City of Boise Mayor s Recommendation Summary FY 2006

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1 City of Boise Mayor s Recommendation Summary FY 2006 Overview The City of Boise continues to reap the benefits of a robust local economy and prudent municipal budget practices. The rigorous business planning principles that formed the foundation of the Fiscal Years Budget are reflected in improved public services, increased efficiency, and a stable financial outlook for the future. Phase II of the City s strategic planning process, currently under way, focuses on developing detailed business plans for each of our departments; this effort will assist us in further implementing our citizens priorities and providing the highest quality services at the lowest cost to taxpayers. With the closeout of Fiscal Year 2006, the first half of the two-year budget cycle, these performance improvements are evident in the bottom line, as well. At the end of FY 2006, the Department of Finance and Administration estimates approximately $9.6 million in one-time, unallocated end-ofyear (EOY) funds. The balance represents 6.8% of total budgeted expenditures for the year. Although the lion s share of these dollars can be tied to healthy economic conditions, the efforts of our departments and employees to limit spending also generated significant savings. The Executive Summary from the Department of Finance and Administration examines these factors in detail. Generally, the FY 2006 EOY balance is attributable to: o Increased development fee revenue due to strong commercial and multi-family residential construction. o Higher sales tax revenues, likewise attributable to construction activity. o Rising user fee receipts, thanks primarily to the popularity of programs at Idaho IceWorld and other City recreation facilities. o Increased interest income, the result of higher than anticipated interest rates and the City s success at saving for one-time projects and meeting or exceeding industry standards for reserve and contingency funds. o Lower-than-budgeted expenditures in personnel, maintenance and operations due to a wide range of factors, including a delay in staffing a new Fire ladder company, numerous staff vacancies Citywide (largely due to recruiting challenges attributable to the region s low, 3% unemployment rate), and unspent contingency dollars in several categories. As always, we must consider most of these to be one-time occurrences that cannot automatically be assumed in the ongoing budget. In particular, the revenue increases might or might not constitute a trend. Moreover, the City may face considerable financial challenges in years to come, as growth continues, additional capital facilities needs arise, and new standards for reporting post-employment 1

2 health benefits ( GASB 45 ) are implemented. Finally, increased service demands would most likely require additional resources. As we progress over the next six months to build the Fiscal Years Budget, the Department of Finance and Administration will better be able to determine which of these revenues can reliably be built into the base. In the meantime, we will continue to budget cautiously and with an eye toward maximum flexibility to accommodate new challenges as they arise. This year s outstanding performance will allow us to move forward on all of the items approved but unfunded in last summer s budget workshop. Of the EOY dollars, I recommend a large majority be returned to the public through an allocation to the Capital Facility account for use on a wide range of important projects. Details of these recommendations follow. Workshop One-Time Unfunded Requests The City Council approved the following items during the June 2006 Budget Workshop. I recommend all items be funded: General Fund Cash Flow Reserve ($500,000) The City Council has set a goal to establish an 8% reserve for General Fund cash flow purposes and for emergency health trust fund reserve needs. A minimum 5% reserve enhances approval of bond rating companies and possibly result in more favorable bond insurance premiums. At the end of the fiscal year, the cash flow balance equated to 5.3% of the subsequent year s budgeted operating revenues. An additional $500,000 will bring the balance to 5.68%. Repair and Maintenance Backlog ($889,000) Three years ago, the City Council began a concerted effort to eliminate a $3.75 million backlog in essential repair and maintenance of City facilities, using one-time end-of-year dollars. The backlog will be eliminated with this installment. Departments have been directed to include all repair and maintenance needs in their budgeting process going forward to avoid any such gaps in the future. Bonded Debt Adjustment ($15,000) Each year, the City pays approximately $60,000 in property taxes on certain fire facilities. This unnecessary expense could be removed by asking the bondholders of those facilities to make the City, rather than the bond trustee, the titled owner of those facilities while maintaining the City s security pledge. This funding would be used to cover the general costs of a bondholder election as well as legal costs. Fire Station #9 Construction ($1,071,168) The land purchase and planning costs for the first phase of this project, to be located off Hill Road, are included in the FY 2007 budget. This allocation would be used to complete construction of the new station. 2

3 Police Taser Replacement ($90,000) Boise Police Department has approximately 120 M26 Tasers in service, most of them assigned to patrol officers. A number of officers do not carry the M26 Taser due to comfort, size and reliability (including battery issues). A newer, smaller Taser technology, the X26, has proven to have more reliable battery operation. This allocation would allow Police to replace the M26 Tasers with the X26 model. Capital Facility Account Reinvestment in essential public facilities ($7,087,056). I recommend that a majority of FY 2006 EOY dollars more than $7 million be allocated to the capital facility account to meet a variety of public facilities needs. This is particularly appropriate, given that about $7.2 million of the $9.6 million in available EOY funds for FY 2006 are attributable to revenue increases, mostly related to growth: higher development receipts due to strong commercial construction activity, increased sales tax and franchise fee income, etc. My recommendation would return these one-time dollars directly to the citizens in the form of improved public facilities that protect and improve Boise s livability in a time of high growth. A number of such capital projects are currently in various stages of planning and review; appropriation of these funds would come, with Council approval, as warranted in the coming months. The following projects in particular may present opportunities during the coming year: o Neighborhood libraries. As I stated in my State of the City address in September, my goal is to open four new neighborhood libraries in the next few years without the need for a property tax increase. Using EOY dollars can help us achieve that goal by helping to fund the opening of two storefront -type libraries on the Bench and in Northwest Boise, and perhaps break ground on one or both existing neighborhood libraries sites at Bown Crossing and Cole/Ustick, during o Community detox. Through the Mayor s Detox Steering Committee, plans are moving forward to build a community detoxification and sobering facility, an essential component of our community s efforts to fight substance abuse, create safe neighborhoods, and address the underlying causes of homelessness. The City of Boise has already committed or designated resources for construction and operation of the facility; other Treasure Valley cities, Ada County, the State of Idaho, and the major hospitals are committed in principle to supporting the center. End-of-year funds could be utilized to move the detox project forward or as an advance against Federal or State reimbursement. o Public safety headquarters. Creation of a new central administrative complex for Police and Fire has been a long-standing goal to improve public service, alleviate crowding at the Barrister facility, and reduce lease payments currently being expended on multiple facilities. The City of Boise has been dedicating $2.5 million a year to finance purchase or construction of the new headquarters. EOY dollars could be used to bring the project to fruition. o Major parks projects. The City has been blessed in recent years with the donation or acquisition of several outstanding parks sites, including Esther Simplot Park, Marianne Williams Park, and others. Private fund-raising efforts are under way to support the green-up of these sites 3

4 as well as development of the Whitewater Park, the Julia Davis Park centennial celebration in 2007, and improvements to Zoo Boise. EOY dollars could be used to supplement these efforts and/or provide an incentive match. o Interagency firearms training facility. The imminent loss of existing police shooting ranges necessitates development of a new facility for essential training and certification activities. Boise Police Department is working with other local law enforcement agencies to site and build such a facility. o Arts projects and Anchor Fund. The Boise City Arts Commission recommends additional resources be allocated to enhance the scope, quality and scale of public art in neighborhood parks and to study renovation of the Gene Harris Band Shell in Julia Davis Park. The commission is also seeking to establish an endowment or trust fund to generate grants for art projects. In addition, allocations for certain capital projects already under way may prove to be insufficient due to increasing construction costs; end-of-year dollars could be utilized to ensure these projects remain on schedule. Likewise, the funds could be utilized to get an early start on projects slated for Fiscal Year Funding of all such projects would be subject to Council approval. Additional One-Time Unfunded Priorities Tenant improvements at community after-school facilities ($85,000). Key to the City s CLEAR (City Leaders Engaged in Afterschool Reform) initiative is development of cooperative arrangements with other agencies and service organizations to provide after-school activities. The City of Boise has partnered with the Boise School District to open and operate community centers at two new schools. The school district is covering the cost of constructing these facilities; this allocation would pay for the tenant improvements needed to prepare and open these community centers upon completion of the schools in Fall Complete construction of the Hollandale Fire Station ($186,000). In May 2006, Fire brought forward an updated cost estimate for the Hollandale Fire Station, which is a joint project with the Whitney Fire District. At that time, Ada County Emergency Medical Services (EMS) was also planning to occupy the building and to pay for its share, $372,000. Since then, EMS has elected to not share in the building or the cost. Fire considered redesigning the building to reduce the square footage but determined that potential cost savings would be absorbed by the additional cost escalations and the time delay. Therefore, Boise City and Whitney Fire will split the $372,000 cost, with the City s share at $186,000. Enhance strategic planning contingency for essential projects ($535,000). Our meetings with neighborhood associations, office contacts and citizen survey revealed that planning for growth and transportation needs are among the public s highest priorities for funding. The City of Boise continues to address that priority through its regional leadership on Blueprint for Good Growth as well as our own planning efforts. The coming year will see major efforts to update the City s Comprehensive Plan and negotiate new Area of Impact boundaries; these and other strategic priorities will demand additional resources to ensure interagency coordination, identification of best practices and, most of all, thorough and ongoing public involvement. In the 4

5 past year, strategic planning contingency dollars have been used to support the Police lateral-transfer program, additional planners in Planning & Development Services, and other important initiatives. Replace the City Hall telephone system ($242,000). High-quality customer service for our citizens is paramount, and reliable telephone service is essential. The current City Hall phone system is approximately 15 years old, and the frequency of disruptions is increasing. Additionally, because of the age of the system, technical support, repairs, and parts are limited and becoming more costly with each service occurrence. This system services approximately 500 phone sets at City Hall. Consolidate the City s electronic data center ($254,000). The City of Boise currently maintains about 125 computer servers in 22 locations. This project will reduce the number of data centers to three or four housing approximately 75 servers. This will result in improved staffing efficiency, reliability, and security. Oracle license renewal (up to $350,000). The original 1996 contract with PeopleSoft (since acquired by Oracle) requires the City to pay a licensing fee for every $100 million incremental increase in the City s operating budget. Oracle recently invoiced the City for a licensing fee based on the published FY The City is currently negotiating the amount of the fee on the basis of a different understanding of the contract. Sponsorship funding for the Western States Police and Fire Games ($25,000). These unique games, scheduled for August 16-23, 2008, will offer 53 sporting events throughout the Treasure Valley. Up to 6,000 law enforcement and fire personnel from California, Oregon, Washington, Nevada, Arizona, New Mexico, Utah, Idaho, Wyoming, Montana, and Colorado will participate. According to the Boise Convention and Visitors Bureau and previous games, the event will attract 10,000 to 12,000 people. All events will be open to the public, free of charge. The economic benefit to the area is estimated at $10 million to $11 million dollars. Reward employees through benefit contributions to be determined (not to exceed $400,000). Vigorous economic activity gets the credit for most of the EOY balance, which is why I m recommending the large majority of those dollars be returned to the public in the form of new and improved capital facilities. However, other EOY dollars are the result of the diligence and creativity of our employees in working smarter and better. In recognition of these efforts, and in hopes of encouraging more like them, I recommend that $50,000 be returned proportionally to the departments to enhance existing employee performancebonus pools on a one-time basis. In addition, I recommend that we reserve up to $350,000 for Citywide benefit contributions for both non-union and union employees, and ask employees themselves, through their representatives on the Wages and Benefits Team, to recommend to the Executive Management Team how those benefits should be allocated. 5

6 Return to the tax-supported departments the 1% M&O holdback on a one-time basis ($428,127) The City Council approved a reduction of 1% of each tax-supported department s maintenance and operations budget for FY I recommend that a one-time allocation equivalent to each department s holdback be returned to those departments. This allocation is to be used for important projects for which funding was otherwise unavailable or to cover unanticipated expenses. Conclusion The people of Boise have entrusted us with a tremendous responsibility: to put the public s resources to the best possible use for the benefit of the city. Through careful budgeting, strong ethical standards, a commitment to open government, and a clear vision for the future, we have demonstrated a commitment to honor that trust. Together, we are helping to make Boise the most livable city in the nation. Respectfully submitted, David H. Bieter Mayor 6