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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 08/14/2012 - UPDATE ON THE CITY MANAGER'S 2013-2014 RECOMMENDEDDATE: August 14, 2012 STAFF: Darin Atteberry Mike Beckstead Pre-taped staff presentation: none WORK SESSION ITEM FORT COLLINS CITY COUNCIL SUBJECT FOR DISCUSSION Update on the City Manager’s 2013-2014 Recommended Budget. EXECUTIVE SUMMARY The City Manager’s 2013-2014 Recommended Budget will be delivered to City Council and available to the public on August 31, 2012. This work session will review the economic assumptions that are being incorporated into the City Manager’s 2013-2014 Recommended Budget and provide an overview of the major themes based on the work to date. Staff will outline the remaining key steps and discuss the City Council process regarding adoption of the Recommended Budget. Discussion of the Recommended Budget will take place during three work sessions and two public hearings in September and October. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED Staff will present an update on the Budget process and address any questions or issues that arise from the conversation with City Council. 1. Does City Council have any questions or concerns about the budget assumptions which are being included in the Recommended Budget? 2. Does City Council have any questions regarding the proposed schedule for discussion of the Recommended Budget? BACKGROUND / DISCUSSION The 2013-2014 Budget process began in earnest with the City Council Workshop in February 2012. At that meeting, the seven key Outcomes, or Result Areas, were confirmed by City Council and suggested process improvements since the last budget cycle were reviewed. Those improvements included (1) aligning the Outcomes with City Plan and the Organizational Strategic Plan, (2) including citizens on the Result Teams, (3) engaging citizens to get their inputs on the offers that had been submitted, and (4) providing greater transparency by posting all the details on each Offer to the City’s website. Since then, significant progress has been made including: • Reviewed process improvements to be implemented with Results Teams (City staff and citizens) and Sellers (department staff) • Developed Requests for Results and Result Maps with input from City Council August 14, 2012 Page 2 • Over 500 Offers (budget requests) submitted and categorized in seven key result areas • Solicited community feedback including input from boards and commissions on the submitted offers in two public forums and an online budget funding tool • Results Teams reviewed offers and performance indicators, negotiated with Sellers and submitted their prioritized list of funding recommendations to the City Manager and Budget Lead Team (Executive Team) • City Manager and the Budget Lead Team are reviewing Result Team recommendations and making adjustments based on the overall budget situation The Budget Lead Team is in the process of finalizing the City Manager’s 2013-2014 Recommended Budget, which will be delivered to City Council and available to the public on August 31, 2012. Budget Assumptions Although the economic downturn is having a slow national recovery, the City of Fort Collins economy is performing better than many municipalities. Most revenue streams are flat to showing only modest growth, but sales and use tax has been up steadily throughout 2012 above our original revenue forecasts. This bodes well for the General Fund, the three dedicated quarter cent programs, as well as Keep Fort Collins Great. Development-related revenue has been strong this year, but investment earnings continue to be much less than in previous years due to the national interest rate environment. City staff is monitoring all revenue sources carefully and will utilize the most current information available to set 2013-2014 projected revenues. Additionally, the Utilities Funds represent nearly 47% of the City’s total budget; proposed rate changes will be discussed during the Council’s budget review process. The City Manager’s Recommended Budget is being developed on these key assumptions: • Focus on City Council and community priorities • Moderate Sales and Use tax revenue growth N Sales Tax: 2.2% and 2.05% for 2013 and 2014, respectively N Use Tax: (5.8%) and 2.25% for 2013 and 2014, respectively • Utility rate increase limited to Platte River Power Authority cost pass plus a small increase to support renewable energy. A water rate increase in 2013 to support fire mitigation costs. • General inflation assumed at 2.0%, wage adjustments of 2.76% and 2% for 2013 and 2014 respectively for market and merit, and health care cost inflation of 5% each year. • Limited use of reserves - it is appropriate and prudent to use some available reserves for one- time offers, yet this will be done with caution recognizing the stagnant recovery from the economic situation nationwide • Utilization of available Building Community Choices (BCC) dollars • Maintain existing operations and seek ways to deliver desired services more efficiently • Fund enhancement offers that are consistent with City Council and community priorities. August 14, 2012 Page 3 City Council Budget Meetings The City Council has a series of work sessions scheduled in September and October to discuss the proposed 2013-2014 budget. Each work session will include staff presentations regarding specific Outcomes, followed by an opportunity for questions and discussion. The final work session has been reserved for City Council discussion regarding overall priorities, policy issues and funding allocations between Outcomes. Key dates for City Council discussions and public hearings are as follows: Meeting Date Topic August 14, 2012 Work Session General Budget Overview September 11, 2012 Work Session Presentations, Questions and Discussion: 1. Economic Health 2. Environmental Health 3. Safe Community September 18, 2012 Regular Meeting Budget Public Hearing September 25, 2012 Work Session Presentation, Questions and Discussion: 1. Community and Neighborhood Livability 2. Culture and Recreation 3. High Performing Government 4. Transportation October 2, 2012 Regular Meeting Budget Public Hearing October 9, 2012 Work Session General Discussion – Final Direction October 16, 2012 City Council Meeting First Reading of Appropriations Ordinance November 20, 2012 City Council Meeting Second Reading of Appropriations Ordinance ATTACHMENTS 1. Powerpoint presentation 1 1 Agenda Item #4 2013-2014 City Manager’s Recommended Budget Overview August 14, 2012 2 Budget Overview The Budget Process: • Challenging choices – different type of trade-offs • Improved engagement – citizens on Results Teams & earlier public involvement • Requested innovative ideas from the organization • Results teams empowered to assess & prioritize Recommended Budget: • Reflects balance across priorities • Continues high level of service expected by the community • Transitioning from City Manager’s Recommended Budget to the City Council Budget ATTACHMENT 1 2 3 Revenue Assumptions Actual Forecast Budget Budget Sales & Use Tax: 2011 2012 2013 2014 Sales Tax $ $84.2 $87.4 $89.4 $91.3 % Change Prior Year 3.9% 2.20% 2.05% Use Tax $ (less incentives) $13.4 $14.4 $13.6 $13.9 % Change Prior year 6.97% -5.78% 2.25% Total Sales & Use Tax $97.6 $101.8 $103.0 $105.2 % Change Prior Year 4.34% 1.07% 2.08% KFCG (Included Above) $19.8 $20.6 $20.9 $21.3 Moderate Sales & Use Tax Revenue Growth in 2013 & 2014 4 Total Governmental Revenue $72.7 $75.6 $78.4 $75.9 $70.5 $74.7 $77.8 $81.2 $82.1 $83.9 $19.8 $20.6 $20.9 $21.3 $13.5 $14.5 $14.9 $16.7 $17.0 $17.8 $17.7 $18.7 $18.6 $18.9 $21.9 $13.3 $8.9 $9.3 $12.8 $16.9 $13.7 $24.6 $5.4 $5.4 $10.6 $11.3 $11.4 $11.0 $10.1 $11.3 $11.4 $10.6 $10.9 $11.0 $56.4 $59.2 $67.4 $54.8 $42.3 $44.1 $51.2 $43.1 $46.7 $48.0 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Millions Other 3 5 Rate Assumptions Actual Actual Budget Budget Utility Rates: 2011 2012 2013 2014 L&P 6.5% 8.3% 4.5%* 4.0%* Water 3.0% 6.0% 4.0%** 4.0% Waste Water 9.0% 8.0% 0.0% 3.0% Storm Water 0.0% 0.0% 0.0% 0.0% * PRPA pass through plus .5% & 1.0% for Renewable Energy in 2013 & 2014 respectively ** 2013 includes 4% Fire Mitigation, 2014 includes 1% Fire Mitigation L&P Primarily PRPA Pass Through…. Water Driven by Fire Mitigation 6 Cost Assumptions Budget Budget 2013 2014 General Inflation 2.0% 2.0% Compensation ** 2.76% 2.0% Healthcare Cost 5.0% 5.0% Pension Contributions No Change GERP Supplemental Contribution $1.1M $1.1M ** Actual increases will vary based on market & performance Moderate Inflation….Compensation Tied to Market…. Healthcare Lower Than National Average 4 7 One-Time Opportunities • BCC funds available - $4.2M • Additional Sales & Use Tax Revenue 2012 available - $4.0M • Recommend holding back $2.0M to increase fund balances • $2.0M available for one-time programs • Use Tax Cap fund balance available - $6.5M • Fund Balances reviewed with Council Finance June 2012 • All healthy at year end 2011 and forecast healthy year end 2012 • Longer term work required in Transportation & Transit to support • Street maintenance • Bridges • MAX/BRT & fixed route configuration • Intentional use of reserves – Self Insurance Fund & Benefits Fund Fund Balances Healthy….Available One-Time Funds 8 Budget Themes Focus on Efficiency, Effectiveness & Elegance • Results team empowered to review current offer cost change over time • Majority of offers include performance measures – BFO Scorecard will be developed after budget is adopted Emphasis on Core City Services – Maintain Quality Services KFCG - Fully budgeted consistent with ballot language • Street maintenance & equipment, Police staffing (Campus West), PFA emergency services, recreation programs • Other Community Priorities – downtown botanical, historic preservation, economic health, affordable housing, environmental health Economic Health • Big projects in motion – I25/392, Museum, Mason Corridor, North College • Begin the implementation of the Economic Action Plan • Continued efforts in 7 Clusters, RMI. New Business Appreciation & Storefront program • Lincoln Triangle/Boulevard & Midtown Corridor study • Development Review staffing increase – volume driven 5 9 Budget Themes Environmental & River Restoration • Poudre River restoration – 20 year vision • Integrated Recycling Facility • Renewable Energy - Feed-In-Tariffs, Solar Gardens Physical Infrastructure Enhancements • MAX / BRT • BOB programs & projects – including Senior Center • N. College Right-of-Way acquisition – shovel ready • Southeast Community Park design • Bridges – 2 per year Organizational Infrastructure Enhancements • Improve safety & reduce liability risk • IT infrastructure & staffing enhancements • HR & Legal staffing enhancements 10 2012 Council Budget Meetings September 11th Work Session • Economic Health • Environmental Health • Safe Community September 25th Work Session • Community & Neighborhood Livability • Culture and Recreation • High Performing Government • Transportation September 18th Council Meeting • Budget Public Hearing October 2nd Council Meeting • Budget Public Hearing October 9th Work Session • General Discussion – Final Direction October 16th Council Meeting • First Reading November 20th Council Meeting • Second Reading Intergovt Grants/ Contributions Property Tax KFCG Sales & Use Tax $175.1 $173.9 $181.0 $167.6 $152.8 $164.9 $191.7 $198.9 $184.6 $188.5 Healthy Overall Revenue Forecasted for 2013 & 2014