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02 - Overviewoverview Geo tow October 1, 2000 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 2000/2001. 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 fixture 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. In developing the 2000/01 Operating Plan, a new, more community -involved process was developed. Town Hall Meetings, public workshops and televised meetings were implemented to give more citizens the opportunity to be involved in the budget process. The Council took the active role in balancing the community needs with the available resources. The result is what you see before you. Budget Process for 2000/01 Annual Operating Plan a Rp v o o� C. 5Qjj�'`�°``�'�Q�o °°� 'got` G`Q GHQ ��� °� 'e 0a Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept CITY HALL • 609 MAIN STREET POST OFFICE Bax 409 • GEORGETOWN, TEXAS 78627-0409 - 51 2/930-3652 • FAX: 51 2/930-3659 BUDGET OVERVIEW As Georgetown continues to 10% grow, so do the expectations of s% the citizens of Georgetown. The soy, projected increases for the a% 2000/01 Operating Plan are the direct result of the phenomenal 2% growth the City of Georgetown 0% continues to experience. Variables of Growth This is the sixth straight year the City has grown by more than 7% annually. The outcome of this growth is. an increasing demand for services by our citizens, which is offset by the City's ability to retain valued employees and compete for job applicants in today's tight labor market. 2000101 Budget by Function Operations 58% Debt Service 7% Interfund Capital 9% Projects 26% The 2000/01 Operating Plan totals $85 million for all funds. Of that amount, approximately $49 million is for continued operations, $5.6 million is for debt service, and $22 million for capital improvement projects. Interfund charges/transfers, which. include internal service fund transfers, are approximately $8 million. Overall increases in this Operating Plan are due to additional staffing in Fire Services and demand -based costs, such as purchased electric power. The General Fund, which accounts for basic _ tax supported services, totals $13.6 million, an increase of 8% more than 1999/2000. This increase mirrors the 7-8% growth in residents and utility customers over the past year. Property Taxes. The City Council adopted a property tax rate of $0.31409 per $100 valuation, which is the effective tax rate for 2000/01. While the tax rate itself decreases from the current rate of $0.34, the average homeowner in Georgetown will pay approximately the same amount in City property taxes as they did in 1999/2000. This decrease in rates results from increased valuations on existing property. Assessed Property valuation 2.000 ,.750 Property Values. The total taxable ,soo property has risen 14%; from $1.4 billion in ,z5o 1999/2000 to $1.6 billion in 2000/01. This increase includes $110 million in new 1'000 property., This also includes a 6.5% increase 750 in existing property values over last year. 500 250 0- 94195 95198 96197 97/98 98199 99M 00101 ❑ Existing Property E3 New Property 2000/0/ Operating Plan Element - Transmittal Letter Page ii of vii Utility Rates. There are no water, wastewater or electric rate increases included in 2000/01 for the ninth consecutive year. Sanitation rates will increase $0.90 for residential and 5.4% for commercial customers in December 2000. This increase will help offset the rising operational costs incurred by the City's sanitation contractor. $140 $120 $100 $80 $60 $40 $20 $0 Sales Tax Per Capita - 7.25% '96 '97 '98 '99 '00 Economic Outlook. Georgetown and the Central Texas region continue to experience strong economic growth. Sales tax revenue for Georgetown has increased an -average of 16% over the past five years. Sales Tax growth is expected to increase to approximately 9% over the next two to three years. Housing starts continue to remain strong, totaling 757, of which 317 were for Sun City Texas. This is the fifth straight year of 750 or more residential permits per year. Non-residential starts 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 199.5, Del Webb Corporation began a 9,500 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. The City makes all infrastructure improvements and debt payments using the SIP fees without cash shortfalls or increases in overall service rates. As of September 30, 2000, 2,247 homes have been completed and over 150 more are in various states of construction. BUDGET HIGHLIGHTS The major initiatives for the 2000/01 Annual Operating Plan and beyond are outlined as follows: • Economic Development In 1999/2000, the Council appointed an Economic Development Task Force to make recommendations for the community's economic development strategy. From this process, an Economic Development Division was created for 2000/01. The purpose of the division will be to recruit new business and help sustain the local economy, direct the Main Street Program and manage the Convention and Visitor's Buteau. 2000/01 Operating Plan Element - Transmittal Letter Page iii of vii Fee Analysis and Review A major objective for 2000/01 will be to assess the citywide financial condition and review its financial strategies in order to develop a long-term business plan that will ensure adequate financial resources for the City in the future. As part of this project, a competitive fee analysis of all City fees, including utility rates, will be undertaken to determine whether the fee structure is adequate to cover the costs associated with providing service. • Staffing Issues The 2000/01 Operating Plan reflects a substantial commitment to invest in the human resources of the City. It includes a 5.5% increase in salary adjustments, or $550,000, to fund the City's merit based pay -for -performance system. In addition, $200,000 was included to improve the employee benefits program. The 2000/01 Plan includes ten (10) additional full-time .positions and two (2) up -graded positions, for a total of 350.50 full-time equivalents (FTE's). The most significant increase is the addition of seven (7) positions in Fire Services to alleviate staffing shortages and to fully staff Fire Station No. 4 on Airport Road. Other additions include two full- time positions in the legal department and a new webmaster position in Information Resources to manage the growing demand on the City's website. • Affordable Housing The City has allocated $30,000 to begin implementation of a citizen committee to plan for the City's need for affordable housing. These funds will be used for the further development of the housing plan and for possible grant matching funds for affordable housing projects. • Utility Issues Providing clarity for the City's long-range water planning process, to ensure future community needs, will be a priority for 2000/01. This includes researching options for securing future water availability and further developing a long-range regional approach to this issue. The City will also implement a Backflow Prevention program to provide protection of the City"s water supply and ensure citizens of the safest and highest quality of water. Another priority for 2000/01 will be to continue monitoring electric deregulation issues to ensure that the City's electric system will be compliant and provide quality service to our customers. • Capital Projects The City will spend $22.4 million on new infrastructure projects in 2000/01. The City will begin construction of the Pecan Branch Wastewater Treatment Plant to provide treatment capacity for Sun City Texas and other significant development in the City's north and northwest quadrants. Major street projects include the realignment of Country Club Drive and the Maple Street extension. The City's Water Department will also complete the construction of pump stations at Sun City and Rabbit Hill, along with continued construction of the. West Loop Water Line to improve water transmission to various parts of the city. 2000/01 Operating Plan Element - Transmittal Letter Page iv of vii FINANCIAL HIGHLIGHTS The City is committed to sound, financial planning and direction, as reflected in the Finance Policy portion of the Georgetown Century Plan and the Budget and Financial Policies adopted as part of the budget. The Council's goal to achieve Finance Focus End 14.01, which states "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 Rinds, including the Airport, are self-supporting. The City has also met its commitment for minimizing tax increases by including no increase to our property tax rate. The minimum contingency reserve remains at $8.5 million to meet policy requirements. A more detailed look at the City's revenues and funds is provided in the Financial Summary Section. 95196 96197 97198 98199 99100 00101 Proj. Combined Utility Revenues Millions 0 10 20 30 40 ® Electric . ® Water o Wastewater D Sanitation tD Stormwater Revenues. The City's revenues continue to rise due to growth in sales tax revenue, 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 8- 9% for the last three years. However, the City has elected to conservatively project at a 6-7% increase in revenues due to utility growth. Since weather conditions affect the electric and water revenues significantly, revenue projections utilize these conservative growth estimates to avoid budget shortfalls, and utilize a rolling average consumption method to factor out any weather aberrations. General Fund. As in many other cities, Georgetown's General Fund revenues, do not support its expenses, which are increasing at a higher rate than its revenues, due in part to the $3 increased demand for governmental services, such as Fire and Police Services. Historically, $2 the City has maintained a low tax rate by using the excess revenues from its utility funds to $1 balance the General Fund. Although all other City funds will be self-supporting, the General Fund continues to rely on substantial transfers to $0 fund operating expenditures. General Fund Transfers 9455 95198 98/97 97/98 98/99 99W 00101 0 GFund Shortfall Transfers o % GFund Expenditures 40% 30% 20% 10% 0% 2000/01 Operating Plan Element - Transmittal Letter Page v of vii c 0 9455 95198 98/97 97/98 98/99 99W 00101 0 GFund Shortfall Transfers o % GFund Expenditures 40% 30% 20% 10% 0% 2000/01 Operating Plan Element - Transmittal Letter Page v of vii Because of customer growth, there is an increased demand for utility services; therefore, 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 minimized new General Fund spending in the 2000/01 budget to reduce the reliance on utility transfers. In 2000/01, the General Fund will require a balancing transfer of $1.9 million or 14.4% of expenses, which is a 36.8% decrease from the prior year. The long-term goal is to continue reducing these transfers through gradual increases in fees and other General Fund revenue. Additional efforts will be managed through the policy limit on transfers and limiting growth in available City services. General Obligation Debt. The City included a proposed debt issuance of $490,000 in its property tax rate calculation for 2000/01. Currently included in this proposed debt issue is the $490,000 reimbursement of funds expended on lighting at the City's new athletic complex. This debt issuance is for street projects included in the Capital Improvement Program may also be added, depending on the timing of the individual projects. Council sub -committees for transportation and facilities are currently meeting to finalize projects that may also effect the spring 2001 debt issue. Currently, the City's General Obligation Debt per capita is $626, well below the national average of $765. The City currently holds an "A" bond rating with both Standard & Poors and Moody's. The economic outlook for Georgetown has recently moved to "positive" from "stable", thus indicating the City's continued strong economy and sound fiscal management. Electric, Wastewater and Water Funds. The City's electric, wastewater and water systems continue 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. Future long-term water supply and the uncertain issues related to electric deregulation may require a rate increase at some point in the future. The City plans to issue $1 million in new revenue debt in 2000/01 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 3.29 times coverage for 2000/01, 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 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. Internal $.ervice 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. 2000/01 Operating Plan Element - Transmittal Letter Page .vi of vii Information Services Fund $1,123,000 Add and replace desktop, network and application technology and hardware, including 77 new and replacement PC's, training for City staff and - maintenance costs of existing software applications. .Facilities Maintenance Fund $609,000 Fleet Management Fund $1,110,000 CONCLUSION Building maintenance and repairs to include HVAC, janitorial services and minor remodeling. Add/replace 16 vehicles and various shop equipment. Growth issues will continue to dominate Council and staff time. The staff is ,prepared to respond to the growth and associated service demands. I believe this budget accomplishes the goals and objectives set forth by the Council and the community. It reflects the,importance and value we place in City staff, as well as emphasizing the demands placed on staff, by the community, for quality service. Finally, I acknowledge the tremendous contributions and teamwork of all City staff in preparing the 2000/01 Annual Operating Plan Element. Most notably, I,want to recognize the Finance and Administration Division for their long and dedicated hours in preparing the Operating Plan. 2000/01 Operating Plan Element - Transmittal Letter Page vii of vii N41 NDED This page intentionally left blank. 1%