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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 11/09/2010 - ADJUSTMENTS TO THE CITY MANAGER'S 2011-2012 RECOMM DATE: November 9, 2010 WORK SESSION ITEM STAFF: Darin Atteberry FORT COLLINS CITY COUNCIL Mike Freeman Pre-taped staff presentation: none SUBJECT FOR DISCUSSION Adjustments to the City Manager's 2011-2012 Recommended Budget, Based on Passage of Ballot Measure 2B. EXECUTIVE SUMMARY \ The City Manager's 2011-2012 Recommended Budget was delivered to City Council on September 3, 2010. Since September 3, the City Council has had a series of work sessions to review details included in the recommended budget and has held two public hearings to gather input from the community. On November 2,2010,Council passed,on First Reading,the appropriations Ordinance for the 2011-2012 Budget. Also on November 2, 2010, the Fort Collins voters passed Ballot Measure 2B, which increases the City's sales and use tax rate by..85%, generating$18.7 million in 2011. Staff has developed a proposal on how to allocate a portion of these funds based on the 2B Ballot language and is recommending a subsequent process to finalize allocation of the remaining funds. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED 1. Which restored or added services should be included in Second Reading of the Appropriations Ordinance for the 2011-2012 Budget on November 16, 2010? 2. What components of the 2011-2012 Budget need more discussion during the follow-up process? BACKGROUND / DISCUSSION The City Manager finalized the Recommended Budget and submitted it to City Council on September 3, 2010. Budget work sessions were held on September 14, September 28, October 12 and October 26. Budget Public Hearings were held on September 21 and October 19. First Reading of the 2011-2012 Budget Appropriations Ordinance occurred on November 2,2010. On November 2, 2010, the Fort Collins voters passed Ballot Measure 2B, which increases the base sales and use tax rate by .85%, generating $18.7 million in 2011. November 9, 2010 Page 2 Overview of Implications of 213 On July 27, City Council adopted Resolution 2010-047 (Attachment 1), submitting a proposed 0.85% increase in the city's sales and use tax rate to the voters for their consideration on the November 2,2010 General Election Ballot. On August 17,2010,Council adopted Resolution 2010- 058 (Attachment 2), which amended the Ballot language to exempt all manufacturing equipment from the .85%use tax increase. Ballot Measure 2B was approved by the voters on November 2. The tax increase includes the following provisions: • An increase of.85% (or 8.5 cents on a $10 purchase) • The additional revenue will be allocated in the following manner: 0 33% for street maintenance and repair($6,171,00) 0 17% for other street and transportation needs ($3,179,000) 0 17% for police services ($3,179,000) 0 11% for fire services ($2,057,000) 0 11% for parks maintenance and recreation services ($2,057,000); and 0 11% for other community priorities as determined by City Council ($2,057,000). • The increase will commence January 1, 2011 and sunset after 10 years, ending at midnight on December 31, 2020. • The increase will yield an estimated $18.7 million in the first full year of collection Additionally, the ballot language requires the City Manager to report annually to City Council on how the revenues are used and the cost saving measures that were undertaken by the City each year. The services which will receive allocated revenues based on the formula in Resolution 2010-047 include Transportation,Police,Fire,Parks and Recreation. In 2010,these programs account for 68% of the expenses in the City's General Fund. The remaining 32% portion of the General Fund includes such services as Economic Development, City Planning, Affordable Housing programs, Cultural Services, Development Review, Code Enforcement, Natural Resources programs, and citywide administrative costs. (The General Fund does not cover the various Utility Enterprise funds, including Electric, Water, Wastewater, and Stormwater services.) On August 17, 2010, Council adopted Resolution 2010-057 (Attachment 3), which,provided additional details regarding the types of programs, activities and services which could be funded through the approximately $2.1 million in revenue provided by the 11% allocated to "other community priorities." Some examples of needs which the City Council could fund include: • Economic Health Programs: Assistance program for business retention and expansion, support of the downtown area, and system improvements for Development Review and Planning processes November 9, 2010 Page 3 • Neighborhood Programs: Code Compliance, Community Mediation program, various Community Partnerships (CSU, Poudre School District, Larimer County) and Affordable Housing programs • Environmental Programs: Recycling, Sustainability Programs,and Green Building Code • Cultural Programs: Museum and community arts • Critical City Service and Support: Technology infrastructure, facility and vehicle maintenance, administration and internal services (Human Resources, Finance, Communications) ATTACHMENTS 1. Resolution 2010-047 Submitting to the Registered Electors of the City a Proposed .85% Increase in the City's Sales and Use Tax Rate on All Non-Exempt Taxable Items,to be Used for Certain Specified Purposes 2. Resolution 2010-058 Amending Resolution 2010-047 3. Resolution 2010-057 Identifying Certain Purposes for Which the Discretionary Portion of Revenues Derived from a Proposed .85% Increase in the City's Sales and Use Tax Rate Might Be Used -ATTACHMENT I RESOLUTION 2010-047 OF THE COUNCIL OF THE CITY OF FORT COLLINS SUBMITTING TO THE REGISTERED ELECTORS OF THE CITY A PROPOSED .85% INCREASE IN THE CITY'S SALES AND USE TAX RATE ON ALL NON-EXEMPT TAXABLE ITEMS, TO BE USED FOR CERTAIN SPECIFIED PURPOSES WHEREAS,despite a series of budget reductions and other cost saving measures undertaken by the City, the amount of funding that is available to the City for critical City services such as street maintenance,transportation,police and fire protection,parks maintenance and recreations services is substantially less than the amount needed to maintain a level of service commensurate with the needs and expectations of the community; and WHEREAS, the City Council and staff have for several months been engaged in a conversation with community representatives about the options available to the City to deal with the ongoing revenue shortfall; and WHEREAS,since 2005,the City has reduced planned or existing expenses by approximately $24 million, has eliminated 150 positions of employment within the City organization, has systematically reviewed City services and eliminated those that are considered by the City Council and community to be lower priority, and is aggressively pursuing ways to make its operations more efficient; and WHEREAS, at the same time,the City is actively supporting the creation of new jobs in the community and working to retain, grow and attract new businesses that will foster the overall economic health of the City; and WHEREAS,the City's sales and use tax on the sale of tangible personal property is the City's primary source of revenue for general government expenses; and WHEREAS,the City's current sales and use tax rate is among the lowest of Colorado Front Range communities; and WHEREAS, the City Council believes that the voters of the City should be given an opportunity to consider increasing the rate of the City's sale and use tax to supplement City revenues for street maintenance, road improvements, emergency services, parks and recreation and other critical needs; and WHEREAS,the City Manager originally recommended that a 1%increase in the sales and use tax rate be placed on the November, 2010, ballot; and WHEREAS, after receiving feedback from the community on this proposal, the City Manager, working with the City Council Leadership Team, has revised this tax proposal to reflect a more modest, .85% increase that would be earmarked for specific,pressing needs of the City and that would terminate in ten years; and i WHEREAS, the City Council believes that it would be in the best interests of the City to place this proposed increase on the November ballot for the voters' consideration; and WHEREAS,by the adoption of Ordinance No. 080, 2010 on July 6, 2010,the City Council has called a special municipal election to be held in conjunction with the Larimer County General Election on November 2, 2010; and WHEREAS,under Article X,Section 3 ofthe City Charter,the City Council may submit any question or proposed ordinance or resolution to a vote of the people at a regular or special election. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS that the following question,in substantially the form shown below, shall be submitted to the registered electors of the City of Fort Collins at a special municipal election to be held in conjunction with the November 2, 2010, Latimer County General Election: SHALL CITY OF FORT COLLINS TAXES BE INCREASED BY AN ESTIMATED $18.9 MILLION FOR THE FIRST FULL FISCAL YEAR(2011),AND BY SUCH AMOUNTS AS MAY BE GENERATED ANNUALLY THEREAFTER, BY INCREASING THE RATE OF THE CITY SALES AND USE TAX FROM 3.00% TO 3.85% ON ALL TAXABLE ITEMS, BUT NOT ON EXEMPT ITEMS SUCH AS FOOD AND PRESCRIPTION DRUGS, COMMENCING JANUARY 1, 2011,AND ENDING AT MIDNIGHT ON DECEMBER 31, 2020, WITH ALL REVENUE GENERATED THEREFROM TO BE SPENT AS FOLLOWS: • 33%FOR STREET MAINTENANCE AND REPAIR • 17% FOR OTHER STREET AND TRANSPORTATION NEEDS; • 17% FOR POLICE SERVICES; • 11% FOR FIRE PROTECTION AND OTHER EMERGENCY SERVICES; • 11% FOR PARKS MAINTENANCE AND RECREATION SERVICES; AND • 11%FOR COMMUNITY PRIORITIES OTHER THAN THOSE LISTED ABOVE,AS DETERMINED BY THE CITY COUNCIL, PROVIDED THAT THE CITY MANAGER SHALL ANNUALLY REPORT TO THE CITY COUNCIL ON THE PURPOSES FOR WHICH THE REVENUES FROM THE TAX HAVE BEEN DESIGNATED OR USED IN THE PRECEDING CALENDAR YEAR AND THE COST SAVING MEASURES THAT WERE UNDERTAKEN BY THE CITY IN SUCH YEAR,AND FURTHER PROVIDED THAT THE FULL REVENUES DERIVED FROM THE TAX, AND ANY INVESTMENT EARNINGS THEREON, MAY BE RETAINED AND EXPENDED BY THE CITY FOR SUCH PURPOSES,NOTWITHSTANDING ANY STATE REVENUE OR EXPENDITURE LIMITATIONS INCLUDING BUT NOT LIMITED TO ARTICLE X, SECTION 20 OF THE COLORADO CONSTITUTION? YES NO -2- Passed and adopted at an adjourned meeting of the Council of the City of Fort Collins this 27th day of July A.D., 2010. . Mayor ATTEST: City Clerk -3- ATTACHMENT RESOLUTION 2010-058 OF THE COUNCIL OF THE CITY OF FORT COLLINS AMENDING RESOLUTION 2010-047 SUBMITTING TO THE REGISTERED ELECTORS OF THE CITY A PROPOSED .85% INCREASE IN THE CITY'S SALES AND USE TAX RATE ON ALL NON-EXEMPT TAXABLE ITEMS, TO BE USED FOR CERTAIN SPECIFIED PURPOSES WHEREAS, on July 27, 2010, the City Council approved Resolution 2010-047 submitting to the registered electors of the City a proposed .85%increase in the City's sales and use tax rate on all non-exempt taxable items, to be used for certain specified purposes; and WHEREAS, since the adoption of such resolution, various members of the business community have expressed concern about the impact that an increase in the amount of use tax imposed on manufacturing equipment may have on local manufacturers and their ability to contribute to the City's recovery from the current economic downturn; and WHEREAS, through its existing use tax rebate program on manufacturing equipment for qualifying manufacturers, the City already acknowledges the need for furthering economic development by providing incentives, including tax relief, to local manufacturers; and WHEREAS, because of the important role that local manufacturers play in promoting the overall economic health of the City,the City Council wishes to respond to this community concern by amending the tax measure to exempt from the proposed .85%use tax increase all manufacturing equipment, as defined in Section 25-63 of the City Code, that is used, stored, distributed or consumed in the City. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS AS FOLLOWS: Section 1. That the question to be submitted to the registered electors of the City pursuant to Resolution 2010-047 is hereby amended so as to read in its entirety as follows: i SHALL CITY OF FORT COLLINS TAXES BE INCREASED BY AN ESTIMATED $18.7 MILLION FOR THE FIRST FULL FISCAL YEAR(2011), AND BY SUCH AMOUNTS AS MAY BE GENERATED ANNUALLY THEREAFTER, BY INCREASING THE RATE OF THE CITY SALES AND USE TAX FROM 3.00% TO 3.85% COMMENCING JANUARY 1, 2011,AND ENDING AT MIDNIGHT ON DECEMBER 31, 2020, WITH ALL REVENUE GENERATED THEREFROM TO BE SPENT AS FOLLOWS: • 33% FOR STREET MAINTENANCE AND REPAIR; • 17% FOR OTHER STREET AND TRANSPORTATION NEEDS; • 17% FOR POLICE SERVICES; • 11% FOR FIRE PROTECTION AND OTHER EMERGENCY SERVICES; • 11% FOR PARKS MAINTENANCE AND RECREATION SERVICES; AND • 11%FOR COMMUNITY PRIORITIES OTHER THAN THOSE LISTED ABOVE,AS DETERMINED BY THE CITY COUNCIL, PROVIDED THAT THIS INCREASE IN THE SALES AND USE TAX SHALL NOT APPLY TO ITEMS THAT ARE EXEMPT FROM TAXATION UNDER THE CITY CODE,SUCH AS FOOD AND PRESCRIPTION DRUGS, AND THAT THE INCREASE IN THE USE TAX SHALL NOT APPLY TO MANUFACTURING EQUIPMENT,AND FURTHER PROVIDED THAT THE CITY MANAGER SHALL ANNUALLY REPORT TO THE CITY COUNCIL ON THE PURPOSES FOR WHICH THE REVENUES FROM THE TAX INCREASE HAVE BEEN DESIGNATED OR USED IN THE PRECEDING CALENDAR YEAR AND THE COST SAVING MEASURES THAT WERE UNDERTAKEN BY THE CITY IN SUCH YEAR,AND FURTHER PROVIDED THAT THE FULL REVENUES DERIVED FROM THE TAX, AND ANY INVESTMENT EARNINGS THEREON, MAY BE RETAINED AND EXPENDED BY THE CITY FOR SUCH PURPOSES,NOTWITHSTANDING ANY STATE REVENUE OR EXPENDITURE LIMITATIONS INCLUDING BUT NOT LIMITED TO ARTICLE X, SECTION 20 OF THE COLORADO CONSTITUTION? YES NO Section 2. That in all other respects Resolution 2010-047 shall remain in full force and effect. Passed and adopted at a regular meeting of4Mayor "Cityof ollins this 17th day of August A.D., 2010. ATTEST: City Clerk -3- ATTACHMENT RESOLUTION 2010-057 OF THE COUNCIL OF THE CITY OF FORT COLLINS IDENTIFYING CERTAIN PURPOSES FOR WHICH THE DISCRETIONARY PORTION OF REVENUES DERIVED FROM A PROPOSED .85% INCREASE IN THE CITY'S SALES AND USE TAX RATE MIGHT BE USED WHEREAS, on July 27, 2010,the City Council approved Resolution 2010-047 submitting to the registered electors of the City a proposed .85%increase in the City's sales and use tax rate on all non-exempt taxable items; and WHEREAS, if the proposed .85% tax rate increase is approved by the voters, the revenue derived from such tax rate increase would be used for the following purposes: 33% for street maintenance and repair; 17%for other street and transportation needs; 17%for Police Services; I 1% for fire protection and other emergency services; 11%for parks maintenance and recreation services; and 11%for community priorities other than those listed above, as determined by the City Council; and WHEREAS,the City Council believes that it is necessary and in the best interests of the City that a portion of the revenues generated by the proposed tax rate increase be available to fund City services other than those specified above; and WHEREAS,it is also important that future City Councils have the discretion to use a portion of the revenues generated by the proposed tax rate increase for purposes that may not presently be foreseeable; and WHEREAS,the City Council wishes to identify certain needs of the City that would benefit from the portion of the revenues generated by the proposed tax rate increase that will be available for other community priorities. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS that the community needs for which this City Council could utilize the discretionary portion of the proposed .85% tax rate increase may include the following: i • Economic Health Programs: assistance program for business retention and expansion; financial/economic support for clusters; • systems improvements for development review and planning processes; Foothills Mall and other midtown College corridor redevelopment; • support of the downtown area; • enhance Poudre River. I I i • Neighborhood Programs: • Code compliance; • community mediation program; • various community partnerships (with entities such Colorado State University,the Poudre School District, Larimer County); affordable housing programs. • Environmental Programs: • air quality; • recycling; • sustainability programs; • green building. • Critical Internal Services and Support: • technology infrastructure; • facility and vehicle maintenance; • administration and internal services such as Finance. Passed and adopted at a regular meeting of the Council the City of Fort Collins this 17th day of August A.D. 2010. J Mayo ATTEST: 1 City Clerk