City of Lancaster, South Carolina

Transcription

1 City of Lancaster, South Carolina Annual Budget Document Fiscal Year July 1, through June 30, 2017

2 City of Lancaster, South Carolina Annual Budget Fiscal Year Ending June 30, 2017 Page 1

3 Mayor and City Council Mayor and City Council John Howard, Mayor Kenneth Hood, Councilman, District 1 Gonzie Mackey, Councilman, District 2 Jackie Harris, Councilwoman, District 3 Tamara Green Garris, Mayor Pro-Tempore, District 4 Hazel Taylor, Councilwoman, District 5 Sara Eddins, Councilwoman, District 6 City Management Steven Flip Hutfles, City Administrator Teresa G. Meeks, Director James A. Absher, Jr., Director Harlean Carter, Chief Support Services Finance Police Department Louis Streeter, Director Justin McLellan, Chief Donald Ledford, Director Building and Zoning Fire Department Wastewater Systems Lisa Driggers, Director Cammie Heath, Administrator Jerry Crockett, Director Human Resources Municipal Court Public Works Marty Cauthen, Director Sanitation & Maintenance Operations Jarvis Driggers, Director Information Technology Page 2

4 Organizational Chart Page 3

5 Table of Content Introductory Section City Administrator's Budget Message 5 Overview of Lancaster 12 Budget Process 19 Budget Calendar 20 Budgetary Fund Structure 21 Financial Policies & Strategies 22 Revenues Revenue Summary 25 Revenue Line Item Budget 37 Expenditures Expenditure Summary 40 Departmental Expenditures 42 Capital Expenditures 89 Expenditure Line Item Budget 90 Financial Statements Statement of Revenue, Expenditures (Expenses), and Changes in Fund Balance 103 Debt Service Debt Summary 107 Debt Service 109 Personnel Personnel Summary 114 Budget Ordinance Budget Ordinance 117 Appendix Appendix A - Schedule of Taxes, Fees and Charges 118 Appendix B - Glossary of Terms 125 Appendix C - Glossary of Acronyms 133 Appendix D - Financial Policies 134 Page 4

6 City Administrator s Budget Message September 26, Honorable Mayor, Council Members, and the Lancaster Community: It is my honor to submit to you the Budget for the City of Lancaster, as approved by the City Council on June 28,. The total Budget equals $33,560,355 and represents a 34.63% increase from the adopted Budget. The reason for the significant increase is the City will begin implementing sanitary sewer rehabilitation projects that are related to the EPA s Consent Agreement and Final Order No. CWA (b) 1, from here on referred to CAFO. These sanitary sewer projects in the Budget have an estimated cost of $11,769,985, and consist of sewer line rehabilitation repairs in the West Arch Street basin, the Erwin Farms basin, and the Poovey Farms basin. The main revenue sources to fund these projects are the South Carolina Department of Health and Environment Control State Revolving Fund, the South Carolina Rural Infrastructure Authority, and South Carolina Department of Commerce Community Development Block Grants. The City will receive funding in the form of a loan, grants, and a forgivable loan. The primary purpose of a budget document and the budget process is to develop, adopt, and implement a plan for accomplishing goals for the upcoming year within given fiscal constraints. The Budget has been designed with the continual City goal and tradition of maintaining a responsive government, a stable financial position, and a high level of service. The City over the past seven years has worked to align and maintain annual expenditures within the annual revenue stream. As has become consistent with the City s past budgets, this year s plan includes conservative revenue estimates based upon a solid set of financial measures. The Budget is expected to deliver the same quality and exceptional services which have been standard for many years for the City of Lancaster. To help identify the priorities and desired services of both the community and the City Council, a fiscal year goal session was held on February 6,. With input from staff, Council Members, and the public a list of seven goals were developed: Support and encourage arts and culture Invest in a vibrant downtown Neighborhood improvement Inspire youths Committed to public participation and engagement Maintain the highest level of service to residents while remaining fiscally prudent Creation of jobs & workforce readiness The adopted balanced budget is structured within the planning guidelines to maintain alignment with the current goals but also with the City s long-term financial stability objectives. The budget 1 This Order was issued on September 30, 2013 that requires the City to develop specific programs to reduce sanitary sewer overflows, to evaluate specific troubled areas within the wastewater collection system, and to identify and make repairs to the wastewater collection system. Page 5

7 City Administrator s Budget Message provides funding towards preserving existing programs and services, increasing investment in the maintenance of public infrastructure, and responding to increase service demands in the areas of community development and public safety. This will be accomplished within the long-term financial constraints of the existing revenue structure, which will make new programs and services more difficult to develop. Factors Influencing the Budget Development Current economic conditions and future economic and political outlook. The Budget was developed to reflect the stagnant economic growth facing the City. Even though the state and nation has been seeing moderate economic growth, this has not been as prevalent within the City. Local economic development, property values, and property tax revenue have been flat for the past few fiscal years in the City. As this is a continuing trend, the City has been positioning itself to begin developing more business growth initiatives and has set aside $25,000 from last year s budget and an additional $25,000 in this year s budget for economic development incentives. As part of the goal to invest in a vibrant downtown and the creation of jobs, and in order to ensure fair and sound distribution of the incentives, the City will implement an economic development incentive ordinance during this fiscal year. The lackluster economic growth will be compounded by ongoing instability at the state legislature. I am predicting actions by the legislature will limit the City s intergovernmental revenue, the City s ability to control revenue from taxation, the lack of funds to maintain and rehabilitate the numerous state controlled roads within the city limits, and our inability to annex enclave lands. However, it is during this time of uncertain outlook that cities need to reinvest in infrastructure, maintenance and equipment, meet service demands, and focus on community priorities while still remaining fiscally conservative. Maintaining Adequate Financial Reserves. The cornerstones of the City s financial management practices are long-term financial planning; balancing recurring expenditures with recurring revenues; and ensuring an adequate unassigned fund balance is available to address emergencies, changing economic conditions, and large capital needs. The need for adequate unassigned reserves was abundantly illustrated once the City was issued the CAFO. During the past three fiscal years, the City expended $2,711,674 for design, repair, and matching cost to begin the needed sewer line rehabilitation work. Of this $2.7 million expenditure $1,103,249 came from General Fund Reserve. Needless to say this $1.1 million expenditure has greatly reduced City s reserves to a point where if the City had not taken actions, the General Fund unassigned fund balance would have dropped below the established 40% unassigned fund balance threshold. In order to ensure the General Fund unassigned fund balance stays above the 40% threshold, the City had to enact a 12 mill reserve tax increase in the Budget in order to maintain the City s General Fund unassigned fund balance at an adequate level. Page 6

8 City Administrator s Budget Message General Fund Reserves Balance 80% 70% 60% 50% 40% 30% 20% 10% 0% Projected Fiscal Year Other fund cash reserves have also decreased in the past few years. At the end of the fiscal year, the Gross Revenue Fund unrestricted cash balance was $652,883 which equals only 12 days of operating cash. While the Solid Waste Fund unrestricted cash balance was $915,470 or 131 days of operating cash. Financial Parameters and Standards. The City has prided itself in maintaining a structural balance between anticipated current revenues and operating expenditures. Ensuring the long-term structural financial balance is the foundation of the City s financial strategy. The Budget includes a level of expenditures which cannot be sustained in future years within the current revenue structure, given the current financial outlook. Without the ability to increase property tax revenue, the City will need to enter into a restructuring phase of programs and services during the next couple of years. Capital Infrastructure and Maintenance. Currently, the City has not adopted a five year Capital Improvement Program or Maintenance Plan. The City Administrator and the Director of Finance will develop these plans for the Budget. In the Budget, 34.74% of the resources will be allocated to capital projects including the CAFO sewer line rehabilitation projects. Revenues Total revenues generated in the fiscal years are projected to be $33,560,355 from the five funds: General, Hospitality Tax, E911, Gross Revenue, and Solid Waste. As indicated in the graph below the largest share of revenue comes from the Gross Revenue Fund. However it should be noted that this amount is inflated due to the additional revenues in the form of loan proceeds and grants that the City will be receiving that are attributed to the CAFO. These additional one time CAFO loans and grants account for 46% of the total Gross Revenue funds. Page 7

9 City Administrator s Budget Message FY Funds Solid Waste 7% Gross Revenue 56% General 34% E911 0% Hospitality 3% Typically, the revenues are collected from four primary sources: property tax, business license, utility service charges, 2 and transfer station fees. Revenue by Type Water 11% Transfer Station 3% Solid Waste Sewer 5% 9% Property Tax 19% Business Lisc 7% CAFO Funds 46% Property Tax Business Lisc CAFO Funds Transfer Station Water Sewer Solid Waste 2 Utility service charges are water and sewer fees charged to inside and outside city customer, and residential and commercial solid waste collection. Page 8

10 City Administrator s Budget Message Property Tax Revenues. This important revenue stream for the General Fund has been flat for the past six fiscal years. Since 2010 there have been two real property reassessments which have resulted in no appreciative increases for the City. The real property assessed valuation supporting the Budget has decreased by 0.13% from last tax year and in the last five tax years by 1.87%. This decrease is being driven by stagnant real estate sales and the lack of new property being added to the tax rolls. The millage levy rate is set at mils and a 12.0 mils has been added for city reserve totaling mils. Business License Revenue. Business license has been remaining relatively stable for the past few years. The City has been netting a neutral position with the number of new businesses opening and those that are closing. The City has been taking a more active approach to ensure that all businesses operating within the city limits are properly registered. The City is anticipating collecting $1,940,000 in business licenses. This revenue stream may see significant changes depending on action the State legislature takes in their attempt to streamline and develop uniformity in the business license process throughout the State. Utility Sales. The aggregated total of the sales of the three utility services (water, sewer, and solid waste) typically accounts for the largest revenue source for the City. The water and sewer fees have a different rate structure for customers inside the city limits and outside city limits. The outside customers pay 35.11% more for water and 39.9% more for sewer. Even though the outside city limits customers are only 33% of total customers they account for 37% of the water revenue and 40% of the sewer revenue. As the majority of the work the City is undertaking, due to the CAFO, is outside the city limits the outside water and sewer customer service charges will be increasing by $4 per month. The Budget also included a new $2.00 per month non recycling fee which is estimated to bring in an additional $30,000 a year in the Solid Waste Fund. Transfer Station Revenue. This revenue is generated by waste haulers paying to dump solid waste at the City s transfer station. Last year the City lost a major transfer station revenue source when a large hauler stop using the transfer station. Staff worked diligently to find new customers and at the end of the fiscal year this loss revenue has been replaced and monthly revenue was near prior anticipated levels. The Budget has projected the transfer station revenue to be near this historical level again of $800,000. Expenditures Total budgeted expenditures for the Budget equal $33,560,355, an increase of 25.6% from the adopted Budget. This increase is due to the CAFO. Discounting the cost associated with the Consent Order the total overall City expenditures have decreased by 12.58% from last year s budget. Personnel Costs. The bulk of the City s expenditures is related towards personnel cost, which includes salary, overtime, City s FICA and retirement contribution, holiday pay, longevity pay, health insurance, workman s compensation, and unemployment insurance. The Budget has no Page 9

11 City Administrator s Budget Message cost of living increases or merit raises. A driving factor that prevented the City offering pay raises to city employees was due to the increasing costs of the City s contributions to the South Carolina Retirement System and the Police and Fire Retirement System, which are projected to increase by 3%, as well as a 35% increase for the City s portion of health insurance premiums. As the graph below illustrates, the majority of the salary and retirement costs is allocated for public safety 3 employees and equals $4,128,935. Public works 4 is second highest cost equaling $2,056,181. Administration 5 counts for $1,283,409, Sanitation is $1,090,271, and See Lancaster and the City s event and performing arts series is $149,339. Personnel Expense 24% 12% 2% 15% 47% Public Safety Administration Public Works Sanitation Hospitality & See Lancaster EPA Consent Order Expenditures. The next major expenditure in the Budget is capital costs related to the CAFO accounting for $11,769,985. During the Budget, the City will be having sewer rehabilitation construction work ongoing in three basins. These expenditures account for 35.07% of the overall budget. Capital Expenditure. The Budget includes specific funding for the City s maintenance, repair and replacement of infrastructure, facilities, and amenities. Some examples of capital expenditures are the replacement of the roofs at the Municipal Justice Center and 15 th Street 3 Public safety includes police, fire, victim s service, & judiciary 4 Public works includes street, vehicle maintenance, water, wastewater, CAD/GIS technology, & PW admin 5 Administration includes Council, city administrator, human resources, finance, information technology, legal services, support service, & building and zoning. Page 10

12 Page 11

13 Overview of Lancaster Lancaster was founded by settlers from Lancaster, Pennsylvania and was originally known as Barnettsville when the first courthouse was erected in In 1802 an application was made for a charter for the village of Lancaster. A court dispute over the original plat was not resolved until In December 1830, by Act of the South Carolina Legislature, the Town of Lancaster was incorporated. The Town of Lancaster was rechartered in 1898 and as the City of Lancaster in Lancaster is a flourishing community and the county seat of Lancaster County. With a population of just under 9,000, Lancaster has maintained its small town charm. Located at the intersection of a number of US and State highways, Lancaster has quick access to larger cities such as Charlotte, North Carolina and Columbia, South Carolina. For work, play, or just a quiet stay, Lancaster offers oldfashioned southern hospitality in a small town environment. The City operates under the counciladministrator form of government. Under this form of governmental structure, the Mayor and Council set policy direction and appoints a city administrator who is responsible for implementing the policies efficiently and effectively. The governing board is composed of a mayor elected at large and six council members elected by district, each for four-year staggered terms. Page 12

14 Overview of Lancaster EDUCATIONAL PROFILE Lancaster is served by Lancaster County School District and University of South Carolina Lancaster. With a student enrollment of over 12,000 students and 1,550 employees, Lancaster County School District is the only school district for Lancaster County. Due to the school district s size, it is also one of the largest employers in Lancaster County. Established in 1959, University of South Carolina Lancaster (USC-L) serves students who mostly are first generation college students from rural areas, small town, and cities across the central Piedmont area of the Carolinas. USC Lancaster is a two year regional campus of the University of South Carolina. USC-L seeks to make education accessible, affordable, and convenient to the residents of this area. COMMUNITY ARTS PROFILE The Arts are an important part of the quality of life in the City of Lancaster. Through the Performing Arts Series and secondary performances in the City of Lancaster, the City offers a variety of programs each year. The Performing Arts Series is held in the Bundy Auditorium located at the University of South Carolina Lancaster campus. The Performing Arts Series at Bundy Auditorium contributes to the City of Lancaster s entertainment and arts profile and provides activities for residents and visitors. The City also partnered with USC-L to create the Native American Studies Center on Main Street in Lancaster. USC-L is home to the largest collection of Catawba Indian pottery. The City renovated the building that houses the Native American Studies Center and provides it to USC-L for its Native American studies program and as a gallery space to display the pottery in its collection. This partnership has brought many visitors to the downtown area and serves as the center piece of the main street area. In addition to the Performing Arts Series and Native American Studies Center, the City promotes and organizes several community events that contribute to the City s sense of community. An example of these special events is the Red Rose Festival held in May each year. The City of Lancaster also has a very active artisan community and community theatre groups. These local artists and theatre groups contribute and enhance the community arts scene for the area. They provide an excellent complement to the City s activities and help contribute to the very positive impact the arts have on the City and surrounding areas. Page 13

15 Overview of Lancaster DEMOGRAPHICS PROFILE The City of Lancaster as the rest of South Carolina has seen a declining unemployment rates as economic conditions have improved. Despite the projected ten year increases by the US Census Bureau for the years of , the 2010 Census showed the actual increase in population during that time period was significantly less. Unemployment for Lancaster County % % % % % % % % % 5.4% City of Lancaster US Census Bureau , , , , , , , , , ,374 The top ten employers for Lancaster County for are as follows: Employer Employees 1. Red Ventures Lancaster County School District Lancaster County Springs Memorial Hospital Movement Mortgage Continental Tire Duracell AECOM Inspiration Ministries Trinity Meyers 300 Page 14

16 Overview of Lancaster ECONOMICS PROFILE City Financial Profile 2012/ / / / /2017 Total Budget $21,498,292 $23,393,520 $22,483,095 $24,883,922 $33,560,355 Total General Fund Budget $10,570,846 $12,324,940 $12,291,748 $11,737,917 $11,290,804 Total FTE Employees Property Tax Millage Rate Fiscal Year Direct and Overlapping Governments Property Tax Rates Last Ten Fiscal Years City of Lancaster Lancaster County School District Lancaster County University of South Carolina - Lancaster Total Page 15

17 Overview of Lancaster Top Taxpayers Taxable Total City Taxpayer Assessed Value Taxes Paid Duracell 4,927,435 $608,779 Lancaster Hospital Corporation 4,327,310 $517,500 Springland Associates, LLC 1,312,140 $152,349 Duke Energy Corporation 909,850 $124,450 Cole WM Lancaster SC, LLC 809,060 $ 93,905 Lancaster Telephone Company 577,960 $ 79,054 Kanawha Insurance Company 570,100 $ 72,844 Springmaid FCU 498,880 $ 80,755 TSO Quality Lancaster LP 457,682 $ 29,700 HD Development of Maryland Inc. 390,290 $ 45,299 Fiscal Year Real Property Personal Property Total Assessed Estimated Assessed Estimated Assessed Value Value Value Value Value Taxable Value ,416, ,769,417 9,824, ,489,016 33,240, ,258, ,898, ,040,000 9,629, ,329,824 33,528, ,369, ,041, ,813,566 9,660, ,539,989 33,702, ,353, ,276, ,874,564 9,970,555 99,180,999 34,246, ,055, ,499, ,563,033 9,254,667 84,365,382 34,754, ,928, ,259, ,407,616 6,394,735 72,919,848 32,654, ,327, ,877, ,758,917 6,994, ,889,862 32,871, ,648, ,794, ,694,441 7,046,990 68,963,049 32,841, ,867, ,812, ,187,151 6,163,025 68,457,867 31,975, ,645,018 25,778, ,642,901 7,586,585 78,084,995 33,365, ,727,896 Page 16

18 Overview of Lancaster UTILITY PROFILE The utility system of the City of Lancaster consists of water and watewater service within the City and its surrounding areas, and is municipally owned and operated. Revenues and expenses for the City s water and wastewater service are budgeted in the Gross Revenue Fund, which is an enterprise fund. The rates for water and sewer service are set by City Council on an annual basis during passage of the annual budget ordinance for the City, but can be adjusted by budget amendment during the budget year if deemed necessary. The current rate schedule has different rates for city residents and those who are provided service outside the corporate limits of the city. The City also has separate agreements for the purchase of water from the Lancaster County Water and Sewer District (LCWSD) and for the treatment of wastewater received from LCWSD at the City s wastewater treatment plant (WWTP). Water System The City of Lancaster purchases the water that is provided to system customers from the Lancaster County Water and Sewer District (LCWSD). LCWSD provides the water to the City for a per thousand gallon rate that is determined annually based on a 1994 Water Agreement between the district and the City. The City s water system contains 127 miles of water lines, 655 fire hydrants, and 3 water tanks. The City s water system provided to customers who reside inside city limits and in areas surrounding the city. Wastewater System The City of Lancaster collects wastewater from residential and industrial customers from inside the city and those who reside in areas surrounding the city. The City s wastewater system has 142 miles of wastewater lines and seventeen (17) pump stations located throughout the City s twenty three (23) basins. The City is currently under consent order for three of its wastewater basins with rehabilitation set to begin in two of those basins in the upcoming budget year. This is the reason that the City s overall and Gross Revenue Fund budgets have increased significantly from the prior budget year. These rehabilitation costs will be covered from grants and loans from the State of South Carolina s Clean Water State Revolving Fund at a rate of 1% for a term of thirty years. The overall estimated costs for rehabilitation in the three basins under consent order are currently estimated at approximately $18 million dollars. The City has been very active in seeking grants to help pay for the costs of these rehabilitation projects and as of June 30, has received over $5.5 million in grants and forgivable loans to help offset these costs. The City also operates a wastewater treatment plant (WWTP) with an overall capacity of 10 million gallons per day (MGD) with a permit from the South Carolina Department of Environmental Control (DHEC) to discharge up to 7.5 MGD. The average daily flow is currently around 2.5 MGD which provides substantial capacity to handle any future economic growth needs. In addition to treating the wastewater collected in the city system, the City provided wastewater treatment services to the Lancaster County Water and Sewer District (LCWSD) through two separate Page 17

19 Overview of Lancaster agreements. The first wastewater agreement signed in 1994 with the district provides an allotment of our 1.6 million gallons per day (MGD) of capacity in the City s wastewater treatment plant (WWTP) to treat wastewater collected in LCWSD s wastewater system in areas that surround the City s service area. The rate for treatment of wastewater received from LCWSD is calculated annually based on the criteria found in the 1994 wastewater treatment agreement. The City and LCWSD signed a separate agreement in 2009 for the treatment of wastewater for the Town of Fort Lawn collected by the LCWSD. The rates for the treatment of the wastewater received from the Town of Fort Lawn are determined by the agreement. Number of Utility System Customers Fiscal Year Customers , , , , , , , , ,812 5,904 Page 18

20 Budget Process Each year, the City of Lancaster s budget is developed in conjunction with the Mayor and City Council, the Finance Department, and all other city departments, with opportunities for citizen feedback. Developing the Budget A City Council budget goal session is held each year during the beginning of the official budget process. During this session, Council and staff discuss goals and priorities for the upcoming budget year and beyond. At the end of the goal session, each council member states goals and priorities that they would like to see addressed in the upcoming year s budget. The City Administrator compiles the list and uses the stated goals and priorities in making funding decisions in the recommended budget that is presented to Council during the budget process. Department heads are then responsible for preparing requests for programs, projects, and initiatives they would like to have considered for the upcoming budget year. Council s goals and priorities serves as a guide by which departments prepare its expenditure requests. During this time, the Finance Director prepares revenue estimates for the upcoming budget year. Departmental budget requests are then compiled and presented, showing any differences between projected revenues and requested expenditures, to the City Administrator and the Finance Committee for review and discussions. Based on feedback from the City s Finance Committee, the City Administrator and Finance Director begin meetings with all department heads to begin the process of creating a balanced recommended budget for presentation to Council. During these meetings, the goals and priorities of each department are reviewed and expenditure requests are evaluated to determine their alignment with the goals and priorities established by Council and the fiscal resources necessary to fund the requests. Following the departmental meetings, the Finance Department and City Administrator prepare a budget for submission to City Council being sure that the goals and priorities discussed in the budget goal session are appropriately reflected in the balanced recommended budget. This recommended draft budget is presented to City Council in April. Adopting the Budget The public has the opportunity to comment on the budget during the first and second reading of the ordinance to adopt the budget and during a public hearing held between the first and second reading of the budget at a separate Council budget work session. Two readings and a public hearing are required for formal adoption of the budget. State law requires the City Council to adopt a balanced budget, in which current revenues equal current expenditures, prior to June 30 th of each year. Amendments to the budget are allowed under state law and are made throughout the year as necessary. The budget calendar is provided on the following page. Page 19

21 -2017 Budget Calendar Saturday, Feb 6 February 8 Feb 8 Feb 26 Feb 29 Mar 11 Friday, Mar 11 Friday, Mar 18 12:00 PM Mar 21 April 6 Thursday, April 7 City Council Goal Session for Annual Budget Finance Director sends departmental budget request packets to Department Heads for completion. Department Heads complete budget requests and submit to finance. Finance prepares departmental budget request document for Finance Committee and City Administrator review. Departmental requests provided to Finance Committee and City Administrator for review. Finance Committee meets to discuss departmental requests. City Administrator and Finance Director meet with department heads and prepare recommended balanced budget. City Administrator and Finance Director provide recommended balanced budget to Finance Committee and Council for review. Thursday, April 21 City Council budget work session for presentation and discussion of 6:00 PM recommended budget. Thursday, June 2 5:30 PM Friday, June 3 Tuesday, June 14 7:00 PM Finance Committee meets to discuss budget for first reading. Notification of Public Hearing in Lancaster News First Reading of Annual Budget Ordinance Thursday, June 16 Finance Committee meets to discuss any new developments or 5:30 PM changes in budget for second reading. Tuesday, June 21 Public Hearing 6:00 PM City Council budget work session for second reading Tuesday, June 28 7:00 PM July 1 Second and final reading of Annual Budget Ordinance New fiscal year begins Page 20

22 Budgetary Fund Structure The annual budget is comprised of many different types of funds. In creating the annual budget, the City appropriates funds for the General Fund and various Enterprise Funds. Although the City has other funds, Hospitality Tax and E-911 Tariff Funds, they have specific revenues/expenditures that limit their uses. NON-ENTERPRISE FUNDS The General Fund accounts for all financial resources that are not accounted for in other funds. This includes common City functions such as Police, Fire, Court Administration, Building and Zoning, Parks and Recreation, and General Administration. The Local Option Hospitality Tax is a City tax on food and beverage sales. The proceeds of this tax are used to fund tourism-related activities including local festivals and tourism facilities. E-911 tariff funds are surcharges on telephone land lines remitted to the City by the local telephone company. These funds are used to support the operation and capital needs of the City s E-911 center. ENTERPRISE FUNDS The Gross Revenue Fund maintains and operates the City s water and wastewater system. The fund includes the City s water department, sewer department, utility billing functions and wastewater treatment plant operations. The Solid Waste Fund maintains and operates the City s sanitation services including the operation of the City owned solid waste transfer station. The City owns the only solid waste transfer station in Lancaster County and charges of its use by Lancaster County Government and independent sanitation contractors who service areas of Lancaster County. NON-ENTERPRISE FUNDS General Fund Hospitality Tax Fund ENTERPRISE FUNDS Gross Revenue Solid Waste E-911 Tariff City of Lancaster - Fiscal Year Annual Budget Page 21

23 Financial Policies and Strategies The City of Lancaster budget and financial policies and strategies are governed by South Carolina state law, the City Charter and Code of Ordinances, and generally accepted accounting principles (GAAP). These laws strategies, principles, and policies describe ways to amend the budget after adoption, provide budget controls and budget reporting, and identify appropriate methods of budgeting, accounting, and reporting. Budget Amendments The Finance Director and City Administrator both have conditional authority to perform certain budget transfers. For purposes of achieving the goals of the budget, and upon written request of the department head, the Finance Director is authorized to make line item transfers within a department in the amount not to exceed one thousand ($1,000) dollars per instance. The City Administrator, upon written request from the department head and Finance Director, is authorized to make line item transfers within a fund in the amount not to exceed five thousand ($5,000) dollars per instance. All other budget transfers exceeding these thresholds or which are made to the Capital Improvement Plan (CIP) items must be submitted to City Council for approval. Also, any changes to the adopted budget which would increase or decrease individual fund balances or the total of the combined authorized revenues or expenditures/expenses must be approved by City Council. All budget amendments that require City Council approval will be itemized in a budget amendment ordinance prepared by the Finance Director and presented to Council for approval. Any amendments made through a budget amendment ordinance requires two readings to become effective with passage by the majority of City Council. Budgetary Controls & Reporting Monthly budgetary reports are prepared for City Council which show revenues collected versus funds expended. The detail of this report is at the budgetary line item level. The monthly budgetary reports also provide revenue and expenditure data by fund and department by monthly totals for the prior two fiscal years and the current budget year for comparison purposes. Any material discrepancies are explained to City Council who then has an opportunity to ask any questions they may have concerning year-todate revenues and expenditures. Budgetary & Accounting Systems The budgetary and accounting policies of the City of Lancaster conform to generally accepted accounting principles (GAAP) as applicable to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted body for establishing governmental accounting and financial reporting principles and standards. The following is a summary of the more significant policies and applicable to revenues and expenditures/expenses. Fund Accounting The accounts of the City of Lancaster are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions to certain governmental functions or activities. Page 22

24 Financial Policies and Strategies The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues and expenditure/expenses. The budgeted funds for the City of Lancaster are described below. Budgeted Funds Governmental Funds are used to account for all or most of a government s general activities. Examples of these activities include public safety, street maintenance, parks and recreation, debt service and general administration. The primary revenue sources are ad valorem taxes, local option sales taxes, business licenses, franchise agreements, grants, permits, and other taxes and fees. Within the category of governmental funds, the City of Lancaster budgets and maintains the General, Hospitality Tax, and E-911 Funds. The General Fund is the City s general operating fund and is used for all required transactions except those required to be accounted for or designated by City Council to be accounted for in another fund. Principal sources of revenue are ad valorem taxes, local option sales tax, business licenses, franchise agreements, grants, and user fees. A few of the primary expenditures in the fund include public safety, general government, street maintenance, debt service, and parks and recreation. The Hospitality Tax Fund was designated by City Council to account for revenues and expenditures associated with hospitality tax receipts from local hospitality businesses. The expenditure of hospitality tax funds is legally restricted by Section of the State of South Carolina Code of Laws, as amended. The revenue generated by the two percent (2%) hospitality tax must be used exclusively for the following purposes: (1) tourism-related buildings including, but not limited to, civic centers, coliseums, and aquariums; (2) tourism-related cultural, recreational, or historic facilities; (3) beach access and renourishment; (4) highway, roads, streets, and bridges providing access to tourist destinations; (5) advertisements and promotions related to tourist development; or (6) water and sewer infrastructure to serve tourism-related demand. The E-911 Fund accounts for fees levied through telephone land line bills to support the emergency 911 system in the City. Use of the fees collected are restricted for improvements, maintenance, and expansion of the City s emergency 911 system in accordance with Section of the South Carolina Code of Laws, as amended. Enterprise Funds are used to account for the business-type activities of a government. The activities are financed and operated in a manner where the intent of the governing body is that the costs (expenses, including depreciation) of providing the goods or services to the general public on a continuing basis be financed or recovered primarily through user charges. The City budgets the following enterprise funds. The Gross Revenue Fund was established to account for the financial results of operations relating to providing water and wastewater collection and treatment services to residential and industrial/commercial customers of the City s utility system. The budget for this fund is prepared on the modified accrual basis. This basis differs from the accounting principles generally accepted in the United States of America for this fund. Page 23

25 Financial Policies and Strategies The Solid Waste Fund was established to account for the financial results of operations relating to the collection and disposal of solid waste for the City s residential and industrial/commercial customers. The budget for this fund is prepared on the modified accrual basis. This basis differs from the accounting principles generally accepted in the United States of America for this fund. Basis of Accounting The accounting and financial reporting applied to a fund is determined by its measurement focus. All governmental funds are accounted for using the current financial resources focus. Only current financial assets and current liabilities generally are included on the balance sheet. Governmental fund revenues and expenditures are recognized on the modified accrual basis. Revenues are deemed susceptible to accrual and are recognized in the period when they become measurable and available. Expenditures are recognized when the fund liability is incurred, except principal and interest on the general long-term debt, claims and judgments, and compensated absences which are recognized as expenditures to the extent they have matured. Basis of Budgeting In accordance with the General Statutes of the State of South Carolina, the City Council is required by state statute to adopt an annual balanced budget ordinance for the Combined General, Other Governmental and Enterprise Operating Funds prior to July 1 st. All budgets are prepared using the modified accrual basis of accounting. This basis differs from accounting principles generally accepted in the United States of America for the Gross Revenue Fund and Solid Waste Fund. City Council has the authority to amend the budget ordinance. Appropriations lapse at the end of the budget fiscal year. Appropriations are authorized in the annual budget ordinance generally at the department level. The legal level of budgetary control is at the object class level. Administrative control is further maintained through more detailed line-item budgets. The City adopts this budget for the General (Fund 100), Hospitality Tax (Fund 110), E911 Fund (Fund 115), Gross Revenue (Fund 200) and Solid Waste (Fund 210) Funds. The proprietary funds are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and liabilities associated with the operation of these funds are included on the statement of net position. Fund net position is segregated into invested in capital assets, restricted and unrestricted net position. Proprietary fundtype operating statements present increases (revenues) and decreases (expenses) in net position. Page 24

26 Revenue Summary GENERAL FUND The General Fund is budgeted at $11,290,804 for the upcoming budget year. This represents a decrease of 3.3% from the Fiscal Year adopted budget. For the upcoming year, the City of Lancaster is adding 12.0 mils of reserve millage. The City expects to end the fiscal year with an unassigned fund balance below the minimum threshold as established by the City s Fund Balance Policy. The City of Lancaster Fund Balance Policy provides remedies that Council must perform in order to increase unassigned fund balance to the minimum level. One option is to impose reserve millage in the next tax year to restore unassigned fund to the minimum amount as required by financial policy. The imposition of reserve millage in order to maintain adequate unassigned fund balance reserves is allowed under Section (D) of the South Carolina Code of Laws, 1976, as amended. The City also increased its local option sales tax credit factor for the upcoming budget year to This increase in the sales tax credit factor will reduce the overall tax burden on the citizens of the city and will offset the increase in taxes payable as a result of the reserve millage being added for the budget year. The graph below shows the percentage of the General Fund Total Revenue Sources. General Fund Total Revenue Lease Proceed 2% Intergovernmental 4% Services 3% Other 4% Franchise Fee 7% Licenses/Permit 19% Property Taxes 54% Local Option 6% Page 25

27 Revenue Summary MAJOR REVENUE SOURCES General Property Taxes General property taxes, including fee-in-lieu of tax (FILOT) payments, account for 51.8% of the general fund revenues for the budget year. South Carolina law allows local governments to levy taxes on real and personal property valuations as assessed and equalized according to statutory guidelines (SC Code of Laws, Chapter 12, Chapter 43, Article 3, Section ). The tax rate remains at mils in the adopted budget with the addition of 12.0 mils in reserve millage for an overall rate of mils. In comparing the local millage rates since the 2007 tax year, the millage rate for the City of Lancaster has varied from a low of mils to a high of (including reserve millage of 12.0 mils in -2017). The tax year is a reassessment year with the resulting change in assessed value resulting in no rollback millage calculation due to the fact that the City s assessed value figures did not increase from the last reassessment tax year in The millage rate history for the last ten tax years (including the tax year) is as follows:. Tax Year Millage Rate Page 26

28 Revenue Summary Monthly Comparison of Revenue Current Taxes- Real Property 2,000,000 1,800,000 1,600,000 1,400,000 1,200,000 1,000, ,000 FY1516 FY1314 FY , , ,000 0 July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June 30,000 Monthly Comparison of Revenue Current Taxes- Vehicles 25,000 20,000 15,000 FY1516 FY1314 FY ,000 5,000 0 July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June Licenses and Permits Page 27

29 Revenue Summary The business license tax, which is imposed on any business, occupation, or profession, in whole or part, within the city limits, is the major source of revenue for this category. Business license taxes account for approximately 17.2% of general fund revenues in the budget year. The fee consists of a base rate plus a percentage of gross income and varies according to the business classification. Building permits also fall under this category but are immaterial in terms of revenue generated for the General Fund. License and permit revenue projections are based primarily on historical trend analysis. No rate increases are planned for the budget year. 1,400,000 Monthly Comparison of Revenue Business Licenses 1,200,000 1,000, , ,000 FY1516 FY1314 FY , ,000 0 July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June Franchise Fees The City of Lancaster receives several franchise fees from area communication and utility service providers. The largest franchise fee the City receives is from Duke Power and accounts for approximately 6.2% of the general fund revenues for the budget year. The City also receives cable and communications franchise fees from the service providers within the city limits. Franchise fee revenue projections are based on historical trend analysis. There are no increases in franchise fee rates for the budget year. Page 28

30 Revenue Summary 250,000 Monthly Comparison of Revenue Franchise Fees 200, , ,000 FY1516 FY1314 FY ,000 0 July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June Local Option Sales Tax The City of Lancaster imposes a 1% local option sales tax as allowed by state law. From the revenue received, a portion has to be used to offset property taxes imposed on residents of the City as mandated by the State of South Carolina. Every year based on anticipated sales tax collections, the City must establish a credit factor to be applied to property tax bills. The remainder of the proceeds each year is budgeted and can be used to fund General Fund operations. For the budget year, the credit factor increased to which completely offset the reserve millage increase approved for the budget year. Page 29

31 Revenue Summary Monthly Comparison of Revenue Local Option Tax 120, ,000 80,000 60,000 FY1516 FY1314 FY ,000 20,000 0 July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June Charges for Services Charges for services, such as fire protection contracts, police fees, cemetery fees, lot clearing fees, certification fees and planning/zoning fees are additional revenue sources for the City. These charges for service help defray some of the operational costs associated with these governmental functions. Revenue projections are based on historical trend analysis of each revenue account and additional information provided by city departments. Intergovernmental Revenues Intergovernmental revenues include items such as the Local Government Fund (LGF), payments from Lancaster County, state accommodations tax, and grant proceeds. These revenue sources provide needed revenue to the City to help fund governmental projects or operations depending on the restrictions associated with the intergovernmental revenue source. Revenue projections are based on historical trend analysis or based on the amount of other governmental appropriations or grant award amounts for a specified fiscal year. Page 30

32 Revenue Summary HOSPITALITY FUND MAJOR REVENUE SOURCES Hospitality Tax Revenue The major source of revenue for the Hospitality Tax Fund is hospitality taxes. State law allows for the imposition of not to exceed 2% of the charges for food and beverages. The hospitality tax was imposed by City Council at a rate of 2% by ordinance in accordance with Section of the South Carolina Code of Laws, as amended. Revenues are based on historical trend analysis taking into account current economic conditions which could have an impact on revenue collections. 160,000 Monthly Comparison of Revenue Hospitality Tax 140, , ,000 80,000 60,000 FY1516 FY1314 FY ,000 20,000 0 July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June -20,000 Performing Arts and Secondary Performances Beginning in the budget year, the City began budgeting and accounting for revenue from the City of Lancaster s Performing Arts Series and Secondary Performances in the hospitality tax fund. The premise for budgeting and recognizing the revenue from these performances in the hospitality tax fund was that although projected revenue for the budget year is $130,000, this is not enough to cover the costs of the performances and this difference is funded through hospitality tax collections. Revenues are based on historical trend analysis taking into account current economic conditions which could have an impact on revenue collections. Page 31

33 Revenue Summary GROSS REVENUE FUND MAJOR REVENUE SOURCES Charges for Services A major source of revenue for the Gross Revenue Fund is charges for water and sewer service. The City serves residential and commercial water and sewer customers both within and outside the city limits. The rates for city customers and outside city customers are not the same. If the City provides water and sewer service to a customer who is outside the city limits, that customer must pay an increased rate for service compared to those customers who reside in the city limits. The amount of premium charged is on a graduated scale depending upon total usage. The minimum usage rates for water and sewer service increased for outside users of the city water and sewer services by $2.00 per month for both the water and sewer service for a total minimum bill increase of $4.00 per month. The minimum usage rates for water and sewer service for inside users of the city water and sewer services remained the same for the budget year. The City also has a separate rate schedule for the installation of second water meters for irrigation purposes only and commercial customers. Copies of these rate schedules can be found in the fees and rates section of this document. Revenues are projected using historical consumption trend analysis along with any changes in population levels or fee schedules. 300,000 Monthly Comparison of Revenue City Water 250, , ,000 FY1516 FY1314 FY ,000 50,000 0 July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June Page 32

34 Revenue Summary 300,000 Monthly Comparison of Revenue City Sewer 250, , ,000 FY1516 FY1314 FY ,000 50,000 0 July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June Intergovernmental Revenues A major source of revenue for the Gross Revenue Fund is intergovernmental revenues. The City currently receives intergovernmental revenues from five sources: 1) payments by the Lancaster County Water and Sewer District (LCWSD) for the treatment of wastewater for the district and the Town of Fort Lawn; 2) payments from Lancaster County for use of building space in the City s 15 th Street Building; 3) grant revenue for work in the Erwin Farms, West Arch Street, and Poovey Farms sewer basins to address EPA Order of Consent issues; 4) State of South Carolina Clean Water State Revolving Fund loan proceeds for the Erwin Farms Basin to address EPA Order of Consent Orders; and 5) pass through grant proceeds for rehabilitation work in the Midway area of the wastewater system. The payments by the LCWSD and Lancaster County will be an on-going contractual payment for the foreseeable future. The intergovernmental revenue for the Erwin Farms, West Arch Street, and Poovey Farms sewer basins will only be for the duration of the projects and for approved reimbursable project expenses. Revenues are based on contractual amounts, projected volume and award/loan documents. Page 33

35 Revenue Summary Monthly Comparison of Revenue Lancaster County Water and Sewer District 80,000 70,000 60,000 50,000 40,000 FY1516 FY1314 FY ,000 20,000 10,000 0 July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June Monthly Comparison of Revenue Lancaster County WSD - Fort Lawn Sewer 20,000 18,000 16,000 14,000 12,000 10,000 8,000 FY1516 FY1314 FY1415 6,000 4,000 2,000 0 July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June Page 34

36 Revenue Summary SOLID WASTE FUND MAJOR REVENUE SOURCES Charges for Services A major revenue source for the Solid Waste Fund is charges for solid waste collection and disposal. The City provides residential and commercial garbage collection, recycling collection and a roll-off container service to individuals and companies within the city limits. The City also collects fees for use of the City s transfer station and disposal of solid waste from independent businesses which provide solid waste collection service to Lancaster County residents who do not reside in the city limits. Revenues are based on historical trends taking into account changes in population and rates. Commercial garbage collection charges increased during the budget year, please refer to the schedule of taxes, fees and charges included in this document to view the new commercial roll-away, commercial containers, and transfer station fee increases for the budget year. 51,000 Monthly Comparison of Revenue Residential Garbage 50,000 49,000 48,000 47,000 FY1516 FY1314 FY ,000 45,000 44,000 July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June Page 35

37 Revenue Summary Monthly Comparison of Revenue Commercial Garbage 50,000 45,000 40,000 35,000 30,000 25,000 20,000 FY1516 FY1314 FY ,000 10,000 5,000 0 July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June Monthly Comparison of Revenue Transfer Station Use 90,000 80,000 70,000 60,000 50,000 40,000 FY1516 FY1314 FY ,000 20,000 10,000 0 July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June Page 36

38 Revenue Line Item Budget Fund Dept Line Account Budget Projected Approved Current Taxes - Real 3,281,304 3,173,568 3,225,000 3,197,003 2,950, Current Taxes - Vehicle 241, , , , , Homestead Exemption 192, , , , , Manf Personal Exemption 138, , , , , Property Tax Rollback 1,136,434 1,286,972 1,515,000 1,545,068 2,072, Local Option Tax Revenue 525, , , , , Del Tax - Prior Yrs 67,986 77,610 75,000 50,567 75, Del Tax - Curr Yr 57,887 66,629 50,000 35,825 50, In Lieu of Taxes 627, , , , , Tax Penalties 27,686 26,943 35,000 23,215 30, Privilege License 1,913,382 1,997,306 1,900,000 2,049,216 1,940, Building Permits 61,619 36,438 40,000 29,120 30, Cable Franchise Fee 121, ,698 70, ,576 85, Telecommunications 39,294 34,819 35,000 33,562 35, Duke Power Tax 659, , , , , Court Fines 303, , , , , Fire Prot. Contracts 58,658 29,317 30,000 32,669 30, Sale of Assets 3,988 11,678 10,000 6,255 10, Victims' Services Revenue 24,929 26,030 20,000 19,736 20, School Guard & SRO 67,939 71,769 70,000 51,177 70, Cemetery Fees 8,525 7,425 10,000 6,975 10, Miscellaneous Income 13,410 31,332 10,000 3,712 10, Lot Clearing 8,770 10,695 10,000 13,146 10, Certification Fees 3,110 3,000 3,000 3,975 3, Insurance Proceeds 21,463 32,453 10,000 19,208 10, Donations 12,444 2,000 4,000 4,000 2, Interest on Savings 11,722 13,301 10,000 26,814 10, Planning And Zoning Rev 2,185 1,850 2,000 2,380 2, Accommodations Tax 46,639 51,837 30,000 55,779 45, Merchants Inventory 71,687 71,687 70,000 71,687 70, Motor Carrier Property Tax 55,710 58,113 50,000 59,104 55, Local Government Fund 185, , , , , Grant Proceeds 89,217 31,425 24,219 4,000 22, Police Dept Revenues 36,777 26,267 30,000 24,034 25, Tran Fr Hospitality Fund 104, , , , County Payments 50,000 50,000 50,000 80,000 50, Carryover - CIP , , Carryover - Downtown , , Carryover - Victim Serv Carryover - Other , Loan Proceeds 0 597, , , Interfund Loan 60,770 60, , ,451 0 Total General Fund Revenue $ 10,333,751 $ 10,997,116 $ 12,243,456 $ 11,070,978 $ 11,290,804 Page 37

39 Revenue Line Item Budget Fund Dept Line Account Budget Projected Approved Performing Arts 129, , , , , Hospitality Tax 745, , , , , Miscellaneous Income 25,239 20,683 15,000 12,865 10, Interest Carryover-Restricted , ,831 Total Hospitality Tax Fund Revenue $ 899,539 $ 954,272 $ 1,193,822 $ 978,241 $ 950, E911 Fees 0 45,088 44,400 44,185 44,400 Total E911 Fund $0 $45,088 $44,400 $44,185 $44, In City Water 1,639,383 1,627,365 1,730,000 1,721,865 1,730, Outside Water 942, , ,000 1,036,056 1,015, Joslyn Clark Controls, Inc 1,865 1,865 1,500 1,889 1, Water Penalties 137, , , , , Water Taps 13,532 3,900 5,000 8,963 5, Second Penalty 88,025 87,100 85,000 88,375 87, Miscellaneous Receipts 10,964 34,207 5,000 3,011 5, EWS Hospital Water 56,642 48,927 50,000 43,390 50, Gillette Company Water 128,523 71,007 75,000 73,613 75, Soliant LLC Water 9,752 16,840 17,000 18,642 17, Administrative Fee 15,563 13,997 15,000 11,540 15, In City Sewer 1,442,185 1,439,941 1,440,000 1,530,228 1,440, Outside Sewer 856, , , , , Springs Industries 4,225 2,812 2,000 2,767 2, Joslyn Clark Controls, Inc Sewer Taps 8,100 9,326 10,000 2,400 10, Soliant LLC Sewer 22,123 18,858 17,500 20,872 17, Septic Tank Fees 32,145 25,936 15,000 27,179 15, EWS Hospital Sewer 63,389 54,750 55,000 48,547 55, Gillette Company Sewer 112,054 65,306 60,000 72,285 70, Lanc. Co W/S District 617, , , , , WSD - Ft Lawn Sewer 82,946 78,101 70,000 87,172 70, Sale of Assets 6,341 9,564 5, , Insurance Proceeds 13,711 12,780 10,000 6,483 10, Restitution Payments Interest on Savings 3,152 3,081 1,500 5,718 1, Grant Proceeds 228,949 84, , ,864, County Reimbursements 487,555 52,150 1,328,250 55,573 1,213, Capital Contributions 0 353, , , Carryover-CIP Allocation , Carryover - Other , , Carryover-Restricted , , Loan Proceeds ,000, Lease Proceeds Total Gross Revenue Fund Revenue $ 7,025,515 $ 6,619,165 $ 10,346,415 $ 7,337,769 $ 18,737,895 Page 38

40 Revenue Line Item Budget Fund Dept Line Account Budget Projected Approved Residential Garbage 579, , , , , Commercial Garbage 511, , , , , Recycling Sales 22,841 31,797 40,000 28,279 30, Interest on Savings ,000 2,692 1, Miscellaneous 1,392 6,045 5, , Sale of Assets 3,684 34,002 5,000 47,265 5, Insurance Proceeds 6,265 4,394 29,675 29,104 5, Roll-Off Containers 95,120 77,370 80, , , Transfer Station Use 571, , , , , Carryover - CIP , , Carryover - Other , , Lease Proceeds , ,550 0 Total Solid Waste Revenue Fund $ 1,792,790 $ 2,099,627 $ 2,435,386 $ 2,242,594 $ 2,537,075 Total All Budgeted Funds $ 20,051,595 $ 20,715,268 $ 26,263,479 $ 21,673,768 $ 33,560,355 Page 39

41 Expenditure Summary EXPENDITURE OBSERVATION ALL MAJOR FUNDS General Fund General Fund departments continue to control costs to help offset the continued lack of property tax assessment value growth for real property in the City of Lancaster. The General Fund expenditures for fiscal year are budgeted at $11,290,804. This is a decrease of 3.33% or ($389,313) from the amount originally budgeted for fiscal year Personnel expenditures make up the most significant portion of the General Fund expenditures and have increased for fiscal year due to increased health care costs. There were no cost-of-living or merit raises included in the fiscal year General Fund budget. Enterprise Funds Gross Revenue Fund The Gross Revenue Fund for water and sewer utilities continues to have severe budgetary constraints related to the City being under an EPA Order of Consent for three (3) of the City s sewer basins. To help offset some of the fiscal constraints on the Gross Revenue Fund, the City has transferred $1,103,249 from the City s General Fund over the last two fiscal years to help pay upfront costs associated with compliance with the consent order. For fiscal year the City will begin to receive loan funds to help recoup some of the funds paid upfront for one of the basins and to pay for construction costs in the amount of approximately $6,791,000. The reimbursement of upfront costs will help replenish reserve funds used in the Gross Revenue Fund in prior fiscal years to address the EPA Order of Consent. To help pay for the repayment of the loan being received and to help build back needed contingency funds in the Gross Revenue Fund, the City has increased the minimum water and sewer rates on utility customers outside of the City limits by $2.00 each. This will result in a total increase in rates of $4.00 per month per customer. The rates were raised on outside customers due to the fact that two (2) of the three (3) basins under the consent order are outside of the city limits and they did not contribute to the general fund tax dollars that had to be transferred to the Gross Revenue Fund to help pay for the consent order compliance costs. Page 40

42 Expenditure Summary Solid Waste Fund The Solid Waste Fund pays for the City s trash and sanitation services. The City operates a countywide transfer station within the City as well as offering curbside pickup of trash, recycling, yard debris and white goods. There were increases for commercial roll-a-way and other trash containers serviced by the City to help offset increasing operating costs. The City also introduced a non-recycling fee of $2 per roll-a-way container per month to promote the use of recycling services by citizens who do not voluntarily participate in the program currently. Increasing recycling usage by city residents will help control landfill disposal fees for the fund. TOTAL MAJOR FUND LEVEL SUMMARY Fund Budget Projected 2017 Budget General 10,618,787 11,842,894 12,243,456 10,717,749 11,290,804 Hospitality Tax 854, ,283 1,193,822 1,016, ,181 Gross Revenue 6,194,613 6,571,781 10,346,415 5,921,348 18,737,895 Solid Waste 1,979,592 1,732,674 2,435,386 1,969,889 2,537,075 Total Expenditures 19,647,347 21,002,632 26,219,079 19,625,622 33,515,955 Page 41