FY 15-16 BUDGET PRESENTATION May 18, 2015 FRAMEWORK
FY 15-16 BUDGET PRESENTATION May 18, 2015 FRAMEWORK PURPOSE ON I S S I M alue ide va in a v o r p To
rvices ly, e s d adde riend f r e m o d cust ent an r i c i f f e cost anne
m v e i effect g in a safe n resulti rosperous and p unity. comm 2 VISION To be a vibrant, safe, progressive and prosperous community in which citizens are actively engaged in governance and community activities. FOUNDATION
Despite the many and continual challenges the City faces, there are a number of positive projects and initiatives underway; this strengthens the Citys infrastructure and overall quality of life for citizens. 3 FOCUS Budget Development Budget Summary Highlights Total Budget General Fund Powell Bill Fund Regional Water Fund Water Fund
Sewer Fund Capital Reserve Funds 4 Grant/Capital Fee Projects Changes Employees Budget Re-cap Future Recognition BUDGET DEVELOPMENT January Departments finalized budget requests in excel workbook and entered data into financial software Council held annual planning retreat April
Budget committee researched alternative funding sources, identified inefficiencies, analyzed the budget with input from published trends, Interim City Manager established a standard for balancing the budget May Budget committee finalized recommended budget for document and presentation preparation for Council Budget work sessions held to review recommendation 5 February Department heads and key budget staff met with budget committee to review requests March Budget committee reviewed requests and began to make revenue projections and analyze
expenditures to develop a recommended budget; held additional budget meetings with larger departments to negotiate requests June Continuation of budget work sessions Public hearing and adoption of budget HIGHLIGHTS o General Fund o No Property Tax Increase o No Sanitation Fee Increase o Kerr Lake Regional Water Fund o 5% Rate Increase Recommended o Water Fund o 4% Rate Increase Recommended o Monthly impact on residential customer using ~5,984 gpm o In City = $.70 increase o Out of City = $1.75 increase o Sewer Fund o 9% Rate Increase Recommended
o Monthly impact on residential customer using ~5,984 gpm o In City = $4.76 increase o Out of City = $11.90 increase 6 HIGHLIGHTS o Workers Compensation Deductible - $17,500 budgeted o FY 2013-14 net premiums were almost $300,000 o Salaries & Benefits o Anticipating an 18% Health Insurance Premium Increase o Medical loss ratio increased o State fees and taxes increased o .5% Retirement Rate Decrease o Citys compensation for employees is well below market o No Reduction-in-Force o No new positions recommended o 10 positions requested/2 additional positions needed o Recommend 4% increase for eligible employees - $183,200
o Recommending Phase 2 of the 5-year Classification & Pay Plan be modified to fit budgetary constraints o Recommending implementation be delayed by three months due to budgetary constraints 7 2015-16 TOTAL BUDGET FUND General $15,397,900 Regional Water $4,499,500 Water $6,851,700 Sewer
$5,032,300 Powell Bill Capital Reserve Funds 8 RECOMMENDED BUDGET $440,000 $8,421,500 Adjustment for Inter-fund Transfers/Cost Allocations ($2,700,500) TOTAL $37,942,400
2015-16 TOTAL BUDGET ed by We are requir 9 law ce. budget ordinan d ce n la ba l a der an annu to operate un GENERAL FUND
GENERAL FUND The City continues to endure lingering constraints and the loss of revenues, such as business privilege licenses, which lessens the elasticity and flexibility normally associated with good budgeting. FY 2014-15 Current Budget* $15,405,312 FY 2015-16 Recommended Budget $15,397,900 Difference $7,412 % Decrease .05%
*Current Budget includes amendments approved by City Council since the budget was adopted. 11 GENERAL FUND MAJOR REVENUES = $10,220,000 Property Tax Rate remains at 62 cents (real property) = $5,300,000 NC DMV Tax and Tag Together (personal property) = $440,000 Sales Tax (remains relatively flat) = $2,650,000 Sanitation Fee remains at $29.00/month = $1,830,000 MAJOR EXPENDITURES = $10,663,800 Public Safety (Police, Fire, Emergency Services) = $6,769,000 Cultural and Public Services (Sanitation, Streets, Recreation Programs, Library) = $3,894,800 The Citys largest revenue sources do not cover the largest service areas! 12 GENERAL FUND UNDESIGNATED FUND BALANCE AS A % OF EXPENDITURES
Local Government Commission (LGC) Minimum 8% Current Status based on the LGCs Methodology 36.34% Current Status based on the Citys Methodology 29.88% City Council Goal 30% o FY 2015-16 Recommendation Appropriate $325,000 o Impact on % depends on current year savings o Based on current spending trends, staff predicts a significant savings that should positively impact the fund balance 13
GENERAL FUND NO FUNDS are budgeted for public buildings capital improvements NO FUNDS are budgeted for new technological equipment for departments ONLY $10,000 is budgeted for the Henderson-Vance DDC ONLY $20,000 is budgeted for street resurfacing ONLY $20,000 is budgeted for demolition of abandoned structures ONLY $35,000 is budgeted for storm drainage improvements ASSET FORFEITURE funds are becoming less and less available 14 GENERAL FUND o $70,700 in lease/purchase payments were removed to consider a delayed payment option - this process includes budgeting the $339,000 revenue and expenditure, receiving a bank loan in FY 2016 and making the first payment in FY 2017. o 10 positions were requested across 5 departments: o Development Services, Henderson-Vance DDC, Fire, Recreation, Aycock Aquatics Center o None were recommended!
o Most departments have remained near the same level of funding; factors that may be contributing to any increases include: o Built-in contract increases o Fully funding the Assistant Finance Director position o Capital equipment needs 15 GENERAL FUND Vance County Shared Programs Key Concerns o Tax Office This office no longer has responsibility for collection of motor vehicle taxes. This is now handled by the NC Department of Motor Vehicles. Their 25% request for the City share only decreased by .58% o Board of Elections A 93.87% increase was requested for FY 2015-16. The City share is 17% for general elections and 100% for municipal elections. Only about 2/3 of their request has been budgeted. o E-911 Emergency Services has managed to add personnel while the City has resorted to reductions-in-force. A $19,633 increase was requested for FY 2015-16. Recommendation Comprehensive review of the contracts!
16 GENERAL FUND Contributions/ Shared Programs; 6.94% Debt; 5.06% Capital; 3.95% Personnel; 53.75% Operating; 30.30% Recommended Budget: $15,397,900 17 GENERAL FUND MAJOR CAPITAL OUTLAY Department Item Cost
Information Services Server and Server Switches $15,000 Police Dodge Chargers (2) $49,100 Police - Asset Forfeiture Dodge Chargers (2)/Chevy Impala $72,000 Fire Dodge Caravan
$36,700 Public Services Admin. 1/3 Parking Lot Resurface/Restripe $3,000 Garage Service Truck (L/P Delay Payment) $42,000 Street LED Lights for Stop Lights $8,300 Street
Portion of Work Order System $3,500 Sanitation Leaf Machine (L/P Delay Payment) $23,100 Sanitation Garbage Truck (L/P Delay Payment) $216,000 Recreation John Deere F-777 Mower $12,000
Recreation Ford F-250 (L/P Delay Payment) $21,500 18 GENERAL FUND DEBT SERVICE TYPE City Hall Aycock Aquatics Center* Police Station Revenue Bonds (Ops Center) TOTAL Rounded to the nearest dollar * Debt is split 50/50 between the City and County 19 BALANCE
FINAL PAYMENT $32,750 7/1/2015 $264,266 6/1/2016 $1,355,000 6/1/2019 $452,839 6/30/2020 $2,084,855 POWELL BILL FUND
POWELL BILL FUND o Allocation is based on the States gas tax, and the Citys lane miles and population o The State is stabilizing the gas tax o The Citys population is declining o Very little construction of new roads, therefore no addition of lane miles o The General Assembly has passed a compromised Senate Bill (SB20) o Revenue estimate is roughly the same for FY 2016 (increase of .15%) o Revenue estimate is expected to decrease in FY 2017 (decrease of 2.56%) 21 REGIONAL WATER FUND REGIONAL WATER FUND o Recommending a 5% rate increase o Each % yields about $39,000 o Results in an additional $195,000 in revenues that will continue to provide for needed capital reserves
o Provides resources for the operations at the Kerr Lake Regional Water Treatment Facility o Partnership with Warren County and the City of Oxford o Henderson Managing Partner/Majority Owner, 60% o Warren County and Oxford share 20% interest each o Regional partners sell water at retail to their own customers and other governmental entities o City of Henderson sells water to Kittrell Water Association, Franklin and Vance Counties as well as residential, business and industrial customers 23 REGIONAL WATER FUND o Current capacity of the facility is 10 MGD o Funding provided in FY 2009 to pursue the expansion of its Inter-basin Transfer (IBT) of water from 10 MGD to 14.2 MGD o Under consideration for approval o The City is considering a design-build concept for completing the plant expansion
o Authorization to construct has been extended to December 2016 24 REGIONAL WATER FUND Debt; 17.10% Personnel; 14.69% Capital; 11.29% Operating; 56.92% Recommended Budget: $4,499,500 25 REGIONAL WATER FUND MAJOR CAPITAL OUTLAY Department Regional Water System
Item SCADA System Replacement Cost $508,000 DEBT SERVICE TYPE 26 BALANCE FINAL PAYMENT KLRWP Priority I Improvements $509,000 4/1/2016
KLRWP Raw Water Improvements $705,902 2/1/2019 KLRWP High Speed Pump Project $1,129,000 5/1/2035 TOTAL $2,343,902 WATER FUND WATER FUND o Recommending a 4% rate increase o Each % yields about $27,000 from the Citys general rate customers
o Needed to absorb the 5% water rate increase from the Regional Water Fund and fund a limited amount of capital o Provides for the distribution of potable water to: o The Citys 8,800 customers o Three governmental customers of Kittrell Water Association, Franklin and Vance Counties o All three Vance County Phases are now on-line, so there will be a full year of water sales to Vance County for FY 2016 o 82.96% of Water Fund revenues are derived from the sale of water to retail and wholesale governmental customers 28 WATER FUND Debt; 17.69% Capital; 0.92% Personnel; 16.38% Operating; 65.01%
Recommended Budget: $6,851,700 29 WATER FUND MAJOR CAPITAL OUTLAY Department Item Cost Engineering Admin. Survey Grade GPS $10,000 Water Distribution Portion of Work Order System $13,500
Water Distribution Portion of Jet Vac Tuck - Lease/Purchase Payment $30,000 Water Distribution 1/3 Parking Lot Resurface/Restripe $2,250 30 WATER FUND DEBT SERVICE TYPE Overhead Storage BALANCE FINAL PAYMENT
$84,197 5/1/2017 $339,629 6/30/2020 $2,056,468 6/30/2020 Warren County Water Line $149,653 6/1/2042 Radio Read Water Meter Project $279,232
5/1/2034 2 Water Main Replacement Project $1,898,571 5/1/2035 TOTAL $4,807,750 Revenue Bonds (Ops Center) Revenue Bonds (Franklin Co. Line) Rounded to the nearest dollar 31 SEWER FUND SEWER FUND
o Recommending a 9% rate increase o Each % yields about $37,000 o Needed to provide for increased debt service o Henderson Water Reclamation Facility Upgrade o Sandy Creek Pump Station Upgrade o Elmwood Cemetery Outfall Project o Provides for sewer collection and treatment for the citys 7,088 customers o 91.44% of Sewer Fund revenues are derived from the sewer user fee 33 SEWER FUND Debt; 24.14% Personnel; 25.13% Capital; 2.42% Operating; 48.31%
Recommended Budget: $5,032,300 34 SEWER FUND MAJOR CAPITAL OUTLAY Department Item Cost Water Reclamation One Ton Truck $38,000 Sewer Collection Portion of Work Order System $13,500
Sewer Collection Portion of Jet Vac Truck L/P Payment $55,500 Sewer Collection 1/3 Parking Lot Resurface/Restripe $2,250 Sewer Collection I & I Service Truck L/P Payment $6,900 35 SEWER FUND DEBT SERVICE
TYPE NVHS Sewer BALANCE FINAL PAYMENT $62,227 5/1/2016 Ruin Creek Outfall $230,571 5/1/2017 Revenue Bonds (Ops Center) $339,629 6/30/2020
TOTAL $21,397,692 Revenue Bonds (Remaining Projects) Sanitary Sewer Loan Elmwood Cemetery Outfall Project (Preliminary) Sandy Creek Pump Station Rounded to the nearest dollar 36 CAPITAL RESERVE FUNDS Capital Reserve Funds help the city prepare for major capital outlay and unforeseen emergencies. 37 Fund
Recommended Budget Capital Reserve Utilities $324,500 Capital Reserve Economic Development $15,800 Capital Reserve Regional Water $4,208,900 Capital Reserve Rate Stabilization $3,872,300 TOTAL $8,421,500
CAPITAL & GRANT PROJECTS Capital Improvement and Grant Project Funds are not considered a part of the annual budget process since they remain open for the life of the project. The 10-year Capital Improvement Plan was submitted to the City Council on January 26, 2015 and approved February 9, 2015. Departments seek grant funding based on their ability to support the funding with existing resources and are expected to manage any reporting requirements. 38 CAPITAL PROJECTS Regional Water Fund o o o o Expansion
Inter-basin Transfer of Water High Speed Efficiency Pump Filter Rehabilitation Water Fund o o o o 2 Water Line Project (near completion) 158 Business Loop DWSRF Railroad Street WL Replacement Thomas Lane Area WL Replacement Sewer Fund o o o o o 39
HWRF Renovation Project (near completion) Elmwood Cemetery Outfall Project (underway soon) Sandy Creek Pump Station Project Storm Restoration/Enhancement for HWRF Access Road SCADA GRANT PROJECTS o Bureau of Justice Assistance (BJA) Grants o Governor's Crime Commission (GCC) Grants o Beckford Drive Widening Project o Newton Dairy Rd./Birch and Bobbitt St. Sewer Extension Project 40 FEE CHANGES o Please bear in mind that in approving the recommended regional water, water and sewer rate increases, various and miscellaneous fees associated will increase as well.
o Other recommended fee changes will be discussed further during the Fund/Departmental workshops. 41 EMPLOYEES The single most important asset that the City has is its workforce. Key Strategic Objective 6 acknowledges the value of employees and the need to address several critical workforce related issues including competitive pay, cost of living adjustment and retention of qualified employees. 42 EMPLOYEES 2014 Classification and Pay Study o Determined the Citys workforce was paid about 22.67% less than peer municipalities o Cost to implement the plan as recommended by Consultants = $1.4M o FY 2015 Phase 1 implementation = $117,000
o Phase 2 implementation = 354,105 + $20,000 for needed performance evaluation training o FY 2016 Recommendation = $183,200 for a modified alternative of Phase 2 o Shortfall = $190,905 o Modified Alternative o 4% pay increase for eligible employees o 4% increase to the salary schedule minimums and maximums 43 EMPLOYEES Staff Capacity and Capability Issues o Workforce has been reduced by approximately 44 positions since 2001 o Departments are expected to do more with less o This practice leads to staff burnout, less productivity, decreased efficiency and effectiveness o Authorized, but unfunded (frozen) positions o Authorized indicates there is an identified need for the position o As many as 19 have existed in the past o Currently, the City has 9 authorized/unfunded positions o Budgets have, in part, been balanced by not funding them
o Department Directors requested that 4 be funded this year 44 BUDGET RE-CAP o General Fund - $15,397,900 o No Property Tax Increase o No Sanitation Fee Increase o Regional Water Fund - $4,499,500 o 5% Rate Increase Recommended o Water Fund - $6,851,700 o 4% Rate Increase Recommended o Monthly impact on residential customer using ~5,984 gpm o In City = $.70 increase o Out of City = $1.75 increase o Sewer Fund - $5,032,300 o 9% Rate Increase Recommended o Monthly impact on residential customer using ~5,984 gpm 45
o In City = $4.76 increase o Out of City = $11.90 increase BUDGET RE-CAP o o o o o o o o o o o o 46 Powell Bill Revenues are expected to decrease FY 2017 Availability of Asset Forfeiture funds are expected to lessen Board of Elections under-budgeted
NO FUNDS are budgeted for public buildings capital improvements (General Fund) NO FUNDS are budgeted for new technological equipment for departments (General Fund) ONLY $10,000 is budgeted for the Henderson-Vance DDC ONLY $20,000 is budgeted for street resurfacing ONLY $20,000 is budgeted for demolition of abandoned structures ONLY $35,000 is budgeted for storm drainage improvements 4% Pay Increase for eligible employees NO new positions recommended Many departments are stretched thin due to decreased staffing and increased responsibilities FUTURE o Capital Utility Projects - supporting growth, attracting industries and bringing about annexation o Economic Development Commission - involvement and leadership are essential o Housing Stock - much of it has become dilapidated and deteriorated o Pending Legislation - E-911 double taxation and Sales Tax laws could generate significant savingsin excess of $500,000
o Scholarship Endowment with VGCC - Does Council wish to re-establish this endowment? 47 FUTURE o Authorized/Unfunded (frozen) Positions - how do we address staffing concerns? o Information Technology - void of readily accessible staff impedes day to day productivity o Risk Management - needed to increase workplace safety and address the growing workers compensation claims o 401(k) - recommended to create a more equitable benefits package; Sworn Law Enforcement Officers are eligible by General Statute 48 RECOGNITION Assistant City Manager, Frank Frazier Assistant Finance Director, Michelle Daniels City Clerk, Esther McCrackin
Department Directors, Corey Williams, Marcus Barrow, Danny Wilkerson, Mike Ross, Kendrick Vann, Clark Thomas, Tom Spain, Christy Lipscomb and their staff Executive Assistant, Pat Pearson Finance Director, Kathy Brafford Human Resources Director, Cathy Brown Former City Manager, Ray Griffin Mayor and City Council 49 QUESTIONS? COMMENTS? CONCERNS?
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