City of Presque Isle, Maine Presentation of 2014 Budget
Are We At the ‘ Tipping Point’ ? Property Taxes Desired & Other Costs Services
State Government Begin Raids Property Taxes Desired & Other Costs Services
How Did We Respond? PI's Tax Rate 28 26 24 PI's Tax Rate 22 20 18 2009 2010 2011 2012
How Did We Keep It Balanced? Created more efficient organization through downgrading of positions and elimination of workforce (mostly attrition) Net savings of $931,142.78 annually (17 positions eliminated) Reduction of overtime $100,000 in Police Numerous other smaller efforts Deferment of capital
Changes in Spending & Capital 12000000 10000000 8000000 6000000 Total Expenses Capital Reserve 4000000 2000000 0 2009 2010 2011 2012 2013 2014 In 5 years, spending is up $291,844 (2.7%) of which $218,131 is capital
Half Decade of Cost Increase Health Insurance * $22,620 2.70% $836,925 vs $859,545 Maine State Retirement $495,882 14,168.06% $35,000 vs $499,382 Payroll* ($87,619) (2.12%) $4,129,659 vs $4,042,031 Gas & Oil $75,000 51.83% $144,700 vs $219,700 Total Increase (for these) $505,883 * Based on 17% less full time employees
Unbalancing by State of Maine Property Taxes & Other Costs Desired Services
‘The Raid’ 2500000 2000000 $1,236,655 difference 1500000 The Law* Actual 1000000 500000 0 2008 2009 2010 2011 2012 2013 2014
The ‘Raid’ Municipal Revenue Sharing Takes 5.1% of all state revenues each month and redistributes those to municipalities the next month Funds distributed based on valuation, population and property tax burden ‘Notwithstanding’ the law State law was not changed Impact in 2014 is $255,017 reduction 22% of operating budget from revenue sharing in 2010 PL2013, c.368, Part S Will require another $40 million in revenue sharing cuts for FY15 (effective July 1, 2014) if other ‘tax expenditures” are not found
Capital Investment Approximately $102,000,000 in capital assets Deferment in capital (anticipating the return of municipal revenue sharing) $582,825 in capital reserves in 2012 Reasonable goal should be about $1,000,000 annually Deferment is not sustainable Capital Reserve allocation was $650,300 in 2013, plus borrowing for plow truck & fire truck
Employee Contributions 2011 no COLA 2012 COLA 1.7% union 2013 COLA 1.5% All employees, one shut down day (except public safety) Fire Contract Concessions to allow per diems; 1 FT positions left unfilled Non-union Elimination of pre-96 health premium Temporary reduction of deferred comp by 1% for 6 months Certain union positions substantial increases to bring to market during this period
Challenges In 2014 2013 mid-year adjustments ($458,171) One time revenue increases or cost reductions covered $333,533 Employees requested to give back $50,000, mostly in one time reductions Only non-union obtained at this time* Revenue Sharing raid impact of $255,017 Benefit costs up $199,161 Other decline in Non-property tax revenues $63,775 Impact of these alone Use of surplus/reserves is $877,895 or $1.72 $90,184 *talks continue with Police Patrol Unit
Department Head Submittals Expenses up $737,380 or $1.44 on the tax rate (largest portion was capital $277,616) Revenues down $318,792 As submitted budget impact of $2.14 on tax rate
2014 Submitted Budget Reduced requested spending by $684,449 Increased capital recommendation by $68,131 Increased revenue forecast by $39,250 Impact on taxes: Spending increase $52,931 $0.10 No use of surplus $90,184 $0.18 Loss of revenues Revenue sharing $255,017 $0.50 Other revenues $24,525 $0.05 Totals $422,657 $0.73 SAD #1 increase (if flat in 2014-2015) $411,449 $0.80
General Comments Starting point not a conclusion Far from ‘ideal’ budget Impact of July 1, 2015 state budget Key assumptions will need action
Budget Specifics Required further personnel cuts Not fill vacant deputy city clerk position Juggling of city hall personnel Maintains 37.5 hour work week for professional unit (down from 40 hours) No layoffs or further reductions in services (at this point) No COLA or raises Assumes elimination of all pre-96 health insurance benefits for entire year Pays off fire truck in cash instead of borrowing ($255,000) Decreases other capital investment for 1 year
More Budget Specifics Increases Cable TV franchise agreement to 5% ($14,000) in new review Increases EAS funding effective June 14 to essentially make airport self funded thereon Elimination of summer ice at the forum Impact on building long term
Solid Waste Budget-Specifics No changes in fees or costs Decrease in property tax support $29,818 (by suggested lower hauling cost negotiation) Increases reserve funding $70,000 or 41.2% Working with MeDEP to potentially eliminate need for a vacant position REMINDER: private haulers can pick up larger items for fee
The Community Center Future Strong recommendation that we tear it down this summer Scale back programming until new facility is built No serious funding in budget to deal with existing and emerging issues
Next Steps/Critical Dates Budget details available to Council now Available by end of the week for public on web site Available by end of the week at City Clerk and Library October 21 workshop: Detailed presentation by City Manager/Finance Director October 28 Department Head presentations November 4 First public hearing on budget December 9 Final public hearing on budget and tentative adoption date
Closing Thoughts 2014 challenge is find the balance with state government pulling at critical revenues Submitted budget far from conclusion Property Taxes & Other Costs There is no ‘right’ answer Five Councilors required Desired Services July 1, 2015 PL 2013, c. 368, Part S Finally, the process will be important
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