Economic Financial outlookPurposePurpose
Discuss economic outlook both nationally Discuss economic outlook both nationally
and locally:and locally:
2010 Economic Outlook2010 Economic Outlook
––Identify existing or emerging financial Identify existing or emerging financial
concernsconcerns
––Identify potential solutions and develop Identify potential solutions and develop
June 23, 2009June 23, 2009
budget strategies to remedy concernsbudget strategies to remedy concerns
HousingHousing
Economic Indicators
Labor & Employment
Interest Rates
Wages
GDP Growth
Unemployment
Fuel Costs
Health Care Costs
U.S.U.S.
––In April, median home price fell 15.4%In April, median home price fell 15.4%
––Existing home sales increased 2.9%Existing home sales increased 2.9%
––High inventory of homesHigh inventory of homes
Consumer Spending
Housing & Commercial
Retail Sales
Growth
Projections
Building Permits
Home Values
Top Taxpayer Meetings
HousingHousingU.S. Home SalesU.S. Home Sales
Southlake*Southlake*
––Early 2000s Southlake had a slower Early 2000s Southlake had a slower
housing market than the U.S housing housing market than the U.S housing
marketmarket
––2006 average sales price were up2006 average sales price were up
––2007 both sales and average sales price 2007 both sales and average sales price
are upare up
––2008 and 2009 2008 and 2009 ––buyer’s marketbuyer’s market
*According to North Texas Real Estate Information Systems
1
Southlake Home ValuesSouthlake Home ValuesRetail SalesRetail Sales
U.S.U.S.
Southlake Average Home Values
––Retail sales rose by 0.5% in the month of Retail sales rose by 0.5% in the month of
600000
May:May:
500000
••Gasoline sales increased 3.6%Gasoline sales increased 3.6%
400000
••Auto parts rose 0.5%Auto parts rose 0.5%
••Other sales increased 1.0%Other sales increased 1.0%
300000
200000
100000
0
2000200120022003200420052006200720082009
Tax Year
Retail SalesRetail Sales
Southlake Sales Tax CollectionsSouthlake Sales Tax Collections
Sales Tax Collections
SouthlakeSouthlake
––YearYear--toto--date sales tax collections are 4.5% date sales tax collections are 4.5%
700,000
600,000
below budget below budget
500,000
••Sales tax collections for 4 out of 7 months were Sales tax collections for 4 out of 7 months were
400,000
300,000
below budgetbelow budget
200,000
November, December, January and MarchNovember, December, January and March
––
100,000
••Amended budget to reduce projectionsAmended budget to reduce projections
-
NovemberDecemberJanuaryFebruary
OctoberMarchJuneAugustSeptember
July
AprilMay
••Administrative budget reductionsAdministrative budget reductions
••Top taxpayer meetingsTop taxpayer meetings
••Budget monitoringBudget monitoring
Montly collections
2009 Budget2008 Actual2007 Actual2009 Actual
Unemployment Unemployment ––USUS
Unemployment Unemployment ––SouthlakeSouthlake
Unemployment Rate-Comparison
10
9
Employment Rate8
7
6
5
4
3
2
1
0
Feb 08Nov 08Feb 09
Jan 08Jan 09
April 08May 08June 08Aug 08Dec 08
July 08Sept 08Oct 08
March 08March 09
SouthlakeTarrant CountyNational
2
2010 Budget Impacts?2010 Budget Impacts?2010 Budget Impacts?2010 Budget Impacts?
••Purchase of goodsPurchase of goods
Sources of Revenue
––Capital projects Capital projects ––favorable biddingfavorable bidding
4%
Permits/Fees
––Increases in other cost driversIncreases in other cost drivers
3%
Charges for
Fuel Fuel
••
Services
InsuranceInsurance
••
2%
2%
3%
49% Property Tax
LaborLabor
••8%
••Revenue ReductionsRevenue Reductions
28%
––Sales taxSales tax
Sales Tax
––Charges for servicesCharges for services
––Development revenueDevelopment revenue
Property TaxSales TaxFranchise FeesFines
Charges for ServicesPermits/FeesMiscellaneousInterest Income
Budget StrategyBudget StrategyWorkforce Costs Workforce Costs ––BenefitsBenefits
•Insurance Benefits
Continue to monitor economic trendsContinue to monitor economic trends
••
–Health/dental:
––HousingHousing
$64,000
•5% rate increase
––Retail (consumer spending)Retail (consumer spending)
–Life, LTD, FSA:
––UnemploymentUnemployment
•No change in rates
Conservatively budget volatile revenue Conservatively budget volatile revenue
••
•TMRS
itemsitems
–Rate incr. 0.78%$130,000
Control budget expendituresControl budget expenditures
••
–Reviewing plan options
Workforce Costs Workforce Costs ––Pay PlanPay PlanIn summary…In summary…
•Annual 3% steps
•Southlake is feeling the effects of the recession,
–Under review
but is faring better than many areas;
•Market Adjustments
•Budget preparation reflects our strong
–Non-exempt, Exempt, Executive
understanding of the Southlake economy;
•No changes recommended
–Public Safety
•As a service-oriented organization, labor costs
•Goal 103%; Market shows 7% lag
constitute a large part of the budget. We must
•7% market adjustment:$463,233
balance our desire to be an employer of choice
•4% market adjustment:$264,708
with budgetary constraints.
•0% market adjustment:$0
3
Council Council
DiscussionDiscussion
Questions:Questions:
•Southlake economy
•Cost drivers
•Labor costs
4