TRANSMITTAL LETTER FOR BOARD MEETING OF DECEMBER 6, 2012
COMMITTEE ON BUDGET AND EMPLOYMENT
Mr. David St. Pierre, Executive Director
Title
Report on Budgetary Revenues and Expenditures Through Third Quarter September 30, 2012
Body
Dear Sir:
Attached is a report of revenues and expenditures for the third quarter ended September 30, 2012. This report is prepared on an unaudited budgetary basis of accounting.
Revenues include the second installment of the 2011 property taxes that were due on August 1. Receipts were within expected levels.
Preliminary expenditure rates through the second quarter were at expected levels. Health care costs are trending lower than expected based on claims data through September, running approximately equal to the claims spend in 2011. Health care costs will continue to be monitored closely throughout the last quarter. Energy costs are trending favorably as compared to last year, primarily due to realized savings resulting from last year's reverse auction.
Two primary economic factors driving the District's revenues are the Consumer Price Index (CPI) and the real estate market. The CPI rose 2.5 percent in the first six months of 2012 and 2.0 percent over the past twelve months. In the third quarter, food prices increased slightly as a result of the drought in the Midwest. The energy index has increased 2.3 percent over the last twelve months, as of September 30, 2012. Increases in gas prices in August and September of this year, after declines in the previous four months, is the primary cause of the energy index increase. In contrast over the past twelve months, as of September 30, the natural gas index and the electricity index declined 10.7 percent and 1.5 percent, respectively.
Construction growth has moderated since the second half of the year, primarily due to nonresidential construction increasing at a slower rate. Multi-family residential construction remains stronger than single-family construction. Residential sales in Cook County increased 29.7 percent as compared to the third quarter of 2012; average prices decreased 2.6 percent over the same time period. The significant amount of remaining distressed property has dampened prices. As of September 30, the interest rate for a 30-year mortgage has remained below four percent for 26 straight months. The Federal Reserve Bank announcement of plans to spend $40 billion per month to buy mortgage securities, until there is substantial improvement in the market, should maintain the low rate environment for the foreseeable future.
A conservative approach in development of the 2013 five-year financial plan is expected to maintain budgetary fund balances at policy levels.
Respectfully Submitted, Eileen McElligott, Administrative Services Manager, BKS
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