FY24 Q2 Financial Update
In Tuesday’s Budget, Finance, and Economic Development (BFED) Committee, Councilmembers heard the Second Quarter Update on the Fiscal Year 2024 Budget. Quarter two ended on December 31st, 2023.
Overall, LFUCG’s revenue for the first two quarters of this fiscal year positively outperformed their budgeted projections. This is attributed to better-than-expected Insurance Premium tax collections and investment income.
LFUCG’s expenses for the first two quarters of the fiscal year were lower than budgeted, but much of the difference will likely be expensed later in the year.
Despite this, LFUCG is reporting a $38,932,578 deficit, largely due to Fund Balance allocations made from last year’s excess revenue. Midyear deficits like these can be normal in budgeting, as revenue doesn’t always come in at the time it is projected. Often, midyear deficits are actually planned for in advance, as some seasons in the Fiscal Year bring in more revenue and have higher expenses than others.
As mentioned above, the principal factor for this fiscal year’s current midyear deficit is the allocation of Fund Balance money by City Council:
Fund Balance is a term used for money leftover from the previous Fiscal Year’s Budget.
In October, Council allotted nearly $56 million in Fund Balance from last fiscal year’s budget to various projects you can read about here.
The use of Fund Balance dollars is reflected as a Transfer in the Quarterly Budget. If the Fund Balance money had not been allocated to different uses, the Quarterly Update would show a roughly $16 million budget surplus.
Another notable component is the slight year-over-year decrease in Net Profits. Net Profit revenue in the City Budget comes mostly from business licensing fees. The City is still on track to hit their projected Net Profit revenue for the full Fiscal Year, but is slightly below where it was expected for this point in time. FY22/23, and fiscal years before it, saw a large over-performance in Net Profits that is not happening this year.
You can view the presentation starting on page five of this packet.
The Budget, Finance, and Economic Development Committee was held Tuesday, January 30th at 1pm in Council Chambers. You can watch the recorded archive on LexTV.
