City Council MeetingApril 21, 2020

COVID-19Budget & Financial Update for Corpus Christi FY 2020 Budget

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COVID-19 potential impacts determined with assistance of:• Nueces County Appraisal District • Nueces County Tax Assessor/Collector • Regional Economic Development Corporation • Convention & Visitors Bureau • Estrada-Hinojosa Financial Advisers • Other regional partners

FY 2020 TOTAL CITY BUDGET $1.075 BILLION

$271.2Million

25%$328

Million 31%

$476Million

44%General FundSupports most basic city services – Police, Fire, Solid Waste, Parks and Libraries

Capital Program• Voter-approved bond

programs• Streets• Airport• Public Safety• Facility• Utility

Enterprise & Special Revenue Funds• Water/Sewer Utility Funds• Airport Fund• Hotel Occupancy Tax Fund• Streets Fund• Type A&B Funds• Development Services Fund

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FY 2020 General Fund Budget: $271.2M

24.4%

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OtherDepartments

$49.4MPolice &

Fire$146.4 M

Services, Fines & Fees, $95.4 M

35%

Other Resources

$28.2 M10%

Sales Tax$61.6 M

23%

Property Tax$86.0 M, 32%

City Council & Mayor’s OfficeCity SecretaryCity AuditorCity Manager's OfficeIntergovernmental RelationsCommunicationLegalFinanceOffice of Management & BudgetHuman ResourcesMunicipal CourtAnimal ControlCode EnforcementHealthLibraryComprehensive PlanningHousing and Community Dev.Outside AgenciesTransfersReserve

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General Fund Revenues

Revenue Budgeted1st Half of the Fiscal Year 2nd Half of the Fiscal Year Total

$177.1M $94.1M $271.2M

Revenue Actuals/ Re-estimate1st Half of the Fiscal Year 2nd Half of the Fiscal Year Total

Low Collections High Collections Low Collections High Collections

$175.5M $74.5M $81.7M $250.0M $257.2M

Revenue Budget Shortfall

Best Case Worst Case

$14.0M $21.2M

5.2% 7.8%

Revenue Sources ($ in Million) FY 2020 Budget Projected Range Variance to Budget

Property Tax $86.0 $84.5 to $85.2 ($0.8) to ($1.5)

Sales Tax $61.6 $48.6 to $52.3 ($9.3) to ($13.0)

Solid Waste Fees $42.3 $40.4 to $41.3 ($1.0) to ($1.9)

Other Revenues $81.3 $76.5 to $78.4 ($2.9) to ($4.8)

TOTAL $271.2 $250.0 to $257.2 ($14.0) to ($21.2)

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General Fund Projected Revenue Impact

Bills issued in October and Due on or before January 31st

– Property Tax Budgeted: $86 Million– Property Tax Collected thru March 31st : $81.9 Million or 95.2% of budget– Typically collection in last six (6) months equal 3.8% of budget– Based on 3.8% collection, we would be $832,000 short of budget – If collections were down by 20%, we would be $1.5 Million short of budget

In November 2016 voters approved additional $.06 per $100 valuation for Residential Street Reconstruction. $.02 was added in FY 2019 and $.02 was added in FY 2020. Final $.02 of the tax rate is not recommended for FY 2021.

In November 2016 voters approved Bond 2018 which included $.02 increase in Debt Service tax rate. This increase will be included in the FY 2021 Proposed Budget.

Current City Property Tax rate

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Property Tax

Maintenance & Operations $ 0.426806 Per $100 valuation

Debt Service $ 0.219458 Per $100 valuation

Total Tax Rate $ 0.646264 Per $100 valuation

Sales Tax:

Sales Tax estimates were determined by: Reviewing each industry sector as categorized by State Comptroller and

forecasting amounts each sector may contribute to sales tax collections Biggest industry sectors: Retail Trade, Accommodation and Food Service,

Information and Telecommunication Reviewing each industry sector by month and determining estimated %

decline in sales tax revenue due mostly to COVID-19 circumstances based on discussions with Regional Economic Development Corporation

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Sales Tax

Collected Booked Sent to the City

March April May

April May June

$4.8

$4.8$5.9

$4.7 $4.6

$5.9$4.8 $4.7

$5.6$5.1

$5.5$4.9

$4.4

$6.2

$4.4 $4.3

$5.2

$1.8

$2.9$4.0 $4.4

$4.8

$4.6

$1.4$2.2

$3.3 $3.7

$4.4

$0.0

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

October November December January February March April May June July August

Budget Actual High Projected Low Projected

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Sales Tax

Sales Tax ($ in Million) FY 2020 Budget Actual/Projected Variance to Budget

October to February $24.8 $24.2 ($0.6)

March to September $36.8 $24.4 to $28.1 ($8.7) to ($12.4)

TOTAL $61.6 $48.6 to $52.3 ($9.3) to ($13.0)

$ in

Mill

ions

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Solid Waste Revenues

Solid Waste FY 2020 Revenue Budget totaled $42.3 Million

Solid Waste revenues most greatly impacted by COVID-19 are private haulers to the landfill which comprise $11 Million or 26% of total revenue

Solid Waste anticipated loses are $1 to $1.9 Million

The majority of FY 2020 revenue loss will be offset through delayed capital purchases and expenses scheduled through lease purchase program

Private Haulers, $11.0M

Residential Accounts, $28.0M

Wastewater Transfer,

$2.2M

Recycling and Other,

$1.1M

SOLID WASTE FY 2020 REVENUES

Large haulers saw 15% decrease in tonnage from Commercial customers in the last 3 weeks

Some haulers were able to make up some shortages on commercial side with increased tonnage from commercially owned housing/apartments and construction

Overall, on commercial side we anticipated a big decline in April and then a slow recovery throughout remainder of the fiscal year

Recycling market was down prior to COVID-19 and continues to be down

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Solid Waste Revenues

General Fund Other Revenues are projected to be short of budget between $2.9 to $4.8 Million

Some other revenue sources with anticipated significant declines ($ in Millions)

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Other Revenues

Revenue Source Low Down High Down

Ambulance Supplemental Payment Program $1.5 $1.5

EMS Transport Fees $0 $0.5

Liquor by the Drink $0.185 $0.3

Police Towing & Storage Charges $0.35 $0.4

Latchkey Program $0.45 $0.55

Vital Statistic Fees $0.15 $0.16

Moving Vehicle Fines $0.225 $0.3

General Fines $.34 $.375

The City Financial Policy: It is a goal of the City Council to build and maintain a reserve of up to 20% of annual appropriations

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General Fund Reserves

General Fund Balance @ 9-30-18 $ 55.3M

Additional Fund Balance with closing of FY 2019 books $ 23.3M

General Fund Balance @ 9-30-19 $ 78.6M

20% Reserve Required per Financial Policy $ 54.2M

General Fund Balance @ 9-30-19 $ 78.6M

Fund Balance in Excess of Required Reserve $ 24.4M

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Initial COVID-19 Impact Solution

General Fund ($ in Millions)

98% of Expenditures $5.0

Vacancy Savings thru Vacancy Review Committee $2.8

TMRS COLA Adjustment from 70% to 30% $2.3

Fuel $0.5

Electricity Bill $0.4

Travel $0.3

Economic Development Agreements $0.25

TOTAL $11.55

Crime Control & Prevention District Funds 63 Police Officer positions

Sales Tax impact due to COVID-19

• The Crime Control & Prevention District has an unreserved fund balance @ 9-30-19 of $4.9 Million

• Budget adopted in June15

Crime Control & Prevention District

Sales Tax ($ in Million) FY 2020 Budget Actual/Projected Variance to Budget

October to February $3.1 $3.1 ($0.0)

March to September $4.4 $2.8 to $3.3 ($1.1) to ($1.6)

TOTAL $7.5 $5.9 to $6.4 ($1.1) to ($1.6)

Type A Funds include Seawall and Arena Fund(1/8 cent of local sales tax dedicated to each)

Sales Tax impact due to COVID-19

• The Seawall Fund has an unreserved fund balance @ 9-30-19 of $45.2 Million• The Arena Fund has an unreserved fund balance @9-30-19 of $19.1 Million

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Type A

Sales Tax ($ in Million) FY 2020 Budget Actual/Projected Variance to Budget

October to February $6.2 $6.0 ($0.2)

March to September $9.2 $5.8 to $6.8 ($2.4) to ($3.4)

TOTAL $15.4 $11.8 to $12.8 ($2.6) to ($3.6)

Type B fund (1/8 cent of local sales tax) contributes 50% of the revenues to Business & Job Development, $500,000 for

Affordable Housing and the remainder is used for Arterial and Collector Street projects

Sales Tax impact due to COVID-19

• The Type B Fund has an unreserved fund balance @ 9-30-19 of $8.3 Million17

Type B

Sales Tax ($ in Million) FY 2020 Budget Actual/Projected Variance to Budget

October to February $3.1 $3.0 ($0.1)

March to September $4.6 $2.9 to $3.4 ($1.2) to ($1.7)

TOTAL $7.7 $5.9 to $6.4 ($1.3) to ($1.8)

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Hotel Occupancy Tax Revenues

Revenue Budgeted1st Half of the Fiscal Year 2nd Half of the Fiscal Year Total

$5.3M $10.1M $15.4M

Revenue Actuals/ Re-estimate1st Half of the Fiscal Year 2nd Half of the Fiscal Year Total

Low Collections High Collections Low Collections High Collections

$5.3M $5.9M $6.9M $11.2M $12.2M

Revenue Budget Shortfall

Best Case Worst Case

$3.2M $4.2M

20.8% 27.3%

90% of HOT Tax revenue is used to support:• Convention and Visitors’ Bureau - $5.0M• Convention Center - $4.6M• Convention Debt - $2.3M• Beach Cleaning - $1.95M

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Initial COVID-19 Impact Solution

Hotel Occupancy Tax Fund ($ in Millions)

Reductions in CVB Budget $1.0

Reduce transfer to Convention Center/ Use Visitors’ Fund Unreserved Fund Balance $0.5

TOTAL $1.5

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General Obligation Bonds

Sale of General Obligation (GO) bonds for voter-approved 2018 Bond Program Issue $96 million to fund 2018 Bond Program Increase property tax rate in FY2021 by 2 cents on I&S side (interest and sinking fund) as approved by

voters

Refinance GO debt for savings Evaluate current GO debt to save interest costs on old bonds and to provide debt capacity without

increasing property tax rate Refinance with favorable market conditions over $140 million of current debt and provide capacity

for 2020 Bond Program with $120 million for new projects without a property tax rate increase

Staff will present bond resolutions to City Council on May 12 along with a Plan of Finance

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Utility Revenue Bonds

Sale of $110 million of Utility Revenue Bonds to fund current CIP projects Financings are already contemplated in City’s most recent rate adjustments

Sale of Utility Revenue Bonds for a Desalination Plant Approval of an application with Texas Water Development Board (TWDB) on April 21 Council Agenda Interest rates on estimated $222,475,000 project through TWDB are expected between 1% to 3% depending

on market conditions at time of sale

Refinance Utility Revenue Bond debt for savings Evaluate over $250 million of current Utility Revenue Bonds to refinance at lower interest cost for savings Market conditions must be favorable to secure lower interest rates

Staff will present bond resolutions to City Council on May 12, along with a Plan of Finance

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Next Budget & Financial Presentation

Water/Sewer Utility Funds

Airport Fund

State Hotel Occupancy Tax (SHOT) Fund

Convention Center/Arena Funds

Visit Corpus Christi Budget (Convention and Visitors’ Bureau - CVB)

Downtown Management District Budget (DMD)

Corpus Christi Regional Economic Development Corporation Budget (CCREDC)

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Next Steps

Executive Level Budget Team to continue to develop budget balancing strategies to be implemented

Executive Level Budget Team to meet weekly to use data to drive decisions

City Manager’s report to City Council to include recurring Budget & Finance updates for foreseeable future

FY 2021 Budget development to begin soon

City Council MeetingApril 21, 2020

COVID-19Budget & Financial Update for Corpus Christi FY 2020 Budget

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Slide Number 1Slide Number 2Slide Number 3FY 2020 General Fund Budget: $271.2MSlide Number 5Slide Number 6Slide Number 7Slide Number 8Slide Number 9Slide Number 10Slide Number 11Slide Number 12Slide Number 13Slide Number 14Slide Number 15Slide Number 16Slide Number 17Slide Number 18Slide Number 19Slide Number 20Slide Number 21Slide Number 22Slide Number 23Slide Number 24