2022-2027 LONG-TERM FORECAST – GENERAL REVENUE FUND (1010)

Purpose

The purpose of the long‐term forecast is to provide a forward‐looking view of the General Revenue Fund, allowing for evaluation of the long‐term sustainability of the annual budget. The forecast also provides a starting point for future budgetary decision‐making by identifying the balance between potential spending needs and projected revenues.

This long‐range forecast is an important financial planning tool that is updated throughout the year as new information about revenues and spending becomes available. This information is used to:

 Incorporate necessary budget adjustments into long‐range financial projections

 Ensure that both additions and reductions to the budget are sustainable

 Maintain options to deal with unexpected contingencies

 Continue advance planning to anticipate factors affecting revenues and service needs

There are many factors that can impact this forecast, including changes in the real estate market, changes in economic conditions, changes in the costs of goods and services, and unforeseen events such as natural disasters to name a few. Therefore, it is important that this projection be viewed only as an estimate of what the future could look like given what is known today.

Assumptions

Revenue is estimated to decrease by 1.3% in 2022 driven by reductions in licenses and permits, tax collection fees, recording fees, and jail fees. In 2023 revenues are projected to grow by 4.2% driven by additional growth in sales tax revenue.

General Revenue Fund (1010)

Revenues are projected to increase by an average of 1.1% from 2024 through 2027. This forecast is based on the following assumptions:

 Property values will grow, but the county’s revenue will be limited in reassessment years to the prior year’s revenue plus an inflationary adjustment. Any tax rate reductions in reassessment (odd‐numbered) years will not be restored in the subsequent (even‐numbered) year

 Sales tax revenues will grow by 2% per year in 2024‐2027

 All other sources fluctuate minimally each year

 No additional transfers‐in from the American Rescue Plan Act (ARPA) – State and Local Fiscal Recovery Funds are anticipated.

 No settlement revenue (NFL, opioid, or utility gross receipts tax) is included in this forecast.

Expenditures are projected to increase 11.0% in 2022 and an additional 3.4% in 2023. Between 2024 and 2027, spending is estimated to increase an average of 3.0% per year based on the following assumptions:

 Public safety salaries will increase pursuant to ordinance/labor agreements, and the budget will include a merit pay program for other employees each year. The number of funded positions remains unchanged from 2024‐2027.

This forecast does not include the potential cost of addressing or correcting pay issues such as comparison to the market rate, compression, etc.

 Fringe benefit costs increase 4.0% per year to allow for growth in employee retirement and health care costs. This forecast does not include additional retiree cost of living adjustments.

 Costs for purchased services, commodities and supplies, and capital outlays are projected to increase slightly each year

 Projections for the transfer payments category fluctuate to accommodate the number of elections budgeted in each year

Fund Balance / Reserve

Transfers‐in from the federal COVID‐19 relief funds during 2021 ($66.4 million) provided funding for governmental services to continue despite current and projected structural deficits.

The budget is projected to be in a structural deficit position each year moving forward. This will draw fund balance down below the 10% reserve target in 2024 and the budget will no longer be sustainable without significant changes.