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HomeMy WebLinkAbout02-Overview Overview Overview Table of Contents Transmittal Letter from the City Manager.................................................................................................i Priority Goals and Strategies Division Responsibility.................................................................ii Budget Overview.......................................................................................................................iii Property Taxes/Property Values/Utility Rates...........................................................................iv Sales and Use Taxes.................................................................................................................v Budget Highlights......................................................................................................................vi Capital Projects........................................................................................................................vii Financial Highlights................................................................................................................. viii Conclusion..................................................................................................................................x October 1, 2005 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 2005/06. 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 and prioritized by the City Council. The City’s budget process begins each year with the Capital Improvements Program (CIP) planning process. CIP budgets are prepared on five and ten year planning horizons, based upon population and development projections. Revenue estimates for utility operations, as well as development impact fees, are prepared to forecast the ability of the rate base to fund needed capital maintenance, upgrades and expansions. Five year and ten year pro-forma models for each utility are prepared, as well as ten year general fund models, which are prepared to determine the impact of general infrastructure and facilities improvements on future property tax rates. Each City department prepares a two-year operating budget. While only one year is formally adopted, the projection of the second year (2006/07 projected budget) is presented to identify the impact of current year programs and commitments on future budgets, and provides a “basis” for beginning the following year’s budget process. The City Council began its 2005/06 budget process by reviewing results and trends from the bi-annual citizen surveys from 2004 and 2001. The success of previous programs and projects implemented over the past five years were measured and priorities from the 2004/05 budget were reviewed. Managing growth issues and enhancing economic development for on-going fiscal health of the City were the primary focus for the Council priorities. Staff developed programs for each of the priorities and estimated costs for implementation of the programs. The City Manager and staff then used the City’s fiscal and budgetary policy (included in the reference section) to prepare a budget proposal that balanced the cost of providing new programs with an acceptable revenue scenario. Budget Process for 2005/2006 Annual Operating PlanOctober 1, 2005 CIP Proces s Begi n s Fin a nci a l mo del s u p d ated Coun c il P r iori t ie s D e t e r min e d B as e Bu d g et P r o c e ss Be g i n s C I P P r e s e ntation to Coun c il Mi d -Year Review Divis i on Work Sess io ns A do p t Up d ate d F i n a n c i a l Po li c y City Manager's Budget Prepared Co u nc il Work Sessi o ns P ub li c Worksho p s /H e ari n g s B ud g e t Ad o p t i o n September 30, 2006 Oct Nov Dec Jan Mar April May June SeptAugJuly ii Many of the priorities from 2004/05 carried forward to the 2005/06 budget year as on-going priorities. The fifteen 2005/06 Council priorities, along with staff-developed strategies to address the goals are shown below. A more in- depth description of the strategies is located in the budget highlights section of this letter. CITY DIVISION RESPONSBILITY FOR IMPLEMENTATION 2005/06 COUNCIL PRIORITY GOALS & STRATEGIES Co mm u n it y D e v Community Svcs F ina n c e & Admin F ir e GUS Mg t Sv cs Police 2005/06 COUNCIL PRIORITY GOALS & STRATEGIES 1 Continue revitalization and economic development *Implement Master Plan for Williams Drive Gateway redevelopment √√√ √ 2 Continue maintenance of Overall Transportation Plan (OTP) *Activate Transportation Advisory Board to identify funding opportunities for transportation needs √√√ √ 3 Continue implementation of Downtown Master Plan *Implement historic abatement program √√ √ *Expand underground electric system conversion in Downtown √ *Complete Downtown Regional Water Quality Plan by constructing second pond.√ *Expand wayfinding signage program √ 4 Improve quality of services while keeping property taxes low *Prepare specifications for an updated Customer Information System to continue to provide excellent customer service to our utility customers √√ √ 5 Continue funding for economic development/industrial recruitment *Access funds generated by 4A sales tax for economic development through creation of corporation bylaws √√ 6 Improve emergency response levels *Fund 11 new public safety positions in Fire & Police √√ √ *Purchase hydraulic rescue tool set √ *Purchase hike and bike trail access vehicle √ 7 Alleviate immediate traffic congestion *Develop plan to assume responsibility for signalization of traffic lights within City, with expected implementation in 2007 √ *Assume maintenance responsibility for Austin Avenue from TxDot √ 8 Expand sewer maintenance program to include Edwards Aquifer *Implement Year 3 testing and Year 2 repairs of wastewater system through capital maintenance program √ 9 Expand and coordinate Parks system *Complete Master Plan for Garey Park √ *Complete design for expansion of the Recreation Center √√ *Expand and renovate the Community Center in San Gabriel Park √√ *Continue playground replacement program in City parks √ 10 Update City's comprehensive plan (Century Plan) *Hire a consultant to coordinate the update process √ *Develop conservation subdivision ordinances √√ *Develop and implement voluntary and involuntary annexation plan √ √√√√√ 11 Develop an Affordable Housing Program *Implement Affordable Housing Task Force recommendations √ *Fund fee waivers for Habitat for Humanity project √√ 12 Expand City's Record Management program *Implement laser fiche program to other areas of the City as outlined in city- wide records management plan √√ *Implement digital archiving for existing as-built utility plans √√ √ 13 Expand recycling opportunities and environmental programs *Construct transfer station that will offer additional recycling opportunities √ *Create a downtown recycling center √ *Pilot a hybrid vehicle program √ 14 Ensure adequate staffing and competitive compensation for all employees *Review staffing levels for non-public safety departments √√√ √√ *Review compensation and benefits for non-public safety employees √√√ √√ 15 Implement Airport Master Plan *Develop funding plan to implement Plan upon final approval √√ iii 2005/06 Budget by Type of Expense Personnel 18% Operations 48% Capital Projects 26% Debt Service 8% BUDGET OVERVIEW The 2005/06 Annual Operating Plan (Budget) is an operational and financial plan for the programs and services provided by the City during the coming year. The proposed $131.8 million budget includes funding for all services, including utilities, as well as capital improvements for the upcoming year. Of that amount, approximately $70.8 million is for continued operations, $10.6 million for debt payments and $33.9 million for capital improvement projects. Operating interfund charges/transfers, which include internal service fund transfers, are approximately $16.5 million. The 2005/06 Operating Plan is approximately 8% more than the 2004/05 budget. Overall, on-going operating costs increased as a result of new programs to address Council priorities, increased purchased power costs and other fixed operational expenses. • Georgetown Utility Systems – 8% increase is due to maintenance and contracted expenses that increase in relation to customer growth. Six positions will also be added in 2005/06 to accommodate increased demands for service. • Community Development – 17% increase is due to contracted expenses for building inspections, as well as for one-time programs for the update of City aerial photography and the update of the Comprehensive Plan. • Fire Services – 12% increase due to increased staffing and compensation for public safety needs. Five positions are added, according to the staffing plan approved last year. 2005/06 is year 2 of 3 year plan. • Management Services – 16% increase for programs for employee market adjustments, retirement and insurance increases, as well as for increased social service contract funding. • Community Services – the net budget decreases due to the completion of one-time projects in 2004/05 for San Gabriel Park, other capital related projects. These costs offset increases in the budget for a new maintenance worker and urban forester. • Police Services – 16% increase due to increased staffing and compensation for public safety needs. Six positions are added, according to the staffing plan approved last year. 2005/06 is year 2 of 3 year plan. • Finance and Administration – An adjustment to reduce the budget for one-time capital replacement costs in 2004/05 offsets a small increase in operational costs for 2005/06, causing the budget to be relatively the same as prior year. • Capital Improvements – the increase relates to the timing of projects in both fiscal years. Major projects for 2006 include the construction of the new public library, as well as an electric substation. • Debt Payments – increased due to the issuance of debt for the 2005 Certificates of Obligation, as well as voter approved General Obligation Bonds for the new Library, and other projects. Debt Service for GTEC, which has debt issued through the City, also flows through the City’s budget. GTEC debt increased for bonds related to Wolf Ranch improvements. • Interfund Charges – these amounts vary from year to year due to project funding and source of funds. Total Budget per Capita $2,613 $2,752 $2,556 $2,449 $2,679 $2,900 $3,193 $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 2000 2001 2002 2003 2004 *2005 *2006 *Projected iv Assessed Property Valuation in billions 1,427 1,629 1,939 2,116 2,247 2,319 2,643 0 250 500 750 1,000 1,250 1,500 1,750 2,000 2,250 2,500 2,750 99/00 00/01 01/02 02/03 03/04 04/05 05/06 Existing Property New Property Sales Tax per Capita $152$147 $124$116 $105$101 $114 $- $20 $40 $60 $80 $100 $120 $140 $160 2001 2002 2003 2004 *2005 *2006 *2007 *Projected Property Taxes. The City Council adopted a property tax rate of $0.34626 per $100 valuation, which is a 10.5% increase over the adjusted effective tax rate. The effective property tax rate (the rate needed to collect the same amount of revenue as last year based upon the current year valuations) is $0.34103 which is 1.5% less than last year’s adopted rate of $0.34626. Last May’s adoption of 1/8 cent sales tax for property tax relief, results in a $0.0277 decrease in the effective rate, thereby lowering the adjusted effective rate to $0.31326. The rollback rate, or the highest rate allowable without risking a rollback election is $0.35914, also adjusted for the sales tax relief. The property tax relief revenue is used to offset the additional debt service associated with voter approved general obligation debt for expanded facilities. Even with this tax rate increase, Georgetown continues to have the lowest municipal tax rate in the Central Texas area. Property Values. The assessed property valuation for 2005/06 is $2.64 billion, which is a 9% overall increase over last year’s adjusted value of $2.4 billion. Of this increase, $136 million is new and annexed property. Existing property values increased 3.3% over last year. The average home value for 2005/06 increased from $163,751 in 2004/05 to $166,458 for 2005/06, a 1.7% increase over prior year. Utility Rates. The City has reviewed rates for 2005/06 and determined that water and wastewater rates are sufficient to fund the costs of the system. The City will be reviewing the cost of providing wastewater service to customers who have wastewater service only and develop a fixed rate for these customers. Potential increases in Edwards Aquifer Recharge Zone environmental mandates, capital needs and increased operational costs may require a rate adjustment in 2006/07. A detailed review and plan will be discussed further in 2005/06. Impact fees were reviewed by the advisory committee in the summer of 2005. The water impact fee increased from $2,295 to $3,324 and the wastewater fee increased from $1,869 to $1,881. A defined area wastewater impact fee was also created for the South Fork service area for $3,114. Electric rates are currently sufficient to fund the cost of operating and maintaining the system. Future fuel related increases and/or decrease will be adjusted through the Power Cost Adjustment (PCA) element of the rate. Sanitation rates and Stormwater rates will remain the same as the current year. The construction of the transfer station, in partnership with TDS, should help stabilize sanitation rates into the future. Sales Taxes. In 2005, the City experienced an increase in sales taxes on average of 14% over the previous fiscal year. This increase is a result of a healthy building supply market in the area, as well as the continued build out of the Rivery Town Crossing. The Wolf Ranch shopping area, a Simon property that includes Target, Old Navy and Kohl’s, opened earlier than anticipated in July 2005. Historically, sales tax fluctuations mirror economic conditions. Base line sales tax (without Wolf Ranch) is expected to increase approximately 1%, with an additional $600,000 budgeted for the full year of Wolf Ranch operations. This projection is 65% of the developer’s estimation of sales tax revenues, and provides a conservative estimate for spending. This projection is the net amount of sales tax, after the City’s payment of a sales tax rebate to Simon from the general 1% sales tax revenue generated within the development. Combined Sales & Property Taxes Property Tax Sales Tax - 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 16,000,000 1996 1997 1998 *1999 2000 2001 2002 2003 2004 **2005 **2006 v Sales tax now funds approximately 26% of the General Fund operating budget, yet sales tax revenue is the most volatile revenue stream within the General Fund. Therefore, the City monitors this revenue stream closely for any potential shortfalls that could impact the General Fund cash flow. The City budgets a contingency reserve of 90 days of general fund operations, to provide stability should sales tax revenues fall short and has adopted a budget contingency plan as part of its Fiscal and Budgetary Policy. Additional Sales and Use Taxes In May 2001, voters authorized the adoption of an additional sales and use tax within the City at the rate of one-half of one percent, with the proceeds thereof to be used for transportation system improvements to support economic development. This tax became effective October 1, 2001. The additional revenue is not part of the City’s general operating budget, but is budgeted and spent by a non-profit economic development corporation, Georgetown Transportation Enhancement Corporation. GTEC was established expressly for the above purpose by the City Council. GTEC’s activities are included in the City’s audited financial statements as a blended component unit. In November 2002, voters authorized the adoption of an additional sales and use tax within the City at the rate of one quarter of one percent, with the proceeds thereof to be used for maintenance of streets in existence at the time of the adoption of the tax. This revenue is included in the City’s operating budget in a Special Revenue Fund. This tax has a four year sunset provision, and will be presented to the voters again in November 2006 for renewal. In May 2005, voters authorized the adoption of an additional sales and use tax within the City at the rate of one eighth of one percent, with the proceeds to be used to promote and develop new and expanded business enterprise on behalf of the City of Georgetown and becomes effective October 1, 2005. This additional revenue is not part of the City’s operating budget, and will be budgeted and spent by a non-profit economic development corporation, Georgetown Economic Development Corporation (GEDCO). This corporation was established by the City Council to oversee this revenue. Activities will be included in the City’s audited financial statements as a discretely presented component unit. In May 2005, voters authorized the adoption of an additional sales and use tax within the City at the rate of one eighth of one percent, with the proceeds to be used for property tax relief. This tax becomes effective October 1, 2005 and is used in the City’s 2005/06 property tax calculation. Revenue from this sales tax is included in the City’s general operating budget. BUDGET HIGHLIGHTS The major program initiatives, linked to the Council’s priorities (paraphrased in bold italics) for the 2005/06 Annual Operating Plan are outlined as follows: • Community Development The update of the Century Plan, Georgetown’s comprehensive plan, will be coordinated by the division during the upcoming year. Community involvement, as well development of conservation subdivision ordinances, will be included in this process. The division will also work on voluntary and involuntary annexation plans, as directed by Council. The update of aerial photography will enhance the City’s Geographic Information Systems database. The division will also work with Georgetown Utility Systems (GUS) to continue maintenance of the Overall Transportation Plan by updating the traffic model, as well as providing support to the newly created Transportation Advisory Board. Sales Tax per Capita (1%) $93.41 $89.99 $94.72 $108.28 $112.55 $113.63 $100.77 $105.44 $116.01 $124.13 $130.77 $16.38 $- $25 $50 $75 $100 $125 $150 19 9 6 199 7 19 9 8 19 9 9 2000 2001 2002 2003 2004 *2005 *2006 Wolf Ranch vi Employees Per 1,000 Population 20.59 17.42 16.39 15.83 13.77 13.47 12.20 11.84 11.50 10.92 10.12 0 5 10 15 20 25 1996 1997 1998 1999 2000 2001 2002 2003 2004 *2005 *2006 *Projected • Community Services This division will continue to expand and coordinate the parks system by preparing a master plan for Garey Park, a 500 acre river-fronting parcel west of the City that is being donated to the City by Jack and Cammy Garey. This master plan will provide the basis for making the changes necessary for the park to be useful to citizens, while maintaining as much of the natural green space as possible. The Gareys will also donate $5 million upon their death towards making improvements. This amount will be matched by the City. Construction for the expansion of the Community Center in San Gabriel Park, as well as design of the expansion of the Recreation Center, both bond funded projects approved by the voters in November 2004 are also scheduled for completion this year. Playground equipment, purchase of trail maintenance and field maintenance equipment are also included in this budget. • Finance and Administration This division will assist other divisions for implementation of the Downtown Master Plan by preparing a historic abatement program. Expansion of recycling opportunities and environmental programs will also be accomplished through the creation of a downtown recycling center and construction of a refuse transfer station. The Utility Office will also pilot a hybrid vehicle program for meter reading and other customer service activities. Finance, Accounting and the Utility Office will coordinate with GUS to prepare specifications for a Customer Information System to continue to improve quality of service. The division will provide support to the new Georgetown Economic Development Corporation (GEDCO), which will administer the City’s 1/8 cent 4A sales tax, which was adopted in May 2005, to provide continued funding for economic development and recruitment. The Facilities Maintenance Department will coordinate construction of the new public library, expansion of the recreation center and construction of a new fire station during the upcoming year. • Fire Services Improving emergency response levels will continue to be the focus for Fire during 2005/06. The coordination of an interlocal agreement to provide services within the new Emergency Services District (ESD) will assist in funding for fire improvements. A new fire station on Industrial Boulevard will provide for the relocation of Fire Station #1 from the downtown area. Five new firefighters will be added, implementing year 2 of a 3 year plan to increase staffing levels for public safety. Salaries for civil service employees will increase on October 1, as a part of the City’s plan to ensure adequate staffing and competitive compensation for all employees. Fire will also be involved in annexation planning to ensure access and response levels are adequate in newly annexed areas. • Georgetown Utility Systems (GUS) An electric substation crew will be added to provide service in high demand areas. Keeping the Electric Fund healthy ensures a good return on investment to the City’s General fund, thereby improving the quality of services while keeping property taxes low. The Street Department, as well as the utility areas, will provide support to implement the master plan for the Williams Drive Gateway, which is an area proposed for revitalization and economic development. The continued conversion of overhead electric lines to underground in the downtown area provides a link to the implementation of the Downtown Master Plan. This division will also provide support to the City’s annexation initiative, and the update of the comprehensive plan. The Water Services Department will continue to expand its sewer maintenance program to include Edward’s Aquifer mandates by completing year four of the testing of the lines and year three of the repair of the lines. This program, mandated by the Texas Commission on Environmental Quality maintains that all lines over the Edward’s recharge zone must be tested every five years. • Management Services Management Services provides oversight to all divisions and also includes several stand alone departments that are not included elsewhere. Information Technology will work with Finance to expand the City’s records management program to include an imaging system. The Airport will be working on a funding plan to implement the Airport Master Plan. Human Resources will coordinate a classification and market study to vii ensure competitive compensation for all employees. Economic Development provides support and information to the newly created 4A Economic Development Board, which will use a dedicated sales tax to continue funding for economic development and industrial recruitment. The City Manager’s Office will benchmark each department with comparable cities to ensure adequate staffing levels. The City Manager’s Office will implement the recommendations from the Affordable Housing Task Force to develop an affordable housing program. Fees will also be waived for Habitat for Humanity projects during the upcoming year to support this effort. This division will ensure the completion of all strategies outlined in the 2005/06 Operating Plan. • Police Services Police will strive to improve emergency response levels by adding six police officers and purchasing a hike and bike trail access vehicle to provide coverage on City trails. Funding to increase police salaries was approved to be more competitive with surrounding communities. Police will also be involved in annexation planning to ensure access and response levels are adequate in new areas annexed by the City. Capital Projects Capital improvements make up 26% of the City’s proposed upcoming budget. The major projects, by type of project, are listed below: General Capital Projects General capital projects are those that are funded through the general tax base, versus utility capital projects, funded through utility rates. The following projects are included as general capital projects for 2005/06: • Construction of the new Public Library - $7 million. • Construction of Fire Station # 1 (relocation from downtown) - $1.75 million. • Expansion and remodeling of the Community Center - $1.6 million. • Parkland development - $370,000. • River trail call boxes and lighting - $350,000. The Airport will complete construction of a control tower, which is funded through grant funds and revenues from Airport operations. Street Improvements and Maintenance The capital budget for street construction and maintenance is funded through four primary sources: General Fund revenue, quarter cent sales tax for maintenance, service improvement program (SIP) fees and half cent sales tax for transportation improvements for economic development (through Georgetown Transportation Enhancement Corporation- GTEC). General, 1/4 cent sales tax and SIP funded projects: • Church Street • Elm Street • Pine Street • Myrtle Street • Walnut Street • Ranch Road • Parkway • Main Street Georgetown Transportation Enhancement Corporation (GTEC) projects are included in a separate budget that is adopted by the GTEC board and approved by City Council during the budget adoption process. Projects are administered and managed by City staff. A copy of GTEC’s approved budget is included in the reference section of this document. Street Maintenance Per Capita $34.40 $46.66 $57.14 $73.27 $82.48 $90.21 $90.88 $54.49 0 20 40 60 80 100 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 viii Utility Capital Projects The City will fund over $16.9 million for utility and infrastructure improvements in 2005/06. The majority of these projects are a part of the City’s on-going capital expansion and upgrades to ensure quality services to the citizens. Electric – Improvements are scheduled throughout the system Water Services – Improvements include line upgrades, mandated Edward’s Aquifer Recharge Zone testing and repairs, and an upgrade at the Southside Water Treatment Plant Stormwater – Construction of downtown regional ponds and the San Gabriel retaining wall. FINANCIAL HIGHLIGHTS The City is committed to sound financial planning and direction, and uses the City’s Fiscal and Budgetary Policy to guide the budget process and financial administration. This policy is reviewed and updated annually as part of the budget process and 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 2005/06 Annual Operating Plan meets the Council's goal 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 2005/06. The City-wide contingency reserves have been increased from $9.5 million to $10.4 million, due to the increase in the total operating budget. This amount represents 75 days city-wide operating expenses, with $4.7 million for General Fund, representing 90 days of operating expense in this fund. Capital is excluded from the contingency calculation. Revenues. The City's revenues continue to rise due to added property tax revenue resulting from an increased total assessed valuation and increased utility service demands. 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 5% increase in revenues for utility growth. Since weather conditions affect the electric and water revenues significantly, revenue projections utilize conservative growth estimates to avoid budget shortfalls, and utilize a rolling average consumption method to factor out any weather aberrations. General Fund. General Fund revenues are expected to increase for 2005/06, through increased property taxes and increases in sales taxes due to new retail development. Return on investment transfers are expected to increase due to overall customer growth and higher revenues in the City’s utility system. Fee adjustments for building inspection fees and parks fees will also contribute towards the increase. Court fines are expected to increase due to increased ticket volume. Other revenues are expected to remain stable through upcoming year. Proposed Debt. Revenue bonds are scheduled to be issued for electric utility infrastructure projects. The estimated amount of the utility bonds needed to fund the Utility Capital Improvement Program is $3.48 million. The City plans to time the issuance of this debt to complement the issuance of the GTEC debt for transportation improvements and match cash flow needs. The debt issue is planned for late Fall 2005. Short term obligations for $603,000 to fund public safety vehicles, including patrol laptops in the vehicles will also be issued, along with an additional $3.4 million to fund general capital projects, including park improvements and construction cost for the new fire station on Industrial Boulevard. $300 $402 $544 $618 $525 $681 $0 $200 $400 $600 $800 '96 '98 '00 '02 '04 '06 Tax Supported Debt Per Capita Combined Utility Revenues 0 1 0,000,000 20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 00/01 01/02 02/03 03/04 04/05 Proj 05/06 Electric Water Wastewater Sanitation Stormwater ix In November 2004, voters approved a $22 million bond package that includes a new library, an expanded recreation center and renovation of the City’s community center. The bonds for design work and renovation of the community center were issued in fiscal year 2005, and construction bonds for the public library construction will be issued in 2006. The bonds are being issued in stages to mirror cash flow needs and to minimize the impact on property tax rates. The City’s debt per capita increased this year due to the issuance of these bonds, yet continues to be lower than most comparable cities. The City‘s total tax-supported general debt is expected to be $36,246,884 by September 30, 2006. Electric and Water Services Funds. Growth demands continue to impact service levels within the City’s two largest utility funds. Operational costs continue to increase as the infrastructure expands. Growth in the City’s outlying areas also creates demands on the City’s existing utility facilities. The City's electric system continues to generate revenues sufficient for operations and maintenance and some system improvements. Growth in the southern most area of the Electric service area will create increased demands on substations in that area. Revenues related to this area are projected to offset any increase in operating cost. Growth, as well as, increased environmental mandates has also impacted the Water Services Fund, which includes the City’s water, wastewater and irrigation utilities. Water utility costs continue to increase due to increased operational costs, as well as increases in long term water supply cost and costs associated with the operation of the Williamson County Raw Water Line. Contracting for additional water with the Brazos River Authority has ensured the availability of a long-term water supply for Georgetown. Expenses in the wastewater utility have increased due to Edwards Aquifer compliance issues and increasing treatment plant operational costs. The expansion of effluent for irrigation purposes, which provides large commercial customers a non-potable water supply for irrigation needs, has been completed to help mitigate the demand on the City’s water plants for treated water. The utility debt coverage ratio, a standard measure of utility revenue debt capacity, or the number of times the debt service payment could be funded through net income from the utility, remains healthy at 3.11 times. While this number is slightly less than previous years, the amount is more than adequate to meet the City’s fiscal and budgetary requirement of 1.5 times coverage and the City’s utility bond requirements of 1.35 times coverage. Airport Fund. The Airport Fund is financially self-supporting and funds its on-going operations, as well as provides a times coverage ratio of 1.68 times for its debt service coverage. The construction of an airport traffic control tower, which is funded 90% through a federal grant administered through the Texas Department of Transportation, will be completed in 2006. The Airport Master Plan update will be completed 2006, 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 $1,495,142 Add and replace network and application technology and hardware. The City began leasing its computer and phone systems in 2003 to provide a citywide standard on computers and a citywide phone system. Fees fund computer support services and annual software maintenance contracts. 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 2001/02 2002/03 2003/04 2004/05 2005/06 Combined Water Services Electric Minimum Policy Requirement x Facilities Maintenance Fund $887,051 Building maintenance and repairs to include HVAC, janitorial services and minor remodeling. Repairs and scheduled maintenance will be completed in 2005/06. Fleet Management Fund $2,066,500 Add/replace 29 vehicles and equipment. The Council continues the three-year replacement cycle for police vehicles and added laptops as standard equipment in the patrol cars. CONCLUSION One of the priorities identified by City Council last Spring was to provide quality services to our citizens while keeping property taxes low. We believe the 2005/06 Annual Operating Plan fulfills that goal. The new or expanded programs that are funded in this budget will not only improve or expand service levels, but will also enhance the quality of life for our citizens. We believe we’ve made an outstanding effort to ensure the goals and objectives set forth by the Council have been met, as well as ensuring that Georgetown remains a safe and affordable place to live and work. The proposed budget balances the needs of the community with the available funding to move the organization toward fulfilling its mission of enhancing the unique character and quality of life for the citizens of Georgetown. Finally, we acknowledge the tremendous contributions and teamwork of all City staff in preparing the 2005/06 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 E. Brandenburg Micki Rundell, CGFO City Manager Director of Finance & Administration