HomeMy WebLinkAbout02 - Overview1
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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
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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
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