Balance increase a function of accounting
Henderson revenues for the first half of fiscal year 2014 are tracking more than $1.5 million ahead of schedule, according to a finance report released Monday.
Kathy Brafford, the finance director for Henderson, told members of the City Council during a work session on Monday they should bear in mind that much of the funding is simply arriving ahead of schedule.
They can’t be counted as above overall projections just yet.
Historically, expected revenues for the year filter in roughly at an even pace during both the second and third quarters of a fiscal year. The city’s budget projected about $2.2 million and $2.5 million respectively over those two quarters, according to Brafford.
With nearly $4 million counted in the shorter timeframe of the fiscal year’s second quarter, Brafford expects third quarter revenues to track below the $2.5 million mark, and end up much closer to overall projections.
She added the net result will potentially be better than expectations, though not by nearly as much as the current numbers appear.
“It’s a matter of timing,” Brafford said. “Revenues are exceeding expected revenues by $1.5 million, but before we get real excited we need to realize that part of this is an accounting function.”
Impacting the quarterly numbers toward an early accumulation of revenue is the fact Vance County is now reporting the revenues monthly, Brafford said.
Sales tax revenues are also higher than expected. According to Brafford, sales tax revenues are volatile and subject to economic downturns.
In that context, “Sales tax revenues have exceeded projections for the past two years,” Brafford said.
Brafford’s report showed sales tax revenues at $220,000 and $280,000 higher for 2012 and 2013 respectively than in 2011, when it was $2.1 million.
Brafford said sales tax revenues in from the first four months of fiscal 2014 track nearly $7,000 ahead of projections.
The report does not include all six months of the fiscal year half because sales tax money goes to Raleigh before reaching city coffers about two months later, according to Brafford.
An explanation of a $960,000 boost to unassigned, available savings for the city was also a part of Brafford’s report. The available, spendable savings totaled $2,966,287 as of June 30, compared to $2,005,613 at the end of the previous fiscal year.
That boost is only part of an overall savings picture, Brafford said.
When including declines to restricted stabilization money, the asset forfeiture account and Powell Bill funds, the city has only $316,747 more than the previous year, standing at $5,092,940 total.
Brafford said the boost to the unrestricted account of money available to spend occurred partly because of a shift from restricted accounts.
The budget tapped less from savings accounts in 2013 compared to 2012.
According to Brafford, stabilization funds restricted according to state statutes include debts, or accounts receivable, due from other governments and entities. Those can include sales tax revenue the state owes.
If various entities pay the accounts receivable to the city — for instance, if the state pays owed sales tax revenues — fund numbers move from the restricted, accounts payable, portion of the budgeting ledger into fund accounts available for spending.
According to Brafford’s report, the state restricted accounts declined more than $350,000 to $1,042,496 as of June 30. This shift was taking place over the fiscal year as available funds rose, Brafford said.
Brafford said that the city’s available fund balance was also impacted by revenues being higher than expected from the local taxes that were collected and by scaling back on proposed spending requests.
Knowledge of the year’s fund activity is not complete until a full audit on the fiscal year is performed, which takes several months. It is typically in the fall that an accurate picture of fund balances as of the close of the fiscal year are known.
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