City Council Budget Work Session City of McKinney August 4, 2017
Agenda Budget Process & FY18 Overview Property Tax General Fund Revenues & Expenditures Capital Improvements Program Debt Service Water and Wastewater Rates Solid Waste, Surface Water Drainage & Replacement Fund McKinney National Airport Component Units Budget Calendar Expectations Discussion
Budget Development Cycle Planning January & February Adopted Budget September 30 Department s Budget March through May City Council s Budget August & September City Manager s Budget June & July 3
Core Businesses Our Core Businesses Responsibilities of City Government Provide essential utility services for daily living Protect people and property, making a safe community Respond to emergency situations Manage traffic flow and road system Plan McKinney's future development Provide leisure and recreational opportunities Support economic expansion Preserve the "McKinney character" our heritage Serve as a community information and resource center 4
Strategic Plan Our Goals Map to McKinney's Destination Direction for Strategic & Economic Growth Operational Excellence Maximize the Development Potential of the McKinney National Airport Financially Sound Government Enhance Quality of Life in McKinney Safe and Secure Community 5
Budget Philosophy & Strategy Policy Tool Forces prioritization of level of service policy decisions. Management Tool Allocates resources based on need and priority. Communications Tool Provides insight as to the level of service being provided and prioritization of available resources. 6
Long Term Planning Initiatives City has created 2 plans with a 10 year horizon General Obligation Debt Service Plan General Fund Plan General Obligation Debt Service Plan Outlines total debt capacity Maintains I&S rate 2015 bond election Plan to issue bonds over 10 years General Fund Plan Provides 10 year projection of operating revenues and expenditures
Budget Guidelines Fiscal Year 2017-18 The General Fund expenditure budget will be based broadly on the following: The City Manager will propose a fully funded and balanced budget. Police and Fire Sworn Personnel pay structures will be based on continuing the current Meet and Confer with appropriate marketbased adjustments. Civilian pay structures will be based on a market-based system, and allocate resources to reward performance through a merit based system. Maintain minimum fund balances and reserves as required by the City s financial policies and to maintain current bond ratings with a General Fund reserve of not less than 25% of budgeted expenditures. 8
Budget Guidelines (cont.) Fiscal Year 2017-18 The Utility Funds (Water, Sewer, Drainage) expenditure budgets will be broadly based on: Long-term financial sustainability of the funds. Implementation of rate adjustments as recommended by appropriate rate studies. Continue Council s direction to at a minimum pass on rate changes from the North Texas Municipal Water District. 9
Citizens Budget Survey Virtual Town Hall Survey completed by over 350 citizens on the allocation of City funds. 10
FY 2018 Budget Opportunities Decrease property tax rate by 3 cents Provide a 4% merit pool for all general government employees Planned step increases for sworn personnel Fully funded fleet and equipment replacements Continue funding Streets Reconstruction Plan Staffing Public Safety/Police & Fire Development Services Parks and Recreation/Aquatic & Fitness Center Water/Wastewater 11
FY 2018 Strategic Opportunities Proposed General Fund Ending Balance $50,802,232 Reserve in excess of 120 days = $5.5M Strategic Projects Parking Garage City Hall Airport Improvements Strategic Land Acquisition Fire Stations Starcenter Expansion 12
FY2018 Fund Balance Estimates Fund Title Beginning Fund Ending Fund Total Revenues Total Expenses Balance Balance General Fund $ 50,802,232 $ 137,244,473 $ 137,244,473 $ 50,802,232 Water/Wastewater 32,590,239 82,698,920 82,132,281 33,156,878 Airport 2,589,985 8,136,576 8,054,596 2,671,965 Surface Water 4,093,704 3,740,000 3,220,922 4,612,782 Solid Waste 7,212,130 9,332,937 8,219,606 8,325,461 Internal Services 10,737,610 23,489,222 22,497,489 11,729,343 Capital Projects 52,875,365 98,357,074 86,605,362 64,627,077 Debt Service 15,474,749 41,905,573 41,293,527 16,086,795 Other Operating 22,982,830 21,250,911 16,325,764 27,907,977 Component Units 58,834,131 30,572,572 25,310,644 64,096,059 80
Property Tax 14
Taxable Value History 15
Makeup of Appraised Values Sister Cities Source: Collin Central Appraisal District 16
Historical Makeup of Appraised Values Source: Collin Central Appraisal District Source: Collin Central Appraisal District 17
Property Tax Rate History 0.6200 0.6000 0.5980 0.5930 0.5880 0.5855 0.5800 0.5730 0.5600 0.5400 0.540199 0.5200 0.5000 FY05 FY06-07 FY08-14 FY15-16 FY17 FY18 18
0.40650 0.40650 0.40650 0.40506 0.41220 0.42179 0.415437 0.409973 0.401769 0.375611 0.17900 0.17900 0.17900 0.18044 0.17330 0.16371 0.167563 0.173027 0.171231 0.164588 Property Tax Rate Operations & Debt Rate History Operations Rate (M&O) Debt Rate (I&S) Total Tax Rate 0.65000 0.60000 0.55000 0.5855 0.5855 0.5855 0.5855 0.5855 0.5855 0.5830 0.5830 0.5730 0.540199 0.50000 0.45000 0.40000 0.35000 0.30000 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 19
Tax Rate/Average Home Value 2016 Tax Year (FY17) 2017 Tax Year (FY18) Tax Rate $0.573000 Avg. Value $299,986 Tax Rate $0.540199 Avg. Value $324,636 Average Tax Levy $1,718.92 Average Tax Levy $1,753.68 20
Citizens Served Per Employee 165 163 160 155 153 153 150 147 145 140 135 FY 2015 FY 2016 FY 2017 FY 2018 21
Citizens Served Sister Cities 180 160 153 147 140 120 100 80 123 122 108 McKinney FY17 McKinney FY18 Allen FY17 Plano FY17 60 Frisco FY17 40 20 0 22
General Fund Revenues 23
General Fund Revenue Makeup FY17 Original Budget FY 18 Proposed Budget Others 2% Charges & Fines 6% Transfers 2% Property Taxes 55% Others 2% Charges & Fines 5% Transfers 2% Property Taxes 54% Licenses & Permits 7% Franchise 11% Sales Taxes 17% Licenses & Permits 7% Franchise 11% Sales Taxes 19% 24
General Fund Yearly Performance 25
General Fund Revenues 26
Property Tax Revenue 27
Sales Tax Revenue 28
$18,874,000 $16,420,000 $16,457,500 $16,450,000 $16,114,000 $19,130,000 $19,800,000 $20,850,000 $21,885,000 $25,675,000 Sales Tax Revenue Budget Actual $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 29
General Fund Expenditures 30
Sister Cities GF Expenditures Per Capita Based on FY2017 Adopted Budgets Plano - $1,064 Allen- $976 Frisco - $893 McKinney - $796
General Fund Expenditure Highlights $6,000,000 New Employees & Equipment $3,000,000 Street Reconstruction & Repair $1,000,000 Public Safety Step Increases (Meet & Confer) $1,200,000 4% Merit Pool (General Government) $1,000,000 OPEB Contribution 41
General Fund Expenditures 33
General Fund Expense Makeup Parks & Library $12,306,095 9.7% Public Works $11,634,436 9.2% Transfers $10,337,198 8.1% FY17 Original Budget General Govt $23,442,793 18.5% Police $31,138,083 24.5% Parks & Library $13,492,318 9.8% Public Works $12,244,761 8.9% Transfers $10,750,118 7.8% FY18 Proposed Budget General Govt $26,776,897 19.5% Police $34,237,016 24.9% Development $10,519,137 8.3% Fire $27,643,279 21.8% Development $11,431,717 8.3% Fire $28,311,646 20.6% 34
General Fund Expense Makeup Sister City Comparison Transfers 8% McKinney FY17 Development Services 8% Public Works 9% Parks & Library 10% General Government 19% Public Safety 46% Development Services 8% Transfers 8% McKinney FY18 Public Works 9% Public Safety 46% Parks & Library 10% General Government 19% 35
General Government 130 Authorized Positions Includes all internal business functions FY18 expenditures include new: Training & Talent Development Program HR Specialist Accounting Technician 36
Public Safety 469 Authorized Positions FY18 increased expenditures due to: Supplementals Police Dept. Employees (13) Radio upgrade Firefighters (4) Outdoor Warning Sirens Station Alert System Power-Load Cot replacements 37
Development Services 101 Authorized Positions FY18 increased expenditures due to: New FTEs (8) Signal Trucks (2) Municipal Growth & Annexation Program 38
Public Works 59.5 Authorized Positions FY18 increased expenditures due to: Maintenance Specialist (2) F-250 w/ Utility Body 39
Parks & Library 146.5 Authorized Positions FY18 budget increase due to: Parks Maintenance Workers (4) Radio Replacements FTE Customer Service Reps. (5) 40
Grants to Community Adopted annually as part of General Fund appropriations Organizations do not reapply annually Arts Commission 200,000 Home for Holidays - A McKinney Christmas 23,750 Volunteer McKinney 67,000 Pecan Grove Memorial Srvc 950 Community Support Grants 119,700 411,400 41
Capital Improvements Program 42
2018-2022 Capital Improvements Program Project FY17-18 FY18-19 FY19-20 FY20-21 FY21-22 TOTAL Airport $ - $ 438,000 $ 6,058,312 $ 14,137,425 $ 15,523,600 $ 36,157,337 Drainage 400,000 420,000 500,000-8,000,000 9,320,000 Facilities - - - - - - Fire - 1,500,000 1,500,000-9,000,000 12,000,000 Parks 7,475,000 6,350,000 5,500,000 5,500,000 7,300,000 32,125,000 Streets 40,673,730 12,000,000 11,500,000 - - 64,173,730 Traffic - 4,000,000 - - - 4,000,000 Water 18,950,000 45,470,000 19,260,000 11,525,000 23,335,000 118,540,000 Wastewater 12,855,000 15,480,000 25,210,000 7,325,000 8,650,000 69,520,000 Grand Total $ 80,353,730 $ 85,658,000 $ 69,528,312 $ 38,487,425 $ 71,808,600 $ 345,836,067
MAJOR PROJECTS - 2018 FUNDING STREETS / PARKS PROJECTS: RIDGE ROAD (380 TO WILMETH) LAUD HOWELL PARKWAY SENIOR CENTER EXPANSION PROSPER ISD NEIGHBORHOOD PARK FINCH PARK PHASE IV WATER / WASTEWATER PROJECTS: STONEBRIDGE WATER LINES (380 TO FM1461) FM 546 WATER LINE HONEY CREEK SS TRUNK MAIN (US75 to NW) FRANKLIN BRANCH SANITARY SEWER
Preliminary 2018-2022 CIP Unfunded Projects UNFUNDED PROJECTS Project FY18-19 FY19-20 FY20-21 FY21-22 TOTAL Airport $ 17,450,000 $ - $ - $ - $ 17,450,000 Facilities 4,500,000 11,500,000 43,000,000 78,000,000 137,000,000 Fire Improvements 6,630,000 7,000,000 1,700,000 1,800,000 17,130,000 Parks 30,000,000 - - - 30,000,000 Streets 1,400,000 12,500,000 24,600,000 12,375,000 50,875,000 Grand Total $ 59,980,000 $ 31,000,000 $ 69,300,000 $ 92,175,000 $ 252,455,000 Major Unfunded Projects Municipal Complex Public Works Complex Public Safety Building Airport Terminal, Parking, & Hangars Fire Station $85,000,000 $24,500,000 $23,000,000 $16,000,000 $10,750,000
Debt Service 46
G.O. Debt Service Rate $0.18500 $0.18000 0.17900 0.18044 $0.17500 0.17330 0.173027 0.171231 $0.17000 0.167563 $0.16500 0.16371 0.164588 $0.16000 $0.15500 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 47
G.O. Debt Refunding Savings Savings as a result of Debt Refunding: FY2013 $3.5 million savings FY2014 $2.5 million savings FY2015 $800 thousand savings FY2016 $6.9 million savings FY2017 $3.7 million savings Total Savings - $17.4 million 48
Water and Wastewater Fund 49
Water and Wastewater Highlights Completed meter change-out program in FY2016 Began water line replacement program for FY2017 Anticipate a debt sale for Capital Projects in FY2018 Supplementals proposed include: Meter Specialist (1) Inspectors (2) Leak Detection/Maintenance Specialist (1) 50
Water and Wastewater Rates Rates and NTMWD NTMWD FY18 10% Increase on Water & Wastewater Increased rates due to capital improvements district wide & increased regulatory requirements City of McKinney proposes 8% increase on Water 9% increase on Wastewater Allows for Water/Wastewater fund to remain self-sufficient Approximate increase = $7.94 per month on an 8,000 gallon bill Comprehensive review of fee structures FY2018 51
Water and Wastewater Projections 52
Water and Wastewater Water Rates - Residential Current FY 17-18 Minimum Charge -- 3/4 $ 14.30 $ 15.45 Volume Charge Per 1,000 Gallons - 20,000 4.08 4.40 20,001 40,000 5.10 5.50 40,001 Above 6.12 6.60 Wastewater Rates - Residential Minimum Charge 15.25 16.60 Volume Charge Per 1,000 4.29 4.65 53
Solid Waste, Surface Water Drainage & Replacement Fund 54
Solid Waste Fund Solid Waste rates maintained since FY2006 Fee Changes proposed for FY18: Increase roll-off fee Eliminate Commercial Recycling fees for front load containers Annual review of fee structures are scheduled for FY18 Supplementals proposed include: Solid Waste Compliance Inspector Environmental Education Staff Assistant 55
Surface Water Drainage Fund No changes to fee schedule (updated in FY15) Continuation of Healthy Creeks & Lakes Program No Supplementals Requested 56
Equipment & Facilities Replacement Fund Fund initiated in FY14 to address needed fleet replacements and facilities upgrades and repairs Attempting to fund depreciation in all funds, as funds are available, to lessen dependence on debt During the past 3 fiscal years, this fund has replaced HVAC units, addressed failing roofs, and provided paint and carpet upgrades for several facilities 57
Equipment & Facilities Replacement Fund During FY17, over $5.9M has been used for replacements in the following departments: Chart Available at www.mckinneytexas.opengov.com 58
Before & After City Hall Roof Repair Funded roof repairs at City Hall: 17
Before & After Aquatic Improvements Funded new floatables for Aquatic Center: 15
Before & After Old Settlers Gym Funded new flooring and painting at Old Settlers Gym: 16
HVAC Replacements Funded 5 HVAC replacements at the Senior Center, installation required a helicopter: 18
McKinney National Airport 63
McKinney National Airport Balanced budget presented for FY18 Includes $413k General Fund contribution (Reduction from 2017 year 1 phase out) Reinvestment in Airport Construction Fund Fee increases for FY 18 include: Security access badges Replacement of lost keys Supplementals proposed include: Aircraft Tug 64
Component Units 65
Hotel/Motel Tax Fund Under Texas law, Hotel/Motel Tax must be expended under 2 criteria: Criteria #1: Every expenditure must directly enhance and promote tourism and the convention and hotel industry. Criteria #2: Every expenditure of the hotel occupancy tax must clearly fit into one of nine statutorily provided categories for expenditure of local hotel occupancy tax revenues. Estimated FY17 Hotel/Motel Tax Collection $1,700,000 Main Use of Funds Transfer to MCVB for operations 66
MCVB Budget Notes Fund balance budgeted to $11,202 for FY18 Management believes it is best to maintain fund balance within the Hotel/Motel Tax Fund Total operating costs up $72,000 over FY17 Adopted $653k to$725k Major increase $20,000 Advertising/Promotional Grants 67
MCVB Budget and Current Staffing 68
MEDC Main Source of Funds ½ Cent 4A Sales Tax FY18 Estimated Collection $13,482,272 4A Funds may be used for land, buildings, facilities, improvements, and expenditures related to: 1. Manufacturing, industrial, R&D, corporate headquarter facilities, and distribution centers 2. Job Training 3. Business airport facilities 4. Light rail, commuter rail, or motor buses 5. Infrastructure assistance to retail or commercial projects 6. 4B projects (with voter approval) 69
MEDC Budget and Current Staffing 70
MEDC Budget and Current Staffing (Cont.) EOY Estimate Proposed STAFFING FY 16-17 FY 17-18 MEDC President 1.00 1.00 MEDC Vice President 1.00 1.00 MEDC Director of Business Development 1.00 1.00 MEDC Director of Business Attraction * 0.00 1.00 MEDC Director of BREP & Emerging Technology 1.00 1.00 MEDC Director of Research * 0.00 1.00 MEDC Director of Marketing and Research 1.00 1.00 MEDC Business Development Specialist 1.00 1.00 Operations & Compliance Administrator 1.00 1.00 Administrative Assistant * 0.00 1.00 Intern (Part-time.5 FTE) 0.00 0.50 * Position(s) added in FY 17-18. Total 7.00 10.50 71
MCDC Main Source of Funds ½ Cent 4B Sales Tax FY18 Estimated Collection $13,482,272 Guaranteed Cost Neutrality through MCDC transfer for the Aquatic & Fitness Center FY17-19 4B Funds may be used for everything authorized under the 4A Sales Tax and: 1. Quality of Life Projects (Parks, Sports Facilities, Entertainment Facilities, Affordable Housing, and Other Improvements) 2. Water Supply Facilities (with voter approval) 3. Hangars, airport maintenance and repair facilities, air cargo facilities, and related infrastructure 72
MCDC Budget and Current Staffing 73
Aquatic & Fitness Center New Fund in FY2017 Estimated Revenues and Expenditures for FY17 are $3,268,111 $72,627 less than FY17 Adopted Guaranteed Cost Neutrality through MCDC transfer FY17- FY19 Projected Revenues for FY18 $4,057,034 Transfer of $696,934 from MCDC Projected Expenditures for FY18 $4,057,034 Projected Staffing Total for FY18 70.5 FTEs 74
Component Units MCDC Board will take action on their budget on August 24 MEDC Board will take action on their budget on August 15 MCVB Board will take action on their budget on August 22 Component Unit Budgets will be approved by the City Council in September by ordinance 75
Budget Calendar July 31 Tax Rate Record Vote Tax Rate First Public Hearing August 15 Sept. 5 Tax Rate Second Public Hearing Budget First Public Hearing Sept. 19 Budget Second Public Hearing Ratification of Property Tax Revenue Increase Adopt Budget, Tax Rate, and Fee/Rate Ordinance 76
Expectations Discussion 77