HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 08/14/2018 - CITY MANAGER'S 2019-20 RECOMMENDED BUDGETDATE:
STAFF:
August 14, 2018
Darin Atteberry, City Manager
Mike Beckstead, Chief Financial Officer
Lawrence Pollack, Budget Director
WORK SESSION ITEM
City Council
SUBJECT FOR DISCUSSION
City Manager’s 2019-20 Recommended Budget.
EXECUTIVE SUMMARY
The purpose of this item is to review the economic, revenue and expense assumptions included in the 2019-20
City Manager's Recommended Budget, which will be delivered to City Council and be available to the public
before September 3, 2018. This work session will also provide an overview of the major 2019-20 budget themes
and the Council budget meeting schedule during September through November.
GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED
1. What questions does City Council have about the budget assumptions which are being included in the
Recommended Budget?
2. What questions does City Council have regarding the proposed schedule for discussion of the Recommended
Budget?
BACKGROUND / DISCUSSION
Budgeting for Outcomes (BFO) Process Status
The 2018 budget process, called Budgeting for Outcomes (BFO), began with the completion of the City’s 2018
Strategic Plan and its adoption by City Council on April 17. The Strategic Plan outlines strategic objectives to be
accomplished by budget proposals (offers) included in the 2019-20 Recommended Budget. Each Budget Offer
aligns with one or more strategic objectives in the 2018 Strategic Plan.
The City Manager’s Recommended Budget is in the process of being finalized and published. It will reflect a
balance of ongoing programs and services with enhancements that directly address Council priorities and the
strategic objectives in the City’s 2018 Strategic Plan. The City Manager’s 2019-20 Recommended Budget will be
delivered to City Council and be available to the public before September 3, 2018.
Budget Assumptions
The City Manager’s Recommended Budget is being developed on these key assumptions:
• Address the Strategic Objectives outlined in the adopted 2018 Strategic Plan
• Focus on City Council and community priorities
• Continue the high level of service expected by the community
The overall City of Fort Collins economy is growing in population; however, the City revenue growth rate is
declining, and overall City revenue has been fairly flat over the last several years. The City organization is in a
good financial position with healthy fund balances. Sales tax revenue is forecasted to grow at 3% each year, while
Use Tax revenue is expected to decline slightly (from $22M in 2018 to $21M and $20M in 2019 and 2020
respectively) based on less development and business investment. In addition, less one-time funding is available
in this budget than prior budgets because recent revenue forecasts and budgets have been closer to actuals
August 14, 2018 Page 2
resulting is less funding flowing into reserves at year end to be used in the next budget cycle. Staff reviewed
assumptions with the Council Finance Committee (CFC) on May 21.
City staff monitors all revenue sources carefully and utilized the most current information available to set 2019-20
projected revenues. Additionally, the Utilities Funds proposed rate changes will be discussed during the Council’s
budget review process.
Significant cost demands to support key services have also contributed to a challenging budget. Modest revenue
growth, less one-time funding availability, and the significant cost demands required the Budget Lead Team to
develop a Strategic Cost Reprioritization plan to allow funding of ongoing key services and several critical
additional services to support community growth.
The City Manager’s Recommended Budget is built around several key themes:
• Public Safety and Police Staffing
• City Assets and Infrastructure
• Sustaining Current Levels of Service
• Continued Energy Efficiency Efforts
• Investing in our Work Force
• Keeping up with Growth
City Council Budget Meetings
The City Council has a series of work sessions scheduled in September and October to discuss the proposed
2019-20 Recommended Budget. Each work session will include staff presentations regarding specific Outcomes
and funded initiatives, followed by an opportunity for questions and discussion.
Remaining key dates for City Council discussions and public hearings are as follows:
Meeting Date Topic
September 11, 2018 Work Session Presentations, Questions and Discussion:
1. Neighborhood Livability and Social Health
2. Culture and Recreation
3. Safe Community
4. Economic Health
September 18, 2018 Regular Meeting Budget Public Hearing #1
October 2, 2018 Regular Meeting Budget Public Hearing #2
October 9, 2018 Work Session Presentation, Questions and Discussion:
5. Environmental Health
6. Transportation
7. High Performing Government
October 16, 2018 Work Session General Discussion - Final Council Direction
November 6, 2018 Regular Meeting First Reading of the 2019-20 Biennial Budget and
the 2019 Appropriation Ordinance
November 20, 2018 City Council Meeting Second Reading of the 2019-20 Biennial Budget
and the 2019 Appropriation Ordinance
ATTACHMENTS
1. PowerPoint Presentation (PDF)
1
2019-20 Budget Preview
August 14, 2018
ATTACHMENT 1
2
Budget Process
Net City Budget = $490M in 2018
• Police Services & Poudre Fire Authority
• Parks, Recreation, Cultural Services, Natural Areas
• Planning, Development, Transportation, Streets, Transit
• Sustainability Services – Economic, Environmental, Social
• Administrative – City Manager, City Attorney, HR, Finance, IT
• Light & Power
• Water
• Wastewater
• Stormwater
• Broadband
The Process
Mar Apr May Jun Jul Aug Sep Oct Nov
Budget Time Line & Process
Strategic
Plan
Finalized
Budget Proposals Developed
BFO Teams Evaluate & Rank
City Manager & Ex
Team Evaluates
& Modifies
Council Discussion
Public Hearings
Budget Adoption
Strategic Objectives
become the basis for
Ranking Budget
Proposals
Staff develops
Budget Proposals to
achieve Strategic
Objectives
BFO Teams (staff &
residents) rank
proposals
Executive Team input
to align with Strategic
Plan, Council Work
Plan & City Priorities
City Manager’s
Recommended Budget
Presented to City
Council August 31st
We Are Here
Finalize Budget
Adopted by the end of
November
3
Budget Review
• Budget Assumption
• Budget Themes
• Strategy Map &
Dashboard Review
4
August September October November
14th 11th
• General Discussion
and final guidance
9th
• Neighborhood &
Social Health
• Culture & Rec
• Economic Health
• Safe Community
6th
1st Reading
20th
2nd Reading
16th
• Enviro Health
• Transportation
• High Performing
Government
18th 2nd
• Budget
Public
Hearing
• Budget
Public
Hearing
Strategic Plan Defines Objectives to be Accomplished
• Requested innovative proposals consistent with Strategic Plan
Challenging Choices
• Flat to Modest Revenue Growth, less One-Time Funding Available
• Significant Cost Issues and Funding Priorities
• Significant Stop Doing & Reductions Included
Recommended Budget
• Addresses the Objectives outlined in the 2018 Strategic Plan
• Reflects Council and community priorities
• Continues high level of service expected by the community
5
Budget Overview
6
Macro Indicators &
Assumptions
Price of Government
7
Price of Government has been relatively flat since 2013
6.6 6.5 6.4
6.3 6.3
6.6
6.2 6.0
5.6
5.3 5.3
5.7 5.8
5.6 5.6 5.4 5.4
5.5 5.5
-
1
2
3
4
5
6
7
8
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Cents
(cents of every dollar earned going to pay for City services, including utilities and golf)
2017-2018 Estimated
Sales Tax Rate Comparison
8
Total Fort Collins Sales Tax Rate in the Bottom Third
Electric Cost Comparison
9
Fort Collins Electric Rates Very Competitive
SANGRE DE CRISTO
SAN LUIS VALLEY REA
ESTES PARK
BLACK HILLS ENERGY
DELTA‐MONTROSE EA
SAN ISABEL
TRI‐COUNTY
SE COLORADO PA
GUNNISON COUNTY EA
EMPIRE EA
MOUNTAIN VIEW EA
LA PLATA
MOUNTAIN PARKS EI
GRAND VALLEY RPL
INTERMOUNTAIN REA
UNITED POWER
POUDRE VALLEY REA
COLORADO SPRINGS
HOLY CROSS EA
FOUNTAIN
FORT COLLINS ‐ 2019
LOVELAND
FORT COLLINS ‐ 2018
MOON LAKE
LONGMONT
$‐
$20
$40
$60
$80
$100
$120
$140
Residential Electric Cost Comparison
(700 kWh per month)
2018 Monthly Utility Cost Comparison
10
Overall, Utility Costs in the Middle Compared with Neighboring Communities
Total Revenue
11
Overall, Relatively Flat Revenue Since 2016
Cost Assumptions
2019 2020
General Inflation 2.3% 2.3%
Salary Adjustments 3.0% 3.0%
Medical and Dental Costs 10.2% 11.4%
Gas Prices $2.51 $2.71 / gallon
Retirement 403/457 Contributions No Change
GERP Supplemental Contribution $1.1M $1.1M
Budget Staffing at 98% of Total Cost
12
Moderate Inflation, Compensation Tied to Market, Modest Benefit Cost Increase
Utility Rate Assumptions
13
Utility Rate Increase Supports Operating Income and Capital Needs
Rate Changes:
Actual Actual Budget Budget
Utility 2017 2018 2019 2020
L&P 3.45% 1.8% 5.0% 5.0%
Water 5.0% 5.0% 0.0% 0.0%
Wastewater 3.0% 3.0% 0.0% 0.0%
Storm Water 5.0% 0.0% 2.0% 2.0%
Note: Additional 0.7% L&P optional rate increase for CAP opportunities to be discussed
14
2019-20 Budget Details
Sales & Use Tax Revenue
15
* Excludes Use Tax – Economic Incentives
Combined Sales & Use Tax Revenue Growth has Leveled Off Last 4 Years
General Fund Ongoing Revenue
16
• Modest Sales Tax growth - 3%
• Flat/Declining Use Tax
• $21M & 20M for 2019-20
• Property Tax up 11% 2018 &
2% 2019 – 68% goes to PFA
• PILOTs up 3.3%
• Other Revenue Up
3% Sales Tax Growth, No Growth in Use Tax….Limited Ongoing Revenue
2018 2019
$
Change
%
Change
Total GF Ongoing Revenue $122.8 $128.9 $6.1 5.0%
Plus: PT 2018 One‐Time 1.7
Less: PFA IGA (1.9)
Net New GF Ongoing Revenue $5.9 4.8%
Significant Demands on Available
General Fund Ongoing Revenue
17
Excludes Significant PFA Cost Changes Use All New General Fund Ongoing Revenue
* Projects include 1) Police Training Facility, 2)Prospect & I-25 Interchange and 3) Lemay Realignment – Debt Service increases to $1.9M in 2020
Available GF Ongoing Revenue $ 5.9
2017/18 Enhancement Offers to ongoing funding 1.3
Debt Service for 3 Capital Projects* 1.2
3.5% Salary Adjustments 1.6
Benefits Cost Increase 1.2
Hourly Classification Changes & SSRM Allocation 0.6
Off Cycle Position (Primarily Development Review) 1.0
Police Overtime to Offset Staff in Training 0.3
Subtotal 7.2
Available After Significant Demands $ (1.3)
One‐Time Revenue
18
More Accurate Forecasts & Tighter Budgets….Less One Time Revenue Available
• One-Time Available
• $36.2M in Prior Budget
• $20.4M in Current Budget
• Recommended Budget
includes partial use of
Revenue Contingency
- $2.2M Remaining
• Develop Revenue
Contingency Plan by year-
end for review with the
Council Finance Committee
($ millions) 2017 2018 2019 2020
Funding Opportunities Included:
General Fund
Use Tax Above Base $4.4 $4.4 $3.8 $3.2
Use Tax AbovePrior Year Budget (reserves) 4.4 0.0 1.4 0.0
Property Tax 0.0 1.4 0.0 0.0
Allocated Reserves 3.6 5.4 2.0 4.0
Total General Fund $12.4 $11.2 $7.2 $7.2
KFCG
Use Tax Above Base $1.7 $1.7 $1.4 $1.2
Allocated Reserves 5.7 3.6 1.7 1.5
Total KFCG $7.3 $5.3 $3.1 $2.7
19
Public Safety Budget History
Public Safety Budget Requires Greater Percentage of Overall Budget
Strategic Cost Reprioritization
Cost Implications ($ Millions)
• Cost Reprioritization and Stop Doing $ 1.8
• Defer Vine/Lemay Intersection Improvements 0.8
• PFA Deferred Contribution 0.5
• Conservation Trust Utilized for Park Maintenance 0.4
• Change Salary Adjustment to 3.0% 0.5
• Street Maintenance (maintain standards but fund safety) 0.7
$ 4.7
Staffing # of Positions
• Open positions not filled 5
• Additional attrition planned 4
9
20
Strategic Cost Reprioritization Used to Fund Service and Growth Needs
Broadband
Broadband Included within 2019-20 Budget
• Broadband Start-up - Selling, General & Administrative for each year
• Phone Cost of Goods Sold in 2020 as ramp up begins
• Video service and cost of goods sold to be added later
• Capitalized interest payments of $5.8M each year
Broadband not Included within the 2019-20 Budget
• Capital Costs for Construction of the Network – appropriated at bond issuance
• Debt service associate with broadband bonds – debt service begins in 2021
21
Broadband Financial Details Will Be Discussed August 21st
& 28th
22
2019-20 Budget Themes
Major Themes with 2019‐20 Budget
23
• Public Safety and Police Staffing
• City Assets & Infrastructure
• Sustaining Current Levels of Service
• Continued Energy Efficiency Efforts
• Investing in our Work Force
• Keeping up with Growth
24
• Police Patrol Staffing & Overtime
• Police Training Facility Financing
• Additional Staffing & Systems in Muni Court
& City Attorney Office
• Continued Code Compliance Resources
• Safe Routes to Everywhere
• Poudre Fire Authority
City provides $500k of in kind services for
accounting, HR and IT
Strategic Objectives:
• 1.5 Foster positive and respectful neighbor
relationship and open communication
• 1.6 Protect and preserve the quality of life in
neighborhoods
• 5.1 Improve community involvement, education and
regional partnerships to increase the level of public
trust and keep the community safe
• 5.2 Meet the expected level of core and specialized
police services as the community grows
• 5.3 Partner with Poudre Fire Authority to provide
high-quality fire prevention, community risk reduction
and emergency response services
Public Safety & Police Staffing
25
• I-25 Prospect Overpass
• City Bridge Program
• Street Maintenance Program
• Street & Intersection Improvements
• Pedestrian Sidewalk Improvements
• Neighborhood & Community Park Development
• Stormwater Design & Improvements
• Light & Power Feeder Capacity
• Water & Wastewater Project Designs
• Broadband Operational Launch
Strategic Objectives:
• 3.5 Maintain utility systems, services,
infrastructure and predictable rates
• 3.7 Deploy reliable, high-speed internet services
throughout the community
• 4.6 Provide a reliable, high-quality water supply
• 6.1 Improve safety for all modes of travel
• 6.4 Support, enhance and accelerate I25
improvements according to the multi-model
environmental impact statement
• 6.6 Maintain Level of Service ‘B’ for City streets
and the current level of service for medians and
associated infrastructure
City Assets & Infrastructure
26
Strategic Objectives:
• 1.7 Guide development through community
planning, historic preservation, and efficient and
effective development review
• 2.1 Develop recreational and cultural programs
with pricing and marketing strategies that drive
value, attendance and cost recovery
• 2.2 Plan, design, implement and maintain the
City’s parks and trail systems
• 5.7 Reduce incidents of, and impacts from,
disruptive behavior of the transient population
• 7.1 Provide world-class municipal services to
residents and businesses
Sustaining Current Service Levels
• Improved Development Review Process
• Homeless / Transient Initiatives
• Graffiti Program / Humane Society Services
• Parks Maintenance & Staffing
• Additional Staff Spring Creek Gardens
• Police Staffing & Overtime
• Street Maintenance Program / Snow & Ice
• Business Outreach & Engagement
27
Strategic Objectives:
• 4.1 Achieve Climate Action Plan (CAP) 2020 goals
and continue progress toward the 2030 goals
• 4.4 Achieve the 2020 Road to Zero Waste goals
and work toaward the 2030 zero waste goals
• 4.8 Protect and enhance natural resources on
City-owned properties and throughout the
community
• 4.10 Expand the Natural Areas land portfolio while
simultaneously maintaining existing lands and
access to nature
Energy Efficiency /
Environmental Enhancements
• Energy Services Programs
• Core Renewable Energy/Efficiency Programs
• Wastewater Carbon Reduction
• Pollution Control & Water Quality Lab Design
• Natural Areas Projects
• Household Hazardous Waste Program
• Stream Rehabilitation Program
• CAP Plan Update
• CAP Opportunity Package
28
Investing in the Work Force
Strategic Objectives:
• 5.6 Optimize the use of data and technology to
improve service, protect mission-critical
infrastructure and enhance cybersecurity
effectiveness
• 7.1 Provide world-class municipal services to
residents and businesses
• 7.2 Promote a values-driven organizational
culture that maintains the public trust through
ethical behavior and transparency
• 7.4 Attract, retain, engage, develop and reward
a diverse and competitive workforce to meet the
needs of the community now and in the future
• Market Based / Competitive Salary
• Competitive Benefits with Appropriate Cost Share
• Leadership Development Programs
• Fall Protection / Arc Flash – Safety Programs
• Safety, Security, Risk Management Support
• FC Lean
• Technology & Systems
• Classification Changes
29
Keeping Up with Growth
Growth Impact and Cost Drivers
• Sales & Use Tax Revenue Supporting General Fund & KFCG – Flat to Modest Growth
• Public Safety Costs Increasing as a Total Percentage of Governmental Spend
• Police and Fire Staffing & Capital Needs Increasing Greater Than Revenue
• Park & Street Median Design Standards Increasing Maintenance Costs
• Expanded Facilities & Serivces Increasing Support Costs
Next Steps:
• Review & Assessment of Service Levels & Design Standards
• State Transportation Funding Opportunity
• Longer Term Alignment of Revenue & Cost
2018 Council Budget Meetings
September 11th
Work Session • Neighborhood Livability and Social Health
• Culture and Recreation
• Economic Health
• Safe Community
October 9th
Work Session • Environmental Health
• Transportation
• High Performing Government
September 18th
Council Meeting • Budget Public Hearing #1 of 2
October 2nd
Council Meeting • Budget Public Hearing #2 of 2
October 16th
Work Session
(after Council Meeting)
• General Discussion – Final Council Direction
November 6th
Council Meeting • First Reading
November 20th
Council Meeting • Second Reading
31
2019-20 Budget Preview
Back-up Slides
Allocation to Outcome Methodology
32
Excludes Funding PFA Allocations Match to Strategic Objectives and Change Over Time
• Strategic Plan & Objectives guide where Offers are aligned
• After round 1 of Offer submittal, available funding is allocated across
all Outcomes based on:
• Available funding allocated based on funding source restrictions
• Available Ongoing funding allocated to fund Ongoing Offers first
• Available 1-time funding initially allocated as a % of Ongoing Offers
• During Budget Lead Team Discussions, funding is moved between
Outcomes to fund highest priority initiatives
Sales & Use Tax ‐ Revenue Assumptions
33
Sales Tax Up 3% Each Year 2019/2020, …Use Tax of $21M & 20M 2019/2020
($ millions)
2014
Actual
2015
Actual
2016
Actual
2017
Actual
2018
Forecast
2019
Budget
2020
Budget
Sales Tax
Sales Tax $101.0 $105.6 $109.3 $111.8 $114.5 $114.5 $117.9
Growth: 3% in 2019, 3% in 2020 3.4 3.5
Sales Tax Revenue $101.03 $105.61 $109.27 $111.79 $114.50 $117.94 $121.47
Use Tax *
Use Tax (On-going) $14.5 $14.5 $14.5 $14.5 $14.5 $14.5 $14.5
Use Tax (One-Time) 11.9 14.5 12.2 9.0 7.5 6.5 5.5
Use Tax Revenue $26.4 $29.0 $26.7 $23.5 $22.0 $21.0 $20.0
* Excludes Use Tax Economic Incentives
Sales & Use Tax Revenue
34
Sales Tax Revenue Growth has Also Leveled Off Last 5 Years
* Excludes Use Tax – Economic Incentives
Sales Tax History
35
Use Tax* History
36
* Excludes Use Tax – Economic Incentives
37
Example: On-Going Budget Comparison
Staff & BFO Teams Review Core Offers in Detail
Budget 2017 FTE Budget 2018 FTE
% Inc.
(Dec.) Budget 2019 FTE
% Inc.
(Dec.) Budget 2020 FTE
% Inc.
(Dec.)
NET ONGOING BUDGET (total including additions - 2018 includes only ongoing portion of enhancements)
Personnel Services $1,081,930 7.15 $1,137,479 7.15 5.1% $1,178,180 8.15 3.6% $1,225,766 0.00 4.0%
Other than Personnel Services $760,614 $806,421 6.0% $903,881 12.1% $915,176 1.2%
Total Ongoing Budget $1,842,544 $1,943,900 5.5% $2,082,061 7.1% $2,140,942 2.8%
Personnel Services $1,063,930 7.15 $1,103,579 7.15 3.7%
Other than Personnel Services $743,614 $738,713 -0.7%
Total Ongoing Budget $1,807,544 $1,842,292 1.9%
ENHANCEMENT: Expansion of Downtown Maintenance
Personnel Services $18,000 0.00 $33,900 0.00 88.3%
Other than Personnel Services $17,000 $72,000 323.5%
Total Ongoing Budget $35,000 $105,900 202.6%
REDUCTION: Fuel Savings ($4,292)
Significant Programmatic Changes to Operations (ex. increased workload, policy changes, etc.) - include data if available - 7
1. Utilities will no longer allow Parks to turn off water account billings during the off season. This will increase the water budget by $11,500 in 2019 and 2020.
2. This offer includes conversion of one year round hourly position to a Park Technician.
3. Parks is assuming responsibility for landscape maintenance at the Police Building from Op Services in 2019.
Parks: Downtown
Landscaping and Maintenance
ORIGINAL ONGOING OFFER Original Budget
Plus Ongoing Enhancements
Other AdjustmentS
Example
38
Reflects Prior Year Use of 1-Time for Enhancements Shifting to Ongoing
Parks Total Funding All Sources
2019 Total Parks Offers $ 14,592.5
2018 Total Parks Offers 14,065.8
Funding $ Increase $ 526.7
Funding % Increase 3.7%
Parks Enhancements & Funding Shifts
# Enhancements & Exception Incl 7
$ Enhancements & Exception Incl $ 1,361.5
Reduction in 1 Time Funding $ (592.00)
Increase in GF Ongoing Funding $ 984.00
39
Public Safety Budget History
Public Safety Budget Requires Greater Percentage of Overall Budget
40
PFA Budgets History
PFA Revenue Estimates Exceed IGA Revenue Forecast Significantly
Historical Budgeted Use of Reserves
41
Fund 2013 2014 2015 2016 2017 2018 2019 2020
General Fund $4.0 $4.9 $6.2 $6.2 $6.2 $5.1 $3.4 $4.0
Capital Expansion 2.3 0.1 6.6 1.1 - - - 1.4
KFCG 2.6 0.9 2.7 2.8 5.2 4.8 1.7 1.5
Neighborhood Parkland 0.8 1.1 - - 0.8 1.2 1.4 -
Natural Areas 0.4 - 0.2 - 0.6 1.3 0.3 -
Transit 0.1 0.1 0.5 0.6 0.4 0.4 0.1 -
Street Oversizing - - - - 0.9 1.1 5.4 0.2
Transportation 0.6 0.2 1.3 0.5 1.4 2.8 2.2 2.6
L&P 6.3 7.1 6.1 8.2 9.5 4.5 0.3 -
Water 3.2 4.6 - 7.4 1.1 1.0 - -
Wastewater 1.5 0.7 - 3.5 1.3 6.8 - -
Stormwater - - 1.4 0.1 1.3 1.1 - -
Self Insurance 0.6 0.6 0.3 0.3 - - 0.0 0.1
Data & Communications 0.5 - 0.3 0.2 1.7 0.2 0.9 0.5
Benefits 1.7 1.6 0.2 0.2 - - - 0.6
CSA 0.7 0.7 0.4 0.5 - 0.1 0.3 0.2
All Other Funds 4.8 0.8 2.7 1.2 1.7 1.7 2.6 0.9
Grand Total $30.1 $23.5 $28.8 $32.7 $32.1 $32.1 $18.6 $12.0