2018 Budget Discussion. Mark A. Freitag, City Manager August 9, 2017

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1 2018 Budget Discussion Mark A. Freitag, City Manager August 9,

2 Agenda Review upcoming 2018 budget Big picture overview of the City s budget 2018 General Fund budget projection and ideas to explore Review proposed budget parameters Review proposed budget study session dates Review the City s procurement policy and process 2

3 3 City Budget by Fund

4 City Budget by Expense Category 4

5 General Fund by Expense Category 5

6 Equalized Assessed Value & Net New Construction Projected 2017 EAV = $4.6B Increase of 11% from 2016 Largest percentage increase since 1996 Municipalities are only allowed to increase their operating property tax levy over last year by the % increase in net new construction 2018 NNC projected to be 2.73% Largest percentage increase in recent memory 6

7 2018 General Fund Budget Macro Revenue Projection Revenue Changes: Operating Property Tax Levy $ 746,000 JFD Revenue 340,000 General Transportation Aid (GTA) 54,511 Interest Income 25,000 Building Permit Revenue 12,700 Seneca Gas Sales (45,000) Bartender Licenses (48,000) Others 24,715 Subtotal for Revenue Changes $ 1,109,926 7

8 2018 General Fund Budget Macro Expense Projection Expenditure Changes: Wages and Wage Driven Fringes $ 653,087 Vehicle Operations and Maintenance 90,241 Utilities 52,801 Elections 44,000 Town Square / Interactive Water Feature 30,000 Labor Negotiations 20,000 JFD Vehicle Replacement Fund Transfer 18,000 Other 192,000 Subtotal for Expenditure Changes $ 1,100,129 Surplus / (Deficit) with Levy Increase $ 9,797 8

9 2018 General Fund Budget What actions can the City take to meet the community s needs while remaining fiscally responsible? Increase revenue Decrease expenditures by reducing or eliminating programs and services 9

10 2018 General Fund Budget Increase Revenue 82% of General Fund revenue comes from property taxes and state shared revenue Both revenue sources restricted by the State User fees are one of the only means to increase and diversify General Fund revenue Conducted a comprehensive review of various program and service fees and recommended fee increases Increases General Fund revenue by $232,600 10

11 General Fund Revenues by Source 11

12 General Fund Expenditures by Service 12

13 2018 Budget Decrease Expenditures Decrease workforce City staff already lean compared to peers Hiring freeze is a temporary solution that increases overtime and shifts workload to those already overworked not strategic Decrease programs and services Recent attempts Ideas to explore 13

14 Recent Attempts 2014 Budget Eliminate downtown snow removal (~$40k) 2015 Budget Decrease animal control funding ($70k) 2016 Budget Reduce JFD minimum staffing from 24 to 22 firefighters/paramedics ($140k) 2017 Budget None 15

15 Ideas to Explore Do not allocate a portion of the operating property tax levy increase to the Hedberg Public Library (HPL) (TBD) Provide emergency-only animal control services ($63k) Change cost recovery philosophy for recreational programming (TBD) Shift utility expenses at the Youth Sports Complex to the various user groups ($9k) 16

16 Ideas to Explore (cont.) Hire lobbyist to represent the City s interest on State issues such as state shared revenue, levy limits, etc. (TBD) Conduct an indoor sports facility feasibility study ($40k) JACVB has expressed interest in partnering on the feasibility study Capital Improvement Plan (CIP) project Others? 17

17 Proposed 2018 Budget Parameters Must-Have Increase the operating property tax levy to the maximum allowable amount under Wisconsin levy limits Maintain or reduce the amount of applied General Fund balance utilized Maintain the City s investment in infrastructure Provide negotiated pay increases to Police, Fire, and Transit union employees 18

18 Proposed Parameters (cont.) Must-Have (cont.) Provide a cost of living adjustment (COLA) to administrative employees to match union employees COLA Continue the merit pay program for administrative employees 19

19 Proposed Parameters (cont.) Nice-To-Have Allocate a proportionate share of the operating property tax levy increase to the Hedberg Public Library (HPL) Implement revenue enhancements and/or cost reductions based on the City Council s feedback from today s discussion 20

20 Proposed Parameters (cont.) Nice-To-Have Implement recommendations from the Employee Engagement Task Force Report (EETF) IT infrastructure needs assessment (~$25k) Personnel policy review (~$25k) Implement the City Administration's personnel priorities plan 21

21 Personnel Priorities Plan City Administration and Department Heads met to review each Department s personnel needs The group prioritized the following new positions if funding is available in IT Helpdesk Technician ($65k) 2. Police Officer ($59k) 3. Housing Director ($7k) 4. HR Generalist ($55k) 5. Firefighter ($72k) 22

22 Budget Timeline

23 Proposed 2018 Budget Study Session Dates October 17, 2017 Requires moving the Sustainable Janesville Committee meeting to another date October 25, 2017 October 30,

24 City Procurement What is the problem? Is the City in compliance with federal, state, and City procurement laws and policies? YES Can the City realize additional cost savings? MAYBE Are the City s procurement policies and processes complex? YES Can improvements be made to existing policies and processes? MAYBE 25

25 City Procurement Policy Division heads can approve purchases under $5,000 Most purchases made via State of Wisconsin contract, other negotiated contracts, bids from three vendors, or negotiated purchases 26

26 City Procurement Policy (cont.) For all purchases of $5,000 and above: Requires a purchase order Requires written bids to be solicited from a minimum of three known vendors If good/service is part of the State of Wisconsin contract, three bids are not required Purchases must be approved by the Division Head and the Finance Director Negotiations in lieu of bids require approval from the Finance Director 27

27 City Procurement Policy (cont.) All IT equipment purchases are reviewed and approved by the IT Manager All vehicles, specialized, and other equipment must be standardized, when possible, and are reviewed and approved by Vehicle Operations and Maintenance (VOM) and the Director of Public Works Fire trucks and ambulance purchases are exempt from this provision 28

28 City Procurement Policy (cont.) Wisconsin state law requires competitive bids for all public construction projects that exceed $25,000 Public construction typically includes all public works contracts for construction projects 29

29 30 City Procurement Process Map

30 Consultant Use & Spending Consultants are utilized to complete projects where the City does not have the available resources or expertise Most consultant use is for engineer and planning design services for capital projects Examples = Fire Station #1, Town Square, CTH G Modifications, Landfill Expansion, etc. Funding is included in the Major Capital Projects budget and approved when contracts are awarded or Promissory Notes are issued 31

31 Consultant Use & Spending Consultant Expenditures Total Expenditures % of Total Expenditures 2015 $1,594,035 $132,127, % 2016 $1,523,387 $147,602, % 32

32 Goal Hold a Kaizen event to review the City s procurement policy and process in 2018 Kaizen = continual improvement Process improvement event led by a facilitator with the implementation team being predominantly members of the area in which the kaizen event is being conducted plus a few additional people from support areas and even management Cost = ~$15k 33

33 Thank you for your time. Please contact the City Manager s Office for more information. (608)

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