Budget Committee Presentation May 2, 2013 Christine Moody, Budget & Financial Planning Manager

1. Budget Committee Presentation May 2, 2013 Christine Moody, Budget & Financial Planning Manager

2. Total Budget Overview • Current FY 12-13 Modified Budget • $500.1 million • Proposed FY 13-14 Budget • $466 million • Reduction $34.0 million or 6.8% • FTE: Down 17.85 or 1.3%

3. Budget Basics - 1 • Local Budget Law dictates how County must prepare budget. • Fund: a fiscal and accounting entity of self-balancing accounts. • FUNDS: General Fund, Special Revenue, Debt Service, Capital, Special Revenue, Enterprise, Internal Service, & Fiduciary. • Organizational Units: Lane County budgets to Department Level with one Non-Department (General Expense)

4. Budget Basics - 2 ACCOUNT CLASSIFICATIONS: Revenue & Expenditures Resources & Requirements REVENUE v. RESOURCES • Revenue: Property tax and non-property tax. money received from funding source (state, federal, grants, taxes) or services provided (fees, licenses, fines, etc.). • Resources: Includes Revenue PLUS any money carried forward (reserve) and one-time transfers.

5. Budget Basics - 3 EXPENDITURES v. REQUIREMENTS Expenditure: on-going expenditures required for operations including Personnel, Materials & Services, Capital Outlay, & Debt Service Requirements: Includes Expenditures PLUS transfers, operating contingency/reserves, and unappropriated ending fund balance (UEFB). Balanced Budget when Resources = Requirements

6. Budget by Fund type • Majority of County funds have to be spent in specific ways by law or as designated by entity providing funding. • Examples: Gas Tax – only to maintain County Roads; Grants – for specific project/service; Video Lottery; Enterprise funds (proceeds need to run), etc.

7. REVENUE & RESOURCES Revenues & Resources in FY 13-14: REVENUE TOTAL: $297,134,926 RESOURCE TOTAL: $466,056,549 Difference: $143,832,891 in beginning fund balance $21,315,160 in fund transfers $3,773,572 in other fiscal transactions

8. expenditures V. requirements Expenditures & Requirements in FY 13-14: EXPENDITURE TOTAL: $336,859,630 REQUIREMENT TOTAL: $466,056,549 Difference: $21,315,160 in fund transfers $3,873,572 in other fiscal transactions $85,149,659 in contingency/reserves $18,852,876 UEFB

9. REVENUE & RESOURCES • Revenue: Property Tax v. Non-Property Tax Property Tax detail: GF: $34.0 million JJC Bond: $2.9 million School Fund: $158 thousand

10. Property Tax Lane County’s Property Tax revenue has twodistinct issues that add to budget imbalance: #1 – The Rate #2 – The Growth of the Tax

11. Property Tax THE RATE: $1.2798 per thousand assessed value $200,000 assessed value = $256 dollars per year How does this compare to other local governments?

12. Property Tax (Permanent Rate Only) Clearly shows economic recession.

13. Overall Revenue Changes

14. Revenue comparisons • State Revenue – $68.2 million • Property Taxes – $37.1 million (includes bond) • Federal Revenue – $32.6 million

15. Revenue comparisons Graphic showing state, federal & property taxes

16. Federal revenue • The story of Federal timber revenue • After over 100 years of federal timber revenue, there is no current replacement for the loss • Federal contract to share timber revenue since 1916 • Last 20+ years very volatile with frequent budget cuts, even while receiving replacement funds. • FY 11-12 was final year of 2008 Secure Rural Schools Act. FY 12-13 received payment equal to 95% of FY 11-12 amounts. July 1, 2013, the County’s revenue share will go back to old 50/50 formula based upon actual timber cut.

17. 30 yr History of O&C Timber Revenue

18. FEDERAL TIMBER PAYMENTS Since 2000, Secure Rural Schools Timber payments have provided $480.7 million in revenue to Lane County as follows: General Fund – $150 million Road Fund - $209.3 million million School Fund – $69.7 million Title 2/3 Funds - $51.7 million

19. COUNTY expenditures & REQUIREMENTS REQUIREMENTS BY TYPE:

20. Overall EXPENDITURES & REQUIREMENT Changes • Personnel 4.4% • Wage 2.2% • Benefits 9.6% • Materials & Services 7.4% • Capital Projects 30.4% • Debt Service - stable • Reserves and UEFB 17%

21. Expenditures • While Revenue has been growing slowly, or even decreasing, expenditures have been increasing: • Health Insurance –growing faster than inflation, FY 13-14 Proposed 12% increase, may be higher • PERS Rates - (set by PERS Board) – FY 13-14 is rate adjustment year. Proposed Budget contains Oct 2012 rates. Between 1-3 percentage point increase. • Materials & Services - Utilities, gas/oil, insurance costs (general liability).

22. BUDGET STRUCTUAL DEFICIT

23. Reserves • Why have them? • To pay obligations prior to receiving revenues (Prop Tax) • Bond rating agency grades financial health • Financial Policies • 5% ‘Prudent Person’ in all funds except General Fund, which requires a minimum 10% reserve • Using as a planning tool • BCC began Service Stabilization Reserve in FY 08-09 with plan to spend reserves slowly in order to keep service levels stable for as long as possible. Continued this planning strategy with FY 12-13 SRS payment – being spent in FY 13-14 RESERVES overall are down 17% in FY 13-14

24. General Fund Budget

25. General Fund Overview • General Fund Budget • Current Year = $88.0 million • Proposed Yr = $79.5 million • Decrease = $8.5 million or 9.7% • General Fund FTE • Current Year = 425.4 • Proposed Yr = 371.99 • Decrease = 53.4 or 12.5% • DECREASE primarily result of Youth Services moving from General Fund to Special Revenue Fund

26. DISCRETIONARY GENERAL FUND • Unrestricted Revenue within the General Fund – that either has no strings attached by State, Feds, or grantors, or is not received for direct service provided to community. • Discretionary Budget • Current Year = $55.2 million • Proposed Yr = $51.9 million • Decrease = $3.2 million • Timber Revenue decrease of $3.4 million • Modest growth in other revenues

27. DISCRETIONARY GENERAL FUND BY REVENUE SOURCE

28. GENERAL FUND SERVICES Where to find out more: www.lanecounty.org/budget > Proposed Budget Document > Service Option Sheets** **Information on services provided with Discretionary General Fund usage, level of mandates County must follow, leverage generated.

29. LOOKING AHEAD2013 and beyond….

30. BUDGET INSTABILITY • FY 13-14 Proposed Budget does not equal stable funding from this point forward. • Still contains some one-time revenue/resources. • FY 13-14, beginning fund balance is $12.3 million, but reserve is $7.0 million meaning spending one-time cash to provide services. • FY 13-14 will be first year of no Secure Rural Schools federal payments if federal government does not act. Timber harvest levels are unstable and revenue will decrease substantially.

31. GENERAL FUND FINANCIAL FORECAST SUMMARY: General Fund will continue to experience a deficit in the coming years. FY 14-15 – Beginning Fund balance will be smaller after FY 12-13 SRS payment is spent – will have to reduce services to balance. FY 15-16 forward – structural deficit and few smaller revenue adjustments.

32. GENERAL FUND FINANCIAL FORECAST FY 14-15: $4+ million FY 15-16: $1.5-2 million FY 16-17 & forward approximately $0.5 million

33. LANE COUNTY’S MISSION Lane County Government will work to create a prosperous community by providing collaborative leadership, fair and inclusive decision making, and excellent sustainable local government services to our residents and guests.