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10/23/2012 03 2013 Budget Presentation r""�.;I• �F�•1 l BUSINESS OF THE CITY COUNCIL YAKIMA, WASHINGTON AGENDA STATEMENT Item No For Meeting of: October 23, 2012 ITEM TITLE: 2013 Budget Presentation SUBMITTED BY: City Manager and Finance Department CONTACT Tony O'Rourke, City Manager 575.6272 PERSON /TELEPHONE: Cindy Epperson, Director of Finance & Budget 576.6771 SUMMARY EXPLANATION: The development of the Preliminary 2013 Budget is based on the following core principles and priorities: • The City Council's five (5) Strategic Plan Priorities o Economic Development o Public Safety o Built Environment o Public Trust and Accountability o Partnerships • No tax increases. • Live within our means. • Preserve core services. • Invest in preserving the City's core capital assets to extend their useful life. • Maintain 60 days or 16.6% General Government Fund operating reserves. • Optimize the delivery of services. • Constrain personnel salary and benefit costs. • Make budget decisions that eliminate future projected deficits and ensure a balanced budget in future years. This budget addresses the City's highest strategic priorities and capital needs for 2013 and will allow us to achieve our key goals. It also puts in place a financing plan that supports our efforts for continued financial stability and sustainability in future years. Resolution Ordinance Other (specify) Contract: Mail to: Contract Term: Amount: Expiration Date: Insurance Required? No Funding Phone: Source: APPROVED FOR SUBMITTAL: hvy6. City Manager STAFF RECOMMENDATION: BOARD /COMMISSION RECOMMENDATION: , ATTACHMENTS: Click to download ❑ Budget INTRODUCTION: TRANSMITTAL ipz ` " R`'4 ; t OFFICE OF THE CITY 1' 129 North Second Street �V� PI! 129 Hall.lakima.Washington 98901 ` �•,, ' i Phone (509) 575 -6040 MEMO TO: Honorable Mayor and Members of the Yakima City Council FROM: Tony O'Rourke, City Manager DATE: October 23, 2012 SUBJECT: City Manager's 2013 Preliminary Budget Summary I am pleased to submit for City Council review the 2013 Preliminary Budget. This budget is balanced, prudent, and responsive to the City Council's and community's strategic priorities and needs. Providing a balanced budget has proven to be a challenging task given the multitude of issues the City faces compounded by the most prolonged economic downturn since the Great Depression. The current recession continues to present a strong headwind, and the lethargic economic recovery only exacerbates the City's financial pressures. According to most economists, the economy's key bellwether, the Gross Domestic Product (GDP), is forecast to grow only 1% to 1.5% annually, which is too slow for a full economic recovery. Yakima's economy continues to lag behind the state and national economies. Our community is struggling with a 10% unemployment rate, while the state and national unemployment rates are 8.5% and 7.8 %, respectively. In addition, Yakima suffers from a 21% poverty rate compared to a national poverty rate of 15% and state rate of 11.5 %. Finally, public confidence in the local economy is weak, given 85% of the citizen survey respondents rated employment opportunities in Yakima as fair or poor. Introduction • Section I — While our current fiscal challenges have been compounded by the broader economic downturn, the underlying problem the City faces is its projected expenses exceed its projected revenues if we continue to "stay the course," as identified in the Five -Year Financial Plan. If we maintain the status quo, based on existing service levels and revenue streams, we will generate annual deficits ranging from $1.5 million to $4.0 million between 2013 and 2016. Based on the Five -Year Financial Plan, we are confronted with some difficult budget decisions now and in the near future. Simply stated, the City of Yakima must correct this projected financial misalignment and adapt to the "new normal" of living within our means. To that end, we must focus on permanent, long -term structural budget solutions to ensure current and future balanced budgets and financial sustainability. The City has taken proactive steps to reduce overall costs, including the elimination of a total of 41 positions between 2008 and 2012, salary freezes, and furloughs. Unfortunately, more needs to be done. It is with this background and understanding we present the Preliminary 2013 Budget. BUDGET STRATEGY The development of the Preliminary 2013 Budget is based on the following core principles and priorities: ➢ Advance the City Council's five (5) Strategic Plan Priorities • Economic Development • Public Safety • Built Environment • Public Trust and Accountability • Partnerships ➢ No tax increases. ➢ Live within our means. ➢ Preserve core services. ➢ Invest in preserving the City's core capital assets to extend their useful life. ➢ Maintain 60 days or 16.6% General Government Fund operating reserves. ➢ Optimize the delivery of services. ➢ Constrain personnel salary and benefit costs. ➢ Make budget decisions that eliminate future projected deficits and ensure a balanced budget in future years. PRELIMINARY 2013 BUDGET The proposed Preliminary 2013 City Budget, including all funds, is balanced. The Fiscal Year 2013 expenditure budget is $205.8 million and represents a $28.4 million or 16.0% increase over the projected 2012 year -end expenditures. The $28.4 million increase in the proposed 2013 budget is driven by a $27 million increase in capital projects, including the Martin Luther King, Jr. underpass ($12.1 million), road improvements ($5 million), sewer industrial line and meter 2 — Section I o Introduction • improvements ($3.7 million), and water and wastewater system improvements of over $11 million. Most of these capital improvements are funded by grants and utility enterprise revenues and reserves. The expenditure budget of $205.8 million is supported by revenue of $200.2 million, and $5.6 million of non - General Government reserves (i.e. enterprise and capital). At the end of 2013, citywide reserve levels are projected to be $49.8 million. The Preliminary 2013 General Government fund expenditure budget, which represents most core City services, is balanced at $61.9 million and represents a $1.4 million or 2.4% increase over the 2012 year -end projected expenditure budget. The revenue budget is $61.9 million and represents a $1.4 million or 2.4% increase over the projected 2012 year -end revenues. General Government operating reserves will not be used to balance the budget. The major elements of the $1.4 million increase in the 2013 General Government Fund expenses are: > Yakima Police Patrolman's Association (YPPA) labor contract settlement $614,000 > International Association of Firefighter's (IAFF) labor contract settlement $385,000 > Medical Plan rate increases $600,000 The General Government budget revenues are based on the following: ➢ Proposed 1% increase in property taxes plus an estimate of 0.75% new construction. > Modest growth of 1.5% in sales tax. > Utility tax increase of 3.6% averaged over all utilities. Components include: • Full year of the 6% rate increase authorized in the 2012 budget for public safety - because of timing of implementation, 2012 revenues include about 11 months. • General utility rate changes. BALANCING STRATEGY We have balanced the 2013 General Government Fund budget using the following strategies: > Instituting a 2% vacancy rate. Personnel costs are budgeted at 98% to account for a minimum 2% position turnover /vacancy - Savings: $730,000. > Projected wage and benefit concessions from represented and unrepresented employees, subject to collective bargaining and negotiations - Savings: $304,000 (general government). ➢ Attrition /vacancy of three (3) positions - Savings: $163,000 • Administrative Assistant - Community Development • Department Assistant II in Public Works • Delay refill of Information Technology position Introduction • Section I - 3 ➢ Airport fire service will be modified by transferring three (3) firefighters staffing the Airport Rescue Fire Fighting (ARFF) apparatus at the Yakima Airport to three vacant fire station positions, thereby filling three existing vacancies. The ARFF will be covered on an overtime or part -time basis to meet FAA standards, instead of with full time staffing - Savings: $220,000. KEY POLICY ON STRATEGIC PLAN DECISIONS Despite the economic hurdles we face, the City must continue to invest in its core strategic priorities. To that end, the following new initiatives are proposed for funding to address and advance the City Council's five strategic priorities. Public Safety Strategy a. Expand Police Gang Unit - Given the public's significant public safety and security concerns as represented in the 2012 Yakima Citizen Survey results, we propose creating a second gang unit of five (5) police officers. Instead of incurring the cost of five new officers, we propose transferring two officers from the Community Relations Unit and back filling those positions with civilian community service officers at a cost of $118,000. In addition, we will transfer an existing patrol officer to the new Gang Unit as well as hire two new police officers, with annualized costs of $200,000. The 2013 budget includes $118,000 representing a phased hiring process. The total cost for expanding the Gang Unit is $328,000. This is less expensive than hiring five new police officers and allows us to operationalize the second gang unit once the two civilian community service officers are hired. b. Indigent Defense - As the City Council is aware, the Washington Supreme Court has imposed a new caseload limit for attorney's providing public defense for misdemeanor cases. The new caseload limit is 300 cases per year if based on a new case weighting system and 400 cases per year if no case weighting system is used. By comparison, our current City Prosecutors are averaging a 1,500 annual caseload. The full cost impact of the Supreme Court decision will take effect in mid -2013. The City currently contracts for five (5) fulltime public defenders at an annual cost of $475,000 to meet indigent defense needs. To comply with the Supreme Court's new standards, the City will need to secure 7.5 additional fulltime defense attorneys at an incremental annual cost of approximately $700,000. Combined, this would represent an indigent defense annual cost of $1,175,000. If a jurisdiction chooses to utilize a weighting system, some cases will be weighted at values less than or more than an average case. More complex misdemeanor cases, such as domestic violence or DUI, are weighted higher due to their complexity. These types of cases constitute a large portion of the City of Yakima's filings. 4 - Section I • Introduction Many jurisdictions have chosen to pursue the case weighted system. Due to the City's heavy DUI and domestic violence caseload, case weighting is not our best option. Accordingly, the annual caseload for a public defender cannot exceed 400. To reduce the cost impacts of the Supreme Court decisions on indigent defense, the City intends to employ a Pre - Filing Diversion program and a Prosecution Charging Unit. These two initiatives will reduce the current misdemeanor caseload of 5,100 annually by almost 40 %, to 3,200. By employing these two initiatives, the City's Prosecuting staff will need to be increased by one (1) attorney at a cost of $115,000. However, the number of full -time defense attorneys can be reduced from 7.5 to 3.5. The cost of these additional indigent defense services will be $347,500 in 2013. The total annual cost of meeting the Supreme Court indigent defense mandate is $462,500. c. Commercial Fire Code Inspectors - This budget includes two (2) Fire Code Inspectors to reinstate the City's inspection of our 4,000 commercial buildings with the objective to reduce fire code violations and fires in the community. This initiative will cost $165,000 but will be largely offset by inspection fee revenue. d. Fire Apparatus Purchase - To ensure the timely replacement of Fire department equipment, we propose lease purchase of a fire engine at a cost of $40,000 annually for the next ten years. ECONOMIC DEVELOPMENT STRATEGY a. Economic Development Manager - In the interest of increasing the City's role in aggressively pursuing economic development opportunities to create a stronger job market and tax base, the City Council in September 2012 agreed to fund an Economic Development Manager position. The annual cost of this new position is $122,500. The primary focus of this new position, led by recently hired Sean Hawkins, will be to foster growth and enhancement of the downtown, the Cascade Mill Site, and the Yakima Airport. b. Special Events - A major impediment to downtown prosperity is the public's perception of crime and parking access in downtown. The Police Department will institute bike and foot patrols in downtown to enhance public safety. Additionally, the City Council has agreed to expand free parking from two hours to four hours during the day. In addition to these measures, we must attract residents and guests downtown through more special events and activities. The downtown needs more energy and animation to create a more vibrant and robust destination for residents and guests. We propose budgeting $100,000 to host more City sponsored events and elevate the quantity and quality of events in downtown during 2013. Introduction • Section I — 5 c. Airport Commercial Service - In the interest of expanding the City's current airport commercial service, this budget includes half the funds ($30,000) to retain a commercial air service consultant. The balance of the funds is proposed to be supplied by Yakima County. BUILT ENVIRONMENT STRATEGY a. Infrastructure Investment - The City currently has a significant backlog of capital needs. The City's 802 lane miles have an average Pavement Condition Index (PCI) score of 54. Based on a 100 -point scale, the City's PCI is far below average. The City must focus on an asset management and preservation program for existing City streets to extend their useful life and reduce future replacement costs. Unfortunately, the City does not have adequate capital reserves for the renovation and replacement of its $600 million road system. To address this problem, I would propose initiating a $5 million bond program in 2013 to improve our roads and begin the process of reducing our road rehabilitation backlog and improving our Pavement Condition Index. The 2013 road improvement initiative should focus on arterial and collector streets throughout the City. Rehabilitation techniques should focus on grind and overlay, with additional full depth reconstruction, chip seal and core seal. These road improvements will extend the useful life span of 28 miles of our roads by an average of 7 to 30 years. The annual debt service on a $5 million bond is approximately $350,000. To continue to fund the City's road improvement backlog, I would recommend the City Council place the car tab fee measure on a 2013 election ballot for public consideration. The 2012 Yakima Citizen Survey indicated a 50% level of support for a car tab fee. The car tab revenue should be dedicated exclusively to capital improvements. A $20 car tab would generate $1 million annually, while a $40 car tab would generate $2 million annually. If successful, the Council could either use the dedicated funds on a "pay -as- you -go" capital improvement program or leverage the annual funds to issue a $12 million to $25 million bond to frontload improvements. The Council may also want to consider sunsetting the car tab fee after 5 or 10 years and require future public reauthorization of the car tab fee. b. Graffiti Abatement - The Citizen Survey underscored the public's dissatisfaction with the overall appearance of Yakima, given 71% rated it fair or poor. To improve that rating, the City proposes to initiate neighborhood -based cleanups as well as implement aggressive eradication of graffiti. To assist in our graffiti abatement efforts, there will be a Volunteer Coordinator at a cost of $15,000. The Volunteer Coordinator will organize and assist community volunteers in cleaning up graffiti sites soon after they are reported in order to diminish the visual blight graffiti creates. 6 - Section I • Introduction FUND BALANCE OPERATING RESERVE The General Government Operating Reserve is at $9,941,466 or 16.1% of annual expenditures which is close to our desired 16.6% or 60 days of working capital standard. This level of operating reserves is sufficient to meet unforeseen, one -time expenditures of an emergency nature, such as a national disaster, catastrophic occurrence, or excessive liability judgment. LONG RANGE FINANCIAL PLAN Although the 2013 Budget adopts the City's financial plan for one year, it is important that the City Council make the Annual Budget decisions in the context of the City's long -range financial plan. The City Council reviewed the City's Five -Year Financial Plan in September 2012 and is cognizant of the economic challenges of recent and projected revenue stagnation and the continued escalation of costs. Of particular concern is our health plan, which this year alone will increase by $1 million or 13.7 %. As you know, the Five -Year Financial Plan projects deficits of $2.5 to $4.0 million between 2014 and 2016. Given this, the annual budget must be framed and acted upon based on these long - range trends. We must continue to constrain our operating costs to live within our nominal revenue growth. Upon the adoption of the budget by City Council, we will update the projections of the Five Year Financial Plan for the next four years and review those with the City Council in January 2013. CONCLUSION This budget addresses the City's highest strategic priorities and capital needs for 2013 and will allow us to achieve our key goals. It also puts in place a financing plan that supports our efforts for continued financial stability and sustainability in future years. In presenting the budget to the City Council, I would like to acknowledge and express appreciation to the City Leadership Team and staff for their willingness to submit realistic budget requests and develop alternatives to meet the Council's priorities. I would also like to recognize the Finance Department for its assistance in preparing this budget and its more streamlined but comprehensive presentation. Finally, I would like to thank the City Council for its leadership in adopting the Strategic Plan and Five -Year Financial Plan which have served as the foundation for this proposed 2013 budget and its commitment to move the City forward toward a brighter and a more sustainable future. Sincerely, Tony 0' rke City Manager Introduction • Section 1— 7 INTRODUCTION: BUDGET SUMMARY This Budget Summary Section provides a high -level overview of the 2012 year -end forecast and the preliminary 2013 budget, along with significant issues that have affected the City's fiscal position in the past year and /or anticipated to have a material impact in 2013. 2012 YE ESTIMATE VS. 2013 BUDGET OVERVIEW The charts below show in summary format how the 2012 year -end budget estimate compares to the 2013 budget. 2012 VS. 2013 EXPENDITURE BUDGET COMPARISON 2012 12 vs. 13 Year -End 2013 Budget Fund Estimate Budget % Change General $51,327,216 $52,435,159 2.2% Parks 3,970,318 4,059,116 2.2% Streets & Traffic 5,194,342 5,421,180 4.4% General Government Totalrn $60,491,876 $61,915,455 2.4% Utilities /Other Operating 65,546,479 64,178,115 (2.1 %) Capital Improvement 27,017,241 54,834,157 103.0% Contingency/Risk Management 3,036,404 3,761,305 23.9% Employee Benefit Reserves 14,094,451 14,601,809 3.6% General Obligation Bond Debt Svc 3,520,336 3,831,384 8.8% Utility Revenue Bond Debt Service 3,181,214 2,127,561 (33.1 %) Trust and Agency Funds 503,225 517,200 2.8% Total - Citywide Budget $177,391,226 $205,766,986 16.0% (1) The 2013 General Government expenditure budget is approximately $1.4 million or 2.4% above the 2012 year -end estimate budget. (2) The City wide expenditure budget is approximately $28.4 million or 16.0% above the 2012 year -end estimated budget. 8 — Section I m Introductzon 2013 EXPENDITURE BUDGET BY FUND ($205.8 MILLION) Utility Revenue Employee Trust and Benefit Bond Agency Reserves Debt Svc Funds Contingency/ $14 6 $2.1 $0.5 Risk 7.1% 1 0% 0 2% Management General $3 8 $52.4 1.8% 25.5% Capital Improvement $54.8 Parks 266% $4.1 2.0% Street & Traffic $5 4 2.6% General Obligation Utilities /Other Bond Debt Svc Operating $3.8 $64.2 1.8% 31.2% 2013 REVENUE BUDGET BY FUND ($200.2 MILLION) Utility Revenue Trust and Employee Bond Benefit Debt Svc Agency Contingency/ Reserves Funds Risk $2.5 $0 5 $14.6 1 2% Management 7 3% 0.2% $3.6 General 1.8% $52.4 26 2% Capital Improvement $48.5 24 2% Parks $41 2.0% Street & Traffic $5 4 2.7% General Obligation Utilities /Other Bond Debt Svc Operating $3.8 $64 8 1 9% 32.4% Introduction • Section I — 9 • The proposed 2013 total city -wide expenditure budget of $205.8 million is balanced within existing resources and reflects a increase of $28.4 million from the 2012 year -end estimate of $177.4 million. The 2013 General Government budget of $61.9 million is approximately $1.4 million more than the 2012 year -end estimate of $60.5 million. The General Government budget consists of three separate Funds: the General Fund, the Parks Fund and the Streets and Traffic Fund. Over 70% of these tax supported budgets are devoted to public safety services in the 2013 budget; this includes Police, Fire, Courts and support to these departments from the Technology Services, Finance, Legal, and Human Resources divisions, along with code enforcement, animal control, street lighting, traffic control, and snow and ice removal activities. 5 - YEAR FINANCIAL PLAN This summer, the City Council was presented with a preliminary 5 -year financial forecast that was based on existing revenue streams and city services. Those projections were based on an assumption of continuing business as usual — with our current structure, services, operating practices, etc. That report provided a look at the financial consequences of maintaining the status quo, which were annual deficits ranging from $1.5 to $4.0 million between FY 2013 and FY 2016. On August 21St, the official 5 -year financial plan was adopted by the City Council. This was the next step in looking at long -term strategies to balance the General Government (i.e. tax - supported funds, which include General; Streets and Traffic Engineering; and Parks and Recreation) budgets. The Five -Year Financial Plan was designed to focus on the City's General Government given these are core to the City's ability to provide essential services and capital improvements As time goes on, this plan is to be monitored, as economic/business conditions will likely be different from preliminary estimates. Any significant changes in assumptions will require future modifications to the plan. The 5 -Year Financial Plan was meant to assist the City Council in meeting the following key goals: ➢ Ensuring a financially sustainable future. ➢ Preservation of the City's core services. ➢ Commitment to funding infrastructure; facilities and rolling stock. ➢ Addressing Strategic Plan priorities. Revenue Forecast The revenue forecast represents an analysis of the economic factors driving the City's revenue base and specific revenue sources available to the City. The City's core General Government 10 — Section I • Introduction revenues are increasingly affected by the economy. The financial plan revenue projections reflect various assumptions about the future economic environment based on national, state and local economic forecasts. Over the next five years, the average annual increase in General Government revenue is projected to be 1.3 %. Expenditure Growth The primary costs of the General Government expenditures are for salaries and wages, and personnel benefits, which combined comprises the majority of the General Government expenditure budget. Over the next five years, the average annual increase in General Government expenditure will be 2.8 %. Bottom Line The following chart summarizes the budget gap identified in the 5 -year Financial Plan. 2012 2013 2014 2015 2016 General Fund (Millions) Forecast Forecast Forecast Forecast Forecast Revenues $59.8 $60.6 $61.2 $62.0 $62.9 Expenditures $59.8 $62.1 $63.8 $65.3 $66.8 Net $0.0 ($1.5) ($2.5) ($3.3) ($4.0) Budget Alternatives Based on the results of the preliminary Five -Year Financial Forecast, the City must develop a longer -term strategy for dealing with both the current and future budget reality. The following were the proposals to City Council to help bring the next several budgets into balance. ➢ Reorganization Plan - Certain areas in the organization were being underserved and needed additional resources allocated to them to better accomplish the City's strategic priorities. > Wage and Benefit Concessions - As bargaining units negotiate wages and benefits, the City will be asking for zero cost -of -living wage growth and benefit concessions. This plan assumes termination of the City's deferred compensation benefits program, with a current cost of $1.5 million annually, subject to collective bargaining negotiation. ➢ Airport Fire Service - The City has fully staffed the Aircraft Rescue Fire Fighting (ARFF) apparatus at the Yakima Air Terminal without any reimbursement from airport operations. The Fire Department is proposing to staff mandated coverage on overtime, instead of full time staffing. Introduction • Section I —11 ➢ 2% Vacancy Rate - By instituting a 2% personnel vacancy rate in General Government, the City can avoid budgeting about $800,000 in 2013, and up to $1 million in 2016. ➢ Health Care Costs - The City is working with the self - insured broker, the Health Benefit board and collective bargaining units to look at benefit design and health care delivery options to lower the steep increase projected in health care costs. Reductions starting in 2013 have been identified, which will be maintained in the Health Benefit fund, as that reserve balance is below required levels. ➢ Managed Competition - Departments have been tasked with identifying operations that can be subject to managed competition. This will be pursued on a regular basis ➢ Attrition /Service Reductions -Vacant positions will be critically examined to determine if and when they should be replaced. ➢ Capital Improvements -- Council has been studying the need for a stable funding source for major street maintenance and improvements. Two viable revenue options have been discussed in the past few months at various study sessions and public meetings. • Metropolitan Parks District (MPD) - Should the MPD go forward as a funding option for Parks and Recreation, the City would also have an opportunity to use resources currently allocated for that function to street improvements. • Car Tab Fee - The Transportation Benefit District can establish an annual car tab fee of $20 per vehicle. Conclusion Although the City of Yakima is slowly coming out of the worst economic recession in recent history, the Five Year Financial Plan represents a prudent and balanced strategy for meeting its fiscal challenges. The strategy reflected in the Five Year Financial Plan allows the City to eliminate projected budget gaps, and make critical investments in its street infrastructure. Moreover, the strategy will allow the City to continue to provide essential, outstanding cost effective service and capital improvements to our residents and businesses. 2013 BUDGET ADJUSTMENTS General Government Budget Reductions As the 2013 budget was developed, all revenue estimates were reviewed and updated for more recent trends, and known changes were incorporated in the expenditure budget. After all known changes were made, the General Government budget was still out of balance by about $1.4 million. At that point the balancing strategies as outlined in the Five Year Financial Plan 12 - Section I ® Introduction were implemented. The following is a summary of the original plan, compared to the elements that were incorporated into the 2013 budget. GENERAL GOVERNMENT BUDGET REDUCTIONS 2013 Preliminary Forecast Budget Original 5 -Year Plan Budget Gap ($1,500,000) ($1,417,000) Expenditure Options Wage & Benefit Concessions 300,000 304,000 Airport Fire Service (AARF) 200,000 220,000 2% Vacancy Rate 800,000 730,000 Attrition /service reduction 200,000 163,000 Net Budget 1,500,000 1,417,000 Detail of Reductions to Balance Wage and Benefit Concessions - Deferred Compensation Non - represented and AFSCME (304,000) 3 Vacant Firefighter Positions Eliminated Airport Rescue vehicle staffed by Overtime (220,000) Attrition /Service Reductions (Vacant) Administrative Assistant - Community Development (75,000) DA II Public Works (Reduces PW Admin Charges) (48,000) Information Technology Position (Keep Vacant 6 months) (40,000) Vacancy Rate -2% of Gen Gov salary and benefits, w /out Med or Dental (730,000) Total Budget Balancing ($1,417,000) General Government Program Changes In response to a citizen survey, City Council had a retreat to review the survey results and align its strategic priorities to better address the community's needs. The following chart is a summary of programmatic changes included in the 2012 budget, and the strategic priority being addressed by each initiative. Introduction • Section I —13 GENERAL GOVERNMENT STRATEGIC INITIATIVES Description Increase Notes Priority City Manager Airport - Consulting Fee $30,000 Intergovernmental PA Olympia/Washington Lobbyist 50,000' City Council Budget PA 80,000 Legal (Indigent Defense:) Increase Indigent Defense Contract 347,500 State Mandated PS Add One Prosecutor & Temporary Hours 115,000 State Mandated PS 462,500 Municipal Court Reinstate Municipal Court Cashier 54,000 Improved Customer Service PT Community Development Dangerous Building Abatement 15,000 BE/PS Graffiti Abatement - Volunteer Coordinator 15,000 Temporary Position BE/PS 30,000 Economic Development Dept Economic Development Manager $122,500 Approved by Council ED Support costs (i.e. phone, training, etc.) 7,500 ED Special Events - Downtown focus 100,000 ED 230,000 Police Gang Unit Enhancement 118,000 2 Civilians Start 4/1/13 PS /PT 2 Police Officers Start 10/1/13 Dispatch - Public Safety Communications 80,000 Additional Interfund Transfer PS (9 -1 -1 funding for dispatch reduced - see 9 -1 -1 Call Taker) 198,000 Fire Purchase Fire Apparatus ($375,000) 40,000 Annual Debt Service - 10 yrs PS 2 Fire Code Inspectors /Supplies 165,000 Supported by New Fee PS 205,000 Streets & Traffic Engineering Reinstate Vehicle Replacement to '11 Levels 100,000 From $150,000 to $250,000 BE $5.0m Councilmanic Bond Issue 300,000 Annual Debt Service (Est) - 10 yrs BE/PT 400,000 Total General Gov. Program Changes $1,659,500 Strategic Priority Legend Economic Development ED Public Trust and Accountability PT Public Safety PS Partnerships PA Built Environment BE 14 — Section I a Introduction Other Fund Changes Most of the other funds are continuing their specific missions without major changes. The following is a summary of strategic initiatives in the other operating and utility funds. OTHER FUND STRATEGIC INITIATIVES Description Inc /(Dec) Notes Priority Utility Project Coordinator $67,000 WW, Water, Irrigation, Gen Fund BE/PT Director of Engineering & Utilities 140,000 WW, Water, Irrigation, Gen Fund BE/PT Housing Specialist (50,000) Attrition Reduction/Federal Grant PT /ED Reduction Reconfigure Franklin Park parking lot 150,000 REET 1 BE/ED Community Relations Bldg Purchase f /Fire 316,250 Transfer from Fund 125 to Fire PS Capital Fund DA II - Transit 27,000 Add .50 FTE PT /ED Asset Management Software System 200,000 WW Fund Capital (+ $100k in '14) PT /ED Water/Irrigation Admin (53,000) Attrition Reduction PT 2 9 -1 -1 Call takers 125,000 Frees up Dispatch Function PS Water Service Specialist (60,000) Attrition Reduction PT $862,250 Strategic Priority Legend Economic Development ED Public Trust and Accountability PT Public Safety PS Partnerships PA Built Environment BE PRELIMINARY BUDGET The 2013 Preliminary Budget broken down by Department, as reflected in the following chart, provides a clear picture of the resource requirements of each functional area within the City and how each area compares both to each other and to the total General Government budget of the City — in dollars and staffing levels. Introduction • Section I —15 2013 GENERAL GOVERNMENT PRELIMINARY BUDGET (By Department) 2012 Dollars in Millions % of Forecast Total -1 1 3 5 7 9 11 13 15 17 19 21 23 25 Organizational Unit Budget , . , , . . . , . . ■ Budget Police $25,300,519 h - 40.9% Fire 9,848,295 IN 15.9% Streets & Traffic Op. 5,421,180 'mini 8.8% Parks 4,059,115 NW 6.6% Transfers 2,477,275 ( 1 4.0% Information Systems 2,310,463 © 3.7% Financial Services 1,456,531 2.4% Municipal Court* 1,387,541 . 2.2% Utility Services 1,301,697 .1 •Personnel 2.1% Police Pension 1,297,225 El 2.1% Code Administration 1,279,417 • CNon- Personnel 2.1% Legal 1,258,965 . 2 0% Indigent Defense 833,500 ❑ 1.3% Engineering 670,639 ■ 1.1% Planning 614,033 II 1.0% Purchasing 529,702 1 0.9% Records 484,404 L 0.8% Human Resources 449,046 1 0.7% City Manager 363,799 1 0.6% City Hall Maintenance 360,225 I] 0.6% Intergovernmental* 291,549 Q 0.5% City Council 284,751 0 0.5% Economic Development 229,585 d 0.4% State Examiner* 110,000 I 0.2% Hearings Examiner* 26,000 1 0.0% 2% Vacancy Rate ($730,000) ❑ (1.2 %) Total $61,915,456 100.0% The Police Department consumes 40.9% of the $61.9 million General Government budget, while the Fire Department consumes another 15.9 %. No other single Department utilizes more than 8.8% of the total General Government budget. The Streets & Traffic Department budget (8.8 %) and the Parks and Recreation Department budget (6.6 %) come in a distant 3rd and 4th place for the utilization of available resources. This has been the relative utilization of General Government resources for many years, and continues to reflect the Council's strategic priorities for the coming year. 16 - Section 1 • Introduction Projected Ending Cash Balance (Reserve) General Government resources consist of annual revenues and cash reserves (fund balances). Prudent fiscal management dictates that adequate reserves be maintained to help ensure the City is prepared to meet any number of unbudgeted and / or unforeseen circumstances that may arise, without requiring major disruptions to normal business operations. Reserves are typically utilized for many different business purposes, including: provide for emergencies; cover temporary cash flow needs; take advantage of one -time, unanticipated opportunities; provide grant matching funds; cover revenue shortfalls; and accommodate unforeseen expenditures and other contingencies. 2013 GENERAL GOVERNMENT PROJECTED REVENUES, EXPENDITURES AND CASH BALANCES 2013 2013 2013 2013 2013 2013 Exp Estimated Estimated End Bal Projected Proposed as % of Beginning Ending as % of Revenue Expenditures Diff Rev Balance Balance Exp General Fund $52,435,635 $52,435,159 $476 0.0% $8,483,190 $8,483,666 16.2% Parks & Recreation 4,058,765 4,059,115 (350) 0.0% 363,235 $362,885 8.9% Street & Traffic Fund 5,418,260 5,421,180 (2,920) 0.1% 1,097,836 $1,094,916 20.2% Total General Government $61,912,660 $61,915,454 ($2,794) 0.0% $9,944,260 $9,941,466 16.1% The 2013 General Government preliminary budget is balanced with minimal use of reserves and the ending reserve balance is projected to be 16.1 %. Fund Balance Change The Governmental Accounting Standards Board (GASB) is the organization that sets accounting and financial reporting rules for governments. In recent years, the GASB has issued several proclamations that have had an effect on our financial statement presentation. Several years ago, GASB Statement 33 gave direction on reporting "derived tax revenues ", which addressed the timing of recognizing revenue of assessments on exchange transactions, such as sales tax or utility tax. In general, this new rule stated that revenue should be recognized when the underlying transaction takes place — i.e. when the sale is done. Because there is a 2 month lag in sales tax collected by the City, and a 1 month lag in utility tax collection, the City added 2 months of sales tax and 1 month of utility tax in the year of implementation in the Comprehensive Annual Financial Report (CAFR). However, because there was no change in the underlying economic condition of the City, just the timing of revenue recognition, we conservatively maintained budgeted fund balances at the pre -GASB 33 levels. This resulted in the General Fund balance reported in the CAFR being about $4 million more than the budgeted fund balance. Introduction • Section I —17 In the City Manager's presentation on the preliminary Business Plan in August, 2012, he pointed out that the Government Finance Officers Association has a "best practice" of maintaining at least a 2 -month reserve of the expected expenditures or revenues. This recommendation presumes that the additional revenue from the accounting change described above is included in the fund balance calculation. Therefore, we have added the additional accrued revenue into the budget system for both 2012 year end estimate and 2013 budget, in the General Fund and all other funds that have "derived tax revenues ", such as gas tax and hotel /motel tax. A more recent pronouncement, GASB 54, addressed the designation of the level of restriction on fund balances. It specifically directs that general contingency funds cannot be presented in the Financial Statements as a separate fund. Therefore, we are proposing that the Contingency Fund be discontinued as an active fund, and the fund balance of about $240,000 be moved into General Fund. (The Contingency Fund balance was built by transfers from General Fund). After these two changes, the General Fund projected fund balance at the end of 2013 is $9.9 million or 16.1% of the budgeted expenditures, which is slightly below the recommended "best practice" of 16.6 %. Cash reserves are an integral and critical component of responsible fiscal management and business planning. Standard and Poor's, a national rating agency, included two references to the City's general fund reserves in explaining the City's credit strengths that influenced their most recent (August 2009) reconfirmation of the City's "A +" credit rating. Standard and Poor's stated in their report that the City has a "track record of very strong general fund balances and good financial policies and practices, including a minimum general fund balance threshold and the use of a financial forecasting model ". The following chart reflects several key aspects of the City's General Government fiscal condition. 18 — Section I 0 Introduction GENERAL GOVERNMENT FUNDS RESERVES USAGE AND BALANCE COMPARISONS (1) (2) (3) (4) (5) 2012 2012 2013 2011 Amended Year -End Preliminary Variance Actual Budget Estimate Budget (4 -2) Beg. Reserve Balance $5,954,903 $5,612,257 $9,948,220 $9,944,260 Revenue 57,622,494 59,574,685 60,487,917 61,912,660 Total Resources 63,577,397 65,186,942 70,436,137 71,856,920 6,669,978 Expenditure Budget $57,658,071 $60,740,391 $60,491,876 $61,915,453 1,175,062 End. Reserve Balance 5,919,327 4,446,551 9,944,260 9,941,467 % of Annual Expenditures 10.3% 7.3% 16.4% 16.1% Inc /(Dec) in Reserves f/ Prior Year ($35,577) (1,165,706) ($3,960) ($2,793) % of Expenditure Budget (0.1%) (1.9 %) (0.0 %) (0.0 %) Revenues ➢ 2013 projected revenues reflect an increase from the 2012 year - end estimate of 2.3 %. Expenditures ➢ The 2012 year -end expenditures are projected to be $0.2 million less than the Amended budget. ➢ The 2013 proposed expenditure budget is $1.4 million more than the 2012 year -end estimate and $1.2 million more than the 2012 authorized expenditure level. Reserves ➢ A comparison of the 2011 beginning and ending reserve balances reflects a minimal use of reserves during that year (from approximately $6.0 to $5.9 million). ➢ 2012 year -end projections indicate virtually no utilization of reserves during 2012. ➢ The 2013 budgeted year -end reserve level is approx. 16.1 %; this is within the reserve guidelines, as noted previously, and expenditures virtually equal revenues. 2013 GENERAL GOVERNMENT BUDGET — HIGHLIGHTS For four years now, staff has been closely monitoring the financial crisis and economic recession that has gripped our entire nation, our State and our local economy. Staff has prepared, and updated, 2012 and 2013 revenue projections for the City based on the economic condition of our region. General Government revenues had been flat for the previous 4 years (hovering between Introduction • Section I —19 $57.4 and $57.6 million from 2008 through 2011), but are now starting to marginally increase. Most of the revenue increase from 2011 actual to the 2012 estimate is the result of City Council's increase of the Water, Wastewater, Refuse and Stormwater utility tax by 6 %- -this accounts for about $2 million of the $2.9 million increase. This new revenue was earmarked specifically for Public Safety, and is supporting 12 Police Officers, a Firefighter, and other public safety support. Unfortunately, costs of providing the same level of service had also increased over these 4 years, causing an erosion of service levels during that time frame. ➢ From 2008 through 2012, a total of 41 positions have been eliminated in order to balance the budget within available resources. ➢ The 2013 budget returns a net of 6.75 positions to the budget, to address citizen concerns and the City Council's strategic priorities. Cost containment and efficiency improvements continue to be a strong focus and an emphasis in every expenditure decision. Taxes Management has included no new taxes in the proposed 2013 Preliminary Budget. ➢ Sales Tax - The General Government budget includes revenue projections that reflect a 1.5% increase in sales tax revenues from 2012 to 2013. Through the 9 months ended September 30, the year to date sales tax is 5% over the prior year. ➢ Property Tax - The 2013 budget is based on a 1% increase in the property tax levy or about $164,000, as currently allowed by state law, plus a 0.75% increase or $123,000 for new construction for a total increase of $286,000. Budget Reductions /Personnel Changes Since revenues have been "flat ", with minimal growth expected in 2012 and 2013, and the cost of doing business continues to grow, significant budget/ service reductions and /or eliminations were necessary in order to balance the 2012 and 2013 budgets within available resources and maintain a minimum reserve level. ➢ The City has a budget freeze on salary and wages (0% increase) for all non -union employees for 2013 and is proposing the same to the labor unions except those that are settled going into next year. Management has also challenged employees to reduce costs in accordance with the Five Year Financial Plan, to reach sustainable levels of service. The City is in various stages of negotiations with all other bargaining units. Note: this represents the fifth salary and wage freeze over the past seven years (2007, 2010, 2011, 2012 and 2013 for non union employees. 20 - Section I ° Introduction NON - GENERAL GOVERNMENT FUND SUMMARY The following chart depicts a summary of resources and expenditures for major operating and Utility fund operations for 2013, including contingency, operating reserve funds and employee benefit funds. Although Equipment Rental is included on the table above, it is split into an operating component and capital component for charting operating vs. capital budgets. 2013 OPERATING AND RESERVE FUNDS Dollar In Millions 2013 0 2 4 6 8 10 12 14 16 18 20 22 24 Division Projected , , I , , , , , , 1 Reserves, Risk Mgmt, Emp Benefits $18,368,614 Cap Theatre, Cemetery, Trust Rsys $24,437,761 Wastewater $19,392,938 $21,520,651 W ater/Irrigation $9,981,317 $12,677,826 Water Rates, Irrigation Fees, Reserves Transit $7,970,772 $9,592,778 Transit Sales Tax, Oper Grants, Fare Box Refuse $5,520,876 $6,004,090 Refuse Rates Equipment Rental $3,856,657 ■Expenditures $3,885,625 imam Charges el Resources Storm Water $2,069,059 lir $2,998,442 Stormwater Fees Special Purpose, Housing, Emer Sys $13,887,501 Public Wks Admin, Cable TV, Misc $17,523,370 i ��Y�f 7Jl f!a — Pil lCii 71lSX 14.6, 11 Total Expenditures $81,047,734 Total Resources $98,640,543 The following describes the relationship of resources and expenditures for major capital budgets of the City, including debt service and the capital portion of the Equipment Rental Fund. Introduction • Section I — 21 2013 CAPITAL AND DEBT SERVICE FUNDS Dollars in Millions 2012 Division Projected 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 1 1 1 1 1 . 1 . 1 1 1 11 1 , Streets $23,170,847 $25,258,022 Wastewater $22,028,357 $27,856,541 W ater/Irrigation $7,822,508 $12,839,967 Reserves, Charges, Loans Transit $545,500 L $1,696,129 = Reserves, Taxes, Grants I • Total Expenditures Equipment Rental $2,010,695 Total Resources $6,290,769 Reserves, Charges Storm Water $435,000 16 $1,273,913 Reserves, Charges Sp Purp Cap, Misc G.O. Debt $6,790,891 $9,847,887 Reserves, Grants, Taxes, Loans Total Expenditures $62,803,798 Total Resources $85,063,228 CHANGES IN FUNDING AUTHORIZATION Due to a mid -year reorganization approved by Council, 5.0 FTEs were added, and with the changes occurring in the Finance Department, the layoff of a filled position was cancelled. Refer to the following chart for more information regarding these staffing changes. 22 — Section I • Introduction 2012 MID -YEAR GENERAL GOVERNMENT BUDGET POSITION ADJUSTMENTS Base Fund/Department Description Chg # Benefits Remarks City Manager Economic Development Add 1.00 $122,500 Reorganization Manager Fire Fire Code Inspector Add 2.00 153,000 Restore Service Engineering Director of Utilities & Add 1.00 146,000 Reorganization Engineering Planning Strategic Project Mgr Net 0.00 0 Reorganization - Replaced Planning Manager Finance Financial Services Spec Add 1.00 63,000 Reinstatement of position. Total Mid -Year Adjustments 5.00 $484,500 The following charts summarize the general government (i.e. tax - supported) and non - general government position additions and deletions included in the 2013 budget. 2013 PRELIMINARY GENERAL GOVERNMENT BUDGET POSITION ADJUSTMENTS Base Fund/Department Description Chg F/V # Benefits Remarks Legal Prosecutor Add 1.00 $103,000 Indigent Defense rule changes. Municipal Court Cashier Add 1.00 54,000 Reinstatement of position. Planning Admin Asst/CEDDir Del V (1.00) (84,000) Attrition Reduction Codes Admin Utility Proj Coordinator Add 1.00 67,000 25% General Government Funding Police Civilian Support Add 2.00 77,000 Expand gang unit - 4/1/13 Officers Add 2.00 44,000 Expand gang unit - 10/1/13 Fire Firefighters Del V (3.00) (220,000) ARRF reductions at the Airport. Net addition of overtime. Customer Service Water Service Specialist Del V (1.00) (60,000) Reorganization / Attrition Reduction Total General Government 2.00 ($19,000) Each of these proposals in the following chart has an identified revenue source or other expenditure reduction to support the additional cost. Introduction • Section I — 23 2013 PRELIMINARY NON - GENERAL GOVERNMENT BUDGET POSITION ADJUSTMENTS Base Fund /Department Description Chg F/V # Benefits Remarks ONDS Housing Specialist Del (0.75) ($50,000) Unfunded Position Public Safety 9 -1 -1 Call takers Add 2.00 124,000 Relieve the workload of the Communications Dispatchers Transit DA II Add V 0.50 26,000 Expand Vanpool Service Irrigation Water /Irrigation Admin Del V (1.00) 53,000 Attrition Reduction Public Works DA II Del V (1.00) 46,000 Attrition Reduction Total Other Operating Funds (0.25) $199,000 GENERAL STAFFING - ADJUSTMENTS SUMMARY & COMPARISONS In the 2013 budget, management continues to accommodate Federal and State unfunded mandates and provides critical public safety and other essential services. In an effort to minimize costs and increase efficiencies, management has increased, decreased, and reorganized personnel resources in the 2013 budget. ➢ Net addition of 6.75 FTE's and approximately $0.7 million dollars between the 2012 adopted and the 2013 proposed budgets. ➢ Since the recession started in late 2008, General Government is operating with a net total of 36 fewer FTE's in 2013 (from 478 in 2008 to 442 in 2013); a reduction of 8.1 %. ➢ The per capita number of General Government employees has decreased over the past decade (per every 1,000 population), from 5.7 FTE's in 2002 down to 5.1 FTE's in 2012. Comparison with other Cities In order to balance the budget within available resources, the City has made numerous reductions in staffing and related programs over the past several years. These staff reductions have resulted in favorable cost comparisons with other cities, as reflected in the following charts. The data utilized in the following comparisons was compiled from the State Auditor's Local Government Comparative Statistics for 2011, and includes comparisons of comparable Washington State cities with populations between 45,000 and 125,000. 24 — Section I e Introduction PAYROLL COSTS The City of Yakima costs well below the average per capita payroll costs out of the twelve comparison cities. Yakima's per capita expenditures on payroll is $500 which $922 $1,000 - is $68 less than the average city per capita of $568 $825 $842 $754 $800 .w., $576 $618 • s • $600 $500 • w 5' $379 $380 $389 $311 $318 $400 t ; $200 - f r t so - v. ...,.,, : . , n . vn. „�c�: ' � �" �*YE..,..; a.°�'x4,row. .; • rA:v::$"'C7 '� k: � A �+ .., zo n a Marysville Pasco Kennewick Kent Auburn Yakima Renton Richland Kirkland Bellevue Everett Redmond TOTAL EXPENDITURES The City of Yakima had the fourth lowest average per capita total expenditures out of the twelve comparison cities. $3,622 $3,309 $3,500 - Yakima's per capita total expenditures are $1,558, which is $647 $2,965 ,, „. Less than the average city per capita revenue of $2,031 $2,763 $3,000 $2,500 $2,088 $2,202 $1,870 $2,039 $2,000 $1,558 $1,233 $1,377 $1,430 $1,500 Y: flY $1,000 - i i $500 F z 41,y3e '' ': -.au. ^..SS +:si' .. ", °'s''u'°` ^::tr.1'•'!'* .'u'-c..: ura' v „ma:: :YrstF mow+ ,- .van °.w.idq.,:,,.;w ' �. ;. m . .. .'' . Pasco MarysvilleKennewick Yakima Kent Aubum Renton Everett Kirkland Bellevue Richland Redmond Introduction • Section I — 25 TOTAL RESOURCES The City of Yakima also had the fourth lowest average per capita total revenue out of the twelve comparison cities. $3,280 $3,337 $3,500 - Yakima's per capita total revenue is $1,525, which is $660 $2,960 less than the average city per capita of $2,185 $2'871 $3,000 $2,197 $2,311 $2,500 - $2,031 � ; ;•: ; fir $2,000 $1,691 $1,525 $1,324 $1,328 $1,368 4,. , $1,500 - $1,000 $500 - # a 4," Kennewick Pasco Marysville Yakima Kent Auburn Renton Everett Kirkland Bellevue Richland Redmond These comparisons demonstrate that the City of Yakima has limited revenue /tax base compared with most cities of its size in the state, and yet provides similar or enhanced services to its citizens. (For example, of the 12 cities included in the comparison, only Everett has a transit system; there are no other city -owned irrigation systems; and a few of the cities are members of a Regional Fire Authority, so have no fire expenditures). As reflected on the previous pages of this section, management has closely monitored and maintained a strong fiscal discipline over spending throughout all City departments for years. This has preserved the City's reserve position - and a stable credit rating - during some very difficult times. The Five Year Financial Plan contains strategies to continue to balance the budget going forward, even though projected revenue growth will continue at a rate below inflation. 26 - Section I ° Introduction Distributed at the - Meeting 0-?3 -- fc _ PRELIMINARY 2013 BUDGET HIGHLIGHTS ➢ Budget is Balanced and Prudent ➢ Responsive to City Council's and Community's Strategic Priorities ➢ Financial Challenges / Headwinds • Volatile /Sluggish Recovery • 10% Unemployment • 21% Poverty Rate • Low Public Confidence in Economic Recovery • Five -Year Plan - $1.5 to $4.0 Deficit 2012 2013 2014 2015 2016 General Fund (Millions) Forecast Forecast Forecast Forecast Forecast Revenues $59.8 $60.6 $61.2 $62.0 $62.9 Expenditures $59.8 $62.1 $63.8 $65.3 $66.8 Net $0.0 ($1.5) ($2.5) ($3.3) ($4.0) PRELIMINARY 2013 BUDGET HIGHLIGHTS > Prepare for the "New Normal" -- Era of Constraints and Limits > Fiscal Sustainability Requires "Living Within Our Means > Development of 2013 Budget Based on: • Aligning Resources to City Council Strategic Priorities • Economic Development • Public Safety • Built Environment • Public Trust • Partnerships PRELIMINARY 2013 BUDGET HIGHLIGHTS ➢ No Tax Increases ➢ Preserve Core Services ➢ Invest in Capital Infrastructure ➢ Maintain Adequate Operating Reserve ➢ Optimize Delivery of Service ➢ Constrain Personnel Costs ➢ Focus on Permanent, Structural Budget Solutions to Eliminate Future Projected Deficits 2013 PROPOSED BUDGET % Inc YE Est General Government $61,915,455 2.4% Enterprise & Non-General Gov't $143,851,531 23.0% Total Proposed Budget $205,766,986 16.0% 2013 PROPOSED EXPENDITURE BUDGET $205.7 Million Utility Employee Revenue Trust and Benefit Bond Agency Reserves Debt Svc Funds $2.1 Contingency/ $14.6 $0.5 Risk 7.1% 1.0% 0.2% Management General $3.8 $52.4 1.8% 25.5% • Capital Improvement $54.8 Parks 26.6% $4.1 2.0% Street & Traffic $5.4 2.6% General Obligation Utilities /Other Bond Debt Svc Operating $3.8 $64.2 1.8% 31.2% 2013 GENERAL GOVERNMENT EXPENDITURES BY DEPARTMENT $61.9 Million Fire City $9,733,535 Management 15.7% $4,670,891 7.5% Legal Police $1,244,295 $25,005,695 2.0% 40.4% Municipal Court $1,371,371 2.2% Finance $7,377,003 11.9% CED $2,480,019 4.0% Utilities & Engineering $662,824 Public Works 1.1% $9,369,822 15.1% 2013 GENERAL GOVERNMENT EXPENDITURES BY CLASSIFICATION $61.9 Million Supplies Salaries & $2,679,937 Benefits Capital Outlay $44,731,814 $15,000 Other Services & Charges $6,624,539 Intergov't Fund Services $5,521,477 Debt Service $87,109 Interfund Pymts for Svc $2,255,579 GENERAL GOVERNMENT BUDGET OVERVIEW ➢ Started with Projected $1.5 Million Deficit ➢ $61.9 Million = $1.4 Million /2.4% Increase ➢ Major Incremental Cost Elements • YPPA Labor Contract $614,000 • IAFF Labor Contract $385,000 • Medical Plan Increase $600,000 ➢ Revenue Assumptions • 1.75% Property Tax Growth • 1.5% Sales Tax Growth • Utility Tax Increase 3.6% Average on all Utilities BUDGET BALANCING STRATEGIES ➢ Institute 2% Position Vacancy Rate ➢ Wage /Benefit Concessions - from represented and unrepresented employees. Subject to negotiations. Failure to achieve these savings will require unilateral reductions of $304,000 ➢ Attrition of 3 Positions — Saves $163,000 • AA - Community Development • DA II - Public Works • Delay IT Position Replacement ➢ Reassign 3 Airport Rescue Apparatus Firefighters to 3 existing vacancies to cover Airport ARFF on P/T or OT basis — saves $220,000 KEY STRATEGIC PLAN INITIATIVES ➢ Public Safety • Expand Police Gang Unit • Transfer two officers from Community Relations • One other from Patrol • Hire two Officers • Backfill Community Relations with two civilian Community Service positions • Total Cost: $328,000 KEY STRATEGIC PLAN INITIATIVES • Indigent Defense • Supreme Court mandated maximum indigent defense caseload workload of 300 — 400 cases. Current City Prosecutor caseload average is 1,500. • City Currently contracts for 5 Public Defenders at $475,000 • Projected need for 7.5 more public defenders at $700,000. Total defense cost of $1,175,000 • To reduce cost impact, City will employ Prosecutor Charging Unit and Pre - Filing diversion program. Reduces case load by 40 %. — Need One new City Prosecutor at $115,000 — Need not 7.5 but just 3.5 public defenders at $347,500 KEY STRATEGIC PLAN INITIATIVES • Commercial Fire Code Inspector Services • Two Fire Code Inspectors • 4,000 commercial buildings • Cost of $165,000 /offset by fee • Purchase Fire Engine on a Lease Purchase - annual cost: $40,000 ➢ Economic Development • Economic Development Manager - Cost: $122,500 • Special Events - Cost: $100,000 • Airport Commercial Service Consultant - Cost: $30,000 (Yakima County to contribute $30,000) KEY STRATEGIC PLAN INITIATIVES ➢ Built Environment • Road Investment • 802 line miles / $600 million asset • Average PCI score 54 • $5 million bond - $350,000 debt service • 28 lane miles for grind /overlay improvements • Consider $20 or $40 car tab fee election • Generate $1.0 to $2.0 million annually for road improvements • City Survey - 50/50 support • Graffiti abatement Volunteer Coordinator - Cost: $15,000 GENERAL GOVERNMENT FUND BALANCE / RESERVES ➢ $9.9 million or 16.1% (58 days) ➢ Goal 60 days or 16.6% based on GFOA policy ➢ Restricted to one -time unforeseen expenditures of an emergency nature (e.g. natural disaster, catastrophic occurrence, liability judgment) CAPITAL HIGHLIGHTS ➢ MLK Grade Separation: $12.1 million ➢ Road Bond: $5.0 million ➢ Automated Meter Reading — Water & Wastewater: $4.2 million ➢ Industrial Waste Line - Wastewater: $2.2 million ➢ Water Treatment Plant Lagoons: $3.0 million ➢ Wastewater Treatment Plant Upgrade — Anaerobic Digester & Electrical: $6.5 million ➢ Replace 12 Police Vehicles ➢ Replace Street Equipment — Roller, Asphalt Paver, 10 Yd Dump Truck and Crack Sealer ➢ Franklin Park — Parking Lot: $150,000 FY 2013 BUDGET SUMMARY ➢ Started with $1.5 million projected deficit due to declining revenues and personnel costs ➢ Balanced budget ➢ Focus on core services and Strategic Priorities Infrastructure investments of $54.8 million for roads, utilities and rolling stock ➢ No service reductions 1 Distributed at the Meeting 1 t0 i43 J City of Yakima 2013 Proposed Street Resurfacing Projects Name Section ID From To Section SURFACE True Zone _ PCI Cost Rank Area Tieton Drive Tiet4000W 4000 3200 M AC 117700 18 27 $402,534 Nob Hill Boulevard NobHL100E 100 1000 P AC 100320 6 29 $343,094 Summitview Summt5600 5600 4800 P AC 150800 22 29 $515,736 r Avenue W 40th AVenue 40thAv600S 600 (Tieton) 130 (Summitview) P AC 132500 19 31 $453,150 64th Avenue 64tAv2600S 2600 (Ahtanum) 2000 M AC 147200 13 32 $503,424 (Washington) 1st Street lstSt1800S 1800 (Mead) 1400 (Nob Hill) P AC 192000 7 35 $656,640 6th Street 6thSt10N 10 (Yakima) 720 (H St) P AC 200000 1 35 $684,000 Fair Avenue Fair1800S 1800 (Mead) 1400 (Nob Hill) M AC 114400 7 35 $391,248 16th Avenue 16thAv600N 600 1100 (Madison) P AC 171600 17 38 $586,872 (Englewood) Walnut Street Walnut100E 100 (1st St) 300 (3rd St) M AC 36400 4 40 $124,488 Walnut Street Walnut300E 300 (3rd St) 600 (6th St) M AC 64400 4 40 $220,248 Washington Avenue Wash100E 100 120 M AC 24000 11 41 $82,080 $4,963,514 City of Yakima - 2013 Proposed Street Resurfacing Projects I • Woodward West Rd n / 7r he 5 Rd 12 : i:n P y - . . •P _ . -'- - )� ' F d - 6P Rd � , r S. I "� , o @ 1: frit, 4 • f' k rk ;.t` Kris - i 4 .r �.��' _ x s la , n R q a .__ _ _ _;' - 1 � • _ °'+ View Dr _ . rh o C - , 0. c;e• C., River RA rn s ., q t rnr4 c, m -7. £ I S t ti 'Rd a v Castlevale Rd Fruitvale lvd y scenic n y - S Gen \ C 'Ctt 4 i Q of C r p,J e Engle•.voorl Arse Z E�-tn i_O 1 Roza Hill Dr - %a ■',I '- D ' + Yakima „e errace H fD ��' cote Ave W Lincoln Ave Yaktm z a He'.. 0, Dr / Kru r ij3 -- - Surnmitview Ext Rd Summitview Ave - �w Summit i w Ave +�' P rk ` Yakima 4 PU t a� ? Country O W W Yakima Ave , J , Orchard Ave vY ChestrtutAv4 L ,, Ra Club c r_ m- v a CA aklma Q as Ti eton Dr m d 4. Tieton Dr FtFnklin v Part. a Sportsman AV m ik'ast.tr•c a < d ' r ' , at at FJrk. 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Postma P..rl 24 Ahtanum Rd Ahtanum Rd , W Ahtanum Rd Union ^ Bell Rd Maotea E r_h art on Ro cc Gap - o e FI... w rt E 5 BeattcfieneRd - w 24 WA - I ' LL I 7 3 mi °' tdccu Ilou h R N c Map Disclaimer Information shown on this map is for planning and illustration rposes only, The City of Yakima assumes no liability for any et o ts,,Onsi Copyright 2011 Ci of Yakima, Washington. All rights reserve g = +h City g or inaccuracies in the inlonnat,on provided or for any action taken, or acliog, taken by the user in reliance upon any majs or informatlor: provided :VI e nr. Crcated: Monday, Oct. 15, 2012 at -2:45 PM - '� P.