The URL can be used to link to this page

Home My WebLink AboutAgenda Packet 09/24/2013 2013 BUDGET REVIEW & 2014 BUDGET DEVELOPMENT SEPTEMBER 24, 2013 AGENDA Review 2013 Budget 2014 Budget •• StatusDevelopment General FundDeveloping the “Starting •• Line” 2013 Challenges & • Opportunities Revenue Update • 2014 Challenges & • Expenditure Update • Opportunities Current Fund Balance • Short-term & Long-Term • Special Revenue Funds • Implications of Proposed Budget Utilities • Where Do We Stand as of • Now? Budget Review Schedule • GOOD NEWS –UTILITY SAVINGS! Successful refunding produces savings for utility rate • payers Total Savings $373,000; approx. $25,000/yr. • Savings equates to 0.25% rate savings for the Water Utility & • Wastewater Utility What was refunded: • 2003 Water/Wastewater Revenue Bond • 1997 DWSRF Loan • 1998 DWSRF Loan • 2013 GENERAL FUND Challenges & Opportunities • Labor Agreement settlements • New agreements with IBEW, AFSCME, Teamsters Non-Sworn, IAFF • Only open agreement is with Teamsters Police Sworn Officers • Criminal Justice Costs • As of Oct. 1 st, the City is no longer accepting felony diversions • Since 2010, criminal justice costs have increased by over $200,000/yr. • 2 primary cost factors: jail “mandays” & felony diversions • New State budget did not “harm” the City’s operating • revenues as much as projected Liquor excise tax –50% reduction • Public Works Trust Fund low interest loan program suspended for • biennium (July 1, 2013 –June 30, 2015) 2013 GENERAL FUND REVENUES 2013 Balance Balance 2012 ActualAmended 08/31/13 YTD Remaining $Remaining % Budget Taxes: Utility Tax3,810,0914,048,0002,860,8051,187,19529.33% Sales Tax2,783,7432,759,0001,835,181923,81933.48% Property Tax3,630,6784,228,0002,374,7291,853,27143.83% Other Taxes903,9491,048,100336,375711,72567.91% Sub-Total Taxes11,128,46112,083,1007,407,0904,676,01038.70% Charges for Services Allocation to Utilities4,212,0644,725,5003,150,3321,575,16833.33% Other Charges for Services549,440501,425381,357120,06823.95% Sub-Total Charges for Services4,761,5045,226,9253,531,6891,695,23632.43% All Other Revenues (1) 1,860,7051,621,3251,040,436580,88935.83% TOTAL REVENUE$17,750,670$18,931,350$11,979,215$6,952,135 36.72% Notes: (1) All Other Revenue includes Licenses & Permits; Intergovernmental; Fines & Penalties; Miscellaneous Revenue; and Other Revenues 2013 GENERAL FUND EXPENDITURES 2013 Balance Balance 2012 ActualAmended 08/31/13 YTD Remaining $Remaining % Budget Salaries & Wages 9,231,0419,352,8006,102,8383,249,96234.75% Personnel Benefits 3,389,8013,582,0502,376,5271,205,52333.65% Supplies 606,514789,130433,942355,18845.01% Services 2,544,8632,799,8601,637,1911,162,66941.53% Intergov. Svcs./Interfund Pmts. 2,592,5512,412,1501,501,318910,83237.76% Capital Outlay 96,019165,50038,684126,81676.63% Total Expenditures$18,460,789$19,101,490$12,090,500$7,010,990 36.70% 2013 SPECIAL REVENUE FUNDS Lodging Tax (Fund #101) • $10,000 ahead of budget as of August 31st • New rules from State on use and reporting of how Lodging Tax is spent • Street Fund (Fund #102) • Subsistence funding only for day-to-day operations –very little funding for • street repair/replacement Charges to Solid Waste for alley repair impacting solid waste rates • Economic Development (Fund #103) • No currently identified source for on-going replacement funding • Fund balance estimate/actual: • As of 12/31/13 $306,600 • As of 12/31/12$2,460,100 • As of 12/31/11$4,753,200 • Real Estate Excise Tax I & II (Funds #105 & 160) • On-track to make 2013 revenue projections • Very little capacity to take on additional costs • 2013 UTILITY FUNDS Electric Utility (Fund #401)Solid Waste Collections & •• Transfer Station (Funds #404 & Revenues and expenditures are • 405) on-track for 2013 Start-up/testing phase of Nippon • Overall operations are on target • Co-generation plant anticipated with budget will create limited one-time reduction of electric revenue StormwaterFund (Fund #406) • Increased regulatory requirements • Water Utility (Fund #402) • for NPDES Phase II will require Reduced water sales appear to • enhanced spending be indicator of efforts by customers to reduce overall costs Medic 1 Fund (Fund #409) • Growing concern regarding • Wastewater Utility (Fund #403) • increase Medicare/Medicaid Revenues & expenditures on-track • write-offs will drive costs to utility with budget rates to cover operating and capital costs Recovery from City’s prior insurers • should help shorten the Harbor Study surcharge period 2014 BUDGET DEVELOPMENT Developing the “Starting Line” • Preliminary Work in 2012 & 2013 • Adjustments in mid-year 2012 built foundation for balancing 2013 & 2014 • Structurally balanced 2013 without use of one-time “rabbits” • Eliminated 8.5 full-time equivalent (FTE) positions • Impact of Long-Range Financial Plan • Decision making focused on long-term, sustainable revenue • Emphasis on long-term impact versus short-term outcome • Changes in Attitude • Focus on cost reduction+ becoming more efficient & effective • Equipment rental –increased focus on reducing fleet and managing • vehicle/equipment “creep” Sustainability & Replenishment • Need to identify funding for capital repair/maintenance of existing assets • 2014 OPPORTUNITIES & CHALLENGES General FundSpecial Revenue Funds •• Tax RevenuesNeed for enhanced •• dedicated funding for Streets Minimal growth in sales & property • starting in 2015 if City follows tax through with plan to phase Utility tax only General Fund • revenue source that out funding from General meets/exceeds inflation Fund Inflation & cost increases • Utilities • City is not immune to inflation & • cost increases –estimated Gen. Comprehensive view of • Fund utility cost increase nearly combined utility rate impact equal to 1.0% property tax Funding of Infrastructure • increase repair/replacement Limited ability to fully control • wage & benefit costs Need for Medic I utility rate • increase starting in 2015 if City Service demands • follows through with plan to phase out funding from Aging population driving • increased/evolving service General Fund demands New mandates & requirements • Public Records • LONG-RANGE FINANCIAL PLAN Focus on sustainability • Building reserves in General Fund & other funds to buffer • adverse economic times Program & Service plan development in 2014 • How much can we afford to provide? • Service delivery options • City pays + City provides service and at what level? • City pays + other agency provides service • City does not pay + City does not provide service • Capital budget • Need for balance • “Taking care of what we got” • “Building for future and new/emerging needs” • 2014 BUDGET HIGHLIGHTS Changes from 2013 Adopted Budget: • Funding for Health & Human Services eliminated • 2013 funding support was reduced from prior years • Humane Society funding based on revised (reduced) formula • Similar to per capita formula used by Clallam County • One-time savings from AWC Health Insurance • 1.0 FTE position eliminated –Archaeologist • 9.5 FTE reduction since mid-year 2012 = 4.0% reduction of total workforce • Capital: • Governmental spending is expected to be $6.0 million @ (1)New funding transfers from • governmental reserves of $133.3K; (2)Utilities support of $838K; @ (3)Grants of $2.6M ; and (4)Existing balances of $2.7M Utility spending on capital is expected to be just under $6.0M @ (1)$726K in grants; • (2)$4.2M from utility reserves: and (3)$2.5M of existing reserves Equipment Services: • Net reduction of 2 vehicles starting in 2014 • Will be undergoing comprehensive review & analysis in 2014 • 2014 WHERE DO WE STAND? General Fund • Preliminary proposed budget is esentiallybalanced • Structural balancing in 2012 & 2013 set stage for 2014 • Department head approach –cost containment • 1x savings from conversion of AWC Health Plan • 1.0% property tax increase included • No new positions added for 2014 • Reduction of vehicles/equipment will translate into reduced • or limited cost increase to General Fund & Utilities 2014 WHERE DO WE STAND Special Revenue Funds:Utilities •• Lodging TaxCost of Service Studies •• Funding for Vern Burton Will provide comprehensive •• Rooflook at combined rates + infrastructure funding Tourism Development focus • Capital Projects • Streets • CSO Project • Minimal funding for street • Phase I on schedule for repair/renovation • completion by year-end No identified funding for • Economic Development • Phase II Limited ability to provide Harbor Study •• project funding and/or Surcharge revenues on • grant match track with budget Solid Waste Landfill • Landfill Bluff discussion with • Clallam County on regional approach to regional problem 2014 PRELIMINARY NUMBERS 2013 Variance from Variance from Preliminary 2012 ActualAmended 2013 2013 2014 Budget BudgetAmended $$Amended % General Fund Revenue17,750,67018,931,35018,929,100(2,250)-0.01% Expenditures18,460,79219,101,49018,890,150(211,340)-1.11% Net(710,122)(170,140)38,950209,090-122.89% Fund Balance/"Reserve"4,967,5304,797,3904,836,34038,9500.81% Total -- All Funds Revenue102,798,111116,251,817101,342,650(14,909,167)-12.82% Expenditures112,322,255137,693,781128,930,781(8,763,000)-6.36% Net(9,524,144)(21,441,964)(27,588,131)(6,146,167)28.66% 2014 BUDGET CALENDAR Public Hearing 10/15/13on Property Tax • 10/18/13Budget delivered to Council • 10/22/13Budget Briefing #1with Council (work session) • • Public Hearing 11/05/13Property Tax Ordinance &1Reading st • 11/12/13Budget Briefing #2 with Council (work session) • Public Hearing 11/19/13Property Tax Ordinance –& 2 nd • Reading/Adoption; Public Hearing 2014 Budget Ordinance & 1Reading st 11/26/13Budget Briefing #3 with Council (work session, if necessary) • Public Hearing 12/03/132014 Budget Ordinance & 2 nd • Reading/Adoption fF O:::!!!!!! • City of Port Angeles City Council Work Session Utility Cost of Service Studies September 24, 2013 _ 111;i1 11111 ' ■ �� Ig1 1111 { . s— t ?+gas w� �� 7 = 1 {'{ F—� s I r 1 . ; Discussion Outline liii o Key drivers ❑ Summaries ✓ Transfer Station ✓ Collection ✓ Water ✓ Wastewater Combined Sewer Overflow(CSO) ✓ Electric ❑ Next Steps ID Questions .v FCSS GROUP Page 2 1 ` 14.5,, . 11 F Eta 9; 1 " Key Drives , .r:i. =-.. ❑ Transfer Station ✓ $19.5 million Land Bluff Stabilization project ❑ Collection ✓ Transfer station cost increases ❑ Water ✓ Reduced consumption ❑ Wastewater ✓ Capital needs ❑ Electric ✓ Bonneville Power Administration >fCSGROUP a Page 3 Average:`Residential Impacts g j-c ; Ullf Existing OM Solid Waste Collection $ 38.05 $ 41.14 $ 43.50 $ 45.97 Water 36.11 38.10 40.10 42.20 Wastewater 44.30 48.80 53.50 57.58 Wastewater-HSM 4.50 4.50 4.50 - Wastewater-CsO 20.10 20.10 20.10 20.10 Electric 110.67 117.86 125.52 132.74 Medic I 5.12 5.43 5.43 5.43 Total $ 258.85 $ 275.93 $ 292.65 $ 304.02 Monthly Increase $ 17.08 $ 16.72 $ 11.37 Percent Increase 6.60% 6.06% 3.89% Notes: Rates may change in 2015 and 2016 Rates shown exclude utility tax:no utility tax changes proposed Solid Waste Collection-Includes weekly pickup and yard waste Water-Residential 5/8"meter with 4504 per month Wastewater-Residential>430ct Electric-Residential with 1.500 kWh per month •>E CS CROUP Page 4 2 COST OF SERVICE SUMMARIES •>FCS GRO Page5 le TS Revenue Requirement Summary I1'[ pan= $81102000 I n,. 7.75% 52,000,000 21.60%— o 56003,000 �� — $5A00LI �_ P $1,000000 — 2013 2014 2015 2016 ®Cash Operating Expenses o Canter 1,01 me New Debt Service =,Aodltorx to Meet Coverage m Post Closure Reserve Transfers —Total&sena Revenue —Total Revenue After Increase o Reduction in tonnage is driving down revenues o New debt service for$19.5 million post closure Land Bluff Stabilization project a Growth in existing O&M and contract costs a Debt service coverage requirements )Fc s GROUP Page 6 3 • Collection Revenue Requirement Summar flfl s4,5C0,000 6.20% 44.000,000 6120% — 6.10% —" 43,500,000 �-- S3,000,000 S2,500,000 Si U 52.000,000 41,Dw,00g 550D(p0 - - 2013 2014 2215 201E -cash Operating 6perses ca.Admrnfstothie Coniroctml(Yard/Recycing) =A Disposal —Total Fisting Revenue —Total Revenue After bcrease • Revenue not sufficient to meet projected needs • Disposal cost increases from the Transfer Station utility along with general and Contractual cost increases causing rate pressure • Fund balance allows use of$953,000 in 2014 through 2019 to phase-in rate increases :)FCS GROUP M Page 7 Wr-- Water Revenue Requirement Summary 1111 s7.000,000 5:25% 5.25% So.oa° 5.50% R.oa $5.000,000 - $4,aaoAao $3Pa0,0co - 52.e00.ca0 50.00Pa0 — S 7013 7014 vas late aaaeCmh Operating&perses rA Easing Debt SeMCe aaae Rate fumed System Reinvestment —Total Edstig Revenue —Total Revenue After Rate increase • Revenue does not currently cover expenses ■ Demands are going down;expenses are increasing faster than rate revenue • Phasing in system reinvestment • Assumes that Clallam County PUD is subject to rate increases •:)Fn GROUP Page8 4 }` , Wastewater Revenue Requirement Summary 5x.000,000 9.00% 56,000,0a0 _ 11.50% 11.00% 55,000.000 G �1111110W1 - -..l $4,000,000 51.000,000 I 'ii;.'J'• $zmgmO — $1,000,000 3i ,•:. 5- 31 _____- x013 20t4 2015 2016 m Cash Operat Ina boernes r_,4 New&Existing Debt Sante o Rote Funded System Reinvestment--Total Em Mg Revenue —Total Revenue After Rote Increase o Revenue does not currently cover expenses o Demands are going down;expenses are increasing faster than rate revenue o Phasing in system reinvestment o Excludes costs associated with the Harbor Study Mandate(HSM),which are funded by a separate surcharge(effective until July 2015) 5 FCS GROUP Page 9 r CSO Revenue Requirement m Sumary i 5x500 om 0.00% 0.00% 0.00% ammo 51500.000 — — — %Aro m 5500.000 $ — zm1 2014 1015 1006 mNew&along 0 .5Se —TflIW.anuReemue —TUtdanmucMter,lime increase o No rate change through 2016 o Phase II CSO debt service in 2017 (PWTF loan) 'S)FMCS GROUP Page 10 5 o ■ W Electric Revenue Requirwerreht Summary v. 25,000.000 6.50% 5.75% 6.50% _ O.Oa% 20,000,000 - ^"-- - 15W0.000 10.000000 �� 5A0opoo - 2013 2014 2015 2016 Cash Operating Expenses IN=Powe s-E>tting Debt Service a Rate Funded System Reinvestment c Reserve Funding -Total EtSng Revenues -Told Revenue After Increase • • Note:Comparison does not include costs or revenues associated with Industrial Transmission. o Increases in BPA wholesale power costs o Loads are flat through the forecast period,while expenses are increasing o Reserve levels o Phasing-in rate funded system reinvestment ,FCS CROU.P Paget] • IeT Average Residential!Bill Irnp cts Nil o Existing ECO3 W O'- Solid Waste Collection $ 38.05 $ 41.14 $ 43.50 $ 45.97 Water 36.11 38.10 40.10 42.20 Wastewater 44.30 48.80 53.50 57.58 Wastewater-HSM 4.50 4.50 4.50 - Wastewater-05O 20.10 20.10 20.10 20.10 Electric 110-67 117.86 125.52 132.74 Medic I 5.12 5.43 5.43 5.43 Total $ 258.85 $ 275.93 $ 292.65 $ 304.02 Monthly Increase $ 17.08 $ 16.72 $ 11.37 Percent Increase 6.60% 6.06% 3.89% Notes: Rates may change in 2015 and 2016 Rates shown exclude utility tax;no utility tax changes proposed solid Waste Collection-Includes weekly pickup and yard waste Water-Residential 5/8"meter with 450cr per month Wastewater-Residential>430cf Electric-Residential with 1,5W kWh per month •FCCS CROUP Page 12 6 le 2014 Impact by Utility , , Oil Medic L $0.31 Sol1 d Wadde ,2% Colebn, $3.09,18% Water, $1.99, 12% Electric, $7.19 ,42% Wastewater, Wastewater- $4.50,26% cso, $,_ ,0% Wastewater- HSM, 5- •0% 2014 Total Monthly Utility Bill Increase:$17.08 S FC s GROUP a Page 13 . »N x Next Steps . _ IIII F _...„„..,..=.,_ f ❑ UAC Meeting October 8 ❑ Rate Hearing October 15? ❑ Second Reading and Adoption November 5? ❑ Rates effective January 1 , 2014 •Q FCS GROUP Page 14 7 QUESTIONS? •:>fa GROUP Page 15 8