City Manager s Proposed Budget for FY 2019 PRESENTED TO CITY COUNCIL SEPTEMBER 25, 2018

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1 City Manager s Proposed Budget for FY 2019 PRESENTED TO CITY COUNCIL SEPTEMBER 25, 2018

2 City Manager s Proposed Budget Back to basics Maintain what we have

3 Proposed Budget Reflects Council s Goals

4 City Council Priorities Address infrastructure, city facilities, and other capital improvements. Focus on housing and transportation. Diversify the local economy by developing new sources of revenue to strengthen our fiscal position during market fluctuations. Create a higher community focus on climate and sustainability. Maintain Durango s unique character and identity. Continue to be a leader in the region.

5 Public Engagement Efforts Team of professional City staff 32 employees We listened We informed We engaged with the public

6 Public Engagement Efforts Publicity on the process over the last year 6 local newspaper articles Over 40,000 views on social media posts Countless views of slides on DGOV, Transit, and screens at Rec Center Presented at International City/County Management Association (ICMA)

7 Public Engagement Timeline Discussion on increasing public engagement (April 2017) Cities and Towns Week (September 11-15, 2017) 2018 Proposed Budget discussion on Wicked Problems (September 26, 2017) Public Engagement PHASE 1 (February April 2018) Martín Carcasson workshops (March 2018) Public Engagement PHASE 2 (May July 2018) Next steps (July 24, 2018)

8 Public Engagement Recap Cities and Towns Week 15+ events Virtual City Hall survey Engage with your City! 4 Community Forums 50 Community Meetings 3 Virtual City Hall surveys 1 statistically valid survey (95% confidence rate) 5,000 comments The community said: Get back to the basics and maintain what we have.

9 Ballot Question 2A Question 2-A: Authorization to increase city taxes for 25 years for the purpose of funding police, public safety and code enforcement, the construction, operation and maintenance of a police station and other city buildings, and street improvements. Shall City of Durango taxes be increased not more than $8,716,000 in tax collection year 2019 and by whatever amounts are generated annually thereafter by a mill levy of not more than 5.4 mills and an additional sales and use tax of not more than 0.55% for the purposes of funding police, public safety and code enforcement, the construction, operation and maintenance of a police station and other city buildings and facilities, and the construction and maintenance of streets, alleys, curbs, gutters, sidewalks and related street improvements, provided that these increased taxes shall not be collected after December 31, 2043? 2A Fact sheet available at DurangoGov.org/HotTopics

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11 FY2019 Budget at a glance General Fund No new programs, no new people General Fund Capital Projects Program No capital projects Water & Sewer Enterprise Funds 3% rate increase for each fund Transportation Service Enterprise Fund Full impact of cost allocation study Solid Waste/Sustainable Services Enterprise Fund 3% rate increase, sustainability fee adjustment Airport Fund Generates enough revenue for capital projects Library No additional staff, same hours, closed on Sundays

12 All Operating Fund Expenditures: Where it goes Airport Enterprise Fund 4% Solid Waste Enterprise Fund 3% Transporation Services Fund 4% General Fund 45% Sewer Enterprise Fund 13% Water Enterprise Special Revenue Funds 7% Internal Service Funds 12% Proposed FY2019 Budget Figures

13 General Fund: FY2019 Projected Fund Balance Unassigned $290,007 TABOR $1,405,921 15% Operating Reserve $6,143,590

14 Proposed 2019 Budget: General Fund Revenue All Other 12% Charges for Service 11% Sales Tax 57% Elastic Revenue Intergovernmental Revenues 6% Licenses & Permits 2% Other Taxes 5% Property Tax 7%

15 Sales & Use Tax Revenue $20,000,000 $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $ Sales Tax Projected Sales Tax Use Tax Projected Use Tax

16 General Fund: Operating Revenues vs. Expenditures $55,000,000 $50,000,000 $45,000,000 $40,000,000 $35,000,000 Time now $30,000,000 $25,000,000 $20,000,000 Revenue Expenditure

17 General Fund CIP Expenditures 2015 vs Adopted CIP Expenditures 2016 Adopted CIP Expenditures 2017 Adopted CIP Expenditures 2018 Adopted CIP Expenditures 2018 Revised CIP Expenditures 2019 Proposed CIP Expenditures $3,671,500 $2,645,000 $2,175,000 $825,000 $175,000 $0 Difference between 2015 CIP & 2019 CIP: $3,671,500

18 General Fund: Capital Projects Fund $4,000,000 $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $ Adopted 2016 Adopted 2017 Adopted 2018 Adopted 2018 Revised 2019 Proposed General Fund CIP

19 General Fund: Projected Fund Balance Analysis 2018 Beginning Fund Balance (actual) $ 6,417,210 Ending Fund Balance (projected) $ 7,104,508 Change in Fund Balance $ 687, Beginning Fund Balance (projected) $ 7,104,508 Ending Fund Balance (projected) $ 7,839,518 Change in Fund Balance $ 735,010

20 Fund Highlights: General Fund Revenues: Total Revenues increase 3.5% ($1,425,392) No City Sales tax growth over 2018 Adopted Budget Licenses and Permits, 7.6% decline in growth Charges for Services, 1.1% decrease Transfers into the General Fund increased (76.4%) cost allocation plan and staffing changes transfer from the 2015 Sales Tax Fund, Lake Nighthorse subsidy.

21 Fund Highlights: General Fund Expenditures: Expenditures increase 2.3% ($933,498) $788,049 of increase is due to reallocation of staff due to the cost allocation plan Personnel related expenditures increase $1,343,729, due mainly to the shift in salaries due to the cost allocation plan ($788,049), salary increases and increased health insurance costs Fund structurally unbalanced with operations absorbing all revenues with no funds remaining for capital infrastructure projects Staffing: No new FTE Capital: No Capital Improvement Projects

22 Fund Highlights: Water Enterprise Fund Revenues: Total revenues decrease 0.5% ($47,500) Residential and commercial rate increase 3% Expenses: Operating expenses increase by 8.6% ($342,773) to $4,320,644 1% Contingency fund has been included in the Water Fund for the first time since 2008 Staffing: No new FTE Capital: Transfer to Capital Projects fund increase of $3,562,500 due to 50% cost of the new Administration Building/Vactor Garage at the Santa Rita Water Reclamation Facility

23 Fund Highlights: Sewer Enterprise Fund Revenues: Total Revenues increase 2.4% ($195,060) Residential and commercial rate increase 3% Expenses: Proposed operating expenses increase 18.1% ($670,053) 1% Contingency fund has been included in the Sewer Fund for the first time since 2008 Staffing: New Fat Oils and Grease (FOG) Technician Capital: Transfer to Capital Projects fund increase by $3,842,500 due to 50% cost of the new Administration Building/Vactor Garage at the Santa Rita Water Reclamation Facility Debt service payments for the Santa Rita Water Reclamation Facility are, $3,397,178

24 Fund Highlights: Airport Enterprise Fund Revenues: Total revenues increase 10.1% ($344,028) due to increased fees and charges schedule Parking revenues from onsite parking increase 1.2% ($17,227) Expenses: Operating expenses increase of 9.8% ($323,824) 2% Contingency fund has been included in the Airport Fund for the first time since 2008 Staffing: No changes Capital: Transfer to capital projects fund for operating projects of $154,500 to address several small scale projects on airport property $8,629,134 in capital projects funded through FAA, PFC, and CFC with the largest project being construction of Taxiway A Schedule III Reconstruction in the amount of $7,948,304

25 Fund Highlights: Sustainable Services Enterprise Fund Revenues: Total revenues increase 4.6% ($124,796) 3% rate increase for residential and commercial solid waste and recycling fees Sustainability fee increase from $2.30 to $2.50 for all inside city utility accounts Expenses: Operating expenses decrease 2.9% ($80,404) Staffing: No new FTE Capital: Transfer $225,000 to Capital Projects fund

26 Fund Highlights: Transportation Services Enterprise Fund Revenues: Total revenues increase 4.6% ($165,019) Federal grant funding decrease 2.7% ($26,661) Parking revenues remain stable Expenses: The proposed operating budget decreases 2.8% ($96,456) Fund continues to struggle to become financially sustainable Staffing: No new FTE Capital Transfer $150,000 to Capital Projects fund

27 Fund Highlights: Durango Tourism Fund Revenues: Lodgers Tax projection: 6.4% decrease under 2018 Adopted Budget Expenditures: Increases funding for Durango Transit to $350,000 Increases funding to Durango Area Tourism Office by 3% Transfers $100,000 to the General Fund for special events that bring out of town visitors to Durango (i.e. Fourth of July)

28 Staffing Changes Fund FTE Position Comments General Transportation Services Fund Sustainable Services Fund Water No new FTE No new FTE No new FTE No new FTE Sewer FOG Technician New FTE Airport No new FTE

29 Fiscal Sustainability: Critical Considerations 1. Increased demand for service 2. Deferred maintenance 3. Sales tax is an elastic revenue

30 Next Steps Study Session: Review CIP October 9 Council/BOCC Study Session on Joint Sales Tax (Library & Senior Center) and Airport October 16 All Day Council Budget Workshop October 17 Community Support (Discretionary), BID October 23 Public Hearing on the Budget November 5 Budget Reconciliation November 13 Budget Adoption December 4

31 QUESTIONS?