FY OPERATING BUDGET AND SIX-YEAR CAPITAL IMPROVEMENT PROGRAM

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1 FY OPERATING BUDGET AND SIX-YEAR CAPITAL IMPROVEMENT PROGRAM March 26, 2013

2 2040 VISION AND THE BUDGET Safe Community Family and Youth Quality Education Economic Vitality Cultural and Recreational Quality Physical Environment Quality Organization 2

3 CAPITAL BUDGET 3

4 CAPITAL IMPROVEMENT PROGRAM ALL SIX YEARS OF FUNDING Utilities 35.3% Schools 18.1% Coastal 5.5% Economic & Tourism 7.0% Parks and Recreation 7% Buildings 7.8% Roadways 16.1% Communication & Information Technology 3.2% 4

5 CAPITAL IMPROVEMENT PROGRAM ALL SIX YEARS OF FUNDING Site Acquisition 3% Replacement, Expansion & Maintenance 65% New Facilities 31% Technology 1% Note: replacement includes the replacement of fire trucks as well as renovation of buildings 5

6 CAPITAL BUDGET (YEAR 1 OF SIX-YEAR PLAN) Project Type FY Schools $36.4 million Roadways $81.7 million Buildings $18.4 million Parks and Recreation $10.6 million Utilities $66.5 million Coastal $19.0 million Economic and Tourism Development $32.3 million Communications and Information Technology $11.8 million Total Capital Budget $276.7 million 6

7 CAPITAL BUDGET (MEANS OF FINANCING) Type of Financing FY Pay-as-you-go $52.9 million General Fund Balance $23.4 million Other Fund Balance/Retained Earnings $8.1 million State and Federal Funds $29.5 million Bonds and Lease Purchases $152.5 million Other Sources $10.3 million Total Financing Sources $276.7 million 7

8 CIP FINANCING STRATEGIES Increase over the six year plan the use of pay-go funding. Increase dedicated funding to support projects Cigarette tax is increased 5 to support Economic Development Projects Boat Tax on pleasure boats is reinstated at $1 per $100 of value to fund navigation channel dredging backlogs (the taxes on commercial boats and recreational vehicles is proposed to decrease to $1 per $100 of value) Previously approved increases to Storm Water ERU and Sewer rates Increase use of storm water debt to advance critical flooding and maintenance projects while staying with approved rate structure. Transfer the 2 real estate rate increase, City Council approved last year, from the operating budget to the CIP to support transportation funding. Use Fund Balance for maintenance and other projects. 8

9 KEY PROJECTS Eastern Shore Drive Drainage (formerly Cape Henry Beach) Replacement of Kellam High School (opens in 2014) Lesner Bridge Indian River/Kempsville Intersection Improvements Arctic Avenue Parking Facility (funded through TIP Fund) Replacement of 4 th Police Precinct Blackwater Fire and Rescue Station Replacement Modernization of Bow Creek and Kempsville Recreation Centers Eastern Branch of the Lynnhaven Dredging Project Pacific Avenue Improvements (funded through TIP Fund) 9

10 OPERATING BUDGET (Total Budget only increases 0.3%) 10

11 VIRTUAL TOWN HALL In January we ask citizens to indicate their priority for certain city services by allocating $ citizens viewed the information and 57 participated in the question. Service Area Amount Allocated Public Safety $144 Road Construction & Maintenance $77 Water, Sewer, Storm Water & Coastal $48 Arts and Humanities, Libraries, & Recreation $40 Human Services $39 Trash Collection, Disposal, & Recycling $39 General Government $32 Economic Development $31 Housing and Neighborhood Preservation $25 Financial $25 11

12 OPERATING BUDGET Human Services, Health & Housing 7.7% General Gov't & Financial 5.8% Public Works, Planning & Utilities 13.4% Recreation, Libraries, & Cultural Affairs 4.4% Gen. Fund Pay-go to CIP 3.0% Public Safety 12.0% Schools & Debt Svc 47.0% Tourism & Economic 4.1% Gen. Fund Debt Service 2.6% 12

13 OPERATING BUDGET REVENUES (IN MILLIONS) FY FY Variance Real Estate $474.3 $472.5 ($1.8) Personal Property $132.4 $140.3 $7.9 General Sales $54.1 $58.0 $3.9 Utility, Cable & Telecommunications Tax $52.5 $51.8 ($0.7) Business License $42.4 $42.8 $0.4 Restaurant, Hotel & Amusement Taxes $87.6 $92.6 $5.0 Utility & Waste Management Fees $155.6 $168.5 $12.9 Other Revenue and Fees $153.2 $158.4 $5.2 State and Federal Revenues $563.8 $562.3 ($1.5) Fund Balance $52.9 $27.1 ($25.8) Total Revenues $1,768.8 $1,774.3 $5.5 13

14 TAX AND FEES Raise the solid waste fee by $3.00 to $13.00 per month Raise the tax on cigarettes by 5 to support economic development activities Raise Personal Property Tax on pleasure boats from the current rate of $ per $100 of value to $1.00 per $100 value to provide a consistent revenue source for navigation channel dredging in light of potential federal funding reductions Lower the Personal Property Tax on commercial boats, recreational vehicles, and airplanes from the current $1.50 per $100 of value to $1.00 per $100 of value. Increase various fees including special event fees and development fees to offset the cost of delivering the service. (complete list on page 66 of the Executive Summary) Previously approved Storm Water ERU rate increase of $1.52 per month and a Sewer rate increase of $2.90 per month on 5,000 gallons 14

15 LOCAL CONTRIBUTION TO SCHOOLS (IN MILLIONS) General Fund Non-Dedicated Local Taxes Less: Required SOQ Match Remaining Non-Dedicated Local Taxes Formula % Discretionary Local Match Illustration Only FY $757.9 $165.2 $ % $191.9 FY Variance $769.7 $162.2 ($3.0) $ % $196.6 $4.7 Dedicated 4 Real Estate Tax $19.2 $19.2 $0.0 School Board s Decision to move Sandbridge Surplus from CIP to Operating Budget $2.0 $2.0 $0.0 City Council s Decision to provide City General Fund Balance to Schools $ ($9.2) Total Local Contribution $387.5 $380.0 ($7.5) 15

16 EXPENDITURES (IN MILLIONS) FY FY Variance Personnel $792.2 $792.8 $0.6 Fringe Benefits $303.8 $296.6 ($7.2) Operating & Supply Accounts $442.2 $439.6 ($2.6) Capital Outlay (equipment) $15.3 $17.3 $2.0 Debt Service $155.8 $156.1 $0.3 Pay-as-you-go to CIP $45.6 $52.9 $7.3 Reserve for Contingencies $13.9 $19.0 $5.1 Total Operating Budget $1,768.8 $1,774.3 $5.5 16

17 MOVES TOWARDS SUSTAINABILITY Reduce use of fund balance in the Operating Budget Sequestration Reserve and Fund Balance Manage cost of the tax relief for the elderly and disabled program Reduce staffing in solid waste by redesigning routes Manage overtime costs more strictly interpreting FLSA Provide standby pay more in line with surrounding communities Continue to work with the Process Improvement Steering Committee and Hampton Roads Partnership s Shared Services Committee to focus on ways to improve service delivery while reducing costs 17

18 REDUCE USE OF FUND BALANCE IN THE OPERATING BUDGET 3.5% 3.0% 3.1% 3.0% 3.2% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 1.1% 1.0% 1.5% 0.0% Proposed Fiscal Year

19 MANAGE COST OF THE TAX RELIEF FOR THE ELDERLY AND DISABLED PROGRAM This program costs $14 million (the State mandated disabled veterans program adds another $2 million) Even with the proposed reduction of $5,000 for each threshold level, Virginia Beach offers the most generous level of relief The proposed reduction will save $1.1 million Income Threshold for 100% Exemption from Real Estate Tax Virginia Beach $0.00 $47,100 $ $42,100 Suffolk $ $41,479 Norfolk $ $28,611 Chesapeake $ $22,000 Hampton $ $25,000 Portsmouth $ $21,000 Newport News No Exemption 19

20 PLANNING FOR SEQUESTRATION The Proposed Operating Budget includes two Sequestration Reservations: 1) There is a Reserve for Contingency account of $2.7 million in the General Fund. 2) $9.8 million within the General Fund Balance is designated to offset potential economic impacts to our revenue streams. We will provide the first economic indicators report to City Council at the end of the month per the Plan we outlined to Council on February 28th. 20

21 COMPENSATION This is the second year of having employee s pay a portion of their retirement cost as required by State Law. Plan 1 City Employees will pay 2% of their salary towards their VRS cost, and the City will contribute 18.68% of the employee s salary Plan 2 City Employees already pay the full 5% of their salary towards their retirement costs, and the City contributes 15.68% School Employees are all Plan 1 and pay 2% of their salary towards their VRS cost with the School System contributing14.96% of the employee s salary All full-time City and School employees will receive a 1.34% salary adjustment. 1% is the mandated offset to the required VRS employee contribution (employees received 1% last year as well) 0.34% is to offset the impact of the pay increase on employee s taxes City and School employer s contribution to health insurance increased by $4.5 million. 21

22 NEW & EXPANDED PROGRAMS 2 paramedics to support volunteers at the new Town Center Station 1 position in EMS to meet the mandate for electronic medical records 5 new call takers and supervisors for the E911 call center due to increased calls 5 new engineers in Public Works: 2 to manage SGA implementation projects 1 for parks and recreation projects including the modernization of Recreation Centers 1 to support the neighborhood dredging program 1 for the City s use of transportation modeling in making construction decisions 3 software development staff for mobile applications in response to City Council retreat discussions 12 new staff in Humans Services to address increasing workload 22

23 WORKSHOPS & PUBLIC MEETINGS Tuesday, April 2 nd Budget Workshop Conference Room Thursday, April 4 th Budget Information Meeting Staff Q & A Convention Center Tuesday, April 9 th Budget Workshop Conference Room Tuesday, April 16 th Budget Workshop Conference Room Thursday, April 18 th Tuesday, April 23 rd Public Hearing Budget Workshop Public Hearing Virginia Beach Middle School Conference Room Council Chambers Tuesday, May 7 th Reconciliation Workshop Conference Room Tuesday, May 14 th Vote on the Operating Budget and Capital Improvement Program 23