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2013 Economic Outlook, Revenue Overview, & Budget Issues Prepared for the Salt Lake County Council and Mayor Darrin Casper Doug Macdonald Lance Brown.

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Presentation on theme: "2013 Economic Outlook, Revenue Overview, & Budget Issues Prepared for the Salt Lake County Council and Mayor Darrin Casper Doug Macdonald Lance Brown."— Presentation transcript:

1 2013 Economic Outlook, Revenue Overview, & Budget Issues Prepared for the Salt Lake County Council and Mayor Darrin Casper Doug Macdonald Lance Brown

2 2013 Economic Outlook & Revenue Overview Economic Outlook – Doug Macdonald Revenue Overview - Lance Brown Budget Issues – Darrin Casper

3

4 October 2012 Forecast Review

5 Utah Economy Improving Relative to U.S. in 2012

6 First led by China and now Europe, world nominal GDP slowing down from 6% to 4.5% Source: The Economist, October 5, 2012

7 The U.S. economy (real GDP) slowing down to just below 2%

8 Business Equipment & Software will increase 6.6% in 2012, slowing down from 10%

9 Unemployment claims, leading indicator for jobs, now below recession levels

10 Salt Lake County employment growth shifting into 3rd gear

11 Utah Wages Shot up over 6% in the First Half of 2012

12 Utah Residential Construction up 15% through July, Salt Lake County up 8% Source: Univ. of Utah, BEBR

13 Auto Sales Highest in 4 Years

14 Last three months up 7.3% Fiscal year- to-date up 7.5%

15 Utah 2nd Quarter 2012 Taxable Sales Sales in Million $% Change from 2011 Retail – Motor Vehicles$ 1, % Wholesale - durable goods 1, Services – Accommodations & Food 1, Retail – General merchandise 1, Retail – Food stores Total Taxable Sales$12, Source: Utah State Tax Commission

16 Seven month year-to-date 7.5%

17 Fiscal Cliff and Europe Loom

18

19 Property Tax New Growth 2013 Or the lack thereof?

20 2013 Property Tax Revenue Projections Projected new growth for 2013 – Reviewed permit authorized construction trends for residential and non-residential properties. – Reviewed personal property (business equipment) taxable values with the Assessors staff. – Projection vetted with Revenue Committee

21 Countywide Real Property Growth 2013 Projected New Growth - Real Property ($000) 486, , , , ,579 Permit Values ($000) Total New Residential Construction Value 474, , , , ,237 Hypothetical Taxable Value 55% of Residential Value 260, , , , ,830 Total Nonresidential Construction Value 501, , , , ,523 Taxable Value based on Permits 762, , ,061 1,146,285 1,104,353 New Growth / Permit Value63.7%59.5%68.3%63.4%62.2% Permit values have an apparent relationship to real property growth August 2011 to July 2012 less than prior year Suggests slightly less growth than last year

22 Personal Property Depreciates rather than appreciates – Requires new investment by businesses just to stay even Was negative countywide in 2011 and 2012 rate setting process (2010 and 2011 values) New growth for rate setting based on prior year values – Reasonably good data available for predicting its effect in 2013 rate setting CountywideLibraryMunicipal Svc ,665,453,468 2,732,788, ,393, ,770,379,113 2,860,858, ,190,813 Growth 104,925, ,070,375 (5,203,142)

23 Centrally-Assessed Property A wildcard Mining the largest component – Somewhat driven by metals prices, but... – Higher metals prices in 2011 did not result in higher value – 2013 metal prices mixed Other components – railroads, airlines, utilities, other MetalPrice % Change Copper8% Gold10% Molybdenum-16%

24 RDA / CDRA Tax increment financing (TIF) by definition captures new growth and diverts it from the normal taxing entities TIF capture offset new growth by $366.4 million in 2012 City Creek is in a redevelopment project area – Additional RDA capture highly likely

25 New Growth 2012 CDRA / RDA ($366 Million)

26 2013 New Growth Positives – Some real property new growth – Some personal property new growth Unknown – Centrally assessed Likely offsets – CDRA / RDA Conclusion – Reasonable probability that modest new growth will be offset again, as it has been the last 2 years – net zero

27 Property Tax Revenue Projections

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29 Inflation Effect on Countywide Property Tax Revenues

30 Sales and Use Tax 2013 Projected Tax Revenues $137,800,000 Total Projected Sales and Use Tax Revenue

31 Actual Sales Tax Receipts vs. Projected Year to Date through July 2012

32 Sales Tax Receipts vs. Same Period Prior Year Year to Date through July 2012

33 Sales Tax Projections

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35 Local Option Sales Tax

36 Sales Tax Projections

37 County Option Sales Tax

38 Sales Tax Projections

39 Transient Room Tax

40 Sales Tax Projections

41 Car Rental Tax

42 Sales Tax Projections

43 Restaurant Sales Tax

44 Sales Tax Projections

45 Zoo, Arts, & Parks Tax

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47 Mayor Peter Corroon 2013 Budget Briefing By Darrin Casper October 16, 2012

48 2013 Budget Direction Elected Officials and Department Directors were asked to illustrate impacts of a 10% cut to County funding Show/request pent up demand (ex. Government Center rent) Capital project funding at or above industry standard by fund

49 Where Weve Been… 2009 Interim Budget Measures: 1 st Step Implemented Hiring Freezes: Phase INov 2008 Phase IIApr 2009 Provided Early Retirement from December 2008 – February 2009 Suspension of 401k payments in April 2009 Goal was to buy time, to allow a gradual reduction in expenditures without a material RIF

50 2010 Budget Measures: Second Step Additional county funding program cuts of $18.4 million in the General Fund 401k suspension carried forward 69 FTEs eliminated from budget 2.75% negative structural adjustment to employee pay Tax rate shifts, program revenue increase

51 2010 Early Retirement November 16, 2009 – March 31, 2010 – Cash out accrued sick leave at 75% as cash, 401k, or 457k Provide $5,000 per year worked in excess of 30 years, not to exceed $25,000 Reduction Goals – Rating Agencies 50 FTEs $3,250,000 – Mayor/Council 62 FTEs $4,000,000

52 2012 Budget Measures: Third Step Additional county funding program cuts of $6.5 million in the General & Related Funds 32 FTEs eliminated from budget

53 Reductions Summary Measures Taken Since Hiring Freezes & 2 Early Retirements232 FTEs Early Retirement Payback$4,000,000 Pay and 401K Cuts $8,081, mid-year budget resolution $12,617,041 Additional budget cuts over past 4 years $24,875,184

54 Salt Lake County Employment Picture FTE Reductions *Transferred 441 FTEs to UPD in 2010

55 Proposed Hiring Freeze Cap total FTE count in County at 3,566 Sets number to include existing vacancies after those approved by Council Additional turnover would enable hiring, but only after vacancies are reviewed for priority, and as long as they do not exceed the FTE cap Effective immediately through budget process

56 Inflation Impact Source: U.S. Dept. of Labor, Bureau of Labor Statistics, Consumer Price Index, All Urban Consumers (CPI-U), U.S. City Average

57 Inflation is Real * Health Insurance spending by Salt Lake County increased from $16.3 million in 2001 to $30.3 million in * The number of enrollees has decreased from 3,788 to 3,279 over the same period. * Sales tax revenue over this same period grew from $35.3 million to $44.5 million, or $9.2 million total.

58 The Demand for Service Most County programs have an inelastic demand for service. The demand is unaffected by a downturn in the economy. Many programs have seen significant increases in the demand for service – Visitation at Parks and Recreation facilities has increased by 640,000 annual visits since 2008 – Human Resource job applications have gone from 13,152 in 2008 to 22,636 projected in 2012 – Social Service referrals up 12% since 2008 – Library circulation has gone for 14.2 million to 15.7 million (e-collection up 876%) – Meals on Wheels have gone up 5% since 2008 – County population has grown 14.7% since 2001

59 The County has Expanded to Meet Demand

60 2013 Budget Challenges New Requests: – General Fund 46 FTEs $10,500,000 – Total County 74 FTEs $29,300,000 Inflation: – Health Insurance – Retirement – Pay Restoration – 401 Restoration

61 2013 Budget Challenges Deferred Maintenance Best Practice – put aside $3 per square foot per year The goal will be a fund by fund solution to all deferred maintenance issues identified by Facilities Management. Solution will enable County to catch up and stay on top of all maintenance needs.

62 2013 Budget Challenges Deferred Maintenance

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64 2013 Budget Challenges OPEB OPEB – Fund Annual Retired Contribution - $2.9 million – Will lower OPEB liability – Smart Management Consider measures to turn benefits for future employees to defined contribution as opposed to defined benefit

65 Work-in-Progress Currently getting all numbers in BRASS Reviewing requests and possibly additional cuts Balanced budget will be proposed November 8 th


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