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Home My WebLink AboutCouncil Presentation 05/05/2020-FY 2020-2021 Budget PlanningFiscal Year 2020-2021: Budget Planning COVID-19 Update ITEMS FOR DISCUSSION Update on where we are today for F/Y 2020 Assumptions and impacts moving forward Updated General Fund FY2021 Outlook Impact to next year budget –Discussion BUDGET BRIEFING 2 BACKGROUND COVID-19 pandemic has caused unprecedented social and economic disruption Intentionally pressed pause on the economy No models exist to quantify the magnitude or duration of financial impact or the eventual recovery Key to recovery will be effectively handling the health emergency and the reopening of our economy BUDGET BRIEFING 3 BACKGROUND National economy contracted by 4.8% in first quarter of calendar year 2020 30 million Unemployment Claims over last 6 weeks Second quarter contraction will likely be significantly worse Rebound expected to commence in the final two quarters of calendar year 2020 Economists agree we are in a recession, but unsure of duration or eventual impact –depends on pandemic! BUDGET BRIEFING 4 FY2020 REVISED OUTLOOK Few Real-Time Indicators or Useful Revenue Trends Marana Hotel occupancy rate fell by 34% ( March Year over Year) Marana Hotel Revenues declined by 51.6% (March Year over Year) Several restaurant chains reporting 70% decrease in sales Housing Permits still being issued but future is uncertain We will not have useful TPT data for another month: Mid May for March Collections to Mid July for May Collections BUDGET BRIEFING Sources: STR Report, JLBC, Marana Development Services 5 F/Y 2020 PROJECTION ASSUMPTIONS Reduced Revenues for period April-June compared to pre-pandemic anticipated collections: BUDGET BRIEFING Sales Tax Retail -50% Utilities & Insurance -20% Construction -40% Restaurants –65% Hotels –65% Other –75% Shared Revenue State Shared –50% Urban Revenue –No change Auto Lieu –35% Development Related Revenue -50% 687 SFR permits to date 6 F/Y 2020 PROJECTION ASSUMPTIONS Projected expenses for remainder of the year: Salaries –Projected based on trending current payroll Contractual, Operating & Capital Trending Discussions with departments Some projects and purchases deferred Travel suspended until further notice Debt service and Transfers assumed at 100% BUDGET BRIEFING 7 F/Y 2020 PROJECTION General fund revenues at 79% of budget ($37.1m actual of $47.2m budget as of 4/7/20) Anticipated year-end revenues at 98% ($46.3m) Anticipated year-end expenditures at 92% ($43.1m) General Fund Balance increase of $2.9m Under most conservative revenue scenario (75% drop), fund balance would still increase slightly ($0-$0.5m) BUDGET BRIEFING 8 BUDGET BRIEFING BUDGET OUTLOOK –COVID 19 9 BUDGET BRIEFING FY2021 REVISED GENERAL FUND SUMMARY –January 2020 Revenues FY2020 Adopted Budget FY2021 Prelim Budget FY2021 $ Change FY2021 % Change Sales tax revenues $ 26,910,247 $ 28,614,336 $ 1,704,089 6.3% Shared revenue 12,840,139 13,272,702 432,563 3.4% Licenses, fees & permits 4,881,012 5,073,142 192,130 3.9% Other 2,557,269 2,649,419 92,150 3.6% Total Revenue 47,188,667 49,609,599 2,420,932 5.1% Summary FY2020 Adopted Budget FY2021 Prelim Budget FY2021 $ Change FY2021 % Change Ongoing 45,087,493 46,905,039 1,817,546 4.0% One-time 2,101,174 2,704,560 603,386 28.7% Total Revenue $ 47,188,667 $ 49,609,599 $ 2,420,932 5.1% Note 1: Sales tax revenue projections for FY2021 could change significantly based upon additional data received from ADOR. Additionally, by development agreement, 45% of monies collected from the Marana Center will be reimbursed back to the developer for public infrastructure. Note 2: Intergovernmental/shared revenue projections may change. Final budget will be based upon ADOR projections & US Census population estimates (~May 2020). 10 Forecasting Assumptions: Impact will depend on duration of pandemic –gradual lifting of social distancing will have symmetrical impact to economy Sales Tax: Decreases to consumer spending and business growth Intergovernmental: Population growth of 2,110 or 4.5% (July 2018 to July 2019) License, Permits, & Fees: 617 new home permits and decrease to commercial activity BUDGET BRIEFING FY2021 REVISED OUTLOOK 11 Few Real-Time Indicators or Useful Revenue Available: Hotel occupancy rate & Revenues at multi-year lows New Businesses continue to open, but have lost a few We will not have useful TPT data for another month: Mid May for March Collections to Mid July for May Collections BUDGET BRIEFING FY2021 REVISED OUTLOOK 12 Sales Taxes Impact to key areas (Year-Over- Year): Retail: 10% Construction: Unchanged Hotel & Lodging: 10% Restaurants: 10% All Others: 10% BUDGET BRIEFING FY2021 REVISED OUTLOOK 2020 Budget 2021 Prelim Budget $ Change % Change 26,910,247 24,389,464 (2,520,783)(9.4%) $0 $2 $4 $6 $8 $10 $12 $14 $16 MillionsHistoric Collections by Major Tax Category Retail Construction Hotel & Lodging Restaurant & Bar 13 Shared Revenues Modest improvements in revenues & Census estimates: Shared Sales Tax: 10% Shared Income Tax: 15% Auto Lieu Tax: 10% Will change based on May estimates by ADOR and US Census population estimates BUDGET BRIEFING FY2021 REVISED OUTLOOK 2020 Budget 2021 Prelim Budget $ Change % Change 12,840,139 13,047,340 207,616 1.6% State of AZ -April Forecast Versus Enacted Budget 14 Licenses, Permits & Fees Single Family Residential (SFR) permits: SFR’s –FY2020 Budgeted: 735 Thru April 30: 687 SFR’s –FY2021 Prelim. Budget: 617 BUDGET BRIEFING FY2021 REVISED OUTLOOK 2020 Budget 2021 Prelim Budget $ Change % Change 4,881,012 4,427,112 (453,900)(9.3%) 668 559 687 794 802 687 735 0 100 200 300 400 500 600 700 800 900 2015 2016 2017 2018 2019 2020 2020Budget SFR Building Permits By Fiscal Year 15 BUDGET BRIEFING FY2021 REVISED GENERAL FUND SUMMARY Revenues FY2020 Adopted Budget FY2021 Prelim Budget FY2021 $ Change FY2021 % Change Sales tax revenues $ 26,910,247 $ 24,389,464 $ (2,520,783) -9.4% Shared revenue 12,840,139 13,047,755 207,616 1.6% Licenses, fees & permits 4,881,012 4,427,112 (453,900) -9.3% Other 2,557,269 2,217,493 (339,776) -13.3% Total Revenue 47,188,667 44,081,824 (3,106,843) -6.6% Summary FY2020 Adopted Budget FY2021 Prelim Budget FY2021 $ Change FY2021 % Change Ongoing 45,087,493 42,442,300 (2,645,193) -5.9% One-time 2,101,174 1,639,524 (461,650) -22.0% Total Revenue $ 47,188,667 $ 44,081,824 $ (3,106,843) -6.6% Note 1: Sales tax revenue projections for FY2021 could change significantly based upon additional data received from ADOR. Additionally, by development agreement, 45% of monies collected from the Marana Center will be reimbursed back to the developer for public infrastructure. Note 2: Intergovernmental/shared revenue projections may change. Final budget will be based upon ADOR projections & US Census population estimates (~May 2020). 16 Finance Revised Budget Assumptions: Payroll at current level with required increases (insurance premiums, pension costs, etc.) No new positions or merit increases Debt service payments at f/y 2021 required level. Incorporates departmental reductions for ongoing and one time requests for f/y 2021 New CIP projects funded by General Fund deferred BUDGET BRIEFING FY2021 GENERAL FUND – REVISED BUDGET 17 Path forward –Base budget with reductions (revised budget) Continue looking for savings –operational impact? Introduce flexibility in budget document Size of Contingency Other methods BUDGET BRIEFING FY2021 GENERAL FUND –NEXT STEPS DISCUSSION 18 BUDGET BRIEFING FY2021 BUDGET PROCESS KEY DATES Dates:Stage in Budget Process Description January 14, 2020 Planning Preliminary budget outlook & Council goals/objectives March 10, 2020 Planning Presentation,discussion & direction regarding FY2021-2026 CIP Program May 5, 2020 Reviewing Presentation & discussion on revised budget outlook and Council direction May 26, 2020 Reviewing Manager’s Recommended Budget June 16, 2020 Approving Presentation & adoption of Tentative Budget July 21, 2020 Approving Adoption of Final Budget 19 DISCUSSION 20