2020-2021 Proposed Budget and 2019-2028 Proposed Capital Improvement Program Department of Finance June 2019
2 ZBB Background City Council mission statement with goals As an exceptionally well-run City we will: Keep Wichita safe Grow our Economy Build and maintain dependable Infrastructure Provide conditions for living well
3 Budget Simulator • May 13 – June 15 • Results will be available online • Data will be compiled into a report for consideration • Themes will be used to build Social Media Town Hall topics
4 Proposed Budget Calendar June 15 - Online budget simulator closes June 26 - Social Media Town Hall July 23 - City Manager presents budget August 6 - Public hearing August 13 - City Council adopts budget
5 Focus on the General Fund • Main taxing fund; 1/3 of the City budget; main source for funding City departments • Due to technological and legal changes future growth expected to be slower than past growth • Revenues are economically sensitive and impacted by assessed valuation (AV) changes
6 General Fund Revenues G E RAL F UND 2019 A DOPT D B UDGE , $244,213,328 NE E T Franchise Fees Gas Tax Sales Tax $47,661,298 $15,431,862 20% $29,124,388 6% 12% Motor Vehicle Tax $12,718,119 5% Property Tax Transfers $84,303,187 Other Sources $5,591,719 35% $49,382,755 2% 20%
7 GF Adjusted Revenue Growth 2009 - 2018 10.0% 9.0% 8.1% 8.0% 7.0% 5 Year Average 2.4% 5.6% 6.0% 5.1% 5.0% 10 Year Average 1.4% 5.0% 4.5% 3.8% 4.0% 3.6% 3.0% 2.6% 3.0% 2.1% 1.7% 2.0% 1.4% 1.1% 1.0% 0.5% 0.3% 0.0% -1.0% -0.9% -1.2% -1.3% -2.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
8 Recession Impact on Revenues • Recessions impact City revenues on a lagging basis • Property tax, sales tax, motor vehicle tax and interest earnings are usually impacted negatively • Total General Fund revenues usually are flat or decline for one or two years
9 General Fund Expenditures • Salaries and benefits are 73% of total expenditures • All other expenditures (27%) tend to grow slowly and predictably (with volatility due to fuel) • Expenditure growth has averaged 3.0% since 2009; much slower than the previous decade • Most growth has been in public safety
10 Police and Fire Portion of GF
11 Reserves • General Fund reserves are important for flexibility, for an emergency and for cash flow • City policy is a reserve level of at least 10% of expenditures • Currently reserves are at 14.8% of expenditures
12 Reserves • Reserves are important: they provide flexibility • Rating agencies monitor reserves very closely, and a change (decrease) in reserves is viewed negatively
13 Looking Forward • Moderate expenditure and revenue growth, with moderate structural imbalance • Continued emphasis on public safety • Continued use of ZBB process to focus dollars on priority areas; identify process improvements to better align expenditures with revenues
14 New Projected Outlook Projected General Fund Revenues and Expenditures (in millions) 2019 2020 2021 2022 2023 $244.2 $250.0 $255.7 $262.6 $268.7 Adopted Revenues On-going adjustments $0.4 $0.8 $1.2 $1.8 $1.9 $5.5 $3.5 $2.5 $1.5 $1.5 Interest earnings New Projected Revenues $250.1 $254.3 $259.4 $265.9 $272.1 $244.2 $250.0 $256.8 $263.8 $271.0 Adopted Expenditures On-going adjustments $4.9 $4.3 $4.3 $3.7 $3.5 New Projected Expenditures $249.1 $254.3 $261.1 $267.5 $274.5 $1.0 $0.0 ($1.7) ($1.6) ($2.4) Surplus (Deficit)
CIP Development 15 • Develop prioritization score for each project • Develop financial capacity models • Consider operating budget impact • Align with City Council direction
CIP Project Prioritization 16 Prioritization model developed with Council input - Community Investments Plan Alignment (20%) - Consistency with Planning Processes (25%) - Financial Considerations (30%) - Other considerations (25%)
Linking the CIP and Budget 17 • The Capital Improvement Program (CIP) is linked to the operating budget • Both are funded with a portion of the City’s mill levy • Both align strategically to the same mission and goals
Linking the CIP and Budget 18 2012 2013 2014 2015 2016 2017 2018 2019 General Fund 24.839 24.443 24.003 24.114 24.177 24.117 24.156 25.186 Debt Service Fund 7.520 8.028 8.537 8.506 8.509 8.508 8.511 7.506 Total 32.359 32.471 32.540 32.620 32.686 32.625 32.667 32.692 The City mill levy has remained flat, but the allocation between the Debt Service Fund and General Fund has changed.
GO At-Large Background 19 2019 Levy: City of Wichita Mill Levy General Fund 25.186 45 Debt Service Fund 7.506 40 Total Levy 32.692 35 30 Mill Levy Rate 25 20 15 10 5 0 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2018 DSF GF
Financing the CIP 20
Funding CIP Projects 21 Whe r e City of Wic hita CIP Dollar s Come F r om 2018- 2027 A L L F UNDS R S $1,760,059,421 E VE NUE Other Funds GO at-large Airport $107,077,763 $340,372,102 Local Sales Tax $33,238,151 $181,750,000 Federal Funds $111,181,367 Sewer Utility $271,614,338 State of Kansas $36,259,000 Special Assessments Water Utility $304,750,000 $373,816,700
Flexible Funding Sources 22 Debt Service Fund – completely fungible, can be used for streets, parks, buildings, etc. Transient Guest Tax Fund – used for assets related to conventions and tourism Local Sales Tax Fund - used for roads, bridges and highways
Determining Debt Capacity 23 Policies impacting the amount of additional debt that can be added include: • Legal limit • Bond covenants • Coverage ratio / percent spent on debt service • Rating agency analysis
Legal Debt Limit 24 • Kansas State Statute KSA 10-308 limits applicable City debt to 30% of the assessed valuation base • The City is at 24.8% of the debt limit • Debt margin is $853.2 million (Dec 31, 2018)
City Policy - Debt Capacity 25 Ratio of debt service payments to property tax revenues
Adopted CIP Update 26 • Aquatics Master Plan • More street maintenance and rebuild projects, fewer freeway projects • Library Branch Study • Police and Fire stations
2020-2021 Proposed Budget and 2019-2028 Proposed Capital Improvement Program Finance Department
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