City of Charlottesville Preliminary Projected Budget and Long Term Forecast General Fund Fiscal Year

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1 1 1/20/2016 City of Charlottesville Preliminary Budget and Long Term Forecast General Fund Fiscal Year General Fund Revenues FY2016 Adopted FY2016 Revised * FY2017 FY2018 FY2019 FY2020 FY2021 Real Estate Tax Revenue 54,391,163 54,391, ,215, ,043, ,884, ,737, ,603, City/County Revenue Sharing 16,220,068 16,220, ,238, ,328, ,417, ,499, ,678, Personal Property Tax (local) 7,268,904 7,268, ,414, ,562, ,713, ,868, ,868, Personal Property Tax (state) 3,498,256 3,498, ,498, ,498, ,498, ,498, ,498, Utility Taxes 4,600,000 4,600, ,630, ,676, ,723, ,770, ,818, Virginia Communications Sales & Use Tax 3,232,000 3,200, ,200, ,232, ,264, ,296, ,329, Sales and Use Tax 11,181,966 11,181, ,405, ,576, ,750, ,926, ,105, Meals Tax 10,710,750 10,710, ,924, ,143, ,366, ,593, ,825, Lodging Tax 3,085,500 3,330, ,400, ,468, ,537, ,608, ,680, Business License Tax 6,768,371 6,768, ,903, ,041, ,182, ,326, ,472, Licenses and Permits 1,835,000 1,835, ,915, ,915, ,915, ,915, ,915, Intergovernmental Revenue 8,839,671 8,844, ,963, ,963, ,963, ,963, ,963, Transfers from Other Funds/Previous Year Carryover 675, , , Other Revenues 24,084,786 23,965, ,453, ,453, ,453, ,453, ,453, Revenues 156,391, ,489, ,462, ,902, ,669, ,456, ,211, * d from FY 2016 Adopted General Fund Expenditures Local Contribution to Schools (40 target) 46,489,860 46,489, ,730, ,121, ,517, ,920, ,267, Additional Funding Request from Schools 852, , ,000, Outside and Nonprofit Agency Funding 8,015,334 8,015, ,543, ,714, ,888, ,066, ,247, Public Safety Agency Funding 7,596,239 7,596, ,779, ,042, ,313, ,593, ,881, Health Care (City Contribution) 4,135,664 4,135, ,834, ,220, ,534, ,866, ,218, Employee Retirement 8,451,212 8,451, ,419, ,702, ,993, ,293, ,602, Fixed Costs 4,999,208 4,999, ,104, ,155, ,206, ,258, ,311, Housing Programs and Tax Relief 1,162,000 1,162, ,165, ,165, ,165, ,165, ,165, Annualization of Employee Salaries and FICA 30,521,904 30,521, ,196, ,820, ,456, ,105, ,768, Employee COLA Increase (7/1/16) and Training 959, , ,150, ,173, ,196, ,220, ,244, Comprehensive Services Act 2,175,000 2,175, ,000, ,000, ,000, ,000, ,000, Fund Balance Target Adjustment 390, , , , , , , Transfer to Debt Service 9,160,000 9,160, ,757, ,416, ,096, ,815, ,055, GF Contribution to Facilities Repair Fund 400, , , , , , , GF Contribution to Capital Improvement Program 4,750,000 4,750, ,065, ,394, ,745, ,118, ,516, GF Contribution to Equipment Replacement Fund 1,122,057 1,122, ,107, ,130, ,152, ,175, ,199, Landfill Remediation 300, , , , , , , All Other Expenditures 24,910,705 24,910, ,138, ,636, ,143, ,660, ,187, Expenditures 156,391, ,391, ,393, ,092, ,811, ,661, ,064, Surplus/(Shortfall) - 98,256 (5,931,304) (7,190,052) (8,142,154) (9,204,563) (9,852,715) Surplus/(Shortfall) as a of Expenditures

2 2 1/20/2016 Notes and Assumptions - FY 16 Revised Revenue Projections Utility Taxes - Projections are now looking to be the same as FY 15. This revenue is driven most notably by weather and therefore, mild weather means the City collects less revenue. Virginia Communications Sales and Use Tax - This revenue source includes the consumer tax for telephones and cable, E-911 tax and cable franchise fee and is now projecting a slight decrease from original projections based on current trends. Lodging Taxes - These revenue sources remain strong, meals in particular at this time, mostly due to new retailers in the City and continued growth based on monthly trend analysis, which has remained consistent. They are projected to grow 3 and 3.1 respectively over FY 14 actuals, improving the outlook for FY 15. Cigarette Tax - Based on FY15 Actuals this item is being reduced slightly from the original projections. Overall sales Citywide are down plus the loss of sales from a large retailer who no longer sells cigarettes end to this reduction. Notes and Assumptions- FY Revenue Projections Real Estate Revenue - Preliminary projections are showing a 1.5 increase in residential reassessment, 1.0 in commercial and $74Min new construction, with a 1.5 increase going forward. Final assessment projections for CY 2016, half of which impact FY 17, will be completed by the end of January. City/County Revenue Sharing - In FY 17 the City is projected to receive a slight increase over the FY 16 amount, by approximately $180,000, which is reflective of the increasing assessments that the County started experiencing a few years ago and continues to do so. This is a preliminary estimate done by City staff since the County has not sent official notice of the FY 2017 at the time this was being completed. Personal Property Tax (Local)- In addition to changes in personal property tax assessments, this revenue may also grow as the burden is shifted from the State (which has in essence eliminated Car Tax Relief) to the taxpayer. Percentages are revised and approved by Council annually. Personal Property Tax (State) - PPTRA is a block grant of money that the City receives each year from the State. The amount received by the City is not expected to change. Utility Taxes - The revenue source, which includes utility taxes collected from City's gas and water operations and consumer utility tax for electric services, is expected to climb modestly in FY 17. This is driven most notably by weather and therefore, mild weather means the City collects less revenue in this area. Virginia Communications Sales and Use Tax - This revenue source includes the consumer tax for telephones and cable, E-911 tax and cable franchise fee. Sales and Use Tax - FY 17 anticipates that this revenue will continue to trend upward. While this revenue trend has been difficult to predict, it's seen consistent growth the past several years indicating consumer confidence in the economy. Meals Tax - Staff is tracking the meals tax revenue month and will report out to Council at year end regarding revenue collected per the rate adjusted revenue. Revenues are still tracking to make budget and to increase by 2 in FY 17. Lodging Taxes - The lodging tax revenue is showing real growth even before accounting for possible revenues as new hotels come online in the next year. Staff has not included any estimates for possible revenue because they are unknown at this time what those new hotels may generate. FY 18 estimates and beyond will reflect what those actually would be. Cigarette Tax - Based on FY15 Actuals this item is being reduced slightly from the FY16 Adopted Budget figures. Overall sales Citywide are down plus the loss of sales from a large retailer who no longer sells cigarettes led to this reduction. Business License Tax - FY 17 and future estimates reflect a modest growth going forward based on the FY16 projected base. Licenses and Permits - The FY 17 projections have been provided by Neighborhood Development Services and reflect the past performance of these revenues in addition to the trends staff is seeing in the amount and values of permits coming forward. Intergovernmental Revenue - This includes revenue from UVA, State, Federal government, schools, and Albemarle county for various shared services and contracts (other than City/County Revenue Sharing revenue). In FY 17, these revenue sources are expected to essentially remain flat except for State Highway Assistance which is expected to see a slight increase. Other Local Revenues - This includes taxes, fees, misc. revenue and charges for services generated by local government. The increase projected is due to increased contractual costs and associated revenues for School Pupil and School Building Maintenance services. Transfers from Other Funds /Previous Year Carryover - As part of the FY 15 year end appropriation, City Council approved $1,000,000 to be used towards a contribution to the retirement fund to cover the 1 COLA given to retirees in FY 16. The liability for that COLA is $700,000; the remaining $300,000 shown above represents one-time revenue used to offset FY 17 cost increases resulting from the adoption of new plan assumptions and funding strategies that were recommended as part of plans' five year experience study.

3 3 1/20/2016 Notes and Assumptions - FY Expenditures Local Contribution to Schools - The Budget Guidelines as drafted now state that the schools receive a target amount that equates to 40 of new real estate and personal property tax revenue. This figure reflects the local contribution based only on the Budget Guideline. Additional Funding Request from Schools - At the January 15, 2016 School Board/City Council Lunch, the School Board made a request for the City for $2.4M in total new funding for FY 17. This amount reflects the difference between the target figure and the additional requested amount. Outside Agency Funding - Includes all contributions to human services agencies (include the Department of Social Services and Community Attention), arts and educational agencies, community festivals, the Visitor's Bureau, Charlottesville Area Transit, JAUNT, and organizational memberships. These agencies' funding request are being reviewed and recommendations will be included as part of the FY 17 Manager's Proposed Budget. This figure reflects increases requested by CAT, JAUNT, the Health Department and Region 10. Public Safety Agency Funding - Includes Regional Jail, ECC, Blue Ridge Juvenile Detention Center, Piedmont CASA, OAR, SPCA and Legal Aid Society. These agencies ' funding requests are being reviewed currently and recommendations will be part of the FY 17 Manager's Proposed Budget. Health Care - This reflects the actual cost of a 15 increase going into FY 17, the largest increase the City has experienced in 10 years. Employee Retirement - The increase reflects the actuarial recommendation for FY 17 retirement rates for the general employee and public safety Defined Benefit plan. The rate for those in the Defined Contribution retirement plan will remain at 8. In future years, while its difficult to predict the increases, the costs will continue to rise as employee salaries rise and the City continues to have a need to fully fund retirement at the actuarial rate. Fixed Costs - This includes I.T. User Fees, Fuel and Vehicle Maintenance, Computer Replacement and Technology Infrastructure Replacement, Workers Compensation and General Insurance. Housing Programs, Tax Relief, and Affordable Housing Grants - This includes funds dedicated to the homeowners tax grant program, tax and rent relief for the elderly and disabled and the City's contributions to PHA and AHIP. Funds are projected to remain the same for FY 17 assuming that Council makes no changes to tax relief/grant program criteria which may require increased funding. Annualization of Employee Salaries and FICA - This represents the total amount needed to cover employee's salaries and FICA following the 2 COLA increase granted on July 1, Employee COLA Increase and Training Funds - FY 17 in this scenario includes a 2 increase in salaries currently in the form of an across the board COLA increase. However, at this time, no final decision has been made and further analysis will need to be done as staff completes the proposed budget. Also included in this figure are funds for citywide training programs and unemployment claims. Comprehensive Services Act - At this time, FY 17 is projected to decline slightly as past year's performance have been better than anticipated, partly due to the savings realized by providing community based, wrap around services. Fund Balance Target Adjustment - This pool of funds provides the City with a bit of extra cushion at the end of a fiscal year to help us achieve the fund balance policy of 17. The figure calculated is what would be required to ensure we meet the policy and is projected to increase in FY 17. Debt Service - These are funds required to pay off the City's long term debt and is based on the 5 year Capital Improvement Program balanced with the City's debt service policy. The estimate for FY 17 reflects the required transfer from the General Fund as the capital budget and the debt the City plans to issue as it is planned now. GF Contribution to Facilities Repair Fund - This is expected to remain at level funding for FY 17. City facilities staff prioritizes various projects in order to fit within this budget. GF Contribution to Capital Improvement Program - This represents the five year CIP as currently proposed. These contributions should keep the City in compliance with the Budget Guideline to transfer at least 3 of general fund expenditures to the Capital Improvement Program Fund. GF Contribution to Equipment Replacement Fund - The current funding is sufficient to replace vehicles and equipment as scheduled during FY 16. In addition, as older vehicles are replaced with more fuel efficient vehicles this will impact, in a positive way, future maintenance and fuel costs that need to be incurred by City departments. Landfill Remediation - These are cost associated with cleanup of the landfill. The FY 17 projection is based on staff analysis of what the City will actually need to pay out in that and future years. All Other Expenditures - This represents all other operational expenditures that a department incurs. Where we can, the City will find additional ways to provide services in a more cost effective and efficient manner.

4 4 1/20/2016 Revenues and Expenditures FY ,000, ,000, ,661, ,064, ,000, ,000, ,393, ,092, ,811, ,211,919 Revenues 160,000, ,000, ,462, ,902, ,669, ,456,723 Expenses 150,000,000 FY 17 FY 18 FY 19 FY 20 FY 21

5 5 1/20/2016 City/County Revenue Sharing FY ,400,000 17,900,000 17,400,000 16,900,000 16,400,000 15,900,000 16,238,000 16,328,000 16,417,000 16,499,000 16,678,000 15,400,000 14,900,000 FY 17 FY 18 FY 19 FY 20 FY 21