City of Charlottesville City Manager’s Office MEMO TO: Council FROM: Michael C. Rogers, Interim City Manager DATE: June 21, 2022 SUBJECT: Financial Report – FY 2022 through May 31, 2022 The online Budget Explorer which can be found at on the Budget Office webpage at www.charlottesville.gov/budget has been revised and includes a quarterly report tab for both revenues and expenditures. These quarterly tabs are automatically updated at the end of each quarter and are available for public viewing. For this report in particular, the 4th quarter visualization contains financial information through May 31, 2022. Final 4th quarter data will be provided once the year is officially closed and the audit is completed. This usually happens in late November or early December. Both a citywide view as well as the ability to drill down to the individual department level is available. The information presented in the visualization comes directly from the City’s financial system and represents dollars that have been received and/or paid out as of the chosen date. This memo serves as a supplement to those reports to provide updates and any other relevant narrative that pertains to the City’s finances. Revenue Budget Projections As of May 31, 2022, approximately 84% of the budgeted revenue has been collected. We remain on track to collect more than the Adopted Revenue budget of $192,212,843. Real Estate and Personal Property tax payments for the first half of 2022 were due on June 6th and are not reflected in the totals below. The revenue team continues to monitor and revise many of the large tax revenues. The following revenue budget revisions are projected: 1 FY 2022 FY 2022 Local Taxes Budget Revised Change Real Estate Tax (using current rate of $0.95/$100) $ 80,277,442 $ 84,314,057 $ 4,036,615 Personal Property Tax (using current rate of $4.20/$100) 9,741,000 11,700,000 1,959,000 Public Service Tax 1,542,930 1,589,086 46,156 Utility Taxes 4,500,000 4,590,000 90,000 Virginia Communications Sales and Use Tax 2,400,000 2,270,000 (130,000) Tax on Bank Stock 1,200,000 1,157,411 (42,589) Tax on Wills & Deeds 725,000 1,000,000 275,000 Sales & Use Tax 12,000,000 14,200,000 2,200,000 Transient Room Tax 5,000,000 7,200,000 2,200,000 Meals Tax 10,700,000 13,100,000 2,400,000 Cigarette Tax 550,000 400,000 (150,000) Licenses and Permits Business & Professional Licenses $ 7,000,000 $ 8,700,000 1,700,000 Charges for Services Recreation Income $ 1,665,859 $ 1,000,000 (665,859) Designated Revenues Meals Tax Designated for the Debt Service Fund $ 2,140,000 $ 2,600,000 $ 460,000 Total Revenue Budget Surplus $ 14,378,323 Expenditure Budget Projections Due to their cyclical nature, expenditure projections are not quite as straightforward as revenue to project. Many factors make projecting expenditures a little more difficult to project than revenues. Many of the City operations are seasonal and the interfund transfers are large amounts that get posted all at once. As of May 31, 2022, we are approximately 92% of the way through the fiscal year and the City’s financials indicate that 85.61% of the budget has been spent. This is a good indicator that expenses are tracking well with the budget. Early indications are that there is likely to also be some budget savings in expenditures as well. Please note all the information presented in this memo and the visualization is collected as of a specific point in time. All amounts are subject to change until the audit is complete and the books are officially closed. At that time, a final report will be presented to Council by the City’s Finance Director and the actual surplus will be quantified at that time. 2 Other Financial Matters As part of the FY 23 budget development process, the Charlottesville City School Board committed some of its federal ARP and CSLFRF (Coronavirus State and Local Recovery Funds) grant funds to help reduce City dollars for school CIP projects. $808k in HVAC projects were identified as eligible to be covered by the CSLFRF grant funds. City and School staff have been working together to document those projects and to transfer the funding. To date, CCS has reimbursed the City CIP $163k using CSLFRF HVAC grant funds. 3 City of Charlottesville Treasurer’s Office Cash & Investment Report April 30, 2022 • The Investment Policy has been established by the Treasurer of the City of Charlottesville to ensure effective management of the day-to-day investment activity for the City, and is designed to increase non-tax revenues by investing funds when not needed for current obligations. • The Treasurer of the City of Charlottesville is an elected office (“Constitutional Officer”) charged with receiving, collecting, safeguarding and disbursing city funds with general custody of city funds from all sources. The general custody of all funds requires the investment of those funds within the confines of the Code of Virginia and a comprehensive Investment Policy developed and maintained by the Treasurer. • All funds are managed to accomplish the fundamental goals of safety, liquidity, and yield. Monthly Cash Balance by Investment Type $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $0 Jul-21 Aug-21 Sep-21 Oct-21 Nov-21 Dec-21 Jan-22 Feb-22 Mar-22 Apr-22 Managed Investements Investment Pools Sweep Accounts Cash & Money Market End-of-Quarter Balance by Investment Category Quarter Quarter Quarter Month Ending Ending Ending Ending Category 9/30/2021 12/31/2021 3/31/2022 4/30/2022 Cash & Money Market $17,918,751 $38,218,626 $41,892,496 $35,522,724 Sweep Accounts $31,489,651 $31,515,982 $31,536,440 $31,553,480 Investment Pools $7,685,349 $1,685,629 $1,686,411 $1,686,949 Managed Investments $36,483,906 $36,483,906 $37,020,645 $36,810,896 Total Amount Invested $93,577,658 $107,904,143 $112,135,992 $105,574,049 Quarterly Investment Earnings by Investment Category Quarter Quarter Quarter Quarter-to- Ending Ending Ending Date Category 9/30/2021 12/31/2021 3/31/2022 4/30/2022 Cash & Money Market $84,478 $62,060 $141,707 $42,474 Sweep Accounts $27,644 $27,712 $27,136 $9,052 Investment Pools $2,179 $393 $669 $538 Managed Investments $96,735 $76,029 $103,257 $8,129 Total Amount Invested $211,036 $166,193 $272,768 $60,194 Managed Investments - Portfolio Composition Certificate of Deposits 2.1% Commercial Paper U.S. Treasuries 9.8% 71.8% Corporate Notes 5.9% Federal Agencies 10.4% Managed Investments - Maturity Distribution 30% 24.9% 25% 22.0% 20% 16.7% 14.6% 15.3% 15% 10% 6.5% 5% 0.0% 0% 0 - 6 Months6 - 12 Months 1 - 2 Years 2 - 3 Years 3 - 4 Years 4 - 5 Years Over 5 Years Permitted Investments and Diversification Permitted Investments Sector Limit Issuer Limit Duration Limit U.S. Treasury Obligations 100% 100% 5 Years Federal Agency Obligations 100% 100% 5 Years Municipal Obligations 10% 3% 5 Years Commercial Paper 20% 3% 270 days Bankers' Acceptances 10% 3% 180 days Corporate Notes 20% 3% 5 Years Negotiable Certificates of Deposit and 20% 3% 5 Years Bank Deposit Notes Money Market Mutual Funds 100% 50% Liquid LGIP 50% 50% Liquid Repurchase Agreements 35% 35% Liquid