Popular Annual Financial Report
Financial Look Back at 2020
Trends
As a result of the impact of the COVID-19 pandemic the City of Arlington faced challenges over the past fiscal year that were without precedent . When Fiscal Year 2020 began , the City was well-positioned to benefit from the steady revenue growth it had experienced over several years since the end of the Great Recession . By January , our revenues were tracking very close to the adopted budget levels ; the 1 st Quarter Budget Analysis Report ( BAR ) showed property taxes , sales taxes and franchise fees at $ 407,000 better than budget in the aggregate , and the General Fund ’ s expected revenues were projected to be $ 347,000 higher than budget . The City was also anticipating the April opening of Globe Life Field , the new home of the Texas Rangers .
The pandemic brought a significant financial downturn almost overnight . For a city that receives an estimated 52 % of its sales tax dollars from visitors , the prospect of fewer visitors created significant financial challenges . The suddenness with which the downturn occurred was unparalleled ; the outlook for sales and hotel occupancy tax revenues declined so quickly that traditional revenue projection models lost much of their predictive value . At the outset of the COVID-19 pandemic , sales tax revenues were considered the most at risk of the General Fund ’ s revenue sources . The uncertainty about the
3.1 % decline
Sales Tax Revenue
8.3 % growth
$ 70,000,000 $ 60,000,000 $ 50,000,000 $ 40,000,000 $ 30,000,000 $ 20,000,000 $ 10,000,000
Sales Tax Receipts from 2019-2020
Sales Tax Receipts Growth from 2018-2019
Sales Tax Revenues FY 2006 - 2020
effects of the pandemic , with business closures and job losses across the City and region , resulted in estimates that were as much as $ 13 million below budget . Although the City ’ s year-end sales tax revenues were above these estimates , coming in at $ 64,195,349 , this amount was still $ 4.2 million ( 6.11 %) below budget and $ 2.77 million ( 4.14 %) below the amount received in FY 2019 . The General Fund ended FY20 under budget in revenues by $ 10.7 million ; however , this was significantly better than the projections made last April , when it was feared revenues could miss budget by as much as $ 18 million .
In this environment , the City managed its budget in the same way citizens and businesses confronting these challenges would need to operate . As revenues declined , the focus shifted to preserving essential services while finding ways to reduce expenditures wherever possible . Citywide expenditure reductions included the suspension of a planned employee
FY 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 raise , holding positions vacant from early March through the end of the year , postponement of public safety hiring academies , and individual department expenditure reductions that impacted every aspect of City operation . Overall , General Fund expenditures were under the adopted FY20 budget amount by $ 18.07 million . The City General Fund ended the year under budget in revenues and expenditures , and all funds had positive ending balances .
Reserves
In accordance with the City ’ s Financial Principles , several cash reserves are maintained to mitigate the impact of a significant economic downturn on our ability to maintain service levels to our citizens . These reserves are an important consideration by bond rating agencies in determining the City ’ s overall credit-worthiness . The major reserves include the Unallocated Reserve , targeted at 3.0 % of recurring General Fund expenditures . It is designed to be used for emergencies and unanticipated expenses . The Working Capital Reserve sets aside one month ( 8.33 %) of recurring General Fund expenditures to provide adequate operating cash during normal revenue and expenditure cycles . This is the City ’ s largest reserve , funded at $ 20.43 million for FY21 . The next-largest reserve is the Landfill Lease Reserve , at $ 17.15 million , which originated from a one-time payment to the City when the landfill was leased in May 2005 . Our newest reserve is the Business Continuity Reserve , originally targeted at 3.0 % of General Fund expenditures . This reserve is in place to ensure that in the face of funding shortfalls , service delivery will
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