY2019. The most significant

increase was in Culture and Recreation at 20% and Transportation & Facilities at 17.5%. Other notable increases were

Health and Human Services at 15.8%, Public Safety at 10.8%, General Government at 7.9%, and Education at 1.3%.

Additionally, in the second quarter, Fringe Benefits increased 52.5% compared to first quarter FY2020.

GENERALGOVERNMENT


TRANSPORTATION ANDFACILITIES


2019 8,443,365 3,041,551 598,464 6,295,087 12,083,495 526,245

2020 9,116,378 3,521,483 703,036 6,975,322 12,242,625 631,650

8,443,365

3,041,551

598,464

6,295,087

12,083,495

526,245

9,116,378

3,521,483

703,036

6,975,322

12,242,625

631,650

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

2019 2020

GENERALGOVERNMENT




1st Quarter 5,500,007 2,298,104 480,619 4,758,972 8,008,294 420,365

2nd Quarter 9,116,378 3,521,483 703,036 6,975,322 12,242,625 631,650

5,500,007

2,298,104

480,619

4,758,972

8,008,294

420,365

9,116,378

3,521,483

703,036

6,975,322

12,242,625

631,650

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000



11

OTHER SERVICES

Other Services saw an overall increase of 10.5% in second quarter FY2020 compared to the same quarter in FY2019. The

most substantial increase occurred in Culture and Recreation at 211%. Other notable increases were in Health and Human

Services at 66.4%. General Government also saw a smaller increase of 0.4%. All other functions saw reductions compared

to FY2019. For instance, there were reductions of 0.05 in Public Safety, Transportation and Facilities saw a reduction of

1.5%, and Education saw reductions of 22%. Additionally, there was a 16% overall increase in second quarter for Other

Services when compared to the first quarter.

GENERALGOVERNMENT




2019 25,929,007 13,540,810 7,169,563 4,119,783 11,568,799 72,971

2020 26,036,886 22,531,645 7,060,281 4,117,872 9,018,536 226,969

25,929,007

13,540,810

7,169,563

4,119,783

11,568,799

72,971

26,036,886

22,531,645

7,060,281

4,117,872

9,018,536

226,969

-

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

2019 2020

GENERALGOVERNMENT

HEALTH ANDHUMAN SERVICES



1st Quarter 70,148,932 17,139,652 8,508,043 3,116,758 13,480,963 92,344

2nd Quarter 26,036,886 22,531,645 7,060,281 4,117,872 9,018,536 226,969

70,148,932

17,139,652

8,508,043

3,116,758

13,480,963

92,344

26,036,886

22,531,645

7,060,281 4,117,872 9,018,536

226,969

-

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000



12

CAPITAL PROJECTS

Capital projects increased 38.7% in first quarter FY2020 compared to FY2019. The most notable increase was seen in

Culture and Recreation at 100%. We are continuing to see some difficulties in getting projects started we experienced in

the first quarter. Comparatively, second quarter spending on capital projects decreased by 57.8% versus the first quarter.

GENERALGOVERNMENT


TRANSPORTATION ANDFACILITIES


2019 166,437 209,533 - - 55,290 -

2020 207,286 284,289 - - 68,363 38,330

166,437

209,533

- -

55,290

-

207,286

284,289

-

-

68,363

38,330

-

50,000

100,000

150,000

200,000

250,000

300,000

2019 2020

GENERALGOVERNMENT




1st Quarter 818,451 1,031,303 17,890 30,509 - -

2nd Quarter 207,286 284,289 - - 68,363 38,330

818,451

1,031,303

17,890 30,509 - -

207,286

284,289

- -

68,363 38,330

-

200,000

400,000

600,000

800,000

1,000,000

1,200,000



13

SUMMARY

We continue to notice a normalization of collections in the STT/STJ district, particularly in GRT collections, as construction

and other activities slow. On the contrary, STX continues to see increased collections in second quarter FY2020 when

compared to FY2019. In second quarter FY2020, the overall General Fund collections increased by 3% when compared to

FY2019. Specifically, Total Taxes increased by 12% and Total Other Revenues decreased by 54%. However, General Fund

saw a 6% increase in Total Operating Income. Unfortunately, Total Contributions decreased by 23%. Nonetheless, at the

end of the second quarter, Total Revenues General Fund increased by 3%. The Total Revenues as of March FY2020 was

$407.1M compared to $396.7 for FY2019. As of March FY2020, actual expenditures increased by 7.1% compared to the same

period in FY2019. The most significant increase occurred in capital projects at 61.2%. Other notable increases were other

services at 12%, Fringe at 5.3%, and Salaries at 1.3%. From a cash flow perspective, at the end of second quarter FY2020,

specifically the week ended April 3, 2020, the Territory had a positive cash flow of $13.5 million and a positive cash balance

of $23.8 million with 9 days cash on hand.

expenditure report - vi...2nd quarter revenue & expenditure report fiscal year 2020 6 corporate...

Documents