Oakland County Executive s Recommended FY 2017 FY 2019 Triennial Budget

Transcription

1 July 20, 2016 Oakland County Executive s Recommended FY 2017 FY 2019 Triennial Budget Presentation to the Board of Commissioners

2 L. Brooks Patterson Oakland County Executive

3 Balanced Budget The Recommended Triennial Budget for FY 2017-FY 2019 is balanced

4 Thanks to... A strong leadership team working together

5 L. Brooks Patterson County Executive Andy Meisner Treasurer Michael Bouchard Sheriff Lisa Brown Clerk Jessica Cooper Prosecutor Jim Nash Water Resources Commissioner Board of Commissioners Nanci Grant Circuit Court Linda Hallmark Probate Court Julie Nicholson District Court LEADERS WORKING TOGETHER

6 Thanks to... Dedicated and professional County employees

7 Thanks to... An improved local economy

8 Unemployment is Declining For May 2016, Oakland County s unemployment rate of 3.9% is less than the state and national rates, which are both at 4.5%.

9 Jobs are Increasing By the end of 2018, it is projected that Oakland County will have replenished 92% of the jobs lost from 2000 to 2009.

10 AdvantageOakland.com Businesses are Investing Many of the new jobs predicted over the next three years will be within the Emerging Sectors strategy, which has generated $3.5 billion of investment to date.

11 Per Capita Income is Increasing Since 2009, per capita personal income in Oakland County has increased by 20%.

12 Foreclosures are Decreasing The number of real property foreclosures are now below 2002 levels.

13 Property Values are Increasing The current total market value of property in Oakland County is $130.2 billion, which is 28% higher than 2012 post-recession values.

14 Thanks to... Acknowledged best practices for long-term financial planning and management

15 TRIPLE AAA Awards Distinguished Budget Presentation Award Since 1984 Certificate of Achievement for Excellence in Financial Reporting Since 1991 Award for Outstanding Achievement in Popular Annual Financial Reporting Since 1997

16 Laurie Van Pelt Director, Management & Budget

17 FY 2017 FY 2018 FY 2019 General Fund/General Purpose (GF/GP) $443,244,156 $450,332,208 $454,141,372 Special Revenue & Proprietary (SR) $411,087,701 $408,789,557 $406,419,823 Total All Funds Recommended Budget $854,331,857 $859,121,765 $860,561,195 Percent Change from Prior Year: GF/GP 2.9% 1.6% 0.8% SR 3.6% -0.6% -0.6% All Funds 3.3% 0.6% 0.2% FY 2017 FY 2019 Recommended Budget The County Executive Recommended Triennial Budget is balanced for the next three fiscal years.

18 Recommended Budget Highlights Revenue adjustments Projected use of fund balance through FY 2021: Annual operations Technology system replacements Continued building security enhancements Local road improvements Employee compensation Recruitment and retention

19 Tax Revenue Limitations By design of law, governmental revenues are increasing at a slower pace than the economy

20 Taxable Value X Levy Rate = Tax Revenue? July Board of Review March Board of Review Property tax revenue is approximately 53% of total GF/GP ongoing revenue* *(excluding planned use of fund balance)

21 Although property market values are now increasing...

22 Growth in taxable value is intentionally limited by State law

23 Estimated Taxable Value Increase Estimated Percentage Change in County-wide Taxable Value FY 2017 FY 2018 FY 2019 Current Budget Recommendation 4% 5% 4% Previous Budget Estimate* 4% 4% 4% Increase from Prior Year s Estimate 0% 1% 0% *From budget adopted on September 17, 2015

24 Mills County General Operating Millage Rate Oakland County History of County General Operating Millage Rate millage rate differential Maximum Authorized Millage Millage Levied Proposal A was approved in Beginning in 1996, properties with ownership transfers became uncapped which accelerated the effect of the Headlee millage rollback calculation. Maximum Millage Millage Year Authorized Millage Levied Differential

25 Variables Affecting Millage Rollback The major variables that impact the Headlee rollback calculation include: Taxable value uncapping from property transfers ( popups ) The greater the number of pop-ups, a greater impact on rollback Change in CPI The lower the CPI, a greater impact on rollback The higher the CPI, a lesser impact on rollback Losses in personal property (recent tax exemption) will have a greater impact on rollback

26 State Equalized Values vs. Taxable Values $52,786 $65,085 $51,895 $60,806 $50,048 $55,084 $49,235 $51,429 Potential future uncapping of properties $49,235 $50,839 $50,798 $52,453 $55,081 $57,745 $62,416 $67,858 TV SEV 2008 $64,745 $74,491 $- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 Millions of Dollars

27 Annual Taxable Value Increase is Capped by the IRM for Non-transferred Properties Inflation Rate Multiplier (IRM) for Annual Taxable Value Cap 4.5% 4.4% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 1.9% 3.2% 3.2% 1.5% 2.3% 2.3% 3.3% 3.7% 2.3% -0.3% 1.7% 2.7% 2.4% Lower IRM = larger Headlee rollback 1.6% 1.6% 0.3% 1.0% 1.9% 2.3% 0.0% -0.5% Note: the IRM is based on the change in the Consumer Price Index (CPI) for the fiscal period of October through September of the preceding year. *Source of estimates for : State of Michigan Consensus Revenue Agreement, May 17, 2016.

28 2016 Equalization Report, TV Change Total County taxable value (TV) increased by 1.72% in 2016 Real property TV increased by 2.84% Personal property TV decreased by % For the first time, this includes the effect of the new exemption for manufacturing personal property (EMPP) The reduction in the market value of personal property was $948 million as reported in the 2016 Equalization Report which was published in April. Since the issuance of the Equalization Report, the State extended the exemption filing deadline which resulted in a further reduction in personal property with market value of $34.4 million.

29 State Reimbursement for PPT Exemptions The State is expected to reimburse local governments for 100% of personal property tax (PPT) exemptions this year Oakland County s estimated reimbursement is $2.4 million for FY 2016 which is anticipated to be received in November (after the end of the fiscal year) Reimbursement in future years is expected but not guaranteed and depends on how much is collected by the State for the new Essential Services Assessment (ESA) Reimbursements to local communities are prioritized with Tier 1 as the highest priority (local schools, TIFs, police, fire & ambulance); Tier 3 is the lowest priority which includes County general operations

30 Property Tax Revenue Adjustments (in millions) FY 2017 FY 2018 FY 2019 Estimated property tax revenue from adopted budget, 9/27/15 $220.1 $229.1 $237.4 Adjustments: Increase in taxable value Personal property exemptions* (2.4) (2.4) (2.4) Adjustment for tax captures (1.4) (1.4) (1.4) Net adjustments ($3.8) ($1.7) ($0.7) Revised recommended property tax revenue estimate, % change in taxable value $216.3 $227.4 $236.7 Percentage change from adopted budget estimate -1.7% Percentage change from recommended budget for prior year 5.1% 4.1% *Reflects estimated amount of personal property exemptions for FY 2016

31 Proactive Monitoring and Planning The County levies and collects it property taxes in arrears as a result of the passage of Michigan Public Act 357 of 2004 Property taxes are levied in July for the fiscal year which begins on October 1 of the preceding year This requirement adds greater uncertainty for budgetary planning, since property taxes and the millage rollback must be estimated approximately 18 months for budget purposes The County Executive recommends continuing the County s prudent past practice of maintaining a millage rate which remains below the maximum authorized rate The Administration will continue to monitor the variables that impact the Headlee rollback calculation in order to foresee the potential constraint on the millage rate for the future

32 General Fund Balance, Five Year Outlook Annual operations Technology system replacements Continued building security enhancements Local road improvements

33 Attention to Fund Balance A healthy fund balance is an essential ingredient for long-term budget flexibility and sustainability = adequate cash flow Past increases in General Fund equity reflect the County s deliberate, planned approach to balance future years budgets for continued sustainability Over the next several years, fund balance will be drawn down gradually as planned

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42 Long-term Forecast of General Fund Balance

43 Jordie Kramer Director, Human Resources

44 HUMAN RESOURCES TOTAL COMPENSATION PACKAGE/ RECRUITMENT & RETENTION Deferred Compensation Match Retiree Health Savings Contribution General Salary Overview Recruitment & Retention

45 Deferred Compensation 457(b) Plan Enhancement - Fidelity Voluntary Deferred Compensation Plan Available to full-time eligible employees Currently 1,892 out of 3,300 employees participate Pre-tax employee contributions Employer Match program - $300 match Eliminated in FY 2010 Reinstated in FY 2016 effective January 1, 2016 FY 2017 recommended increase to $500 match - January 1, 2017

46 Retiree Health Savings plan (RHS): Effective January 1, 2006 elimination of retiree health coverage for new employees New employees provided Retiree Health Savings plan FY2016 increase county contribution - $50 to $75 bi-weekly

47 General Salary Overview General salary decreases during tough economic times 2.5% reduction FY % reduction FY 2011 No general salary increases FY 2012 and 2013 October one-time payment of $500 Restoring general salary increases 2% FY % FY % FY 2016 Proposed 2% FY 2017

48 Employee Recruitment and Retention One third of the County s current workforce is expected to turn-over in the next three to five years Retirements Voluntary turnover Competition in recruitment and retention efforts Low unemployment rates creating competition in the labor market Shortage of skilled and qualified workers Median tenure of employees in the general workforce is 4.6 years

49 Employee Recruitment and Retention Increased effort to promote Oakland County as an employer of choice: Health Care Benefits Tuition Reimbursement Parental Leave Competitive Salaries Intangible Benefits

50 Employee Recruitment and Retention Recruitment Efforts Social media Human Resources website re-design Relationship building with colleges, universities and high schools New Hire applicant system - NEOGOV Implemented June 2015 User friendly / mobile friendly New Hire onboarding Fall 2016 Disabled Worker Pilot Program Working with MORC (Macomb Oakland Regional Center) Initial placement and new opportunities

51 Employee Recruitment and Retention Training and Employee Development Launched Human Resources Connection Redesign of supervisor training courses Promote talent development and inclusion in the workforce On-going training of employees and supervisors Succession Planning Identifying needs within departments Developing strategies

52 OakFit Wellness Program

53 L. Brooks Patterson Oakland County Executive

54 In Closing The recommended budget is balanced through FY 2019 The longer term five-year includes continued but diminishing use of General Fund Balance through FY 2021 Fund balance will continue to be closely monitored prior to recommending use of fund balance to fund future capital projects Oakland County retains its AAA rating, which would not be possible without the continued support from the Board of Commissioners, the elected officials, and the County s workforce

55 Thank you Postscript: A detailed overview of the Recommended Budget will be presented by Fiscal Services at the August 11th Finance Committee meeting