EXECUTIVE SUMMARY THE FY09 ADOPTED AND FY10 APPROVED TO THE FY08 AMENDED BUDGETS BALANCING SUMMARY

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1 THE FY09 ADOPTED AND FY10 APPROVED TO THE FY08 AMENDED BUDGETS BALANCING SUMMARY The FY09 budget continues to hold the line on governmental growth and spending. Departments were directed to submit as conservative a budget as possible while maintaining existing service levels. The FY09 Adopted Budget reflects a maintenance level for general government operations and maintains core functions and services. The largest financial issue that has been facing the CBJ, and many local governments in Alaska, over the past 5 years has been the Public Employees Retirement System s (PERS) unfunded liability. In 1999 through the early 2000 s, the small surplus being reported by PERS changed to a very large unfunded liability by FY04. In responding to this liability, the State annually increased employer contribution rates. In FY04, our employer contribution rate was 6.22%. Initially local governments participating in the PERS were told that contribution rates needed to increase, on average, from the mid 6% range to approximately 28%. This rate was later revised upwards gradually climbing to over 40%. In 2008 s legislative session, the Legislature adopted legislation (SB125) that caps the local government employer contribution rate at 22%. The adoption of SB125 will have a significant positive impact on the CBJ s ability to balance our future operating budgets without significant service decreases and/or property tax increases. The second largest financial impact to the CBJ s general governmental operations has been operating support for education. The Assembly has consistently supported local funding for the School District s general operating fund to the maximum amount allowed under the State s funding formula. Under this formula, local governments are required to contribute 4 mills of full and true value plus they can optionally fund an additional 23% above Basic Need. Full and True Value is the total amount of property, both real and personal, that the CBJ can assess for taxation including optionally exempted property. The CBJ required contribution for FY09 is $13.74 million. The District requested an additional $11.19 million in funding ($10.39 million for general operations and an addition $805,000 for other programs). The School District s total funding requests for FY09 and FY10 are $24.93 million and $25.64 million. These are increases of $1.96 million and $2.67 million over FY08 s funding level. The FY09 Adopted and FY10 Approved budgets fully fund the amounts requested by the School District for their general operations ($24.13 million and $24.94 million). Funding for programs outside of general operations (youth activities, after school activity buses and transport of homeless students) are funded at $270,000 in FY09 and $474,000 in FY10. While we have experienced some increases in operating costs, we have also experienced some significant revenue increases as well. The major revenue sources helping us fund this year s additional operating costs are - Funding Sources FY09 Change from FY08 FY10 Change from FY08 Revenues: State Revenue Sharing (exc. debt reimb.) $ 305,700 $ 305,700 Federal PILT (57,700) 481,800 Property Tax (excluding debt) 965, ,500 Sales Tax Current Year 3,663,800 4,786,700 Interest Income 398, ,900 Miscellaneous * 147, ,400 Total Current Year Revenue Increases $ 5,423,100 $ 6,864,000 *The miscellaneous category includes income from various sources such as penalties and fines, user fees, grants, transfers from other funds and permit sales. It is important to note that while State Revenue Sharing amounts noted above only shows an increase of $305,000, the State legislature adopted, and the Governor signed, legislation (SB72) that implements a permanent Community Revenue Sharing program. This program will provide up to $60 million dollars per year for local general governmental support. The CBJ is expecting to receive approximately $2 million per year under this program. 15

2 The following is a list of the departments or functions (general governmental areas) partially or fully funded with general tax dollars: Mayor and Assembly Manager's Office Community Development Management Information Systems Bartlett Regional Hospital (Rainforest Recovery Center) BUDGET COMPARISONS Capital Transit Centennial Hall Clerk and Elections School District Eaglecrest Finance General Engineering Law Libraries Capital City Fire/Rescue Parks and Recreation Human Resources Police Streets The schedule shown below is a summary comparison of the changes between the FY08 Amended Budget, the FY09 Adopted and FY10 Approved Budgets. You will find additional budgetary change details included in each departmental budget sections under the title Budget Highlight. FY08 FY09 FY10 Amended Adopted % Change Approved % Change Funding Sources: State Support (Note 1) $ 55,719,000 61,277, ,253, Federal Support (Note 2) 10,707,600 9,077,600 (15.22) 9,617, Taxes (Note 3) 79,017,700 85,851, ,086, User Fees, Permits & Donations (Note 4) 100,814, ,939, ,928, Penalties & Fines 975,300 1,124, ,128, Interest-Investment and A/R (Note 5) 5,954,300 6,128, ,308, Property Sales and Rents 4,538,200 4,391,300 (3.24) 4,325,700 (1.49) Bond Proceeds (Note 6) 10,927, Special Assessments (LIDS) 69,900 79, ,600 (14.65) Other Miscellaneous Revenue 395, ,000 (69.37) 121,000 - Fund Balance Usage (Contribution) 439,300 8,587, ,400 (0.92) Total Funding Sources $ 269,558, ,577, ,516, Expenditures: General Government, City (Note 7) $ 57,619,900 59,143, ,650, General Government, School District (Note 8) 79,253,700 83,169, ,906, Non-Board Enterprise (Note 9) 12,819,400 13,157, ,479, Board Controlled (Note 10) 79,078,100 87,755, ,364, Internal Service Funds (Note 11) 2,013, ,000 (58.17) 1,168, Debt Service (Note 12) 14,003,400 18,543, ,823, Capital Projects (Note 13) 24,044,000 27,238, ,418,300 (14.03) Special Assessments 227, ,200 (0.44) 206,400 (8.75) Special Appropriations 500, , ,000 - Total Expenditures $ 269,558, ,577, ,516, See below and on the following page for differences to note when comparing the FY08 Amended, FY09 Adopted and FY10 Approved Budgets. 1. State Support The FY09 Adopted Budget includes State Support of $5.7 million to the Juneau School District due to an increase in the factors used to determine State Foundation Funding. Another increase is $3.3 million in State s School Construction Bond Debt Reimbursement Program (SCBDRP) funding. The SCBDRP funding increase is due to the issuance of qualifying new high school general obligation bonds. Offsetting these increases is a decrease of $2.9 million in the State grants that support education. The increase between the FY09 Adopted and FY10 Amended Budgets is primarily due to a continued increase of $1.7 million in State Foundation Funding. 16

3 2. Federal Support The decrease between the FY08 Amended and FY09 Adopted Budgets is due primarily to a Federal grant received in FY08 to purchase new buses for the City s mass transit system. The increase between the FY09 Adopted and FY10 Approved Budgets is due to an increase in payment in lieu of taxes of over $500, Tax Revenues This includes $1.5 million increase in property taxes and $5.2 million in increased sales and excise tax revenues between the FY08 Amended and FY09 Adopted Budgets. The increase in property tax is a result of increases in assessed values due to a combination of decreases in residential property offset by increases in commercial property plus new construction, a decrease of 0.10 mills in the operational mill levy and an increase of 0.10 mills in the debt mill levy (due to repayment of general obligation debt), with the net result of no increase in the overall mill levy. General sales tax revenues are projected to increase by approximately $5.2 million over the FY08 Amended. This amount includes sales tax revenues used for capital improvement projects. For additional property assessment and taxation information see the Property Assessment and Taxation section. 4. User Fees - Increases in user fees of over 13% between the FY08 Amended and FY09 Adopted Budgets is primarily due to Bartlett Regional Hospital ($11,330,500 increase) and the continuation of the Port Development Fee ($1,170,900), which had originally been scheduled to sunset March 31, Interest-Investment and A/R Interest rates have been steadily increasing and this is reflected in the adopted and approved budgets. 6. Revenue Bonds - The Harbor Enterprise operations issued revenue bonds to fund the purchase of DeHart s Marina, construction of a commercial loading facility at Auke Bay, pay for major deferred maintenance of Juneau s harbors and installation of electricity at Statter Harbor. 7. General Government, City The increase between the FY08 Amended and FY09 Adopted Budgets is the result of multiple changes including, but not limited to, increased energy costs, increased personnel costs including health care costs and multiple position upgrades, and short term funding for assistance associated with the implementation of the new financial and lands management core software. 8. School District - The increase between the FY08 Amended and FY09 Adopted Budget is due to increased State s per student allocation, school district area cost differential and intensive needs student cost factor. The increase between FY09 Adopted and FY10 Approved is due to an additional increase in the State s per student allocation, area cost differential and intensive needs cost factor. 9. Non-Board Enterprise - This increase is due to increases in all the non-board enterprise funds, Waste Management and the Water and Sewer Utilities funds. 10. Board Controlled This increase is primarily due to increases for Bartlett Regional Hospital operations. 11. Internal Service Funds - These are internal City operations that are fully self-funded. It includes Risk Management and Fleet operations (both maintenance and replacement). The difference between the FY08 Amended and FY09 Adopted Budgets is due to a decrease in anticipated purchases through the Equipment Replacement (Fleet) Fund. The increase between the FY09 Adopted and FY10 Approved Budgets is due to an anticipated increase in health care costs. 12. Debt Service - This change is due to projected increases in debt service requirements for general obligation school bond issues. FY09 is the beginning of repayment of GO School Bonds for a new valley high school issued in FY08. The increase between the FY09 and FY10 is due to the beginning of repayment of GO bonds for the new swimming pool. 13. Capital Projects - The capital projects increase between FY08 Amended and FY09 Adopted is the result of increased funding from sales tax (for general and special capital projects), Wastewater and Water Utility Enterprise Funds. The decrease between FY09 Adopted and FY10 Approved Budgets is due no Wastewater Utility projects in FY10 and to the expiration of a temporary 1% sales tax levy that was used to fund a variety of specific capital projects (Downtown Parking and Transit Center, Statter Harbor improvements, Areawide Sewer expansion, and the Eaglecrest Ski Area mid-mountain chairlift). 17

4 STAFFING CHANGES The FY09 Adopted Budget includes funding for 1, Full Time Equivalent (FTE s) positions. The FY09 Adopted Budget staffing is 7.36 FTE's more than the FY08 Amended staffing level. The increase consists of an increase of 1.52 FTE's in the General Fund, excluding General Engineering an increase of 2.24 FTE s in the Special Revenue Funds, excluding the School District an increase of 7.70 FTE's in the School District an increase of 0.47 FTE s in the Enterprise Funds, excluding Bartlett Regional Hospital a decrease of 5.80 FTE s for Bartlett Regional Hospital an increase of 0.75 FTE s in the Internal Service Funds an increase of 0.20 FTE s in Capital Project Engineering a redistribution of 0.02 FTE s between General Engineering and Capital Project Engineering a redistribution of FTE s between PW Admin, Streets, Fleet Maintenance, Waste Management and the Water Utility. Total FTE staffing changes and a reconciliation between FY08 Adopted Staffing, FY08 Amended, FY09 Adopted and FY10 Approved Staffing are shown below. (A complete staffing summary by department is contained in the "Summary of Staffing" schedule.) FTE FY08 Adopted Staffing, referenced in full time equivalent positions (FTEs) 1, FY08 General Government and Enterprise midyear staffing changes (Note 1 below) FY08 School District increases FY08 Amended Staffing, referenced in full time equivalent positions (FTEs) 1, FY09 General Government and Enterprise increases (Note 2 on the following page) 8.25 FY09 General Government and Enterprise decreases (Note 3 on the following page) (8.59) FY09 School District increases 7.70 FY09 Adopted Staffing, referenced in full time equivalent positions (FTEs) 1, FY10 General Government increases (Note 4 on the following page) FY10 General Government decreases (Note 5 on the following page) (1.50) FY10 Approved Staffing, referenced in full time equivalent positions (FTEs) 1, (1) FY08 General Government and Enterprise Midyear Staffing Changes FTE Docks and Harbors: Staffing increased due to increased security needs Airport: The Airport underwent a staff reorganization with the addition and deletion of several 2.33 positions to better serve the needs of Airport customers. Human Resources and Risk Management: During FY08, these departments were combined and a previously unfilled position was reinstated. Eaglecrest: Eaglecrest management adjusts staffing on a continuing basis as conditions change in (1.07) order to provide the most cost effective service. Bartlett Regional Hospital (BRH): This increased staffing is due to the need to serve additional patients. BRH adjusts staffing based on need throughout the year. Streets: Reclassification within the Equipment Operation group resulted in a net increase of FTE. 18

5 FY08 General Government and Enterprise Midyear Staffing Changes, continued Police: Four 0.25 FTE Police Reserve Officer have been added to provide downtown foot and bike patrol during the summer tourism season. Capital City Fire Rescue: There is a significant increase in the number of requests for basic life 1.68 support transports during the summer tourism season. EMTs have been added to provide for this need. Community Development: Temporary staff was added to assist with the implementation of the new 1.50 lands management core software. Total FY08 Midyear Staffing Changes (2) FY09 Increases FTE Fleet Maintenance: Increased Mechanic I position from 0.25 FTE to FTE. The department was 0.75 unable to hire a qualified person as only a 0.25 FTE. In addition, increased workload warrants a fulltime position Fire: The addition of a Division Chief to oversee the volunteer firefighters and EMTs. Manager's Office and Finance: Temporary staff was added to assist with the implementation of the 2.25 new financial and lands management core software. Teen Health Center: With the addition of a second high school, the Teen Health Center will 0.20 operate in both locations, requiring additional staff hours. Clerk's and Elections: Additional elections officials to adequately staff the Valley Absentee Voting 0.07 Station. Community Development Department: Additional support staff for the Environmental/Zoning Enforcement Officer to assist with processing paperwork associated with enforcement issues. Streets: Addition of an Equipment Operator II due to increased workloads (additional lane miles, sidewalks, culverts, drainage structures, street and traffic lights). Eaglecrest: Eaglecrest management adjusts staffing on a continuing basis as conditions change in 0.78 order to provide the most cost effective service. Waste Management: The CBJ is hiring a full-time Solid Waste Coordinator. Engineering: Additional staff due to capital project management needs FY09 Increases 8.25 (3) FY09 Decreases Finance: The sales tax audit function has been contracted out resulting in the elimination of 2.0 FTE (2.00) Sales Tax Auditor positions. Capital Transit: FTE adjustment for actual hours worked by part-time employees. (0.07) Parks and Recreation: The ice rink reorganized with the result of a net decrease in FTE's. (0.47) Docks: Reorganization resulted in net decrease of FTE's. (0.25) Bartlett Regional Hospital (BRH): This decreased staffing is due to the need to serve additional (5.80) patients. BRH adjusts staffing based on need throughout the year. FY09 Decreases (8.59) (4) FY10 Increases Parks and Recreation: The new Valley Pool is scheduled to open in FY10. An Aquatics Director is being added to manage both of the CBJ's pools. FY10 Increases (5) FY10 Decreases Community Development: Temporary staff was added to assist with the implementation of the new lands management core software. It is anticipated the project will be completed during FY09. FY10 Decreases (1.50) 19 (1.50)

6 NOTES This page has been left for notes. 20