District of Columbia General Credit Update Distric ict o of Colu lumbia ia March 5, 2015
Presentation Participants District District of Columbi of Columbia Office of the Mayor Office of the Chief Financial Officer The Honorable Muriel Bowser Jeffrey S. DeWitt Mayor Chief Financial Officer John Falcicchio Chief of Staff Angell Jacobs Deputy CFO and Chief of Staff Rashad M. Young City Administrator Fitzroy Lee Matthew Brown Deputy CFO and Chief Economist Budget Director Jeffrey Barnette Council of the District of Columbia Deputy CFO and Treasurer The Honorable Phil Mendelson Council Chairman Financial Advisors The Honorable Jack Evans Chairman, Finance and Revenue Committee Rebecca Perry-Glickstein Grace McAllister Jennifer Budoff Public Financial Management Council Budget Director Ruth Werner Committee Director 2
Presentation Agenda District District of Columbi of Columbia I . Credit Highlights II. CAFR Highlights III. Fund Balance and Reserves IV. Economy and Revenue Estimates V. FY2015 Budget and FY2016 Budget Formulation VI. Debt Position, CIP and Transactions VII. Pension and OPEB VIII. Conclusion IX. Appendix 3
District District of Columbi of Columbia I. Credit Highlights 4
The District’s Overview District District of Columbi of Columbia Strong Economic Performance and Prudent Fiscal Management The District has an institutionalized governance and disciplined financial Strong Institutionalized management Fiscal Management The Mayor’s Administration and District Council leadership support building the fund balance and fully funding the multiple reserve accounts The Washington, D.C. area has developed into a diverse economic region Historically Stable Estimated growth in future revenue reflects improved economic performances, Economy population growth, and a significant rebound in property values Long track record of balanced budgets and clean audit opinions Sound Budgetary The FY 2014 CAFR shows an increase in the General Fund balance to $1.87 billion, Flexibility including $863 million of federal and District mandated reserves Outstanding and projected debt obligations remain within 12% limit of total General Prudent Debt/Pension Fund expenditures Management Well funded Pension and Other Post-Employment Benefit Plan (OPEB) liabilities 5
a District District of Columbi of Columbia II. CAFR Highlights 6
FY2014 CAFR Highlights District District of Columbi of Columbia Clean audit opinion (18th Consecutive) $1.87 Billion Cumulative General Fund Balance - Increased $125 million over FY 2013 fund balance (GAAP) Mandated Federal and local reserves (working capital) increased by $72 million to $863 (45 days of operating expenses) Revenue slightly below the revised estimate by (0.2%) due to decreases in capital gains income taxes; offset by strong wage-related income, property, and deed taxes Expenditures of 3.4% or $250 million below the revised estimate offset lower revenues and strengthen reserves 7
District District of Columbi of Columbia III. Fund Balance and Reserves 8
Trend of Total Reserves and Bond District District of Columbi of Columbia Rating History $1.87 $2,000 Billion $1,500 $1,000 Revitalization Act Fund Balance $500 Restoration Act of 2010 $- 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Control Period $(500) -$518 million $(1,000) General Obligation Bond Ratings A- A- A- B B B BB BBB BBB BBB+ BBB+ A- A- A A+ A+ A+ A+ A+ A+ A+ AA- AA S&P: Moody's: Baa Baa Baa Ba Ba Ba2 Ba1 Baa3 Baa3 Baa1 Baa1 Baa1 A2 A2 A2 A1 A1 A1 Aa2 Aa2 Aa2 Aa2 Aa2 A- A- BB BB BB BB+ BBB BBB BBB+ BBB+ A- A- A A A+ A+ A+ AA- AA- AA- AA- AA Fitch: Income Tax Secured Revenue Bonds: S&P: AAA Moody's: Aa1 Fitch: AA+ 9
General Fund Balance Continues to Improve District District of Columbi of Columbia ($ in millions) $2,000 $1,873.1 Other Nonspendable, Restricted, Committed, Assigned or Unassigned Funds $1,748.9 Restrictive Bond Debt Service Fund $1,800 Emergency & Contingency Cash Reserves $1,600 Fiscal Stabilization & Cash Flow Reserves 572.0 469.6 $1,506.4 $1,400 337.2 $1104.9 $1,200 437.7 $930.7 488.2 $1,000 226.8 388.2 $800 304.5 345.3 355.4 339.5 339.1 $600 288.3 $400 338.6 508.0 451.6 441.9 $200 337.9 194.2 $0 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Source: District’s CAFRs from FY 2010 through FY 2014 10
Locally and Congressionally Mandated Reserves District District of Columbi of Columbia % of Amount Reserves Expenditure/ Status ($ in Millions) Budget Emergency 2% 116.0 Full Contingency 4% 239.4 Full Fiscal 2.34% 164.6 Full Stabilization Cash Flow 8.33% 343.5 57% Total $863.5 11
District District of Columbi of Columbia IV. Economy and Revenue Estimates 12
Current State of the District’s Economy District District of Columbi of Columbia Labor Markets & Employment Personal Income The District’s resident employment in December The District’s per capita personal income was 168.3% 2014 was 14,566 (4.3%) more than the same period of the U.S. average in 2013 last year, measured by the 3-month moving average In the quarter ended September 2014, the District‘s personal income grew by 4.2% and estimated wages The unemployment rate was 7.3% in December 2014, of District residents grew by 4.1%, as compared to down from the high of 10.4% in 2011 same period one year earlier December 2014 wage and salary employment in the Most of the wage increase was due to growth in the District was up by 13,433 (1.8%) from one year private sector, but federal government wages also earlier, measured by the 3-month moving average increased for the first time in 2 ½ years. District Employment and Unemployment District Per Capita Personal Income (in thousands) ($ in billions) 345.9 350 12% $76,000 339.7 $74,480 $74,773 $74,513 340 10% $74,000 331.5 330 8% $72,000 $69,769 314.2 $70,000 320 6% 311.3 $68,008 310 4% $68,000 300 2% $66,000 $64,000 290 0% 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 Per Capita Personal Income DC Resident Employment Unemployment Rate Source: U.S. Department of Labor, Bureau of Labor Statistics, U.S. Department of Commerce, U.S. Census Bureau, Bureau of Economic Analysis 13
Current State of the District’s Economy (Continued) District District of Columbi of Columbia Housing / Commercial Office Market A Diverse Economic Region One of the most popular tourist destinations, with The number of single family home sales in CY 2014 350 historic sites and major cultural attractions decreased by 0.9% and the average sales price increased 5.6%, as compared to CY 2013 Washington Metro represents the 2 nd busiest rapid transit system in the nation, behind New York City Direct vacancy rate of commercial office space was Subway 9.7% at year-end 2014, up from 9.6% in 2013 Home to many institutions, including over 9 colleges and universities, more than 50 museums, 206 foreign embassies, and a number of international organizations The Housing Market Is Strong and Growing The District’s Population Has Been Growing D.C.’s population has grown by 53,904 since 2010 • 9,000 $712,800 $748,023 $800,000 690,000 $601,000 $630,100 $538,400 7,717 658,893 8,000 $600,000 7,466 660,000 646,449 6,968 632,323 7,000 $400,000 630,000 6,347 619,020 6,269 604,989 6,000 $200,000 600,000 5,000 $0 570,000 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Number of Home Sales Average Home Sale Prices Source: February 2014 Revenue Estimates Certification Letter, U.S. Census Bureau 14
Jobs in DC: Year-over-year change (December 2014) District District of Columbi of Columbia Other Professional and technical 3,033 2,667 Food service Retail trade 2,533 2,034 Education 1,967 Local government Other Business services 1,867 766 Employment services Construction 733 500 Personal and miscellaneous ser. 466 Health Finance 100 67 Amusement and recreation Information 34 -100 Other private Wholesale trade -100 -333 Legal services -534 Organizations Accomodations -867 -1,400 Federal government -2,000 -1,000 0 1,000 2,000 3,000 4,000 15
Jobs in DC, DC suburbs, US: 2-year Trend District District of Columbi of Columbia 16
Jobs in DC, DC suburbs, US: 10-year T rend District District of Columbi of Columbia 17
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