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2011 Fourth Quarter Financial Report

Jack Louws, County Executive Compiled and Presented by the Administrative Services Department Finance Division Brad Bennett, Finance Manager February 14, 2012

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Whatcom County Fourth Quarter 2011 Financial Report

For the Quarter Ended December 31, 2011

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Executive Summary
The following information presents Whatcom Countys fourth quarter 2011 financial report. At yearend Whatcom Countys General Fund collected 95.8% of its budgeted revenues. Whatcom Countys General Fund spent 91.8% of its budgeted expenditures. The estimated 2011 General Fund ending fund balance is projected to be approximately $10 million. This is an increase of $800,000 from the 2010 ending fund balance. The increase is primarily due to collection of delinquent taxes together with the associated penalties and interest. The spikes in collections of delinquent taxes were received from mortgage companies and new owners of foreclosed properties. These payments are not considered to be a new source of ongoing revenues.

Whatcom County 2011 Fourth Quarter Financial Report - Page 1

Whatcom County Fourth Quarter 2011 Financial Report

For the Quarter Ended December 31, 2011

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General Fund Revenue - Budget vs. Actual

Taxes

Licenses and Permits

Intergovernmental

Charges For Services

Fines and Forfeits 2011 BUDGET Miscellaneous Revenue 2011 ACTUAL Other Sources
$0 $ 0 00 00 00 00 00 00 00 00

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2011 Budget Adopted Taxes Licenses and Permits Intergovernmental Charges For Services Fines and Forfeits Miscellaneous Revenue Other Sources Total Revenue 40,083,325 2,221,177 15,636,981 6,537,754 2,028,741 2,314,880 2,700,346 71,523,204

2011 Budget Suppls 0 0 2,071,539 0 0 36,465 359,405 2,467,409

2011 Budget Amended 40,083,325 2,221,177 17,708,520 6,537,754 2,028,741 2,351,345 3,059,751 73,990,613

Actual % Collected To as of Date 12/31/2011 41,144,488 2,021,851 14,802,570 6,109,739 1,907,261 2,313,410 2,556,744 70,856,063 102.65% 91.03% 83.59% 93.45% 94.01% 98.39% 83.56% 95.76%

See pages 4 and 5 for General Fund Revenue Notes.

Whatcom County 2011 Fourth Quarter Financial Report - Page 2

Whatcom County Fourth Quarter 2011 Financial Report

For the Quarter Ended December 31, 2011

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General Fund Revenue to Date - Compared to Prior Years

Taxes

Licenses and Permits

Intergov. Revenue

Charges For Services

Fines and Forfeits

Miscellaneous

2009 2010 2011

Other Financing Sources

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2009 Taxes Licenses and Permits Intergov. Revenue Charges For Services Fines and Forfeits Miscellaneous Other Financing Sources Total Revenue 38,114,068 2,193,021 15,398,586 6,826,350 1,810,481 1,845,244 6,386,598 72,574,348

2010 39,539,733 2,196,297 15,587,895 6,510,452 1,810,630 2,418,623 5,393,504 73,457,134

41,144,488 2,021,851 14,802,570 6,109,739 1,907,261 2,313,410 2,556,744 70,856,063

See pages 4 and 5 for General Fund Revenue Notes.

Whatcom County 2011 Fourth Quarter Financial Report - Page 3

$4 5,

2011

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Whatcom County Fourth Quarter 2011 Financial Report

For the Quarter Ended December 31, 2011

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General Fund Revenue Notes Taxes

Property tax and retail sales tax make up 95% of Whatcom Countys tax revenue budget. Tax revenues are $1,604,756 greater than 2010 and $1,061,166 greater than budget. Current year property tax collections are up $1,021,343 over last year resulting from an increase in the general fund levy of $457,000 (neutral shift), tax on new construction of $326,000 and an increase in the collection rate of the current year taxes. Collections of delinquent taxes, interest and penalties are $1,377,754 over budget due to large payments received from mortgage companies and new owners of foreclosed properties. Sales taxes totaled $11,858,889 and are $522,657 under budget. Sales taxes are up $72,000 from 2010 however they are $800,000 less than the pre-economic downturn year of 2008.

Licenses & Permits

Building permits account for 52.5% of Licenses & Permits budgets. Health Department, marriage and fire control licenses and permits account for the remaining 47.5%. License and Permit Fees are $174,447 less than collected in 2010 and $199,326 less than budget. Building permit revenues are down 11.2%, or $130,960, from last year. The numbers of permits issued are 22% less than 2010 but permit valuations are up 22% from 2010 levels. Two large commercial projects at BP Refinery and Meridian High School account for the valuation increases. On Site Sewage permit revenues are down $132,233, or 37%, as a result of low construction activity levels. Restaurant and food handling permits are up $59,623 from 2010 amounts. At the end of the year we have collected 91% of budget.

Intergovernmental Revenue
Intergovernmental Revenue comes from a variety of sources including grant revenue, state entitlements and payment for intergovernmental services rendered. Revenues collected as of year end were $2,905,953 less than budget, which is 83.6% of budget. Due to state funding cuts and project delays, the Health Department is not expected to receive $1,145,000 of grant revenues budgeted for 2011. Year-end grant adjustments will result in additional revenues significantly closer to budget targets. Whatcom Countys Payment in Lieu of Taxes (PILT) revenue from the federal government is $141,000 more than budget.

Charges for Services

Charges for Services include document recording fees (Auditor), motor vehicle license fees (Auditor), plan check fees (Planning & Development Services), adult probation fees (District Court Probation), immunizations (Health Department) and several other miscellaneous service fees that help cover the costs of providing specific services used by individual customers. Overall, Charges for Services are approximately $400,000 below 2010 amounts and 2011 budget. Planning and development fees decreased $247,000, or 14.2% below 2010 revenues. Health Department fees are down $181,000, or 29%, due to decreases in H1N1 immunization fees and construction related fees. Adult probation fees are up $27,735 and rifle range revenues are up $34,139 over 2010.

Whatcom County 2011 Fourth Quarter Financial Report - Page 4

Whatcom County Fourth Quarter 2011 Financial Report

For the Quarter Ended December 31, 2011

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General Fund Revenue Notes, continued Fines and Forfeits

Fines and Forfeits consist principally of traffic infraction revenue and criminal traffic misdemeanor penalties, which include driving while intoxicated penalties. It also includes bail/bond forfeitures, code enforcement fines, public defense recoupment and other miscellaneous criminal costs and penalties. Fines and Forfeits revenues are $96,630 greater than 2010 levels but are $121,000 less than budgeted amounts. 2011 budgets were increased $200,000 for bail/bond forfeiture revenues and traffic infraction revenues from contested calendars. The actual revenues from those items came in below budget at $66,000.

Miscellaneous
Miscellaneous revenues are made up of interest earnings, rents, contributions, refunds, and various small, otherwise unclassified, amounts. After year end adjustments are made, miscellaneous revenues should end up about $23,000 ahead of budget and about $45,000 less than 2010 amounts. Investment interest earnings continue to decrease and are approximately $260,000 or 21% less than 2010 amounts. The average annual yield earned in 2011 was .88%, this is down from 1.35% earned in 2010. Rents and royalties income has increased $176,000 over 2010 amounts due to increases in cable franchise fees and moving parking space rentals from Administrative Services to the General Fund in 2011.

Other Financing Sources

The Other Financing Sources revenue budget is composed of state timber revenues (14%) and 86% from transfers from other Whatcom County funds. After year end adjustments, Other Financing Sources will have decreased about $730,000 under 2010 and $56,000 under budget. State timber sales revenue is up $182,000 over 2010 and $43,000 over budget. State timber revenues fluctuate based on harvest plans and market conditions. Transfers are down about $950,000 under 2010 amounts. Transfers in 2010 included residual equity transfers from other funds utilized to stabilize the General Fund balance due to the economic downturn. Transfers in 2011 have fluctuated based on one-time project needs. In addition, operational transfers in support of positions in the Sheriffs and Prosecuting Attorneys Office are $168,000 below budget. Revenues in the Drug Fund were inadequate to fund budgeted transfers.

Whatcom County 2011 Fourth Quarter Financial Report - Page 5

Whatcom County Fourth Quarter 2011 Financial Report

For the Quarter Ended December 31, 2011

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General Fund Expenditures - Budget vs. Actual

Assessor Auditor County Council County Executive Planning/Development Treasurer Sheriff District Court District Ct Probation Hearing Examiner Juvenile Prosecuting Attorney Public Defender Superior Court Extension Parks Public Health Non - Departmental
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2011 BUDGET 2011 ACTUAL

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See page 7 for chart detail and page 9 for General Fund Expenditure Notes.

Whatcom County 2011 Fourth Quarter Financial Report - Page 6

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Whatcom County Fourth Quarter 2011 Financial Report

For the Quarter Ended December 31, 2011

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General Fund Expenditures - Budget vs. Actual

Adopted 2011 Budget Assessor Auditor County Council County Executive Planning & Development Treasurer Sheriff District Court District Court Probation Hearing Examiner Juvenile Prosecuting Attorney Public Defender Superior Court/Clerk Extension Parks Public Health Non - Departmental Total General Fund Exp 2,748,664 1,226,126 933,765 589,255 5,087,269 1,299,323 13,450,232 1,960,280 1,623,160 176,351 4,157,043 5,618,377 3,409,730 4,918,361 325,644 3,400,349 12,349,647 11,663,978 74,937,554 Budget Supplementals 0 0 63,420 0 0 0 1,889,284 1,100 0 515 0 0 11,917 0 0 29,900 0 1,047,217 3,043,353 Amended Budget 2,748,664 1,226,126 997,185 589,255 5,087,269 1,299,323 15,339,516 1,961,380 1,623,160 176,866 4,157,043 5,618,377 3,421,647 4,918,361 325,644 3,430,249 12,349,647 12,711,195 77,980,907 Actual as of 12/31/11 2,663,618 1,206,900 930,228 576,345 4,498,195 1,235,718 14,760,893 1,899,955 1,457,880 174,457 3,935,606 5,483,723 3,235,462 4,758,301 308,427 3,154,514 10,592,186 10,705,028 71,577,436 % Expended To Date 96.91% 98.43% 93.29% 97.81% 88.42% 95.10% 96.23% 96.87% 89.82% 98.64% 94.67% 97.60% 94.56% 96.75% 94.71% 91.96% 85.77% 84.22% 91.79%

See page 9 for General Fund Expenditure Notes.

Whatcom County 2011 Fourth Quarter Financial Report - Page 7

Whatcom County Fourth Quarter 2011 Financial Report

For the Quarter Ended December 31, 2011

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General Fund Expenditures - Compared to Prior Years

Assessor Auditor County Council County Executive Planning & Development Treasurer Sheriff District Court District Ct Probation Hearing Examiner Juvenile Prosecuting Attorney Public Defender Superior Court Extension Parks Public Health Non-Departmental

2011 2010 2009

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See page 9 for chart detail and General Fund Expenditure Notes.

Whatcom County 2011 Fourth Quarter Financial Report - Page 8

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Whatcom County Fourth Quarter 2011 Financial Report

For the Quarter Ended December 31, 2011

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General Fund Expenditures - Compared to Prior Years

2009 Assessor Auditor County Council County Executive Planning & Development Treasurer Sheriff District Court District Ct Probation Hearing Examiner Juvenile Prosecuting Attorney Public Defender Superior Court Administration Extension Parks Public Health Non-Departmental TOTAL 2,439,927 1,205,370 981,986 581,908 5,874,976 1,295,185 12,788,162 1,839,738 1,527,340 169,919 4,078,099 5,437,849 3,354,449 5,049,719 311,429 3,530,845 11,644,845 13,721,680 75,833,426 2010 2,453,606 1,222,041 901,330 606,412 5,321,579 1,260,005 13,464,898 1,859,278 1,489,734 172,740 3,971,479 5,462,738 3,252,643 4,941,228 308,482 3,365,823 11,144,574 12,252,159 73,450,749 2011 2,663,618 1,206,900 930,228 576,345 4,498,195 1,235,718 14,760,893 1,899,955 1,457,880 174,457 3,935,606 5,483,723 3,235,462 4,758,301 308,427 3,154,514 10,592,186 10,705,028 71,577,436

General Fund Expenditure Notes

Overall expenditures for the General Fund were at 91.8% of the approved budget at year end. Approximately $1,350,000 of spending authority will be continued or reappropriated in 2012 in order to complete projects and contract obligations that span fiscal reporting periods. All departments had expenditures within their budgeted authority. Planning & Development Services had significant budget lapse due to not refilling vacant positions as a result of decreased permit activity. The Health Department also had significant lapse due to delays in the implementation of the on-site sewage loan program and cuts in grant-funded activities. Non-Departmental lapsed over $900,000 on the Assessor Treasurer System project which has been reallocated in 2012. In addition, two Community Development Block Grant projects will be carried over to next year.

Whatcom County 2011 Fourth Quarter Financial Report - Page 9

Whatcom County Fourth Quarter 2011 Financial Report

For the Quarter Ended December 31, 2011

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General Fund Conclusion

Amended Budget Beginning Fund Balance 1/1/2011 9,188,595 Projected 9,188,595

Revenues Budgeted/Actual Revenues 2011 Unrecorded Year End Revenue Estimates Decreased Revenue Estimates Continuing Appropriations from 2010 Supplemental Budgets 2011 Total Revenue Expenditures Budgeted Expenditures 2011 Decrease Expenditure Estimates Continuing Appropriations from 2010 Supplemental Budgets 2011 Total Expenditures Adjusted Surplus (Deficit) Other Considerations Estimated Budget Lapse Preliminary Ending Fund Balance Interfund Loan Adjustment Adjusted Fund Balance 12/31/2011
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71,523,204 (1,200,000) 577,521 1,889,888 72,790,613

70,856,063 1,500,000 72,356,063

74,937,554 (2,100,000) 786,304 2,257,049 75,880,907 (3,090,294)

71,577,436 71,577,436 778,627

4,173,450 10,271,751 2,320,977 12,592,728

9,967,222 2,320,977 12,288,199

Accounting for interfund loans used to finance the Central Plaza Building purchase and the AssessorTreasurer System in accordance with generally accepted accounting principles has the effect of artificially reducing the fund balance. This happens because the capital purchases are shown as expenditures but the loan proceeds are not presented as revenues in the income statement but only as a liability on the balance sheet. The interfund loan adjustment presented above reflects a positive impact on the cash balance of the County General Fund.

Whatcom County 2011 Fourth Quarter Financial Report - Page 10

Whatcom County Fourth Quarter 2011 Financial Report

For the Quarter Ended December 31, 2011

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Special Revenue Funds and Other Funds - Revenues

2010 Actual 2011 Actual As of 12/31/2010 As of 12/31/2011 County Road Fund 27,051,004 24,708,561 Election Reserve Fund 1,117,819 1,319,195 Veterans Relief 296,347 277,667 Jail Fund 11,880,098 12,328,659 Low Income Housing Projects 208,763 192,785 Homeless Housing 1,341,978 1,265,395 Stormwater Fund 1,442,939 1,488,463 Chemical Dependency/Mental Hlth 3,341,671 3,298,033 County Wide Emergency Medical 2,540,602 2,551,347 Trial Court Improvement Fund 49,008 47,300 Solid Waste Fund 1,046,247 809,460 WC Convention Center Fund 496,035 498,660 Victim/Witness Assistance Fund 132,399 124,405 Whatcom Co Drug Fund 484,487 274,156 Auditors O&M Fund 187,694 177,942 Emergency Management 1,493,442 870,459 Flood Control Zone Dist Fund 5,957,330 4,243,996 Pt Roberts Fuel Tax Fund 54,938 79,298 Conservation Futures Fund 448,974 1,344,877 Sub-Flood Zones 960,062 939,608 Real Estate Excise Tax Fund II 1,025,029 1,042,783 Real Estate Excise Tax Fund I 1,760,206 1,042,783 Civic Center Bldg Improvement 1,524,325 1,404,036 Public Utilities Improvement 2,833,906 2,928,904 East Cnty Regional Resource Ctr 1,055,279 3,203,014 Yew St Road Construction 1,562,427 37,533 Lincoln Road Construction 1,954,084 1,962,241 Jail Improvement Fund 3,008,115 120,767 Lummi Nation Lease Fund 2,000,000 Ferry System Fund 2,312,407 2,896,253 Equipment Rental & Revolving 8,735,603 9,445,809 Administrative Services Fund 19,417,286 18,799,074 2011 Budget 24,686,342 1,265,573 309,396 12,065,471 170,000 1,407,099 2,432,159 3,407,590 2,583,211 48,000 990,750 460,000 135,550 610,000 166,900 1,861,466 5,214,279 50,000 988,758 1,054,961 1,688,365 1,037,401 1,404,036 2,917,871 3,202,814 665,573 1,961,916 104,860 2,000,000 2,506,616 9,297,219 19,803,355 % Collected of 2011 Budget 100.09% 104.24% 89.74% 102.18% 113.40% 89.93% 61.20% 96.78% 98.77% 98.54% 81.70% 108.40% 91.78% 44.94% 106.62% 46.76% 81.39% 158.60% 136.02% 89.07% 61.76% 100.52% 100.00% 100.38% 100.01% 5.64% 100.02% 115.17% 100.00% 115.54% 101.60% 94.93%

Note: Road Improvement Districts, Capital Project Funds and Debt Service Funds are not shown on this list.

Whatcom County 2011 Fourth Quarter Financial Report - Page 11

Whatcom County Fourth Quarter 2011 Financial Report

For the Quarter Ended December 31, 2011

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Special Revenue Funds and Other Funds - Expenditures

2010 Actual 2011 Actual As of 12/31/2010 As of 12/31/2011 23,028,828 21,411,638 1,332,606 1,082,792 166,765 341,246 12,044,768 12,212,366 227,374 413,470 1,556,224 1,506,510 1,224,885 1,879,174 1,560,704 2,455,928 2,422,058 2,423,055 31,055 7,495 1,088,647 337,285 1,026,958 834,743 336,197 395,678 142,027 125,684 600,138 407,284 209,512 198,589 1,482,799 1,195,008 4,751,205 3,306,101 1,653,036 763,586 252,572 682,728 900,445 1,286,713 2,979,625 1,459,318 1,760,585 3,602,570 295,810 4,161,798 1,923,114 72,794 442,814 2,698,265 12,381 2,593,833 2,434,693 8,776,922 9,276,737 18,378,675 17,886,267 2011 Budget 28,346,026 1,311,910 457,534 12,806,632 415,000 1,738,456 2,724,687 3,544,447 2,566,466 43,235 550,000 1,159,494 425,280 142,874 608,967 223,412 1,861,466 5,589,577 335,517 1,323,968 3,469,621 1,501,438 1,404,036 4,288,596 4,211,697 1,604,815 3,457,188 3,117,700 2,674,125 9,894,455 20,227,165 % Expended of 2011 Budget 75.54% 82.54% 74.58% 95.36% 99.63% 86.66% 68.97% 69.29% 94.41% 17.34% 61.32% 71.99% 93.04% 87.97% 66.88% 88.89% 64.20% 59.15% 227.58% 51.57% 37.09% 97.19% 0.00% 84.00% 98.82% 4.54% 78.05% 0.40% 91.05% 93.76% 88.43%

County Road Fund Election Reserve Fund Veterans Relief Jail Fund Low Income Housing Homeless Housing Stormwater Fund Chemical Depend/Mental Hlth County Wide Emergency Medical Trial Court Improvement Fund LEOFF I Healthcare Fund Solid Waste Fund WC Convention Center Fund Victim/Witness Assistance Fund Whatcom Co Drug Fund Auditors O&M Fund Emergency Management Flood Control Zone Dist Fund Conservation Futures Fund Sub-Flood Zones Real Estate Excise Tax Fund II Real Estate Excise Tax Fund I Civic Center Bldg Improvement Public Utilities Improvement East Cnty Regional Resource Ctr Yew St Road Construction Lincoln Rd Construction Jail Improvement Fund Ferry System Fund Equipment Rental & Revolving Administrative Services Fund

Note: Expenditures in most of the funds presented are project-driven and do not follow regular spending patterns. Road Improvement Districts and Debt Service Funds are not shown on this list.
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Conservation Futures Fund is over budget as a result of a State Auditor directed adjustment to account for a purchase of development rights transaction that was budgeted and paid into escrow in 2010 but did not close until 2011.

Whatcom County 2011 Fourth Quarter Financial Report - Page 12