City of Mercer Island. Section C Budget Summary

Transcription

1 City of Mercer Island Section C Budget Summary

2 This section has been prepared as a general summary of the biennial budget for the City of Mercer Island. It is designed to provide City residents and other interested readers with a quick overview of the financial plan of the City for the next two years. The summary is divided into seven sub-sections: City Organization how the city is organized to do business Staffing who provides the services Total Resources what the funding sources are for the city Total Expenditures how the revenues are spent Fund Summary revenue and expenditure totals by fund Utility Rates overview of proposed rate increases City Debt purpose and status of debt issued by the City and debt capacity If a more in-depth understanding of the budget is desired, detailed information can be found within the graphs, charts, narrative text, and funding level summaries located in the full budget document. City Organization The City of Mercer Island has a Council/Manager form of government. In this form, the City Council, comprised of seven elected members, hires a City Manager to act as the Chief Executive Officer of the City. The City Manager reports directly to the Council and carries out their policies. Council members listen to their constituents, the Island residents, and also receive advice and help from the Council appointed Boards and Commissions, which numbered ten in The Council is vitally interested in hearing the voices of all residents and in increasing citizen involvement. The day-to-day activities of the City are carried out by the ten departments shown on the chart on the following page. For an in-depth description of the functions carried out by these departments, see Section F (Operating Budget by Department) of the budget document. City of Mercer Island Budget C-1

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4 Staffing Budget Summary The two charts that follow show the number of regular and contract positions authorized by the Council in The regular full-time equivalents (FTEs) represent the City s permanent staff. Regular Full-Time Equivalents (FTEs) Department City Attorney City Manager Human Resources Court Development Services Finance Fire Park & Recreation Police Youth & Family Services Public Works Support Services Right of Way Utilities Capital Project Engineers Information & Geographical Svcs Total The changes to the City s regular FTEs in and are noted below: Staff Changes: Reinstatement of Assistant City Attorney to full time (0.25 FTE); position was cut to 0.75 FTE in 2013 Public Records Support increase to Paralegal position (0.50 FTE) Partial reinstatement of Court Administrator (0.25 FTE); position was cut to 0.50 FTE in 2011 Addition of Long Range Planner position (1.0 FTE) Addition of fourth elementary school counselor (0.83 FTE) Addition of Water Quality Technician (1.0 FTE) Addition of Transportation Engineer (1.0 FTE) Council Approved Staff Changes: Conversion of seasonal labor to two regular (2.0 FTE) Park Maintenance team members Helpdesk Technician (1.0 FTE) Reduction of ENTF Detective (1.0 FTE) In addition to regular employees, the City utilizes contract employees, casual labor, consultants and contractors to address workload needs that exceed the capacity or expertise of the City s regular staff and that are time limited or seasonal. City of Mercer Island Budget C-3

5 Contract employees are hired or retained when there is a significant increase in workload that cannot be absorbed by the City s regular staff and when the ongoing need for a new position is in question. They are just like regular employees, except their positions are time limited usually one or two years. The departments that utilize contract employees the most are Youth & Family Services, Parks & Recreation, and Development Services. If the workload is deemed to be ongoing (typically after three biennial budget cycles), a department can request that a contract position be converted to a regular position. Casual labor is used primarily to address seasonal workload needs and short-term workload issues created by special projects or position vacancies. Compared to a contract position, a casual labor position has limited or no benefits and is filled for a shorter period of time (1-3 months, 6 months, or 9 months). The departments that utilize casual labor the most are Parks & Recreation, Public Works, and Youth & Family Services. Consultants and contractors are hired when the City s regular staff lacks the capacity or expertise to perform specialized work that is usually short term in nature (i.e. less than a year). Consultants are considered experts in their white collar fields, providing specialized legal, engineering, technology, financial, and other professional services. Contractors, on the other hand, are highly skilled in the blue collar trades, providing specialized repair and maintenance services (e.g. electrical, plumbing, and heating/cooling system repairs) and bidding on public works projects (e.g. re-surfacing a road). Consultants and contractors are more expensive on an hourly basis than regular or contract employees; however, they are generally more cost effective than trying to perform the specialized work in-house. Contract Full-Time Equivalents (FTEs) CONTRACT City Manager Development Services Fire Information & Geographical Svcs Public Works Park & Recreation Youth & Family Services Total C-4 City of Mercer Island Budget

6 Full Time Equivalents (FTEs) and Contract FTEs Budget Summary City of Mercer Island Budget C-5

7 Total Resources For 2017 and 2018, the City s total budgeted resources amount to $66.3 million and $65.6 million respectively. These totals include the use of beginning fund balances to cover planned expenditures in (typically for capital projects and vehicle/equipment replacements). The remaining fund balances are not budgeted to be spent in , but are reserved for various purposes (e.g. operating reserves, capital projects after 2018, and vehicle/equipment replacements after 2018). The City derives its revenues from a variety of sources, as noted in the table below and the graphs on the following page. Charges for Services, which account for 35% of total budgeted resources in , are the largest resource, with $22.9 million budgeted in 2017 and $23.5 million budgeted in They mostly consist of water, sewer, and storm water utility charges; recreation fees; and Thrift Shop sales. Property Tax, which accounts for 20% in 2017 and 20% of total budgeted resources in , is the second largest resource, with $13.1 million budgeted in 2017 and $13.4 million budgeted in Collectively, Sales Tax, Business & Utility Taxes, and Real Estate Excise Tax, which account for 20% of total budgeted resources in , are the third largest resource, with $13.2 million budgeted in 2017 and $13.4 million budgeted in The chart below details resources for the period The graphs on the next page provide a percentage breakdown of total resources for 2017 and Resources, All Funds Percent Change Description Actual Forecast Budget Budget RESOURCES Budgeted Use of Fund Balance $ 2,662,946 $ 12,303,226 $ 4,591,132 $ 3,081, % -32.9% Property Tax 12,672,224 12,708,863 13,066,865 13,356, % 2.2% Sales Tax 4,768,534 5,230,000 5,183,000 5,275, % 1.8% Business & Utility Taxes 4,712,579 4,727,800 4,805,200 4,889, % 1.8% Real Estate Excise Tax 3,269,379 3,551,000 3,165,000 3,284, % 3.8% Shared Revenues 2,220,051 2,106,125 2,765,615 2,663, % -3.7% Utility Overhead 419, , , , % 2.6% Charge for Service 22,455,290 22,140,385 22,971,217 23,560, % 2.6% Licenses & Permits 3,856,377 3,799,400 3,595,500 3,360, % -6.5% District Court Fines 433, , , , % 0.0% Other Resources 2,600,327 2,627,291 2,712,491 3,410, % 25.7% Interest 47,469 95,448 89,894 96, % 7.0% Interfund Transfers In 2,034,287 2,487,960 2,504,336 1,724, % -31.1% Total Budgeted Resources 62,152,336 72,632,691 66,317,420 65,582, % -1.1% Not Budgeted Beginning Fund Balance 31,597,309 24,637,369 24,738,577 22,775, % -7.9% TOTAL RESOURCES $ 93,749,647 $ 97,270,060 $ 91,055,998 $ 88,358, % -3.0% C-6 City of Mercer Island Budget

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9 Total Expenditures For 2017 and 2018, the City s total budgeted expenditures amount to $65.2 million and $63.8 million respectively, which are accounted for in 22 different funds. Section E (Recap by Fund) provides summary level information on the revenues, expenditures, and fund balances for each fund. The General Fund is the City s largest fund, with $29.4 million budgeted in 2017 and $29.4 million budgeted in Most of the City s general government services, including police and fire protection, emergency medical response, street and park maintenance, recreation programs, land use planning, and community development, are accounted for in the General Fund. Taken together, the Water, Sewer, and Storm Water Funds, are the second largest group of funds, with $19.2 million budgeted in 2017 and $18.3 million budgeted in These funds account for all operating, maintenance, and capital costs related to water distribution, sewage treatment and disposal, and storm water management. Another way to look at the City budget is by expenditure category. The Budget is comprised of 14 separate categories, which are noted in the table below. The largest expenditure categories are Salaries and Benefits, which collectively comprise 46% of the total Budget. The graphs on the next page provide a percentage breakdown of all expenditures for 2017 and Expenditures, All Funds Percent Change Description Actual Forecast Budget Budget USES Budgeted Salaries & Wages $ 19,668,026 $ 21,270,706 $ 21,217,714 $ 21,820, % 2.8% Benefits 7,065,639 7,757,408 8,049,756 8,448, % 4.9% Supplies 1,462,225 1,545,557 1,479,626 1,454, % -1.7% Contractual Services 4,951,220 7,456,831 6,779,327 5,848, % -13.7% Communications 203, , , , % 0.6% Equipment Rental 1,963,312 1,987,504 1,997,533 2,019, % 1.1% Insurance 667, , , , % 4.7% Utilities 874, , , , % 0.7% Other Services & Charges 2,152,922 1,874,623 1,931,197 2,733, % 41.6% Intergovernmental 1,019,105 1,076,367 1,301,153 1,396, % 7.3% Water/Sewer Treatment 6,535,430 6,367,868 6,581,252 6,833, % 3.8% Capital 5,748,472 11,723,662 8,998,000 8,126, % -9.7% Bond Redemption 2,456,775 2,462,077 2,460,833 2,173, % -11.7% Interfund Transfers 2,039,734 2,575,651 2,368,580 1,772, % -25.2% Total Budgeted Expenditures 56,809,051 67,940,349 65,198,451 64,705, % -0.8% Not Budgeted Expenditure Cuts/New Revenue (849,081) N/A N/A Ending Fund Balance 36,940,595 29,329,709 25,857,546 24,501, % -5.2% TOTAL USES $ 93,749,647 $ 97,270,060 $ 91,055,998 $ 88,358, % -3.0% C-8 City of Mercer Island Budget

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11 Fund Summary Total revenues and total expenditures by fund for the period are summarized in the tables below. Summary of Revenues by Fund for Fund No. Description Actual Forecast Budget Budget 001 General Fund $ 28,704,512 $ 30,212,992 $ 29,549,000 $ 29,522, Self Insurance Fund 5,000 10,000 10,000 10, Youth Service Endowment Fund Subtotal General Purpose Funds $ 28,709,924 $ 30,223,492 $ 29,559,500 $ 29,532, Street Fund $ 2,472,521 $ 4,861,790 $ 2,728,368 $ 3,455, Transportation Benefit District 220, , , , Criminal Justice Fund 660, , , , Beautification Fund 1,167,324 1,240,604 1,145,502 1,186, Contingency Fund 23,674 25,000 25,000 25, % For the Arts Fund 17,167 55,170 15,000 20, Youth and Family Services Fund 2,458,801 2,433,034 2,748,719 2,464,250 Subtotal Special Revenue Funds $ 7,020,803 $ 9,712,314 $ 7,739,314 $ 8,262, Bond Redemptiion (Voted) $ - $ - $ - $ Bond Redemption (Non-Voted) 1,007,036 1,004,311 1,011, ,159 Subtotal Debt Service Funds $ 1,007,036 $ 1,004,311 $ 1,011,099 $ 847, Capital Improvement Fund $ 2,660,489 $ 4,789,517 $ 4,706,243 $ 3,459, Technology and Equipment Fund 401, , , , Fire Station 92 Construction 1,111, , Capital Reserve Fund - 181, Subtotal Capital Funds $ 4,173,145 $ 6,283,374 $ 5,437,243 $ 4,191, Water Fund $ 7,503,907 $ 8,801,359 $ 7,317,818 $ 7,298, Sewer Fund 8,531,032 9,746,328 9,271,432 9,285, Storm Water Fund 2,064,399 3,371,365 2,574,312 2,049,570 Subtotal Enterprise Funds $ 18,099,338 $ 21,919,052 $ 19,163,562 $ 18,633, Equipment Rental Fund $ 2,100,339 $ 2,055,575 $ 2,171,291 $ 2,781, Computer Equipment Fund 951, ,573 1,138,412 1,230,826 Subtotal Internal Service Funds $ 3,051,428 $ 2,993,148 $ 3,309,703 $ 4,011, Firemen's Pension Fund $ 90,662 $ 93,000 $ 97,000 $ 103,000 Subtotal Trust Funds $ 90,662 $ 93,000 $ 97,000 $ 103,000 TOTAL REVENUES $ 62,152,336 $ 72,228,691 $ 66,317,421 $ 65,582,646 C-10 City of Mercer Island Budget

12 Summary of Expenditures by Fund for Budget Summary Fund No. Description Actual Forecast Budget Budget 001 General Fund $ 27,189,885 $ 28,987,713 $ 29,436,000 $ 29,413, Self Insurance Fund - 10,000 10,000 10, Youth Service Endowment Fund Subtotal General Purpose Funds $ 27,190,297 $ 28,998,213 $ 29,446,500 $ 29,423, Street Fund $ 1,990,278 $ 4,199,095 $ 2,728,368 $ 3,455, Transportation Benefit District 188, , , , Criminal Justice Fund 493, , , , Beautification Fund 1,066,366 1,085, , , Contingency Fund % For the Arts Fund 37,970 41,170 15,000 15, Youth and Family Services Fund 2,411,721 2,574,790 2,748,719 2,444,250 Subtotal Special Revenue Funds $ 6,188,513 $ 8,921,853 $ 7,408,357 $ 7,827, Bond Redemption (Voted) $ - $ - $ - $ Bond Redemption (Non-Voted) 1,007,036 1,004,311 1,011, ,159 Subtotal Debt Service Funds $ 1,007,036 $ 1,004,311 $ 1,011,099 $ 847, Capital Improvement Fund $ 1,981,307 $ 3,293,840 $ 4,706,243 $ 3,459, Technology and Equipment Fund 152, , , , Fire Station 92 Construction 851, , Capital Reserve Fund - 181, Subtotal Capital Project Funds $ 2,985,144 $ 4,762,256 $ 5,437,243 $ 4,191, Water Fund $ 7,080,756 $ 8,826,041 $ 7,317,818 $ 7,246, Sewer Fund 7,588,991 9,699,793 9,271,431 9,079, Storm Water Fund 2,143,626 3,338,439 2,574,312 1,934,956 Subtotal Enterprise Funds $ 16,813,373 $ 21,864,273 $ 19,163,561 $ 18,260, Equipment Rental Fund $ 1,724,961 $ 1,482,639 $ 1,658,766 $ 2,139, Computer Equipment Fund 809, , ,926 1,063,193 Subtotal Internal Service Funds $ 2,534,026 $ 2,296,444 $ 2,634,692 $ 3,202, Firemen's Pension Fund $ 90,662 $ 93,000 $ 97,000 $ 103,000 Subtotal Trust Funds $ 90,662 $ 93,000 $ 97,000 $ 103,000 TOTALS $ 56,809,051 $ 67,940,349 $ 65,198,451 $ 63,856,408 City of Mercer Island Budget C-11

13 Utility Rates The Water, Sewer, and Storm Water Funds are completely self-supporting utilities that are operated like a not-for-profit enterprise. They are primarily funded by customer charges, not taxes. The City purchases its water from the City of Seattle as do many of our neighboring communities. The Wastewater Treatment Division of King County provides treatment for all of the sewage in the King County area, including Mercer Island. The 2016 actual, 2017 adopted, and 2018 planned bi-monthly utility charges for water, sewer, storm water, and Emergency Medical Services (EMS) are broken down in the table below (excluding utility taxes, which are a General Fund revenue source) for a typical single family residential customer. Utility Rate $ Change % Change Component Adopted Adopted Planned Water $99.36 $ $ $5.46 $ % 5.5% Sewer Maintenance (City) $80.47 $85.06 $89.91 $4.59 $ % 5.7% Sewer Treatment (King County) $84.06 $88.44 $88.44 $4.38 $ % 0.0% Storm Water $31.88 $33.09 $34.35 $1.21 $ % 3.8% EMS $8.53 $8.88 $9.24 $0.35 $ % 4.1% Total $ $ $ $15.99 $ % 3.8% City Debt The City has prudently issued little debt over the years, maintaining a sizable debt capacity and consistently following a conservative fiscal management policy, which is reflected in the excellent bond ratings from Moody's rating service Aa1 rating on its unlimited tax general obligation (UTGO), or voted, bonds and a Aa1 rating on its limited tax general obligation (LTGO), or non-voted, bonds. According to Moody s, Mercer Island has the highest LTGO bond rating in the state, along with Seattle, Bellevue, and Redmond, and the second highest UTGO bond rating in the state, following Seattle and Bellevue, which have a Aaa rating. A high bond rating equates to lower interest costs and is very desirable. The City can issue five types of debt which have legal limits set by the State. The five types of debt include: voted and non-voted general obligation bonds, revenue bonds, lease debt, and loans. For the purposes of the legal limit debt calculations, leases and loans are included with the non-voted general obligation debt limits. A schedule of all the City debt classified by type is included later in this section. Voted Debt Voted debt is that which the citizens agree to in an election and is supported by special (excess) tax revenues levied on property each year. Voted debt has generally been used for the purpose of funding large public buildings or buying land or open space. The City currently has no voted debt outstanding. Non-Voted Debt Non-voted debt must be paid for out of the general revenues of the city. Non-voted debt includes not only bonds but also any loans and lease obligations of the City. The active issues are described below: 2003 Mercer View Property This bond issue, paid for from real estate excise taxes, was used to buy the site from the Mercer Island School District for the construction of a new community center. To save on interest costs, this bond issue was refunded in The total principal owed on the refunded debt at the end of 2016 is $155,000. C-12 City of Mercer Island Budget

14 2004 MICEC Construction In 2004, the City issued $2.0 million in councilmanic bonds to partially pay for the construction of a new community center. The new center was completed in December To save on interest costs, this bond issue was refunded in The total principal owed on the refunded debt at the end of 2016 is $895, Fire Apparatus Lease (Velocity Pumpers) In 2007, the Mercer Island City Council authorized a contract with Pierce Manufacturing to purchase two Velocity Pumper Trucks through a lease purchase financing agreement with Municipal Asset Management Inc. in the amount of $1,035,026. The total principal owed at the end of 2016 is $122, LTGO South Mercer Playfields In 2009, LTGO bonds were issued to fund capital improvements at the South Mercer Playfields. The original issue amount was $1,000,000, and the total principal outstanding at the end of 2016 is $505, LTGO Sewer Lake Line In 2009, LTGO bonds were issued to fund a portion of the sewer lake line replacement project. Sewer utility rates are being used to repay the long-term debt. The original issue amount was $9,405,000, and the total principal outstanding at the end of 2016 is $6,790, LTGO First Hill Water Improvements In March 2011, LTGO bonds were issued to fund a portion of a water system improvements project in the First Hill neighborhood. Water utility rates are being used to repay the long-term debt. The original issue amount was $1,500,000, and the total principal outstanding at the end of 2016 is $1,160, Fire Apparatus Lease (Velocity Pumper) In 2012, the Mercer Island City Council authorized a contract with Pierce Manufacturing to purchase a Velocity Pumper Truck through a lease purchase financing agreement with Municipal Asset Management Inc. in the amount of $619,547. The total principal owed at the end of 2016 is $389, LTGO Fire Construction and Equipment - In February 2013, the City issued $4.94 million in LTGO bonds to fund the replacement of Fire Station 92 and a Fire Rescue Truck. The debt service is being funded by a 9 year levy lid lift approved by Mercer Island voters on November 6, The total principal owed at the end of 2016 is $2,905, Fire Apparatus Lease (Mini Pumper) In 2015, the Mercer Island City Council authorized a contract with Pierce Manufacturing to purchase one Mini Pumper Fire Truck through a lease purchase financing agreement with Municipal Asset Management Inc. in the amount of $341,295. The total principal owed at the end of 2016 is $306,522. Public Work Trust Fund Loans In addition to the above debt, the City has one long-term loan outstanding as of the end of 2016, with $4,027,573 in principal due. Public Works Trust Fund loans are low-interest loans (1% interest) administered through the State of Washington Department of Community Development. In 1985, the legislature made provisions for this program using the Public Works Assistance Account, which is funded by the Motor Vehicle Excise Tax (MVET) collected by the state. To qualify, jurisdictions are required to do the following: 1. Impose the ¼ of one percent real estate excise tax; 2. Have developed a long-term plan for financing public work needs; 3. Be using all local revenue sources which are reasonably available for funding public works; and 4. Have an adopted comprehensive plan. City of Mercer Island Budget C-13

15 Schedule of Outstanding Debt City of Mercer Island Schedule of Long Term Debt Description Date Issued Original Amount Amount Outstanding 12/31/2016 Non-Voted Debt: 2009 LTGO South Mercer Playfields 08/17/09 1,000, , LTGO Sewer Lake Line 08/17/09 9,405,000 6,790, LTGO First Hill Water Improve 03/23/11 1,500,000 1,160, Refunding (MV Property) 02/06/13 630, , Refunding (MICEC Bldg) 02/06/13 1,140, , LTGO Fire Construction & Equip 02/06/13 4,940,000 2,905,000 Total Non-Voter Approved $18,615,000 $12,410,000 Voted Debt: Total Voter Approved $0 $0 Lease Obligations 2007 Fire Velocity Pumpers 07/02/07 1,035, , Fire Velocity Pumper 06/01/12 619, , Fire Mini Pumper 06/01/15 341, ,522 Total Lease Obligations $1,995,868 $818,980 Total General Obligation Debt $20,610,868 $13,228,980 Public Works Trust Fund Loans Sewer Lake Line 01/31/05 6,650,000 4,027,573 Total Public Works Trust Fund $6,650,000 $4,027,573 C-14 City of Mercer Island Budget

16 Debt Capacity The debt capacity of the City is limited by law. Below is a chart showing the computation of the debt capacity as of December 31, Limited Tax Unlimited Tax General Purpose Debt 1 General Purpose Debt 1 Open Space and Parks Utility Purposes (Based on 1.5% of AV) (Based on 2.5% of AV) (Based on 2.5% of AV) (Based on 2.5% of AV) Legal Limit $163,033,584 $271,722,640 $271,722,640 $271,722,640 Add: Cash on hand for debt redemption 5,038 5, Less: Limited Tax Debt outstanding -14,805,896-14,805, Less: Unlimited Tax Debt outstanding Remaining Debt Capacity, Limited Tax $148,232,729 $256,921,782 Remaining Debt Capacity, Unlimited Taxes $271,722,640 $271,722,640 1 General Purpose debt may not exceed 2.5% of total assessed valuation, which equals $10,868,905,593 as of 12/31/15. Any non-voted debt reduces the margin available for voted general purpose debt. City of Mercer Island Budget C-15

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