CITY OF FALLS CHURCH. Title: Resolution Endorsing Proposed Expenditure Reductions To The City Of Falls Church FY2010 Budget (TR9-28)

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1 1 2 3 Meeting Date: CITY OF FALLS CHURCH Title: Resolution Endorsing Proposed Expenditure Reductions To The City Of Falls Church FY2010 Budget (TR9-28) Agenda No.: 10 (b) (3) Proposed Motion: MOVE passage of (TR9-28) Originating Dept. Head: Wyatt Shields, City Manager Disposition by Council: City Manager: F. Wyatt Shields FWS City Attorney: John Foster JEF CFO: John Tuohy JHT REQUEST: Council is requested to endorse, by resolution, a list of spending reductions to close the FY10 Budget gap. RECOMMENDATION: The Manager s recommendation is adoption of the resolution. Other options would include: 1) No Council action on these reductions, which are authorized by Charter; or 2) Council adoption of a budget ordinance amendment. BACKGROUND: The fiscal year 2009 Year End Financial Report reflects significant revenue shortfalls, which make it necessary to revise our revenue forecasts for the current fiscal year. In total, our revised revenue projections point to a potential $5.6 million dollar shortfall for the current budget year, fiscal year The City Manager worked with staff to develop a list of spending reductions, which are detailed in the attached Memorandum, dated October 19, 2009 Plan and Options for Closing the FY2010 Budget Projected Shortfall. The reductions in spending are summarized in the tables below. The holds on CIP projects total $4,246,145. The reductions in spending to the operating budget total just over $1,500,000, including $300,000 reduction in the General Fund Transfer to Schools. $4.1 million Property Tax shortfall: CIP Holds $1.5 million all other revenue shortfall: Operating Budget Reductions $5.6 million total shortfall

2 The approach outlined here requires no immediate tax increases. It does assume additional revenue from property taxes from a real estate tax rate increase as part of the FY11 Budget development. This is because the tax rate adopted for the FY11 budget will apply to the second (spring) real estate billing for FY10, per the City s normal tax billing schedule. I am also recommending a review of City owned properties with the purpose of offering some properties for sale, to help fund Capital Improvements in the future. Depending on the amount of revenue generated from both the spring tax billing and the possible sale of property, the City Council would then take formal action on revised Capital Improvements Program in May, 2010, releasing some projects from their hold status, and permanently eliminating others, based on the amount of pay as you go (PAUG) local tax funding that is available. Process: The City charter requires that the City balance its budget each year (Section 6.05.) It provides further that: if at any time during the fiscal year, the city manager shall ascertain that the revenue cash receipts of the general fund or any utility fund for the year, plus any cash surplus available from the preceding year, will be less that than the total appropriations to be met from such receipts, he shall have the power to restrict expenditures, subject to the laws of the Commonwealth relating to obligatory expenditure for any purpose, so as to forestall the incurring of a deficit, provided however, that there shall be no reduction of salaries except by ordinance. (Section 6.15). The process outlined here is in keeping with the City Charter provisions above. However, by holding work sessions on the reductions with the School Board and the Planning Commission, the discussion of the impacts and of other options is held in a transparent manner for full public discussion and input into various options available. Summary Tables Summary of CIP reductions: Please see Attached Chart CIP Hold List, dated November 5, 2009 (Attachment 2). Summary of Operating Budget Reductions: What follows is a summary table of the operating budget reductions outlined in detail in the City manager s Memorandum dated October 19, 2009, Plan and Options for Closing the FY2010 Budget Projected Shortfall. The operating budgets, total, can be summarized as follows: $300,000 School Transfer Reduction $100,000 Post Retirement Health Benefits (OPEB) $500,000 General Government Hiring Freeze $600,000 Reductions to Non-Personnel Related Expenditures $1,500,000 Total Reductions

3 The $600,000 in operating budget cuts are as follows: Dept # Dept Name Amount Explanation 1201 City Manager 5,400 Operating expenses 1202 Communications 1,700 Operating expenses 1203 Human resources Transit Subsidy 12,000 Professional Services 20,000 Training 26,000 Advertising & postage 15,100 73, Risk Management 900 Operating expenses 1220 IT 64,298 IT support contract, reduce 1 position 8400 Economic Development 4,500 Operating expenses 1204 City Attorney 1,050 Operating expenses 1210 RE Assessment 1,500 Travel & Training 1214 Finance 6,000 Travel & Training, Professional services 9000 Non-departmental 8,000 Bond issuance costs 3101 Police Chief 4,700 Travel & Training 3102 Red Light camera 34,100 Implementation costs 3108 Police Services 1,200 Operating expenses 3401 Building inspections 15,000 Outsourced inspections 4101 PW Administration 4,000 Overtime 4102 Street & Highway 72,100 Non-VDOT paving 4103 Storm Water 12,500 Professional services & supplies 4204 Recycling One Hazardous waste event 8,500 Other supplies 1,000 9, General Services 74,099 Repairs & Maintenance 8101 Planning 27,000 Zoning ordinance publishing, professional services 8102 Urban forestry Hanging basket 9,500 maintenance Agricultural supplies 5,000 Landscape services 11,200 Tree maintenance/removal 14,300 40, Park Maintenance 11,500 Reduce mowing, tipping fees 7101 Recreation 5,000 Eliminate one employee event, travel & Training 7109 Programs & special events 40,000 Instructor fees 5301 HHS 3,250 Operating expenses 7301 Library State funded materials 8,413 Operating costs 2,600 11, Juvenile Programs 56,500 CSA costs, shelter care 2107 Sheriff 12,300 Vehicle expenses, Operating expenses Total 600,210

4 In addition to these operating reductions above, the City instituted a hiring freeze in July. Staff forecasts savings of $500,000 in FY2010 due to this hiring freeze. Over this period, the following vacancies have not been filled: Contract Manager (DES) This position administers the very significant contracts for street paving, building maintenance, stormwater maintenance, traffic signal maintenance, and most of our capital projects. Not filling this vacancy will slow down the delivery of all contracted services, increase risk associated with less contract oversight and performance, and place additional demands on engineering staff, public works administration staff, and the City purchasing officer. 2 Maintenance Workers (DES) These vacancies are on the City s refuse pickup crew and city street maintenance crews. The loss of these positions places greater work load on the remaining work crews, and exposes the city to risk of falling behind in trash pick up due to illness or planned vacation. Senior Crew Leader (DES) This is a key facility maintenance position that has been filled by further reducing our street maintenance crews, beyond the vacancy listed above. HR Assistant (.625) This part time position provides reception and administrative support to our HR department. Maintenance Worker (Library) This is a custodial worker in the library. Not filling this position requires staff from the community center to provide custodial services in the Library, reducing total available man hours for custodial services. Librarian (.7) This is the audio visual specialist position who maintains the City s collection of tapes, videos and DVDs, which is a rapidly growing component of Library customer demand in recent years. Not filling this vacancy requires other library staff to pick up these duties. Urban Forestry Manager. The duties of the City Arborist position are being met through a reorganization of duties. With this organizational change the intention is to hire one additional entry level crew member; however that position is being frozen as well. Senior AA for Economic Development This full time position has been filled with a temporary part-time employee to provide administrative support for the Economic Development Office. These positions will be held open through development of the FY11 Budget adoption, at which time permanent decisions will be made on filling these vacancies. With the lay-offs associated with FY10 Budget and these vacancies, there are 194 City employees as compared to 206 funded positions at the end of FY2009. We expect the

5 number of vacancies to grow over the coming months through natural loss through retirement, moving, etc. In a small organization, each vacancy presents a significant service reduction and/or increase in workload for remaining employees. The School Superintendant has put forward vacancy holds as well and these are not included in the list above. TIMING: Immediate FISCAL IMPACT: As noted. Attachments: 1) CIP Hold List ) October 19, 2009 Plan and Options for Closing FY 10 Projected Budget Shortfall Memorandum (TR9-28) RESOLUTION ENDORSING PROPOSED EXPENDITURE REDUCTIONS TO THE CITY OF FALLS CHURCH FY2010 BUDGET WHEREAS, revised forecasts of revenues for Fiscal Year 2010 have been prepared by the City s Chief Financial Officer, and such revised forecasts project a shortfall in the FY10 budget of $5,592,254; and WHEREAS, the City Charter states that if at any time during the fiscal year, the City Manager ascertains that revenues of the general fund will be less than total appropriations, he shall have the power to restrict expenditures, subject to the laws of the Commonwealth relating to obligatory expenditures for any purpose, so as to forestall the incurring of a deficit, provided, however, that there shall be no reduction in salaries except by ordinance; and WHEREAS, the City Manager has worked with City staff to develop a list of spending reductions in the adopted FY10 budget to offset this shortfall and this list is provided in the Manager s report accompanying this resolution; and WHEREAS, the City Council is committed to fiscal responsibility, to maintaining the City s excellent bond rating, and to ensuring the citizens and business owners of the City receive excellent City services; WHEREAS, the City Council has had two work sessions with the City School Board, one work Session with the Planning Commission, and two public hearings on the proposed expenditure reductions to the Capital Improvements Program and the Operating Budget and believes that the

6 community is well served when these bodies work together in a coordinated fashion to address these budget shortfalls; and WHEREAS the City Council recognizes that local governments across the region and nation are experiencing serious budget challenges, and that the City Council will work closely with the community to make difficult, long term decisions about budget priorities for FY11 Budget and beyond. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Falls Church hereby endorses the mid-year spending restrictions as outlined by the City Manager, and directs the City Manager to provide regular reports on the fiscal situation of the City, and in consultation with Council, make further expenditure restrictions as are necessary to ensure that the City does not operate in deficit, regardless of changes in the economy and resultant changes to revenues. Reading: Adoption: (TR9-28)

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