City of Alexandria, Virginia
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MEMORANDUM
DATE: DECEMBER 7, 2021
TO: THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
FROM: MARK B. JINKS, CITY MANAGER /s/
DOCKET TITLE:
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Consideration of the Monthly Financial Report for the Period Ending October 31, 2021.
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ISSUE: Receipt of the Monthly Financial Report for the Period Ending October 31, 2021.
RECOMMENDATION: That City Council receive the Monthly Financial Report.
BACKGROUND: The following discussion is a summary of the Monthly Financial Report for this period. Detailed comparative schedules are attached.
As of October 31, 2021, General Fund revenues totaled $158.3 million, an increase of $23.9 million or 17.8 percent compared to the same period in FY 2021. It is important to note that revenues collected in July and some of the revenue collected in August are for taxes owed in June and are therefore accrued to the prior fiscal year. Timing issues are also much more pronounced in the early months of the fiscal year. For example, several Consumer Utility payments were received in August outside of the accrual period and are reflected in FY 2022. In FY 2021, the payments were received on time and reflected in the appropriate fiscal year. The first significant tax revenue in FY 2022 is traditionally due on October 5, when personal property taxes for vehicle and business personal property were due. In FY 2021, through October 2020, the City had received $38.5 million of personal property tax revenue. For the same period in FY 2022, the City has received $48.9 million. It is important to note that in FY 2021, the personal property tax due date was moved to December to provide taxpayers with a brief extension in light of the pandemic. However, through 33 percent of the fiscal year, the City has collected 88.7 percent of budgeted personal property revenue. This compares to pre-pandemic collection rates of 84.1 percent in FY 2020 and 85.9 percent in FY 2019.
Revenues often do not track consistently with a monthly calendar since many revenue sources have due dates that do not occur evenly through the year. Large revenue sources, such as real estate and personal property tax revenues are remitted twice per year and once per year, respectively. Through the first four months of the fiscal year, no category has sufficient receipts to establish a clear pattern, however when the last three months of FY 2021 are taken into account, several categories, including Business License Tax, Restaurant Meals, and Sales Tax Revenue are reflecting positive conditions. Transient Occupancy Tax collections underperformed expectations in FY 2021 but are also showing positive indications in FY 2022.
In addition to the revenues and expenditures schedules, Attachment 3 provides a comparison of the City’s primary local taxes related to consumer spending. Sales Tax revenue continues to exceed prior years. In total, in FY 2021, Sales Tax revenue exceeded the prior year by $2.3 million, or 7.7 percent. August 2021 Sales Tax revenue exceeds August 2020 revenues by 10 percent. A large portion of the sales tax increase can be attributed to on-line purchases where the sales tax is designated for the jurisdiction where the home delivery of the online purchase occurred. For in store purchases, the sales tax is attributed to the jurisdiction where the store is located. This shift in the situs of the taxable sale benefitted Alexandria as City residents’ out of jurisdiction in store shopping dropped significantly during the pandemic, while internet shopping with home delivery increased substantially.
With three months of collections in FY 2022 (Restaurant Meals taxes are remitted to the City one month after they are collected), Restaurant Meals tax revenues are 29.4 percent or nearly $1.6 million above where they were in the first three months of FY 2021. In the past three months, going back to June 2021, which is part of FY 2021, Meals Tax Revenue exceeds revenues for the same pre-pandemic months in 2019. Transient Lodging is showing signs of improvement. Through the first four months of FY 2022 (three months of collections), revenues exceeded the same period in FY 2021 by $1.4 million or 141.9 percent. During the pandemic in FY 2021, Transient Lodging tax revenue was down from the prior (pre-pandemic) year by approximately 70 percent. Although revenues are still below pre-pandemic levels, the gap has now narrowed to approximately 35 percent. Weekend stays from leisure travel are largely driving the revenue growth, as business travel during the week remains subdued.
As of October 31, 2021, FY 2022 General Fund expenditures totaled $211.1 million, an increase of $12.9 million or 6.5 percent over the same time period for FY 2021. Similar to the situation with revenues, it is a little early to make any definitive economic interpretation from the activity that has occurred in the first four months of the fiscal year. No significant expenditure has occurred in the first four months of Fiscal Year 2022 that is unbudgeted or unexpected. The most significant difference is the timing and source of payments. For example, the City’s contribution to WMATA is funded from several sources. Last year during the uncertainty of the longer term economic impact of the pandemic, General Fund resources were conserved and a greater portion of the contribution came from other sources compared to this year in which the budgeted contributions are being utilized.
ATTACHMENTS:
Attachment 1: Comparative Statement of General Fund Revenues
Attachment 2: Comparative Statement of General Fund Expenditures
Attachment 3: Consumer Spending comparison charts
STAFF:
Laura Triggs, Deputy City Manager
Kendel Taylor, Director, Finance Department
Morgan Routt, Director, Office and Management and Budget