IVGID GM’s Corner: Reviewing our revenues and expenditures
July 30, 2015
Like most government agencies, a lot of time is spent reviewing the proposed budget for each fiscal year. Conversely, as we close out the books during the dog days of summer, rarely do your hear much about our actual revenue and expenditure results. While it typically takes a number of months to fully close out the books and complete the audit, I thought now would be a good time to provide you with our preliminary results.
Overall Operating Budget
This includes all operating revenues and expenditures for District operations. Total revenue for 2014-2015 was $35.558 million.
Total income was slightly below projections primarily due to our drought-plagued ski season, but expenses were slightly below projections as well. Total operating income of $3.063 million was about $121,000 above budget.
This account provides general administrative support for the District as a whole. The primary sources of revenue for this account are property tax, consolidated taxes and charge outs to operating departments.
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Total revenues were 1.5% above budget while expenditures were up a similar amount.
Personnel costs, professional services and services and supplies were significantly below budget. These savings were offset by a significant one-time expenditure for desperately needed technology improvements. Kudos to staff for squeezing the budget to provide room for an expenditure which will pay dividends for many years to come. Also, thanks to our Board of Trustees for approving this budget modification in September.
Our water, sewer and solid waste revenues came in about one percent above projections while operating costs were about three percent below projections. Operating Income came in at $1.534 million which was approximately $400,000 above projections. The robust net operating income allows us to build up our fund balance to help pay for significant upcoming capital expenses, primarily the replacement of our effluent line which exports our wastewater discharge to the Carson Valley.
On the consumption side, water use was down 7.6% from the previous year. Wastewater flow was up 1.7% from the previous year, but still over 40% below the peak years of the late 1990s and 20% below 2011.
Overall revenues for our recreation functions were nearly 6% below budget thanks to Mother Nature refusing snow for our skiers most of the winter. Belt-tightening at ski helped to keep expenses down as well. Thus, the $1.005 million in lower revenues were partially offset by a $512K reduction in budgeted expenses. Net Operating Income came in at about two thirds of budget at $1.173 million.
I thought I would also provide some additional detail for some of the key subcategories of Community Services as well.
Championship Golf Course
Revenues came in nearly 7% above budget projections. With increased play, expenses were up about 6%. Operating Income was $53,000 over budgeted projections at $257,991. If you subtract the recreation fee support from the income side and depreciation from the expense side, the net loss was approximately was $60,000. The loss is very modest considering that IVGID Picture Pass holder green fee discounts were approximately $900,000.
Mountain Golf Course
Based on feedback from our outside experts, green fees were reduced at the course in order to spur additional play. Unfortunately, while the discounted rates provided a modest increase in rounds, there wasn't a corresponding increase in revenue. Revenues were 6.7% less than budget, but staff did a good job of reacting to the lower revenues during the year, bringing in expenses 7% below budget and allowing the course to beat its overall budget target.
Diamond Peak Ski Area
As noted several times above, the lowest snowfall total in decades greatly affected Diamond Peak in not meeting its budget projections. Given the weather dependence of the ski business, it isn't unusual for Diamond Peak to either greatly exceed or greatly come in below their budget.
Our ski lesson and rental programs actually beat budget, but overall revenues (excluding the recreational facility fee) were nearly 20 percent below. Skier visits were nearly 30 percent below projections and revenues were down a lesser percent due to the overwhelming popularity of our programs for novice skiers.
After several drought years, staff has also become very adept at cost cutting during the season to help offset the reduction in skier visits and skier revenue. Despite the need to incur higher than anticipated utility costs for snowmaking, overall expenses were reduced by nine percent.
So in spite of suffering through the worst snow year since the late 1970s, Diamond Peak's EBITDA was nearly $700,000 in the black. EBITDA stands for earnings before interest, taxes, depreciation and amortization which is defined as the industry standard measurement for performance. I can assure you that all of our peer (modestly sized) ski areas, all of which have inferior snowmaking capacity, were deep into the red this past year.
If you'd like to review our financial results in more detail, you can access the details on our financial transparency page: https://www.yourtahoeplace.com/uploads/pdf-ivgid/2015_-_June_MFR_BOT.pdf
"GM's Corner" is a recurring column from Incline Village General Improvement Distinct General Manager Steve Pinkerton, who will discuss issues and offer updates regarding various district matters.