1 Two Logan Square Suite th & Arch Streets Philadelphia, PA fax Public Financial Management, Inc. PFM Asset Management LLC PFM Advisors City of Baltimore, Maryland Ten-Year Forecast FY2013-FY2022 In recent years, like many governments nationally, the City of Baltimore has seen its revenues eroded by the most severe economic downturn in generations, while key expenditure drivers such as employee healthcare and retirement costs have been growing at unsustainable rates. As in other mature cities transitioning from an industrial base to a new economy, these challenges have been compounded by a longer-term legacy of aging infrastructure, high taxes, and sections of the City blighted by crime and vacant properties. To address these structural challenges, Mayor Stephanie Rawlings-Blake launched development of a Ten-Year Financial Plan. This planning process builds on Baltimore s longstanding commitment to responsible fiscal stewardship by working to establish a balanced framework for financial sustainability. The resulting Plan, on track to be released later this month () will set forth a set of actions designed to bring the City s recurring revenues and expenditures into alignment, while also prioritizing new investments to strengthen Baltimore s fiscal foundation and promote economic and community stability and growth. In support of this process, the City engaged Public Financial Management, Inc. (PFM), through a competitive selection to assist in the development of a long-range financial forecast and options going forward. PFM is the nation s leading financial advisor to state and local governments, and has assisted other major governments nationally in the development of multiyear financial plans. PFM is coordinating a team that also includes Hay Group, a leading international human resources and actuarial consulting firm, and Walker Benefits Services, a minority-owned benefits consultancy active in the Baltimore region. The City s Finance Department and its Bureau of the Budget and Management Research have also provided extensive technical input and review throughout this process, and the work has also been informed by Guidance Committees including Administration, City Council, and civic representatives, as well as scores of stakeholder interviews. In past PFM engagements over the years, including successful long-range plans developed with the City of Philadelphia, District of Columbia, and City of Pittsburgh, such analysis has typically been linked to turnaround strategies for governments under external oversight boards and facing immediate fiscal distress. In Baltimore, this effort is proactive, so that the City can better head off its underlying structural budget pressures both to maintain sound fiscal condition and to identify additional resources for critical long-range investments. In the coming weeks, building on the findings from this process, Mayor Stephanie Rawlings- Blake will set forth a comprehensive plan to change how the City does business, sustain its financial health, and invest in the initiatives needed to grow Baltimore over the decade ahead. In addition, PFM will release a 100+ page companion report detailing the findings we have developed for the City.
2 Page 2 This preliminary summary highlights the key challenges we have identified that our full report will detail, and that the Mayor s forthcoming plan will address. Structural Budget Deficit To balance the City's FY2013 Budget, Baltimore had to close a $48 million shortfall in the funding available to carry forward prior year service levels, even after a series of sharp cuts and revenue increases had already been adopted over the preceding several years. These recent actions to maintain the City s fiscal stability have included: Unpaid furloughs in FY2010-FY2012, wage freezes and containment, and health benefits program restructuring for both active employee and retirees; A sustained hiring freeze from FY2008 through FY2012, along with layoffs imposed in FY2010 and FY2011; Significant reforms of the Fire and Police Employees Retirement System (FPERS), establishing a more affordable and sustainable benefit structure through measures including increased employee contributions, lengthened age and service requirements, and establishment of a predictable cost-of-living adjustment to replace a volatile variable benefit that siphoned off investment gains to fund post-employment increases; Severe curtailments of capital program investments, with reduced debt financing and lower pay-as-you-go (PAYGO) capital funding from the operating budget, resulting in widespread deferral of infrastructure renewal and replacement; Rotating company closures within the Baltimore Fire Department from FY2010 to FY2012, with a permanent closure in FY2010 and two more of the rotating closures made permanent in FY2013; Closure of five City recreation centers and four Police Athletic League (PAL) centers, a shift to once-weekly trash and recycling pick-up, and reductions in tree maintenance, street lighting, building upkeep, prisoner re-entry and mentoring programs, Arts and Culture funding, library hours and book purchases, and multiple other services; and, An increase to the City s income tax rate from 3.05 to 3.20 percent (the maximum allowed under State law), establishment of a new beverage container tax, negotiation of a voluntary contribution agreement with the City s largest nonprofit institutions, and increases to parking, hotel, and energy tax rates. In total, over just the past three years, the City has eliminated nearly $300 million in shortfalls, primarily through spending reductions. While such restructuring in the aftermath of the Great Recession has not been unique to Baltimore, this recent history now means that the remaining options for the City s fiscal realignment will be that much more limited and difficult going forward. At the same time, even these significant measures to maintain fiscal stability have not resolved the City s underlying financial pressures. Fundamentally, Baltimore now faces a structural imbalance between the rates of growth in the City s recurring revenues and its faster-growing expenditures, such that additional shortfalls will
3 Page 3 continue to open up in each new fiscal year despite past corrective actions. This dynamic is consistent with the pressures faced by state and local governments nationally, as highlighted in projections developed by the U.S. Government Accountability Office GAO that forecast near and long-term fiscal challenges for the sector that will grow over time if no change occurs 1. At the same time, each individual government faces its own unique fiscal characteristics and challenges. To quantify Baltimore s specific, structural budget gap, the PFM consultant team worked closely with the City Finance Department to develop a baseline forecast that takes into account the City s unique fiscal factors. This forecast focuses on Baltimore s General Fund, the primary, tax-supported operating fund, excluding enterprise activities such as water and wastewater services funded primarily by utility user rates. For this General Fund analysis, PFM developed a detailed, multi-year budget model that applies assumptions about future growth to thousands of individual revenue and expenditure lines, and that can evaluate alternative economic scenarios. Building on three-year projections regularly updated by the Finance Department, as well as actuarial analysis by the Hay Group, the analysis updates and extends such forecast assumptions through the end of the Ten-Year Financial Plan period. This Ten-Year Financial Plan baseline forecast is intended to represent a carry forward or current services set of projections such that no reduction or enhancements in services, headcount, or tax rates are generally assumed, except where already adopted into current law or consistent with existing policy. In addition, the forecast is based on projected economic conditions consistent with mainstream forecasts and expectations, with a modestly paced but steady economic recovery. In the event of slower economic growth or another recession, City revenues would almost certainly be worse than the forecast, and certain key cost centers such as City pension contributions partially dependent on positive investment returns would also be more difficult to manage. The baseline forecast represents the City s reasonably expected conditions, not a pessimistic or worst case scenario. Without corrective action, under this mainstream set of assumptions, PFM projects a fiscal gap of approximately $30.3 million in FY2014, growing to more than $124 million by FY2022. Over the nine years from FY2014-FY2022, this cumulative shortfall would total $744.8 million, eroding all of the City s reserves in less than three years and driving the City deep into deficits. Quite simply, a status quo approach is not financially sustainable. 1 United States Government Accountability Office (GAO), State and Local Governments Outlook, April 2012 Update (GAO SP).
4 Page 4 $0 ($100) ($200) ($300) ($400) ($500) Baseline Projected Gap General Fund ($30.3) ($67.9) ($126.4) ($200.5) ($273.0) ($374.0) ($495.7) ($600) Cumulative Deficit Annual Deficit ($620.1) ($700) ($800) ($744.8) FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 Revenue $1,571.1 $1,585.9 $1,612.7 $1,648.6 $1,677.4 $1,711.9 $1,732.4 $1,769.1 $1,814.8 $1,868.2 Expenditures $1,571.1 $1,616.2 $1,650.3 $1,707.1 $1,751.4 $1,784.5 $1,833.4 $1,890.7 $1,939.2 $1,992.9 Annual Deficit ($0.0) ($30.3) ($37.6) ($58.6) ($74.0) ($72.5) ($101.0) ($121.7) ($124.4) ($124.7) Cumulative Deficit ($0.0) ($30.3) ($67.9) ($126.4) ($200.5) ($273.0) ($374.0) ($495.7) ($620.1) ($744.8) Underlying these projections, aggregate baseline revenues are forecast to grow by a compound annual average of 1.9% over the ten year forecast period. In FY2014, overall City revenue growth is forecast to be even lower at just 0.9%, as property tax revenues from prior triennial assessments will continue to lag any recovery in the housing market and weak economic conditions persist. While property tax revenue growth is projected to gradually increase throughout the forecast period, relatively flat state assistance and other factors are forecast to constrain growth at an average of approximately 1.8% in the middle years of the plan before total revenue growth is forecast to rebound in FY2020 (2.1%) through FY2022 (2.9%). On the expenditure side of the budget, growth rates for employee health and pension costs have been one of Baltimore's primary "budget busters" in recent years. Even with a hiring freeze, wage containment, pension restructuring for public safety employees, and furloughs in recent years, total City workforce costs increased 11.7% from FY2007 to FY2012 (budgeted) while revenues rose only 3.0%. Within these totals, active employee healthcare costs grew by 20.7% and the City's employer pension contributions increased by 89.4%.
5 Page 5 Benefit Costs Outpace Revenues FY2007 FY2012 (Budget) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 3.0% Revenue 11.7% Wages + Benefits (Active and Retiree) 20.7% Healthcare (Active Employees) 89.4% Pensions Looking forward, consistent with state and local governments nationally as evaluated by the GAO, these benefit costs are projected to continue to outpace revenues across the Ten- Year Plan Period. Relative to recent prior trends, reforms adopted by the City within the past several years are projected to achieve moderation in these rates of workforce cost growth. In particular, health benefit modifications identified through this Ten-Year Financial Plan process implemented in FY2013 in advance of Plan finalization have already generated significant savings while maintaining quality, competitive coverage levels. Nonetheless, without additional reforms, the cost for active employee health benefits is projected to continue growing at more than twice the rate of revenues across the overall Ten-Year Financial Plan period. Similarly, pension cost growth is also projected to outpace revenues, with average increases of more than 5% per year in the near-term period through FY2017, and could grow even faster if more conservative actuarial funding policies now under consideration are adopted. Along with other cost drivers such as utility cost pressures, overall City expenditures are projected to grow at a compound annual average rate of 2.7% across the Ten-Year Financial Plan forecast period almost a full percentage point faster than revenues.
6 Page 6 5.0% Major Budget Drivers Compound Annual Growth Rate (CAGR) FY % 4.0% First Five Years (FY13-FY18) Property Tax Revenue Compound Annual Growth Rate Second Five-Years (FY18-FY22) 1.5% 3.1% 4.4% 4.6% 3.5% 3.2% 3.0% 2.7% 2.6% 2.5% 2.2% 2.0% 1.8% 1.9% 1.5% 1.0% 1.1% 0.5% 0.2% 0.0% State Aid State Aid State Highway User Revenue State Highway User Revenue Income Tax Property Tax Total Revenue Total Exp. Wages Pensions Utilities Employee Healthcare (Active) Income Tax Property Tax Total Revenue Total Exp. Wages Pensions Utilities Employee Healthcare (Active) FY13 $100.5 $132.0 $256.1 $768.3 $1,571.1 $1,571.1 $579.5 $149.4 $25.8 $95.1 FY22 $102.0 $145.9 $301.9 $934.8 $1,868.2 $1,992.9 $731.0 $198.8 $38.0 $142.6 $ Change $1.5 $13.9 $45.9 $166.5 $297.1 $421.8 $151.5 $49.5 $12.2 $47.5 CAGR 0.2% 1.1% 1.8% 2.2% 1.9% 2.7% 2.6% 3.2% 4.4% 4.6% As noted previously, the Ten-Year Financial Plan baseline forecast is calibrated to reflect a reasonable set of assumptions. While not intended to reflect a rosy scenario, it is also far from a pessimistic scenario let alone worst case. The following are among the major areas of identified budget risk still present in the baseline: Economically sensitive revenues Global market concerns may slow U.S. economic growth, or even drive the U.S. economy into another recession, reducing revenue growth relative to the baseline scenario. The housing market may not recover as quickly as assumed in the baseline scenario, and may decline again within the ten-year forecast period. Employment challenges may impact the City s local economy more severely than anticipated, weakening income tax and other economically sensitive revenues.
7 Page 7 Intergovernmental funding Potential State budget reductions below assumed funding levels for Highway User Revenues and the Disparity Grant program would further increase the projected fiscal gap. Additional State cost shifts and mandates, as occurred in FY2013 with teacher pension costs, could increase City expenditures; and. Federal cutbacks to address national deficit reduction goals could slow the region s economic growth, and, where such reduced programs have historically funded services within the City (e.g., Community Development Block Grants) could create increased pressure for the City to provide new local funding. Workforce The single largest, most immediate threat to the City's fiscal stability is ongoing litigation related to reforms of the Fire and Police Employees Fire and Police Employees' Retirement System (FPERS) adopted by the Mayor and City in June To date, the City has received favorable rulings regarding some, but not all, of the adopted reforms -- and certain issues of major fiscal importance remain under active litigation. If the City's approach is not fully upheld (and/or if equivalent reforms are not developed), the City's recent fiscal progress would be set back dramatically to the severe detriment of the public interest and welfare, and the health and sustainability of the FPERS retirement system would also be severely eroded. Any negotiated wage increases above assumed COLAs and level/longevity increases would further have a significant impact on the cost of services, if not funded by offsetting savings. Each 1% increase in wages would result in additional General Fund costs of approximately $6-$7 million. Health care inflation may surpass projected levels of cost growth. Actual pension investment returns, overall plan experience, and the impact of new and anticipated accounting changes could lead to contributions higher than those assumed in the baseline forecast. Other expenditures New service demands and costs could be generated by infrastructure failure and/or other unforeseen factors. The City has some potential exposure to the performance of existing economic development projects. Unfavorable litigation against the City could result in legal costs and/or settlements/penalties higher than those assumed in the forecast.
8 Page 8 Given that actual results will inevitably vary from the baseline scenario as real world events unfold (no matter how reasonably the baseline is constructed), the Ten-Year Financial Plan team also created two additional scenarios under alternative economic conditions Pessimistic and Optimistic. The Pessimistic scenario generally assumes economic recovery will be delayed, but it is not intended to reflect the worst possible economic conditions. In particular, it does not assume another severe decline as sharp and protracted as the most recent downturn, nor any further recessionary periods in the latter years of the Plan period. Similarly, the Optimistic scenario assumes a somewhat stronger and more accelerated nearterm recovery, with moderately more favorable long-term economic assumptions. Under each of these alternative scenarios baseline, pessimistic, and even optimistic the City still faces projected budget shortfalls if no corrective action is taken. As shown in the chart below, even the optimistic scenario results in deficits in every year with a cumulative shortfall of more than $325 million over the next nine years. Under the pessimistic scenario, deficits would grow even deeper year-by-year, resulting in a cumulative shortfall of nearly $1.3 billion. Economic Scenarios Projected Deficits As previously outlined, the primary baseline scenario used for this Ten-Year Financial Plan process is reflective of a carry forward approach to current services and programs. To the extent that some current activities are underfunded, however, this approach will actually understate the City s true budget needs. Among such concerns, appropriate funding for longterm retiree medical obligations (Other Post-Employment Benefits OPEB ) and for capital
9 Page 9 investment to renew and replace basic infrastructure have both been identified as areas of concern. Like many governments nationally, the City of Baltimore has historically funded its postemployment healthcare obligations to retirees primarily on a PAYGO basis covering only the costs of benefits for those who have already retired and are receiving post-employment benefits. In recent years, the Governmental Accounting Standards Board (GASB) has required that the cost of such benefits be accounted for on an actuarial basis reflecting how much should be set aside based on current service, much as public employers have long done for pension obligations. While GASB has not required that governments fully fund up to these actuarially determined levels, continued PAYGO funding generally falls short of these actuarially determined costs creating a growing liability to be addressed in future years. To help address this liability, the City has created an OPEB Trust, and has made some contributions above PAYGO levels a positive financial management practice assumed to continue in the Ten-Year Financial Plan baseline. In the FY2013 Budget, this supplemental payment totals $8.5 million in the General Fund ($9.5 million All Funds). According to the City s most recent FY2011 OPEB valuation, however, to fully fund the cost of future retiree medical liabilities at actuarially determined levels, the City would need to contribute an additional $31.6 million above PAYGO funding on an All Funds basis an amount projected to trend upward over time. Infrastructure Investment Of even greater fiscal significance, carry forward capital investment in the renewal and replacement of basic City infrastructure roads, bridges, and facilities now falls far short of the levels required just to maintain the current state of repair. Simply to prevent further erosion of current, suboptimal asset conditions while beginning to make slow incremental progress toward improved conditions, City departments estimate that capital funding would need to be increased by an order of magnitude of well over $100 million annually. Across City government, many Departments are now engaged in formalized capital needs assessments, however, such analysis is generally a work in progress. At the same time, from the perspective of long-range financial planning, the Ten-Year Financial Plan team felt strongly that it would be critical to gain some sense of the magnitude of Baltimore s infrastructure challenges even if only preliminary and inherently imprecise. In this context, to gain a highlevel sense of the City of Baltimore s underlying capital investment needs, the Ten-Year Financial Plan project team surveyed the City s major departments regarding their capital needs. Major departments were asked to provide their best estimates as to funding levels required to reach a reasonable funding standard meeting the following definition: Reasonable In addition to addressing critical needs, this level of funding would include the estimated funding required (a) to maintain the current, overall asset condition plus (b) if the current condition is below generally accepted standards for a state of good repair, to begin to work incrementally toward attaining adequate condition over time
10 Page 10 For certain smaller agencies, the project team assumed an annual carry forward of FY2014 funding levels from the City s current 6-year CIP after FY2013. In addition, funding for the significant facility needs of the Baltimore City Public Schools (BCPS) was treated as a challenge separate from this analysis, and only the historic City BCPS capital funding of $17 million is included in this analysis with any school needs beyond this level, as well as the Mayor s Better Schools Initiative to address these concerns, evaluated separately. Similarly, potential capital investment to improve blighted neighborhood conditions such as through vacant property demolition was also evaluated as a separate need. Based on the high-level estimates received from City departments, capital funding included in the Ten-Year Financial Plan status quo baseline scenario based on actual expenditures in recent years would fall short of identified, reasonable levels by over $115 million in FY2014, rising to more than $130 million annually by FY2016. On cumulative basis, the shortfall in local capital funding relative to reasonable levels exceeds $1.1 billion through FY2022. Of note, these estimates reflect annual needs over a ten-year period from General Fund supported dollars only. In many cases, continued intergovernmental funding is assumed to help meet the overall costs of core capital investment, which are even greater than these local funding requirements. Examples of underfunded infrastructure needs in the baseline scenario include the following: Of Baltimore s more than 300 bridges managed by the Department of Transportation (DOT), 21 have been rated below a level of 50 on the bridge sufficiency rating index used by the Federal Highway Administration to evaluate condition. This reflects a state of repair that renders those bridges eligible for replacement, and indicates a serious need for reconstruction. Looking forward over the decade ahead, DOT estimates that another bridges will likely require major rehabilitation, reconstruction, or replacement. Estimated costs to replace or reconstruct those bridges already programmed for near-term replacement typically range from $10-30 million per bridge. DOT also maintains approximately 5,000 lane miles of roadways across the City. As of a major survey in 2008, 43% of the City s roads were rated to be in a poor state of repair based on pavement condition index standards, and funding for repaving and resurfacing has only been further reduced since that review. Currently, DOT has funding sufficient to repave only 200 lane miles or less per year out of the total 5,000, resulting in roadways falling further into disrepair. Not only does this result in poor street conditions, but it will also drive up long-term, life cycle costs, as roadways reach the point where resurfacing is no longer an option and full-depth pavement reconstruction (at several times the cost) becomes necessary. Within the next decade, in order to manage Baltimore s solid waste disposal needs, the City is projected to need to begin a major expansion the Quarantine Road landfill. Preliminary cost estimates are in the range of $40 million, which would add another quarter century to the landfill s life span. City public safety facilities are also aging, with many in disrepair. Overall capital needs for Baltimore s fire stations and related infrastructure alone, for example, are estimated
11 Page 11 to exceed $20 million. This includes needed electrical system upgrades and fixed generator installations, deteriorated concrete within station bays and outside aprons and sidewalks, and basic safety and working condition concerns at active stations. Overall, the City s fire stations average over 60 years old, and the older half average more than 100 years old. In addition to significant deferred maintenance needs at these fire houses, given population shifts within Baltimore over the decades, some fire companies might be better sited in other locations that would provide for improved response times. To improve the City s Recreation and Community Centers, many of which are also in very poor, unsafe condition, a Mayoral Task Force developed a comprehensive plan in 2011 to provide a smaller number of upgraded facilities focused on Baltimore s youth with other facilities beyond the City s capacity to adequately sustain being transferred to nonprofit and community partners. In turn, this transformational approach requires significant new capital investment estimated by the Parks and Recreation Department to cost approximately $35-40 million over the decade ahead to fully develop this new, core network of ten model community centers to serve as anchors for Baltimore neighborhoods. Along with general infrastructure needs, Baltimore has approximately16,000 vacant and abandoned structures, a large majority of which are in distressed communities with limited market potential for reinvestment. While repair, rehabilitation, and attraction of private investment are important strategies for reclaiming vacant structures in neighborhoods of strength, the Planning Department estimates that 11,000 properties are located in challenged areas generally best-suited for clearance, greening initiatives, and other non-housing reuse. In addition, Baltimore faces significant funding challenges for water and wastewater infrastructure not included in the above figures, because such needs are funded on an enterprise (user charge) basis that does not directly impact the City s General Fund. In addressing these infrastructure challenges, the City is constrained by its structural budget shortfall, as detailed in the Ten-Year Financial Plan projections. During the economic downturn, City PAYGO capital funding from the operating budget has been sharply curtailed, and annual capital borrowing is bounded by the need to maintain responsible and sustainable levels of debt and debt service. Compounding these local capital funding constraints, federal infrastructure funding since the stimulus program ended is generally in decline, and key State capital programs have been cut severely. Of particular note, Maryland s Highway User Revenues (HUR) for Baltimore and other localities statewide are down dramatically. For the City, total State transportation funding as of FY2013 is more than $100 million below peak levels, and PAYGO capital dollars from this source have dropped from $73.4 million in FY2007 to just $5 million in FY2013.
12 Page 12 State Transportation Capital Funding (PAYGO) Has Declined Sharply $80,000,000 $70,000,000 $60,000,000 $50,000,000 $73,440,000 $66,228,000 $60,500,000 $53,265,000 $47,400,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $ $0 $ $5,000,000 $5,000, Long-Term Liabilities As part of a long-range financial planning approach, it will be important for the City to make progress over the decade ahead with reducing its long-term liabilities and leaving behind a stronger balance sheet that does not overburden future generations nor inhibit opportunities for growth. Along with infrastructure needs, Baltimore s retiree benefit liabilities are also an important area of balance sheet concern, consistent with many governments nationally. As of the most recent (FY2011) actuarial valuations, Baltimore had an aggregate unfunded retiree liability of more than $3 billion -- including actuarial shortfalls in the City's Fire and Police Employees' Retirement System (FPERS - $558.6 million), Employees' Retirement System (ERS - $530.2 million), and non-pension Other Post-Employment Benefits (OPEB - $2.1 billion, primarily associated with retiree medical coverage).
13 Page 13 Unfunded Pension and OPEB Liabilities FY2011 valuations FPERS $558.6 million OPEB $2,080.7 million TOTAL $3.2 Billion Liability ERS $530.2 million Note: The small Elected Officials Retirement System, not shown, was above 100% funded as of FY2011 by approximately $1.6 million New Governmental Accounting Standards Board (GASB) accounting rules will further highlight these retiree benefit sustainability challenges in the years just ahead, as more conservative approaches are coming into place for recognizing these liabilities in public sector financial statements. Similarly, the major credit rating agencies now also have a growing focus on retiree benefit funding and other liabilities beyond just debt service. Non-Competitive Tax Structure In evaluating Baltimore s overall fiscal condition, a further key challenge is the City s high rate of taxation. This existing, non-competitive rate structure severely limits Baltimore s ability to address its structural budget shortfalls through further rate increases. Currently, Baltimore's property tax rates are, by far, the highest in Maryland, and overall tax burdens are also well above the rest of the state. Further, Baltimore s second largest revenue source the income tax is already at the maximum level allowed under state law. Under Maryland s local government tax structure, which relies heavily on the property tax and resident-only income taxes, these high overall tax burdens fall disproportionately on residents and businesses that have chosen to locate in the City, further impeding Baltimore s ability to compete for growth. While overall revenues must remain sufficient to support basic services, this non-competitive tax structure is a major impediment to long-range financial and community sustainability.
14 Page 14 In the FY2013 Budget, the Mayor and City Council have begun to address this challenge with a new Targeted Homeowners' Tax Credit program designed to bring down the residential property tax by 20 cents by Nonetheless, high taxes remain a real and critical challenge, compounded by perception problems when comparisons are made to Maryland County tax rates without considering additional municipal tax rates and/or trash collection fees. Source: Tax data from the State of Maryland Department of Legislative Services, 2012 Overview of Maryland Local Governments; County rate shown includes special rates for services not funded from the general county property tax rate where applicable (Howard, Montgomery, Prince George s) According to analysis by the State of Maryland Department of Legislative Services (DLS), Baltimore s combined per-capita yield of income and property taxes adjusted for differences in tax rates the City s tax capacity is just 48.9 percent of the average of all Maryland counties 2. As a result, to generate enough revenue to pay for services, Baltimore s tax effort the degree to which it taxes its base to generate actual property and income tax revenue yields is now the highest in the State. In the DLS analysis, a tax effort index is calculated to compare the ratio of actual revenue generated through Property and Income taxes to a hypothetical yield if rates were set at the statewide average. An index of 100 is equal to the statewide average, while an index of greater than 100 indicates that the county must levy higher rates than other counties to generate a given yield. Baltimore s Tax Effort Index in 2010 was % higher than the state average and 28% higher than the index of the next highest county. 2 Maryland Department of Legislative Services, Office of Policy Analysis, Tax Capacity and Effort of Local Governments in Maryland, March 2012 (2010 data).
15 Page Tax Effort Index Source: Maryland Department of Legislative Services, Office of Policy Analysis As a result of this structure, Baltimore, again, cannot simply hike tax rates to improve its fiscal position. Given current competitiveness challenges, such increases would only further erode the City s tax base and overall economy by deterring and driving out private investment by businesses and families. Summary For those committed to Baltimore and its future, the challenges identified through this Ten-Year Financial Plan process are not new and, in some cases, efforts toward addressing these goals are already underway. Over just the past several years, the Rawlings-Blake Administration and City Council have already made many difficult choices to counter difficult, underlying trends and maintain balanced budgets, and have launched new initiatives to invest in critical areas of concern such as tax reduction and school facilities. At the same time, whether newly emerging or already well-understood, taking on these continued challenges boldly and comprehensively will be critical to Baltimore's next ten years and beyond both for the health of the City's finances, and the direction of the broader community. A status quo approach is not sustainable.
Executive Summary The (LTFP) report is an update from the preliminary report presented in January 2009 and reflects the Mayor s Proposed Budget for Fiscal Year 2010 and Fiscal Year 2011. Details of the
2015 Charter Township of West Bloomfield Finance Department GENERAL FUND AND PUBLIC SAFETY FUND PROJECTION Fiscal Years Ended December 31, 2015 through 2024 Contents Finance Director s Report 3 Historical
CITY OF ALEXANDRIA, VIRGINIA FINANCIAL MANAGEMENT SELF-ASSESSMENT USING STANDARD AND POORS RATING CRITERIA June 2009 Revenue and Expenditure Assumptions Are the organization s financial assumptions and
TASK FORCE ON SUSTAINABLE FUNDING OF BALTIMORE CITY S FIRE AND POLICE PENSION SYSTEM By THE GREATER BALTIMORE COMMITTEE The City of Baltimore is facing a serious fiscal challenge. Current contributions
GENERA L OBLIGATION DEBT SERVICE SUMMARY General Obligation debt is secured by and payable from the receipts of annual ad valorem taxes, within legal limits, on taxable property within the City. The City
The Art and Science of Multi-Year Financial Projections September 2, 2015 Public Financial Management, Inc. 99 Summer Street Suite 1020 Boston, MA 02110 Phone: 617-330-6914 www.pfm.com 10 Weybosset Street
FITCH RATES METROPOLITAN WATER RECLAMATION DIST OF GREATER CHICAGO, IL GOS 'AAA'; OUTLOOK STABLE Fitch Ratings-New York-03 December 2014: Fitch Ratings has assigned an 'AAA' rating to the following Metropolitan
Recovery Process for Two Financially Distressed Cities Washington DC Financial Control Board and the City of Detroit Financial Emergency Congress Asked GAO To Review Causes of Financial Crisis In DC Review
Attachment 1 OFFICE OF THE INDEPENDENT BUDGET ANALYST REPORT Date Issued: September 21, 2012 IBA Report Number: 12-39 Budget and Finance Committee Docket Date: September 26, 2012 Item Number: 8 OVERVIEW
L2 Office of the President TO MEMBERS OF THE COMMITTEE ON : DISCUSSION ITEM For Meeting of UPDATE ON LONG RANGE FINANCIAL PLAN EXECUTIVE SUMMARY The Regents will be presented with an update of the University
Financial System Review What Is the Funding Status of Corporate Defined-Benefit Pension Plans in Canada? Jim Armstrong Chart 1 Participation in Pension Plans Number of Plans Number of Members Thousands
Policy Brief June 2010 Pension Tension: Understanding Arizona s Public Employee Retirement Plans The Arizona Chamber Foundation (501(c)3) is a non-partisan, objective educational and research foundation.
Path to Prosperity Published by The Maine Heritage Policy Center The Cost of Doing Nothing: Maine s Pension s are Crowding-Out Other Spending By J. Scott Moody February 3, 2011 Maine s annual public pension
Background The Long-Term Financial Liabilities Russell Fehr City Treasurer January 28, 2014 3 of 16 Along with the severe short-term fiscal challenges brought on by the deep and prolonged recession, the
5 Year Financial Trend Report FINANCIAL CONDITION ANALYSIS For the Five Year Period of FY2007-2008 through FY2011-2012 Report Date: January 2013 Financial Condition Analysis Page 0 INTRODUCTION Financial
FITCH RATES $1B MARYLAND GOS 'AAA'; OUTLOOK STABLE Fitch Ratings-New York-26 May 2016: Fitch Ratings has assigned an 'AAA' rating to $1.036 billion in State of Maryland general obligation (GO) bonds, state
Staff Report on the City of Philadelphia s Revised Five-Year Financial Plan for Fiscal Year 2015 - Fiscal Year 2019 September 24 Revision October 14, 2014 Pennsylvania Intergovernmental Cooperation Authority
POLICY BRIEF Visit us at: www.tiaa-crefinstitute.org. September 2004 The 2004 Report of the Social Security Trustees: Social Security Shortfalls, Social Security Reform and Higher Education The 2004 Social
Background, Approach and Limitations Applied Analysis was retained to review and analyze Nevada s ad valorem (property) tax system and to estimate the potential impacts of reducing the state s depreciation
2014 City of Yakima Five-Year Financial Plan Presented to City Council January 21, 2014 To: From: Subject: The Honorable Mayor and Members of City Council Tony O Rourke, City Manager Cindy Epperson, Director
The Art and Science of Multi-Year Financial Projections April 27, 2015 Public Financial Management, Inc. Two Logan Square, Suite 1600 18th & Arch Streets Philadelphia, PA 19103 phone: 215-567-6100 www.pfm.com
City of Newton Retiree Benefits A Primer Ruthanne Fuller with Gail Deegan Dan Fahey Ellen Grody Tony Logalbo Rob Mashal Howard Merkowitz Mal Salter Becky Searles Terry Yoffie April 22, 2014 Updated October
Improving the Effectiveness of Multi-Year Fiscal Planning By Holly Sun Long-term forecasting and fiscal planning has long been advocated by the Government Finance Officers Association and other organizations
STATE OF OREGON LEGISLATIVE REVENUE OFFICE H-197 State Capitol Building Salem, Oregon 97310-1347 http://www.leg.state.or.us/comm/lrohome.htm Research Report (503) 986-1266 Research Report #6-99 The New
BEST PRACTICES Budgeting for Sustainability A Florida Perspective By Linda C. Davidson Local governments need to react in the short term by providing current budget solutions, but also by developing the
CITY OF CHICAGO FY2015 PROPOSED BUDGET: Analysis and Recommendations November 3, 2014 1 TABLE OF CONTENTS EXECUTIVE SUMMARY... 3 CIVIC FEDERATION POSITION... 5 ISSUES THE CIVIC FEDERATION SUPPORTS... 5
August 2014 Gauging Current Conditions: The Economic Outlook and Its Impact on Workers Compensation The exhibits below are updated to reflect the current economic outlook for factors that typically impact
The City of Houston s Finances Is Now The Time To Raise Property Taxes? September 9, 2015 No. 2 Greater Houston Partnership Municipal Finance Task Force Overview On July 24, 2015, the Greater Houston Partnership
The Future of U.S. Health Care Spending Conference, April 11, 2014 The Potential Impact of Alternative Health Care Spending Scenarios on Future State and Local Government Budgets Author: Donald Boyd, Rockefeller
Focus Fund 73030,, was created to capture long term investment returns and make progress towards reducing the unfunded actuarial accrued liability under Governmental Accounting Standards Board (GASB) Statement
JUNE 30, 2013 POST RETIREMENT BENEFITS ANALYSIS OF THE TOWN OF SMITHFIELD September 2013 2013 Smithfield OPEB report - Sept TABLE OF CONTENTS Section Item Page SECTION I OVERVIEW... 1 SECTION II REQUIRED
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 2015-2019 Revenue and Expenditure Projections and Long
The Impact of Pension Reform Proposals on Claims Against the Pension Insurance Program, Losses to Participants, and Contributions Pension Benefit Guaranty Corporation October 26, 2005 Contents Introduction
A Strategic Fiscal and Management Plan for the City of Memphis, FY2015-FY2019 Prepared for the City of Memphis January 2014 The PFM Group 530 Oak Court Drive, Suite 160 Memphis, TN 38117 Phone: 901-682-8356
Tax Relief and Local Government The primary focus of state and local government is to provide basic services, such as public safety, education, a safety net of health care and human services, transportation,
GAO United States Government Accountability Office Report to the Ranking Member, Committee on the Budget, U.S. Senate January 2013 PATIENT PROTECTION AND AFFORDABLE CARE ACT Effect on Long-Term Federal
STATE REVENUE FORECASTING PROJECT 2010 TECHNICAL MEMORANDUM December 2, 2010 By Paul Shinn, Consultant Introduction This memorandum provides technical details and historical background for Oklahoma Policy
PENSION FUND ACTUARIALLY REQUIRED CONTRIBUTIONS (ARC) A Civic Federation Issue Brief Prepared By The Civic Federation February 14, 2007 TABLE OF CONTENTS OVERVIEW... 3 DEFINITIONS... 3 METHODS FOR CALCULATING
(ATTACHMENT 2) REPORT AND POSSIBLE ACTION ON THE ACTUARIAL VALUATION OF THE DISTRICT S OBLIGATION FOR OTHER POST-EMPLOYMENT BENEFITS (OPEB) AS OF JULY 1, 2011 Milwaukee Public Schools Retiree Healthcare
Employees' Retirement System Department Overview Ken Nakatsu, Interim Executive Director (206) 386-1293 http://www.seattle.gov/retirement/ The Employees' Retirement System has two major functions: administration
Pennsylvania Intergovernmental Cooperation Authority Philadelphia Must Reduce Its Need for Tax Revenues White Paper (No. 7) January 31, 2000 PENNSYLVANIA INTERGOVERNMENTAL COOPERATION AUTHORITY 1429 Walnut
Fiscal Year Integrated Financial Operating Capital Financing EXECUTIVE SUMMARY Despite the ongoing efforts A Deep Financial Hole (as of September 30, ) of the Postal Service to Liabilities exceed assets
X00A00 Public Debt REVISED Operating Budget Data ($ in Thousands) FY 13 FY 14 FY 15 FY 14-15 % Change Actual Working Allowance Change Prior Year General Fund $0 $83,000 $195,000 $112,000 134.9% Adjusted
The Truth about the State Employees Retirement System of Illinois The State Employees Retirement System (SERS) began in 1944 as a core benefit for state and local employers to use in attracting and retaining
City of San José General Fund Structural Budget Deficit History & Service Restoration Priorities and Strategies January 2015 General Fund Structural Budget Deficit History and Service Restoration Priorities
Fiscal Year Integrated Financial Operating Capital Financing Integrated Financial EXECUTIVE SUMMARY Unaudited - A Deep Financial Hole (as of September 30, 2014) Liabilities exceed assets by approximately
PROFILE OF CHANGES IN COLORADO PUBLIC SCHOOL FUNDING 988-89 TO 998-99 Prepared for THE COLORADO SCHOOL FINANCE PROJECT Colorado Association of School Boards Colorado Association of School Executives Colorado
Warwick Public School System Actuarial Valuation Post Employment Benefits Other Than Pensions as of July 1, 2011 under Governmental Accounting Standards Board Statement No. 45 (GASB 45) (Estimated Disclosures
Mayor Antonio R. Villaraigosa Overview of Proposed 2011-12 Budget April 20, 2011 Human Resources Benefits Expenditures FY05-06 to FY11-12 Total $401.3 $439.7 $466.5 $467.6 $505.3 $545.7 $555.4 $154.1 $800.0
2012 The City of San José s Budget Crisis INSIDE Introduction The City s Budget The Balancing Act Impact of Cuts Choices for the Future Introduction San José faces significant challenges in financing its
Higher Education Each year, millions of Californians pursue degrees and certificates or enroll in courses to improve their knowledge and skills at the state s higher education institutions. More are connected
Governmental Accounting Standards Board Other Postemployment Benefits: A Plain-Language Summary of GASB Statements No. 43 and No. 45 Please note: This document, prepared by the GASB staff, has not been
1 1/20/2016 City of Charlottesville Preliminary Budget and Long Term Forecast General Fund Fiscal Year 2017-2021 General Fund Revenues FY2016 Adopted FY2016 Revised * FY2017 FY2018 FY2019 FY2020 FY2021
REPORT ON FINANCIAL PLAN, COST OF SERVICE AND RATES WATER AND SEWER OPERATING FUND Harford County, Maryland APRIL 2016 Black & Veatch Holding Company 2011. All rights reserved. Harford County Report on
Research Report DEUTSCHE ASSET & WEALTH MANAGEMENT REAL ESTATE OUTLOOK Second Quarter 2013 Economic Outlook Business and consumer spending to drive recovery Quantitative easing beginning its expected unwinding
GAAP require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of the Management's Discussion and Analysis (MD&A). This letter
Chula Vista s Path to Financial Recovery, Using the GFOA s 12-Step Process By Maria Kachadoorian The City of Chula Vista, California, grew by 47 percent (approximately 75,600 people) between 1998 and 2008,
Michigan League for Human Services November 2004 Proposal A, School Aid, and the Structural Deficit This year marks the 10 th anniversary of the passage of school finance reform, known as Proposal A. Proposal
Ministry of Finance Chief Economist - Research, State Revenue and International Affairs June 2013 Forecasts of Macroeconomic Developments, State Revenues from Taxes and Revenue from Other Sources, 2013-2014
Management & Careers The Finance Director s Role in Helping Public Enterprises Look their Best By Bryan A. Mantz Finance directors of public enterprises face special challenges; developing expertise in
M a n a g i n g Public-Sector Retiree Health-Care Benefits under the Affordable Care Act By Michael Nadol, Jim Link, and Adam Benson The news surrounding the often contentious launch of the Patient Protection
2008/09 Financial Management Strategy Report on outcomes For more information visit www.manitoba.ca R e p o r t o n O u t c o m e s / 1 Report on Outcomes Budget 2008 set out the second Financial Management
Fiscally Responsible Proposals for Economic and Job Growth to the House of Commons Standing Committee on Finance The Canadian Real Estate Association (CREA) is one of Canada s largest single-industry trade
Performance Audit Review of the Submitted Budget for Fiscal Year 2008 March 2007 City Auditor s Office City of Kansas City, Missouri 11-2007 March 7, 2007 Honorable Mayor and Members of the City Council:
For release at 8:30 a.m. EST February 10, 2016 Statement by Janet L. Yellen Chair Board of Governors of the Federal Reserve System before the Committee on Financial Services U.S. House of Representatives
OPERATING POSITION INDICATORS 27 28 WARNING TREND: Decreasing amount of General Fund operating surpluses as a percentage of net operating revenues. Formula: General Fund Operating Surpluses Net Operating
Budget and Business Plan 2015 Policies & Procedures POLICIES & PROCEDURES Policies & Procedures Presentation of Halton Region s Financial Information General Guidelines Halton Region prepares and presents
Financial Outlook for the Metropolitan Transportation Authority Thomas P. DiNapoli New York State Comptroller Kenneth B. Bleiwas Deputy Comptroller Report 5-2011 September 2010 Transit Facts The economic
The Roads to Recovery Facts About Transportation Funding and Spending How Pima County spends transportation money (F.Y. 2014-15 Transportation Budget) 1 Debt Service (1997 bonds): $19.1 million In 1997,
City of San Antonio, Texas Labor Costing Review Presentation to the Mayor and City Council January 28, 2015 700 Lavaca Suite 1500 Austin, TX 78701 Two Logan Square 18 th and Arch Street Philadelphia, PA
Tompkins County Department of Administration 125 East Court Street Ithaca, NY 14850 Phone: (607) 274-5551 Fax: (607) 274-5558 COUNTY ADMINISTRATOR Joe Mareane DEPUTY COUNTY ADMINISTRATOR Paula E. F. Younger
El Segundo Unified School District Special Budget Meeting Part I School Services Information January 24, 2011 Overview of the State Budget and the State Economy 2011 School Services of California, Inc.
Kansas Legislator Briefing Book 2012 Retirement V-4 Long-Term Funding of KPERS Other Retirement reports available V-1 Kansas Public Employees Retirement System V-2 Kansas Defined Contribution Retirement
IBISWorld Executive Summary Industry Report 23822 - Plumbing, Heating, and Air-Conditioning Contractors: NAICS 2002 : NAICS 1997 DISCLAIMER This product has been supplied by IBISWorld Inc. ('IBISWorld')
Page Intentionally Left Blank Department Description The Financial Management Department provides fiscal services to the Mayor and serves as an internal fiscal consultant to other City departments. Financial
THE UNITED STATES CONFERENCE OF MAYORS Struggling Local Government Finances and Decelerating Public Water Investment JUNE 2015 The United States Conference of Mayors Kevin Johnson Mayor of Sacramento President
K a n s a s L e g i s l a t i v e R e s e a r c h D e p a r t m e n t Q-1 Kansas Public Employees Retirement System Retirement Plans and History Retirement Kansas Legislator Briefing Book 2015 Q-1 Kansas
2010 financial statement discussion and analysis INTRODUCTION The City of Ottawa 2010 Annual Financial Report contains the audited consolidated financial statements prepared in accordance with principles
Project LINK Meeting New York, - October 1 Country Report: Australia Prepared by Peter Brain: National Institute of Economic and Industry Research, and Duncan Ironmonger: Department of Economics, University
NOVEMBER 2012 ARIZONA Arizona s Pension Challenges: The Need for an Affordable, Secure, and Sustainable Retirement Plan The funding level of Arizona s public employee retirement systems has declined every
VA529 Oversight Report No. 1 Biennial VA529 Status Report July 2014 Profile: Programs Operated by VA529 as of March 31, 2014 CURRENT STATUS PrePAID InVEST CollegeWealth CollegeAmerica* Program type Defined
State and Local Government Retiree Benefits Retiree Health Care Benefits: Structures, Protections, and Funded Status Barbara Bovbjerg Director, Education, Workforce, and Income Security U.S. Government
BASIC FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED JUNE 30, 2015 ANNUAL REPORT FOR THE YEAR ENDED JUNE 30, 2015 Table of Contents Independent Auditor's Report 4 Management's Discussion
State of Florida 2011 Debt Affordability Report Prepared by The Division of Bond Finance December 2011 Page 1 TABLE OF CONTENTS Executive Summary... 1 Introduction... 4 Composition of Outstanding Florida
PNB Audit: Accounting for Pensions and NB Power Chapter 3 Province of New Brunswick Audit: Accounting for Pensions and NB Power Contents Introduction... 41 Provincial Pension Plans... 41 Accounting for
City of Surprise, Arizona Comprehensive Financial Management Policies FY 2013 Introduction The City Council s Strategic Plan Framework, goals and objectives provide the foundation for the comprehensive
CITY OF GREATER SUDBURY Financial Planning for Municipal Roads, Structures and Related Infrastructure Final Report July 10, 2012 Financial Planning for Roads Table of Contents I. Financial Planning for