1 City Council Budget Worksession Agenda and Materials December 19, 2013 Basement Conference Room, 6:00 8:00PM 1. FY 2015 Budget Process Update 2. FY Revenue and Expenditure Projections and Long Term Forecast 3. FY 2015 DRAFT Budget Guidelines 4. Prioritization Discussion 5. Review Staff Follow Up
2 1 12/5/2013 Revenues FY2014 Adopted FY2014 Revised FY2015 * FY2016 FY2017 FY2018 FY2019 Real Estate Tax Revenue 50,623,542 50,623, ,619, ,655, ,712, ,827, ,924, City/County Revenue Sharing 16,931,333 16,931, ,295, ,705, ,019, ,341, ,667, Personal Property Tax (local) 6,346,440 6,619, ,752, ,887, ,025, ,165, ,308, Personal Property Tax (state) 3,498,256 3,498, ,498, ,498, ,498, ,498, ,498, Utility Taxes 4,453,240 4,426, ,470, ,515, ,560, ,606, ,652, Virginia Communications Sales & Use Tax 3,411,900 3,300, ,333, ,399, ,467, ,537, ,607, Sales and Use Tax 10,450,920 10,305, ,511, ,721, ,935, ,154, ,377, Meals Tax 7,676,310 8,031, ,192, ,355, ,523, ,693, ,867, Lodging Tax 2,920,741 2,862, ,919, ,979, ,038, ,099, ,161, BPOL 6,753,682 6,304, ,780, ,916, ,054, ,195, ,339, Licenses and Permits 2,021,000 2,021, ,021, ,021, ,021, ,021, ,021, Intergovernmental Revenue 9,157,226 9,005, ,005, ,005, ,005, ,005, ,005, Other Revenues 23,923,272 23,624, ,216, ,216, ,216, ,216, ,216, Revenues 148,167, ,554, ,615, ,877, ,079, ,362, ,648, * d from FY 2014 Adopted Expenditures Local Contribution to Schools 44,067,826 44,067, ,628, ,097, ,574, ,077, ,573, Outside and Nonprofit Agency Funding 6,561,315 6,561, ,561, ,626, ,693, ,760, ,827, Public Safety Agency Funding 8,070,369 8,070, ,312, ,561, ,818, ,083, ,355, Health Care (City Contribution) 3,811,099 3,811, ,811, ,039, ,282, ,539, ,811, Employee Retirement 8,581,986 8,581, ,839, ,104, ,377, ,659, ,948, Fixed Costs 5,311,511 5,311, ,402, ,456, ,510, ,565, ,621, Housing Programs and Tax Relief 1,404,270 1,404, ,404, ,404, ,404, ,404, ,404, Employee Salaries 26,376,732 26,376, ,904, ,711, ,542, ,399, ,280, Employee Compensation and Training 1,000,000 1,000, ,020, ,050, ,082, ,114, ,148, Comprehensive Services Act 2,300,058 2,300, ,300, ,415, ,535, ,662, ,795, Fund Balance Target Adjustment 300, , , , , , , Debt Service 8,469,077 8,469, ,408, ,832, ,326, ,851, ,408, GF Contribution to Facilities Repair Fund 450, , , , , , , GF Contribution to Capital Improvement Plan 4,467,500 4,467, ,650, ,533, ,578, ,624, ,624, GF Contribution to Equipment Replacement Fund 1,051,520 1,051, ,051, ,072, ,094, ,115, ,138, Landfill Remediation 300, , , , , , , All Other Expenditures 25,644,599 25,644, ,131, ,629, ,136, ,653, ,180, Expenditures 148,167, ,167, ,475, ,584, ,008, ,560, ,169, Surplus/(Shortfall) - (613,758) (1,859,880) (2,707,004) (2,929,140) (3,198,466) (3,520,990) Shortfall as a of Expenditures
3 2 12/5/2013 Notes and Assumptions - FY 14 Revised Revenue Projections Personal Property Tax - Revenue projection was revised in FY 14 due to higher than anticipated assessments on vehicles. Utility Taxes - Projections are now looking to be the same as FY 13. This revenue is driven most notably by weather and therefore, mild weather means the City collects less revenue Virginia Communications Sales and Use Tax - This revenue source includes the consumer tax for telephones and cable, E-911 tax and cable franchise fee and is now projecting a slight decrease from original projections based on current trends. Sales and Use Tax - Sales and Use taxes were projected to grow 2 in FY 14 but this has been revised downward based on current trends. This will hopefully change with the upcoming holiday shopping activity. This revenue also has a several month reporting delay. Meals and Lodging Taxes - These revenue sources remain strong, meals in particular at this time, mostly due to new retailers in the City and continued growth based on monthly trend analysis, which has remained consistent. Staff will continue to monitor the lodging tax. BPOL - In FY 14, a hedge fund will be paying the City less than in previous years, the reason for the revised projection. Intergovernmental Revenue - The revised revenue figure reflects a lower than anticipated reimbursement from the State Compensation Board for the Constitutional Officers (the City's budget is approved before these figures are released). Other Local Revenues - This includes taxes, fees, misc. revenue and charges for services generated by local government. In FY 14, the largest driver is the decrease of the tax on bank stock which is now projected to bring to the City $300K less than budgeted due to negatively trending bank deposits and receipts. Notes and Assumptions- FY Revenue Projections Real Estate Revenue - The current projections are showing a.06 increase in the general reassessment over 2013 and $82M in new construction. Final assessment figures will be reported at the beginning of the 2014 calendar year. City/County Revenue Sharing - In FY 15 the City will receive less revenue than in FY 14, by over $500,000, which is reflective of the declining assessments that the County started experiencing several years ago and continues to do so. A chart on the following page shows that City staff does not anticipate the City/County Revenue Sharing dollars to start increasing until FY 17. Personal Property Tax (Local)- In addition to changes in personal property tax assessments, this revenue may also grow as the burden is shifted from the State (which has in essence eliminated Car Tax Relief) to the taxpayer. Percentages are revised and approved by Council annually. Personal Property Tax (State) - PPTRA is a block grant of money that the City receives each year from the State. The amount received by the City is not expected to change. Utility Taxes - The revenue source, which includes utility taxes collected from City's gas and water operations and consumer utility tax for electric services, is expected to climb modestly in FY 15. This is driven most notably by weather and therefore, mild weather means the City collects less revenue in this area. Virginia Communications Sales and Use Tax - This revenue source includes the consumer tax for telephones and cable, E-911 tax and cable franchise fee. Sales and Use Tax - The projection for FY 15 anticipates that this revenue will continue to trend upward. While this revenue has been difficult to trend, it's seen consistent growth the past several years indicating consumer confidence in the economy. Meals and Lodging Taxes - Similar to trends in FY 14, these revenue sources are projected to remain strong and grow at a modest rate. BPOL - FY 15 and future estimates reflect a revised base from FY 14 and modest growth going forward. Licenses and Permits - In FY 14 staff took a more aggressive look at these revenues, that have outperformed projections in recent years and are not expected to slow down anytime soon based on known and projected development plans in the City. The FY 15 projections are shown as flat for the moment at the same level as FY 14 but may be adjusted as more information is received about permit trends and values. Intergovernmental Revenue - This includes revenue from UVA, State, Federal government, schools, and Albemarle county for various shared services and contracts (other than City/County Revenue Sharing revenue). In FY 15, these revenue sources are expected to remain flat at best. Other Local Revenues - This includes taxes, fees, misc. revenue and charges for services generated by local government. The decrease projected includes one time revenue that was budgeted in FY 14 but is not anticipated at this time to be budgeted in FY 15 and the loss of parking garage revenue due to a significant increase in what the City pays for rent at the Water St. Parking Garage.
4 3 12/5/2013 Notes and Assumptions - FY Expenditures Local Contribution to Schools - The Budget Guidelines as drafted now state that the schools will receive 40 of new real estate and personal property tax revenue. The target shown is based on this formula and based on this the schools are projected to receive an additional $560,000 in new City funding in FY 15. The Blue Ribbon Commission on Sustainable Schools Funding is expected to bring a report to City Council in January that may alter this guideline and funding streams for the schools. Outside Agency Funding - Includes all contributions to human services agencies (include the Department of Social Services and Community Attention), arts and educational agencies, community festivals, the Visitor's Bureau, Charlottesville Area Transit, JAUNT, and organizational memberships. These agencies' funding request are being reviewed and recommendations included as part of the FY 15 Manager's Proposed Budget. Public Safety Agency Funding - Includes Regional Jail, ECC, Blue Ridge Juvenile Detention Center, Piedmont CASA, OAR, SPCA and Legal Aid Society. These agencies ' funding requests are being reviewed currently and recommendations will be part of the FY 15 Manager's Proposed Budget. Health Care - Increases for FY 15 are projected at 6 and probably less based on last years' and recent claims performance. But the City is looking to absorb any increase which is reflected in the calculations above. Employee Retirement - The increase reflects the actuarial recommendation for FY 15 retirement rates for the general employee and public safety Defined Benefit plan. The rate for those in the Defined Contribution retirement plan will remain at 8. In future years, while its difficult to predict the increases, the costs will continue to rise as employee salaries rise and the City continues to have a need to fully fund retirement at the actuarial rate. This also assumes no major changes to the pension retirement plan. Fixed Costs - This includes I.T. User Fees, HVAC Fees, Fuel and Vehicle Maintenance, Computer Replacement and Technology Infrastructure Replacement, Workers Compensation and General Insurance. Housing Programs, Tax Relief, and Affordable Housing Grants - This includes funds dedicated to the homeowners tax grant program, tax and rent relief for the elderly and disabled and the City's contributions to PHA and AHIP. Funds are projected to remain the same for FY 15 assuming that Council makes no changes to tax relief/grant program criteria which may require increased funding. Employee Compensation and Training - The FY 15 in this scenario includes a 2 increase in salaries currently in the form of an across the board COLA increase. However, at this time though, no final decision has been made and further analysis will need to be done as staff complete the proposed budget. Also included in this figure are funds for citywide training programs and unemployment claims. Comprehensive Services Act - At this time, FY 15 is projected to remain level funded as past year's performance that has been better than anticipated, partly due to the savings realized in providing community based, wrap around services. Fund Balance Target Adjustment - This pool of funds provides the City with a bit of extra cushion at the end of a fiscal year to help us achieve the fund balance policy of 14. Debt Service - These are funds required to pay off the City's long term debt and is based on the 5 year Capital Improvement Program balanced with the City's debt service policy. The estimate for FY 15 reflects the required transfer from the as the capital budget and the debt the City plans to issue as they are planned now. GF Contribution to Facilities Repair Fund - This is expected to remain at level funding for FY 15. City facilities staff priorities various projects in order to fit within this budget. GF Contribution to Capital Improvement Plan - The dollars represent the five year plan as it stands right now. These contributions should keep us in compliance with the Budget Guideline to transfer at least 3 of general fund expenditures to the Capital Improvement Fund. GF Contribution to Equipment Replacement Fund - The current funding is sufficient to replace vehicles and equipment as scheduled during FY 15. In addition, as older vehicles are replaced with more fuel efficient vehicles this will impact, in a positive way, future maintenance and fuel costs that need to be incurred by City departments. Landfill Remediation - These are cost associated with cleanup of the landfill. The FY 15 projection is based on staff analysis of what the City will actually need to pay out in that and future years. All Other Expenditures - This represents all other operational expenditures that a department incurs. The projection is that these costs will be reduced as the city finds additional ways to provide services in a more cost effective and efficient manner where applicable.
5 4 12/5/ ,000, ,000, ,000, ,000, ,167, ,296, ,475, ,615, ,584, ,008, ,877, ,079, ,560, ,362, ,169, ,648,591 Revenues Expenses 125,000, ,000,000 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19
6 5 12/5/2013 City/County Revenue Sharing Projections 18,400,000 17,900,000 17,400,000 16,900,000 16,931,333 16,667,983 16,400,000 15,900,000 15,400,000 16,295,277 15,705,306 16,019,412 16,341,160 14,900,000 14,400,000 13,900,000 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19
7 FY 2015 Proposed Budget Guidelines 1. Maintain the current real estate and personal property tax rates. 2. Develop operational budgets within projected available revenues. 3. Focus on Council's Strategic Vision: Economic Sustainability A Center for Lifelong Learning Quality Housing Opportunities for All Charlottesville Arts and Culture A Green City America s Healthiest City A Connected Community Community of Mutual Respect Smart, Citizen Focused Government 4. Continue to incorporate the use of performance measures to assist in making decisions that support budget priorities related to City Council s Strategic Vision and Priorities, the goal being to use measures as a management and decision making tool during the budget process. 5. Continue the strong commitment to education by allocating up to 40 of new City real estate and property tax revenue to schools Invest strategically in employees by providing adequate pay, benefits, training, technology resources, support, and appreciation. 7. Annually review the living wage ordinance so that every City contract for the provision of non-professional services will require that the contractor pay each employee assigned to perform services a living wage equal to no less than the lowest starting salary for City employees. 8. Fund no new programs or major expansion of existing programs without fully offsetting revenues or reductions in expenditures. 9. Balance reinvestment in the City s existing infrastructure and facilities and creation of new opportunities for investing in the future of the City. 10. Conduct the Agency Budget Review Team process, jointly with Albemarle County, the Commission on Children and Families, to evaluate agency requests for program congruence with Council s priority areas. 11. Transfer at least 3 of general fund expenditures to the Capital Improvement Fund (CIP). 12. Budget a reserve for Council Priority Initiatives and Council Discretionary Funds. 13. Budget a Fund Balance Target Adjustment pool of funds to help ensure that the City continues to meet the important financial policy of maintaining an unappropriated fund balance in the equal to 14 of the City s operating budget and a Downturn Reserve Fund equal to 3 of the City s operating budget. Long Term Financial Policies 1. Maintain a minimum balance of at least 14 of budget. 2. Maintain a minimum Downturn Reserve Fund balance of no less than 3 of budget. 3. Maintain sufficient working capital in the utilities funds (Water, Wastewater and Gas). 4. Stabilize all non-general funds by ensuring they have a positive fund balance. 5. Maintain a debt service to general fund total expenditure budget ratio of 8 or less. 6. Transfer 1-cent of the meals tax revenue to the Debt Service Fund to be used for debt service. 1 The Blue Ribbon Commission on Sustainable School Funding will be presenting their report to Council in January. This may impact the Budget Guidelines.
8 City s Potential Future Expenditures Annual Operating Costs Downtown Mall - $250,000 - $750,000 Schools Operating Deficit - $2-$3 million CRHA Assistance - $250,000 - $750,000 West Main Street Corridor TBD New Design Division (2.5 positions) - $200,,000 - $250,,000 Full Time Design Professional in NDS- $65,000 - $80,000 Downtown Workforce Development Center - $150,000 One-Time Projects and Capital Needs Small Area Plan Designs Eleven plans - $1.5 - $2 million Middle School Reconfigurationn - $45 - $65 million Courts - $5 - $7 million Parking - $5 - $10 million ADA Transition Plan $150,000 - $200,000 in facilityy improvements $5 million in ramp improvements Sidewalks TBD
9 Belmont Bridge/Underpass $15 - $30 million (local dollars = $1 million in revenue sharing match) City Market - $1.5 $4.5 million Bike/Pedestrian Improvements - $900,000 - $1.5 million Street Improvements (Bike Lanes, Street Trees, etc.) - TBD Traffic circulation studies and improvements or comprehensive system wide traffic analysis- $900,000 - $1,000,000 Fifeville 10 th and Page Woolen Mills JPA/Fontaine Martha Jefferson North Downtown Cedar Hill Road Rose Hill Drive