Next month, the Albemarle County Board of Supervisors will start discussing how to spend the county’s projected $13.2 million surplus from fiscal year 2021.
County staff said strong revenue growth in the fourth quarter, delayed purchases and pandemic-related federal money all contributed to the county’s “larger budget variances” projected for the last fiscal year.
On Wednesday, the Board of Supervisors were given numbers from the county’s unaudited annual financial report for fiscal year 2021, which ended June 30. The $13.2 million positive variance is preliminary and could be adjusted when the audited report comes out in December.
County Executive Jeff Richardson said not only is there one time money available, but the county’s base revenue projection for the current fiscal year has also increased. He said in December, he will be recommending a mid-year adjustment to county government salaries.
“We’ve got to maintain competitiveness, we’ve got to maintain entry-level salary ranges that are competitive in the market,” he said. “I’m increasingly concerned that while the financial foundation under us is stronger, much stronger than it was 20 months ago, the economic vitality in this community, we have trend data that suggests that it is as strong as ever, the ground we stand on with workforce stabilization is very fragile.”
Nelsie Birch, the county’s CFO, said fiscal year 2022 is starting off with higher revenues than what was budgeted and the board will discuss the “unprecedented” mid-year salary adjustments and potential new positions.
“We will give you comfort as we continue to provide the financials to suggest that our base has considerably moved, and it’s moved without the knowledge of what the reassessment on real estate taxes and real estate property are going to provide for us in FY 22,” she said.
Andy Bowman, the county’s chief of the budget division, said that around 45% of the county’s general fund revenues are collected in the fourth quarter. Typically, the year-over-year revenue change in the fourth quarter is within a percentage point, plus or minus, the year-over-year revenue change of the first three quarters combined, he said.
But in the first three quarters of fiscal year 2020, the county’s revenue grew 4.4% compared to the prior year, and then increased only 0.6% during the last quarter, when the pandemic started, Bowman said. In fiscal year 2021, however, revenue grew 2.6% over the prior year’s first three quarters and then shot up to 7% more in the fourth quarter.
“When there’s a significant change in that quarter compared to what happened prior in that year, that can significantly shift the county’s financial position for the worse — in fiscal year 20 — or for the better — in fiscal year 21,” he said.
For fiscal year 2021, the unaudited numbers showed that revenues exceeded what was budgeted by 5.3% or $16.1 million, and expenditures were under budget by 4.9% or $15.4 million.
“I went back and that is actually the highest variance we’ve had in expenditures since the onset of the Great Recession, where there was a dramatic decrease in expenditures as the revenue picture began to change quickly,” he said.
The county cut back spending at the end of fiscal year 2020 and modified its fiscal year 2021 budget due to the pandemic. At the time the fiscal year 2022 budget was proposed, Birch said the county was not overly aggressive with its revenue estimates.
Bowman said about $10.4 million of the $15.4 million has already been or will be recommended for reappropriation in the current fiscal year.
“To elaborate on what I mean by that is those reappropriations should include things such as purchase orders for items that were planned to be purchased in fiscal year 21, but due to changes in responding to the pandemic, or the supply chain, they were not going to be able to deliver it on time as expected, and these expenditures will now be taking place in fiscal year 22,” he said.
Albemarle also received about $19 million of Federal Coronavirus Aid, Relief, and Economic Security Act of 2020 Coronavirus Relief Fund money.
The county said previously that $7.1 million of CARES money was used to reimburse county public safety pay, which was allowed by the federal government.
The county then used that $7.1 million in savings to create a “pandemic reserve.” Bowman said at the end of FY 21, that reserve still had about $4.7 million, which is also part of the $15.4 million.
Birch said still will work with the board over the next two months on how it can use the $13.2 million for one-time needs and the board’s strategic initiatives.
“We’ll be providing a plan to the board as we work through with you the five-year financial plan, as well as the FY23 budget, of how we can use this funding to support those initiatives,” she said.
At the Nov. 17 meeting, county staff will be showing the board the first quarter financials from July through September. In December, the board will be hearing recommended adjustments to the current budget that focus on the county’s workforce.
This fiscal year, due to the issues with slow mail delivery, the county assessor will present the real estate reassessment presentation on Dec. 15.
“Our fear is that we will not have the reassessment notices in the hands of people in time to be able to meet the appeal process that happens after that if we do it in January as we typically do,” she said. “That ,we hope, will allow for enough time for people to get that assessment and reassessment notice, and be able to go through the process and not have the mail challenges delay that.”
Supervisor Liz Palmer asked for more specifics about where the $13.2 million positive variance came from.
“I think that’s going to be very important for us when we go out to talk to constituents to clearly understand that and be able to articulate the sources of those dollars,” she said.