CITY MANAGER'S FY 2011 PROPOSED BUDGET
City of Fairfax, VA City Council Work Session March 9, 2010
CITY MANAGER’S FY 2011 PROPOSED BUDGET
FY 2011 Budget Goals Best Value to Residents Unsurpassed Services Lowest Overall Tax Burden in the Region Exceptional Amenities Maintain Infrastructure Maintain the City’s AAA Bond Rating Sound Financial Practices 2
Review of FY 2010 Adopted Total Reductions $7.3m (6.3%) from FY 2009 Internal Operations
$2.2m
Reduction 10.5 FTE’s; Add back 3 Police Officers Elimination of Part-time, Temporary, and future
undesignated positions (equiv. 12 FTE’s) COLA provided @ 1.75%; Merit / Step increases eliminated Elimination of awards programs, educational assistance, executive pay plan, and training / development funds Elimination of Holiday Pay (Fire Dept.) Elimination of two holidays
3
Review of FY 2010 Adopted (Continued)
Contractual Services Reduced
$600k
Some Services & Programs Reduced / Eliminated
Asphalt & Concrete repairs/p.m. Holiday Refuse Service Refuse Set Out Service Scope of Special Events Resident Information (Cityscene,etc.)
School Tuition Savings
$196k $ 56k $ 76k $ 50k $ 75k
$3.7m
4
FY 2010 Snapshot / Updates County contracts adjustments Tuition Contract bill Jail Contract
Personnel Savings Sales Tax receipts beating estimates Sale of Property Reduced State Aid Decrease in Investment Income Other FY 2010 Estimated Deficit
-$1.9m -$1.6m -$300k
+$750k +$900k +$400k -$650k -$250k -$ 50k -$800k
5
FY 2011 Challenges Fiscal / Contractual Unknowns Real Estate Assessments Sale of Property Employee Compensation Retirement System State Aid Capital Budget School Tuition Contract County Contracts (Jail) CUE Transfer
TBD $3.5m $2.7m $1.3m $1.0m $0.9m $0.8m $0.7m $0.3m $0.3m
Total FY 2011 Estimated Deficit
$11.5m 6
FY 2011 Balancing Strategy Category
Amount
% of Total
New Sources of Revenue - non taxpayer impact Other Cost Reductions
$0.3m
3%
$0.8m
7%
Projected Revenue Increases
$1.0m
9%
Personnel Cuts
$1.8m
15%
Fund Balance Transfer Rate Increases
$1.8m
16%
$5.8m
50%
$11.5m
100%
(RE, Pers. Prop, & Tobacco Tax & CUE)
Total
7
Discretionary vs. Non-Discretionary City Expenses FY 2011General Fund Expenses $111m Less County Schools Contract $37m Less City, Schools Debt Service $15m Less City – County Contracts $ 6.0m Less Fund Transfers $ 1.7m Non-Discretionary Annual Expenses $60m Discretionary Annual Expenses $51m Everything Else: Personnel, Capital Projects, Purchased Materials, Only 46% of Total Contracts, Etc… Budget Available for Reductions 8
FY 2011 Proposed Budget Highlights General Fund total $111m 1% increase over FY 2010 Budget School Tuition ($770k) CIP ($800k) Retirement Contribution ($1.1m)
.5% increase over FY 2010 Estimate
All funds total $135m 7% increase over FY 2010 (includes Enterprise Funds) Water & Sewer Capital Improvements 9
FY 2011 Proposed Budget – Employee Impact
No compensation increases
Market Adjustment Merit / Step Increases
$860k ($560k) ($300k)
Health Insurance Premium Shift
From City to Employees 10% Will monitor local jurisdictions for updates
Unspecified Personnel Savings
$300k
$500k
Hiring freeze & reductions thru attrition Potential for furloughs as last resort; wait as FY progresses for any fiscal changes 10
FY 2011 Proposed Budget – Employee Impact (Continued) Further Overtime Reductions Net Increase 2.5 FTE’s Water Fund (Treatment Plant) - 2 FTE’s
approved mid FY 2010 Community Center (Parks & Recreation) 2 FTE’s requested Elimination of 2 FTE’s via attrition (1 FTE Code Administration & 1 FTE Public Works) Increase .5 FTE Public Works / Transit 11
FY 2011 Proposed Budget Highlights (Continued) Real Estate Tax Rate
Increase of 8.5 cents from 88 to 96.5 ($4.3m) 3.5 cents above Residential Equalization (93 cents) 1.5 cents above Overall Equalization (95 cents) Maintains Commercial Transportation Tax Rate of 8 cents One cent equal to $502,500 12
Comparative Real Estate Tax Rates
13
FY 2011 Proposed Budget Highlights (Continued) Personal Property Tax
Increase from $4.13 to $4.37($545k) One cent equal to $22,700
Cigarette Tax
Increase from 75 cents to 85 cents per pack
($170,000) One cent equal to $17,000
Reflects GMU Fire Services Fee $150k Use of Fund Balance $1.8m FY 2010 Estimated Surplus $1.3m One time $500k to balance budget
14
Comparative Personal Property Tax Rates (Proposed)
15
FY 2011 Proposed Budget Highlights (Continued) CUE Bus Increase of 15 cents from $1.45 to $1.60 (45k);
follows Metro recommendation Schedule change discussion to continue
Enterprise Funds Planned Financing for Capital Improvements Water Rate Increase 7.5% Sewer Rate Increase 12%
16
FY 2011 Proposed Budget Highlights (Continued) School Tuition Contract Budgeted at $37.3 million
($770k increase from FY 2010 Budget) Assumes flat transfer to Fairfax County Public Schools (FCPS) from Fairfax County If FCPS receives more funding from either Fairfax County or state, presumed to increase costs to $700k Will continue to monitor both areas
17
FY 2011 Impact State Aid Loss of $922k from FY 2010 Adopted to FY
2011 Proposed Education sources account for 2/3 of the reduction Remaining Areas – State Aid for Police, Highway Maintenance, Constitutional Officers, Registrar Further cuts are possible
18
Total Value of Real Estate Tax Base
19
Trends in 2010 Real Estate Assessments Residential Commercial Combined Total
-5.5% -10.6% - 7.2%
or -$386 m 20
Impact of Proposed Real Estate Tax Rate Increase – Residential Properties 2009 Assessment
2009 Taxes
2010 Assessment
2010 Taxes
Monthly Increase
Annual Increase
$300,000
$2,640
$283,500
$2,736
$8
$96
500,000
4,400
472,500
4,560
13
160
700,000
6,160
661,500
6,383
19
223
Annual Increase of 3.6% 21
Impact of Proposed Real Estate Tax Rate Increase Commercial Properties 2009 Assessment
2009 Taxes
2010 Assessment
2010 Taxes
Monthly (Decrease)
Annual (Decrease)
$1,000,000
$8,800
$849,000
$8,627
($14)
($173)
2,000,000
17,600
1,788,000
17,254
(29)
(346)
5,000,000
44,000
4,470,000
43,136
(72)
(865)
Annual decrease of 2% 22
Comments on FY 2011 Proposed Real Estate Tax Rates – All but one jurisdiction FY 2011 Proposed
rates above Residential Equalization; range from 1cent to 20 cents
Advertised Rates All Jurisdictions have approved / considering
rates higher than proposed; uncertainty surrounding State Budget impact
23
Calendar Year 2011 Regional Comparison Average Annual Local Taxes/Fees per Household
BASED ON: Real Estate Tax -home value of $520,100; Personal Property Tax -2 vehicles/household; Utility Tax; Water/Sewer fee -70,000 gal/year; Solid-Waste /Recycling –City and Falls Church part of Real Estate Tax; and Decal Fee
24
Debt Service as % of General Fund Expenditures
25
Sales Tax Collections
* net figure after repayment to Fairfax County ** estimated
26
Status of General Fund Balance Council Policy minimum of 10% Use of $1.8m to balance FY 2011 Projected balance 6/30/2011 is $14m 12.5% of Expenditures 1% = $1.1m
Potential Cash Flow Implications - could trigger Line of Credit Other Potential Impacts on General Fund Balance School Bus Parking Lot
$1.2m less budgeted $275k = net cost $925k
Sale of Other City Properties Pending Unknown Revenue and Expenditure Adjustments
( State, BPOL, School Tuition, Etc…)
27
Status of General Fund Balance Fund Balance June 30, 2011 Bus Parking Lot Potential Westmore Demolition Increase in County Schools Request Unknown Revenue and Expenditure Adjustments Potential Ending Fund Balance
Fund Balance Amount
% of General Fund Expenditures
$13.9 m -925k -525k
12.5% 11.7% 11.2%
-700k
10.6%
TBD
TBD
$11.8m
10.6% 28
SUMMARY REVIEW OF ENTERPRISE FUNDS
Sewer Fund – Financial Forecast
•Implementing 10 Year Capital Program •Significant Significant Rate Increases on Horizon Regarding County Treatment Plant Upgrades 30
Comparative Sewer Rates Residential Sewer Comparison (For 20,000 per quarter)
31
Water Fund – Financial Forecast
•Treatment Costs Increasing, Alternatives Being Considered •Implementation of 10 Year Financing Plan •Wholesale Water Customer Transition
32
Comparative Water Rates Residential Water Comparison (For 20,000 gallons per quarter)
33
Combined Sewer and Water Rates Residential Water/Sewer Bill Comparison (for 20,000 gallons per quarter
34
FY 2012 & Beyond Real Estate Assessments Decline Economic Turnaround CIP Needs (Stormwater, etc.) Resumption of Schools Capital Spending Debt Service Refunding Employee Compensation - Current / Deferred State Budget Actions
35
FY 2011 Budget Calendar March 9, 2010
City Manager Presentation of Proposed Budget
March 15, 2010
Public Outreach Meeting
March 16, 2010
Work Session - Staff Presentations
March 17,2010
Work Session - Staff Presentations
March 23, 2010
Regular Meeting – No Scheduled Budget Discussions
March 30, 2010
Public Outreach/Hearing & Work Session
April 6, 2010
Work Session – Discussion of FY 2011 Budget (tentative)
April 13, 2010
Regular Meeting – Consider Real Estate Tax Rate to be Advertised & Work Session – FY 2011 Budget
April 29, 2010 (Thursday)
Regular Meeting – Public Hearing on Budget & Real Estate Tax Rate; FY 2011 Budget Adoption
36
Conclusion Challenges in addition to economy & real
estate market Use of Fund Balance Maximum Tax Rate Advertisement? Staff Recommendation Pending
Additional Cuts Will Affect Services Maintains Best Value To Residents Fiscal / Contractual Unknowns FY 2012 & Beyond 37
General Fund Support – Historical CIP Expenditures $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000
FY 2010 is estimated & FY 2011 is proposed
20 11
20 10
20 09
20 08
20 07
20 06
20 05
20 04
20 03
20 02
$0
CITY MANAGER’S FY 2011 PROPOSED BUDGET
FY 2011 Budget Goals Best Value to Residents Unsurpassed Services Lowest Overall Tax Burden in the Region Exceptional Amenities Maintain Infrastructure Maintain the City’s AAA Bond Rating Sound Financial Practices 2
Review of FY 2010 Adopted Total Reductions $7.3m (6.3%) from FY 2009 Internal Operations
$2.2m
Reduction 10.5 FTE’s; Add back 3 Police Officers Elimination of Part-time, Temporary, and future
undesignated positions (equiv. 12 FTE’s) COLA provided @ 1.75%; Merit / Step increases eliminated Elimination of awards programs, educational assistance, executive pay plan, and training / development funds Elimination of Holiday Pay (Fire Dept.) Elimination of two holidays
3
Review of FY 2010 Adopted (Continued)
Contractual Services Reduced
$600k
Some Services & Programs Reduced / Eliminated
Asphalt & Concrete repairs/p.m. Holiday Refuse Service Refuse Set Out Service Scope of Special Events Resident Information (Cityscene,etc.)
School Tuition Savings
$196k $ 56k $ 76k $ 50k $ 75k
$3.7m
4
FY 2010 Snapshot / Updates County contracts adjustments Tuition Contract bill Jail Contract
Personnel Savings Sales Tax receipts beating estimates Sale of Property Reduced State Aid Decrease in Investment Income Other FY 2010 Estimated Deficit
-$1.9m -$1.6m -$300k
+$750k +$900k +$400k -$650k -$250k -$ 50k -$800k
5
FY 2011 Challenges Fiscal / Contractual Unknowns Real Estate Assessments Sale of Property Employee Compensation Retirement System State Aid Capital Budget School Tuition Contract County Contracts (Jail) CUE Transfer
TBD $3.5m $2.7m $1.3m $1.0m $0.9m $0.8m $0.7m $0.3m $0.3m
Total FY 2011 Estimated Deficit
$11.5m 6
FY 2011 Balancing Strategy Category
Amount
% of Total
New Sources of Revenue - non taxpayer impact Other Cost Reductions
$0.3m
3%
$0.8m
7%
Projected Revenue Increases
$1.0m
9%
Personnel Cuts
$1.8m
15%
Fund Balance Transfer Rate Increases
$1.8m
16%
$5.8m
50%
$11.5m
100%
(RE, Pers. Prop, & Tobacco Tax & CUE)
Total
7
Discretionary vs. Non-Discretionary City Expenses FY 2011General Fund Expenses $111m Less County Schools Contract $37m Less City, Schools Debt Service $15m Less City – County Contracts $ 6.0m Less Fund Transfers $ 1.7m Non-Discretionary Annual Expenses $60m Discretionary Annual Expenses $51m Everything Else: Personnel, Capital Projects, Purchased Materials, Only 46% of Total Contracts, Etc… Budget Available for Reductions 8
FY 2011 Proposed Budget Highlights General Fund total $111m 1% increase over FY 2010 Budget School Tuition ($770k) CIP ($800k) Retirement Contribution ($1.1m)
.5% increase over FY 2010 Estimate
All funds total $135m 7% increase over FY 2010 (includes Enterprise Funds) Water & Sewer Capital Improvements 9
FY 2011 Proposed Budget – Employee Impact
No compensation increases
Market Adjustment Merit / Step Increases
$860k ($560k) ($300k)
Health Insurance Premium Shift
From City to Employees 10% Will monitor local jurisdictions for updates
Unspecified Personnel Savings
$300k
$500k
Hiring freeze & reductions thru attrition Potential for furloughs as last resort; wait as FY progresses for any fiscal changes 10
FY 2011 Proposed Budget – Employee Impact (Continued) Further Overtime Reductions Net Increase 2.5 FTE’s Water Fund (Treatment Plant) - 2 FTE’s
approved mid FY 2010 Community Center (Parks & Recreation) 2 FTE’s requested Elimination of 2 FTE’s via attrition (1 FTE Code Administration & 1 FTE Public Works) Increase .5 FTE Public Works / Transit 11
FY 2011 Proposed Budget Highlights (Continued) Real Estate Tax Rate
Increase of 8.5 cents from 88 to 96.5 ($4.3m) 3.5 cents above Residential Equalization (93 cents) 1.5 cents above Overall Equalization (95 cents) Maintains Commercial Transportation Tax Rate of 8 cents One cent equal to $502,500 12
Comparative Real Estate Tax Rates
13
FY 2011 Proposed Budget Highlights (Continued) Personal Property Tax
Increase from $4.13 to $4.37($545k) One cent equal to $22,700
Cigarette Tax
Increase from 75 cents to 85 cents per pack
($170,000) One cent equal to $17,000
Reflects GMU Fire Services Fee $150k Use of Fund Balance $1.8m FY 2010 Estimated Surplus $1.3m One time $500k to balance budget
14
Comparative Personal Property Tax Rates (Proposed)
15
FY 2011 Proposed Budget Highlights (Continued) CUE Bus Increase of 15 cents from $1.45 to $1.60 (45k);
follows Metro recommendation Schedule change discussion to continue
Enterprise Funds Planned Financing for Capital Improvements Water Rate Increase 7.5% Sewer Rate Increase 12%
16
FY 2011 Proposed Budget Highlights (Continued) School Tuition Contract Budgeted at $37.3 million
($770k increase from FY 2010 Budget) Assumes flat transfer to Fairfax County Public Schools (FCPS) from Fairfax County If FCPS receives more funding from either Fairfax County or state, presumed to increase costs to $700k Will continue to monitor both areas
17
FY 2011 Impact State Aid Loss of $922k from FY 2010 Adopted to FY
2011 Proposed Education sources account for 2/3 of the reduction Remaining Areas – State Aid for Police, Highway Maintenance, Constitutional Officers, Registrar Further cuts are possible
18
Total Value of Real Estate Tax Base
19
Trends in 2010 Real Estate Assessments Residential Commercial Combined Total
-5.5% -10.6% - 7.2%
or -$386 m 20
Impact of Proposed Real Estate Tax Rate Increase – Residential Properties 2009 Assessment
2009 Taxes
2010 Assessment
2010 Taxes
Monthly Increase
Annual Increase
$300,000
$2,640
$283,500
$2,736
$8
$96
500,000
4,400
472,500
4,560
13
160
700,000
6,160
661,500
6,383
19
223
Annual Increase of 3.6% 21
Impact of Proposed Real Estate Tax Rate Increase Commercial Properties 2009 Assessment
2009 Taxes
2010 Assessment
2010 Taxes
Monthly (Decrease)
Annual (Decrease)
$1,000,000
$8,800
$849,000
$8,627
($14)
($173)
2,000,000
17,600
1,788,000
17,254
(29)
(346)
5,000,000
44,000
4,470,000
43,136
(72)
(865)
Annual decrease of 2% 22
Comments on FY 2011 Proposed Real Estate Tax Rates – All but one jurisdiction FY 2011 Proposed
rates above Residential Equalization; range from 1cent to 20 cents
Advertised Rates All Jurisdictions have approved / considering
rates higher than proposed; uncertainty surrounding State Budget impact
23
Calendar Year 2011 Regional Comparison Average Annual Local Taxes/Fees per Household
BASED ON: Real Estate Tax -home value of $520,100; Personal Property Tax -2 vehicles/household; Utility Tax; Water/Sewer fee -70,000 gal/year; Solid-Waste /Recycling –City and Falls Church part of Real Estate Tax; and Decal Fee
24
Debt Service as % of General Fund Expenditures
25
Sales Tax Collections
* net figure after repayment to Fairfax County ** estimated
26
Status of General Fund Balance Council Policy minimum of 10% Use of $1.8m to balance FY 2011 Projected balance 6/30/2011 is $14m 12.5% of Expenditures 1% = $1.1m
Potential Cash Flow Implications - could trigger Line of Credit Other Potential Impacts on General Fund Balance School Bus Parking Lot
$1.2m less budgeted $275k = net cost $925k
Sale of Other City Properties Pending Unknown Revenue and Expenditure Adjustments
( State, BPOL, School Tuition, Etc…)
27
Status of General Fund Balance Fund Balance June 30, 2011 Bus Parking Lot Potential Westmore Demolition Increase in County Schools Request Unknown Revenue and Expenditure Adjustments Potential Ending Fund Balance
Fund Balance Amount
% of General Fund Expenditures
$13.9 m -925k -525k
12.5% 11.7% 11.2%
-700k
10.6%
TBD
TBD
$11.8m
10.6% 28
SUMMARY REVIEW OF ENTERPRISE FUNDS
Sewer Fund – Financial Forecast
•Implementing 10 Year Capital Program •Significant Significant Rate Increases on Horizon Regarding County Treatment Plant Upgrades 30
Comparative Sewer Rates Residential Sewer Comparison (For 20,000 per quarter)
31
Water Fund – Financial Forecast
•Treatment Costs Increasing, Alternatives Being Considered •Implementation of 10 Year Financing Plan •Wholesale Water Customer Transition
32
Comparative Water Rates Residential Water Comparison (For 20,000 gallons per quarter)
33
Combined Sewer and Water Rates Residential Water/Sewer Bill Comparison (for 20,000 gallons per quarter
34
FY 2012 & Beyond Real Estate Assessments Decline Economic Turnaround CIP Needs (Stormwater, etc.) Resumption of Schools Capital Spending Debt Service Refunding Employee Compensation - Current / Deferred State Budget Actions
35
FY 2011 Budget Calendar March 9, 2010
City Manager Presentation of Proposed Budget
March 15, 2010
Public Outreach Meeting
March 16, 2010
Work Session - Staff Presentations
March 17,2010
Work Session - Staff Presentations
March 23, 2010
Regular Meeting – No Scheduled Budget Discussions
March 30, 2010
Public Outreach/Hearing & Work Session
April 6, 2010
Work Session – Discussion of FY 2011 Budget (tentative)
April 13, 2010
Regular Meeting – Consider Real Estate Tax Rate to be Advertised & Work Session – FY 2011 Budget
April 29, 2010 (Thursday)
Regular Meeting – Public Hearing on Budget & Real Estate Tax Rate; FY 2011 Budget Adoption
36
Conclusion Challenges in addition to economy & real
estate market Use of Fund Balance Maximum Tax Rate Advertisement? Staff Recommendation Pending
Additional Cuts Will Affect Services Maintains Best Value To Residents Fiscal / Contractual Unknowns FY 2012 & Beyond 37
General Fund Support – Historical CIP Expenditures $8,000,000 $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000
FY 2010 is estimated & FY 2011 is proposed
20 11
20 10
20 09
20 08
20 07
20 06
20 05
20 04
20 03
20 02
$0
