Finance Committee
Report by Louie Nady, Chairperson
Updated Daphne Budget Projections 2010
A 2010 budget analysis with projections going forward to 2015 has been prepared and provided to Mayor Small and the Daphne City Council.
■Daphne Budget Projections (pdf)
2010 budget with attached notes and comments (4 pages)
Updated Daphne Budget Projections 2008
A 2008 budget analysis with projections going forward to 2015 has been prepared and provided to Mayor Small and the Daphne City Council. ■ Daphne Budget Projections (pdf)
2008 budget with attached notes and comments(3 pages)
Past Budget Projections:
■ Daphne Budget Projections (pdf):
2006-2007 Budget
Daphne Personnel Costs % Sales Tax Income Projections Projections for Personnel Costs as a Percentage of Total Income
■ Daphne Budget Projections (5/10/2004)
Comments and projections from mid-year budget review (pdf)
Comments and projections from mid-year budget review
Comments: Updated Daphne Budget Projections 2006-2007
The budget projection tables noted above and the comments listed below were provided to Mayor Small and the Daphne City Council
I have updated the Daphne Budget projections based on the information in the 2007 Daphne Budget Book dated August 10, 2006 and additional information from the September 11, 2006 Finance Meeting packet. The updated table is attached. I have discussed my update with Ron Scott and he asked that I give you a copy of my update. I have also prepared some comments below to go with the attached tables. The attachments include a table of the Daphne Budget Projections, a table comparing the Daphne Personnel Costs and Sales Tax Income Projections and a table showing the Projections for Personnel Costs as percent of Total Income.
The financial picture for the City looks good and will be for the next couple of years. A key measure of the health of the city is the size of the City’s Unrestricted Reserve. It is currently just over $7MM and projected to grow to about $9MM in the next couple of years. This is up considerably from what it was just several years ago and the City is to be commended for this achievement! A city the size of Daphne should probably target a Reserve in the $8-10MM range. Such a Reserve will allow the city several years to deal with problems that may arise.
Other key measures for the City’s financial health are the growth rates of the City’s major expenditure (Personnel Cost) compared to the City’s major source of income (Sales Tax) and the change in the percentage of Total Income consumed by Personnel Cost.
Longer term, my projections (based on past historical percentage increases) show that financial pressures (i.e., the beginning of growing yearly budget deficits) will begin by 2010. This is due to the fact that Personnel Costs are projected to rise at a higher percentage yearly then Sales Tax revenues. Historically, the Personnel Cost each year has been lower than the Sales Tax revenue but it has also generally risen at a faster rate. It currently has reached the Sales Tax revenue in value and will start to exceed it in coming years! Going forward, I have projected that the Personnel Cost will rise at a 10% annual rate while the Sales Tax revenue will rise at an 8% annual rate. A more conservative projection would be to project the Personnel Cost increase at 11% annually and the Sales Tax increase at 7%. This would make the situation worse.
Over the last several years, the Personnel Cost has been approximately 50% of Total Income. This is a reasonable percentage range. With the projected yearly rise in Personnel Cost continuing to outpace the rise in Sales Tax income, this percentage will continue to increase and reach 60% by 2010 and 70% by 2015! These higher percentage rates will be a problem and will not be sustainable long term! The City will need to make some difficult choices by 2010. Otherwise, the yearly deficits starting in 2010 will grow and deplete the City’s Unrestricted Reserve by 2015!
L Nady, OTDA
9/13/06