10-Year Financial Model

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Lucy Stephens
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1 10-Year Financial Model MAY 23, 2016 PURPOSE OVERVIEW OF BASE CASE INVESTMENT/ENHANCEMENT OPTIONS / POLICY CHOICES SIMULATIONS FOR TSPLOST AND PARKS BOND NEXT STEPS

2 Purpose for the 10-Year Financial Model Facilitate Setting of Policies Assist in Defining Priorities and Implementation Projects Input to the Budget Process Example: Two approaches to setting the Millage Rate (1) Set millage rate and work within to fund your priorities (2) Determine/set funding for your priorities then set the millage rate accordingly Regardless of preference for approach, the 10-Year model allows Councilmembers to consider different scenarios for funding and prioritization of priorities

3 BASE CASE 3 Components 1. Revenues 1. Local Option Sales Tax 2. Property Taxes 3. Franchise Fees 4. Insurance Premium Taxes 5. Building Permits 6. Business/Occupation Taxes 7. Motor Vehicle TAVT 8. Municipal Court Fees (These 8 = 95% of total revenues) 2. Operations Base Personnel Contract Services Operations One Time Expenses Debt Service Asset Replacement Infrastructure Maintenance FY2016 Personnel Additions 3. Investments and Enhancements Balance between Revenues and Operations historically invested in: Transportation Recreation and Parks Economic Development Public Safety Additional Resurfacing Reduction in Property Taxes

4 1. Revenues Base Case Municipal Court* 2% Motor Vehicle TAVT 3% Other Revenues* 5% Local Option Sales Tax Business & Occupation Tax* 4% Building Permits* 4% Insurance Premium Tax 7% Franchise Fees 8% Property Taxes* 31% Local Option Sales Tax 36% Property Taxes* Franchise Fees Insurance Premium Tax Building Permits* Business & Occupation Tax* Motor Vehicle TAVT Municipal Court* Other Revenues* *revenues that can be directly impacted by Council policy/action $54,943,079 = FY 2016 Base Revenues

5 10 Year Forecast for Revenues $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 Local Option Sales Tax (2.5%) Property Taxes (2%) Franchise Fees (2%) Insurance Premium Tax (3%) Building Permits (3%) Business/Occupation Tax (2%) Motor Vehicle TAVT (5%) Municipal Court Fees (4%) Other Revenues (2.3% average) Assumed growth rates (in parentheses) $0 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024 FY2025 FY2026

11% One Time Expenses 0% Debt Service 2%

6 2. Operations Base Case Base Personnel* 46% Contract Services** 25% Operations 12% Contract Services** Operations One Time Expenses Debt Service Asset Replacement Infrastructure Maintenance Base Personnel* *Base Personnel includes only city employees (not contract employees) Infrastructure Maintenance 11% One Time Expenses 0% Debt Service 2% Asset Replacement 4% **Contract Services includes both contract employees and other contracted services $50,640,233 = FY 2016 Base Operations

7 10 Year Forecast for Operations $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 Contract Services (3% average) Operations (2%) One Time Expenses (2%) Debt Service (-11% average) Asset Replacement (1% average) Infrastructure Maintenance (1% average) Base Personnel (3% average) Assumed growth rates (in parentheses) $0 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026

8 3. Investment and Enhancements Since incorporation, the difference between revenues and operations has been invested in capital projects. Options for investments (one-time expenses) and enhancements (ongoing operational impacts) in future years include: Transportation Recreation and Parks Economic Development Public Safety Additional Resurfacing Reduction in Property Taxes Future investments and enhancements are policy choices for Council.

3. Investments/Enhancements Base Case Personnel Additions (Enhancement) 2% Capital Investments

12% Infrastructure Maintenance (Investment) 13% Personnel Additions (Enhancement) Operations

(Investment) Capital Investments (Investment) Type of project shown (in parentheses) Investments

9 3. Investments/Enhancements Base Case Personnel Additions (Enhancement) 2% Capital Investments (Investment) 71% Operations Additions (Enhancement) 2% Infrastructure Investments (Investments) 12% Infrastructure Maintenance (Investment) 13% Personnel Additions (Enhancement) Operations Additions (Enhancement) Infrastructure Investments (Investments) Infrastructure Maintenance (Investment) Capital Investments (Investment) Type of project shown (in parentheses) Investments = one-time expenses Enhancements = on-going, operational impacts $30,754,954 = FY 2016 Investments/Enhancements

10 10 Year Forecast of Identified Investments/Enhancements to be considered $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 Available for Investments/Enhancements (balance of revenues - expenses) Staff Identified Projects (including those with potential for federal or state funding) Staff Identified Projects (without other funding sources identified) $20,000,000 $- FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026

11 Policy Choice Example: TSPLOST TSPLOST (Transportation Special Purpose Local Option Sales Tax) Key Dates: June 1 - Project Lists, June 30 IGA, and November 8 Referendum Implementation (if approved): 5 years, FY2017 FY 2021 Revenues Anticipated: $83,625,000 (at 100%) Costs Anticipated: $75,000,000 (Tier 1 and Tier 2 - Projects Identified) $375,000 (0.5% of revenue) Administration/Audit Fees - Fulton County $4,500,000 (6% of revenue) Inflation/Increased Demand for Construction Projects $3,750,000 (5% of revenue) Project Management/Local Administration Contract Services (revenues already factor in Department of Revenue retaining 1% of collections for administration) Note: This entire scenario is just a model no determinations on TSPLOST have been made by the City Council

12 Modeling TSPLOST Impact TSPLOST (Transportation Special Purpose Local Option Sales Tax) Impact Y/N Rate Participate in TSPLOST and Accept Revenues? -$83,625,000 YES Revenues Assumed to Cover Tier 1 (85% of estimate or $73.03M)? $65,500,000 YES Tier 1 Inflation/Increased Demand for Construction Projects $3,930,000 YES 6% Tier 1 Fulton County Administration Fees $367,500 YES 0.50% Tier 1 Local Project Management Fees $3,275,000 YES 5% Revenues Assumed to Cover Tier 2 (100% of estimate or $83.6M)? $9,500,000 YES Tier 2 Inflation/Increased Demand for Construction Projects $570,000 YES 6% Tier 2 Fulton County Administration Fees $47,500 YES 0.50% Tier 2 Local Additional Project Management Fees $475,000 YES 5% Note: This entire scenario is just a model no determinations on TSPLOST have been made by the City Council

13 Modeling TSPLOST Impact (continued) $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $0 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Projects Supplanted by TSPLOST Available for Investments/Enhancements (balance of revenues - expenses) Staff Identified Projects (including those with potential for federal or state funding) Staff Identified Projects (without other funding sources identified) TSPLOST Administrative/Other Costs Totals: $75,000,000 Projects Supplanted $8,625,000 Other Costs $83,625,000 Total Impact

14 Modeling TSPLOST Impact (continued) $90,000,000 $80,000,000 $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $- $(10,000,000) FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Modeling Reduction in Property Tax Revenue (if full-offset sale tax - shown over 15 years) Available for Investments/Enhancements (balance of revenues - expenses) Staff Identified Projects (without other funding sources identified) Modeling Millage Offset $83,625,000 Total Cost 1.40 Mill-reduction for 15 years $3M annual reduction in operations in Year 1 (then average $500K for other investments in remaining years) To offset over the 5-year tax period would equate to a 4.21 mill-reduction and $10.5M annual operations cut

15 Policy Choice Example: Parks Bond Parks Bond Key Dates: next week telephone survey June discuss results August 8 deadline to call for November 2016 referendum Implementation (if approved): 30 years Revenues Anticipated: $50,635,924* *amount to be determined by projects selected see next slide for this scenario Note: This entire scenario is just a model based on the Recreation and Parks Plan no determinations on a Parks Bond have been made by the City Council

16 Modeling Parks Bond Impact Parks Bond? Impact Y/N rate Include Build out of Large Acquired Parks? $21,199,870 YES Include Build out of Small Acquired Parks? $1,936,054 YES Include Rogers Bridge Connection? $2,500,000 YES Include Additional Parkland Acquisition? $25,000,000 YES If so, how much parkland acquisition? $ 25,000,000 Include Indoor Recreation Center? $0 NO Include General Fund Reimbursement for Completed Acquisitions? $0 NO If so, how much GF reimbursement for completed acquisitions $ 21,710,344 Resultant Bond Size if selected projects included: $ 50,635,924 Note: This entire scenario is just a model based on the Recreation and Parks Plan no determinations on a Parks Bond have been made by the City Council

17 Modeling Parks Bond Impact (continued) $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $- FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Park Investments funded through Parks Bond Available for Investments/Enhancements (balance of revenues - expenses) Staff Identified Projects (including those with potential for federal or state funding) Totals: $50,635,924 Projects Supplanted $6.65 per month per household Cost based on 30-year bond at 3%; average single family home median taxable value of $125,142 (40% of fair market value of $350,354, with a $15,000 basic homestead exemption)

18 Modeling Parks Bond Impact (continued) $80,000,000 Reduction in Property Tax Revenue $70,000,000 $60,000,000 $50,000,000 $40,000,000 $30,000,000 $20,000,000 $10,000,000 $- $(10,000,000) FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Available for Investments/Enhancements (balance of revenues - expenses) Staff Identified Projects (including those with potential for federal or state funding) Staff Identified Projects (without other funding sources identified) Modeling Millage Offset $50,635,924 Total Cost Mill-reduction $903K reduction in Operations in Year 1 ($1-$2M available in other years for investments)

19 Other Choices for Investments/Enhancements Transportation (estimated $96M of other projects) Traffic Congestion Relief, Regional Flow, Safety/Operational, Sidewalks, Pedestrian Bridges Recreation and Parks (estimated $27M of other projects) Existing Parks, Programming, Trails and Greenways, Rec Center, Tournaments, Parkland Acquisitions Economic Development (estimated $103M of other projects) Catalytic Additions such as Municipal Complex, Town Square/Green, Performing Arts Center Government Efficiency (estimated $5M of potential savings) Rebid Contract Services, Limit Personnel Cost Increases to set percentage or by benefit Public Safety (estimated $68M of other projects) Adjustments to Public Safety Staffing, Additional Fire Stations, Additional Infrastructure Investments Sense of Community (projects incorporated in other areas)

20 Next Steps Detail review of 10-Year Financial Model with each Councilor (as interested) Finalize Base Case with feedback from full Council Each Councilor can test out their preferences regarding different policy choices and the impacts on the Investments and Enhancements for the city Utilize as a tool to facilitate major policy decisions and define priorities Millage Rate Approaches including: (1) set millage, fund priorities within or (2) set funding for priorities, then set millage FY2017 Budget Update/improve as new information becomes available (tax digest, etc.) Future versions of 10-Year Model can better integrate and align cash flow, cost-accounting related to personnel and one day a public-facing scenario testing tool

SPLOST Whitfield County & Municipalities

SPLOST Whitfield County & Municipalities SPLOST 2019 Whitfield County & Municipalities SPLOST: What is it? A SPLOST is an optional one penny county sales tax used to fund capital outlay projects. SPLOST funds can only be used to fund capital