City of East Lansing. Financial Forecast FY

Transcription

1 City of East Lansing Long-Term Financial Forecast FY

2 FY FINANCIAL FORECAST TABLE OF CONTENTS Risks, Uncertainties and Vulnerabilities 1-2 Forecast Exclusions 3 FY14 Year End Estimates Inclusions 4 Forecast Inclusions 5 Assumption Tables 6-8 Five Year Forecast 9 Taxable Value Analysis General Fund Revenue Detail General Fund Expenditure Detail 17

3 RISKS, UNCERTAINTIES AND VULNERABILITIES TO THE FORECAST An economic forecast is based on the best information available at the time the forecast is prepared. Because assumptions and foresight are not perfect, risk and uncertainties are inherent in any forecast. The key risks in this forecast stem predominantly from uncertainties surrounding the overall economic environment, market conditions and fiscal policy at both the national and state levels, energy prices, housing markets, state-revenue sharing (EVIP), Public Act 289 funding, property tax reform, labor agreements, defined benefit contribution valuations and health insurance costs. US Economic and Market Conditions & Monetary and Fiscal Policy The Congressional Budget Office (CBO) updated their Budget and Economic Outlook for their Fiscal Years 2014 to 2024 in a report dated Feb. 4, The CBO is projecting a faster rate of growth of real GDP (3.1% to 3.4%/year in 2015 to 2017). They also project federal fiscal policy will not restrain growth in the demand for goods and services and purchases of goods and services by state and local governments will contribute modestly to economic growth. Developments that could change or impact CBO projected outcomes: Significant weakening of banking and fiscal problems in Europe and/or Asia could spill over to U.S. financial markets and greatly weaken economy here; future changes in U.S. fiscal policy could affect economic growth or U.S. financial markets. Michigan Economic and Market Conditions & Monetary and Fiscal Policy The University of Michigan Research Seminar in Quantitative Economics released their Michigan forecast report on November 22, They see Michigan now being into its fourth year of economic recovery and see job growth continuing through They also project income growth in Michigan to continue its rebound, largely a result of a steady payroll tax; reaching 4.7% in The January 2014 House Fiscal Agency's Economic Outlook projects a continued decline in Michigan unemployment rates (8.2% in 2014 down to 6.4% in 2016). Housing Market Revenue Sharing City's millage rate increases in FY11 & FY12 somewhat mitigated taxable value declines in the last few years. City Assessor is projecting a taxable value increase of just below $6.1 million in FY15 that will lead to a very small increase (.6%) in tax revenue for FY15. Modest (about 1.0%) increases in taxable value are expected in subsequent years as local market appears to show signs of slow recovery but numerous economic factors (both US and Michigan) could change future projections. According to Governor Snyder's budget proposal, they are projecting a 3% increase in constitutionally required payments to local units. The EVIP portion of revenue sharing is being modified and supposedly a local could receive a 15% increase in these payments, subject to meeting existing state requirements or adopting an alternative best practices (as further defined by the state) requirement. Continuation of EVIP program in out years of forecast remains in question if state administration changes. Further risks to revenue sharing; sales tax collections decline and/or less EVIP money is appropriated in the State's budget. Page 1

4 RISKS, UNCERTAINTIES AND VULNERABILITIES CONTINUED Public Act 289 Property Tax Reform Defined Benefit Pension Contributions Given this source of revenue is subject to appropriation, under closer scrutiny by both administrative officials and certain legislators and now requires more substantive reporting requirements, future of funding amounts to cities remain a vulnerability for us. Even though property values are still declining in many Michigan markets, the State legislature passed a personal property tax reform bill in December 2012 that exempts various amounts of personal property tax from assessment. According to the City Assessor, newly exempted personal property as defined by the law represent a taxable value of approximately $6.75 million and roughly $149 thousand in tax revenue for the City. Further reforms to Michigan property tax law cannot be ruled out in future years. The December 2012 MERS actuarial valuation, calls for an approximate 10.05% increase in FY15 over FY14 rates in the City's defined benefit pension contributions. We have made significant changes to the benefit over the last several years. Changes such as increasing employee contribution rates by 1.0%, implementing hybrid plans for employees willing to change (during an enrollment period), requiring police and fire future hires to receive lower multipliers, capped leave time payouts (per the governor's plan) and removing overtime from pensionable wages have been some of the changes made. Even with these plan changes, the rate of increase in contribution rates continues to climb (6.2% in FY14 over FY13) as a result of shorter amortization periods and continued recognition of market losses on plan assets. After discussions with actuaries, further funding ratio decreases and contribution rate pressures will be felt by our mature plan for several years to come. Health Insurance Renewal bids not yet ready for FY15. While national averages appear to be increasing because of the Affordable Care Act, our assumption of a 2% annual increase (based on past favorable results) may not be enough. Uncertain how many more years we can sustain a very low rate of increase without substantive changes to the benefit or increased contributions by employees, particularly when the impact of the Affordable Care Act on premium rates is still unknown. Labor Agreements Deviation from FY14 budgets Bargaining in outer years in response to anxiety over job security and continued flat to low (1.0%) annual increases combined with higher healthcare cost sharing. Since we did not have year end estimates available yet for FY14 expenditures items, we are forecasting from FY14 budget amounts for FY14 expectation and outer years of the forecast. If the actual financial results come in much different than the FY14 budget amounts, the results in this forecast and the impact on fund balance will change (either positive or negative). Page 2

5 WHAT IS EXCLUDED FROM THE FORECAST POTENTIAL LARGE DOLLAR ITEMS Other Revenue Dispatch Revenue Post-employment benefits Defined Benefit Pension Plan Year End Estimates Transfers to Capital Improvement Fund The General Fund advanced $230,000 at the end of FY10, $150,000 at the end of FY12, and $120,000 during FY14 to cover Avondale Square project costs. It is unknown if or when these amounts will be reimbursed to the General Fund. Additional contributions to the project are not included in this forecast. Consolidation took place in June No further reimbursement of 911 millage will occur in FY13 and beyond. A small reimbursement of approximately $19,000 will be made to the City from Meridian Township and MSU to help cover legacy costs for dispatch employees who retired before the consolidation date and remain on the city's plan. No additional payments for the prefunding portion of the annual required contribution (ARC) included in forecast numbers for General Fund. It only includes the pay-asyou-go piece for retiree healthcare. No supplemental funding for catch-up of group plans. Funding ratio has dropped from 62.4% (December 2011 valuation) for all groups, to 60.6% funding as of December 31, 2012 (most recent) actuarial valuation. Since we did not have year end estimates available yet for FY14 expenditures items, we are forecasting from FY14 budget amounts for FY14 expectation and outer years of the forecast. If the actual financial results come in much different than the FY14 budget amounts, the results in this forecast and the impact on fund balance will change (either positive or negative). Assumes no transfers to the CIP fund for FY15 and thereafter for assistance in paying Avondale Square debt service. Will likely be needed in outer years. Page 3

6 WHAT YEAR END ESTIMATES DO INCLUDE FOR FY14 MAJOR ITEMS REVENUE Property Tax Revenue State Revenue Sharing PA Fire Protection Dispatch Revenue Grant Revenue EXPENDITURES IMPORTANT NOTE Salaries and Wages Retiree Health Insurance Fleet and Computer Replacement Emergency Sidewalk Repair Capital Outlay Operating Expenditures Operating Transfers EHOP Funding FY14 operating mills remain at Headlee cap at Revenue continues to decline, approximately 0.8% or $129 thousand from FY13 totals. FY15 and forward are forecasted to have modest increases each year in total revenue. Funding is estimated to be $163 thousand more than FY13, based on the State's Department of Treasury's latest projections. FY13 had a one time additional payment of approximately $1 million. FY14 funding came in higher than what was budgeted by $117 thousand. Consolidation took place in June No further reimbursement of 911 millage will occur in FY13 and beyond. A small reimbursement of approximately $19,000 will be made to the City from Meridian Township and MSU to help cover legacy costs for dispatch employees who retired before the consolidation date and remain on the city's plan. FY14 includes full year of funding for the police hiring grant and only $27 thousand final payment of the fire hiring grant. It's important to note that since we did not have fiscal year end estimates available yet for FY14, we are using FY14 budget amounts to populate the expense amounts in the FY2014 expectation column. Includes 1.0% wage increases for all groups( except COAM (2% ) and ELIEU (2%))and all applicable merit increases. Assumes pay-as-you-go and does not account for additional prefunding OPEB costs Includes the budgeted replacement charges for FY14. Small amount budgeted for emergency repairs and the roll over of an outstanding encumbrance from prior fiscal year. This amount represents only 57% of what the recommended amount should be ($500,000) according to the DPW Director. Includes only the budgeted capital outlay for FY14 Includes only the budgeted operating expenditures for FY14 Debt Service transfers are based on the actual debt service payment amounts needed for FY14. Operating transfers to the Parks & Rec and Seniors Funds will be the same as the budgeted amounts for FY14. The transfer to the Self Insurance Fund is for the OPEB payment made to the trust in December. None Page 4

7 WHAT IS INCLUDED IN THE FORECAST MAJOR ASSUMPTIONS REVENUE Property Tax Revenue State Revenue Sharing PA289 - Fire Protection Dispatch Revenue Grant Revenue FY15 and forward are forecasted to have modest increases each year in total revenue. FY15 includes a conservative 3.5% increase in FY15 based on the Governor's budget proposal. This funding has been quite volatile over the years, thus no increase is forecasted in FY15 or outer years. Consolidation was completed in FY12, therefore, no 911 millage revenue will be received from the County. MSU and Meridian Township have agreed to assist in funding legacy costs that will remain with the City. The Fire Department's grant (for hiring of 2 FTE's) is fully expended. These 2 positions remain in the expenditures for FY15 and forward. The Police Department's grant (for hiring 3 officers) is also fully expended. Similarly, the 3 positions remain in the expenditures in FY15 and forward. EXPENDITURES Salaries and Wages Projects a 1% increase for most groups in FY15 and PTO cash in option scheduled as normal. Since FY15 payroll (wage and benefit) costs are prepared for this forecast as the base year, we will forecast an increase of 1% for most groups in the outer years from the FY15 totals Retiree Health Insurance Health Insurance - Actives Assumes pay-as-you-go or annual portion and does not account for additional prefunding OPEB costs. In FY15 we are budgeting a 2% increase since we ended FY13 with accumulated reserves of $472,430 in the Self Insurance Fund for healthcare. We are seeking a little budget relief in our charges to departments/funds for healthcare in the FY15 budget but return to the customary 3.5% increase in outer years Expectation of the Task Force to hold insurance and Rx cost increases to caps established by the Governor's EVIP plan. Using the same strategy for rate increases as with retirees (2.0% in FY15 and a return to 3.5% in the outer years). Fleet and Computer Replacement Hazardous Sidewalk Repair Capital Outlay Operating Expenditures Full charges for maintenance and replacement costs remain intact. Same amount forecasted as is budgeted in FY14. This amount represents only 57% of what a recommended annual amount ($500,000) should be according to our DPW Director Large investment not scheduled; only carrying forward an amount similar to what was budgeted in FY14. All operating expenditures adjusted by an inflation factor using FY14 budget as base year Operating Transfers Transfer to Library eliminated with the successful campaign to increase dedicated library millage to full 2 mills.. Transfer to Seniors and Parks & Rec increased by CPI factor in FY15 and outer years. Page 5

8 CITY OF EAST LANSING FORECAST ASSUMPTIONS FY2015 THROUGH FY2019 REVENUE ASSUMPTIONS Projected Category Assumption/Additional information UOM FY2015 FY2016 FY2017 FY2018 FY2019 Taxes: Taxable Values Taxable Values adjusted for items outlined in development projection grid Projected equalization adjustments used for FY15-19 calculation see taxable value analysis Millage Rate Assumes max operating millage (with headlee rollback) mills Property taxes-operating Amounts calculated from the projected taxable values Administrative Fees-Tax Based on anticipated tax growth or decline (CPI factor plus new growth plus equalization factors) % 0.70% 1.33% 1.16% 1.11% 1.14% Payment in Lieu of Taxes Constant; very little fluctuation from year to year % 0.00% 0.00% 0.00% 0.00% 0.00% Penalties/Interest on Taxes Based on anticipated tax growth or decline (CPI factor plus new growth plus equalization factors) % 0.70% 1.33% 1.16% 1.11% 1.14% State Revenue Sharing Increase FY15 on low end of Governor's budget proposal and outer years increased by CPI factor % 3.50% 1.90% 1.90% 1.90% 1.90% State Revenue - PA289 Fire Expect amount to remain flat % 0.00% 0.00% 0.00% 0.00% 0.00% Dispatch Revenue - County/Twp/MSU: MSU Dispatch Per agreement, $10,000 contribution for FY (10 years) % 0.00% 0.00% 0.00% 0.00% 0.00% Meridian Dispatch Per agreement, $9,000 contribution for FY (10 years) % 0.00% 0.00% 0.00% 0.00% 0.00% Licenses and Permits: Sign Licenses Eliminated licensing of signs in FY2014 Permits and Inspections - Building Fee schedule is cost recovery, adjust by wage increase % 1.00% 1.00% 1.00% 1.00% 1.00% Housing Licenses & Inspections Fee schedule is cost recovery, adjust by wage increase % 1.00% 1.00% 1.00% 1.00% 1.00% Business & Restaurant Licenses Constant; set fee schedule - no increase anticipated % 0.00% 0.00% 0.00% 0.00% 0.00% Fines & Forfeitures: Court Parking Fines Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% Transfer to Parking (allocated amt) FY15 is actual amount expected with all other years based on 20% of pertinent year court parking fines projected Ordinance Fines and Costs Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% Court Screening Fees Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% Administrative Service Charges From Other Funds: Major Street Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.80% 1.80% 1.80% 1.80% 1.80% Solid Waste Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.80% 1.80% 1.80% 1.80% 1.80% Parking Fund Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.80% 1.80% 1.80% 1.80% 1.80% Sewer Fund Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.80% 1.80% 1.80% 1.80% 1.80% Water Fund Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.80% 1.80% 1.80% 1.80% 1.80% Garage Fund Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.80% 1.80% 1.80% 1.80% 1.80% Interfund Contributions Downtown Maint Service Charge First year based on expected taxable values, outer years based on anticipated tax growth or decline % 1.33% 1.16% 1.11% 1.14% DDA - Grand River Project $30,000 per year until paid in full (project repayment started in FY13) Page 6

9 CITY OF EAST LANSING FORECAST ASSUMPTIONS FY2015 THROUGH FY2019 REVENUE ASSUMPTIONS Projected Category Assumption/Additional information UOM FY2015 FY2016 FY2017 FY2018 FY2019 General Government Charges for Services: Court Cost Recovery Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% City Attorney Cost Recovery Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% Planning Services Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% Finance Services - ELMWSA Constant; agreement between City and ELMWSA % 0.00% 0.00% 0.00% 0.00% 0.00% Assessor Services Payroll based; use pay increase percentages % 1.00% 1.00% 1.00% 1.00% 1.00% Treasury Services Constant - no increase anticipated % 0.00% 0.00% 0.00% 0.00% 0.00% City Clerk Services Constant; set fee schedule - no increase anticipated % 0.00% 0.00% 0.00% 0.00% 0.00% Engineering Services Constant; set fee schedule - no increase anticipated % 0.00% 0.00% 0.00% 0.00% 0.00% Public Safety Charges for Services: Municipal Services - Deerpath Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% Police Services to Others Constant; fee schedule for FOIA, reports, etc % 0.00% 0.00% 0.00% 0.00% 0.00% PBT Revenue Constant; based on orders of Judges and Probation Officers % 0.00% 0.00% 0.00% 0.00% 0.00% Police Services to MSU Based on payroll cost recovery; assume service is constant % 1.00% 1.00% 1.00% 1.00% 1.00% OUIL Cost Recovery Based on payroll cost recovery and number of OUIL convictions % 1.00% 1.00% 1.00% 1.00% 1.00% Inmate Reimbursement Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% Impound Lot Fees Decreases in prior years due to change in license plates - expect to increase slowly back to ~ $70,000 per year % 2.50% 2.50% 2.50% 2.50% 2.50% Fire Chief Shared Services One year contract extension (January - December) Ambulance Services Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% Hazmat Services Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% MSU Fire Contract Constant; $326,000 per contract. No percentage increase allowed % 0.00% 0.00% 0.00% 0.00% 0.00% Fire Services to MSU and Others Based on payroll cost recovery; assume service is constant % 1.00% 1.00% 1.00% 1.00% 1.00% Inspection Services to Other Constant; based on Meridian Township fee structure % 0.00% 0.00% 0.00% 0.00% 0.00% Public Works Charges for Services: Sidewalk Revenue Based on approximately 35% of projected expenditures Downtown Maintenance Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% Rec/Culture - Park Reservations Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% Investment Income Rates have started to stabilize and we have seen a slight uptick in income % 0.50% 0.50% 0.75% 1.00% 1.00% Contributions and Donations: Contribution/Donation from Others Based on pledged contributions Cable Revenue Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% Miscellaneous Revenue: Miscellaneous Revenue Constant % 0.00% 0.00% 0.00% 0.00% 0.00% Franchise Applications Sold leases and will recognize the revenue over a 30 year term Miscellaneous Dept. Revenue Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% Residential Parking Permits Constant; fee schedule not expected to change % 0.00% 0.00% 0.00% 0.00% 0.00% Grant Revenue: Police Federal Grants Based on anticipated award amounts; hiring grant is for 3 officer positions over a 3 year period ending August 2014 ($693,321) Police State Training Funds Constant; based on number of employees % 0.00% 0.00% 0.00% 0.00% 0.00% Fire Federal Hiring Grant Based on anticipated award amount; 2 FTE's for a 2 year period ending September 2013 ($331,583) Page 7

10 CITY OF EAST LANSING FORECAST ASSUMPTIONS FY2015 THROUGH FY2019 EXPENDITURE ASSUMPTIONS Projected Category Assumption/Additional information UOM FY2015 FY2016 FY2017 FY2018 FY2019 Personal Services : Wages Percentage increase of 1% COLA - no factor for step increases or retirements estimated % 1.00% 1.00% 1.00% 1.00% 1.00% Retirement Defined Contribution Based on wage increases % 1.00% 1.00% 1.00% 1.00% 1.00% MERS FY15 increased based on latest valuation amounts received from MERS. FY15 and forward are estimates based on last increase. Rates are those established by MERS in the December 2012 valuation % 10.05% 10.05% 10.05% 10.05% 10.05% Other Fringe Benefits: Health Insurance Based on Health Insurance Task Force negotiated rates; must limit increase to no more than 3.5%. However the employer paid costs must now not exceed rates established by the state's EVIP plan. Since over $400,000 of medical costs reserves have been acccumulated in the Self Insurance Fund, we are budgeting only a 2% increase in cost for FY15. % 2.00% 3.50% 3.50% 3.50% 3.50% Dental Assume constant; self-funded experience within budgeted amounts % 0.00% 0.00% 0.00% 0.00% 0.00% Workers Comp Insurance No increase needed due to accumulation of $450,000 of workers compensation reserves in Self Insurance Fund % 0.00% 0.00% 0.00% 0.00% 0.00% Misc Insurance Constant % 0.00% 0.00% 0.00% 0.00% 0.00% FICA and LTD Based on wage increases % 1.00% 1.00% 1.00% 1.00% 1.00% Operating Costs: Contract Services Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% Utilities (Gas and Electric) Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% Repair & Maintenance Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% Fleet - Gasoline Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% Garage Fees Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% Computer - Equip Rental Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% All Other Expenditures Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% Sidewalk replacement Budget same funding levels as those in FY14 budget Capital Outlay Budget same funding levels as those in FY14 budget Transfer to Other Funds: Transfer to Library Eliminated in FY14 with successful levy of 2 mills dedicated to Library operations % Transfer to Seniors Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% Transfer to Parks & Rec Increase by CPI Estimate from Economic Outlook and House Fiscal Agency Revenue Estimates (Jan 2014) % 1.70% 1.90% 1.90% 1.90% 1.90% Transfer to Debt Service Based on actual debt payment schedule of capital improvements bonds Transfer to CIP $120,000 budgeted in FY14 to cover Avondale Square project deficit; nothing forecasted in outer years Page 8

11 CITY OF EAST LANSING FIVE YEAR FORECAST February 15, 2014 FY2013 FY2014 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 ACTUAL BUDGET EXPECTATION FORECAST FORECAST FORECAST FORECAST FORECAST REVENUE Taxes 15,836,460 15,708, % 15,707, % 15,800, % 16,004, % 16,186, % 16,360, % 16,540, % State Shared Revenue 4,943,300 4,986, % 5,106, % 5,284, % 5,385, % 5,487, % 5,591, % 5,698, % PA 289 Fire Protection 2,013,829 1,005, % 1,121, % 1,121, % 1,121, % 1,121, % 1,121, % 1,121, % Dispatch Revenue - County/Township/MSU 19,000 19, % 19, % 19, % 19, % 19, % 19, % 19, % Licenses & Permits Building Permits & Housing Licenses 1,290,821 1,195, % 1,200, % 1,212, % 1,224, % 1,236, % 1,248, % 1,261, % Business & Restaurant 128, , % 100, % 100, % 100, % 100, % 100, % 100, % Total Licenses & Permits 1,419,718 1,295,400 1,300,400 1,312,400 1,324,520 1,336,760 1,349,130 1,361,620 Fines & Forfeitures Court Parking Fines 1,159,244 1,196, % 1,196, % 1,254, % 1,254, % 1,278, % 1,303, % 1,327, % Ordinance Fines and Costs 1,913,417 2,065, % 2,065, % 2,100, % 2,140, % 2,180, % 2,222, % 2,264, % Court Screening Fees 32,824 37, % 32, % 32, % 33, % 33, % 34, % 35, % Total Fines & Forfeitures 3,105,485 3,298,180 3,293,180 3,387,170 3,427,650 3,493,380 3,559,750 3,627,390 Charges for Services 4,461,468 4,190, % 4,436, % 4,435, % 4,451, % 4,517, % 4,590, % 4,624, % Other Revenue 701, , % 630, % 635, % 642, % 648, % 655, % 664, % Grant Revenue 402, , % 272, % 31, % 31, % 31, % 31, % 31, % SUBTOTAL FUND REVENUE 32,902,732 31,469,180 31,887,592 32,027,985 32,408,635 32,842,820 33,280,115 33,689,438 Revenue Growth (Decline) -4.4% -4.4% -3.1% 0.4% 1.2% 1.3% 1.3% 1.2% One Time Source of Revenue Reappropriated Equity General and Special Purpose - 700, , Encumbrances - 253, , TOTAL RESOURCES AVAILABLE FOR OPERATIONS 32,902,732 32,423,525 32,841,937 32,027,985 32,408,635 32,842,820 33,280,115 33,689,438 Unassigned Fund Balance at Start of Fiscal Year 4,539,980 4,903,365 4,903,365 4,903,365 4,903,365 4,392,725 3,353,170 1,721,620 TOTAL FUND RESOURCES 37,442,712 37,326,890 37,745,302 36,931,350 37,312,000 37,235,545 36,633,285 35,411,058 EXPENDITURES Personal Services Salaries 13,043,049 13,554, % 13,554, % 13,960, % 14,100, % 14,241, % 14,384, % 14,527, % Retirement 4,289,061 4,542, % 4,542, % 5,046, % 5,516, % 6,034, % 6,603, % 7,229, % Retiree Health - annual "pay-as-you-go piece" 1,857,585 1,914, % 1,914, % 1,788, % 1,850, % 1,915, % 1,982, % 2,051, % Health Insurance - Actives 1,911,249 1,998, % 1,998, % 2,091, % 2,164, % 2,240, % 2,319, % 2,400, % Other fringes 1,527,548 1,572, % 1,572, % 1,604, % 1,623, % 1,641, % 1,661, % 1,681, % Total Personal Services 22,628,491 23,583,560 23,583,560 24,491,780 25,256,090 26,073,920 26,950,210 27,890,320 Operating Expenses 5,909,644 6,225, % 6,225, % 6,330, % 6,451, % 6,573, % 6,698, % 6,826, % Hazardous Sidewalk Program 2, , % 287, % 287, % 287, % 287, % 287, % 287, % Capital Outlay 269, , % 190, % 190, % 190, % 190, % 190, % 190, % Transfers to Other Funds 2,911,855 2,136, % 2,136, % 1,334, % 1,341, % 1,364, % 1,392, % 1,415, % SUBTOTAL FUND EXPENDITURES 31,722,331 32,423,525 32,423,525 32,635,415 33,526,705 34,489,805 35,519,095 36,609,820 Expenditure Growth (Decline) -5.3% 2.2% 2.2% 0.7% 2.7% 2.9% 3.0% 3.1% Prior Year Encumbrances (change in) 192,475 Inventory and Prepaid reserves (change in) (51,126) Reserved for Special Purpose (change in) (89,369) Designated for Next Year (change in) 765,036 Assigned for FY14 Year End Performance 418,412 Cost Savings Measures to be Identified (607,430) (607,430) (607,430) (607,430) (607,430) TOTAL FUNDS USED FOR OPERATIONS 32,539,347 32,423,525 32,841,937 32,027,985 32,919,275 33,882,375 34,911,665 36,002,390 Unassigned Fund Balance at Year End 4,903,365 4,903,365 4,903,365 4,903,365 4,392,725 3,353,170 1,721,620 (591,332) UNASSIGNED FUND BALANCE AS % OF OPERATING EXPENDITURES 15.5% 15.1% 15.1% 15.0% 13.1% 9.7% 4.8% -1.6% 363,385 0 (0) 0 (510,640) (1,039,555) (1,631,550) (2,312,952) Page 9

12 POTENTIAL NEW DEVELOPMENT IMPACT ON CITY'S TAX BASE AND OVERALL TAXABLE VALUE ANALYSIS January 24, 2014 FIVE-YEAR FORECAST OF TAXABLE VALUE PROJECT NAME AREA PROJECT ASSUMPTIONS FY14 (2013 Tax Year) FY15 (2014 Tax Year) FY16 (2015 Tax Year) FY17 (2016 Tax Year) FY18 (2017 Tax Year) FY19 (2018 Tax Year) 1 MAYNARD OFFICE PARK LADH 2 BEAUMONT DEVELOPMENT LADH 3 HAWK'S NEST DEVELOPMENT ELDW Construction of approximately 14 office buildings within condo park Completion of mixed-use project containing 26 single-family homes, 80 townhouse condos, 320 apartments, and 8,000 square feet of retail space Construction of remaining residential condo units (about 7 remaining after FY15) --- $0 $250,000 $250,000 $250,000 $500, $0 $0 $250,000 $300,000 $300, $480,000 $280,000 $280,000 $0 $0 4 EAGLE EYE DEVELOPMENT BATH Construction of remaining residential condo units (about 12 remaining total) --- $0 $250,000 $250,000 $500,000 $500,000 5 FOSTER/HARMON REDEVELOPMENT EL Construction of mixed-use building with 1,500 square feet of office area and 18 2-bedroom apartments --- $0 $300,000 $450,000 $0 $0 6 TRILOGY HEALTH COMPLEX LADH Construction of two new medical care buildings of 53,500 square feet (91 beds) and 21,600 square feet (35 beds, memory care) --- $3,650,000 $0 $0 $0 $0 7 AMERICAN BOARD OF EMERGENCY MEDICINE EXPANSION EL Construction of 6,000 square foot office building addition --- $250,000 $0 $0 $0 $0 8 BP GAS STATION REDEVELOPMENT EL Construction of mixed-use building with 1,200 square feet of retail space and 21 4-bedroom apartments --- -$62,500 $1,275,000 $0 $0 $0 9 THE VILLAS AT STRATFORD PLACE DEVELOPMENT LADH Construction of additional residential condo units --- $270,000 $540,000 $0 $0 $0 SUB-TOTAL ADDITIONAL NEW CONSTRUCTION--Assumes typical building permit activity for new additions, decks, garages, etc. GRAND TOTALS--NEW CONSTRUCTION (Taxable Value ) --- $4,587,500 $2,895,000 $1,480,000 $1,050,000 $1,300, $300,000 $350,000 $400,000 $400,000 $400, $4,887,500 $3,245,000 $1,880,000 $1,450,000 $1,700,000 Page 10

13 TAXABLE VALUE (TV) ADJUSTMENTS AND UNCAPPING The "small taxpayer" personal property exemption recently enacted into law has been reflected in the FY15 figures shown below when the exemption will first become effective. An estimated $6,750,000 in personal property tax base will be lost, starting in FY15. If not for this exemption, it is projected that the FY15 tax base growth (in existing property) would have been $7,954,700. An increase of 1.5% is projected for residential taxable value for FY15. No change is projected in commercial class taxable value for FY15. For years after FY15, it is projected that moderate taxable value increases (about 1.0% per year) will occur for both classes of property in the City. Taxable Value Forecast Calculations Actual FY14 (2013 Tax Year) FY15 (2014 Tax Year) FY16 (2015 Tax Year) FY17 (2016 Tax Year) FY18 (2017 Tax Year) FY19 (2018 Tax Year) Prior TV --- $900,289,494 $906,381,694 $918,279,294 $928,898,394 $939,174,894 Estimated Change in TV, Existing Property --- $1,204,700 $8,652,600 $8,739,100 $8,826,500 $8,914,700 Estimated TV Gain Due to New Construction --- $4,887,500 $3,245,000 $1,880,000 $1,450,000 $1,700,000 Estimated Taxable Value $900,289,494 $906,381,694 $918,279,294 $928,898,394 $939,174,894 $949,789,594 (Loss)/Gain --- $6,092,200 $11,897,600 $10,619,100 $10,276,500 $10,614,700 Page 11

14 FIVE-YEAR FORECAST PROJECTED TAXABLE VALUE (TV) CHANGE CALCULATIONS DUE TO PROJECTED STATE EQUALIZED VALUE (SEV) CHANGES January 22, 2014 SEV TV Inflation Property Change From Change From Ratio of Rate Class Year SEV Prior Year TV Prior Year TV to SEV Multiplier Residential 2007 $665,990, $570,965, % Residential 2008 $673,705, % $589,377, % 87% Residential 2009 $647,891, % $597,156, % 92% Residential 2010 $610,045, % $575,058, % 94% Residential 2011 $595,610, % $555,578, % 93% Residential 2012 $560,236, % $536,008, % 96% Residential 2013 $550,595, % $530,314, % 96% SEV TV Inflation Property Change From Change From Ratio of Rate Class Year SEV Prior Year TV Prior Year TV to SEV Multiplier Commercial 2007 $361,590, $320,439, % Commercial 2008 $375,082, % $338,752, % 90% Commercial 2009 $393,402, % $367,322, % 93% Commercial 2010 $376,954, % $356,198, % 94% Commercial 2011 $358,622, % $341,180, % 95% Commercial 2012 $345,764, % $331,058, % 96% Commercial 2013 $342,927, % $326,986, % 95% Projected Projected Projected Projected 2013 Projected Projected Property Taxable Percentage Taxable Taxable Percentage Taxable Taxable Class Value Change Value Change Value Change Value Change Value Residential $530,314, % $7,954,700 $538,268, % $5,382,700 $543,651,514 Commercial $326,986, % $0 $326,986, % $3,269,900 $330,256,000 Total: $7,954,700 Total: $8,652,600 Page 12

15 Projected Projected Projected Projected Projected 2015 Projected Projected Property Taxable Percentage Taxable Taxable Percentage Taxable Taxable Class Value Change Value Change Value Change Value Change Value Residential $543,651, % $5,436,500 $549,088, % $5,490,900 $554,578,914 Commercial $330,256, % $3,302,600 $333,558, % $3,335,600 $336,894,200 Total: $8,739,100 Total: $8,826,500 Projected Projected 2017 Projected 2018 Property Taxable Percentage Taxable Class Value Change Value Change Residential $554,578, % $5,545,800 Commercial $336,894, % $3,368,900 Total: $8,914,700 Comments: A figure of $7,954,700 is projected for the change in TV for Although the expected increase in residential SEV is greater than the inflation rate multiplier for 2014 (1.6%), the difference between TV and SEV has shrunk in recent years. Any increase above the inflation rate multiplier due to taxable value uncapping is expected to be more than offset by parcels which experience a change in SEV below 1.6%. Hence, an increase of 1.5% is projected for residential taxable value for No change is projected in commercial class taxable value for For years after 2014, it is projected that moderate taxable value increases (about 1.0% per year) will occur for both classes of property in the City. Page 13

16 City of East Lansing Revenue Detail - General Fund FY2013 FY2014 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 ACTUAL BUDGET EXPECTATION FORECAST FORECAST FORECAST FORECAST FORECAST Taxes Property taxes-operating 15,006,214 14,896,770 14,880,020 14,968,150 15,161,785 15,333,965 15,499,925 15,670,708 Tax-Administration Fee 609, , , , , , , ,460 Payment in Lieu of Taxes 52,556 52,555 56,785 56,790 56,790 56,790 56,790 56,790 Penalties/Interest on Taxes 168, , , , , , , ,860 Total Taxes 15,836,460 15,708,925 15,707,305 15,800,830 16,004,785 16,186,085 16,360,865 16,540,818 State Revenue Sharing Constitutional Portion 3,560,651 3,604,000 3,658,030 3,786,060 3,858,000 3,931,300 4,005,990 4,082,100 Statutory Portion / EVIP 1,352,922 1,352,920 1,418,100 1,467,730 1,495,620 1,524,040 1,553,000 1,582,510 State Liquor 29,727 30,000 30,000 31,050 31,640 32,240 32,850 33,470 Total State Revenue Sharing 4,943,300 4,986,920 5,106,130 5,284,840 5,385,260 5,487,580 5,591,840 5,698,080 State Revenue - PA289 Fire Protection 2,013,829 1,005,130 1,121,970 1,121,970 1,121,970 1,121,970 1,121,970 1,121,970 Dispatch Revenue - County/Twp/MSU MSU Dispatch 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 Meridian Dispatch 9,000 9,000 9,000 9,000 9,000 9,000 9,000 9,000 Total Dispatch Revenue 19,000 19,000 19,000 19,000 19,000 19,000 19,000 19,000 Licenses and Permits: Building Permits & Housing Licenses Sign Licenses 29,895 25, Permits and Inspections - Building 531, , , , , , , ,500 Housing Licenses & Inspections 729, , , , , , , ,720 Subtotal Building Permits & Housing Lic. 1,290,821 1,195,000 1,200,000 1,212,000 1,224,120 1,236,360 1,248,730 1,261,220 Business & Restaurant Licenses Licenses: Entertainment 30,023 25,000 25,000 25,000 25,000 25,000 25,000 25,000 Licenses: Arcades Licenses: Restaurant 47,032 40,000 40,000 40,000 40,000 40,000 40,000 40,000 Licenses: Take Out 1,650 1,800 1,800 1,800 1,800 1,800 1,800 1,800 Licenses: Miscellaneous 49,593 33,000 33,000 33,000 33,000 33,000 33,000 33,000 Subtotal Business & Restaurant Licenses 128, , , , , , , ,400 Total Licenses and Permits 1,419,718 1,295,400 1,300,400 1,312,400 1,324,520 1,336,760 1,349,130 1,361,620 Fines & Forfeitures: Parking Fines Court Parking Fines 1,436,739 1,500,000 1,500,000 1,525,500 1,554,480 1,584,020 1,614,120 1,644,790 Transfer to Parking Fund (parking fines) (277,495) (303,820) (303,820) (270,980) (300,000) (305,100) (310,900) (316,800) Subtotal Parking Fines 1,159,244 1,196,180 1,196,180 1,254,520 1,254,480 1,278,920 1,303,220 1,327,990 Ordinance Fines and Costs 1,913,417 2,065,000 2,065,000 2,100,110 2,140,010 2,180,670 2,222,100 2,264,320 Page 14

17 City of East Lansing Revenue Detail - General Fund FY2013 FY2014 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 ACTUAL BUDGET EXPECTATION FORECAST FORECAST FORECAST FORECAST FORECAST Court Screening Fees 32,824 37,000 32,000 32,540 33,160 33,790 34,430 35,080 Total Fines & Forfeitures 3,105,485 3,298,180 3,293,180 3,387,170 3,427,650 3,493,380 3,559,750 3,627,390 Charges for Services: Administrative Charges Major Street Admin Service Charge 102, , , , , , , ,260 Solid Waste Admin Service Charge 58,010 59,050 59,050 60,110 61,190 62,290 63,410 64,550 Parking-Admin Service Charge 99, , , , , , , ,280 Sewer Fund Admin Service Charge 290, , , , , , , ,770 Water Fund Admin Service Charge 133, , , , , , , ,430 Garage Fund Admin Service Charge 67,470 68,685 68,685 69,920 71,180 72,460 73,760 75,090 Subtotal Administrative Charges 751, , , , , , , ,380 Interfund Contributions Downtown Maint Service Charge (DDA) 111,300 93,400 93,400 81,745 82,830 83,790 84,720 85,690 DDA - Grand River Project 30,000 30,000 30,000 30,000 30,000 30,000 35,000 - Subtotal Interfund Transfers 141, , , , , , ,720 85,690 General Government Court Cost Recovery 1,037, , , , , , , ,420 City Attorney Cost Recovery 36,591 35,630 35,630 36,240 36,930 37,630 38,340 39,070 Planning Services 24,815 27,000 30,000 30,510 31,090 31,680 32,280 32,890 Finance Services - ELMWSA 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 Assessor Services 62,451 62,465 62,500 63,130 63,760 64,400 65,040 65,690 Treasury Services 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 City Clerk Services 43,473 2,000 2,000 2,000 2,000 2,000 2,000 2,000 Engineering Services 34,169 28,500 30,000 30,000 30,000 30,000 30,000 30,000 Subtotal General Government 1,273,025 1,090,095 1,094,630 1,111,690 1,130,990 1,150,650 1,170,670 1,191,070 Public Safety Municipal Services - Deerpath 25,766 26,000 26,225 26,670 27,180 27,700 28,230 28,770 Police Services to Others 40,712 39,000 39,000 39,660 40,410 41,180 41,960 42,760 PBT Revenue 21,439 30,000 30,000 30,000 30,000 30,000 30,000 30,000 Police Services to MSU 54,641 50,000 53,600 54,140 54,680 55,230 55,780 56,340 OUIL Cost Recovery 77,108 80,000 54,000 54,540 55,090 55,640 56,200 56,760 Inmate Reimbursement 39,848 30,000 50,000 50,850 51,820 52,800 53,800 54,820 Impound Lot Fees 30,098 40,000 40,000 41,000 42,030 43,080 44,160 45,260 Fire Chief Shared Services 94,086 97,000 97,900 49, Ambulance Services 1,267,782 1,150,000 1,300,000 1,322,100 1,347,220 1,372,820 1,398,900 1,425,480 Hazmat Services 14,970 12,000 12,000 12,200 12,430 12,670 12,910 13,160 MSU Fire Contract 326, , , , , , , ,000 Fire Services to MSU and Others 97,205 97,500 97,500 98,480 99, , , ,460 Inspection Services to Others 202, , , , , , , ,000 Subtotal Public Safety 2,291,836 2,140,500 2,336,225 2,315,080 2,296,320 2,327,570 2,359,390 2,391,810 Page 15

18 City of East Lansing Revenue Detail - General Fund FY2013 FY2014 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 ACTUAL BUDGET EXPECTATION FORECAST FORECAST FORECAST FORECAST FORECAST Public Works Sidewalk Revenue (8,814) 54, , , , , , ,580 Downtown Maintenance - 5,000 5,000 5,090 5,190 5,290 5,390 5,490 Subtotal Public Works (8,814) 59, , , , , , ,070 Recreation and Culture Park Reservations 12,626 12,000 12,000 12,200 12,430 12,670 12,910 13,160 Total Charges for Services 4,461,468 4,190,610 4,436,850 4,435,175 4,451,160 4,517,630 4,590,260 4,624,180 Other Revenue: Investment Income 79,425 70,000 80,000 80,400 80,800 81,410 82,220 83,040 Contributions and Donations Contributions/Donations 6, Police Contributions/Donations Subtotal Contributions and Donations 6, Cable Revenue 394, , , , , , , ,160 Miscellaneous Revenue Miscellaneous Revenue 50,602 5,000 5,000 5,000 5,000 5,000 5,000 5,000 Franchise Applications 55,142 52,465 52,465 48,270 46,040 41,855 38,050 36,240 Miscellaneous Court Revenue 106, , , , , , , ,850 Miscellaneous Police Revenue - - 5,600 5,700 5,810 5,920 6,030 6,140 Miscellaneous Fire Revenue 8, Residential Parking Permits Subtotal Miscellaneous Revenue 220, , , , , , , ,680 Total Other Revenue 701, , , , , , , ,880 Grant Revenue Planning Misc Grants 1,000-8, Police Federal Miscellaneous Grants 34,250 20,000 20,000 20,000 20,000 20,000 20,000 20,000 Police Federal Hiring Grant 238, , , Police State Grants 1,803 1,600 1, Police Training Funds (State) 10,457 11,500 11,500 11,500 11,500 11,500 11,500 11,500 Fire Federal Hiring Grant 116,660 90,000 27, Total Grant Revenue 402, , ,242 31,500 31,500 31,500 31,500 31,500 TOTAL REVENUES 32,902,732 31,469,180 31,887,592 32,027,985 32,408,635 32,842,820 33,280,115 33,689,438 Percentage change -3.1% 0.4% 1.2% 1.3% 1.3% 1.2% Page 16

19 City of East Lansing Expense Detail - General Fund FY2013 FY2014 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 ACTUAL BUDGET EXPECTATION FORECAST FORECAST FORECAST FORECAST FORECAST Personal Services: Wages 13,043,049 13,554,720 13,554,720 13,960,975 14,100,580 14,241,590 14,384,010 14,527,850 Retirement-Defined Benefit 3,989,232 4,198,971 4,198,971 4,640,930 5,107,340 5,620,630 6,185,500 6,807,140 Retirement-Defined Contribution 299, , , , , , , ,940 Retiree Health, Rx, Humana 1,857,585 1,914,820 1,914,820 1,788,035 1,850,620 1,915,390 1,982,430 2,051,820 Actives Health and Rx 1,911,249 1,998,608 1,998,608 2,091,723 2,164,930 2,240,700 2,319,130 2,400,300 Other Fringe Benefits 1,527,548 1,572,418 1,572,418 1,604,632 1,623,080 1,641,980 1,661,380 1,681,270 Total Personal Services 22,628,491 23,583,560 23,583,560 24,491,780 25,256,090 26,073,920 26,950,210 27,890,320 Other Expenditures: Contract Services 1,380,799 1,425,410 1,425,410 1,449,640 1,477,180 1,505,250 1,533,850 1,562,990 Utilities 930, , , , , ,380 1,007,160 1,026,300 Repair & Maintenance 157, , , , , , , ,530 Fleet - Gasoline 202, , , , , , , ,890 Garage Fees 883, , , ,520 1,010,360 1,029,560 1,049,120 1,069,050 Computer - Equip Rental 558, , , , , , , ,180 All Other Expenditures 1,795,862 1,911,580 1,911,580 1,944,080 1,981,020 2,018,660 2,057,010 2,096,090 Total Operating Expense 5,909,644 6,225,145 6,225,145 6,330,970 6,451,270 6,573,860 6,698,760 6,826,030 Hazardous Sidewalk Repair 2, , , , , , , ,380 Capital Outlay 269, , , , , , , ,620 Capital Outlay-Debt financed Subtotal Expenditures 28,810,476 30,286,700 30,286,700 31,300,750 32,185,360 33,125,780 34,126,970 35,194,350 Transfers: Transfer to Parks & Rec 1,175,185 1,100,230 1,100,230 1,118,930 1,140,190 1,161,850 1,183,930 1,206,420 Transfer to Library 555, Transfer to Seniors 133, , , , , , , ,520 Transfer to Self Insurance Fund 975, , , Transfer to Debt Service 71,880 80,195 80,195 77,995 60,795 59,145 62,445 60,530 Transfer to CIP - 120, , Total Transfers 2,911,855 2,136,825 2,136,825 1,334,665 1,341,345 1,364,025 1,392,125 1,415,470 TOTAL EXPENDITURES 31,722,331 32,423,525 32,423,525 32,635,415 33,526,705 34,489,805 35,519,095 36,609,820 Percentage change 2.2% 0.7% 2.7% 2.9% 3.0% 3.1% Page 17