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Date
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February 25, 2008
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Agenda
Item No. 47A&B Roll
Call No. 08- Communication No. 08-103 Submitted by: Richard A. Clark, City Manager |
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AGENDA HEADING:
Hearings on amendment to the Annual Budget for current fiscal year
ending June 30, 2008; on the proposed Annual Budget for fiscal year ending June
30, 2009; and the Capital Improvements Program for fiscal years 2008-09 to 2013-14.
SYNOPSIS:
Recommend adoption of amendment of the annual budget for the
current fiscal year (FY 2008) and adoption of the annual budget for the next
fiscal year (FY 2009). The recommended operating and capital improvement
budgets were presented to Council on January 25, 2008, after several workshops
were held to discuss various budget policies.
FISCAL IMPACT:
Amount:
$610 million
The
recommended operating budget for FY 2009 is over $471 million. The FY 2009 recommended capital budget is approximately
$139 million.
ADDITIONAL INFORMATION:
The following are the major highlights that summarize the proposed budget
and process:
No increase
in overall tax rate:
The recommended budget was prepared under the assumption that there would
be no increase in the overall tax rate.
Based on final valuations from the auditors of Polk and Warren counties,
it now appears the tax rate to be adopted will be 16.58. There are still valuations under protest,
which may result in a tax rate of 16.59, as presented in the budget document.
Reduced
general obligation bonding:
The planned tax-supported general obligation (G.O.) bond
issuance in FY2009 has been reduced by $910,000 from what was shown in last
year’s CIP. This reduction was
accomplished by funding some of the planned projects with Tax Increment
Financing (TIF) backed G.O. bonds and by eliminating, reducing, or delaying
other projects. Overall, G.O. debt will be $42 million less in FY 2009 than it
was projected to be in 2005. Reduction in bonding amounts has a positive impact
on the debt service tax rate and the overall tax rate. Because of recent
reductions, the FY 2009 debt service tax rate is 52 cents lower than it was
projected to be in 2005.
Increased
investment in Public Safety:
Several public safety investments are
included in the budget. Approximately $4 million in Tax Increment supported
general obligation bonds will be issued to fund the construction of a Fire Maintenance and Logistics Training
Campus. The total project cost is $7,156,000. On average, $3,280,000 per year
is planned to be spent on Fire Protection Improvements during FY 2009-2014.
Also, $950,000 has been included for City-wide Radio System Improvements for
the Police Department. This project will bring the City into compliance with
Federal Communications Commission requirements for its radio systems. In addition, bridge funding in FY 2009 will
be $2 million and address the results of the 2007 Citywide Bridge Evaluation
Study.
Strategic
staffing:
The recommended operating budget includes
funding for three positions in Community Development to improve the timeliness
of commercial, residential, subdivision and site plan review; an Urban Design
Architect position in Community Development to enhance in-house urban design
capabilities; and increased staffing in the Public Information Office to
improve communication with residents, visitors and employees. These positions
will be added through reallocations. Overall, the City’s General and Special
Revenue Funds will experience a net reduction of three authorized positions in
FY 2009. The City continues to practice a limited hiring freeze as an ongoing
savings strategy, as this requires a critical review of the need for each
position before it is filled. This strategy will save the City $225,000 in FY
2009.
The recommended
budget also includes $100,000 for succession planning. Within the next five to
eight years, the City will experience significant turnover due to retirements.
Currently, 51% of employees in non-public safety departments are age 50 or
over. The median age of council appointees and department directors is 52 while
the median age of senior managers (deputy directors and divisions heads) is 55.
The funding for succession planning will cover costs associated with
specialized training and employee development programs that will ensure
continuity of operations amidst personnel changes.
Municipal
building improvements:
The Capital Improvement Budget (CIP) includes two
significant projects - the City Hall Annex and Eastside Parking Garage. These
projects are related and contingent upon a yet-to-be written development
agreement. $6 million is programmed in FY 2010 for the City Hall Annex ($3
million TIF Bonds, $3 million land sale proceeds), which currently is
anticipated to be a three-story, 30,000 square foot office building with
limited underground parking to be located on Robert D. Ray Drive across from
City Hall. Approximately $18.5 million
of TIF bonds are planned to be sold between FY 2009 and FY 2010 for the $20
million Eastside Parking Garage. The garage is planned to include 1,000 spaces
and to be located just southeast of City Hall. It will provide parking for City
employees, Embassy Suites customers, and downtown visitors, but it will not be
a part of the Parking system. The scope of these projects, however,
may change pending the results of a City space needs study, to be completed
this fiscal year.
Maintained tax rate for the
The City will provide DART a grant of $1,200,000 over three
years to support regional transit operations. Funding will come from
Below are some other areas that have, in
the past, been the subject of attention and questions from both the City
Council and members of the public. The explanations below outline how each is
addressed in the amended and proposed budgets.
Franchise Fees:
The City is still involved in litigation regarding gas and electric franchise fees. Based on the preliminary legal analysis, a positive outcome is anticipated. Franchise fee revenues, therefore, are included in the budget. If the legal outcome on franchise fees is not favorable, the Council does have alternatives to address the shortfall. These would include operating cost reductions, short-term borrowings, and adjustments to the tax rate.
Gaming Revenues:
The City anticipates collecting $6 million of gaming revenues in FY 2008 and FY 2009. This is one million dollars more than was received in FY 2007, but one million dollars less than was projected last year. As planned last year, $2 million/year will be used to help fund bridge projects, however, the allocation for streets will remain at $4 million/year instead of increasing to $5 million/year. The $2 million for bridges will greatly help the City meet the needs identified in the 2007 Citywide Bridge Evaluation Report.
The City
Council will consider a multi-year adjustment to sanitary sewer rates,
consisting of increases of 6% on July 1, 2008, July 1, 2009, and July 1, 2010. Staff has prepared revisions to the sanitary
sewer ordinance to be included on the February 25, 2008 Council agenda that, if
approved, would increase rates for each of the next three fiscal years. Increases are necessary to fund combined
sewer separation projects that are required by the National Pollutant Discharge
Elimination System (NPDES). The budget does not reflect any rate
increases beyond the previously adopted fee schedules for storm, solid waste,
and parking enterprise operations.
Subsequent Budget Actions:
Subsequent to
the publication of the budget document, three additional changes were proposed. The City Manager’s Office staffing
configuration is being changed with the addition of one Assistant City Manager
position; this will be offset by the deletion of the Management Analyst and the
Management Intern positions; the Economic Development Office will add a
management intern position; this will be offset by the deletion of an Economic
Development Coordinator position; and the Engineering Department will add an
Assistant City Architect position. The staffing
adjustments in the City Manager’s Office will result in a $50,000 savings while
the addition of the Assistant City Architect position will be funded through expense
allocation to the Capital Improvement Program, specifically various airport
projects.
At the February
18th workshop, there was discussion concerning the FY 2010 budget outlook. A preliminary projection of a $5.2 million
shortfall was provided for FY 2010. Once
again, this is an indication of the structural deficit condition, which the
City faces each year. Every effort will be made to identify means to close the
funding gap, including: reviewing opportunities to improve efficiency in
operations; minimizing health insurance costs; reviewing existing and potential
revenue sources other than property tax; diversifying and expanding the City’s
revenue stream; and reviewing potential service reductions. Specific strategies
to be pursued include a citywide organization and space study, review of a 311
call center, a review of field service operations and organization, a review of
custodial services, and a city services fee study.
As discussed in
the past, the City will most likely face similar shortfalls beyond FY10 given
the current funding system for municipal governments in
PREVIOUS COUNCIL ACTION(S):
Date: February 11, 2008
Roll Call Number: 08-213
Action: Setting
Date of Hearing for Amendment
to the Annual Budget for the current fiscal year ending June 30, 2008,
(2-25-08). Moved by Hensley to
adopt. Motion Carried 7-0.
Date: February 11, 2008
Roll Call Number: 08-214
Action: Setting
Date of Hearing for Proposed
Annual Budget for the fiscal year ending June 30, 2009, (2-25-08). Moved by Hensley to adopt.
Motion Carried 7-0.
BOARD/COMMISSION ACTION(S): NONE
ANTICIPATED ACTIONS AND FUTURE COMMITMENTS: NONE