AGENDA #5f
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Estimated Effects of Revised Census Count on Town Revenues
DATE: October 27, 2003
This memorandum provides information about the recent notification by the U.S. Census Bureau of a reduction in the official 2000 Census population count for the Town and the estimated effects of this reduction on Town revenues. Based on this notification, the Town’s initial 2000 Census count of 48,715 is being reduced by 2,696 to 46,019.
We have requested additional information from the Census Bureau regarding this reduction (Attachment 1).
BACKGROUND
The U. S. Census Bureau conducts a population count every ten years and certifies an official population count for all local and State governmental units in the U.S. In 2001, the Census Bureau certified an official population count for the Town of 48,715.
The N.C. State budget office uses information from the Census Bureau and maintains and updates an annual population count for all governmental jurisdictions in North Carolina. On September 15 of each year, the State budget office certifies the official population for each jurisdiction to the N. C. Department of Revenue and the N. C. Department of Transportation to be used in the distribution of certain revenues to local governments that are based on population. These include the local sales tax distribution to cities and counties by the Department of Revenue and the annual distribution of the Powell Bill funds for street maintenance by the N. C. Department of Transportation.
Using base data from the initial 2000 Census, the State budget office’s estimated population for the Town last fiscal year was 52,440. On September 15, 2003, the State budget office certified a new population figure for the Town of 53,488 to be used for distribution of State revenues in the current fiscal year 2003-04.
On October 1, we received notice that the U. S. Census Bureau had reduced the Town’s official 2000 population count by 2,696 because of Census Bureau errors in the count of the University’s group quarters population.
DISCUSSION
On October 1, we contacted the State budget office to determine how and when the State would adjust the Town’s official population based on the reduction by the Census Bureau. Based on these conversations, we determined that the Town’s population will be reduced by approximately 2,696 (perhaps slightly greater), effective for the next distribution of sales tax revenue on November 15, 2003.
Effects of Population Change on Sales Tax Revenue
Current Year
We have revised our estimate of revenue from the sales tax based on the estimated reduction in population figures by the State budget office this year, and taking into consideration the distribution schedule for sales tax revenue and the conservative amounts budgeted for sales tax revenue in the current year. Considering all of these factors for the current budget year, we believe the budget impact will be a reduction of about $47,000 in sales tax revenue.
Although, we estimate the reduction in sales tax revenue this year (reduced for 10 months of the current year) would be about $156,000 less than we would have received without the population adjustment, the total projected sales tax revenue of $7,477,000 for the current year is only about $47,000 less than the amount included in the adopted current year’s budget. The small shortfall results from the fact that we based the budget for sales tax revenue this year on conservative estimates of receipts last year, and that last year’s final sales tax receipts exceeded the conservative budget estimates by about $137,000.
The table below provides a summary of actual receipts for sales tax last year compared to budgeted amounts, and the revised estimated amounts for the current year compared to budgeted amounts.
Future Years
Due to the timing of the sales tax reductions this year, we estimate a reduction of about $156,000 in the current year based on reduced revenue for only 10 months of the current year. Therefore on an annual basis, we estimate the sales tax reduction would be about $188,000 beginning in fiscal 2004-05. We will take this fact into consideration when we prepare budget estimates for sales tax revenue for future years.
Effects of Population Change on Powell Bill Revenue
Powell Bill revenue for local street maintenance and repair for 2003-04 was distributed by the N.C. Department of Transportation on September 30, 2003 and was based on the Town’s population of 53,488 as certified by the State budget office on September 15, 2003. Because this distribution was made prior to the Census notice of a change in population for the Town, we believe there will be no adjustment in this year’s Powell Bill receipts to the Town. Revenue received this year totaled $1,375,512, about $18,500 less than budgeted for the current year. This small shortfall for the Town resulted from a shortfall in total State-wide Powell Bill funds available for distribution this year.
We anticipate the Town’s adjusted population will be used in the next distribution of Powell Bill funds on September 30, 2004. Based on the per capita amount of $21.28 for the current year’s distribution, we believe the potential reduction in the Town’s Powell Bill allocation next year would be about $57,000 ($21.28 per capita times the reduction in population of 2,696).
The anticipated reduction will be reflected in estimates of Powell Bill revenue in future years.
Effects of Population Change on Federal Grants
Revenues for major federal grants are not normally based on population. Based on current information, we believe there would be no change in revenues from federal grants for the Housing capital grant funds and Transportation operating and capital grant funds. We believe the potential exists for the population change to affect the level of Community Development funds but have not yet completed our investigation into this matter.
SUMMARY
Based on our review of the effects of the anticipated change in the Town’s population by the U.S. Census Bureau and the State budget office, we believe the reduction will affect only the General Fund revenues. Due to the timing of the change in population this year and the conservative estimate of sales tax revenue included in the current year’s budget, we believe the General Fund budget impact of the reduction in revenues will be about $47,000 as discussed above.
For future years, we estimate the population change will result in a loss of about $188,000 annually in sales tax revenue and about $57,000 annually in Powell Bill revenue. We will revise our estimates of sales tax and Powell Bill revenue for future budgets to reflect these anticipated reductions.
For major federal grant programs and revenue, we are continuing our efforts to determine any possible effects of the population change for these grants.
ATTACHMENT
- Letter to US Census Bureau (p. 5).