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Home My WebLink About06/07/2011 04B2 2012 Budget Planning • BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No. 8 - 7-- For Meeting Of June 7, 2012 ITEM TITLE: 2012 Budget Planning SUBMITTED BY: City Manager and the Finance Department CONTACT PERSON /TELEPHONE: Cindy Epperson, Deputy Director of Acct. & Budget or Rita DeBord, Finance / Technology Director (# 509 / 576 - 6771.) SUMMARY EXPLANATION: The Council Budget Committee (CBC) met on May 25, 2011 to review the preliminary 2012 General Government revenue forecast and to provide direction to staff regarding the preparation of the 2012 Gen. Government budget. Enclosed, for the full Council's review, you'll find the full set of information provided to the CBC. At this meeting, staff identified two key Council decisions needed for direction to staff for staff's initial preparation of the 2012 budget: (1) Direction regarding the 2012 labor negotiations — Committee proposed scheduling an Executive Session on Tuesday, June 21, 2011 to discuss this issue, and (2) Direction regarding 2012 budget constraints; including: (a) revenue allocation to Council's six budget priorities (i.e.: the Priorities of Government Model); (b) the minimum use reserve balance (current policy is 7.0 %) and, (c) the use of reserves to balance the 2012 budget. The Committee agreed to recommend to the full Council at their June 7 regular business meeting, that the CBC review the above issues, form a recommendation and bring that back to the full Council at the June 21, 2011 meeting for their review and approval. Additionally, Council member Kathy Coffey requested that the budget staff provide Council with a preliminary look at the 2012 general government expenditures by general functional category after receiving Council direction regarding the 2012 budget constraints, for Council to review prior to the departments commencing their in -depth 2012 budget preparations. Resolution Ordinance Other (Specify) Contract Mail to (name and address): Phone: Funding Source APPROVED FOR City Manager STAFF RECOMMENDATION: • III BOARD /COMMISSION /COMMITTEE RECOMMENDATION: Council Budget Committee COUNCIL ACTION: a,.,... ;.. .. ... :.............„.:.,- .:,,.: ° ..«..::..;.:.- :.w.:;s..• ..xrr'wkSau,w" 'f-..:K.::.._w.,m...a.,.a..... ' >S:.:m_, ae,a...,;..J..wcm;.a ..,. H., u_.. -..,w. ,.., ..a.•.4...�.,.i;sw!.«. .e. u.«. ..,, xd:r �:. ,..,.:.:s:,.:,i: �.. ;,a6 Council Budget Committee CEO Conference mom (2nd floor) Wednesday, May 25, 2011 3:30 — 4:45 p.m. Attendance: 'Council Members: Kathy Coffey, Bill Lover, Maureen Adkison Staff: Dick Zais, Michael Morales, Rita DeBord, Cindy Epperson, Robin Dukart Discussion: > Dick Zais presented the preliminary 2011 and 2012 revenues projections. He reviewed a detailed listing of General Government estimated revenues and noted changes within the 2011 current budget. • 2011 Gen. Gov. Revenues are projected to be slightly lower than budgeted (approx. $219,000). Primary changes from budget are in following areas: ♦ Projected revenues under budget: > City's' In -Lieu (Utility) taxes (water consumption is down) ➢ Building Permits ➢ Traffic infractions ♦ Projected revenues over budget: > Sales Tax > Property Tax (gen. fund allocation) ♦ 2011 Gen.Gov. Expenditures are projected to be slightly higher than budgeted (approx. $228,000). Primary expenditure increases are due to higher than budgeted increases in: > Fuel costs > Jail costs • Early 2012 budget projections and issues: ♦ Revenues are projected to remain fairly constant between 2011 & 2012 ♦ Fire Fighters — potential reinstatement of the 2011 compensation adjustment (of approx. $244,000) ♦ Raising Medical Costs ♦ Collective Bargaining - all union contracts up for negotiation in 2012 ➢ The Committee requested staff to present the projected 2012 General Government revenues to full Council on June 7, 2011 for review. r Rd 5 -25 -1 1 CBC Minutes • Page 1 of 2 The 2012 Budget process was discussed. Staff identified two key Council decisions needed for direction to staff in their initial preparation of the 2012 budget: (1) Direction regarding the 2012 labor negotiations - Committee proposed scheduling an Executive Session on Tuesday, June 21, 2011 to discuss setting bargaining guidelines for all outstanding labor contracts for 2012. (2) Direction regarding 2012 budget constraints; including: (a) revenue allocation to Council's six budget priorities (i.e.: the Priorities of Government Model); (b) the minimum use reserve balance (current policy is 7.0 %) and, (c) the use of reserves to balance the 2012 budget. Additionally, Council member Kathy Coffey requested that the budget staff provide Council with a draft budget by July 19 in order for Council to review prior to commencing in depth budget preparations. The Committee agreed to recommend to the full Council at their June 7 regular business meeting, that the CBC review with the full council these issues including: process, timelines, POG allocations, minimum reserves, 2012 budget and outside agency request, form a recommendation and bring that recommendation back to the full Council at their June 21, 2011 meeting for their review and approval. Next Meeting: Wednesday, June 22, 2011 3:30 — 5:00 p.m. CED Conference Room Committee Chair (K F by Co ey-- alternate) Rd 5-25-11 CBC Minutes Page 2 of 2 . z�[ a'�d+"s � Ft'L �x f'� '4 '�',�} lY t ' . , � Ya af _" h ,:�acm, 1 a :.*fir : - t , . ..>� r i . . v' .� �.�"� i ? :4 �'�- t >� "I 44N Y ? s p I qtr S 5 y ; I l �. G 9 r n h 7�y y; m (� . 1n, }�µ n .. , t _ >t5/ a t 'e . � 11' X 31 �� '. 1�1i _! ♦ ■ ■ 0 A ..:: tr 1. i l . • 7 .,. r a 01". 1 , Council Committee • CrED Conference loom (2nd fTor) May25,2011 3:30 — 5:00 p.m. AGENDA Members Staff Councilmember Cawley (Chair) Dick Zais, City Manager Councilmember Coffey Michael Morales, Acting Asst. City Manager Councilmember Lover Rita DeBord, Finance & Technology Director Councilmember Adkison (Alt) Cindy Epperson, Deputy Director, Acctg /Budget Randy Beehler, Community Relations Manager Discussion Items: 1. Review preliminary 2012 General Government revenue forecast (Materials to be distributed at meeting) 2. Suggested full Council budget review dates - to provide 2012 budget direction to staff: • Executive Session re collective bargaining guidelines Tuesday, June 21, 2011 • Regular business meeting Tuesday, July 19, 2011 • Direction to Staff: I. POG Allocations (similar / changes to 2011 allocations) ii. Minimum Reserve balance (current policy 7.0 %) iii. Use of Reserves to balance 2012 budget iv. Outside Agencies Requests (accept requests ?) 3. Set next meeting date Rd 4 -27 -11 CBC Agenda - MEMORANDUM May 24, 2011 To: Council Budget Committee (CBC): Micah Cawley, Mayor, Committee Chair Kathy Coffey, Assistant Mayor, Committee Member Bill Lover, Committee Member Maureen Adkison, Alternate From: Dick Zais, City Manager DeBord, Finance Director Cindy Epperson, Deputy Director of Accounting & Budgeting Re: Transmittal for May 25, 2011 Council Budget Committee meeting Attached for your review are the "first look" at General Government revenues for both the year end estimate of 2011, and 2012. These estimates were made based on April's year -to -date activity. Even though we believed revenues were conservatively estimated for 2011, the effects of the long national recession are lingering. Results for the first 4 months were mixed, with sales tax running ahead of prior year and budget, while revenues tied to housing /construction were running below budget and prior year. Utility taxes were also below budget, as consumers respond to the economic downturn with conservation efforts. The probable reduction in state - shared revenue was also factored in. 2011 Revised Estimates All of the identified changes netted to a reduction of ($217,650) in total revenue for 2011. The projected savings of the LEOFF 1 medical program for Firefighters also resulted in a reduction of property tax allocation to the benefit fund which would increase the General Fund in the same amount -- $100,000. In order to estimate the beginning fund balance, 2011 expenditures were updated for significant known effects. These included the increase in jail and fuel costs, offset by known savings from position vacancies and the net change in Police LEOFF 1 medical costs. These netted an additional $228,000 of expense. Note: as this is greater than the current budget, an appropriation would be necessary, but we are proposing to wait until the numbers are more thoroughly reviewed before bringing an appropriation to Council. When all of these changes are factored in, the estimated ending balance for 2011 is about $4,850,000, which is $1,105,000 less than the actual beginning balance of $5,955,000. This use of reserves can be separated into the following components: Cje Transmittal 5 -2 -11- Cindy.doc Previously Authorized use of reserves: Approved in the Adopted Budget (all Public Safety) $244,000 Approved 2010 Carry- forward (Encumbrances)* 414,000 Sub -total currently authorized use of reserves $658,000 *The beginning balance for 2011 was higher by this amount, since these represent items that were contemplated to be spent in 2010, but weren't completed by 12/31/10. Additional potential use of reserves: Projected increase in 2011 Expenditures $228,000 Projected decrease in 2011 Revenues 219,000 Sub -total potential additional use of reserves $447,000 Therefore, at this point in time prior to any cost containment measures, the total use of reserves is estimated to be $1,105,000. If this scenario plays out, the projected ending balance would be $4,850,000 or 8.4% of the amended 2011 expenditure estimate, still above the minimum guideline of 7.0% set by Council. It should be noted that the 2011 Adopted Budget estimated that the ending balance would be $4,672,000 or 8.1% of budgeted expenditures. A combination of slightly higher revenues and lower expenditures (including the encumbered items) in 2010 resulted in a higher beginning balance. 2012 Revenue Forecast 2012 revenue is projected to increase above the 2011 budget by about $215,000, and above the year -end assumed stimate by $432,645, or 0.8 %. The major increase in the forecast for 2012 is Property Tax, which a an inflationary increase of 1% (the 12 month increase in IPD as of Feb. 2011 is 1.572 %), and an additional 1% for new construction. The change in the Firefighter LEOFF 1 medical program is estimated to increase the General Fund allocation of Property Tax by $200,000. Again, the construction related revenues are forecast to remain low. , A summary of the major categories. of General Government Resources is attached as both a table and chart. Also attached is the detail listing of estimates that are changed from the current budget, and a 2011 summary of General Government expenditures by division including the amended budget; year- to -date through April 30, 2011, and the revised estimate. Summary At this point in time, the changes in expenditures have not been quantified specifically by Priority of Government (POG) category. In general, the 2011 expenditure estimate is a combination of an increase in Public Safety (jail costs and fuel), offset by savings in many of the categories. The ending reserve estimate for 2011 is still above the adopted budget level and minimum guidelines. However, should Council direct additional cost containment measures for 2011 to increase reserves, a majority of budget reductions would be required to come from Public Safety in order to remain within the POG model. 0 Cje Transmittal 5 -2 -11- Cindy.doc GENERAL GOVERNMENT RESOURCES THREE YEAR COMPARISON % of 2012 vs. 2011 0 2010 2011 Percent 2012 2010 Increase Percent Source Actual Estimate Change Budget Total (Decrease) Change General Sales Tax $12,653,993 $12,579,000 (0.6 %) $12,579,000 22.0% $0 0.0% Crim. Justice Sales Tax* 2,553,893 2,532,000 (0.9 %) 2,532,000 4.4% 0 0.0% Property Tax 14,231,526 14,552,000 2.3% 14,963,000 26.1% 411,000 2.8% Franchise Sr Util. Taxes 12,035,789 11,819,000 (1.8 %) 12,010,500 21.0% 191,500 1.6% Charges for Services 6,076,139 6,160,310 1.4% 6,096,055 10.6% (64,255) (1.0 %) State Shared Revenue 2,933,636 2,699,450 (8.0 %) 2,678,850 4.7% (20,600) (0.8 %) Fines and Forfeitures 1,658,467 1,646,400 (0.7 %) 1,646,400 2.9% 0 0.0% Other Taxes 1,394,441 1,395,000 0.0% 1,395,000 2.4% 0 0.0% Other Revenue 644,463 601,920 (6.6 %) 601,920 1.1% 0 0.0% Transfers from other Funds 1,230,565 1,259,000 2.3% 1,259,000 2.2% 0 0.0% Other Intergovernmental 1,272,580 1,013,930 (20.3 %) 928,930 1.6% (85,000) (8.4 %) Licenses and Permits 768,469 611,300. (20.5 %) 611,300 1.1% 0 0.0% Total Revenue $57,453,961 $56,869,310 (1.0 %) $57,301,955 100.0% $432,645 0.8% Beginning Fund Balance 6,413,707 5,954,903 (7.2 %) 4,849,813 (1,105,090) (18.6 %) Total Resources $63,867,668 $62,824,213 (1.6 %) $62,151,768 ($672,445) (1.1 %) • * Some Criminal Justice Sales Tax is allocated to the Law and Justice Capital Fund (a non - General Government fund) for capital needs. 40 • ' GENERAL GOVERNMENT RESOURCES 2011 YEAR -END ESTIMATE AND 2012 BUDGET Sales Tax /Crim. Justice Sales Tax 1 I - $15,111,000 Property Tax 1. $14,963,000 . Franchise & Util. Taxes pli1111111111.11111111.1 $12,010,500 Charges for Services 1111110111111111111111111111.1 $6,096,055 _ State Shared Revenue = $2,678,850 2012 vs. 2011 Estimate Decrease Total Resources Fines and Forfeitures 1 $1,646,400 Amount $672,445 Other Taxes a $1,395,000 Percent 1.07% Other Revenue ® $601,920 ■ 2012 Budget Transfers from other Funds 1 $1,259,000 D 2011 WE Estimate Other Intergovernmental FMli 8928,930 Licenses and Permits ® $611,300 Beginning Fund Balance 1 1 $4,849,813 $0 $2,000,000 $4,000,000 $6,000,000 $8,000,000 $10,000,000 $12,000,000 $14,000,000 $16,000,000 4110 erp 5/24/2011 3:20 PM Copy of ggmajorResource2012.xls Table for DZ Table III 0 City of Yakima General Government Expenditures 2011 Budget vs. Actual 2011 2011 2011 Amended Expenditures Percent Budget Budget To 04/30/11 Spent Estimate Police $ ' 22,028,620 $ 7,060,712 32.1% $ 22,462,107 Fire 8,929,340 2,778,228 31.1% 8,900,328 Information Systems 2,568,136 774,090 30.1% 2,569,446 Transfers To Other Funds 2,412,275 590,918 24.5% 2,333,275 Police Pension 1,404,590 513,604 36.6% 1,304,590 Financial Services 1,386,046 429,004 31.0% 1,386,046 Code Administration 1,330,361 434,565 32.7% 1,279,430 Utility Services 1,305,084 444,131 34.0% 1,279,211 Municipal Court 1,234,194 373,191 30.2% 1,234,194 Legal 1,139,157 331,763. 29.1% 1,139,157 Engineering 757,250 243,360 32.1% 756,071 Planning 678,679 225,267 33.2% 674,873 City Manager 509,913 137,801 27.0% 501,473 Indigent Defense 480,000 156,422 32.6% 480,000 0 Purchasing 452,835 137,988 30.5% 452,835 Human Resources 447,436 118,750 26.5% 504,486 Records 411,556 165,906 40.3% 411,555 City Hall Maintenance 352,127 173,491 49.3% 349,940 Intergovernmental 257,439 120,091 46.6% 257,439 Nonrecurring Expenses 208,287 0 0.0% 208,287 City Council 203,061 100,227 49.4% 203,061 State Examiner 103,000 6,020 5.8% 103,000 Urban Area Hearings Exam. 39,500 7,085 17.9% 39,500 Total General Fund $ 48,638,886 $ 15,322,614 31.5% 48,830,304 Parks & Recreation Fund 4,032,938 1,177,807 29.2% 4,028,601 Street & Traffic Ops. 5,074,091 1,698,585 33.5% 5,115,497 Total General Government $ 57,745,915 $ 18,199,006 31.5% 57,974,402 • . cje 5/24/2011 ' • City of Yakirna Schedule of Changes for 2011 and 2012 Budget May 2011 1 2011 Budget Estimate 2012 Budget � General Fund: Expenditure Revenue Revenue City Mgr Salaries (s $ $ City Mgr Ret Cashout - D. Zabel! 13,540 � ___________ � __ City Professional 23500 .__ City Mgr Recmi�men� 11,500 HR Retirement Caohout'8.Smith 22.O5U Planning Services Salaries N1 [N | - --- ------------� ------�------'-- annng emceo ' M. Morales (3,806) d Salaries C. Belles -----'-- ---'-- ---- ---' ---- Codes au o eu' � (61.2G8) Fuel 10 _ 96 125.77D _ ___ - ____ - ____'__ - ._______ - ___ Police Salaries - Chief, 2 Officers, Crime Analysis (275,408) Police Jail Coot GDO.DOO FinmSo|oheo - Cief ----- --- CQ.822) -- ---------'------- --- — -- ___ __________ Engineering Salaries - M. Morales (2,947) _ City Hall Salaries - M. Morales (2,103) __ ___ _ Customer Services Salaries- K. Valenzuela (28,815) _ Transfers in-lieu of tax (79,000) _ Property Tax 100,000 _ 461.000 Water/Wastewater in-lieu oftax (181.500) 0 Sales Tax 246.000 246.000 Bui|dingPmrmit (10U.ODO (100,000) _i_ ---- KAunicipo|Tnof�o|nhactionPena|ty _ _ Bec�hoUUUtyTax 5O�OO 5D,OOO ��_��_ ; Engineehng Professional Svc |nte� (50,000) lnterfund _ ___ __ �.UD0) (100.000) Violent Crimes Task Force (45.800 (85.000) _ Print Shop __ __ (35,000) (35.000) Other Revenue Adjustments ___ (95,500) _ ___� __ State Shared Revenue __~ _�___ _ ______ (2O.45O) (40,750) Customer Service Interfund 15.250 HR Salaries 'LEDFF|Ponuion 36.0DD Police Pension - LEOFF 1 Medical Program 08.000) _ _ _ Total G | F ,d ---- -- - - -- -- — General Fund $191,417 ($217,250) $165,695 __ _ Parks & Rec Fuel ($4,336) $D _____________ $0 Property Tax 0 0 15.000 State Shared Reveriue __ (400) (700) Rec ($4,336) ($400) $14,300 - ______ __ --_ Stn*etf7rafficEn c�rg : '__'--_ - _ - ____ -----'--' --'---�----'---------- ----- Fuel _ 0 0 Property Tax _____________________ D i0 35,000 _ Total Street $41,406 ---' $0 ---- $35.000 -- - - --'-- ---' ` Gen Gov Changes Total • *228.487 ($217.658) s214.095 Amended Budget 03/31/11 67.745.915 57.086.960 57.086.980 ��n Revised Budget 57.974.401 56.888.310 57.301.955 -- Revised Budget 05/33/11 $57 $56.868.310 $57.301.955 erp 5/24/20 1 2:44 PM budgetChangesOther Funds 5-24-11.xls