Higher-than-projected revenues in Fiscal Year 2020 and stronger-than-expected revenues from sales and use taxes so far this year have helped push revenues for the city of Auburn past the projected budget for Fiscal Year 2021, according to a Mid-Biennium Budget Review presentation given to the City Council on Tuesday evening.
Sales and use tax was basically flat for FY20 over FY19 as the pandemic affected the local economy, but belt-tightening by the city helped it finish FY20 with higher revenues than projected.
"Despite Covid in 2020, our revenue outperformed projections by about 4.1 percent or $3.9 million," said City Manager Megan McGowen Crouch. who noted that total revenues in FY20, which ended last September, increased $2.6 million over FY19. The city was able to shave $8.7 million from its overall expenses than what was approved in the budget — $6.6 million in operating budgets and $1.5 million in capital budgets.
In total, the city took in total revenues of approximately $99.7 million in FY20 over the projection of $95.8 million.
The city's ending fund balance was $12.7 million stronger than anticipated, with the total ending fund balance at about $64.3 million.
Increased revenues from sales and use taxes are helping push the outlook for FY21 beyond the projected budget, with the city forecasting revenue from sales and use taxes in FY21 to end 10.5 percent higher than expected. FY21 ends Sept. 30.
The city received record collections from sales and use taxes from February through June this year. Sales and use taxes typically account for 45 to 50 percent of General Fund revenue.
"For the first half of this (fiscal) year — October through January or February —, we were right on track with my monthly projections, very close to budget, a little bit higher at some points, but through that time we were really close to budget," said Finance Director Allison Edge. "Our last five months ... are some of the highest sales tax collection months that we have ever seen."
Edge noted some of the elements that might have resulted in the jump in sales tax and use revenues include the availability of Covid vaccinations, the passage of a large stimulus bill, and restrictions being lifted.
"That is very unusual, and the challenge now is projected and trying to predict how long that's going to last. Is it sustainable?" said Edge, who added that she is communicating with her counterparts in cities throughout the state who are seeing the same trends. "Everyone is seeing this kind of sales tax growth. It's not surprising at all."
In all, Edge said she is predicting FY21 to end with $45.6 million in sales and use tax revenue, the highest tax budget the city has ever had. Edge said the projection for sales and use tax revenue for FY22 is on par with FY2021, with a $45.8 million projection for the former.
"We may see that be a little bit higher, which is unusual," she said.
Edge also discussed the city's General Fund debt, which will decrease significantly in FY22.
"Starting in about '22, we see that start dropping off," said Edge. "We start having lower debt service payments, which gives us the capacity for additional borrowing."
The projected debt includes $15.5 million in borrowing for Parks, Recreation and Cultural Master Plan projects; $28.3 million for the Richland Road Connector project and the relocation of Environmental Servies and Public Works departments; and $13 million in borrowing for Boykin Campus Improvements.
At Tuesday's meeting, Crouch also detailed significant changes of more than $100K in the FY21 budget. Those include:
• a $1.4 million increase in the city's appropriation to Auburn City Schools
• an additional $424.417 for the Cox and Wire Roundabout
• about $251,000 for the Exit 50 Lighting and Landscaping project
• more than $220,000 in unexpected payouts to retiring staff for annual and sick leave
• $112,000 in credit card fees due to expanded online payment options for residents
Crouch also detailed changes for FY22, which included an additional $1.18 million for the Cox-Wire roundabout; a $1 million outlay to increase the temporary employment pay rate by more than $2 an hour to $10 an hour; and an additional $870,000 appropriation to ACS; among other changes.
Crouch also provided an update on the city's Capital Improvement Projects plan.
Among the projects currently being worked on, Dinius Park and the Town Creek Park Inclusive Playground, both currently under construction, are expected to be completed in October. Construction on the planned Soccer Complex down Wire Road, which is currently in the design phase, is expected to begin in January and be completed by January of 2023.
The Jan Dempsey Community Arts Center renovations, with a projected budget of roughly $2.85 million, are expected to begin in January as well, and be completed by July of 2022.
One of the biggest projects included in the CIP is the relocation of Environmental Services and Public Works to a new facility down Wire Road. Construction for the project, which has a budget of $20 million that falls within FY22, is expected to begin in October and be completed by October 2022. Once those two departments are relocated, the Boykin Campus Improvements project can begin. The campus will be located on the property currently used by the two departments along North Donahue and include a cultural museum, a branch of the Auburn Public Library; a new gym; the relocation of the recycling center; and other amenities.
For more on planned CIP projects, check the presentation pdf attached to this article.