This financial snapshot presents a general overview of the financial operations for Q1 ending Sept. 30, 2024, which is 25% of FY 2025. The financial summaries provide comparative data for revenues and expenditures for Cary’s two major funds, the General and Utility funds. The data shows year-to-date information compared with the prior year’s period. 

The fiscal year began July 1 with an approved $497 million budget supporting operating and capital spending. Cary adopted the property tax rate of $0.325 per $100 of assessed value. The FY 2025 budget focused on maintaining services, housing, public safety, and the environment. More information can be found in the operating and capital budget at carync.gov. 

During this quarter, a significant amount of work was dedicated to closing out FY 2024 and working through the year-end audit. While FY 2024 audited financial statements were not complete as of the end of the first quarter, as of this report’s publication date, staff can confidently share that Cary remains in a good financial position. Cary has a stable fund balance and continues to meet the financial policies and guidelines that are in place to maintain fiscal stability.

Cary’s efforts during this period reflect disciplined management of expenditures and a focus on strategic investments while monitoring the recent significant inflationary pressures. The ongoing commitment to sound financial practices will allow Cary to not only meet but also exceed its objectives for preserving and enhancing Cary’s financial resources.

As the audit process wraps up, the results underscore Cary’s ability to manage its finances prudently and maintain the flexibility needed to support future initiatives while ensuring long-term financial health.

As of the end of Q1, although it is too early to provide year-end projections, staff continues to monitor patterns while expanding the information provided quarterly to ensure results are in line with budget and policy guidelines for the year. 

Overall, expenditures surpassed revenues in the first quarter, changing by a nominal 1% compared with the prior year. This performance was expected and is consistent with prior years, as revenues are not received evenly over the year.

Property tax revenue is 59% of the 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 2024 and are due no later than Jan. 6, 2025. 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. As previously mentioned, Cary adopted a property tax rate of $0.325 for FY 2025. As of the end of the first quarter, property tax receipts were up approximately 31%, which is in line with budget expectations. This revenue will continue to be evaluated, and significant variances will be reported in future quarters.

Sales tax is the second largest revenue source at 23% of total budgeted revenue. Coupled with property tax, the two revenues make up 82% of the total General Fund. Normally, due to the North Carolina Department of Revenue’s distribution method, no sales tax collections are recorded during the first quarter of the fiscal year. The first receipt is in October and will be reflected in the second quarter report. It is too early to say whether sales tax revenue will meet or exceed budget estimates at this time. 

General Fund operating expenditures decreased approximately 5% compared with FY 2024. Nonoperating expenditures increased by 73% due largely to the timing of transfers to support capital investments for the year.

Encumbrances represent funds reserved in Cary’s financial reporting system to satisfy a commitment to make a purchase. As of the end of the first quarter, the total outstanding encumbrances in the financial system for the year are $30.9 million. After accounting for year-to-date spending and encumbrances, the General Fund has about $171 million of budgeted funds available for the remainder of the fiscal year.

This year, Cary’s financial strategy is centered on capital preservation, the strategic maintenance of current investments, and the continued focus on fund balance. To achieve these objectives, Cary is taking a careful, deliberate approach to monitoring departmental performance and capital spending throughout the year.

In addition to what is presented, future quarterlies may present additional details regarding financial performance. This initiative is designed to provide greater transparency and ensure that activity throughout the organization is aligned when reviewing overall activity.

No significant/unusual variances have been noted in the Utility Fund as of Q1. The net results in FY 2025 remained stable. Both revenues and expenditures had minor increases. 

Utility revenues in FY 2025 have increased slightly compared with FY 2024 levels. The marginal increases in revenue align with the 3% rate increase to water and sewer rates in the FY 2025 budget. Revenues and expenditures will continue to be monitored throughout the year. Anything significant and/or unusual will be noted in future quarters. 

Like the General Fund, encumbrances represent funds reserved in Cary’s financial reporting system to satisfy a commitment to make a purchase. As of the end of the first quarter, the total outstanding encumbrances in the financial system for the year are $8.7 million. After accounting for year-to-date spending and encumbrances, the Utility Fund has about $73.2 million of budgeted funds available for the remainder of the fiscal year.

As of Q1, Cary has 588 active capital projects. Utility capital projects, with a total budget of $462 million, constitute 33% of the capital budget authorization. General capital projects total $768 million, or 67% of the total $1.2 billion capital budget authorization.

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. The following table details the inter-functional transfer that occurred during Q1. This transfer was made to redirect funding from Research and Development to Public Works to support the new asset optics work order system.

 

 

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 110 budget-related public input comments in Q1. 

Cary’s cash and investments totaled about $427 million for Q1, including about $20.7 million of bond proceeds. Cary maintains daily liquidity accounts across different banking partners 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 is 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. 

A fixed-fee independent consultant oversees Cary’s cash and investment program. The financial advisors compile the weekly cash flow forecast and provide market insights and advice as well as quarterly reports. Cary’s cash balances are expected to increase in Q2 due to the increase in property tax receipts.