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HomeMy WebLinkAboutAgenda Packet 08/30/2011CITY OF PORT ANGELES Special City Council Meeting Work Session / 2012 Budget Commissioners Meeting Room / Clallam County Courthouse August 30, 2011 at 5:00 p.m. 1. Teambuilding — City Manager 2. Budgeting for Priorities Update — City Manager / Finance Director 3. Council Priorities (information e-mailed ) — City Manager / Finance Director 4. Program Scoring (information e-mailed) — Council / Staff 5. 2012 Preliminary Budget Projections — Finance Director 6. Budget Options: Long -Term vs. Short -Term — Finance Director 7. Where Are We Now? — Finance Director 8. Electric Utility Rate Structure Options — Public Works & Utilities Director 9. Budget Calendar (information e-mailed) — City Manager 8130/2®11 WORK SESSION The 20-12 Budget x..; Special City Council Meeting August 30, 2011 City Manager - dent Myers MAJOR FACTORS For a successful Budget Process MAJOR FACTORS Recognizing the Challenges • Teamwork * Communications • public Involvement and Input Prioritizing Programs and Services CHALLENGES In Developing the 2012 Budget a;. 8/3®/2011 2 t 0 F, CHALLENGES • Preliminary 2012 General Fund Budget about $900,000 deficit + Decrease in financial support from State and Federal governments • Pressure from citizens to reduce costs while maintaining services CHALLENGES • Revenues flat while costs continue to increase + Aging infrastructure requires continued fund9ng commitment - • Union negotiations continue - Two remaining without agreements 5/30/2011 3 i M C FGAR, 1 UT I � Respect and understand roles and responsibilities "O�� WOW M ■ Critical for Council and Staff r Tough decisions needed to balance the budget • Build on process started last year • Review budget reports carefully • Ask questions and make suggestions early 8/30/2011 4 TEAMWORK • Council — Policy maker — Focus on major issues, priorities, and community needs • Council -Key Guidance -- Provide direction on supplemental budget requests ■ Council — Final decision maker -Decide what programs are in the final Budget TEAMWORK • Staff - prepare preliminary budget based upon Council priorities and estimated revenues • Staff - provide scoring on programs and services by each department • Staff — provide supplemental budget requests for Council consideration 8/30/2011 5 8/30/2011 COMMUNICATIONS The Key to Success - Open, Clear and Consistent COMMUNICATIONS • Clear, consistent communications involving Council, Staff and the public is key to success • Council questions and written responses • Public comments and questions ■ Employees • Communicate early in budget process PUBLIC INVOLVEMENT Needs and Interests Are Critical PUBLIC INVOLVEMENT • Public needs and interests are critical • Public hearings — September 27, November 1, November 15, December 6 Public comments -Other Council Meetings Use of the 2©10 Survey • City represents almost 20,000 citizens 8/30/2011 P1 PRIORITIZING Programs &Services * Budgeting for Priorities - Important process to help make difficult budget decisions -Scoring of programs and services may not be totally satisfactory to everyone - Intended to be fair and consistent. - Will be fine-tuned as budget process proceeds 8/30/2011 8 A 8/30/2011 Questions or Comments? -09 (a P�po��I�y Bum s c u s,�� Presented by: Yvonne Ziomkowski, Finance D - .fY _ CP August 30,2011 - _ v- . - _ i r.._.•r . . - • _;� . - - ;' � - '•�'`'•�' - 'ate . 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'✓i- _ ::�L'=.:a.. - �..c _ - _ _ - _ _ - •L'r - t.__ f _ i • Today's Focus • Budgeting for Priorities Update • Council Priorities • Program Scoring • 2012 Preliminary Budget Projections'I • Budget Options Long-term vs. Short— term • Electric Utility Rate Structure Options • Budget Calendar �I Budget*ing Priorities BOO �fi�C?C� Q Whmt ara them das'Oira,7--d [na- Tone TasuRcs- r Budgeting _Ferformance .- I The focus is on blame and credits Do your job well Measure what you do Measure activity in every unit and roll these measures up to create an organizational measurement infrastructure The focus is on learning Create great results Measure what citizens value Choose a few key bottom line measures of the value the organization creates. Ask subordinate units to develop measures of ways they contribute to that value Be clear about your role and turf � The boss is the best judge of our work Impose the best way of doing things from the top down Measurement is used to find people to reward or punish Be clear about the results you are seeking to create Those whom we serve are the best judge of our work Workers are empowered to experiment on ways to improve performance using measures as the yardstick of success Measurement is used to help everyone learn Budget Focus � • Alignment between citizen survey and budgeted � spending Maintain an affordable price of government while meeting citizen needs and expectations • Maintain a strong financial position while providing the community with a sustainable level of service • What programs should we maintain • Establish measurements to determine success Results should be "Evidence — based" r- ZL= oRe��u c ndnicmtars 0 Z -/- D)' 0 0 clommun�CY7 urvey R -esu 9 onudget 2vcrmceg,Nes Score Programs -How?/Why? • Scoring assumptions • Programs were evaluated and scored by departments • A "value" was applied based on evidence of a programs influence on achieving results • Supplemental requests and.Capital were added to scoring process cappecardso0 IOIEROOO/� Compare City Priorities to personal budget? • M o rtgag R • Food • Utilities • Telephone • Cable • Insurance • Dining out/ Entertainment Allocating dollars • How many priorities can we afford? • Focus on results o Will vision be achieved? Concentrate on core services • Understandable and transparent evaluation process • Alternative service providers? • Cost vs. benefit We must ask ourselves... • Have we adequately addressed the citizen survey? • Public safety �OO �]iu G^trilG�l�tl�C�ai�C� • Infrastructure p�,n��,Q�� ��� • Street maintenance • Street lighting • Animal control 0. 0, • Public restrooms • Support for tourism and marketing • Business attraction and retention • Recycling 0 Ba anc�ng the 20 2 Bu aget, 0 0 0 Pro�oro�to�xe programs to prolVD-71 0 , 0 the most va- ue to t h- e C�tMze, I nr - - S- What Changed Th*s Year7. • Revenues II Expenses - - -hat Qt h chanorgad- n � sypII7 �p ������'Gq�--4,--t t s- o - x �. vatL s � i r"� t �s rte" y� f'e, , f r t"� ues -ve n s e- ,--,d ;O_:' `'Y. c-, t-, ing oe e. +�% re , C ---L --- - sr1-2 M0 a or Revenue Assum tionsTaxes Property Tax $4,092,789, $23K increase • New Construction $ (OM - $23K increase • Continued higher collection of revenues • Consider 2% Levy increase = $80K (not included in budget) Sales Tax :$2,860,000, $37K decrease • Decrease for Dealership • Increase for Nippon project - $50K estimate • Conservative increase for slow economic growth Utility Taxes $3,742,445,$130K increase • No Nippon closures • Electric rate increases — 2012 Revenue Assumptions I, State Shared Revenue ' Gasoline Tax o $403K or $21.15 per capita (down $ I K) • Profits of Liquor Board and Liquor tax $214K or $11.20 per capita (down $12K, previously 12.36 per capita) Criminal justice no change f Other Revenue • Building activities ~ I OK increase • Grants — $175K decrease $36K Public Safety decrease $139K Community Development decrease • Gambling taxes � $2K increase 2008 Gambling tax revenue $185K* now estimated at $25K for 2012 • Interest on investments $37K decrease Implemented changes 2009 - 2011 — Labor -related • Reorganizations • Reduced OT M • Decreases in seasonal labor cost Temporary hiring freeze • Wellness efforts to reduce health care costs • Grants — COPS, Economic Development t • Change to PPO health insurance plan for AFSCME members � • No COLA in 2011 io 20 12 Budget Assumpt�ons SOL T t -eZ 57. v" z FF >0% COLA pmolm's"affy budget estimat ------------ cz No iWl >0% COLA pmolm's"affy budget estimat ------------ Challenges - Revenue& ExDend'l*tures (GF & ST) 700 tv 600 500 400 300 200 100 0 2012 Salary Increase is 2012 Benefit Increase ® 2012 Salary Increase Property 201 2 Budget Assumptiolns"""� Other Cost Increases • Munic 4 1pal Court $134K • Equipment Service e Charges i29K ($3.44/gal plus 12% ES overhead for total $3 85/gal) o $0. 10 increase over 2011 • Medic I Contribution $385K - 3%, $11 K • Street Contribution $170K — 2%, $4K Where are we now7* • Economic Development • Cultural Resources • REET General. Fund Summary ------ ------ ------ ------ ------ ------ ------ ­ ------ ------ ------ Discussion: Priorities to balance budget. Long-term solutions based on Priorities. What services can we afford to keep? I...... ...... ...... ...... ...... ...... ...... ...... ...... Net of BTOF project 1- $300K General Fund GENERALFUND 2010 otal Revenue 17' 509,805 Expenditures c I P 3801000 Operating Expenditures 1516427844 Total Expenditures 17902 ,544 'ariance * 487.161 2011 B 2011 Est 2012 17 592,334 17)993J12 17,938, 399 4251000 177582 7 334 18.007.334 Ire Negative variance means use of reserves will be necessary 2012 Expenditures exclude $300K for BTO P prviect 4 598,174 18,548,211 18.548.211 810.'112 ■ M M Mh T e e h S Pree o f u n cnjg, 0 C Expenses - $256K Increase Salaries &Wages - $312K Benefits — $254K Supplies — $109K Charges for Services - $105K Property Insurance - $ I OOK InterRov./Capital — ($624K) ' 0 1 v- 2011 A 9 Reserves o nearly 6 0 1o} capital k 120j( General Fund Projections 24 a 23 0 22 21 20 19 IN 17 2311 2+12 2013 2014 2015 2016 2017 �lRevenues omn=Expenses Reserves 6 4 2 0 _2 i4 -6 r8 .10 -12 -14 LM". Street Fund STREET FUND 2010 2011 B 2011 Est 2012 Revenue: Program Rev. 135531217 11549,557 1,5387383 1,490, 272 GF Support 1703000 1661000 1661000 170$000 Total Revenue 1,723,217 117157557 1,7041383 116605272 Expenditures C I P 1501000 - 300X0 - Other Expenditures 175887255 11715,557 1,773,810 1,872,857 Total Expenditures 1,738,255 11715,557 29073,810 198729857 ariance * (15,038) - (369,427) (2122585 Negative variance means additional GF support or use of reserves will be necessary PENcoM 2010 2011 B 2011 Est 2012 Revenue: Program Rev. 118731193 118581612 212741574 118307645 GF Support 2821476 2821476 2521476 2861682 Total Revenue 21125,669 21111,088 21527,050 2,116,327 Expenditures Capital 1661250 - 4127670 - Other Expenditures 210441112 2,198, 088 212207447 27280,138 Total Expenditures 2,210,362 25198,088 216339126 2,280,138 ariance * (84,693) (879000) (106,076) (163,811 * Negative variance means increased user toe charges or use of reserves a - 0 MA 4M 11-141:, ISIF0 Med*lc I Fund MEDIC I 2010 2011 B 2011 Est 2012 Revenue: Program Rev. 11 087, 270 171457 290 1,127, 390 121007805 GF Support 300, 000 374, 000 374, 000 385, 000 Total Revenue 11447,270 1,519,290 1,501,390 114859805 0tal Expenditures 19453,414 135193290 11508,759 135299427 arianee 9144 - 7 369 (43,7622 * Negative ,variance means additional GF support or use of reserves will be necessary -ice 4. Econo mic Development ECONOMIC DEVELOPMENT Revenue: Interest on Investments 106, 286 Support from other funds 1251000 Total Revenue 2311286 Expenditures Capital 259730 Other Expenditures 8291798 Total Expenditures 15089,528 ariance * (858.242 U 2011 B 2011 Est 2012 1133787 1251000 903508 `I25,000 601581 2651000 2385787 2153508 325,581 1, 000, 000 110001000 5001000 5767814 587) 301 5701054 1,576,814 1,587,301 1,070,054 1.338,0271 (1.371.793) (744.473 Cu:ltural Resources CULTURAL RESOURCES 2010 Revenue: Intergov, Environmental Svcs 380 Interest on Investments 51441 GIF Support - Total Revenue 87821 vital Expenditures 2383540 ar ance * (2319719 2011 B 2011 Est 2012 81435 37720 2,503 1407000 140,000 - 1481435 1431720 2)503 249.459 158.818 15.098 158.3{65 Revenue: Taxes Interest on Investments Total Revenue otai Expenditures ariance * REST 1 & 2 227:420 11 ,662 239,922 455,7,63 216. ■ 31 2911 B 2011 Est 2+12 240, QOO 137536 240,000 67843 2401000 41747 253,536 246,843 2447747 150,136 409136 398.460 103,400 (153,293) (163.713 levenues-designated For projects throug h 20 . . . . . . . . . . . -Z. 7: 7: -7 Bud--etAssum.tIolls Proposed ases 7 _7 How do we close -- ­­ 7; 7­' the gap? The nevt C. step I s to �7 F, 73, review prioritization Priori' t W: information to identify what 7 f t we can zf programs I<eep, a or to K7 7 ... . ........ ..... S� ­7 LSM Staff will review supplemental requests internally to reduce total requests by 75%. The remaining supplemental requests will be brought to Council for consideration. III. I II LSM Staff will review supplemental requests internally to reduce total requests by 75%. The remaining supplemental requests will be brought to Council for consideration. H �'� + i. ' F. Y, +x *i .' �•-.. -fir *,.'iptions to Consider Long ..Term A proach • Eliminate low priority services • Labor contracts & related issues • Health insurance —change in insurance plan and employee contribution, wellness options • Other pay — review longevity, out -of -class • Seasonal labor —cut/decrease will result in lower level of maintenance or services o Eliminate COLA in favor of performance increases or eliminate both Property insurance options -M What Level of Cost Recovery? • Park and Recreation • Medic I • Building and Planning Activities • PenCom • Parking Enforcement • School Resource Officer • Downtown Resource Officer • Interfund Charges 2012 Projections and Beyond Current Revenues at R isk • Utility Taxes • Conservation efforts • Businesses at risk Property Tax • Resistance to increase • Tax limitations • Building activity revenues o Growth? Lodging tax support of Park & Recreation Interfund service charges • Reduction of reserves for capital • Initiatives Property Tax • Regular levy options 0 2% Banked = $80K I% Statute = $40K 0 No increase MOM'dw Moo • 2012 Special levy o decrease of $225K, last year of bond payment for Sr. Center/Fire Stn. 2% C7 N 0 in • 2012 Special levy o decrease of $225K, last year of bond payment for Sr. Center/Fire Stn. m po rtant to N ote Changes to special (voted) in the next few years... Sr. Center/Fire Stn. Bonds with a decrease of $225K $166K a rl-a - d fm H TWG- DMO -1 a i[ME mature in 2012 in 2013, and o Approximate annual debt service of $390K * Library Bonds maturein 2015 o Approximate annual debt service of $285K * By 2016, property tax will decrease $670K as compared to 2011 0 o Total of .40 per $ 1,000 Assessed Value 2011 2012 Capital Projects •Reserves designated to capital projects o Lauridsen Bridge - $750K * $250K GF * $500K REET 0 Waterfront Project - $750K ,a $300K GF * $150K EURED * $300K Street me� 11111atrq o $300K Criminal Justice now GF Possible Projects 0 215 S Lincoln (Historical Restoration) o Civic Field improvements • Cross town truck route Major street improvements r I 8th St r Overkay PortAngeles. n, INCt �,% j %f y�/ip. VN WTO D AR 101 ','f�' I' COO ���[��LQ`� �O[� (DIP ViB =77 z% L Lr J Continued Focus on Long -Term Solutions • Sustainable • Improve services and infrastructure • Some long-term solutions may include: • Transportation Benefit District • Criminal Justice & E91 I revenues - (telephone 20 cent tax or sales tax) • Focus on economic development, job creation, and business retention • City/county and other agencies cooperation • Continue to include citizens (survey, informal gatherings, Farmer's Market) • Ensure core services can continue without interruption • Increase communication between all stakeholders Next Step... •Use citizen input as a major guidance in developing a budget for priorities • Inform and engage Council members in the budget process and to reach consensus through prioritizing • Fully inform public and city employees on budgetary issues and impact k t Calendar 'bud- ge • September ~ Internal budget review with City Manager • September 27 ~ Special Council meeting to present the 2012 preliminary budget and discuss budget policies and priorities. • October 4 ~ Utility fee review • October 4 ~ Adopt 2011 amended budget • October 25 � Special Council meeting to conduct a work session regarding the 2012 Preliminary budget and discuss budget policies and priorities. (if necessary) meetingsSeptember Council Bu dfget Calendar • November I Preliminary Budget available to public • November I Public hearing on revenue sources and property taxes. • November 15 First public hearing on proposed 2011 budget. Levy property taxes. December 6 ~ Second public hearing on proposed 2012 Budget,. Adopt 2012 Budget. L �uestions OY 10-RT Date: August 30, 2011 To: CITY COUNCIL From: Glenn A. Cutler, P. E., Director of Public Works & Utilities Subject: Bonneville Power Administration Wholesale Electric Rate Increase Summary: The Bonneville Power Administration's new Tiered Rate Methodology is estimated to increase the City's purchase power costs for its retail customers by $840,000 or 9.0%. A retail rate adjustment will be necessary and staff is seeking guidance from City Council on whether the increase should be applied to the basic charge, energy rates, or a combination thereof. Recommendation: Following a presentation, provide direction to staff on whether the increase should be applied to the retail basic charge, consumption charge, or a combination thereof. Background/Analysis: On July 26, 2011, the Bonneville Power Administration (BPA) released its final record of decision on wholesale power rates under the new Tiered Rate Methodology (see attached press release). The Tiered Rate Methodology established a new "take or don't take but pay" monthly fixed charge, new load shaping charges and credits, and a new approach to charges for peak system demand. Staff estimates the new wholesale rates will increase the City's purchase power costs for retail customers by $840,000 or 9.0%. Staff will be providing a presentation at tonight's meeting and request direction on how increased costs should be applied to monthly retail basic charges, energy rates, or a combination thereof. A key component of the consideration is the new high wholesale monthly fixed charge and the new retail revenue risk. Staff will also return to the Utility Advisory Committee at its September 13, 2011 meeting to present the Electric Utility rate study, which will include the impact of the increased wholesale power costs and other cost increases, if any, on retail rates. The proposed retail rate adjustment will need to be effective on January 2, 2011 to maintain the fund in a financially prudent manner. Attachment: BPA adopts new wholesale power rates press release NACCOUNCIL\FINA L\BPA Wholesale Power Rate Increase - Retail Rate Options.doc BPA News - BPA adopts new wholesale power rate Bonneville Power Administration http://www.bpa.gov BPA Home y BPA News 1, BPA Adopts New Wholesale Power Rate t. Newsroom Home ret BPA adopts new Wholesale s power rate I, Newsroom Archive This week, the Bonneville Power r, News Releases Administration adopted a 7.8 percent ;I4; ,. Media Contacts average wholesale power rate increase. The new wholesale power Y., r, Media Library rate supports needed improvements to •,�:::.� , ••��- F�,}�,pI ensure the region's 31 federal dams and one nuclear plant can continue to p outagel5tornn Info r0ably deliver carbon -free, affordable ;, E_ •��� _i�=':t.`•a � power to Northwest homes and } 'I`'� HotlCold Weather businesses, BPA's transmission rates Grand Coulee Spillway Resources are holding steady or decreasing, while BPA is reducing its renewable energy k E -Mail Arerts integration rate slightly. The new rates take effect Oct. 1, 2811, Power Rates BPA was able to hold down its 2012 - 2013 wholesale power rate increase by: D Relying more heavily on its ability to borrow from the U.S. Treasury, instead of replenishing its reserves, to address unexpected financial risk; h Adopting a rate adjustment mechanism that would increase rates if its reduced reserves run out, and P Settling a long-standing residential exchange program dispute over how benefits from the federal hydra system are divided between public and investor-owned utilities. "We need to make careful investments to protect the substantial value of the Northwest power system, but we also need to keep rates as low as possible, especially since the economy is still struggling," said Steve Wright, BPA administrator, "This rate strikes a balance that allows us to replace and refurbish aging equipment at the dams and Columbia Generating Station and maintains the momentum of our efforts to protect endangered salmon." BPA also is able to announce that, due to this year's above average water conditions, there will not be an additional within -year rate increase for fiscal year 2012. The initial rate proposal included a ane -in -three chance that such a surcharge would be necessary, based on BPA's financial performance in 2011. BPA power customers will operate under new long-term contracts for the first time this rate period. The contracts are a result of BPA's multi-year regional dialogue process. Under those contracts, BPA customers receive a designated amount of BPA power at the new lowest cost, tier one wholesale rate. Any power necessary to serve their energy needs beyond that amount will be purchased from BPA at a slightly higher rate or from the customer's own source. "This rate period marks a new era in BPA's relationship with its customers," said Wright. "We are pleased that the transition to a new business paradigm is proceeding smoothly with very little controversy In this rate proceeding." The new wholesale power rates would affect Northwest consumer -awned utilities such as public utility districts, tribal utilities, cooperatives, municipalities and federal entities. BPA sells power to investor-owned utilities and direct -service industries under different rate structures. The main costs behind the rate Increase are: Rehabilitation of the aging federal hydroelectric system, which includes large components such as turbines and cranes that are beyond their planned design life. F Fuel purchases and repairs at Columbia Generating Station, the region's only nuclear plant. BPA funds the plant and markets its power output. ? Investments to protect Northwest salmon and steelhead as outlined in the biological opinion on federal hydropower system operation and Columbia Basin Fish Accords agreements with three Northwest states and seven Native Page 1 of 2 Stay connected Facebook IIS I Twitter You YouTube Media contact See our media contact info. http://www.bpa.gov/corporatefBPANews/ArticIeTempIate.cfm?Ar,ticleId=article-2D 11072... 8/19/2011 BPA News - BPA adopts new wholesale power rate American Tribes. The impact of the rate increase will vary by utility because no utility is average. Each utility has a unique profile that determines when and how it receives its electricity. Because of that uniqueness, utilities will experience increases that are larger and smaller than the average. How the BPA wholesale rate increase will affect retail customers will be determined by each utility. Transmission Rates Last December, BPA and its transmission customers reached a partial settlement to avoid a transmission rate increase. Under the settlement, BPA will use some of Its financial reserves to cover transmission costs, keeping rates level in fiscal years 2012 and 2013. BPA transmission rates are separate from wholesale power rates and apply to Northwest utilities and others that transmit electricity on high-voltage BPA lines. However, the December settlement did not cover the costs of integrating wind power and other generation into the grid or use of the Montana Intertie. The Montana Intertie transmission rate will decrease by 54 percent. The 500 -kilovolt power line integrates generation from Montana's Colstrip power plant into EPA's transmission system. BPA also is adopting a separate rate for the cost of providing services to non-federal thermal resources connected to its transmission system to ensure equitable treatment of thermal and variable energy resources. Variable Energy Resource Balancing Service BPA also announced it will reduce by 4.7 percent the rate for integrating wind onto its transmission grid. The total cost of integrating more wind is increasing, but the reduction is possible because of some additional geographic diversity of the wind projects connecting to the BPA transmission system and modifications to the calculation of necessary reserves. Today, there are more than 3,500 megawatts of wind connected to the BPA transmission system. This is equivalent to the installed capacity of three typical nuclear plants. By Sept. 30, 2013, the end of this rate period, that amount is expected to grow to approximately 5,500 megawatts. BPA anticipates having the capability to integrate the projected wind coming onto the BPA system through 2013, but is rapidly running out of system Flexibility. BPA has developed mechanisms to acquire more balancing reserves if the growing amount of wind outpaces BPA and its customers' ability to integrate it. If the need for more reserves arises, BPA has established mechanisms in this rate proceeding to pass those costs on to the customers using the service. In addition, BPA is providing options for wind generators to obtain additional service or to lower their cost by committing to adjust their schedules every half hour. If you believe information on this site is missing or in error, please Submit that comment here. Page 2 of 2 NOTICE: This site is owned and operated by the Bonneville Power Administration, United States Department of Energy. Use of this system Is monitored by system and Security personnel. Anyone using this system consents to MONITORING of this use by system or security personnel. BPA Privacy Policy http://www.bpa.gov/corporate/BPANews/ArticleTemplate.cfm?Articleld=article-2011072... 8/19/2011