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III <br /> ORANGE COUNTY ABC BOARD —AGENDA FORM <br /> Meeting Date: May 23, 2023 Agenda Item#6 <br /> Regular Session X <br /> Closed Session <br /> Expenses <br /> GASB 87 requiring the capitalization of leases presented a series of calculations that <br /> produced lease assets and liabilities, new lease amortization and interest expenses and reductions <br /> to rent expenses in the prior fiscal year. As this is the first year that these items are being considered <br /> in the annual budget, it remains unclear if these "expenses" should be part of the budget process. <br /> Like depreciation,these items ultimately may be determined not to be relevant to the annual budget <br /> process. For the time being, however, these items have been included as expenses. <br /> i <br /> The amount paid annually for "retiree's group insurance" is calculated by actuarial. <br /> Formerly on a three-year cycle, this calculation is now required each year. This year's calculation <br /> will not be available until the latter part of June at the earliest. For this draft budget,the calculation <br /> has been estimated. <br /> i <br /> Payroll' <br /> Prior to the pandemic,total payroll expenses were relatively consistent, increasing 3-5%per <br /> year. In 2022 and 2023,additional labor payouts and increases related to the"Orange County Living <br /> Wage" increased payroll expenses by 14% and 12%. As payroll expenses are anticipated to level <br /> out, total payroll expenses have been increased 7.22% for FY 2024. <br /> Operational Expenses: <br /> Operational expenses generally increase 7-10% per year, following an initial 19% increase <br /> at the onset of the pandemic in 2020.As the current fiscal year included expenses related to opening <br /> two new stores, expense increases for FY 2024 are projected to increase 4.92%. This estimate <br /> includes significant declines in store expenses (-6.51%) and office expenses (-17.61%). <br /> Depreciation <br /> While the depreciation of assets is recorded as a normal business outlay, per the NC ABC <br /> Commission, it is not included in the annual budget as it is a "non-cash" expense. Estimated <br /> depreciation "expenses" for FY 2024 are presented, however, for the benefit of the Board's <br /> consideration. <br /> Page 2 of 7 pages <br />