The following financial summary presents a general overview of the financial operations through Q3 ending March 31, 2024, which is 75% of FY 2024. 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 same period of last year. 

As of March 31, Cary’s General Fund shows expenditure trends outpacing revenues. This stagnation in revenue is directly related to the Federal Reserve efforts to slow growth and control inflation. Less consumer spending, combined with increasing costs, has resulted in Cary experiencing slower revenue growth and increased expenditures in some categories.

Throughout Q3, Cary continued to support those projects prioritized by Council and the community. Cary brought Downtown Cary Park online this year, opened a new food waste drop-off at Mills Park in response to resident demand, and purchased electric vehicles to support Cary operations.

In response to emerging revenue trends, Cary staff took a closer look at the FY 2024 projections in preparation for the year-end close. This work focused on transition of funding that is no longer needed for certain projects in an effort to positively facilitate the continuity of operations. 

During Q3, Cary staff focused on developing the FY 2025 budget, considering the impact of recent economic trends, and analyzing the recent Wake County revaluation. A team of directors, making up the Financial Foundations Team, analyzed budget requests and reviewed revenue projections. As in the past, Cary’s town manager will provide the recommended FY 2025 budget to Council in May. Following a public hearing, Council is scheduled to adopt the budget on June 27, 2024. State law requires local governments to adopt a balanced budget by June 30 of each year. Cary’s team continues to consider the holistic financial picture of past and present performance, strengthening the ability to develop a recommended budget that Cary can sustain into the future.

Overall, General Fund net results decreased by $6.3 million compared with Q3 of last year. The following sections will discuss significant changes within the General Fund.

General Fund revenues saw a marginal increase of 2%. While most revenues remained fairly consistent, Cary is beginning to see a slowdown in sales tax revenue growth compared to Q3 of FY 2023.

Property Tax revenue, the largest revenue source for the General Fund, is nearly half of total budgeted revenue and increased 2% from Q3 of last year. Taxes are based on an ad valorem tax levy on real and personal property. Real property taxes were billed in July 2023 and were due no later than Jan. 5, 2024. Cary has realized 98% of budgeted revenue as of Q3. These collections were based on the $0.345 property tax rate.

Sales Tax, included with Other Taxes and Licenses, is the second largest revenue source within the General Fund’s budget, comprising nearly a quarter of total budgeted revenues. While sales tax revenues increased modestly, compared with Q3 of FY 2023, Cary is beginning to see a slowdown in sales tax revenue growth. In comparison, Cary experienced a 12% growth in sales tax revenue this time last year.

Permits and Fees revenue decreased by 24% due to a recent state law change that prohibits Cary from collecting watershed maintenance fees and due to a shift in types and quantity of permits issued. Miscellaneous revenue increased by 25%, in part due to recognizing the first full year of administrative fees generated from Cary serving as the Capital Area Metropolitan Planning Organization’s lead planning agency. 

Overall, General Fund expenditures increased by 6% over last year and are currently at 73% of the FY 2024 budget. A 20% increase in operating expenditures was offset by a 34% decrease in nonoperating expenditures. Operating expenditures include items such as personnel, contracted services, and vehicles. The main contributors to the increase in operating expenditures were the timing of vehicle purchases and contracted services. 

Nonoperating expenditures include items such as fund transfers to capital and debt. These expenditures decreased primarily due to the timing of capital projects, which allowed for reduced transfers from the General Fund to the Capital Projects Fund. Additionally, debt payments were down due to the payoff of some long-term obligations in the prior year.

Encumbrances represent funds that have been reserved to satisfy a commitment to make a purchase. After considering year-to-date spending and outstanding encumbrances listed below, the General Fund has about $44.8 million budgeted for use for the remainder of the year. 

Overall, the Utility Fund’s net results through Q3 have declined by $1.6 million. The increase in expenditures is marginally greater than the increase in revenues.

Utility Fund revenues increased slightly from last year. This is expected due to the 3% water and sewer rate increase included in this year’s budget. The new rate equated to an estimated $2.57 per month increase in a family of four’s total utility bill. Nonoperating revenues also increased slightly this fiscal year due to more investment earnings as interest rates have risen since FY 2023. 

Utility operating expenses increased 8% this fiscal year, mainly due to inflationary-related increases in supplies and wage costs in Administration, Field Operations, and Wastewater. Overall, current utility fund expenditures are at 67% of budgeted amounts.

The following table shows the outstanding encumbrances for the Utility Fund. After accounting for year-to-date spending and encumbrances, the Utility Fund has about $25.1 million in the budget for use for the remainder of the year. 

Cary has 537 active capital projects. General capital projects, with a total budget of $696.6 million, make up 62% of the capital projects budget, and utility capital projects, with a total budget of $419.2 million, make up 38%. Through Q3 of this fiscal year, Cary spent $103.4 million on capital projects. 

The four largest capital investments this fiscal year are:

• $12.9 million for the downtown Cary multi-modal transit facility.
• $8.2 million to build a parking deck at the corner of West Chatham Street and South Harrison Avenue in downtown Cary.
• $8.7 million to build the Winding Pine Regional Pump Station. This station will replace the aging Kit Creek Pump Station that serves the northwest region of Cary.
• $5 million to implement a new Oracle enterprise resource planning system. Oracle will consolidate and modernize Cary’s various information systems. Expected go-live dates will be phased in during FY 2025.

Midyear Appropriations

The FY 2024 operating budget includes $1 million to support emerging or unforeseen needs during the fiscal year. There was no midyear appropriations by Council this quarter, leaving the full $1 million available for use during the remainder of the fiscal year. 

Q3 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 priorities and 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 Q3 of FY 2024.   

Budget Public Input and Recommendations

Citizens are invited to share their budget priorities throughout the year, including via social media, voicemail, and email. A few public input comments were received in Q3 related to the Wake County property tax revaluation in January and how it would impact lower-income or senior residents.   

Public Input

Citizens are invited to share their thoughts and priorities related to the budget through:

• Email: budgetinput@carync.gov
• Phone: (919) 469-4307
• Twitter: @caryncgov
• Facebook: facebook.com/caryncgov
• Public Speaks Out during a regular Council meeting

This quarter, Cary had approximately $500 million in cash and investments, which included about $22.3 million from bonds. Cary continues to diversify its portfolio by keeping all funds in various accounts with different banks so it can quickly access funds when needed. Cary has elected to use bond funds for larger capital projects. Most of Cary’s investments are in safe fixed-income securities. These are chosen to keep the initial amount safe, allow quick access in an emergency, and earn as much interest as possible. These securities are set to mature (be available for use) over the next three to four years, matching when Cary plans to spend money on things like payroll and expenses.