Income Tax Revenues
In the 2017 Operating Budget, Staff projected $84,734,100 in revenue from the local income tax, with 75% or $63,550,575 programmed in the General Fund, and 25% or $21,183,525 programmed in the Capital Improvements Tax Fund. Maintaining our conservative approach to estimating revenue, this estimate was based on an assumption of a 4% decrease over the 2016 revised revenue estimate, determined when the 2017 Operating Budget was approved. However, our actual income tax revenue for 2016 exceeded the revised estimate by 5.1%. Compared to 2015 income tax revenue, our 2016 collections increased 2.5%.
The first quarter of any given year can be unpredictable in terms of income tax revenue. Overall, the quarter closed with revenues decreasing 1.3% over the first quarter 2016. The largest source of the City’s income tax revenue, withholding taxes derived from those individuals working in Dublin, decreased 0.8% while business net profits increased 6.8% and individual returns decreased 18.9%. The total income tax revenue collected for the quarter was $20,991,087.
The graph below depicts the City’s first quarter income tax revenue each year from 2013 through 2017.
Property Taxes and Service Payments
Based on receipts through the first quarter, property tax revenue in 2017 increased 2.4% or $45,172 over 2016. The total amount collected was $1,922,651 which was distributed between the Capital Improvements, Parkland Acquisition and Safety Funds.
Revenues generated from service payments, or payments in lieu of taxes, on properties within the Tax Increment Financing (TIF) areas increased 2.5% over 2016. Total collections for 2017 were $4,636,555.
The Tax Incentive Review Council (TIRC) will be meeting on May 2, 2017 to discuss the status of the City’s TIF areas. Information compiled for that meeting will be shared with Council in mid-May and will include the current and prior year’s valuation of each parcel within each TIF district.
Hotel/Motel Tax Revenue
The Hotel/Motel Tax Revenue collected through the first quarter 2017 totaled $349,572, which represents a $1,555 or 0.5% increase over collections through the first quarter 2016.
As a reminder, for hotel stays beginning in January 2016, City Council increased the funding provided to the Dublin Convention and Visitors Bureau (DCVB) from 25% to 35% of the actual bed tax revenues. This will need to be kept in mind when comparing the revenue from year to year. The amount for the DCVB is deposited directly into a separate fund established solely for their portion of the tax revenue. Through March 2017, the hotel/motel tax revenue which is dedicated to the DCVB was $188,231, an increase of $51,649, or 38% over the first quarter 2016.
Similarly, for hotel stays beginning in January 2016, City Council modified the agreement with the Dublin Arts Council (DAC) which provides that organization with 25% of the actual bed tax revenues as opposed to 25% of an estimated amount. Through March 2017, the DAC had received $101,678 in net revenue (after the deduction for rent and the art in public places program), which was a decrease of $7,917 over their payment in the first quarter of 2016.
Important Note: Comparison of March YTD 2017 financial data against March YTD 2016 data may result in inaccurate conclusions. The Department of Finance implemented a new financial system March 1, 2016. The implementation required a ‘black-out’ period at the end of February/early March in which no financial transactions took place, other than payroll. While receipts were deposited to the bank on a daily basis, the entering of receipts and the recording of expenditures in the financial system were delayed. A more accurate comparison should be drawn based on the second quarter information.
General Fund revenue totaled $17,250,891 through March. This was an increase of $8,043 or 0.1% over the March YTD 2016 receipts. The total revenue received in the first quarter of 2017 represents 24.0% of the total General Fund revenue budgeted for 2017. A breakdown of the revenues is as follows:
General Fund expenditures through March totaled $22,551,732, which was an increase of 85% or $10,361,347. Again, it is important to remember that for a significant period of time in February and March 2016, there were no expenses recorded in our financial system other than payroll. For this reason, it is not accurate to infer that our level of spending is 85% higher this year than last. As noted in the General Fund Balance section below, there is a $4,806,700 advance from the General Fund to the Capital Construction Fund to pay for the North High Street widening. These funds will be reimbursed when bonds are issued to finance this project. There were no advances from the General Fund in the 1st quarter of 2016.
The level of General Fund expenditures through the first quarter of 2017 represents 31.1% of the total amount budgeted for 2017.
General Fund Balance
The General Fund balance is a critical component to the financial stability of the City and continues to be a key financial indicator used by the rating agencies in evaluating the financial strength of the City. As Council is aware, the City’s policy is to maintain a year-end balance equal to or greater than 50% of the General Fund expenditures, including operating transfers. As of March 31, 2017, the General Fund balance was $51,394,976, or 71.4% of the budgeted 2017 operating expenditures.
As Council is aware, the General Fund advanced money to the Capital Construction Fund in the amount of $4,806,700 for the North High Street widening project (Resolution No. 01-17 approved by City Council January 10, 2017). This advanced reduced the General Fund Balance by the same amount. Had the advance not been done, the General Fund Balance would have been $56,201,676, or 78.1% of the budgeted 2017 operating expenditures. This advance will be repaid once long-term bonds are issued for this project.