2010 Proposed Budget City Council Meeting October 5, 2010 2011 - PowerPoint PPT Presentation

2010 Proposed Budget City Council Meeting October 5, 2010

2011 Proposed Budget Purpose of this presentation is to provide an  overview of the proposed 2011 budget and the timeline for approval. Will briefly cover:  Budget overview  Priorities  Effect of weak economic environment on each fund  Revenue highlights  Operating expenditure highlights  Capital commitments & new projects /purchases  Reserves 

Budget Overview This overview assumes Amendments 60 & 61  and Proposition 101 do not pass in November. A revised budget has been developed by staff to  prepare for at least $270,000 in spending cuts should these measures pass.

Budget Overview Five separate budgets; some costs are allocated (staff, insurance)  General Fund  Decreasing revenue in the general fund and cost inflation are  being offset by personnel expense reductions, achieved through staff attrition and continued salary freezes. Reviewing other areas for operating efficiencies and cost  reductions, assessing needs vs. wants & cost/benefit analyses, consequences of non-compliance with accepted practices, etc. Water Fund  No major changes  Development fees are not sufficient to cover debt service; expect  rate increases Sewer Fund – No major changes  SteamPlant – No major changes  CTF – Building reserves for future projects 

Priorities The budget directs dollars to achieve priorities set by  the council. Staff Goals:  Reduce operating expenditures without major disruptions  to short- or long-term service levels Maintain properties and infrastructure; improve streets  Comply with regulatory & safety standards  Expand / enhance trails and recreation amenities (mostly  completion of previously approved grant projects) Manage / improve (where necessary) fund reserves 

Effects of Weak Economic Environment General Fund  Sales tax (most significant general fund revenue stream)  continued to decline in 2010; projecting no growth in 2011 Expect continued decrease in revenue generated by fees for  services SteamPlant  Operating growth and community support are a financial  challenge. Water Activity Enterprise Fund (Water & Sewer Operations)  Construction industry slowdown equates to minimal  development revenue that is not sufficient for debt service and capital projects. Slow growth also equates to slow growth in operating revenue 

General Fund Revenue Highlights General Fund Revenue of $6.1 million Sales Tax - $4.5 million (74%) of total GF revenue  Capital – 31% of total revenue  $1.5 million (81%) from city sales tax allocation  $243,000 (13%) from grants  $112,000 (6%) from occupation tax on lodging  Operating – 69% of total revenue  $3.3 million (78%) from city sales tax, allocation of county  sales tax, occupation tax on lodging and franchise fees $370,000 (9%) from fees for services (pool, park rentals, vital  statistics, permit fees, etc.) $367,000 (9%) from intergovernmental grants & revenue  sharing (vehicle registration fees, South Ark Fire District, etc.) $168,000 (4%) from licenses, fines, interest and misc 

General Fund Expenditures Overview General Fund Expenditures of $6.0 million Capital – $1.8 million  Financing obligations for previous streets projects, hot water  line improvements & Touber Bldg (45% of capital spending) New projects / purchases such as street improvements and  equipment purchases (34% of capital spending) Completion of projects already underway or previously  committed to (21% of capital spending)

General Fund Expenditure Highlights – Capital General Fund Capital Expenditures of $1.8 million New Projects / Purchases:  Streets overlay project  Culvert replacement / pans  Replace traffic signs (regulatory compliance)  Airport runway surfacing (grant match)  Picnic tables  Life / Safety equipment  Carry-over:  Hot water line replacement / pool upgrades (grant match)  Milk Run trail (grant match)  Safe Routes to School (grant match)  Unique Theater remediation  Debt service:  Increased due to final year of 1998 sales tax bond 

General Fund Expenditure Highlights - Operations General Fund Operating Expenditures of $4.2 million $2.9 million (70%) for personnel  Reduced $200,000 from the 2010 budget  Headcount reduced by two full-time employees  Eliminated raise pool in 2010 budget amendment; salary freeze  continues into 2011 54 full time employees with benefits; 40 – 50 part time /  seasonal employees Nearly $2.3 million in salaries and $700,000 in taxes and  benefits Employee insurance increase budgeted at 15%  Remainder spent for supplies, utilities and other purchased  services, insurance and community support

General Fund Operating Expenditures Other $5,000,000 Parks & Trails $4,000,000 Pool & Recreation $3,000,000 Public Works $2,000,000 Fire Police & Municipal Court $1,000,000 Community Development $- 2006 2007 2008 2009 2010E 2011E Administration & Gen'l Government

Enterprise Funds Highlights SteamPlant  Revenue of $194,000, representing an expected increase of  17% compared to 2010 expectations. Revenue increase will come from rate increases; number of  events projected to be flat. Total revenue is projected to decrease due to reduced  expectations for donations and partner support. Operating revenue is expected to increase approximately  25% compared to the 2009 / 2010 level due to rate increases. Total expenditures of $293,000, represent an expected  decrease of 4%. Reduced subsidy from general fund planned for 2011  ($99,000)

Enterprise Funds Highlights Water  Operating and capital revenue of $1.2 million, an expected  increase of 3%. Operating expenditures, debt service and capital upgrades  require over $1.6 million in 2010. 2011 shortfall to be provided through debt approved in 2010  to be fully drawn down in 2011 upon completion of water system improvements at the Galleries. Rate study to be completed to address financial needs.  Sewer  Operating and capital revenue of $1.3 million, an expected  increase of 4% Operating expenditures of $755,000, a 14% increase due to  one-time costs for documenting a sewer system model. Debt service and costs for plant upgrade are estimated at  $8.5 million.

Capital Expenditure Highlights – Water & Sewer Enterprise Waste water treatment facility upgrade (expect  to break ground at the end of 2010) Deferred maintenance to extend life of the  water tank at the Galleries (portion deferred from 2010) Fire hydrant replacements  Sewer main replacements  Equipment replacements and line upgrades 

Conservation Trust Fund Highlights Available for open space, parks, recreation  facilities. No major projects in 2011  Tree replacement and maintenance in parks  budgeted in CTF during 2011 May also use to fund community support  requests Will build reserve for future projects 

Fund Reserves General Fund – Rebuilding available reserves  The 2011 budget shows essentially no change in total  reserves; the unreserved fund balance will increase due to use of debt reserves for a portion of the final payment of the 1998 sales tax bonds. Fund balance will increase $200,000 to $300,000 during  2010, barring unforeseen financial events. Final audited results for 2009 reflect a $1.4 million fund  balance decrease from paying off the Vandaveer land purchase debt ahead of schedule, depleting capital reserves. TABOR emergency reserve and Salida’s incremental  “contingency fund” of 15% of operating budget maintained.

Fund Reserves Water Department – Action Needed The 2011 budget and 2010 projections included in this  budget package do not resolve the pending financial insolvency for water operations. Unrestricted net assets of $300,000 as of the beginning of  2010 will be nearly depleted by the end of the year. A rate increase (after completion of a rate study) should be  anticipated in 2011. Sewer Department – Being used as planned  Reserves built up in recent years for the plant upgrade are  now being used; balances depend on the project timing. Conservation Trust Fund – I ncreasing $38,000 

Items Highlighted for Council’s Consideration Long term solution to budget shortfalls  Sales tax revenue is unlikely to keep pace with cost increases  from inflation and regulatory requirements. 2011 budget balanced through staff attrition; this is not  sustainable without a reduction in services or real changes in how we deliver services. Water rates and development fees / volumes are not meeting  financial needs Timeline:  October 15 deadline met to present proposed budget  Public hearing scheduled for November 2  Plan to adopt budget and appropriate funds on November 16  Budget available to public at City Hall 