This financial snapshot presents a general overview of the financial operations through Q4 of fiscal year 2024, ending June 30, 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 of the same period the prior year. The results in this report are unaudited and will vary from the results in the FY 2024 Annual Comprehensive Financial Report (ACFR), which is distributed to Council in December. The following results are limited by the data available at the time, as not all revenues for the year will be known until late summer. This reality is consistent with previous Q4 financial reports.

In Q4, trends were consistent with projections discussed in previous quarters, particularly regarding the slowdown in sales tax revenue growth and a decrease in revenue from permits and fees. At the same time, expenditures increased from the previous year due primarily to inflation’s impact on operations and personnel costs. All the while, the results have remained within budget boundaries. These patterns align with expectations and have been factored into the development of the FY 2025 budget. Significant changes from the previous year are mentioned in this report.

Despite these signs that Cary is becoming a more mature community, we remain committed to investing in key priority areas, including housing, public safety, parks, stormwater management, and environmental initiatives. These areas are critical to the community’s well-being and sustainability, 
and Cary is dedicated to maintaining support for these community values.

The FY 2025 budget, adopted on June 27, was a focus this quarter. To recap, the $497.4 million budget adjusts Cary’s tax rate to $0.325 per every $100 of assessed valuation. On the Utility Fund side, the budget includes a 3% increase in utility rates. 

Cary’s proactive adjustments in the FY 2025 budget demonstrate commitment to fiscal responsibility while still addressing the needs of the community. By aligning our budget with the current economic realities, Cary aims to provide stability and continued investment in the areas that matter most to residents. Cary’s team continues to consider the holistic financial picture, of past and present performance, which strengthens the ability to develop a recommended budget that Cary can sustain into the future. 

Overall, General Fund net results improved significantly compared with Q4 of last year. Based on previously highlighted revenue and expenditure trends that will become the new norm, financial management has committed to a timelier reconciliation of accounts to prepare sooner for year-end. Significant changes within the General Fund are discussed in the following section. 

General Fund revenues saw an increase of 16%. While most revenues remained fairly consistent, Permits and Fees revenue saw an overall decline. 

Property Tax revenue, the largest revenue source for the General Fund, representing 41% of the budget, saw an increase of 3% compared with Q4 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 due no later than Jan. 5, 2024. Cary has realized 100% of budgeted revenue as of Q4. 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 in the General Fund’s budget, comprising nearly 25% of total budgeted revenues. Cary is beginning to see a slowdown in sales tax revenue after several years of double-digit growth. Municipalities receive final sales tax distributions about two and a half months after year-end. Current sales tax projections suggest this revenue will end the year at $58.2 million, which would be a 2% increase over FY 2023 collections and a 7% decrease from the FY 2024 budget. Moving forward into the FY 2025 budget, staff has budgeted a conservative 3% growth rate to recognize the significant downturn of sales tax revenue growth over the past year. 

Intergovernmental revenue increased by 10% over the prior year. Utility sales tax, seized drug fund, and school resource officer revenue increased by about $1 million over the same period last year. Cary received about $33,000 more per school resource officer than in FY 2023. Also, as the federal government is working through the COVID-19 backlog, revenue from seized drug funds has grown in FY 2024. 

Permits and Fees revenue decreased by 21% due mainly to a recent state law change that prohibits Cary from collecting watershed maintenance fees.

Overall General Fund expenditures increased by 2% over last year and are currently at 92% of the FY 2024 budget. A 17% increase in operating expenditures was offset by a 46% decrease in nonoperating expenditures. Operating expenditures include items such as personnel, contracted services, and vehicles. General Government expenditures increased primarily due to Downtown Cary Park operations at $5.3 million, additional Research and Development and Marketing contractor services at $4.6 million, and additional IT contractor services at $3 million. These contractor expenditures are primarily related to townwide system enhancements and staffing of the Information Technology group. The increase in Public Safety is primarily from the timing of new police vehicle purchases and additional police department head count versus FY 2023. 

Nonoperating expenditures include items such as fund transfers to and from capital and debt, based largely on the timing of projects. The decrease this year is directly linked to the timely reconciliation/close of capital projects and funds being transferred back to the General Fund. 
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 on the following chart, the General Fund is about $8.2 million less than budget. 

Overall, the Utility Fund’s net results through Q4 have declined by $2.3 million compared with FY 2023 since the increase in expenditures exceeded the growth in revenues. 

Utility Fund operating revenues increased slightly from FY 2023. This is expected due to the 3% water and sewer rate increase included in this year’s budget. The new rate equates 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 compared with FY 2023. 

Utility operating expenses increased 10% this fiscal year, mainly due to inflation-related increases in supplies and wage costs in Administration, Field Operations, and Wastewater. Overall, current utility fund expenditures ended the year at 86% 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 $9 million in the budget for use for the remainder of the year. 

Cary has 545 active capital projects. General capital projects, with a total budget of $699.4 million, make up 62% of the capital projects budget, and utility capital projects, with a total budget of $421 million, make up 38%. This fiscal year Cary has spent $156.8 million on capital projects.

The four largest capital investments this fiscal year are:

• $21.3 million for the downtown Cary multimodal transit facility.
• $12.7 million to build a parking deck at the corner of West Chatham Street and South Harrison Avenue in downtown Cary.
• $10.5 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.
• $7 million to implement a new Oracle enterprise resource planning system. Oracle will consolidate and modernize Cary’s various information systems and is scheduled to go live in phases beginning in the fall of FY 2025.

Midyear Appropriations

The FY 2024 operating budget includes $1 million to support emerging or unforeseen needs arising during the fiscal year. These funds were not used during FY 2024. Additionally, Q4 saw no appropriations of General or Utility Capital Reserve fund balance for capital needs.

Q4 Delegated Budget Authority Action

Throughout the fiscal year, challenges and opportunities develop that warrant financial resources not included in the original budget. Staff can 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 end-of-year interfunctional transfers. These transfers within the General Fund represent a redirection of contingency funding in the nondepartmental function to all other functional areas to ensure that they would not exceed their budgetary authority.

Budget Public Input and Recommendations

Citizens are invited to share their budget priorities throughout the year, including via social media, voicemail, and email. There were five public comments in support of affordable housing in the FY 2025 budget, five public comments regarding opposition to the FY 2025 budget’s effective tax rate increase, and one noted public comment against the future bond referendum.

Public input

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

• Email: budgetinput@carync.gov
• Phone: 311
• X: @caryncgov
• Facebook: facebook.com/carync.gov
• Public Speaks Out during a regular Council meeting

Cary’s cash and investments totaled about $444 million for Q4, including approximately $20.5 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. 

Cary’s cash and investment program is overseen by a fixed-fee independent consultant. The financial advisors compile the weekly cash flow forecast and provide market insights, advice, and reporting quarterly.

On June 20, 2024, Cary closed on an installment financing for approximately $11.7 million to reimburse Cary for the purchase of vehicles. Cary has historically used installment financing to purchase vehicles, with the most recent examples occurring in 2018 and 2020. As a part of staff’s routine review of fiscal activity, staff determined that funding 2024 purchases with short-term installment debt is a prudent financial action. Installment purchase financing, which is authorized under NCGS 160A-20, does not require voter approval as Cary’s taxing power is not pledged as security for the debt.

The purchased vehicles will serve as collateral to secure the debt that was issued. These vehicles include 80 vehicles for Public Safety, 22 vehicles for Parks, Recreation, and Cultural Resources, 22 vehicles for Public Works, and nine vehicles for Inspections and Permits. This financing also reimbursed Cary for the purchase of two pumper fire trucks.

Cary intends to use installment financing to purchase future vehicles, and installment financing has been budgeted for FY 2025.