Financial update shows city ‘faring OK’; council allocates first donations from Share 2 Care program
Published 12:05 am Thursday, December 3, 2020
By Natalie Anderson
SALISBURY — On the National Day of Giving, Salisbury City Council members allocated the first month’s worth of donations to the Share 2 Care program and received a financial report during which Finance Director Shannon Moore said the city is “faring OK.”
At Tuesday’s city council meeting, Moore updated council members on the current fiscal year’s first quarter financial report, which includes July, August and September. Following the presentation, the city formally voted to disburse the first month of donations to the Share 2 Care program, which was established in October to assist local households with utilities payments.
In the month of November, the fund received $1,648 in donations. A check for that amount will be written to Rowan Helping Ministries, which is in charge of distributing the funds to households that need the assistance. Moore said staff will continue to update the council each month on the donations received and a check will be disbursed to Rowan Helping Ministries by the beginning of each following month.
“City staff is pleasantly pleased with the amount that we received in the first month,” Moore said. “We have a very generous community.”
Councilman David Post asked if donating to the Share 2 Care program is a tax-deductible opportunity. Moore said it is per the IRS guidelines.
On Wednesday, Moore told the Post there weren’t “any huge surprises” with the data she presented at Tuesday’s meeting since the city budgeted cautiously due to the pandemic.
Overall, property tax and sales tax revenues, which are the two major sources for the general fund, are trending on budget, Moore said, though only two months of sales tax data have been received. Additionally, both water and sewer fund and stormwater fund revenues are “coming in as budgeted.”
The transit fund, however, is in danger of revenue loss, Moore said.
“With only one quarter, it’s hard to really get a great picture yet as some of our revenues are still unknown,” Moore said. “We are faring OK, but are still cautiously optimistic. Overall, the city continues to monitor expenses and avoid unnecessary expenditure until we see more revenues.”
Since the start of the fiscal year on July 1, the city has spent 31.7% of its adopted budget, which is lower than the three-year record of 33.46% presented Tuesday.
At the meeting, Moore said the city has received a slight increase in general fund revenue compared to the first quarter of the 2019-20 fiscal year. At this same time in 2019, the city received $15.21 million, while $15.5 million has been received for the current fiscal year.
She said the increases in revenue were driven primarily by to the use of cemetery services, planning and department fees, deferred revenue from a house sale as part of the city’s Housing Rehabilitation program and the city’s recycling contract, which Moore said was driven by the increase from the vendor.
However, those increases are offset by two reductions, she added, which includes a decline in user fees for Parks and Recreational services due to COVID-19 restrictions and a reduction in general fund interest earnings. By the end of the first financial quarter in the 2019-20 fiscal year, the city had $52,000 in the general fund interest earnings. But for the current budget, the city has only received $8,000 in general fund interest earnings.
The collection of property taxes is slightly less than the amount collected at this same time for the 2019-20 fiscal year. At the same time last year, the city collected $13.26 million, or 64.60% of what was billed. But for the current year, $12.94 million has been collected, which amounts to 64.22% of the budget and 61.61% of all property taxes billed.
When the current budget was passed this summer, the city budgeted to collect $20.15 million with a 97% collection rate due the pandemic.
Moore said the county billed public utilities much quicker than they have in past years, which could account for a lower collection rate, according to the city’s Finance Manager Wade Furches.
“Typically, (we do not) see that information on (the) reports until around October and November,” Moore said. “So the fact that (the county) has billed those public utilities early is driving some of this percentage of collection down. So hopefully that will spike back up in the second quarter and we’ll continue to monitor where our collections come in.”
However, the county has billed for $21.01 million, which is more than what the city budgeted, Moore added.
“So the billed amount, if we were to receive a collection rate of 95.9%, we should be very close to our budgeting mark,” Moore said. “Budgeted for 97%, and if we come in at 95.9%, hopefully we will be there for the year.”
Sales tax revenue for the first quarter was not included in the presentation as that data is received by the city three months in the arrears from when sales took place in retail areas. However, the city has received sales tax revenue for July and August, which amounts to $783.34 million — an increase compared to the same time in fiscal years 2018-19 and 2019-20.
Moore said that the sales tax revenue is promising for the current budget, particularly as sales tax revenue was a question mark for many counties and municipalities this summer when they were preparing their budgets.
In terms of the general fund expenses, most departments are within their budgets currently. General government expenses are currently at 26%, which is slightly higher than the budget for this time of the fiscal year, but Moore said that Telecomm and IT services have “extremely large dollar purchases” that take place in the start of the fiscal year.
General government expenses include city council, human resources, city administration, facilities, IT and public services administration.
Additionally, education expenses are currently at 50%. A total of $40,000 was budgeted for the year, but half of that has been paid out in the first quarter.
The city this year budgeted $2.33 million in the stormwater fund and has collected $476,393, or 20.42%, of that in the first quarter. That’s higher than what was collected in the first quarter last fiscal year, but Moore said there was a modest increase in fees for these services this year. Additionally, the current budget is higher than fiscal year 2019-20’s as the city carried over $437,622 from the previous budget.
Stormwater fund expenses are lower than what was budgeted for the quarter, but Moore said that’s due to the timing of the larger budgeted projects that have not yet begun.
For the current fiscal year, $26.39 million was budgeted in the water and sewer fund. In the first quarter, $7.2 million has been collected, which is 27.29% of the budget. However, that’s nearly $800,000 lower than what was collected in the first quarter in 2019-20. Moore said some of the larger customers such as schools aren’t operating at a normal capacity and, therefore, aren’t using as much water and sewer services.
Revenues are down for the transit fund. While it was budgeted to collect $164,180 in the first quarter, the city only received $61,621. By contrast, the city collected $182,455 in the first quarter of the 2019-20 fiscal year. A total of $1.49 million was budgeted this year for the transit fund.
Moore said the city will need to maximize its reimbursement from CARES Act funding and other federal funds in the current fiscal year to avoid a significant impact to the transit fund. While $549,816 of CARES Act funds remain for the transit fund, the city won’t be receiving $195,142 it anticipated from the state. Additionally, while $2,000 in interest revenue was budgeted, Moore anticipates the city will receive half of that.
And while the city budgeted fares and ticket sales revenue to be $67,000, the city’s transit system is currently fare-free due to pandemic restrictions. Rodney Harrison, the city’s Transit Division Manager, told council members on Tuesday that Salisbury’s decrease mirrors the rest of the nation due to reduced hours and schedules.
Overall, the city anticipates a loss of $71,715 in the transit fund.
In the Fibrant fund, which primarily contains the city’s money from its Hotwire lease, the city has received $743,165, though it budgeted $1.1 million for the first quarter. However, Moore said the city doesn’t receive first quarter revenue until 45 days after a quarter ends. Thus, most of the first quarter’s revenue comes from a transfer from the general fund.
Additionally, as of September, the city has 3,465 Hotwire customers, which does not include city of Salisbury accounts.
Contact reporter Natalie Anderson at 704-797-4246.