Comprehensive Annual Financial Report

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The City’s CAFR includes all funds of the City, the primary government, as well as all of its component units. Four discretely presented component units, the Richmond Ambulance Authority, Richmond Redevelopment and Housing Authority, Richmond Behavioral Health Authority, and School Board of the City of Richmond, are included in the reporting entity because of the City’s financial accountability for these organizations. These component units are reported in separate columns in the City’s basic financial statements. Additional information concerning these legally separate organizations can be found in the notes to the financial statements. Budget Process The budget serves as the foundation for the City’s financial planning and spending control. The City adopts a biennial budget, with amendments made in the second year of that biennium. Fiscal Year 2012 was the first year of the biennium. The proposed biennial budget was presented to City Council in March 2011. City Council, through its Finance and Economic Development Standing Committee, undertook an intensive review of the proposed budget in a series of public meetings and outlined their policy priorities. Prior to adopting the biennial budget, a public hearing was held in April with budget adoption in May 2011. Legal budgetary restrictions are established at the governmental function (i.e. Department of Public Works), with effective administrative controls maintained through detailed line-item budgets. Any revisions that alter the total budgeted amounts and/or appropriations of any fund must be approved by the City Council. Budget to actual comparisons are provided in this report for governmental funds where an appropriated budget has been adopted. These comparisons are presented in the “Other Required Supplementary Information” section of the financial statements. Expenditures For the most part, agencies did stay within range of their amended budget. Exhibits H-1 and H-2 located in the financial section of this report provide budgetary comparison information for the City’s General Fund agencies. Revenue As part of the City’s Well Managed Government building blocks, many improvements have been made in the area of financial management. The City has continued to build on improvements made during FY 2010 and FY 2011, including continued utilization of a five-year forecast for financial planning and the implementation of a comprehensive tax compliance plan. FY 2012 General Fund revenues ended the year within 0.2 percent of the amended budget forecast, or $1.85 million less than projected. Improved collections of current and delinquent real estate taxes were a key driver for offsetting the continued declines in payment from the state, particularly Social Services revenue. Current and delinquent personal property tax revenue was also significantly less than budgeted, due to the absence of a third-party collection agency since January 2011, further contributing in offsetting the positive gains in real estate tax revenue. In addition to the variances discussed above, revenue was reclassified from consideration as personal property tax revenue to real estate tax revenue. This change was driven by changes in revenue reclassification by the State Corporation Commission, the organization that assesses the value of this respective property. Moving forward, this reclassification will continue, in line with best practices utilized by other Tier-One cities and counties throughout the Commonwealth. Economic Overview The economic recovery continues at a tepid pace for the nation and City of Richmond. The Great Recession began halfway through FY 2008 in December 2007. The City of Richmond ended FY 2008 with $651,660,975 in revenues as reported in the CAFR. On a year-over-year (YOY) basis, revenues decreased by 1.78% in FY 2009 followed by an additional 0.29% decrease in FY 2010. This decline was reversed in FY 2011, when revenues increased by 1.15% over FY 2010. FY 2012 saw marginally positive growth of 0.24% from FY 2011. The City has yet to pass the previous revenue peak from FY 2008; revenues are down by 0.69%. All figures reported exclude the RMA payment account due to a large, one-time, FY 2012 payment of $62.1 million. III
After the recession began in December 2007, the City of Richmond saw an employment peak of 159,421 ending March 2008. By March 2011, the City hit a new low with employment down 11,016 jobs to 148,405. As of September 2012, employment has increased by 1,541 jobs to 149,945 (note: numbers do not sum due to rounding); this represents a gain of 14.0% jobs from the trough. The unemployment rate hit a high of 10.7% in the City of Richmond 1 during January 2010. By contrast, the Virginia unemployment rate hit a high of 7.3% in January 2010. Since that time, the City’s unemployment rate has declined and currently stands at 8.6% at the end of September 2012, with Virginia’s at 5.9% for the same period. The national unemployment rate was 7.8% at the end of September. All unemployment rates reported in this section are seasonally adjusted. In the Richmond Metropolitan Statistical Area (MSA), seasonally adjusted single-family building permits were 340 per month when the recession started in December 2007. Due to the recession, permits fell to a low of 152 per month as of March 2009. The highest level since the recession has been 311 per month in December 2011. Permits currently stand at 215 per month. The four-quarter percent change for the Richmond MSA House Price Index (HPI) is -1.96% ending June 2012 (the most recent data available). Major Initiatives and Accomplishments: Well Managed Government In fiscal year 2010, the Mayor outlined his vision of making Richmond a Tier One City through a series of changes in the way government operates. This vision included running a top-notch, well managed organization grounded in accountability and strong financial management that serves the community, runs the business, manages resources and develops employees. In FY 2011, the City implemented the Mayor’s vision with a comprehensive tax compliance program, a one-time tax amnesty program, and twice-per-year real estate billing. Collectively these programs improved the current real estate tax collection rate and collections of delinquent real estate tax revenue. In FY 2012, the City strengthened its financial foundation by adopting revised debt and unassigned fund balance policies. Throughout the fiscal year, a number of actions that were initiated in FY 2010 were continued through FY 2012, including the continued utilization of a five-year revenue and expenditure forecast, quarterly financial reports including an economic outlook, and introduction and adoption of a structurally balanced budget that maintains core services, protects the fiscal integrity of the City, ensures the City is poised for future growth, and budgets for priorities, just to name a few. Moving forward to fiscal year 2013 the Administration will continue to expand on these accomplishments, making strides toward achieving a goal of a Tier One City with a well managed government and a AAA bond rating. <strong>Financial</strong> Policies and Guidelines The following policies and guidelines represent principles and practices that guide the City and help to foster the City’s financial stability. These are not the only financial guidelines, but are those that have had a major impact in recent years or will have a major impact on the City’s future financial positions. For a complete listing of the City’s <strong>Financial</strong> Guidelines, please see the City’s website www.richmondgov.com. Fund Balance Guidelines As of June 30, 2012, the Unassigned Fund Balance was $72.9 million, which equaled 9.0 percent of the adopted General Fund budgeted expenditures, including transfers. The City considers the Unassigned Fund Balance to be comprised of funds that have no limitations or restrictions or planned use. Fiscal year 2012 is the second year in which GASB 54 requirements are implemented. Based on recommendations from the Mayor, the Council adopted several new fiscal policies, including a revised debt policy and a new unassigned fund balance policy. 1 The Bureau of Labor Statistics (BLS) does not provide data for the City of Richmond unemployment rate. For the City of Richmond unemployment rate, JobsEQ data were used. IV
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Page 31 and 32: OVERVIEW OF THE FINANCIAL STATEMENT
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CITY OF RICHMOND, VIRGINIA NOTES TO
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Due To CITY OF RICHMOND, VIRGINIA N
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EXHIBIT H-1 CITY OF RICHMOND, VIRGI
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EXHIBIT H-1, Continued CITY OF RICH
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Exhibit H-2 CITY OF RICHMOND, VIRGI
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EXHIBIT I-1 Special Revenue CITY OF
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EXHIBIT I-3 CITY OF RICHMOND, VIRGI
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CITY OF RICHMOND, VIRGINIA BUDGETAR
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EXHIBIT J-1 CITY OF RICHMOND, VIRGI
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EXHIBIT J-3 CITY OF RICHMOND, VIRGI
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EXHIBIT K-1 CITY OF RICHMOND, VIRGI
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EXHIBIT K-3 CITY OF RICHMOND, VIRGI
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EXHIBIT L-1 CITY OF RICHMOND, VIRGI
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EXHIBIT L-3 CITY OF RICHMOND, VIRGI
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CITY OF RICHMOND, VIRGINIA MISCELLA
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Monthly Commercial and Industrial B
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CITY INDEBTEDNESS All of the City
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122 CITY OF RICHMOND, VIRGINIA CHAN
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124 CITY OF RICHMOND, VIRGINIA ASSE
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126 CITY OF RICHMOND, VIRGINIA PRIN
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128 CITY OF RICHMOND, VIRGINIA RATI
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CITY OF RICHMOND, VIRGINIA PLEDGED-
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CITY OF RICHMOND, VIRGINIA FULL-TIM
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CAPITAL ASSETS STATISTICS BY FUNCTI
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Comprehensive Annual Financial Report

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