Income Tax Revenues
In the 2016 Operating Budget, revenue from the local income tax was projected to be $83,285,000, with 75% or $62,463,750 programmed in the General Fund, and 25% or $20,821,250 programmed in the Capital Improvements Tax Fund. Maintaining our conservative approach to estimating revenue, this estimate was based on an assumption of no change from our 2015 revised revenue estimate, determined when the 2016 Operating Budget was approved. However, our actual income tax revenue for 2015 exceeded the revised estimate by 5.4%. As such, the 2016 estimated income tax revenue reflected a 5.1% decrease over 2015 actual collections.
The first quarter ended with income tax revenues increasing 4.1% over the first quarter 2015. Through the second quarter of 2016, income tax revenues increased 2.2%, or $1,014,916. This increase was driven by a 3.7% increase in withholding, the largest source of income tax revenue. Business profits declined $681,706 or 9.7% while individual returns increased $423,093 or 8.9% over the second quarter of 2015. In total, the City received $46,996,145 in income tax revenues through the second quarter of 2016.
The graph below depicts the City’s income tax revenue through the second quarter each year from 2012 through 2016.
For planning purposes, staff can start to draw more informed conclusions as to projected income tax revenues at year-end based on collections through the first half of 2016. As indicated on the attached spreadsheet, our actual revenues through the second quarter reflect a 7.7% increase over the 2016 budgeted amount. While remaining conservative, we have revised our 2016 income tax revenues upwards by 2.8% to reflect anticipated revenue of $85,590,000, an increase of $2,305,000. This revised projection will be utilized as a basis for our revenue when the Capital Improvements Program (CIP) for 2017 – 2021 is presented. While this revised projection still reflects a 2.5% reduction over the 2015 actual receipts, it takes into account an anticipated reduction in income tax revenue from Nationwide beginning in the second half of 2016.
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 practice has been to maintain a year-end balance equal to or greater than 50% of the General Fund expenditures, excluding advances.
The General Fund balance through the second quarter of 2016 was $65,800,805, or 94.1% of the 2016 planned General Fund expenditures, excluding advances.
Property Taxes and Service Payments
Property tax revenue increased 17.4% or $286,601 over the first half of 2015. The property taxes generated from the City’s inside millage (1.75 mills) is distributed with .35 mills credited to the Parkland Acquisition Fund and the remaining 1.4 mills to the Capital Improvements Tax Fund. This resulted in $338,477 in revenue for the Parkland Acquisition Fund and $1,353,986 for the Capital Improvement Tax Fund through the second quarter. Given that the total increase in valuation from 2015 to 2016 (tax year 2014 to 2015) was only 1.8%, it is expected that our second half distribution will be lower to bring out total revenue in line with the overall increase in valuation.
Revenues generated from service payments, or payments in lieu of taxes, on properties within the Tax Increment Financing (TIF) areas increased 2.5% over 2015. Given that the overall change in valuation in our commercial TIF areas increased 1.4% from 2015, the revenue collected through the first half of year is in line with the amount expected. Total service payments collected through June totaled $4,524,365.
Hotel/Motel Tax Revenue
The Hotel/Motel Tax Revenue collected through the second quarter 2016 totaled $929,590, which represents a $26,568 or 2.8% decrease over collections through the second quarter 2015.
The decline in bed tax revenue beginning in February reflects the increase in funding (from 25% to 35% of the actual bed tax revenues) provided to the Dublin Convention and Visitors Bureau (DCVB). The gross bed tax revenues collected through the second quarter of 2016 increased 9.4% or $120,235 over the same time period in 2015. The above referenced numbers show the net amount receipted into the Hotel/Motel Tax Fund.
The amount for the DCVB is deposited directly into a separate fund established solely for their portion of the tax revenue. Through June of 2016, the DCVB had received $471,977 in bed tax funds, which was an increase of $153,258 over 2015.
The Dublin Arts Council (DAC) has similarly seen an increase in revenue as a result of the increased collections coupled with the modification to their agreement which provides them with 25% of actual bed tax revenues as opposed to 25% of an estimated amount. Through June of 2016, the DAC had received $336,912 in gross revenue (prior to any deduction for rent and the art in public places program), which was an increase of $43,139 over 2015.
Other Information
General Fund revenue totaled $38,314,488 through June. This was an increase of $485,705 over the first half 2015. As previously stated, this was driven by the increase in income tax collections, which increased $761,185 in the General Fund alone. This increase was offset by decreases in intergovernmental revenues of $113,143 and interest income of $107,549. Building activity throughout the City resulted in Fines, Licenses and Permits increasing $364,203 over the first half of 2016 while Charges for Services decreased $325,535. It is likely that some of the decrease in Charges for Services is attributable to the timing of deposits.
General Fund expenditures through June totaled $32,082,857, which was a decrease of 46% or $26,860,220 over the same time period in 2015. Please recall that 2015 expenditures included $27,806,000 in advances to other funds. Of that amount, $22,600,000, was advanced from the General Fund to the Capital Construction Fund for construction of the Riverside Drive Realignment, the Riverside Drive/SR 161 Roundabout, and a minimal amount of the riverside park construction.
This advance was repaid to the General Fund when long term bonds were issued in the fall of 2015. Excluding advances to other funds, the expenditures through the second quarter increased 0.6% or $945,780 over 2015. Personal services increased approximately $1,054,609 or 10.3% while capital outlay increased $1,885,321 or 1134% as a result of the purchase of the property at Rings Road and Frantz Road (the Nationwide property). On an aggregate level, contractual services, supplies and other charges remained even over second quarter 2015.
