Agenda - 03-07-2017 - 4-a - Alcoholic Beverage Control (ABC) Board Update Presentation

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5 NOR'1"I....1 CAROLINA NA FINANCE andADMINISTRATIVE SERVICES Gary Donaldson,CTP,Chief Financial Officer I gdonaldson @orangecountync.gov I 200 S.Cameron Street,Hillsborough,NC 27278 I 919.245.2453 Memorandum TO: Commissioner Mark Dorosin FROM: Gary Donaldson, Chief Financial Officer DATE: October 14, 2016 RE: Petition Response on ABC Board Funding to the County At the September 6, 2016 Board of County Commissioner meeting your petition request was for financial information pertaining to the Alcoholic Beverage Control(ABC)Board funding to the County's General Fund. This petition response is supported by two exhibits which illustrate a five year financial summary of the ABC Boards financial performance and ABC benchmarking with 15 other ABC Boards. Exhibit 1: Orange County ABC Board Five Year Statement of Revenues,Expenses and Changes in Net Position The last column on Exhibit 1 provides a five year average of revenues, expenses, and operating income performance; as noted Net Sales (Revenues)experienced an average annual growth rate of 5.9%while Operating Expenses experienced an average annual growth rate of 3.8% from fiscal years 2012 through 2016. Net income has experienced an average annual growth rate of 11.4%between fiscal years 2012 through 2016. The ABC strong financial performance has resulted in the net position increasing to $7,805,267 as of June 30, 2016. The ABC Board has utilized 64% of their net position to cash finance the majority of their capital projects including construction of a new store#3 this past fiscal year. The cash on hand remaining after these capital investments is $2,450,028 as of June 30, 2016. The ABC capital funding strategy indicated above was confirmed at a meeting with the ABC General Manager, ABC Finance Director,ABC Board Chair,myself, and Deputy County Manager Myren. Exhibit 2: Alcoholic Beverage Control Board Benchmarking among 16 Jurisdictions Exhibit 2 provides a comparison of the Orange County ABC distribution of income after accounting for net profits with 15 other jurisdictions. This benchmarking comparison is sourced to the fiscal year 2015 audited financial reports of the 16 benchmarked jurisdictions. As noted in Exhibit 2, the Orange County ABC Board distribution after profit to the County is 39% as compared to the benchmark average of 82%for the other 15 jurisdictions for fiscal year 2015. The Orange County ABC Distribution is as follows: Law Enforcement $130,000 Alcohol Education $156,550 Local $400,000 Total $686,550 Oranges County Government I www.orangecountync.gov 1 919.732.8181