Five Year Forecast - Virginia Beach, Virginia · 2016-01-26 · Five Year Forecast FY 2015-16...

Five Year ForecastFY 2015-16 through FY 2019-20

City of Virginia BeachVirginia Beach City Public Schools November 18, 2014

Agenda:Economy

Revenues

Expenditures

Projects Under Consideration

Final Thoughts

2

FY 2014-15 Adopted Budget (Gross) By Fund Type

General Fund| $1,012,458,390

School Operating Fund, $751,309,177

Other School Funds|

$110,038,040

Special Revenue Funds| $154,466,617

City Grant and Other Funds| $26,132,505

Enterprise Funds|

$206,958,352

Capital Project Funds| $48,075,641

Internal Service Funds| $198,378,330

• Gain a better understanding of City and School’s finances

• Plan for future growth and sustainability

• Strategically use financial resources

3

Economic Indicators

4

U.S. Labor Force Participation Rate

5052545658606264666870

1948

1951

1954

1957

1960

1963

1966

1969

1972

1975

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2011

2014

2017

2020

Part

icip

atio

n Ra

te

Calendar YearSource: U.S. Bureau of Labor 5

Change in U.S. Gross Domestic Product

0.2

-8.2

-0.5

4.6

2.5

0.1

-2.1

4.2

1.5

3.23.5 3 2.42.3

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

06q

306

q4

07q

107

q2

07q

307

q4

08q

108

q2

08q

308

q4

09q

109

q2

09q

309

q4

10q

110

q2

10q

310

q4

11q

111

q2

11q

311

q4

12q

112

q2

12q

312

q4

13q

113

q2

13q

313

q4

14q

114

q2

14q

415

q4

16q

417

q4

18q

419

q4

CH

AN

GE

IN G

DP

QUARTER

Source: U.S. Bureau of Economic Analysis (Projection-Congressional Budget Office) 6

National Consumer Price Index

3.4%

2.0%

5.4%

-1.5%

3.8%

1.7%2.3% 2.4%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

August Year-Over-Year*The projected rates are annualized

Source: U.S. Bureau of Economic Analysis (Projection - Congressional Budget Office) 7

Consumer Confidence Index

90.9

0.010.020.030.040.050.060.070.080.090.0

100.0110.0120.0130.0

Source: The Conference Board 8

Estimated Defense Spending Hampton Roads

10.193

13.659

17.32

19.589 19.537

0

5

10

15

20

25

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Billi

ons

Source: Old Dominion University’s State of the Region Report 9

Total Civilian Employment in Virginia Beach

180.0184.0188.0192.0196.0200.0204.0208.0212.0216.0220.0224.0228.0

Thou

sand

s of P

eop

le

Source: U.S. Bureau of Labor and Statistics 10

Ten Year Change in Employment High & Low Wage Sectors in Virginia Beach

15.7%

3.5%

4.2%

7.4%

-10.5%

-4.5%

-20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0%

Accommodation and Food Services

Arts, Entertainment, and Recreation

Other Services (except Public Administration)

Finance and Insurance

Professional, Scientific, and Technical Services

Management of Companies and Enterprises

10 Year Change in Employment in Virginia Beach

Three Sectors with Lowest Average Weekly Wage

Three Sectors with Highest Average Weekly Wage

Source: Virginia Employment Commission 11

Average Weekly WagesPrivate Sector Only

$560$661

$733 $769$789

$917$1,024 $1,049

$0

$200

$400

$600

$800

$1,000

$1,200

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

1st Quarter

Virginia Beach VirginiaSource: U.S. Bureau of Labor and Statistics 12

Annual Change in Disposable Personal Income

5.35%

8.12%6.78%

5.08%

1.31%

4.90%

0.72%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Fiscal YearUnited States Virginia

Source: U.S. Bureau of Economic Analysis & the International Monetary Fund 13

Residents Spending More than 30%of Income on Housing

30.5% 32.1%

36.4% 35.3%

41.0%42.7%

39.9% 39.0%41.2%

47.0% 47.8% 47.8% 48.3% 49.5%53.5% 54.9% 55.2%

53.1%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013Calendar Year

Home Owners Renters

Source: U.S. Census Bureau, American Community Survey 14

Residents Receiving Supplemental Nutrition Assistance Program Benefits

11,402

14,32216,447

20,999

27,637

35,327 36,642

34,892

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Source: Virginia Department of Social Services 15

Revenues

16

Change in assessed real estate value by type

3.4% 3.1% 4.1%

7.0% 7.2%

11.5%

21.7% 22.2%20.7%

2.3%

-4.0%-5.8%

-3.3%-5.7%

-2.3%

1.9%

4.8% 4.4% 4.5%2.7% 3.7%

9.9%11.6%

9.8%11.0%

6.1% 5.2%

0.2% 0.9% 1.4%

-1.2%

1.8% 2.50% 2.50% 2.50% 2.50% 2.50%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

FISCAL YEAR

Residential Commercial TotalSource: Virginia Beach Real Estate Assessor’s Office 17

Real Estate Tax Revenue (excludes TIF & SSDs)

$435 $441

$428

$400

$420

$440

$460

$480

$500

$520

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Mill

ions

Fiscal Year

Budget Actual Projection

$0.89 $0.89 $0.95 $0.93

Each 1₵ change in the rate = $4.85 million

18

Personal Property Tax Revenue

$100

$110

$120

$130

$140

$150

$160

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Mill

ions

Fiscal Year


$4.00$3.70

Each 10₵ increase in the rate = $3.48 million

19

Business Professional and Occupancy License (BPOL) Revenue

$30

$35

$40

$45

$50

$55

$60

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Milli

ons

Fiscal Year


2012 was the initiation of the City Council’s exemption of BPOL taxes for the first 2 years of a new business.

20

Virginia Telecommunications Tax Revenue

$-

$4.0

$8.0

$12.0

$16.0

$20.0

$24.0

$28.0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Milli

ons

Fiscal Year

Budget Actual Projection 21

General Sales Tax Revenue

$40

$50

$60

$70

$80

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Milli

ons

Fiscal YearBudget Actual Projection

This rate requires General Assembly action to adjust. Currently we receive 1% of the sale tax collected in Virginia Beach. That 1% generates $60 million.

22

State Shared Sales Tax Revenue

$60

$62

$64

$66

$68

$70

$72

$74

$76

$78

$80

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Milli

ons

Fiscal Year

Budget Actual Projected 23

Hotel Tax Revenue

$0.0

$2.0

$4.0

$6.0

$8.0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Milli

ons

Fiscal Year

Budget Actual Projection 24

Restaurant Meal Tax Revenue

$0.0$5.0

$10.0$15.0$20.0$25.0$30.0$35.0$40.0$45.0$50.0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Milli

ons

Fiscal YearBudget Actual Projection

25

State Revenue - City

$80

$85

$90

$95

$100

$105

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Milli

ons

Fiscal Year


State RevenueSchool Operating Fund (Excludes State Shared Sales Tax)

$215

$220

$225

$230

$235

$240

$245

$250

$255

$260

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Milli

ons


Federal RevenueCity

$-

$5.0

$10.0

$15.0

$20.0

$25.0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Milli

ons

Fiscal YearBudget Actual Projected

28

Federal RevenueSchool Operating Fund

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Milli

ons

Fiscal Year


City Use of General Fund Balance

Fiscal YearCity

Operating BudgetSchool

Operating Budget

Capital Improvement

Program

Total Use City General Fund

Balance2010-11 0 0 23,527,923 23,527,9232011-12 6,236,739 0 15,863,756 22,100,4952012-13 9,887,917 9,200,000 11,202,054 30,289,9712013-14 0 0 14,883,022 14,883,0222014-15 0 0 19,075,027 19,075,0272015-16 6,300,000 0 7,983,534 14,283,5342016-17 10,300,000 0 3,464,937 13,764,9372017-18 0 0 3,464,937 3,464,9372018-19 0 0 2,450,723 2,450,7232019-20 0 0 2,233,777 2,233,777

30

School Operating Budget Use of Fund Balance(Reversion Funds)

Fiscal Year

School Operating

Budget

Capital Improvement

Program

Total Use School Reversion,

Fund Balance and Sandbridge Surplus

2010-11 $13,000,000 $3,116,978 $16,116,19782011-12 $22,593,767 $0 $22,593,7672012-13 $22,200,000 $1,116,978 $23,316,9782013-14 $17,116,978 $0 $17,116,9782014-15 $18,000,000 $1,591,000 $19,591,0002015-16 $0 $2,591,000 $3,116,9782016-17 $0 $2,591,000 $5,091,0002017-18 $0 $3,591,000 $5,591,0002018-19 $0 $3,591,000 $5,591,0002019-20 $0 $3,591,000 $5,591,000

31

Revenue Summary

$850

$900

$950

$1,000

$1,050

$1,100

$1,150

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Milli

ons

Fiscal Year

City Operating Fund

$670.0

$680.0

$690.0

$700.0

$710.0

$720.0

$730.0

$740.0

$750.0

$760.0

$770.0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020M

illion

sFiscal Year

School Operating Fund

32

Expenditures

33

Expenditures by CategoryCity General Fund

$-

$200

$400

$600

$800

$1,000

$1,200

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

MIL

LIO

NS

FISCAL YEAR

Personal Services Fringe Benefits OperatingCity Debt Service School Funding Formula Transfers to Other FundsReserves/Future Capital Projects

Projected

34

City VRS & Health Insurance Costs

$-

$10

$20

$30

$40

$50

$60

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Milli

ons

Fiscal YearVRS Health Insurance

Projected

35

Expenditures by CategorySchool Operating Fund

$-

$100

$200

$300

$400

$500

$600

$700

$800

$900

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Milli

ons

Fiscal Year

Personal Services Fringe Benefits Operating Debt Service Reserves/Future Capital Projects

Projected

36

School VRS & Health Insurance Costs

$-

$20.0

$40.0

$60.0

$80.0

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Milli

ions

Fiscal Year

VRS Health Insurance

Projected

37

Revenue and Expenditure ForecastCity General Fund

$970.5

$947.5

$990.9

$985.3

$1,012.5

$1,037.6

$1,059.7 $1,080.4

$1,104.8 $1,122.4

$1,024.1 $1,044.2 $1,065.3

$1,087.1

$1,109.4

$800

$850

$900

$950

$1,000

$1,050

$1,100

$1,150

$1,200

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Milli

ons

Fiscal Year

Expenditures Revenue 38

Revenue and Expenditure ForecastSchool Operating Fund

$706.4

$729.0

$751.3 $762.0

$779.5 $784.5 $798.4

$806.6

$704.3

$728.0 $733.6 $740.8

$748.4 $756.1

$764.0

$640

$660

$680

$700

$720

$740

$760

$780

$800

$820

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Milli

ons

Fiscal Year

Expenditures Revenue

Projected

39

10 Year History of Salary IncreasesCity and Schools

City

Fiscal YearVRS

RequiredGeneral Increase

Merit Increase

2005-06 0 0 4.5%

2006-07 0 1.7% 3.0%

2007-08 0 1.5% 2.0%

2008-09 0 2.5% 0

2009-10 0 0 0

2010-11 0 0 0

2011-12 0 2.5% 0

2012-13 1.0% 0 0

2013-14 1.34% 1.66% 0

2014-15 1.34% 1.66% 0

Schools

Fiscal YearVRS

Required BonusSalary

Increase

2005-06 0 0 7.0%

2006-07 0 0 7.06%

2007-08 0 0 3.5%

2008-09 0 0 3.5%

2009-10 0 0 0

2010-11 0 0 0

2011-12 0 2.5% 0.5%

2012-13 1.0% 0 2.0%

2013-14 1.34% 0 1.66%

2014-15 1.34% 0 1.66% 40

Looking to the Future

41

Arena Infrastructure• City Council is currently considering a proposal for a private developer to

construct and finance a privately owned 500,000 square foot entertainment and sports venue adjacent to the Virginia Beach Convention Center. Estimated construction cost to be paid by the developer is $200 million.

• The City would need to construct infrastructure to support this facility. This includes roadway enhancements and streetscapes, parking lots, water and sewer upgrades, and storm water systems. This is estimated to cost as much as $53 million. In addition there are another $25 million in “options” that could be considered.

• The initial debt authorization of $53 million if the project moves forward would come in FY 2015-16 with the Capital Improvement Program.

42

Arena Infrastructure – Use of TIP Fund

FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20Revenues $36.5 m $37.6 m $38.8 m $40.1 m $41.4 m

Expenditures $36.5 m $33.6 m $33.8 m $33.8 m $32.8 m

Increase to Fund Balance $0 $4 m $5.1 m $6.3 m $8.6 mAvailable Fund Balance $2.6 m $6.6 m $5.8 m $4.3 m $4.7 mArena Infrastructure Cost @ $78million

$0 $5.9 m $7.8 m $8.2 m $10.5 m

Remaining Balance $2.6 m $ 0.7 m ($2 m) ($3.9 m) ($5.8 m)Note: available Fund Balance is the sum of the remaining balance from the previous year added to the increase to Fund Balance for that year.Available Fund Balance is drawn down each year by the arena infrastructure cost.

43

Light Rail• This would extend the existing Tide Transit System into Virginia Beach. HRT is currently

evaluating 4 different endpoints.

• No decision on the endpoint has been made

• The State and City have entered into an agreement to cover $310 million of cost on a 50/50 share. Costs beyond this amount would need Federal participation or additional State Support. The City’s 50% is $155 million.

• The first debt authorization could be as early as FY 2015-16 at $10.5 million, an additional $88.5 million would be authorized in FY 2016-17 and the final authorization would be in FY 2017-18 at $56 million.

• Annual operating costs for the transit extension into Virginia Beach would be between $6 to $8 million beginning as early as FY 2017-18.

• Town Center • Oceanfront via the Norfolk and Southern Right of Way

• Rosemont Road • Oceanfront via Laskin Road Corridor

44

Annual Light Rail Funding Per Fiscal Year

FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20Light Rail Debt Service $0 $0.8 m $7.4 m $11.6 m $11.6 mAnnual Operating costs(net of Ridership Revenues) $0 $0 $6 m $6.2 m $6.4 m

Total $0 $0.8 m $13.4 m $17.8 m $18 m

Real Estate Tax rate needed: 2.9 cents in FY 2016

45

Enhanced School Modernization Program• In 1999 the City Council and School Board embarked on a program to modernize the oldest

elementary schools in the system. To date 23 elementary schools, 2 middle schools, 1 high school, and 2 school plant facilities have been modernized or replaced.

• Before the recession funding for this program had reached $60 million through a combination of school pay as you go funding ($17 million); debt ($32 million) and State Funding ($11 million). After the recession the program has relied on the $32 million in debt.

46

• On October 21st School staff presented three options for enhancing the Modernization Program back to its pre-recession level of funding:

School

CurrentSchedule at $32 million $50 million $60 million $80 million

John B. Dey 2019 2019 2019 2019

Thoroughgood Elementary 2020 2020 2019 2019

Princess Anne Middle 2023 2020 2020 2019

Princess Anne High 2025 2024 2022 2022

Bettie F. Williams Elementary Not Funded 2024 2023 2021

Kempsville High Not Funded Not Funded Design Funded Design Funded

47

School Modernization Funding

FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20

Debt Service Amount $0 $0 $3.2 m $6.2 m $9.2 m

Total $0 $0 $3.2 m $6.2 m $9.2 m


48

Public/Private Partnership Funding• There are several other projects under discussion, but at various stages of consideration.

Projects such as the Dome Site development; additional phases of Town Center, parking decks, etc.

• A total of $102 million is identified as a placeholder for the purposes of this analysis with the first authorization of $29 million in debt in FY 2016-17, the remaining debt would be authorize over the next two years. Obviously the timing and amount of debt needed would ultimately be determined by the needs of each project.

49

Public/Private Partnership Funding

FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20Debt Service Amount $0 $3.1 m $7.5 m $10.5 m $10.2 mTotal $0 $3.1 m $7.5 m $10.5 m $10.2 m


50

Annual Funding Concerns

FY 2015-16 FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20City Deficit $13.5 m $15.6 m $ 15.1 m $17.8 m $13.0 m

School Deficit $28.4 m $38.7 m $36.1 m $42.3 m $42.5 m

Pay Increases (City and Schools) $18.1 m $18.7 m $18.9 m $19.4 m $19.7 m

Debt Service – All Projects $0 $8 m $26 m $36 m $39 m

Light Rail Operating Cost $0 $0 $6 m $6.2 m $6.4 m

Total $60.0 m $81.0 m $102.1 m $121.7 m $120.6 m

51

Final ThoughtsNext five years

1. Enhance city and school efforts to improve efficiencies, improve and share processes, and other cost cutting measures

2. Work with the General Assembly to fully fund School Programs with a State and Local strategy to have education be the strongest in the Country.

3. Continue to look to the Future with projects and services desired by the community and appropriately funded.

Five Year Forecast - Virginia Beach, Virginia · 2016-01-26 · Five Year Forecast FY 2015-16...

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