CITY OF SANGEROverview of 2011 proposed budget

REVIEW OF 2010 BUDGET

Defunded Five Positions Maintained Service Levels Continued Infrastructure Improvements Cut spending early to avoid impacting

services Avoided layoffs and furloughs by leaving non-

essential positions open when possible Added Debt Service Fund and Capital

Improvement Fund and Merged Smaller Departments

2011 BUDGET HIGHLIGHTS

Department Name Changes Parks is now Parks & Recreation Data Processing is now Finance

Reclassifying Accounting Tech. Position to Finance Director

No Merit Raises Planned for 2011 Significant Cuts in Operating Expenses Funding for Capital Projects Maintained

2011 BUDGET HIGHLIGHTS

2008 2009 Current$0.00

$100,000.00

$200,000.00

$300,000.00

$400,000.00

$500,000.00

$600,000.00

General FundEnterprise Fund

Continue to Build Reserves

SWOT ANALYSIS

Strengths Location, Location, Location Quality of Life Electric Utility 4A & 4B

SWOT ANALYSIS

Weaknesses Dependence on

Property Tax Ratio of

Residential to Commercial

Median Home Price

Water CCN

SWOT ANALYSIS

Opportunities Industrial Development Residential Development Commercial Development

Threats Depreciation of Property Values Decreased Sales Tax Revenues Increased Cost of Goods & Services Lack of Emergency and Operating Reserves

UNDERSTANDING THE BUDGET

Six Semi-Autonomous Funds General Fund Enterprise Fund 4A Economic Development Funds 4B Economic Development Fund Debt service Fund* Capital Improvement Fund*

* New Funds

UNDERSTANDING THE BUDGET

Budget Process Spring – Staff begins estimating revenues

and expenses and researching the cost of capital projects and equipment

Early Summer – Staff submits proposed budget to City Manager – City Manager balances revenues and expenditures

Summer – Council holds workshops and public hearings on the budget

UNDERSTANDING THE BUDGET

Budget Process Continued September Final Budget is Adopted October First – New budget begins January Property Tax revenue starts

coming in and Capital purchases begin April – Process starts again for next year

IMPORTANT POINTS

Revenues are estimates Revenues do not appear in the bank

October First – they come in over the year

Revenue shortfalls mean cutting expenditures

City Operates on a Cash Basis Conservative revenue estimates Control of costs and budget

management

IMPORTANT POINTS CONTINUED

A large proportion of our costs are set costs and are unchangeable. This includes bond and lease payments

Another large portion of our costs are “automated”, meaning that we do not control the increases. This includes all insurance and water purchases

The bulk of the rest is “current” costs or what it takes to maintain current service levels

What little, if any, that is left can be used for capital improvements, increased personnel benefits or increased service levels

UNDERSTANDING THE PROPERTY TAX Property Taxes Collected in January 2011

are based on Property Values from 2009 Property Tax is Made up of Two Components

Interest & Sinking Rate (I&S) Maintenance and Operation Rate (M&O)

I&S Rate is Determined By Debt Obligations M&O Rate is Determined By Council I&S Rate is About 19¢ M&O Rate is About 43¢

UNDERSTANDING THE PROPERTY TAX Effective Rate – Rate that will service the

debt (I&S) and generate the same amount of operating money (M&O) as last year

Rollback Rate – 108% of Effective Rate. Any increase over the rollback rate is subject to challenge by petition

Setting a rate below the Effective Rate means a decrease in revenue. That decrease comes 100% from the M&O rate

UNDERSTANDING THE PROPERTY TAX Property Tax Varies Widely from City to

City Based on Many Factors Sanger’s is About Average for the Area

and for Cities With a Similar Size and Valuation

Lowering the Property Tax Long Term Requires A Higher Ratio of Commercial to Residential Higher Residential Values Carefully Managing Debt

GENERAL FUND

Expenditures Revenues

Property Tax Sales Tax Court Fees Fire and EMS fees Franchise Fees Enterprise fund

Transfers

Public Safety56%Community

Services21%

Public Works11%

Admin. & Support12%

General Fund

ENTERPRISE FUND

Composed of revenue generating utilities (Water, Wastewater, Electric)

Intended to generate revenues in excess of costs

Excess Revenues can be used for infrastructure improvements and help support the General Fund

Currently only Electric generates significant excess revenues

ENTERPRISE FUND

REVENUES VS EXPENSES

NO RATE INCREASE

2010-2011 Proposed Water Wastewater Electric

Total Operation Cost

$ 1,143,594.00

$ 820,632.00

$ 6,661,290.00

Total Capital Cost $ 458,361.00

$ 139,278.00

$ 419,739.00

     

Projected Revenue

$ 1,245,333.00

$ 1,045,333.00

$ 7,795,333.00

       

Revenue over (under)

$ (356,622.00)

$ 85,423.00

$ 714,304.00

Balance $ 443,105.00    

2010 RATE STUDY

Water currently operates at a deficit Wastewater barely breaks even Electric is supporting the other

enterprise utilities Water and wastewater rates need to be

raised incrementally over the next few years to lessen the impact on customers

WHY RATE INCREASES ARE NECESSARY To bring water out of operating at a

deficit To save money toward the new

wastewater plant (Save 10% of wastewater revenues)

To help pay for the new wastewater plant when it is built

To help pay for some water and wastewater capital improvements without having to go into debt

PROPOSED RATE INCREASE

Water and Wastewater – 10% increase except for residential base rate increase of 6%

Will work out to be a 7% to 8% increase for residential customers

This is the same as last year Will still leave us generally below the

average on utility rates of cities in the area of similar size

IMPACT ON RESIDENTIAL CUSTOMERSImpact Current Proposed % Change $ Change

Residential        

Water      

Residential customers using:      

4000 gallons a month  $  23.80   $ 25.55  7%  $  1.75 

     

Wastewater      

Residential customers using:      

4000 gallons a month  $   23.75   $   25.50  7%  $  1.75 

ECONOMIC DEVELOPMENT FUNDS

Revenues from Sales tax (1/2c each) 4A Expenditures

Warehouse 4B Expenditures

Sports Park Administrative Costs – Requesting

$18,000 from each this year

DEBT SERVICE AND CAPITAL IMPROVEMENT FUND

Created to make general fund budget more understandable

Also helps track project costs Debt Service Fund is funded by the I&S

Rate Capital Improvement Fund is an

internal service fund where bond proceeds are deposited and expended on projects

CONCLUSION

The goose and the Golden Egg

GENERAL FUND DEPARTMENT HIGHLIGHTS

NON-DEPARTMENTAL

Used for expenses that do not fit inside one department

Includes Postage, Property and Liability Insurance and Tax Collections

Also includes line items for Keep Sanger Beautiful and Park Board for better tracking of expenses

CITY COUNCIL

Split 50/50 between GF & EF No major changes this year

ADMINISTRATION

Split 50/50 between GF & EF Moved TML Insurance and Tax

Collections to Non-Departmental Moved Administrative Assistants Salary

from Data Processing (Finance) to Administration

PUBLIC WORKS ADMINISTRATION

Split 50/50 between GF & EF No Major Changes

POLICE DEPARTMENT

Includes $7000 to support the Child Advocacy Center

Funds to purchase and equip only one vehicle next year

Includes $38,000 for Dispatch Services from the County

ANIMAL CONTROL

No Major Changes

FIRE DEPARTMENT

Includes two grants totaling $40,000 in matching funds if grants are awarded

Does not include SAFER grant Adds funds for dispatch services

AMBULANCE

No Major Changes

COURT

No Major Changes

DEVELOPMENT SERVICES

No Major Changes

STREETS

$100,000 for street improvements to be used for leveraging County funds

$50,000 for continued sidewalk expansion

Moved two positions from Parks to Streets to reflect new workforce structure

PARKS & RECREATION

Moved two positions to Streets Now includes the Sullivan Center and

Community Center budgets

FLEET SERVICES

No Major Changes

LIBRARY

No Major Changes

ECONOMIC DEVELOPMENT

Pared back to reduce Transfers from 4A & 4B

ENTERPRISE FUND

NON DEPARTMENTAL

Includes Safety & Incentive and One Plus Fund

Includes line item for reimbursement of Damage Claims

Includes $50,000 in contingency reserve to hedge against revenue shortfalls and for emergencies

FINANCE

Used to be Data Processing Reclassified Accounting Clerk to

Finance Director Moved Administrative Assistant to

Administration

WATER

$40,000 in contingency reserve for unexpected repairs

$50,000 in water line improvements

WASTE WATER

$150,000 for Wastewater system improvements including I&I study

ELECTRIC

Includes $125,000 for lighting at the Sports Park

Includes $90,000 for system Improvements

Includes funds for a stump grinder that will be shared with other departments

4A

Looking at funding significant utility improvements in the industrial area

Approximately $400,000 fund balance Requesting Transfer of $18,000 to

Economic Development Department

4B

Pledged $180,000 to Sports Park Fund Balance of Approximately

$500,000 Requesting $18,000 for Transfer to

Economic Development Department

SUMMARY

Planning on another lean year Continue to fund capital improvements

to aging infrastructure Continue to build reserves Continue planning and preparing for

the future