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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 01/09/2018 - KEEP FORT COLLINS GREAT EXPIRATIONDATE: STAFF: January 9, 2018 Ginny Sawyer, Policy and Project Manager Blaine Dunn, Senior Sales Tax Auditor WORK SESSION ITEM City Council SUBJECT FOR DISCUSSION Keep Fort Collins Great Expiration. EXECUTIVE SUMMARY The Keep Fort Collins Great (KFCG) .85% dedicated tax will expire December 31, 2020. Well in advance of this date, staff is developing potential options and a community outreach plan to engage residents in a conversation on desired level of service and potential funding options while targeting a potential ballot measure in November 2018. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED 1. Which options would Council like to pursue further? 2. Does Council support the proposed plan and timeline? 3. What financial information and narrative is most critical to Council? BACKGROUND / DISCUSSION The City’s current total tax rate is 3.85%. The ongoing general tax rate is 2.25% and has not changed in over since 1980. There are three dedicated ¼-cent taxes (Open Space, Street Maintenance, Community Capital) totaling .75% and Keep Fort Collins Great is a .85% dedicated tax. (Attachment 1) In 2008-2009 the City was experiencing significant revenue shortfalls. In response, a major community dialogue was launched to engage the public regarding choices surrounding elimination of services and identification of new revenue. That engagement process focused on: • House in Order- services and personnel that had been cut and other efficiencies • Appropriate Role in the Economy- City-driven economic health activities • Resourcing Our Future- Immediate needs and options to get there First proposed as a 1% on-going tax, the end-result of these efforts and dialogues was the passage of KFCG, a 10-year, .85 dedicated sales tax, in 2010. By vote, these dollars support the following operations: 33% Street Maintenance and Repair 17% Other Transportation Needs 17% Police Services 11% Parks and Recreation 11% Other Community Priorities 11% Poudre Fire Authority The City utilizes KFCG dollars to fund a variety of programs and basic services. Each year a summary report of KFCG funds and projects along with an organizational efficiency report is created, provided to Council, and posted online. (Summary information-Attachment 2) Numerous full-time positions, including 41 in Police Services and 12 at Poudre Fire Authority are currently funded by KFCG revenues. Loss of KFCG funding through the January 9, 2018 Page 2 expiration of the tax on December 31, 2020 would have a significant impact on the level of service the City is able to provide. Staff is proposing a community conversation beyond a “renewal” of KFCG and instead focusing on desired programs and services and clarification on what the general on-going sales tax rate (2.25%) should cover and what a dedicated tax might support. Staff presented this information at the November 17, 2017 Council Finance meeting. Feedback from that meeting included: • Decreasing the overall tax rate should be a consideration • Consider funding Police, Fire, and Streets needs through the general ongoing sales tax • Have one transportation category not multiple • Identify additional services/programs for dedicated tax • Is a mill levy something to consider? With this feedback, staff has begun identifying and evaluating the different tools and mechanisms that could be considered to create overall funding options. Potential Mechanisms/Options Option A: Renew KFCG either as is, at a different amount, and/or change the percentages of support. PROS CONS • Renewal is a clear and understandable message to voters. • KFCG is meeting current needs. • Leaves many core on-going core services subject to an expiring funding source. Option B: Increase general ongoing sales tax rate. Staff looked at recent year collections, projected out annual growth rates, and equated the percent on-going tax rate increase needed to equal the current funding amounts: Amounts to Add to Ongoing Sales Tax Amounts needed as Stand-alone tax Streets - 0.24 Other Transportation - 0.14 Police - 0.13 Parks - 0.095 Fire - 0.08 Other Community Priorities - 0.095 Funding police, fire, and streets out of the general ongoing sales tax would require a .45 increase bringing the total tax rate from 2.25 to 2.70. Greater and lesser changes are also an option. PROS CONS • Puts on-going core services under a more sustainable funding source. • Potential for fewer tax measures going to the voters. • Tourists and visitors contribute. • General on-going sales tax is collected on groceries.* • This scenario does not account for needs within Parks, Other Transportation and Other Community Priorities. * The dedicated taxes do not apply to groceries, this includes the current KFCG. Prescription drugs are never taxed. January 9, 2018 Page 3 Option C: Seek a Mill Levy Depending on the desired level of service, a dedicated mill levy could be brought forward for some or all the ongoing services. This could possibly be grouped into a single item or broken down by the specific items being funded. PROS CONS • Puts on-going core services under a more sustainable funding source. • Potential for fewer tax measures going to the voters. • Only property owners contribute. The mechanisms/options listed above can each be explored more thoroughly and could be combined in a variety of ways to meet Council and community goals. Additional taxes and/or fees could also be considered. Public Engagement and Timeline Staff anticipates engaging the public at an Involve/Collaborate level through August 2018 (Attachment 3). This level of engagement, and this topic, are well-suited for forums and interactive engagement such as live polling and a telephone town hall. There will also be opportunities to “tag-team” outreach efforts with budget outreach and to utilize the online engagement platform Your|My|Our City. Staff plans to engage the Council Finance Committee and schedule Council work sessions in April, June, and July to develop this discussion and refine Council’s preferred direction. If Council opts to refer a measure to the November 2018 ballot the last meeting day to refer will be August 21, 2018. ATTACHMENTS 1. Sales Tax Data (PDF) 2. KFCG 2011-2016 Actual Spending (PDF) 3. Public Engagement Summary (PDF) 4. Powerpoint presentation (PDF) ATTACHMENT 1 1 KFCG 2011-2016 Actual Spending Construction/Maintenance $48,544,403 One-Time Project $173,128 Hourlies $114,978 Street Maintenance Ongoing Operations $18,812,566 Vehicle Replacement $1,192,198 New FTE $490,855 Police Services ATTACHMENT 2 2 Ongoing Operations $6,445,577 Equipment/Maintenance $5,234,253 One-Time Project $1,502,645 Construction/Maintenance $744,265 Study/Consultant $698,085 New/Special Program $604,639 ADA Compliance $574,564 Other Transportation Ongoing Operations $8,039,897 Equipment/Mainten ance $2,492,810 Construction/Maintenan ce… New/Special Program $970,407 Hourlies $636,580 Vehicle Replacement $365,852 New FTE $254,785 New Parks $227,835 ADA Compliance $212,448 One-Time Project $55,000 Parks & Recreation 3 New/Special Program $5,415,785 Ongoing Operations $4,732,405 One-Time Project $1,444,211 New FTE $772,031 Study/Consultant $643,414 Plan Update $300,000 Equipment/Maintenance $259,226 Technology $238,655 Other Community Priorities Ongoing Operations $14,492,143 Fire PUBLIC ENGAGEMENT PLAN PROJECT TITLE: KFCG EXPIRATION/RESOURCING FORT COLLINS OVERALL PUBLIC INVOLVEMENT LEVEL: COLLABORATE BOTTOM LINE QUESTION: What level of service at what price are Fort Collins residents willing to support? KEY STAKEHOLDERS: • Residents • Boards and Commissions • Downtown Business Association • Downtown Development Authority • Chamber of Commerce • Limited-English proficiency • Homeless and low-income families TIMELINE: January -August 2018 Phase 1: Inform/Involve Timeframe: January-March 2018 Key Messages: ▪ Education of what current level of resources provides and at what price ▪ Overview and analysis of City revenue/expenses o Base rate, which hasn’t been increased since the 80’s, hasn’t kept up with the rate of community growth o Dedicated taxes have covered the base rate gaps in core services o House in order: Price of government, budgeting at 98% of staffing, utilizing underspend, streamlined budget process, strategy maps, 2018 cuts (street maintenance) Tools and Techniques: ▪ Community Survey ▪ Strategic Planning Outreach Feedback ▪ Website ▪ OurCity Platform ▪ State of the City ▪ Graphs/Charts (General Fund & KFCG allocations, Sales tax rate comparisons, price of government chart) ▪ FAQs ▪ Public meetings ▪ Boards and Commissions ▪ Targeted outreach ATTACHMENT 3 PHASE 2: Involve/Collaborate Timeframe: April-June 2018 Key Messages: ▪ Seek questions regarding desired level of service, price of service, future funding of service o Is the City providing the right services? o What, if any, services should be funded from dedicated tax renewal? o What, if any, services should not be funded from dedicated tax renewal? o Is the base tax rate appropriate or should it be adjusted? ▪ Impacts that “doing nothing” will have on the community o Community commitments (365 Transit) ▪ Test options for how we fill the gap o Cut more services; if so, which ones? o Add new revenue; if so, what type and amount? Tools and Techniques: ▪ BFO Outreach ▪ Website/surveying (Our City) ▪ Q & A Documents/FAQs ▪ Public meetings/Interactive Polling ▪ Community Issue Forum ▪ Boards and Commissions ▪ Targeted outreach ▪ Telephone Town Hall ▪ City at a Glance ▪ City News ▪ Possible videos/bulletin boards ▪ Social Media/Spotlights PHASE 3: Inform/Involve Timeframe: July-August 2018 Key Messages: These messages will be developed at a later date. They will be focused on potential ballot language if that is direction the project goes. Tools and Techniques: ▪ Website/surveying ▪ Q & A Documents/FAQs ▪ Public meetings/Interactive Polling ▪ Community Issue Forum ▪ Boards and Commissions ▪ Targeted outreach ▪ Any video resources/bulletin boards ▪ City News ▪ Social Media/Spotlights January 9, 2018 Keep Fort Collins Great-Expiration Ginny Sawyer and Blaine Dunn ATTACHMENT 4 Direction Sought 1. Which options would Council like to pursue further? 2. Does Council support the proposed plan and timeline? 3. What financial information and narrative is most critical to Council? 2 Background  Since 1980, on-going sales tax rate = 2.25%  2008-2009 significant revenue shortfalls  Resourcing Our Future  Community conversations  1%-ongoing  Keep Fort Collins Great  .85%  10-year sunset (2011-2020) 3 Keep Fort Collins Great Breakdown: • 33% Street Maintenance and Repair • 17% Other Transportation Needs • 17% Police Services • 11% Parks and Recreation • 11% Poudre Fire Authority • 11% Other Community Priorities 4 Funding and Reporting Actual Spend 2011-2016 Street Maintenance 48,832,509 Other Transportation 15,804,028 Police Services 20,495,619 Parks and Recreation 14,382,703 Fire 14,492,143 Other Community Priorities 13,805,727  Annual project and spending reports  Annual organizational efficiency report 5 Council Finance  Decreasing the overall tax rate should be a consideration  Consider funding Police, Fire, and Streets needs through the general ongoing sales tax  Have one transportation category not multiple  Identify additional services/programs for dedicated tax  Is a mill levy something to consider? 6 Potential Funding Mechanisms 1. Renew KFCG either as is, at a different amount, and/or change the percentages of support. 2. Increase general ongoing sales tax rate. 3. Seek a Mill Levy 4. Other (taxes, fees, combinations) 7 Renewal Renew KFCG either as is, at a different amount, and/or change the percentages of support. 8 PROS CONS  Renewal is a clear and understandable message to voters.  KFCG is meeting current needs.  Leaves many core on-going core services subject to an expiring funding source. Increase On-going Tax Rate % Increase Needed Streets 0.24 Police 0.13 Fire 0.08 Other Transportation 0.14 P & R 0.09 Other Priorities 0.09 9 Streets, police, and fire equal .45% .45% increase brings the total tax rate from 2.25 to 2.70 Increase On-going Tax Rate CONS:  General on-going sales tax is collected on groceries.  This scenario does not account for needs within Parks, Other Transportation and Other Community Priorities. 10 PROS:  Puts on-going core services under a more sustainable funding source.  Potential for fewer tax measures going to the voters.  Tourists and visitors contribute. Seek a Mill Levy CONS:  Only property owners contribute 11 PROS:  Puts on-going core services under a more sustainable funding source.  Potential for fewer tax measures going to the voters. Looking Ahead “What is the community’s desired level of service and what are the funding options to achieve that level of service?” Engagement Level: Collaborate Timeline: January-August 2018 Target Election: November 2018 12 Proposed Timeline 13 Dec Jan Feb Mar Apr May Jun Jul Aug Nov Initial financial analysis & scenario building Ongoing option analysis OurCity Page Community Outreach Work Session CFC Work Session CFC Work Session Work Session Council referral Election Direction Sought 1. Which options would Council like to pursue further? 2. Does Council support the proposed plan and timeline? 3. What financial information and narrative is most critical to Council? 14