City of Galveston First Quarter Report FY 2021 CITY OF GALVESTON QUARTERLY REPORT FISCAL YEAR 2021 OCTOBER 2020 – DECEMBER 2020 ________________________________________________________________________________________ Financial Summary Schedule of Revenue and Expenditures Page City-wide Summary 1 General Fund 2 Special Revenue Funds 5 Rosenberg Library Fund 8 Seawall Parking Fund 8 Convention Center Surplus Fund 10 Trolley Project Budget 11 Historical Buildings Fund 12 City Council Projects & Initiatives Program Fund 12 Infrastructure Fund 13 Separation Pay Fund 13 Public Access Channel Fund 14 Parking Management Fund 14 Lasker Pool Fund 15 Pension Reform Fund 15 Revenue Producing Parks 16 D.E.A. Asset Forfeiture Fund 17 Police Special Revenue Fund 17 Police Quartermaster Fund 18 Alarm Permit Fund 18 Fire Special Revenue Fund 19 Municipal Court Building Security Fund 19 Municipal Court Technology Fund 20 Municipal Court Local Truancy and Diversion Fund 20 Settlement and Capital Reserve Fund 21 Technology Improvement Fund 21 Island Transit Fund 22 Hurricane Harvey Fund 23 Debt Service Fund 25 Enterprise Funds 26 Combined Utility Funds 27 Waterworks Fund 28 Sewer System Fund 29 Sanitation Fund 30 Drainage Utility Fund 31 Airport Fund 32 Internal Service Funds 33 Central Service Fund 34 Central Garage Fund 35 Casualty and Liability Insurance Fund 36 Workers’ Compensation Fund 37 Health and Life Fund 38 Capital Projects Fund 39 CITY OF GALVESTON QUARTERLY REPORT FISCAL YEAR 2021 OCTOBER 2021 – DECEMBER 2021 ________________________________________________________________________________________ Capital Improvement Capital Improvement Status Update 41 Cash Flow Report for Funding Sources 50 Appendices City of Galveston Property Tax Collections 71 Analysis of Property Tax Revenues 73 City of Galveston Sales Tax Collection 74 Sales Tax Model 75 Monthly Water Revenue History FY2015-2021 79 Monthly Sewer Revenue History FY2015-2021 80 General Fund Revenue Detail FY2021 81 Position Totals by Department 83 OFFICE OF THE CITY MANAGER PO Box 779| Galveston, TX 77553-0779 [email protected] |409-797-3520 February 24, 2021 Honorable Mayor Dr. Craig Brown and Members of Council This is to present the First Quarter Budget Status Report for the period ending December 31, 2020 with projections as of the fiscal year ending September 30, 2021 (FY 2021). This quarterly report includes preliminary statements of income, expense and ending fund balances for all operating funds as well as the cash balances and project allocations for all capital funds. As you know, last fiscal year FY 2020 became extremely challenging with the advent of COVID-19 in March 2020. City operations had begun to stabilize when the most severe winter storm in 30 years hit Galveston and the entire State of Texas during the week of February 15-19, 2021. The effects of this storm on city finances are still being added up and are not yet available for inclusion in this report. But we expect to receive reimbursement for virtually all of our additional expenses through disaster assistance provided by FEMA through the State. After ending FY 2020 in strong financial condition, overall city revenues have continued to perform well in FY 2021. In total, the city budgeted $133 million in revenue, and collections for FY 2021 are projected to total $133.4 million. Citywide spending was budgeted at $148.3 million, including $32.7 million in the City’s Special Revenue Funds. Projected spending for year-end totals $138.9 million with the Special Revenue Funds accounting for the vast majority of the drop-off in spending from the budgeted level as they always do. (Note: Because special fund revenues are legally restricted to limited purposes, it is our practice to include all of the available special fund revenue in each year’s budget. This makes the money available in case the City Council determines a need for those funds to be spent. Unexpended special fund balances remain in their dedicated fund until they are expended for an appropriate legally restricted purpose as authorized by City Council.) General Fund As of July 2020, when we prepared the FY 2021 General Fund Budget, we estimated $57.5 million in revenue and $57.1 million in spending for FY 2020 resulting in a net i | Page OFFICE OF THE CITY MANAGER PO Box 779| Galveston, TX 77553-0779 [email protected] |409-797-3520 anticipated addition to fund balance of $600,000. As of the FY 2020 fourth quarter end, revenues are now projected at $58.5 million and General Fund spending is projected to be $56.6 million, providing a $1.9 million boost to the city’s most visible and critical fund reserve. Including this boost, the $18.2 million projected ending fund balance is $4.2 million in excess of the 90-day requirement. However, it is also still $1.6 million less than it was at the beginning of FY 2019 ($19.7 million) prior to the CDM settlement payment. This $18.2 million beginning balance for FY 2021 does not include 80 percent of the expected but not yet received CARES Act reimbursement for COVID-19 costs estimated at $1.7 million for the General Fund. The projections in this report also exclude anticipated reimbursements in excess of $292,000 for General Fund preparations for Hurricane Laura. These expenses (CARES Act and Laura) are under review by the Texas Department of Emergency Management and a decision is expected during FY 2021. As of the writing of this transmittal, pending is an adjustment proposed for budget approval by City Council on February 25th to write off $1.53 million in CDBG receivables because collection is highly unlikely. This writeoff is being recommended for inclusion in the FY 2020 Comprehensive Annual Financial Report. If approved, this will reduce the FY 2020 ending General Fund balance by $1.53 million to $16.6 million as the previously charged expenses must be funded with City dollars. The potential net effect of the CARES Act, Laura and CDBG adjustments is to increase the reported fund balance by approximately $470,000 to $18.8 million once they have all been approved. Both General Fund revenue and expense are projected to underrun the FY 2021 Adopted Budget by approximately one percent. (See pages 1 and 2 from this report.) General Fund revenues, budgeted at $60.97 million are projected to end FY 2021 at $60.41 million. This $558,000 shortage is attributable to lower mixed drink tax revenues resulting from ongoing COVID-19 effects as well as the prolonged and continuing effect on Municipal Court revenue due to difficulties associated with in-person appearances. Also, lower franchise tax revenue is being collected as the full effect of the 2019 state legislation that forgives telephone franchise payments by Comcast and cable TV payments by AT&T takes effect for a full year. Sales tax revenue is currently projected to make budget ($16.3 million) while property tax revenue is projected to be less by yearend as the result of $52 million less in taxable ii | Page OFFICE OF THE CITY MANAGER PO Box 779| Galveston, TX 77553-0779 [email protected] |409-797-3520 value being certified by GCAD than was assumed when the budget was prepared. We are advised by GCAD that very little of this taxable value loss was due to taxpayers who appealed their current year taxable values as provided by the disaster relief measure passed by Council in December. FY 2021 General Fund spending is also budgeted at $60.97 million, and is projected to end the fiscal year at $60.4 million, or $574,000 below the FY 2021 Budget. Each significant variation in projected revenue or spending from budget is footnoted and explained in the General Fund summary herein (See pages 1-2). Other Funds The Combined Utility System Fund (including the water and wastewater funds) is currently projected to receive $39.93 million in revenue, more than $1 million over the $38.7 million budget. (See page 23 of this report.) Prior to the recent winter storm, and before significant water revenue losses were incurred as a direct result of the storm, water fund revenue was projected at $1.17 million over budget. All water revenue losses now are being prepared for submission to TDEM/FEMA for reimbursement through disaster assistance. Wastewater fund expenses are projected at $16.1 million, $283,000 over budget. This is solely attributable to a clerical error made in the preparation of the Wastewater Collection budget. This will be corrected in the first budget amendment submitted to City Council for FY 2021. (See page 25 of this report.) As a key portion of this quarterly report, let me express concern for the steady trend experienced with higher medical costs than anticipated in the FY 2021 Budget for the joint Health and Life Fund. (See page 35 of this report.) Since last July, total medical and pharmaceutical costs net of stop-loss reimbursements have remained in the $1 million range per month. The City, the Port and the Park Board each contribute an employer’s share to this plan and all our employees receive benefits accordingly. We are self-insured, as we have been for some time, but the current trend is being referred to our benefits consultants, HUB International for recommendations. HUB provided expense projections for this report that total $12.7 million. Scheduled premium payments by plan members and the three employers total $11.9 million. This is problematic for the current year because the goal is to maintain balance between these two numbers and keep the plan sound. Currently, it appears that the plan began iii |