INTEROFFICE MEMORANDUM. DATE: November 15, Honorable Mayor and City Council. F. Wyatt Shields, City Manager. Budget Guidance for FY2015

Transcription

1 INTEROFFICE MEMORANDUM DATE: November 15, 2013 TO: FROM: SUBJECT: Honorable Mayor and City Council F. Wyatt Shields, City Manager Budget Guidance for FY2015 On Council s Work Session on Monday, November 18 is a discussion of Council guidance to the City Manager on FY15 Budget Development. From this discussion I will bring back a draft Budget Guidance Statement for Council consideration at your December 2 Work Session. Budget guidance is helpful to the Manager to ensure that the work done with staff over the coming four months to develop the FY15 Budget is aligned with Council expectations. However, it is understood that circumstances and expectations can change between budget guidance and the Manager s presentation, and that is traditionally acknowledged in the Budget Guidance Statement itself. For reference is the Statement from last year. Also attached is the presentation provided to the Council and School Board at your joint work session on November 14. Harry E. Wells Building 300 Park Avenue Falls Church, Virginia

2 RESOLUTION RESOLUTION PROVIDING GUIDANCE TO THE CITY MANAGER ON THE DEVELOPMENT OF THE FY2014 CITY BUDGET WHEREAS, the City Council believes it is valuable to provide early guidance to the City Manager on budget development, as he begins working with staff on the putting together recommendations to the City Council in March; and WHEREAS, the City Council has received initial projections for revenues and expenditures for the coming fiscal year, as well as for the years FY2015 through FY2018, and has considered these projections in providing budget guidance; and WHEREAS, the guidance to the City Manager is intended to provide a framework for budget development, and assist the Manager in putting together recommendations next spring that are aligned with Council expectations based on the preliminary projections; and WHEREAS, the City takes tremendous pride in the quality of public input and citizen involvement in the budget process, and the budget process is designed to provide as many opportunities as possible for citizens to exchange information about budget priorities, and this public input will ultimately inform the Council s final budget decisions next spring; and WHEREAS, Council expects to have several opportunities to review additional information about budget projections, refine the choices between now and March 11, 2013 when the Manager will present budget recommendations, and may take the opportunity to provide additional guidance as necessary. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Falls Church that the attached FY2014 Budget Guidance Statement is hereby adopted. Reading: Adopted: (TR12-40) IN WITNESS WHEREOF, the foregoing was adopted by the City Council of the City of Falls Church, Virginia on December 10, 2012 as Resolution Kathleen Clarken Buschow City Clerk

3 Res Page 2 of 3 City Council FY2014 Budget Guidance Statement for the City Manager December 10, 2012 The City Council directs the City Manager to prepare a FY 2014 budget that maintains and protects the City s sound and sustainable financial footing. Even in continued tight financial times, the City of Falls Church is committed to providing valuable core services that promote public safety and a high quality of life. To these ends, the City Manager should: Review all City government programs and operations to achieve the most cost effective delivery of community services possible, and present alternatives that reduce costs through consolidation, mergers, contracting, partnerships, and other means. Present a budget in which any increases in revenues for general government expenses are generated solely by economic growth. To the extent that this constraint on expenditures results in negative impacts to programs, equipment replacement, or infrastructure maintenance, information about those impacts should be provided to the City Council with the budget presentation. If expenditures significantly exceed revenues and there is a need to reduce or eliminate programs, that in light of the need to undertake these reductions it would be Councils responsibility to select the areas for reduction. In as much as program reductions could represent a change or alteration of the Vision of the City, it is the Council s responsibility. Present a budget in which no less than $1.3 million in revenue is used only for additional pay as you go capital projects, or set aside for capital reserves, fund balance restoration, and other identified long term financial obligations. Present a budget for operating expenditures that fully considers the spending constraints included in the multi-year financial model reviewed by Council as part of FY13 Budget adoption Present an operating and capital budget that focuses on infrastructure maintenance and improvements. Present a capital improvements plan for meeting the City s critical needs, including general government and school facilities, parks, buildings, transportation, and storm water infrastructure.

4 Res Page 3 of 3 Provide the Council with options for dedicated funding long term storm water system capital improvements, including the option of the creation of a stand alone storm water enterprise fund. Present a five year capital financial plan that: a) maintains an unassigned fund balance at the policy target as set by City Council resolution; and b) maintains annual debt service expenditures below policy limits set by Council resolution. Multi-year projections: present revenue and expenditure projections for FY15 and more general projections for FY16 through FY18, so that FY14 budget decisions can be assessed in the context of long term sustainability. The multi-year forecasts should include operating and capital expenditure projections. Present a budget that provides a level of employee compensation that is competitive within the regional labor market and sustainable over the long term. Present a budget that fully funds City Basic and Police pension plan actuarially required contributions (ARC) as called for in the actuarial report of Identify current and potential future financial risks to the City stemming from state decisions regarding VRS and provide the Council with options, including possibly setting aside funds for future VRS obligations, in light of the state s current under funding of those obligations. Provide the City Council with a recommendation on the pros and cons of acting to align the City s Fiscal Year and Tax Year.

5 CITY OF FALLS CHURCH FY2015 FORECAST & 5 Year Capital Planning NOVEMBER 14, 2013 PRESENTATION TO CITY COUNCIL & SCHOOL BOARD Richard A. LaCondré, Director of Finance Wyatt Shields, City Manager 1 FY2015 FORECAST & 5-YEAR Capital Plan FY2015 FORECAST Revenue Drivers Comparisons to FY2014 & Actual FY2013 Assumptions Challenges MULTI-YEAR CAPITAL PLANNING Debt Service Projections Keys to Achieving the Goals of the Capital Plan 2 1

6 FY2015 Revenue Forecast Real Estate Revenue: 60% Local Taxes 25% Sales, Personal Property, Meals, Etc All Other Revenue 15% Federal & State Grants, Fees for Services, Etc. 3 FY2015 Revenue Forecast 4 2

7 FY2015 Revenues Real Estate 2.5% in market appreciation in CY14 Plus: $868,310 in RE Tax revenue from new construction (Northgate, Hilton Garden) Current RE Tax Rate: $1.305 / $100 AV 5 FY2015 Change in Revenues FY2014 FY2015 $ % Real Estate Tax $ 43,887,000 $ 45,164,246 $ 1,277, % Personal Property Tax 4,302,700 4,555, , % Other Taxes 13,904,600 14,525, , % All Other Revenues 10,648,075 10,898, , % New Development Rev - 1,506,769 1,506,769 - Water Admin Allocation 1,100,000 - (1,100,000) % Total 73,842,375 76,649,402 2,807, % 6 3

8 FY REVENUE TRENDS & FORECAST Sales Tax $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 Budget/Projection $1,000,000 Actual $ $6,000,000 FY REVENUE TRENDS & FORECAST Meals Tax $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 Budget/Projection Actual $

9 FY REVENUE TRENDS & FORECAST Other Taxes $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 Budget/Projection $1,000,000 Actual $ $6,000,000 FY REVENUE TRENDS & FORECAST BPOL Taxes $5,000,000 $4,000,000 $3,000,000 Budget/Projection $2,000,000 Actual $1,000,000 $

10 FY REVENUE TRENDS & FORECAST Base Operating Revenues $80,000,000 $70,000,000 $60,000,000 $50,000,000 Budget/Projection $40,000,000 Actual $30,000,000 $20,000, FY2015 Expenditure Scenario 1 FY2014 FY2015 $ % Total Revenues $ 73,842,375 $ 76,649,402 $ 2,807, % General Government 34,932,553 36,260,471 1,327, % School Division 33,775,600 35,059,538 1,283, % Net Operating 5,134,222 5,329, % Debt Service 4,745,554 5,034, , % Capital (PAUG) 600,000 - (600,000) % Capital Reserves 366,968 - (366,968) % Stormwater 900,000 - (900,000) % SURPLUS/(DEFICIT) $ (1,478,300) $ 295,

11 FY2015 Expenditure Scenario 2 FY2014 FY2015 $ % Total Revenues $ 73,842,375 $ 76,649,402 $ 2,807, % General Government 34,932,553 36,260,471 1,327, % School Division 33,775,600 37,153,160 3,377, % Net Operating 5,134,222 3,235, % Debt Service 4,745,554 5,034, , % Capital (PAUG) 600,000 - (600,000) % Reserves 366,968 - (366,968) % Stormwater 900,000 - (900,000) % SURPLUS (DEFICIT) $ (1,478,300) $ (1,798,534) 13 FY2015 Revenue & Expenditure Summary Revenue Growth 3.8% increase in Revenues over FY2014 $2.8 million increase relative to FY2014 Operating Expenditure growth: Range from 3.8% to 6.8% Gap Range from surplus of $295,000 to deficit of $1.8 million 14 7

12 Expenditure Drivers General Government Fire Service Cost Increases Staffing Levels & Compensation Equipment & Vehicle Replacement Parks, Facility & Infrastructure Maintenance WMATA Increases 15 FY2015 FORECAST City-wide Challenges Status of Economic Recovery Capital Needs - School and Government Facilities - Transportation Funding (HB2313) VRS and City pension School Enrollment 16 8

13 Capital Planning 17 Capital Improvements Program FY2014 FY2015 FY2016 FY2017 FY2018 Total Information Technology $ 507,500 $ - $ - $ - $ - 507,500 Public Safety (Fire) 2,058, , ,258,048 General Govt/City Hall 6,733, , , , ,000 7,983,500 Library Expansion - 2,800, ,950,000 6,750,000 Schools 3,400,000 5,525,290 99,200,000 5,400, ,525,290 Transportation 2,445,000 1,880, , , ,000 5,980,000 Recreation and Parks 430, , , , ,000 1,878,000 Total $ 15,574,048 $ 10,955,290 $ 100,705,000 $ 6,648,000 $ 5,000,000 $ 138,882,338 Sources Grants/Other Revenue $ 1,100,000 $ 940,000 $ 620,000 $ 300,000 $ 300,000 3,260,000 Bonds 13,874,048 8,740, , ,000 4,050,000 27,822,338 Contingent - 650,000 99,000,000 5,000, ,650,000 Pay As You Go 600, , , , ,000 3,150,000 Total $ 15,574,048 $ 10,955,290 $ 100,705,000 $ 6,648,000 $ 5,000,000 $ 138,882,338 Adopted April,

14 Keys to Accomplishing CIP Continue to Refine & Prioritize Project Goals Promote Economic Development to Grow Tax Base Including new opportunities from Boundary Adjustment Fund Capital Reserves Assigned to specific capital goals Uphold Established Financial Policies Maintain Strategic Discipline on Operating Budgets Set Long Range Policy on Water Sale Proceeds To achieve lasting, permanent benefit to the City 19 DEBT SERVICE PROJECTION $25,000, $20,000, $15,000, New Debt Existing Debt $10,000, % Policy Limit $5,000, $0.00 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 *Note: FY2012 includes refunding payments of $17.4M. The projection includes $95M in GMHS new debt

15 Debt Service Costs (Base Case) FY2015 FY2016 FY2017 FY2018 FY2019 Projected Projected Projected Projected Projected New Debt Service ($1,798,534) (3,555,759) (6,749,954) (11,665,167) (12,567,703) Net Revenue from New Dev't 1,001,485 2,964,753 3,324,530 3,324,530 Total Deficit ($1,798,534) (2,554,274) (3,785,201) (8,340,637) (9,243,173) Tax Rate Impact 1 = $335, , , , ,000 Tax Rate Increase Note: This projection assumes no tax rate increases for growth in Operating Budgets after FY15. It also assumes a worst case wherein the options listed on the prior slide are not used to mitigate the cost of the capital program. 21 $20,000,000 FUND BALANCE PROJECTION $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $ Unassigned Fund Balance 12% of Expenditures 17% of Expenditures 22 11

16 School Capital Proffers School Capital Contribution FY Broadway $ Byron $447, Pearson Square $1,111, Read Building $107, Spectrum $936, $2,602,974 Northgate* $820, Rushmark $2,163, Reserve at Tinner Hill** $1,682, $4,666, Next Steps Budget Calendar Council Budget Guidance to City Manager City Council School Liaison Committee Discussions of a possible Revenue Sharing Agreement Ongoing communication about budget development Policy Issues: Water Sale Proceeds Disposition GMHS Land Use Planning & and Public Private Parntership Plan of Finance for Capital Improvements Alignment of Tax Year and Fiscal Year Economic Development 24 12