HomeMy WebLinkAbout02-Overview-Transmittal LetterOverview
October 1, 2002
To the Honorable Mayor Nelon, members of the City Council and citizens:
We are pleased to present to you the adopted Annual Operating Plan Element (Operating Plan) of the Georgetown
Century Plan for 2002/2003. The Georgetown Century Plan is the comprehensive strategic plan by which
Georgetown strives to enhance its quality of life. The Operating Plan is an outline of the programs and services to
be provided by the City during the coming year. The Operating Plan continues the direction established by our
citizens and the City Council to meet the existing challenges and effectively plan for future needs. It is also an
opportunity to ensure energies and resources are directed to the programs, policies and issues that are shaped by
the Georgetown Century Plan.
During this budget cycle, the Council was faced with growing needs, particularly in public safety and lower than
anticipated revenues from the summer of 2002. Yet, the Council’s primary focus was to continue to fully implement
the Fiscal and Budgetary Policy, adopted last year, to ensure every fund is financially self-sustaining. This was
particularly challenging in the General Fund, where historically, operations were partially funded through utility
subsidies. Sales tax revenues fell as part of the general economic slowdown experienced after September 11, 2001
thus creating more challenges. The 2002/03 Annual Operating Plan continues the implementation plan for full
compliance to eliminate these utility subsidies and establish the General Funds as self-supporting in 2003/04.
Another major priority was to address concerns regarding public safety staffing and compensation. Due to the
increasingly competitive Central Texas job market for police and fire personnel, the City was experiencing issues
with recruitment and retention, primarily due to inadequate compensation. The 2002/03 Annual Operating Plan
includes hiring three additional police officers to assist in both traffic enforcement and crime prevention, as well as
adding three new firefighters to assist in compliance with new state guidelines requiring added personnel on the
scene of structure fires. In addition, this budget implements the first phase of a new public safety compensation
plan to improve the City’s public safety pay scale within the Central Texas market and assist in recruiting and
retaining qualified employees.
Managing Georgetown’s future growth was another priority for the Council, as they worked to maintain the City’s
unique character and preserve its rich heritage. Funds are included in the 2002/03 Annual Operating Plan to
complete the implementation of the Unified Development Code, providing consistent development regulations that
promote long-term quality of life for the community. Funds are also included to implement the Downtown Master
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Budget Process for 2002/2003 Annual Operating Plan
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Plan, which will preserve and enhance the historical downtown area. Development of an annexation plan that
incorporates the benefits and related costs of annexation is also included. The Georgetown Transportation
Enhancement Corporation, the City’s 4B economic development corporation, will address developing a
Comprehensive Transportation Plan to assist in long-term planning for community roadways.
Economic development continues to be a high priority, as funds are included to continue the outsourcing of
business recruitment and retention. During 2002/03, the City’s Economic Development Commission will continue
refining the goals and strategies for the City’s economic development efforts.
Various other priorities included increasing polling places for City elections, updating the Airport Master Plan, and
developing strategies to increase local tourism.
The adopted 2002/03 Annual Operating Plan balances the cost of new programs needed to address these priorities
against the City’s limited financial and human resources.
BUDGET OVERVIEW
Managing the City’s phenomenal growth and measuring
the success of its programs were major goals for this
budget. Because the City continues to grow at a rapid
pace, service demands have also increased, thus
stretching project dollars is critical.
Limited resources along with increased demands make it
important for the City to fund only the programs that
successfully have the most impact to the citizens. The
City continues its project to upgrade its performance
measurement system, which provides criteria to assist in
gauging the success of programs and services provided
to the community. This information is used in future
decision making for new programs and services, as well
as assessing the efficiencies and effectiveness of current
programs.
The 2002/03 Operating Plan totals $88.4 million for all funds. Of that amount, approximately $66.1 million is for
continued operations, $6.9 million for debt service, and $15.4 million for capital improvement projects. Operating
interfund charges/transfers, which include internal service fund transfers, are approximately $5.2 million.
On-going operating costs increased as a result of new programs to address Council priorities, the increased cost of
health insurance for employees and growth related costs of providing utility services. Georgetown Utility System
increased 8.6% due to four new staff positions, as well as increased cost of system maintenance. Planning and
Development and Economic Development decreased 11.2% and 14.9% respectively, as one-time projects in 2002
were completed. Finance and Administration
increased 13.8% due to an additional staff position,
as well as increased costs of fleet and facility
services. Management Services increased 8.2%
due to increased programs and personnel costs.
Police increased 8.4% due to the addition of three
officers, as well as increased personnel costs
related to the funding of a public safety
compensation program. The increase in Fire
Services, due to the addition of three firefighters
and the funding of a public safety compensation
program, was offset by a decrease in fleet cost for
Fire because future fire apparatus will not be cash
funded. Parks and Recreation remained relatively
flat, only increasing for insurance and personnel
costs.
Total Operating Budget per Capita
$2,538 $2,671 $2,775 $2,61 3 $2,752
$2,556 $2,506
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
1997 1998 1999 2000 2001 *2002 *2003
*Pro jected
2002/03 Budget by Function
Operations
59%
Debt Service
8%
Interfund
16%
Capital
Projects
17%
iii
Property Taxes. The City Council adopted a property
tax rate of $0.30261 per $100 valuation, which is a 1.92%
increase over the effective tax rate. While the tax rate
itself decreases from the current rate of $0.30708, the
average homeowner in Georgetown will pay approximately
$16 more annually in City property taxes than they did in
2001/02. The decrease in the tax rate results from
increased valuations on existing property.
Property Values. The total taxable property has risen
11.8%; from $1.9 billion in 2001/02 to $2.1 billion in
2002/03. This increase includes $167 million in new
property. This also includes a 4.7% increase to existing
property values over last year.
Utility Rates. The City conducted an extensive cost of service study for water and wastewater services in 2001 to
ensure cost recovery and the availability of funds for capital maintenance and replacement. A rate model was
developed that is updated during the budget process to review additional costs imposed on the water and
wastewater utilities during the current year.
Wastewater rates increased from $2.70 per 1,000 gallons of water billed to $2.95 per thousand. Increased costs
include the initial costs of line testing associated with Chapter 213 of the Texas Commission on Environmental
Quality’s Edwards Aquifer Protection Program and operations of the new Pecan Branch Wastewater Treatment
Plant. Because 98% of the City’s wastewater service area is located over the Edwards Aquifer recharge zone, the
City is particularly sensitive to environmental mandates. This rate increase is expected to generate approximately
$230,000 in additional revenue to offset the rising cost of maintenance on the system. This is the first volumetric
wastewater rate increase since 1991. Both wastewater volumetric rates and customer charges will be reviewed
again in the upcoming year as additional costs of repairs for implementing Chapter 213 are more fully known.
Stormwater drainage rates will increase from $2.90 to $3.75 to provide Fiscal and Budgetary Policy compliance and
provide approximately $200,000 per year of available capital to correct drainage problems throughout the city.
Previously, the Stormwater Fund did not meet the 1.5 times coverage ratio for its annual debt service payment that
is required in the Policy.
Sanitation rates will increase from $11.75 to $12.50 as a result of increased fixed costs for the City’s contracted
waste service provider, Texas Disposal Systems (TDS). The additional revenue will also fund neighborhood
cleanups and a city-wide brush grinding and storm cleanup program.
Economic Outlook. Although sales tax revenues slowed
after September 11, 2001 due to overall economic
conditions, utility revenues have continued to grow.
Recent indications point to increased activity within the
development community, as the Rivery Towne Center
project completes construction and opens next fall,
followed by other proposed retail developments in the
area. Sales tax revenues are projected conservatively and
are expected to increase substantially with the opening of
Home Depot and a Super Wal-Mart next year. Economic
development activity continues to be a high priority,
working to match desired employers with local needs.
Revenues are expected to remain constant in 2002/03,
with major increases anticipated in 2003/04 and 2004/05.
Assessed Property Valuation
in billions
653
695
1,195
1,427
1,629
1,939
2,100
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
96/97 97/98 98/99 99/00 00/01 01/02 02/03
Existing Property New Property
Sales Tax per Capita - 7.75%
$125
$110
$96$98
$114$113$108
$-
$20
$40
$60
$80
$100
$120
$140
1999 2000 2001 *2002 *2003 *2004 *2005
*Projected
iv
BUDGET HIGHLIGHTS
The major program initiatives for the 2002/03 Annual Operating Plan and beyond are further outlined as follows:
• Georgetown Utility Systems
Managing growth in the City’s utility infrastructure and continuing to prepare for a deregulated electric market
will dominate the resources of the GUS division this year. Two additional field representatives will be added to
inspect infrastructure construction, and a systems engineering technician will provide additional support for the
utilities. A key account representative will be hired to recruit and retain large accounts within the utility system.
The City will add a financial analyst to help support the City’s Capital Improvement Program, as well as provide
additional support on financial modeling of the utility funds. GUS will also assist the Georgetown Transportation
Enhancement (GTEC) in preparing a comprehensive transportation plan.
• Economic Development.
The 2002/03 budget provides for continued funding for the Business Retention and Recruitment (BRR) contract
to diversify the tax base and assist with economic development efforts. A part time staff position will be
upgraded to full time to provide support to the division. A one-stop promotional publication will also be
developed to help promote tourism.
• Finance and Administration
A financial analyst will be hired to provide support for capital projects accounting, as well as assist with on
going rate analysis. The purchase of equipment and funding for the relocation of all departments to the
facilities under construction are also included.
• Fire Services
Fire Services will add three additional firefighters to comply with new regulations and will begin providing
annual physicals for firefighters. An initial phase of a public safety compensation plan, including a step pay
program and increased entry level starting salary, is included.
• Management Services
The City will continue development of its public information program that started last year. A performance
audit of the Airport will also be contracted in 2002/03. A part time staff position at Animal Services will be
upgraded to 40 hours per week to provide more support to the animal shelter. The City will increase polling
places for City elections.
• Planning and Development
The implementation of the Unified Development Code, as well as the Downtown Master Plan, both begun in
2001/02, will be the primary focus of the division 2002/03. The division will also assist GTEC with the
comprehensive transportation plan this year.
• Police Services
Police Services will add three additional officers in 2002/03, including a traffic unit to increase safety by
enhancing traffic enforcement and a crime prevention officer to proactively address prevention issues within
the community. The first phase of a public safety compensation plan, including a step increase and an
increase in the starting salary for police officers is also funded.
v
• Capital Projects
The City will spend $15.2 million on new infrastructure projects in 2002/03. The City will complete the
expansion of the Lake Water Treatment Plant, increasing the capacity from 7.5 mgd to 16.5 mgd. Other
funded Water improvements include line expansions in the DB Wood/Booty’s crossing and Inner Loop areas,
as well as tank rehabilitations and the Rabbit Hill pump station. Wastewater projects include improvements to
the Berry Creek and Dove Springs Plants, as well as compliance with Edwards Aquifer mandates. The
irrigation line for the Rivery Park connection is also scheduled for this year. Electric capital projects include
substation improvements, along with the continued expansion of underground electric service to new
subdivisions.
In May 2001, the citizens of Georgetown approved an additional ½ cent sales tax dedicated to transportation
improvements. Projects to be funded using this 4B sales tax revenue are approved in a separate budget by the
Georgetown Transportation Enhancement Corporation (GTEC) board. A copy of the approved budget is
included in the reference section of this document.
In an effort to expand the City’s street maintenance funds, the Council will ask the voters in November to adopt
an additional ¼ cent sales tax for maintenance of existing city streets. Should the initiative be approved, the
City’s sales tax levy would increase from 7.75% to 8.0%, still lower than any surrounding community, and
provide the City with an additional $800,000 available for street repairs.
FINANCIAL HIGHLIGHTS
The City is committed to sound financial planning and direction, as reflected in the adoption of the Fiscal and
Budgetary Policy in 2001. This policy requires all funds be self-sustaining, meaning on-going operating revenues
must fund on-going expenses. Also, the policy has substantial debt coverage requirements. All enterprise funds
that have debt commitments are required to maintain 1.5 times coverage, meaning excess operating revenues
must equal 1.5 times the annual debt service payment. In 2002/03, fee increases in both the Airport and
Stormwater Drainage Funds were made in order to meet this policy requirement. The 2002/03 Annual Operating
Plan continues the Council's goal to ensure that each utility system is a self-supporting operation that provides a
desirable and affordable level of service. All of the City’s enterprise funds, including the Airport, are self-supporting
and policy compliant in 2002/03.
The minimum contingency reserve remains at $8.5 million, or 78 days city-wide, exceeding policy requirements. A
more detailed look at the City’s revenues and funds, along with a copy of the Fiscal and Budgetary Policy, is
provided in the Financial Summary Section.
Revenues. The City's revenues continue to rise due to
growth in increased property taxes from increased
valuations, as well as new property, and increased utility
service demand. The City's overall customer base for its
electric, sanitation, wastewater and water services has
increased at a rate of 5-7% for the last three years. The
City continues to conservatively project a 4 - 4.5%
increase in revenues for utility growth. Since weather
conditions affect the electric and water revenues
significantly, revenue projections utilize these conservative
growth estimates to avoid budget shortfalls, and utilize a
rolling average consumption method to factor out any
weather aberrations.
General Fund. Historically, the General Fund’s revenues do not support its expenses, which have increased at a
higher rate, due in part to the increased demand for governmental services, such as Fire and Police Services. The
City had historically maintained its low tax rate by using the excess revenues from its utility funds to balance the
General Fund. Because of customer growth and increased demand for utility services, the excess funds previously
sent to the General Fund are now needed to fund infrastructure improvements within each utility. Recognizing this
issue, the Council adopted the new fiscal and budgetary policy in 2001, which maintains that each fund’s revenue
Combined Utility Revenues
0 5,000,000 1 0,000,000 1 5,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000 45,000,000
97/98
98/99
99/00
00/01
01/02
Proj 02/03
Electric Water Wastewater Sanitation Stormwater
vi
*Projecte
d
support its expenses. As part of the 2001/02
budget process, the Council approved a three
year implementation plan for General Fund
compliance, assuming a minimal increase in
expenses, with increases in property tax and
other General Fund revenues. Revenues,
primarily sales tax, were less than anticipated
in 2001/02 due to the downturn in the
economy following September 11, 2001. The
shortfall of approximately $446,000 was
addressed through delays in hiring open
positions, as well as other expenditure
reductions in 2002, thus maintaining the plan
for policy compliance. The City intends to be
policy compliant with the Fiscal and Budgetary
Policy with a self-sustaining General Fund by
2003/04.
General Obligation Debt. The City received an upgrade in May 2001 for its general obligation debt from A2 to A1
by Moody’s and from A to A+ by Standard and Poor’s. This upgrade will provide lower interest costs on future debt
issues. The City will issue $3.1 million in Certificates of Obligation on behalf of the Georgetown Transportation
Enhancement Corporation (GTEC) for transportation projects related to the Rivery Development. The City saves
over $250,000 by issuing the debt on GTEC’s behalf. The related debt service will be paid by GTEC sales tax
revenue and is included in the GTEC budget.
Electric, Wastewater and Water Funds. The City's electric system continues to generate revenues sufficient for
operations and maintenance and some system improvements. The City will complete an extensive electric rate
study early in the fiscal year, to finalize cost of services, un-bundle the electric rates and provide comparison
information with utilities in our area. The City will continue its “wait and see” approach to electric deregulation.
The Water and Wastewater Funds are expected to support the infrastructure improvements needed through this
budget cycle. Rates will be reviewed again in the upcoming budget process to evaluate the effect of increases in
the water system treatment capacity, increases in long term water supply, the completion of the Williamson County
Raw Water Line, and the Edwards Aquifer compliance issues have on rates and overall condition of the funds.
Contracting for additional water with the Brazos River Authority has ensured the availability of long-term water. The
creation of the Irrigation Utility in 2002 provides large commercial customers a non-potable water supply for
irrigation purposes and reduced the demand on the water plants for treated water.
The 2002/03 Annual Operating Plan includes
plans to issue a total of $9.2 million in revenue
debt to fund the capital projects program. The
City plans to issue $6.5 million in new revenue
debt early in 2002/03 to fund electric system
expansion and to reimburse costs for the
expansion of the Lake Water Treatment Plant
currently underway. The remaining budgeted
revenue debt could be issued as soon as
spring 2003, depending upon the timing of
wastewater and irrigation projects. This
additional debt will not require a rate increase
to fund the added debt payments. The times
coverage ratio, a standard measure of utility
revenue debt capacity, is 3.48 times coverage
for 2002/03, which exceeds the policy
requirement of 1.5 times coverage.
Times Coverage Ratio
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
10.00
1998/99 1999/00 2000/01 2001/02 2002/03
Combined Water Electric Wastewater Minimum Policy Requirement
% of General Fund Expense covered by Transfer
27.99%
12.59%
37.28%
4.84%
6.98%
40.40%
25.17%
35.53%
29.15%
18.82%14.28%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
1 993 1 994 1 995 1 996 1 997 1 998 1 999 2000 2001 2002 *2003
Projected
vii
Airport Fund. The City will increase revenues earned through hangar and tie down rentals as well as fuel sold in
order to bring the fund into policy compliance. Previously, the Airport Fund did not meet the debt coverage
requirement of the policy. A performance audit will be conducted in 2002/03 to address recent issues brought
forward to Council, as well as, increase operational efficiency at the Airport.
Internal Service Funds. The internal service funds provide administrative services and asset management for
information, facility, and fleet services to City programs and departments by charging lease and administrative fees.
These fees are incorporated in each department’s budget.
Information Services Fund $1,143,000 Add and replace desktop, network and application technology and
hardware. The City will review leasing computers as an option to
reduce its current four year replacement cycle to a three year
program.
Facilities Maintenance Fund $502,000 Building maintenance and repairs to include HVAC, janitorial
services and minor remodeling. This fund increased due to
additional square footage for the remodeled Municipal Complex.
Fleet Management Fund $1,629,000 Add/replace 18 vehicles and various shop equipment. The
Council will also review leasing vehicles as an option to reduce the
age of the City’s fleet, particularly the age of patrol vehicles.
CONCLUSION
The task of addressing most of the Council’s priorities while continuing the plan to eliminate the General Fund
subsidy was a challenge for the management team, as well as the Council. We believe we’ve made an outstanding
effort to ensure the goals and objectives set forth by the Council are met, as well as planning for the future financial
stability of the City’s General Fund.
Finally, we acknowledge the tremendous contributions and teamwork of all City staff in preparing the 2002/03
Annual Operating Plan. The management team worked together to assist in achieving the goals set by Council.
Each department worked to find savings in their operating budgets, and to make suggestions for program
improvements. Most notably, we want to recognize the Finance and Administration Division for their long and
dedicated hours in preparing the Annual Operating Plan.
Respectfully submitted,
Paul Brandenburg Micki Rundell
City Manager Director of Finance & Administration