HomeMy WebLinkAbout02-Overview-Transmittal LetterOverview
Overview Table of Contents
Transmittal Letter from the City Manager.................................................................................................I
Budget Overview........................................................................................................................ii
Property Taxes/Property Values ...............................................................................................iii
Economic Outlook.....................................................................................................................iii
Budget Highlights......................................................................................................................iv
Financial Highlights....................................................................................................................v
Conclusion................................................................................................................................vii
October 1, 2003
To the Honorable Mayor Nelon, Members of the City Council and Citizens of Georgetown:
We are pleased to present to you the adopted Annual Operating Plan Element (Operating Plan) of the Georgetown
Century Plan for 2003/2004. 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 directed staff to develop programs to address a list of priorities, while
implementing the final year of the 3 year plan to balance the City’s General Fund, ensuring compliance with the
City’s Fiscal and Budgetary Policy. This Policy requires that each of the City’s funds is financially self-sustaining.
Implementation of this Policy was particularly challenging in the General Fund, where historically, operations were
partially funded through utility subsidies. This utility subsidy amount exceeded $3 million prior to 2001. The
2003/04 General Fund’s revenues support its on-going operational expenditures, and for the first time in over 14
years, there is no subsidy transfer from the utility funds.
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 2003/04 Annual Operating Plan to begin
the first phase of improvements in the Downtown Master Plan, adopted by Council in the Spring of 2003, which is
designed to enhance the economic viability of the Downtown area. Another Council priority, improving San Gabriel
Park, is also budget to help preserve Georgetown’s largest, most picturesque City park. Other growth related
Council priorities included in this budget are completion and implementation of the Airport Master Plan update, and
developing a plan for Library expansion. The Georgetown Transportation Enhancement Corporation, the City’s 4B
economic development corporation, will address transportation issues related to economic development through
the Transportation Improvement Program (TIP) process.
Budget Process for 2003/2004 Annual Operating Plan
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ii
Economic development continues to be a high priority, as funds are included to continue business recruitment and
retention efforts. Last year, the City restructured its Economic Development Department, creating a marketing
position to help carry out the strategies of the Economic Development Commission and City Council. The City’s
new economic development director will begin work on October 1 to spearhead the program.
Public safety was another priority for 2003/04, which was a carry-forward priority from the last budget. The second
phase of the Public Safety Compensation Plan, which increased the step increments for public safety salaries will
be implemented. Police vehicles will be replaced, in order to reduce the age of the patrol fleet. Laptops will be
added to patrol vehicles to enhance the effectiveness of Police programs. A fire apparatus will also be replaced as
a new fire apparatus replacement program is implemented. Various other public safety equipment was also
funded.
Other Council priorities included the promotion of affordable housing options, maintenance of competitive salaries
for City staff, expansion and promotion of recycling opportunities and expansion of the City’s social service funding.
Each of these priorities were addressed in the 2003/04 budget.
The adopted 2003/04 Annual Operating Plan balances the cost of new programs needed to address these priorities
against the City’s limited financial and human resources and its adherence to the Fiscal and Budgetary Policy.
BUDGET OVERVIEW
The 2003/04 Operating Plan totals $104 million for all
funds. Of that amount, approximately $67.8 million is for
continued operations, $7.6 million for debt service, and
$23 million for capital improvement projects. Operating
interfund charges/transfers, which include internal
service fund transfers, are approximately $5.7 million.
On-going operating costs increased as a result of new
programs to address Council priorities, the increased
cost of purchased power and other utility operational
costs. Georgetown Utility Systems increased 8.3% due
to seven new staff positions, as well as increased cost
of system maintenance.
Management Services increased by 11.3% due to the addition of
one-time projects for 2004.
Finance and Administration increased 9.7% due to additional
staff in the Utility Office, as well as increased costs of fleet and
facility services.
Police and Fire increased 6.5%and 7% respectively, due to
increased personnel costs related to the funding of a public
safety compensation program.
Parks and Recreation and Planning and Development remained
relatively flat, only increasing for insurance and personnel costs.
Total Operating Budget per Capita
$2,671 $2,775 $2,61 3 $2,752
$2,556 $2,506
$2,865
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
1998 1999 2000 2001 2002 *2003 *2004
*Pro jected
Debt
Service
7%
Capital
Projects
22%
Personnel
18%
Operations
53%
2003/04 Personnel, Operations and Capital
iii
Property Taxes. The City Council adopted a
property tax rate of $0.32194 per $100 valuation,
which is a 2.93% increase over the effective tax
rate. The effective tax rate of $0.31277 was slightly
higher than the actual rate for the prior year of
$0.30261. Georgetown taxpayers can expect to
spend around $17 more annually in City taxes for
2003/04. The tax rate continues to be the lowest
municipal rate in the Central Texas area.
Property Values. For the first time in over a
decade, existing property values in Georgetown fell.
This 3% decrease was offset by over $92 million in
new property. Therefore the total assessed
valuation of $2.2 billion was only 1% more than the
prior 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. The rate study indicated a staggered rate increase was preferable, to
match the increases with the planned increases in costs.
Wastewater rates increased from $2.95 per 1,000 gallons of water billed to $3.10 per thousand. A second increase
of $0.10 is planned for October 1, 2004. The opening of the Pecan Branch Wastewater Treatment Plant increased
operational costs of the system. Wastewater costs also increased as a result of costs of line testing associated
with Chapter 213 of the Texas Commission on Environmental Quality’s Edwards Aquifer Protection Program.
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. Repairs and maintenance of the system are expected to increase
as a result of this program
Water rates increased from $2.13 per 1,000 gallons to $2.25 per thousand. Payments on the Williamson County
Raw Water Line from Lake Stillhouse, as well as increased cost of water supply from the Brazos River Authority
necessitate the increase in rates.
Economic Outlook. The City experienced an
upswing in sales tax revenues throughout the year,
averaging an increase of 5% over the recession and
economic downturn of 2002. The opening of the Home
Depot in June 2003, as well as the opening of the
Super Wal-Mart in August 2003, is expected to
increase the City’s revenue substantially. Tax
revenues are projected conservatively and are
expected to increase in the 2005 plan, when additional
developments are projected to open. Economic
development activity continues to be a high priority,
working to match desired employers with local needs.
In July 2003, the City approved a development
agreement with Simon Properties for the 750,000 sq ft
Wolf Ranch Towne Center. The project will include Target and 70 other retailers and restaurants. As part of the
agreement, the City will provide utility improvements to the site, as well as, fund $10.5 million of highway
improvements for the project. The $10.5 million to be funded with debt issued and repaid by GTEC, will improve
SH 29, as well as, provide the badly needed frontage roads for IH-35. TxDOT will be contributing over $7 million
for these improvements as well.
Sales Tax per Capita - 8.0%
$120$121
$103$101
$114$113$108
$-
$20
$40
$60
$80
$100
$120
$140
1999 2000 2001 *2002 *2003 *2004 *2005
*Projected
Assessed Property Valuation
in billions
985
1,195
1,427
1,629
1,939
2,116
2,222
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
97/98 98/99 99/00 00/01 01/02 02/03 03/04
Existing Property New Property
iv
The City also entered into a sales tax sharing arrangement with Simon for $15 million in on-site improvements. The
City’s net share of the sales tax is expected to exceed $1.1 million in general sales tax within 2-3 years after the
project opens in 2005. This project is expected to enhance not only General Fund revenues, but also provide the
community with greater retail opportunities, which was the number one priority from the 2001 Quality of Life Citizen
Survey.
BUDGET HIGHLIGHTS
The major program initiatives for the 2003/04 Annual Operating Plan and beyond are further outlined as follows:
• Finance & Administration
The Utility Office will develop a collections program to increase collections on utility bills previously being
written off to bad debt, as well as increasing advertising for participation in recycling programs. A Household
Hazardous Waste Program will be developed, because the County is no longer providing this service. Facilities
Maintenance will add an employee to support the additional facilities added in 2003, as well as those being
constructed in 2004.
• Fire Services
Fire Services implement the second phase of a Public Safety Compensation Program that was initiated last
year. This phase increases the salary steps for each year of service from 2% to 2.25%. The funding to replace
a fire apparatus is included, as well as seed money to explore the options on a training facility.
• 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. An electric crew is added to support the City’s
growing electric infrastructure. A streets crew is also added to increase maintenance for City streets. The City
also added a staff assistant to provide administrative support to the City’s GUS Advisory Board and the
Georgetown Transportation Enhancement Corporation (GTEC).
• Management Services
The implementation of the Downtown Master Plan, as well as the review of the Facilities Plan will be major
projects for this division in 2004. A long-range plan for non-utility capital improvements will be prepared in 2004
to provide a prioritization of projects, a financial implementation plan and a timeline for voter approval.
• Parks and Recreation
Improvements to San Gabriel Park will be made this year, including repairs to the gazebo, addition of BBQ pits
and benches along the trail, replacement of playground equipment, repairs to the irrigation system and other
major improvements will be completed in 2004. The division will also complete the expansion of the hike and
bike trail through the Texas Parks and Wildlife and Lower Colorado River Authority grants. Parks
Administration will be relocated in 2004 to the old GUS facility in San Gabriel Park, which will create more
space in the Recreation Center for programs.
• Planning and Development
The implementation of the Geographic Information Systems project continues with funding for 2004, along with
the implementation of the Property Information Resource Center (PIRC). Planning will also assess its needs
and review options for a planning information tracking system.
• Police Services
The second phase of a public safety compensation plan, which increases the salary step progression each
year from a 2% increase to a 2.5% increase, was funded. The third phase is scheduled for 2004/05 and
includes certification pay. Various equipment, as well as a vehicle replacement program and laptops for the
patrol cards, are also funded for the Police Department in 2004. Animal Services will be relocated to an
expanded Animal Shelter in 2004.
v
• Capital Projects
The City will spend $23 million on new infrastructure projects in 2003/04. The City will complete the expansion
of the Lake Water Treatment Plant, by completing the de-watering facility. Other funded Water improvements
include line expansion at DB Wood/Booty’s Crossing and construction of the Jennings Branch elevated
storage tank. Wastewater projects include improvements to the Dove Springs Plants, as well as compliance
with Edwards Aquifer mandates. Completion of the expansion of the Berry Creek Wastewater Treatment
Plant, budgeted in 2003, will be completed in 2004. The irrigation line for the Country Club 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.
The Georgetown Transportation Enhancement Corporation, whose board is appointed by the Council, makes
recommendations on the projects to be funded through the ½ cent sales tax for economic development.
Projects to be funded using this 4B sales tax revenue are approved in a separate budget by the GTEC board
and are also approved by Council. Projects are administered and managed by City staff. A copy of the
approved budget is included in the reference section of this document.
In November 2002, the voters approved an additional ¼ cent sales tax to be restricted for the maintenance of
existing streets. This additional $1.1 million per year is used only for streets in existence at the time of the
election. The tax has a sunset provision in four years. Projects that will be funded through this tax in 2004
include improvements to 13th Street, Gabriel View, MLK, Jr., Smith Creek Road and other projects.
Other streets and drainage improvements include the completion of the Shell Road realignment, as well as
improvements to Northwest Boulevard. Stormwater will focus on the completion of outstanding projects in
various areas with drainage problems, as well as implementation of the Regional Stormwater Plan.
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. The 2003/04 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 $9 million, or 76 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.
Combined Utility Revenues
0 5,000,000 1 0,000,000 1 5,000,000 20,000,00
0
25,000,00
0
30,000,00
0
35,000,00
0
40,000,00
0
45,000,00
0
50,000,00
0
98/99
99/00
00/01
01/02
02/03
Proj 03/04
Electric Water Wastewater Sanitation Stormwater
vi
General Fund. Historically, the General
Fund’s revenues did not support its expenses,
which had increased at a higher rate, due in
part to the increased demand for governmental
services, such as Parks, 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 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. The 2004 budget cycle marks the first time in over a
decade that the General Fund is self-supporting, that is, on-going revenues fund on-going costs.
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 $1.1 million in short term obligations, Public Property Financial Contractual Obligations,
to fund its new police patrol program, as well as for the replacement of a Fire apparatus.
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 completed a rate study in 2003, which
finalized the cost of service and provided a basis for un-bundling the electric rates to provide better comparison
information with utilities in our area. Rates were updated as a result of the study. The City also completed an opt-
in readiness assessment in 2003, with the assistance of the Lower Colorado River Authority. The City will continue
its “wait and see” approach to electric deregulation.
The City combined its presentation of its Water, Wastewater and Irrigation Funds into a single combined Water
Services Fund for the 2004 budget. This combined presentation provides a stronger financial base for review by
bond rating analysts and mirrors the standard presentation for many other municipal utilities. The Water Services
Fund will support the infrastructure improvements needed for all three services through this budget cycle. Rates
will be reviewed again each 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 expansion of effluent for
irrigation purposes, which provides large commercial customers a non-potable water supply for irrigation purposes,
has further reduced the demand on the water plants for treated water.
The 2003/04 Annual Operating Plan includes plans to
issue a total of $6.8 million in revenue debt to fund the
capital projects program. A portion of this debt
issuance, $3.5 million in new revenue debt, is being
issued in accordance with the Wolf Ranch
development agreement. The City will also facilitate
the issuance of debt for the GTEC projects that will
support the Wolf Ranch development. The 2004
budgeted debt issuance will be broken down into two
separate issues, one in the Fall of 2003 and the other
in the Spring of 2004 in order to comply with the $10
million annual limitation by the IRS for non-taxable
debt issues and to meet the cash flow needs for the
projects. This additional debt will not require a rate
increase to fund the added debt payments.
% of General Fund Operating Expense covered by Transfer
27.99%
0%
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%1993 1 994 1995 1996 199 7 1998 1 999 200 0 2001 20 02 2003 *2 004
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
1999/00 2000/01 2001/02 2002/03 2003/04
Combined Water Electric Wastewater Minimum Policy Requirement
vii
The times coverage ratio, a standard measure of utility revenue debt capacity, is 3.67 times coverage for 2003/04,
which exceeds the policy requirement of 1.5 times coverage.
Airport Fund. The Airport Fund is financially self-supporting by funding its on-going operations, as well as
providing a times coverage ratio of 1.5 times for its debt service coverage. Major capital improvements are typically
funded through federal and state grants, as is customary for airports of this size. The Airport Master Plan will be
reviewed and updated in 2004, and will include expected improvements to the Airport. Funding needs and a
financial plan will be considered in the adoption of the updated Plan.
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 $1,354,793 Add and replace desktop, network and application technology and
hardware. The City began leasing its computer and phone
systems in 2003 to provide a City-wide standard on computers
and a City-wide phone system.
Facilities Maintenance Fund $637,667 Building maintenance and repairs to include HVAC, janitorial
services and minor remodeling. This fund increased due to
additional square footage for the Georgetown Municipal Complex.
Fleet Management Fund $2,388,594 Add/replace 40 vehicles and equipment. The Council
implemented a three-year cycle for patrol vehicles and added
laptops as standard equipment in the patrol cars. A fire apparatus
will also be replaced in 2004, as the first step in development of a
fire apparatus replacement program.
CONCLUSION
The task of addressing most of the Council’s priorities while fulfilling the goal of financial stability through
elimination of 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 2003/04
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