AGENDA #5c

MEMORANDUM

TO:                  Mayor and Town Council

FROM:            W. Calvin Horton, Town Manager

SUBJECT:       Report on  Revised  2004-2005 Public Housing Operating Budget

DATE:             January 10, 2005

INTRODUCTION

The purpose of this memorandum is to present information on a revised 2004-2005 operating budget for the public housing program.  A revision to the 2004-2005 budget is necessary because of reduced subsidy from the U.S. Department of Housing and Urban Development (HUD) and increased public housing program costs.

BACKGROUND

In October 2004, we received notification from HUD that the amount of operating subsidy for 2004-2005 will be $1,109,767, which is $25,318 less than the $1,135,085 included in the original budget estimates.  The notification from HUD also included an additional expense of $7,775 for resident participation activities.

The public housing program also has additional expenses totaling $32,000 ($18,000 County recycling fee and $14,000 Town stormwater management fee).  When the 2004-2005 budget was approved by the Council, on March 1, 2004, the amount of these additional fees was not known.

With the reduction in income and increased costs, the 2004-2005 public housing operating budget has a revenue shortfall of about $65,000.  The $65,000 shortfall results from the following:   

Reduction in HUD subsidy                                                        $25,318

HUD addition of resident participation allocation                       $  7,775

Addition of County recycling fee                                               $18,000

Addition of Town storm water management fee             $14,000

TOTAL                                                                                   $65,093

DISCUSSION

In order to balance the 2004-2005 public housing operating budget, expenditures must be reduced. Therefore, we have made the following budget reductions:

Reduced personnel due to vacant position, actual pay increases,

health insurance, and workman’s compensation                         $53,680

Reduced postage                                                                                  $  4,000

Reduced travel                                                                         $  4,000

Reduced tenant activities                                                                       $  3,000

Eliminated purchase of 1 vehicle                                                            $17,000

TOTAL                                                                                               $81,680

Below is a summary of the revised 2004-2005 budget for the public housing program.  We will take precautions to make sure that expenditures do not exceed revenues

Revised 2004-2005 Budget for the Public Housing Program

                                                 Original                       Ytd Exp                          Revised

                                               2004-2005                   2004-2005                   2004-2005

                                                  Budget                         Actual                           Budget

Personnel Services                   1,011,819                     363,134                       958,139

Operations                                 482,046                     169,402                         531,226

Non-Routine  Maint.                   84,520                         10,943                           90,799   

Capital Outlay                             75,300                           905                            63,478

Total                                       1,653,685                    544,384                       1,643,642

Estimated Rental Income              363,846                    137,558                          363,846

Estimated Federal Subsidy        1,135,085                    414,697                       1,109,767

Est. Fund Bal. to be Used            131,818                       -------                         147,093

Other Income                                22,936                      13,886                            22,936

Total                                       1,653,685                    544,384                       1,643,642

Est. Fund Bal. 6-30-05                329,399                      -------                          314,124

HUD Recommended Fund          297,013                       -------                          297,873

Balance                                                

Based on the revised budget, we would use $147,093 of the fund balance to cover the expenditures.  The remaining fund balance would be $314,124, which is $16,251 above HUD’S recommended amount of $297,873.