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HomeMy WebLinkAbout02 - Overview1 1 1 1 1 J Ps- ED OF eo town October 1, 2001 To the Honorable Mayor Kersch, members of the City Council and citizens: I am pleased to present to you the adopted Annual Operating Plan Element (Operating Plan) of the Georgetown Century Plan for 2001/2002. 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. III Budget Process for 2001/02 Annual Operating Plan III ea Goo `ex Q'e,°� QQ�°Q yJ° o���• a°Q�\ 5°ZJ �a°G\e a'�o�`�`y�°� a°'& . JAG\ .. G° � G° I �. -- Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept During this budget cycle, the Council's focus was on fiscal responsibility and eliminating the historical utility subsidy needed to balance the General Fund. This was accomplished through the adoption of a new financial policy that stresses fiscal management by matching operating revenues with operating expenses. The policy formalizes existing City procedures and incorporates "Best Practices" recommended by the Government Finance Officers Association (GFOA), as well as, providing long-term sound financial guidelines for City operations. The City intends to be in full compliance with the policy within three years. The biggest issue facing this budget cycle was addressing financial policy compliance within the General Fund. Historically, General Fund revenues have been significantly less than the expenses, thereby necessitating the need for utility transfers beyond a standard return on investment and the franchise fees traditionally paid by municipal utilities. Council and staff were challenged with decisions that effected the General Fund's compliance with the new fiscal policy and with the long-range financial needs of the utility funds. The Council took an active role in balancing community, needs with the available resources.. This included reviewing existing programs and making difficult choices without drastically reducing the level of services expected by our citizens. CITY HALL 6 609 MAIN STREET POST OFFICE BOX 4139 - GEORGETOWN, TEXAS 78627-0409 • 512/930-3652 • FAX: 512/930-3659 BUDGET OVERVIEW Managing the City's phenomenal growth and measuring the success. of its programs were major goals for the budget. Because the_ City continues to grow at a rapid pace, service demands have increased as well. Limited resources along with increased demands make it important for the City to fund only the programs, which successfully make the most impact to the citizens. The City has updated and revised its performance measurement system to assist in gauging the success of programs and services provided to the community. This information will be used in future decision making for new programs and services, as well as assessing the efficiencies and effectiveness of current programs. Council and staff had to make difficult decisions to reduce or eliminate certain programs this year. The decisions generally focused around the General Fund, due to its non-compliance with the new financial policy. The overall reduction in the per capita budget growth rate is a direct result of the cost containment reductions made within the General Fund, while still maintaining a low property tax rate. 2001/02 Budget by Function Interfund 15 /o o 1 r Operations t 54% Debt Service 7% Capital Projects 24% The 2001/02 Operating Plan totals $87.5 million for all funds. Of that amount, approximately $59.7 million is for continued Operations, $6.3 million for debt service, and $21.5 million for capital improvement. projects. Interfund charges/transfers, which include internal service fund transfers, are approximately $4 million. While operating costs for administrative and General Fund divisions decreased, these reductions are offset by additional staffing and maintenance costs in the utility funds and increased capital costs, for an overall budget increase. Purchased power costs are also significantly higher than the previous year, due to growth in the system and fuel surcharges. The General Fund, which accounts for basic tax supported services, totals $17.6 million, a slight increase of 3.6% from 2000/2001. This increase is due to one-time projects, such as revision of the development ordinances. Overall operating expenses are lower due to program reductions, such as the elimination of the administrative department that managed the Library, Airport and other community programs whose oversight was reassigned to other City departments, and the outsourcing of services such as Legal.. Property Taxes. The City Council adopted a property tax rate of $0.30708 per $100 valuation, which is a 7.74% increase over the effective tax rate. While the tax rate itself decreases from the current rate of $0.31409, the average homeowner in Georgetown will pay approximately $41 more City property taxes than they did in 2000/01. This decrease in rates results from increased valuations on existing property. Property Values. The total taxable property has risen 19%; from $1.6 billion in 2000/01 to $1.9 billion in 2001/02. This increase includes $130 million in new property. This also includes a 9% increase in existing property values over last year. Utility Rates. The City conducted'an extensive cost of service study for Water and Wastewater services in 2001, which had not been reviewed and updated since 1991. The goal was to ensure cost recovery and the availability of funds for capital maintenance and replacement, reducing the need for additional debt funding. Capital replacement and rehabilitation needs were included as was the costs associated with ensuring an adequate long-term water supply. - Assessed Property Valuation 2250 2000 1750 1500 1250 1000 750 500 250 0 93.72 1,421 95196 96/97 97/98 96/99 99/00 00101 01/02 O Existing Property a iv—Property Wastewater rates for residential customers will not increase, but a policy change was recommended for commercial customers. The policy change will eliminate the "winter averaging" of summer bills for commercial customers who will now pay for actual sewer usage. The Water volumetric rate will increase from $1.95/1000 gallons to $2.13/1000 gallons for customers living inside the City limits. Comparable increases will be made for customers living outside the City. The meter charge will increase for larger meters to conform to American Water Works Association (AWWA) standards. Residential meter charges will not increase. Stormwater drainage rates will increase from $2.25 to $2.90 to fund service improvements including the additional staffing needed to maintain the City's growing number of detention ponds and drainage culverts. The City will implement an Irrigation Utility for commercial landscaping that recycles water and encourages a reduction in demand for treated water. The rate for irrigation is set at $0.54/1000 gallons. Fee Increases. During the budget process, Council and staff identified many areas where fees had not been updated to reflect the increased cost of providing service. Development and building permitting fees were increased in an attempt to recover more of the cost of providing service and still remain competitive within the regional area. Animal Services, Library, Parks and Recreation user fees will also increase to provide additional revenue to support the cost of those programs. Sales Tax per Capita - 7.25% $125 $100 $75 $50 $25 s 1998 1999 2000 '2001 '2002 $120.61 $118.33 $108.28 5113.75 $ Economic Outlook. While the growth in revenues have slowed due to economic conditions, as well as the September 11 terrorist att 93.72 acks, revenues have continued to remain steady. Sales tax growth was 3.5% over the prior year, while growth in the previous years varied from 11 % to 16%. Housing starts continue to remain strong, totaling 1,032, of which 299 were for Sun City Texas. This is the fifth straight year of 750 or more residential permits per year. Non-residential start s have also increased, with numerous new retail, commercial and small industrial facilities in various stages of construction. Sun City Texas continues to provide long-term retail and commercial growth for the community. In 1995, Del Webb Corporation began a 10,500 home, 5,300 -acre active retirement community in the northwestern quadrant of the City. The City's development agreement with the Del Webb Corporation provides for fire protection, wastewater, water and electric services and transportation improvements. Del Webb pays a per unit fee (called SIP fee) for its share of the improvements. As of September 30, 2001, 2,546 homes have been completed and more are in various states of construction. BUDGET HIGHLIGHTS The major program initiatives for the 2001/02 Annual Operating Plan and beyond are outlined as follows: • Economic Development This budget supports the recommendations of the City's Economic Development Task Force to fund a contract for an outside firm to assist in the recruitment of businesses looking to relocate to the Georgetown community. • Organizational Structure During the budget process, the Community Services division was eliminated and its various functions transferred to other areas of the City. The Library, Animal Services and Airport will be under the Assistant City Manager for Operations within the Management Services Department. Finance and Administration will oversee the Sanitation contract, managed through the Utility Office. • Planning and Development The budget provides funding to update the Georgetown Century Plan, which serves as the guide for the City to effectively manage its growth, and direct its land use, transportation, and economic decisions in a manner that will promote and ensure long term quality of life for its citizens. Planned revisions to the development codes will provide'consistent. regulations ensuring a viable, sustainable community for its citizens. The number of building inspectors has also been increased to improve the service currently provided and to meet the growth demands facing the City. Funding is also provided to implement a downtown overlay district in order to maintain and enhance the City's downtown historical uniqueness and character. Finally, a Geographic Information System (GIS) is being developed as well, which will include hiring a GIS analyst, purchasing equipment and participating in an aerial photography project which will ensure that the City has the tools it needs for effective and efficient planning. • Staffing During the budget process, each program was carefully evaluated for possible reductions in on-going operating costs to facilitate compliance with the new financial policy. As a result, positions 'funded through the General Fund revenues were reduced by a total of 13.5 positions. These reductions included 2.5 from Community Services Administration, one from Planning and Development and three from Police Services. Also, by contracting the Legal Services function, an additional five positions were eliminated. Part time positions were reduced in Fire Prevention and Accounting, and a Main Street Coordinator was also eliminated. Georgetown Utility Systems staff will increase by 7 to maintain the growing infrastructure needs and provide increased hours for dispatch service. General Funds positions offset through increases in revenue includes a GIS analyst, a building inspector and a staff assistant to improve service in the Planning and Development division. Two motorcycle officers and a warrant officer were added in Police Services to enhance compliance with laws and promote collection of assessed fines. Funding for the City's pay for performance system is also included. iv • Utility Issues The City's utilities will be renamed Georgetown Utility Systems (GUS) to provide brand recognition and promote community identification. The focus of GUS will be to continue to provide utility services that meet changing state and federal requirements, while providing a superior level of service to the residents of Georgetown. GUS will also continue monitoring electric deregulation issues to ensure the City's electric system provides reliable and efficient service to our customers. • Capital Projects The City will spend $21.5 million on new infrastructure projects in 2001/02. The City will complete construction of the Pecan Branch Wastewater Treatment Plant to provide treatment capacity for Sun City Texas and other development in the City's north and northwest quadrants. The City's Water Department will also complete the construction of pump stations at Sun City and Rabbit Hill, add capacity to the City's Southside Microfiltration Plant and continue the construction of the West Loop Water Line to improve water transmission to various parts of the city. Electric capital projects include substation improvements, along with the continued expansion of underground electric service to new subdivisions. Last May, the citizens of Georgetown approved an additional 1/2 cent sales_tax dedicated to transportation improvements. Collection of this tax revenue began October 1, 2001. Projects to be funded using this 4B gales tax revenue will be approved in a separate budget by the Georgetown Transportation Enhancement Corporation (4B sales tax) board in early 2002. The Board of Directors and the corporation bylaws will be approved in fall 2001. FINANCIAL HIGHLIGHTS The City is committed to sound financial planning and direction, as reflected in the adoption of the new fiscal and budgetary policy. The Council's goal to ensure that each utility system is a self -supported operation that provides a desirable and affordable level of service is continued in this budget. All of the City's enterprise funds, including the Airport, are self-supporting. The minimum contingency reserve remains at $8.5 million exceeding policy requirements. A more detailed look at the City's revenues and funds is provided in the Financial Summary Section. Combined Utility Revenues DVC 2 Pro]. 00,0, 42100 99199 97106 99197 0 5,000.000 4,000.000 5,000.000 20,000.000 26,000,000 70.000,000 36,000,000 40,000,000 ® Electric ® Water ❑ Wastewater o Sanitation ❑ Stormwater conservative growth estimates to avoid budget shortfalls, and method to factor out any weather aberrations. 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 services demand. The City's overall customer base for its electric, sanitation, wastewater and water services has increased at a rate of 6- 7% for the last three years. The City continues to conservatively project at a 4-5% increase in revenues for utility growth. Since weather conditions affect the electric and water revenues significantly, revenue projections utilize these utilize a rolling average consumption 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 has 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 City Council adopted a new fiscal and budgetary policy, which maintains that' each fund's revenues support its expenses. The Council effort's this year to reduce the balancing transfer has resulted in a 60.5% reduction in the General Fund operating shortfall. This was accomplished through reductions in expenses, as well as increases in taxes and user fees to support General Fund programs. Full compliance with the policy is expected within the next.two years. General Fund Transfers 4,000,000 40% 3,500,000 350/6 3,000,000 309/6 2,500,000 259/6 2,000,000 20% 1,500,000 159/6 1,000,000 10% 500,000 t5% - 1 0% 95/96 96/97 97/98 98/99 99/00 00/01 01/02 D Gfund Shordal Transfers t % Gfund Expenditures General Obligation Debt. The City received an upgrade in' May 2001 for its general obligation debt from A2 to Al by Moody's and -from A to A+ by Standard and Poor's. This upgrade will provide lower interest costs on future debt issues. Although this budget does not include any general obligation debt, a bond election will be held in November for citizens to vote on issuing $9 million worth of debt to expand the Public Library, remodel the Community Center and remodel City Hall. Electric, Wastewater and Water Funds. The. City's electric system continues to generate revenues sufficient for operations and maintenance and some system improvements. An increase in the fuel surcharge assessed by the Lower Colorado River Authority, the City's source of,purchased power, was passed through to the City's electric customers in 2000 and is expected to be removed by January 2002. The City is conducting an extensive electric rate study in 2002 to determine 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 the new rates implemented with this budget cycle. Long-term water has been ensured by contracting for additional water with the Brazos River Authority, as well as, by the completion of the Lake Stillhouse •raw water line from Bell County to Lake Georgetown. The creation of the Irrigation Utility to provide large commercial customers a non -potable water supply for irrigation purposes will reduce the demand on the water plants for treated water. The City plans to issue $1.5 million in new revenue debt in 2001/02 to fund electric system expansions. This additional debt will not require a rate increase to fund the added debt payments. The City is using a combination of previously issued revenue debt and cash to fund the Pecan Branch Wastewater Treatment Plant and interceptor. The times coverage ratio, a standard measure of utility revenue debt capacity, is 3.10 times coverage for 2001/02, which exceeds the policy requirement of 1.5 times coverage. Airport Fund. The recent closure of private aircraft facilities in the Austin metropolitan area has caused a dramatic increase in service demands at the City's airport over the past three years.. Previously issued Airport debt proceeds will be used as a grant match for the completion of the expansion of the terminal. building. Fuel revenues, leases and rents are projected to be sufficient to fund the related debt payments and to set aside reserve funds for future improvement projects. The Council will consider pursuing funding for a control tower this year. 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 charges and services were decreased, along with the related, programs, to reduce the costs to users in the General Fund. Information Services Fund $984,000 Add and replace desktop, network and application technology and hardware. The City's PC replacement program was increased to a four-year cycle in 2002, instead of the previous 3 -year cycle. This provided a one-time cost savings for the fund. Facilities Maintenance Fund $552,000 Building maintenance and repairs to include HVAC, janitorial services and minor remodeling. This fund reduced its maintenance budget by 10% in order to decrease allocated costs to the departments. Fleet Management Fund $1,305,000 Add/replace 23 vehicles and various shop equipment. This fund also reduced maintenance expenses by 10%. CONCLUSION This budget cycle was challenging for both Council and staff. I 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, I acknowledge the tremendous contributions and teamwork of all City staff in preparing the 2001/02 Annual Operating Plan Element. Each department worked to find savings in their operating budgets, and to make suggestions for program improvements. Most notably, I want to recognize the Finance and Administration Division for their long and dedicated hours in preparing the Operating Plan. Respectfully submitted, City Manager A 017 OR GEO�y, �o 0