This financial snapshot presents a general overview of the financial operations for Q1 ending Sept. 30, 2023, which is 25% of FY 2024. The financial summaries provide comparative data for revenues and expenditures for the General and Utility Funds. The data shows year-to-date information as compared with the same period in the prior year.  

The fiscal year began July 1 with an approved $524 million budget supporting both operating and capital spending. Cary maintained the property tax rate of $0.345 per $100 of assessed value. The FY 2024 budget focuses on maintaining services, housing, public safety, parks, and the environment.

The utility base and volumetric rates for water, sewer, and irrigation increased by 3% for a typical ratepayer this fiscal year. Cary is committed to providing the highest-quality, safest drinking water and utility services while keeping the financial impacts to consumers in mind. This commitment is evident in Cary’s strategy for eliminating large utility rate spikes by implementing smaller, more frequent rate adjustments in accordance with Cary’s 10-year financial forecasting model. The decision to slightly increase utility rates is in line with this forecasting model, and the model allows staff to forecast both current operational needs as well as future infrastructure needs. More information can be found in the operating and capital budget at carync.gov. 

Although it is too early to provide year-end projections, we will continue to monitor patterns quarterly to ensure results are in line with budget and policy guidelines. 

Overall, expenditures surpassed revenues this quarter. This is expected and consistent with prior years as revenues are not received evenly over the year. Expenditures decreased overall by 11% primarily due to decreases in transfers to capital project funds and the timing of debt service payments. More details about these decreases can be found in the General Fund Expenditures section.

Overall, FY 2024 General Fund revenues increased 6% compared with the same period in FY 2023. While most of Cary’s revenues remained fairly consistent when compared with last year, revenues can fluctuate year to year due to the timing of allocations from state and federal sources. 

Operating Revenues

Property Tax revenue is 45% of total budgeted revenue and is the largest revenue source for the General Fund. Taxes are based on an ad valorem tax levy on real and personal property. Real property are items such as land and buildings, while personal property are items such as vehicles and commercial business equipment. Real property taxes were billed in July 2023 and are due no later than Jan. 5, 2024. Therefore, most real property tax revenue will be received during Q2. Conversely, personal property tax revenue is collected throughout the year based on the state of North Carolina’s Tax and Tag program, which combines the vehicle ad valorem tax collection with the state’s vehicle license renewal process. The property tax rate remained unchanged at $0.345 for FY 2024, and Q1 revenues totaled $18.6 million, which is almost $1 million more than the tax revenue received in FY 2023. It’s too early in the fiscal year to make projections on property tax. This revenue will continue to be evaluated, and significant variances will be reported in future quarters.

Permits and Fees revenue saw a decrease of 18% compared with the prior year mainly due to a decline in building permits issued. Nonresidential permits decreased by 23% and residential permits decreased nominally by 1% compared with FY 2023. This revenue source is highly dependent on development within Cary. The timing of development fluctuates, and the associated permits and fees revenue will be in line with those fluctuations. 

Sales and Services revenue increased 5%, primarily due to a $200,000 increase in sponsorship revenue at the Cary Tennis Park resulting from the two Atlantic Tire Championships held in Q1.  

General Fund operating expenditures increased by 33% compared with FY 2023. A $4.7 million increase in Public Safety and a $3.4 million increase in Operations were primarily due to vehicle purchases in the police and public works departments, respectively. In the police department, Cary is focused on creating a single assigned vehicle fleet program to serve as a positive recruitment tool and a force multiplier during critical situations. Vehicle purchases townwide were delayed in FY 2023 due to supply chain shortages, and Cary was able to make those purchases this quarter. 

A $5.5 million increase in General Government is mainly driven by IT software renewal, software maintenance, and contracted services costs, as well as by townwide initiatives led by the town manager’s office. The increases in IT and the town manager’s office allow Cary to continue focusing on creating a connected workforce and community. The initiatives include management and rollout of the new Downtown Cary Park and evaluation of current and future townwide information systems.  

Nonoperating expenditures decreased because of lower transfers for capital needs and also due to the timing of reported debt service payments. The timing difference with the debt service payments will be eliminated in Q2 of FY 2024.

Encumbrances represent funds that have been reserved in  Cary’s financial reporting system to satisfy a commitment to make a purchase. The following table shows the total outstanding encumbrances in the financial system that are remaining at the end of Q1. After accounting for year-to-date spending and the encumbrances listed below, the General Fund has about $171.1 million of budgeted funds available for the remainder of the fiscal year.

 

Utility Fund net results in FY 2024 remained stable compared with FY 2023. Both revenues and expenditures had minor increases. 

Utility revenues in FY 2024 have risen slightly compared with FY 2023 levels. The marginal increases in water and sewer revenue align with the 3% hike in water and sewer rates in the FY 2024 budget. Also contributing to this increase is growth in Cary’s population over the past year. The implications of this 
on a family of four is an additional $2.57 per month in their  total utility bill.

Nonoperating revenues in FY 2024 were greater than FY 2023 due to an increase in investment earnings. Investment earnings are allocated based off each fund’s cash balance as a percentage of total cash. Interest rates have increased steadily since Q1 of last fiscal year. More information on investment earnings can be found in the Cash and Investment section of this report.

Utility operating spending remained fairly consistent with only a 5% increase compared with FY 2023. The increase is due not to one or two large items but rather to marginal increases across multiple departments. 

The following table shows the total outstanding encumbrances for the Utility Fund remaining at the end of Q1. After accounting for year-to-date spending and the encumbrances, the Utility Fund has approximately $69.1 million in the budget for use for the remainder of the year.

 

As of Q1, Cary has 500 active capital projects. Utility capital projects, with a total budget of $423.1 million, constitute 37% of the capital budget authorization. General capital projects total $722.5 million, or 63%, of the total $1.1 billion capital budget authorization.

Capital project spending totaled $15.2 million in Q1 of FY 2024. The fluctuation in capital spending is due to the timing in which projects become active or near completion. The three largest investments in capital for the community in Q1 were $1.4 million for street improvements, $900,000 for the widening of Carpenter Fire Station Road, and $800,000 for the construction of the Winding Pine Regional Pump Station. Because the mix of capital projects changes over time, there are no discernible patterns in capital spending.

Midyear Appropriations

The FY 2024 operating budget includes $1 million to support emerging or unforeseen needs that arise during the fiscal year. There were no Q1 midyear appropriations by Council, leaving the full $1 million available for use during the remainder of the fiscal year. Additionally, Q1 saw no appropriations of General or Utility Capital Reserve fund balance for capital needs.

Q1 Delegated Budget Authority Action

Throughout the fiscal year, challenges and opportunities develop that warrant financial resources not included in the original budget. Staff can often redirect existing resources to address the highest-priority initiatives. The budget ordinance authorizes the town manager to approve inter-functional budget adjustments and requires reporting to Council. There were no inter-functional budget adjustments approved during Q1 of FY 2024. 

Budget Public Input and Recommendations

Citizens are invited to share their budget priorities throughout the year specifically via social media, voicemail, and email. There were no budget public input comments received via these channels in Q1.

Cary’s cash and investments totaled about $498 million for Q1. In addition, Cary has about $39 million in unspent bond proceeds. Cary maintains over $50 million in daily liquidity accounts to ensure it has immediate access to funds. The bond proceeds are also maintained in daily liquidity accounts to support large bond-funded capital expenditures. The balance of Cary’s investments are in fixed income securities that first, ensure the safety of the principal; second, provide quick access to additional funds for any unforeseen needs (liquidity); and finally, earn the maximum interest income. These securities are scheduled to mature in regular increments over the next three to four years to match projected disbursements for payroll and expenditures. 

Since March 2022, the federal funds rate has risen by more than 5 percentage points, which has resulted in higher available interest rates. Cary’s cash balances are expected to increase in Q2 and will peak in the early part of Q3 due to the influx of property tax receipts.