Popular Annual Financial Report

Transcription

1 Popular Annual Financial Report City of Des Plaines, IL For the Fiscal Year Ended December 31, Miner Street Des Plaines, IL (847)

2 Legislative Martin J. Moylan, Mayor Gloria J. Ludwig, City Clerk City Council Patricia Haugeberg First Ward John Robinson Second Ward Matthew Bogusz Third Ward Dick Sayad Fourth Ward James Brookman Fifth Ward Mark Walsten Sixth Ward Dan W. Wilson Seventh Ward Mike Charewicz Eighth Ward Administration City Manager... Michael G. Bartholomew General Counsel... Peter Friedman Director of Finance... Dorothy Wisniewski Chief of Police... William Kushner Fire Chief... Alan Wax Director of Public Works & Engineering... Timothy Oakley Director of Community & Economic Development... Alexander Dambach

3 TABLE Table of Contents Page Introduction General Fund Revenue Expenditures Letter to the Citizens Des Plaines 1 About the City of Des Plaines 2 Overview 3 Property Tax 4 Sales Tax 5 Overview 6 Police & Fire 8 Public Works & Other Departments 9 Gaming Tax Fund 10 Enterprise Funds City Owned & Metra Parking 11 Water & Sewer 12 Debt Burden 13 Statement of Net Position 14 Unassigned General Fund Balance 15 Contact Information 16

4 Letter to the Citizens of Des Plaines City of Des Plaines Finance Department ki Miner Street DES PLAINES Des Plaines, IL ILLINOIS Tel: Fax: Dear Citizens of Des Plaines, The City of Des Plaines is proud to present the Popular Annual Financial Report for the Fiscal Year ended December 31, This is the very first year that the City has decided to undertake the compilation of this important document. The goal of this report is to provide financial information in an understandable and easy-to-read format. Included within the report is a summary of the City s revenue sources and an overview of its major costs. The information reported on throughout this report is primarily obtained from the Comprehensive Annual Financial Report (CAFR) and is consistent with generally accepted accounting principles (GAAP). The scope of the financial data only includes primary government activities. More detailed and comprehensive information regarding the City and its financial condition can be found in the CAFR or Annual Budget document, which can be found on the City s website. The Des Plaines Library is a component unit of the City and is included in the City s CAFR, however, will not be discussed in this report since the Library is governed by a separate board. During Fiscal Year 2012 the City received the following awards from the Government Finance Officers Association: Certificate of Achievement for Excellence in Financial Reporting for the period ended December 31, 2011(32 consecutive years) Distinguished Budget Presentation Award for the Fiscal Year 2012 budget (4 consecutive years) The City continues to stay committed in preserving long term financial health as evidenced by our Aa2 bond rating and fund balance reserves. We hope this report will shed some insight on the financial health of the City and help residents understand how their government operates. If you have any questions regarding this informaton, please refer to the contact infonnation listed on the final page of the report. Mic ael Bartholomew City Manager Dorothy Wismewski Director of Finance City of Des Plaines, IL 2012 Popular Annual Financial Report Page 1

5 TABLE About the City of Des Plaines The City of Des Plaines is located approximately 17 miles northwest of downtown Chicago near O Hare International Airport. It is a vibrant, diverse collection of residential, commercial, and industrial land uses, encompassing roughly 15 square miles of land area. The City of Des Plaines was incorporated in 1857 and operates under the statutory City Manager form of government. The City Manager serves as the City s Chief Administrative Officer and is responsible to the Mayor and City Council for the efficient management and operation of all of the affairs of the City and its departments. The City Council is comprised of the Mayor and eight Aldermen. The City is divided into eight wards, with the residents of each ward electing an Alderman to represent the ward. The Council is the legislative body of the City, setting policy direction and enacting legislation affecting the City. Des Plaines is a full-service City and its operations are concentrated within six major operating departments City Manager s Office, Community & Economic Development, Finance, Fire, Police, and Public Works & Engineering. Most of these operations are recorded in the General Fund but the City maintains 19 separate funds to account for all budgeted activity. A fund is a separate fiscal entity with revenues and expenses that are segregated for the purpose of carrying out a specific purpose or activity. Fund accounting demonstrates legal compliance and aids financial management by segregating transactions related to certain government functions or activities. The City s fund structure is presented below: Primary Government Fund Types General Fund Capital Projects Funds Capital Projects Special Revenue Funds Equipment Replacement TIF #1 IT Replacement TIF #3 TIF #4 Enterprise Funds TIF #5 Water/Sewer TIF #6 City Owned Parking Motor Fuel Tax Metra Leased Parking CDBG Grant Projects Internal Service Funds Gaming Tax Risk Management Health Benefits Debt Service Fund Quick Facts Population 58,364 City Employees 345 Median Income $63,528 Median Home Value $269, Tax Year EAV 2,184,333,304 Land Use Residential 43.00% Manufacturing 15.50% Commercial/ Retail 7.80% Education & Recreation 15.70% Streets, Alleys & Railroads 13.30% Vacant 4.70% City of Des Plaines, IL 2012 Popular Annual Financial Report Page 2

6 TABLE General Fund Revenue General Fund - is the principal operating fund of the City. It accounts for all revenues and expenses of the City, which are not specifically earmarked for special purposes. The General Fund supports the day to day operations of the City and may also be referred to as a Governmental Fund. The General Fund s FY2012 receipts were $63.2M. Much of this revenue comes from property taxes but a significant amount also comes from intergovernmental payments from the State of Illinois. Sales Tax and Income Tax account for most of the intergovernmental revenue while other taxes are more evenly distributed. This diversified revenue base allows the City to maintain service levels during uncertain economic conditions. Other Taxes Intergovernmental Utility Taxes 3.2M State Income Tax 5.1M Gas & Use Tax 0.3M Local Use Tax 0.9M Franchise Tax 0.7M Personal Property Food & Beverage Tax 1.2M Replacement Tax 1.1M Telecommunication Tax 3.0M Municipal Sales Tax 8.8M Hotel/Motel Tax 1.7M Road and Bridge Tax 0.2M Auto Rental Tax 0.2M Federal, State, and Local Grants 0.1M Real Estate Transfer Tax 0.4M $16.2M Home Rule Sales Tax 1.4M $12.1M City of Des Plaines, IL 2012 Popular Annual Financial Report Page 3

7 Millions TABLE General Fund Revenue - Property Tax The Property Tax is the largest source of revenue for the City comprising 36.8% of all receipts within the General Fund. As a Home Rule unit of government, the City has no legal limitations on the amount of the Property Tax it can levy but the City has attempted to keep the tax levy s growth to a minimum. The Property Taxes are levied by December following the lien date (by passage of a Tax Levy Ordinance). Tax bills are prepared by the County and issued on or about February 1 and September 1 of the following year and are payable in two installments, on or about March 1 and October 1 or within 30 days of the tax bills being issued EAV and Tax Rate EAV (billions) City Rate For FY 2012 the City s General Fund property tax revenue was $23.1M. The side graph of EAV and Tax Rate is a 10 year trend of the property tax rates as compared to the City s equalized assessed value (EAV).The peak of housing values in 2008 allowed for a lower tax rate at that time. However, the economic recession reduced the City s overall property value thus having a counter effect of increasing the City s tax rate. The Tax Levy graph shows a gradual change in the tax levy despite fluctuations in EAV and tax rates Historical Tax Levy Schools 65% Property Tax Breakdown Other 3% City 13% Library 4% County 6% Water Reclamation Park District 5% District 4% The City s property tax rate composes a 13% share of a residents total property tax bill. This breakdown is based on the 2011 tax rates assessed for Des Plaines residents in Maine Township. City of Des Plaines, IL 2012 Popular Annual Financial Report Page 4

8 Millions TABLE General Fund Revenue - Sales Tax Sales Tax is the third largest source of revenue for the City and comprises about 16% of total receipts for the General Fund or approximately $10.2 million from both Municipal and Home Rule sales taxes for FY In 2012 the sales tax rate for the City of Des Plaines was 9.25%, of which the City receives 2% within the corporate limits of the municipality. Of the 2% the City receives, 1% is a Municipal Tax on all sales while the other 1% is from sales subject to the Home Rule sales tax. The Home Rule sales tax is a 1% tax approved by City Council where 25% is remitted to the General Fund and 75% is allocated towards the Capital Projects Fund. The total sales tax rate decreased to 9% as of January 1, 2013 due to a rate reduction in the Cook County portion. 1.25% 1.0% 2.0% 9.25% 5.0% State City County RTA The list to the right illustrates the retail sales portion of the City s total sales tax revenue that comes from many different types of businesses. The Municipal Tax portion of sales tax is 1% of all sales and can therefore be used to estimate economic activity in the City Historical Municipal Sales Tax Revenue Municipal Sales Tax Receipts by Category January December 2012 General merchandise 0.8M Food stores 1.3M Drinking & eating places 0.7M Lumber, building & hardware 0.3M Automotive & filling stations 2.1M Drugs and miscellaneous retail 1.1M Agriculture & all others 2.1M Manufacturers 0.2M Other 0.1M $8.8M The graph on the left represents 10- year historical sales tax revenue received by the City from the 1% Home Rule Sales Tax collected by the State on an annual basis. As reported by the Illinois Department of Revenue. City of Des Plaines, IL 2012 Popular Annual Financial Report Page 5

9 TABLE General Fund Expenditures The General Fund revenues provide necessary funding to support the day to day operations of the City. The General Fund expenditures cover major services provided by the City including police and fire services, public works and community development operations as well as administrative and financial support. The chart below demonstrates the allocation of the cost of the City s major services per department. Additionally the numbers on the bottom of the chart show what the annual cost of each service per resident would be if it was not covered by the property taxes and other revenues generated by the City. General Fund Expenditures by Department 34% 1% 2% 3% 4% 5% Other Dept. Finance Department Community Development 19% Overhead City Administration Public Works Fire Department 32% Police Department Cost per resident calculated based on the 2010 Census population of 58,364 City of Des Plaines, IL 2012 Popular Annual Financial Report Page 6

10 TABLE General Fund Expenditures When looking at the General Fund expenditures it is apparent that the personnel related costs including salaries (46.5%) as well as taxes and benefits (29.9%) represent the largest portion of the expenditures. Debt Service 6% Other Expenses 13% All Budgeted Funds Expenditures Classification Capital Outlay 7% Other Financing Uses 6% Salaries 24% Taxes and Benefits 15% However, when looking at the City as a whole and considering how much is spent on capital outlay; annual debt payments; insurance costs, and the cost of commodities and contractual services, it become more prevalent the distribution evens out. Commodities 8% Subsidies and Incentives 1% Repairs and Maintenance 1% Other Services 2% Other Employee Costs 0% Insurance 10% Contractual Services 7% City of Des Plaines, IL 2012 Popular Annual Financial Report Page 7

11 Millions TABLE General Fund Expenditures Police & Fire Services Public safety in Des Plaines is managed by the Police and Fire Departments. As can be seen on page 6, police and fire comprise about 64% of all General Fund expenditures. This is typical among cities because one of the major responsibilities of local government is to provide for the imminent safety of its residents. Presented below are the operating indicators supplied by each department. Department FY 2012 Police Physical Arrests 2,208 Compliance & Parking Violations 13,656 Traffic Violations 6,643 Fire Emergency Medical Calls 5,451 Fires/Reports of Fires 2,144 Inspections 4,304 As part of the 2013 budget development process, each department established a list of major undertakings during the 2012 fiscal year. Below is a summary of each department s accomplishments. Police Services: The Police Department implemented the new Cook County interoperable radios in conjunction with NSECC. The Police Department worked with outside organizations to establish security protocols at Rivers Casino. Fire Services: The Fire Department collaborated with Rivers Casino to establish an Emergency Medical Technician program. The Fire Department managed the development of a study to identify options for operating aerial ladder trucks in the City. Annual Police & Fire Expenditures Fire Police City of Des Plaines, IL 2012 Popular Annual Financial Report Page 8

12 Millions TABLE General Fund Expenditures Public Works and Engineering Services Historical Public Works & Engineering Expenditures The Public Works & Engineering Department serves the City by providing capital infrastructure design, construction, operation and maintenance within one consolidated Department. The Department strives to develop a consistent, cohesive system that responds to infrastructure concerns as well as proactively addresses issues that arise with any new programs or projects. Engineering Department Street resurfacing (square yards) 29,700 Sidewalks removed & replaced (sq ft) 69,300 Snow and ice control (tons of salt) 1,143 In 2012 the Public Works & Engineering Department: Completed the scheduled Capital Improvement Projects Implemented the Emerald Ash Borer Plan Combined work forces with the Fire Department to improve the fire hydrant flushing program Other Departments City Manager s Office is responsible for the overall management of the City s departments and provides administrative services. Finance Department manages all the City s programs related to general finance, accounting and revenue collection functions Expenditures 0.1M Fire and Police Commission 0.1M Emergency Management Agency 0.6M Elected Office 1.0M Finance Department 1.8M Community Development 2.4M Overhead 3.1M City Administration Community & Economic Development Department is responsible for current and long-range planning functions, the enforcement of the Building Code and the administration of the federally funded Community Development Grant program. Elected Office consists of the City Clerk s Office and the Legislative Department. The Legislative Department is composed of the Mayor and eight Aldermen. The Department works to identify community problems and concerns and is ultimately responsible for establishing goals and policies to address community needs. Board of Fire and Police Commissions provides the citizens of Des Plaines with professional Fire & Police personnel through fair and impartial hiring, promotional, and disciplinary processes. Homeland Security and Emergency Management saves lives, prevents injuries, and protects property and the environment in the event a natural or man-made disaster occurs. City of Des Plaines, IL 2012 Popular Annual Financial Report Page 9

13 TABLE Gaming Tax Fund In July 2011 Rivers Casino opened in Des Plaines making FY2012 the first full year to observe its full impact on the City s financial position. The City receives two types of Gaming Taxes related to the casino. The first is a $1 admissions tax that is received for every person entering the casino while the second is a 5% tax on all wagering activities. In 2012 Des Plaines received about $24.8 million from the operations at Rivers Casino and the breakdown can be seen below: Gaming Tax - Admissions Gaming Tax - Wagering $4.0M $20.8M $24.8M The agreement that allowed the casino to be built in Des Plaines requires that the State of Illinois receive $10 million every year from the City proceeds. Additionally, 40% of any revenues over $10 million are shared amongst 10 benefitting communities. This leaves 60% of all revenues over $10 million to be utilized by the City. After these contractual obligations were fulfilled, the Casino brought in approximately $8.9 million to the City in State of Illinois $10M City of Des Plaines $8.9M Other Municipalities $5.9M $24.8M City of Des Plaines, IL 2012 Popular Annual Financial Report Page 10

14 Thousands TABLE Enterprise Funds Enterprise Funds - The significant attribute of Enterprise Funds is that they are financed primarily by charges to consumers and that the accounting for them makes it possible to show whether they are operated at a profit or loss similar to comparable private enterprises. The goal of these funds is to be self-supporting by relying on the revenues received from user charges. The City has three Enterprise Funds: Water/Sewer Fund and two Parking Systems Funds Enterprise Fund Expenditures by Category Capital Outlay 2% Debt Service/Other 1% Salaries and Benefits 36% Commodities 56% Contractual Services 5% City Owned and Metra Leased Parking These funds account for the revenue and expenses associated with the maintenance of the City s two parking facilities (Metropolitan Square and Prairie Avenue) and parking lots leased from the Union Pacific Railroad. The revenue is generated through daily charges. $350 City Owned/Metra Leased Parking $300 $250 $200 $150 $100 Revenues Expenses $50 $ City of Des Plaines, IL 2012 Popular Annual Financial Report Page 11

15 Millions Water Rate TABLE Enterprise Funds Water and Sewer The Water and Sewer Fund accounts for the revenue and expenses associated with the transmission, treatment, storage, and sale of water to the residential, commercial and industrial customers within the City. There are currently more than 16,000 customers in the system. The water distribution system has a total of 248 miles of water mains and water can be stored in eight facilities with a total capacity of 19 million gallons. The average daily water consumption is over 7 million gallons. City of Des Plaines Utility Billing Rates Water Rate - Inside City Limits $4.075 per 100 cubic feet Water Rate - Outside City Limits $8.150 per 100 cubic feet Sanitary Sewer Rate $0.910 per 100 cubic feet Des Plaines is a wholesale purchaser of water from the City of Chicago. The water rate has two components; the City of Chicago purchase rate (the amount Des Plaines pays Chicago for treated Lake Michigan water, or the product cost), and the City of Des Plaines O&M rate (operation and maintenance, or the delivery cost). These two components are used to calculate the rate Des Plaines charges its customers. In addition, the Water/Sewer Fund is responsible for the maintenance of the City s sanitary sewer mains. $4.500 $4.000 $3.500 $3.000 $2.500 $2.000 $1.500 $1.000 $0.500 $ Delivery Cost $1.645 $1.744 $1.844 $1.912 $1.912 $1.912 $1.912 $1.912 $1.912 $2.200 Product Cost $0.937 $0.966 $0.995 $0.995 $0.995 $1.144 $1.316 $1.500 $1.500 $1.875 Total Cost $2.582 $2.710 $2.839 $2.907 $2.907 $3.056 $3.228 $3.412 $3.412 $ Water/Sewer Fund Total Revenues Total Expenses City of Des Plaines, IL 2012 Popular Annual Financial Report Page 12

16 Millions Millions TABLE Debt Burden General Obligation Debt: All general obligation notes and bonds payable are backed by the full faith and credit of the City. Notes and bonds in the governmental funds will be retired by future property tax levies, tax increments accumulated by the debt service fund, or other sources of revenue as defined in the bond documents. Business type activities debt is payable by revenues from user fees of those funds or, if the revenues are not sufficient, by future tax levies. The City makes principal and interest payments on bonds issued for approved projects. The graphic Historical Debt Principal Outstanding shows the relative pace with which the City has been paying its outstanding debt, as well as early pay-off of callable debt. Total outstanding principal of $58.4 million as of December 31, 2012 will be reduced to $17.8 million by 2020 as illustrated below in the Total Debt Outstanding Graphic. All current debt will be retired by the end of $120 $100 $80 $60 $40 $20 Historical Debt Principal Outstanding $ Total Debt Outstanding $80 $70 $60 $50 $40 $30 $20 Interest Principle Moody s Investors Service has assigned an Aa2 rating to the City s outstanding municipal bond issues. The City has taken advantage of this rating to refinance its outstanding debt for better interest rates and pay off debt early to save on future interest costs. $10 $- City of Des Plaines, IL 2012 Popular Annual Financial Report Page 13

17 TABLE Statement of Net Position One of the most important questions asked about the City s finances is, Is the City as a whole better off or worse off as a result of the year s activities? The Statement of Net Position reports information about the City as a whole in a way that helps answer this question. The focus of the Statement of Net Position (the "Total Net Position") is designed to be similar to bottom line results for the City and its governmental and business-type activities. Over time, increases or decreases in net position may serve as a useful indicator of whether or not the financial position of the City is improving. The statement distinguishes governmental activities (general government, public safety, highways & streets, sanitation, and economic development) from business -type activities. Governmental Business-type Total Primary * All figures in millions of $ Activites Activities Government ASSETS Current and Other Assets Capital Assets Total Assets DEFERRED OUTFLOWS OF RESOURCES Deferred Amounts from Refunding Debt LIABILITIES Long-Term Liabilities Other Liabilities Total Liabilities DEFERRED INFLOWS OF RESOURCES Deferred Property Tax Revenue NET POSITION Net Investment in Capital Assets Restricted Unrestricted Total Net Position The figure above shows an increase in net position equal to $23.1 million during fiscal year Capital Assets - Capital assets are defined by the government as assets with an initial cost of more than $25,000 for general capital assets and $25,000 for infrastructure assets, and an estimated useful life in excess of 1 year. Net Investment in Capital Assets Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances (excluding unspent bond proceeds) of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Restricted Net assets with constraints placed on their use either by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments or, 2) law through constitutional provisions or enabling legislation. Unrestricted All other net assets that are not "restricted" or "invested in capital assets, net of debt." City of Des Plaines, IL 2012 Popular Annual Financial Report Page 14

18 Millions TABLE Unassigned General Fund Balance Similar to the Unrestricted Net Position, the Unassigned General Fund balance provides an indicator of how financially secure the day to day operations of a government are. The Unassigned General Fund balance has increased over recent years from a dangerously low level of $1.1 million in 2007 to a more stable $23.0 million in The ratio of the unassigned fund balance to General Fund expenditures in 2012 is 41.7%. This is significant because it demonstrates that the City can maintain general operations for a sustained period of time without additional revenues. As revenues continue to be unstable due to fluctuating economic conditions and unforeseen emergencies continue to arise, the City will be able to maintain service levels. Fund Balance Percent of Expenditures Year M 2.2% M 2.2% M 7.8% M 30.5% M 39.0% M 41.7% $60 $50 $40 $30 $20 $10 $ Unassigned General Fund Balance Total Yearly Expenditures City of Des Plaines, IL 2012 Popular Annual Financial Report Page 15

19 Contact Information For more detailed financial information about the City of Des Plaines, please visit To view the Comprehensive Annual Financial Report, please visit For information about the annual budget, please visit For an electronic version of the Popular Annual Financial Report, please visit Any questions about city services can be directed to: City of Des Plaines 1420 Miner Street Des Plaines, IL Phone: :00 am - 5:00 pm Monday Friday City of Des Plaines, IL 2012 Popular Annual Financial Report Page 16