On May 15th, the Council Auditor released the City’s 2nd quarter financial report – and as you might expect, the news isn’t good. The Council Auditor notes that many of the City’s subfunds presented in the report are financially challenged – with many of the same comments being repeated for several subfunds. Overall, the Council Auditor is concerned with the negative cumulative effect these subfunds have on the City’s overall financial health. Add to this a projected $15 million tax shortfall, and the City’s budget process, beginning with the Mayor’s budget presentation in July, could get very testy.
Read more about the Council Auditor’s 2nd quarter financial report after the break.
Clerk of the Court (Sub-fund 016): The Sub-fund is projecting to have a year end unfavorable variance of ($1,281,065). The projection for Charges for Services appear to be overstated. With the current economic climate, we believe the negative impact at the end of the current fiscal year to the General Fund could be closer to $2,000,000.
According to the Council Auditor’s comments, the unfavorable variance of $1.3 million is due to lower than anticipated Recording Fees and Documentary Stamps as reflected in Charges for Services resulting from continuing problems in the housing market.
Building Inspections (Sub-fund 159): The Building Inspections Sub-fund is projecting an overall unfavorable variance of ($2,035,609). Revenues for this Sub-Fund are projected to experience an unfavorable variance of ($3,023,233) for the fiscal year. This year’s Budget Ordinance appropriated $1,800,000 from fund balance and most likely will deplete all remaining fund balance. The Administration will need to increase revenues or decrease expenditures in order to provide for a balanced FY 09/10 budget.
According to the Council Auditor’s comments, the unfavorable variance in Charges for Services is due to the slowdown in construction.
Parking Garage Revenue (Sub-fund 412): The balance sheet for Sub-fund 412 shows a negative cash balance ($841,484) with current liabilities of $4,150,190 and negative fund equity of ($5,985,759). Also the Sub-fund is projecting an unfavorable variance at year end of ($178,111). Per the Budget Office, this subfund will benefit from the retirement of debt on October 1, 2009. However, we are still concerned about this sub-fund’s poor financial condition.
Solid Waste (Sub-fund 441): The Sub-fund is projecting a year end unfavorable variance of ($196,210). The projection for Charges for Services appear to be overstated by $5,000,000, which would result in a greater unfavorable variance.
According to the Council Auditor’s comments, the unfavorable variance of $5.3 million in Charges for Services is the result of a projected decrease in tonnage of approximately 45,000 tons. This was mostly offset by a decrease in Operating Expenses.
The City Council Finance Committee will conduct its mid-year budget review at a special meeting on May 21, 2009 in City Council chambers beginning at 1pm. That review should prove interesting given the repeat of bad news from the 1st quarter financial report issued back in February.
To read the entire Council Auditor’s 2nd quarter financial report click here, and then click on Report # 662.