Minutes 03/29/2004 - Laserfiche WebLink

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March 29, 2004 Cigarette taxes. The cigarette taxes are showing positive revenue trends. The growth is estimated to be 12.3% or $341,075. Charges for service. In the past, bulk water sales, totaling almost $7.7 million, were recorded in the General Fund. At first glance it appears this category is down by more than 71.6%. However, the loss of revenue is a change in accounting practices. Bulk water sales are now shown as revenue to the Public Utilities fund. The estimated revenue from bulk water sales is anticipated to increase by 3.5%, with the return on investment to the General Fund of almost $9 million. This change in accounting practice is also reflected in the revenue category of Transfers Into the General Fund. Recovered costs. As part of the Public Utilities accounting change, there are no longer indirect charges being paid to the General Fund by the Public Utilities Fund, which in FY 04 was $564,000. This is not lost revenue to the General Fund, but has been moved to "Return on Investment Revenue." A second significant impact was the policy decision to provide a "holiday" from indirect charges to those Internal service funds with deficits. The impact of this holiday is $327,783. · Other revenues. The remaining revenues are remaining fairly level from the previous year with minimal growth. As discussed earlier we can anticipate in FY 06 and FY 07 that there will be good growth in revenue to support services in the City as a whole. The impact of State funding cannot be underestimated. The fate of the State budget is not known at this time. The Commonwealth provides more than $23 million to the General Fund; and this funding is designated for various activities from Constitutional Officers to reimbursement for Local Law Enforcement. If the Commonwealth resolves the budget impasse and if we are allocated additional funds for operations, we will evaluate the potential increase or decrease and bring the appropriate budget amendments to City Council. With Council's concurrence, I plan to send a copy of this proposed budget to the Governor and each member of the General Assembly so they can see the impact of State budget inaction on our budget. ONGOING COMMITMENT TO SCHOOLS Over the past several months there has been much discussion about the City of Portsmouth's contribution to Schools. I would like to take a moment to discuss the available funding for all City operations. On average, only 75% of the total revenue the City generates is available for funding the core services. The 25% of dedicated funding is made up of reimbursement for services (such as VDOT reimbursements, state funding for library books, etc.), dedicated funding for services (such as state funding for Constitutional Officers, rental of land and buildings), or debt service, which is a non- operational item. All of these items are specifically earmarked and cannot be redirected for other City operations and services. Given the funding challenges of the last few years, available funding has gone to the City's top priorities of Schools and public safety. The Schools have been the single largest expenditure. Since FY 01, spending on Schools represents, on average, approximately 30% of the available funding to the City. Among the two priority areas of education and public safety, 67% of the City's available funding is spoken for in FY 05. The remaining 33% must be used to fund all the other City services, such as parks, libraries, museums, code enforcement, jails, and other essential core services. City funding for Schools is made up of more than just the direct transfer from the General Fund, and also includes debt service, indirect costs, and grounds maintenance. Debt service related to Schools over this period has averaged 36% of the City's tax support general obligation debt service. This year's proposed funding is 13.6% above the FY 04 amount and 22% above the FY 03 amount.