General fund budget slightly ahead of projection

First quarter revenues and expenses are detailed during Tuesday's City Council study session.

The City of Tacoma’s general fund is slightly ahead of projected first quarter revenues, reported Diane Supler, director of the Office of Management, Budget and Analysis.

Supler detailed the status of estimated revenues and expenses through the first three months of this year, as compared to the real thing, during her presentation to the City Council at Tuesday’s study session. She also reported on the general fund – which provides money for basic city services – and significant changes to other funds.

Biennium revenues through March 2003 were projected to be nearly $34.4 million, while actual revenues collected amounted to $35.5 million, for a projected variance of slightly over $1.1 million, according to information presented by Supler.

“We have a lot of interesting anomalies in our general fund revenues,” Supler noted.

Property tax revenue nearly doubled expectations, she observed, adding her office usually predicts such income fairly accurately.

Projected revenues from property taxes were $524,811, while the amount actually received was $958,317.

“Sales tax revenue was down,” Supler said, with projected revenues of $9,233,353, compared with $8,876,412 actual revenues.

It was excise taxes, however, that displayed the greatest negative variance ($446,008), with projected revenues of $3,363,764 and $2,917,756 in actual revenues.

“It has definitely slowed down,” Supler said.

Still, with more money coming in than projected in the areas of business and occupation taxes, the utility tax, penalties and interest and state shared revenue, among others, the city was able to collect slightly over $1 million more than predicted for the first three months of this year.

The total general fund for the the revised 2003-2004 budget is $342,130,152, including $6,391,122 added in budget adjustments from the 2003-2004 adopted budget. The total revised city budget fund is $2,072,998,405.

Other information presented during Supler’s report to the City Council included the following:

UNRESERVED BALANCE FUND
City policy calls for an unreserved fund balance – which represents money that may be appropriated for any legal purpose – of 5 percent to 15 percent of projected annual expenditures.

The projected unreserved fund balance for 2003 is 6 percent. Last year’s unreserved fund balance was 2.8 percent.

“It varies depending on the economic cycle,” Supler explained, adding, “I think this is quite an accomplishment for the city…”

She attributed the increased unreserved balance fund to department belt tightening and deliberative business practices.

BUILDING PERMITS
“We’ve had some phenomenal activity in our building permit activity,” Supler said.

While the number of building permits was down to 566 in the first quarter of 2003, compared to 586 last year, the value of those permits increased from $52,529,987 in 2002 to $128,321,937 this year.

“We are doing significantly larger projects,” Supler said.

A large part of that dollar amount increase is attributable to the many public sector construction projects that are currently taking place in the city.

“Public sector construction is holding up construction in general,” Supler said.

A lot of public sector construction projects – such as the new Mount Tahoma High School, the new headquarters of the Tacoma Police Department and the Greater Tacoma Convention and Trade Center – will be winding down in 2004, she said, at which point it is hoped private sector construction will pick up.

ECONOMIC OUTLOOK
With leading indicators pointing to a tentative economic recovery on the national and local level, Supler was cautiously optimistic about Tacoma’s budget, factoring in such unknowns as Thea Foss clean-up costs, future operating and maintenance costs of the Business Systems Improvement Project, labor contracts, retirement contributions and health care costs.

“The most important thing for us to do is hold our pattern,” she said, including fiscal conservatism and possible hiring freezes instead of budget reductions. “The first three months are not a good time to make predictions, despite being ahead $1.1 million.”

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