BUDGET OVERVIEW

Transcription

1 BUDGET OVERVIEW

2 Major Budget Proposals No salary increases Plan further benefit and/or wage reductions of $900,000 across all funds To balance budget and qualify for revenue sharing Changes in pension contributions and provisions Changes in health care plans Beginning Union negotiations - Contracts expire at June 30, 2011 Assume City will qualify for new revenue sharing program of $815,000 Requires collaborations and benefit reductions 2

3 Compensation Reductions No proposed wage increases New hires after In new hybrid pension plan New hires after No retiree health care, now in HCSP Employee pension contribution increased 3% points City is now self insured for health care Increased co-pays and deductibles Reduced pension costs by reducing vacation accumulation

4 Health Care Cost Comparison Total Employee Employer Port Huron $13,278 *see below $13,278 Semco $15,816 $1,812 $14,004 St. Clair County $17,484 $1,181 $16,303 State of Michigan $18,087 $ 904 $17,182 PHASD $20,654 $3,098 $17,556 Bay City $19,793 $1,248 $18,545 Marysville $19,704 $19,704 * The City of Port Huron uses a point of service philosophy (higher deductibles and co-pays) to share costs with employees, resulting in lower overall employer health care costs

5 Major Budget Proposals No proposed use of General Fund fund balance Reduce McMorran operating subsidy from $220,000 to $200,000 and reduce capital from $100,000 to $50,000 Turn the Lightship over to the Museum and consider Museum subsidy of $14,000 No allocation to the Chamber of Commerce 5

6 Major Budget Proposals Eliminate 12 positions across the City Estimated labor cost savings $650,000 Total eliminated positions is now 88 since 2002 Eliminated 18 Administrators and Supervisors Eliminated 70 other positions Workforce has declined from 328 to 240 Decrease of over 25%

7 Workforce Reductions (Positions by Department) Fire 12 Police 7 DPW (Utilities/Streets) 28 Dispatch 11 Finance 4 Parks/Forestry/Cemetery 11 Legal 2 City Manager 1 Human Resources 1 Engineering 1 Community Dev/Inspection 4 Data Processing 3 Recreation 2 Clerk 1 Total Reductions 88 7

8 Number of Full-time Employees

9 Major Budget Proposals Operating cost savings in Water and Wastewater budgets of over $600,000 eliminates General Fund subsidy need Increase water and sewer rates by an average 6.4% - as discussed last year - long term plan to solve cash flow problem Necessary to reduce continuing revenue gap, estimated at $5.5 million for Property tax decreases offset water increases 9

10 BUDGET OVERVIEW GENERAL FUND

11 General Fund - Property Taxes $9.0 $8.0 $7.0 $6.0 Millions $5.0 $4.0 $3.0 $2.0 $1.0 $ est bgt Property Tax 11

12 Average Home Using a Value of $100,000 in 2008 $55,000 $50,000 $45,000 $40,000 $35,000 $30, SEV Taxable 12

13 Property Taxes for Homeowner (Using $100,000 Value in 2008) $1,700 $1,600 $1,500 $1,400 $1,300 $1,200 $1,100 $1,

14 Property Taxes for Rental Home (using $75,000 Value in 2008) $2,000 $1,800 $1,600 $1,400 $1,200 $1,

15 Estimated Property Tax Savings $100,000 Homeowner Home Property Taxes Savings 2008 $1, $1,504 $ $1,347 $ $1,265 $ 82 Total $ 293

16 Estimated Property Tax Savings $75,000 Rental Home Property Taxes Savings 2008 $1, $1,672 $ $1,497 $ $1,406 $ 91 Total $ 326

17 General Fund - Income Tax $9.0 $8.0 $7.0 $6.0 Millions $5.0 $4.0 $3.0 $2.0 $1.0 $ est bgt Income Tax 17

18 General Fund - Revenue Sharing $9.0 $8.0 $7.0 $6.0 Millions $5.0 $4.0 $3.0 $2.0 $1.0 $ est bgt Revenue Sharing 18

19 General Fund Revenue Components $9.0 $8.0 $7.0 $6.0 Millions $5.0 $4.0 $3.0 $2.0 $1.0 $ est bgt Income Tax Property Tax Revenue Sharing 19

20 General Fund Revenue and Operating Expense $30.0 $25.0 $20.0 Millions $15.0 $10.0 $5.0 $ est bgt Revenue Operating Expense Capital & Transfers Inflation 20

21 General Fund Revenue and Operating Expense $26.0 $24.0 Millions $22.0 $20.0 $18.0 $ est bgt Revenue Operating Expense Inflation - Rev Inflation - Exp 21

22 BUDGET OVERVIEW WATER AND WASTEWATER FUNDS

23 Water Fund $10.0 $8.0 Millions $6.0 $4.0 $2.0 $ budget budget Revenue Expense 23

24 Wastewater Fund $20.0 $15.0 Millions $10.0 $5.0 $ budget budget Revenue Expense 24

25 Combined Utility Funds $25.0 $20.0 Millions $15.0 $10.0 $5.0 $ budget budget Revenue Expense 25

26 Share of Usage and Revenue 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% Usage Water Rev Sewer Rev Total Rev Port Huron Townships 26

27 OVERVIEW PROJECTED UTILITY FUND REVENUES AND EXPENSES 27

28 Projection initially assumes the following: No rate increases Usage will be relatively unchanged Expenses will be reduced below budget based on current estimates New debt based on estimated cost of projects Transfers from operations will be reduced All savings will be used until operating balances are reduced to minimum recommended levels 28

29 Utility Funds Projected Transfers from Savings $30 $25 $20 Millions $15 $10 $5 $ Debt Service Capital Projects O & M Expenses Savings Transfers Oper Transfers Base Revenue 29

30 Utility Funds Rate Increase Needed After Savings Exhausted - 50% to 70% $30 $25 $20 Millions $15 $10 $5 $ Debt Service Capital Projects O & M Expenses Savings Transfers Revenue Gap Oper Transfers Base Revenue 30

31 REVENUE GAP Once savings are depleted, there will be a revenue gap: Estimated to be over $7 million in Expected to be over $9 million by Revenue difference 50% to 70% That gap is larger than any current General Fund activity as follows: 31

32 Utility Funds Revenue Gap Compared to 11/12 General Fund Budget Activities $10 $9 $8 $7 Millions $6 $5 $4 $3 $2 $1 $0 Police Dept General Gov't All Other Oper Fire Dept Parks& Rec All Other Oper Parks & Rec General Gov't Revenue Gap Fire Dept Police Dept 32

33 Eliminate Revenue Gap A projected 6% annual increase will increase rates more gradually and will: Eliminate revenue gap in Allow savings to last until revenues match expenses Avoid 50% to 60% rate increase in Limit adjustment to approximately $3 per month Rate increase may be reduced or eliminated in and beyond as debt service peaks 33

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35 Debt Costs Bond rating downgraded from A+ to A (subsequent recalibration to AA-, not an upgrade) Rating agency spoke to: General concerns: Michigan economic conditions Manufacturing jobs and unemployment Specific Port Huron concerns: Subsidy of Water and Sewer System Lack of rate increases Downgrade could add $1.0 to $1.5 million to debt costs on planned borrowing through 2016

36 Debt Repayment Bonds purchased by investors Bond agreement specifies system revenues to be used for repayment Investors expect debt to be repaid by utility revenues Subsidies and transfers are unusual in other municipalities Bond agreements require adequate revenues City pledges full faith and credit to repay General Fund makes up any payment shortage Before other services

37 Comparison to Other Utilities Compared monthly City utility cost to: Natural Gas Electricity Cable TV Looked at prior eight years Used actual Comcast cost for digital starter Used typical usage amounts and actual residential billings for DTE and SEMCO 37

38 Monthly Utility Rate Comparison $140 $120 $100 $80 $60 $40 $ Gas Electric Cable Water 38

39 Current Average Monthly Utility Bills Water and Sewer $ Cable TV $ Natural Gas $ Electricity $

40 Comcast Cable Revenue City Cable Revenue reported by Comcast 2006 $5.0 Million 2007 $5.6 Million 2008 $5.7 Million 2009 $5.8 Million 2010 $5.9 Million Increased by over $850,000 from 2006 to 2010 Comcast Digital Starter Service costs over $18 more per month than Water and Sewer

41 Comparison to Other Communities Looked at average quarterly utility billings Called similar cities around the State (central cities that provide their own utility services) Called several St. Clair County communities Used 2,000 cubic feet per quarter as base for calculation ease (slightly larger than City s 1,680 average) 41

42 Average Utility Bills (2,000 Cu Ft) City Quarterly Monthly Bay City $ $88.87 Sault St. Marie Saginaw Lansing Grand Rapids Mount Clemens PORT HURON (proposed) $ $54.17 Portage Battle Creek Ann Arbor Midland Monroe Jackson Holland Muskegon Kalamazoo Higher Lower

43 Average Utility Bills (2,000 Cu Ft) City/Township Quarterly Monthly Cottrellville Township $ $ St. Clair Township Marine City Clay Township Port Huron (proposed) $ $ Algonac St. Clair (w/o remote read) Marysville St. Clair (with remote read) East China Township Fort Gratiot Township Port Huron Township Kimball Township Higher Lower

44 BUDGET OVERVIEW