HomeMy WebLinkAboutFY09 General Fund Spending Reductions
Commission Memorandum
REPORT TO: Honorable Mayor and Commission Members
FROM:
Chris Kukulski, City Manager
Chuck Winn, Assistant City Manager
Anna Rosenberry, Finance Director
Ron Dingman, Parks, Cem, & Rec. Director
James Goehrung, Facilities Superintendent
Alice Meister, Library Director
Jason Shrauger, Fire Chief
Brendan Steele, IT Director
Mark Tymrak, Police Chief
SUBJECT: FY09 General Fund Spending Reductions
MEETING DATE: January 20, 2009
RECOMMENDATION: Listen to staff presentation and provide comments and
recommendations to the City Manager.
BACKGROUND: In response to the national economic situation, changes in the local
economy, and the decline in new construction within the City limits during calendar year 2008,
we have been working on ensuring that current workloads are aligned with staff levels and that
resources are being spent in the most prudent manner.
Because of the funding sources, these concerns were quickly felt this past spring and summer in
development and building-related funds; the Planning Fund and Building Inspection Fund
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budgets for FY09 included lay-offs, vacant positions eliminated, and decreases in operating and
capital budgets. We also significantly revised our revenue estimates for Impact Fee collections
and moved projects to later years in the Capital Improvements Plan because of lack of funding.
Our main concern within the General Fund is the decrease “new construction” tax revenue that
we project for FY10. Based on building permit activity, our local tax base is estimated to
increase approximately 3.5% for the coming fiscal year. This is compared to increases ranging
from 6.9% to 9.6% in the past 5 years.
The only new property tax revenue the city can collect, without voter approval, comes from the
value of new construction in town and the one-half inflation rate allowed by statute. The table
below shows the building permit values (an indication of new construction) for the past 5 years.
The 2008 calendar year will be used for the FY10 budget, and is 62% of the average for the past
5 years (avg. $180 Million), and half of the prior year’s new construction. Based on this
information, we estimate dollars from new construction in the General Fund to be roughly
$350,000 for FY10.
The General Fund is heavily reliant on property tax revenue (largest single source, approximately
50%.) Property taxes are a much more stable source of revenue than local income taxes,
FY05 FY06 FY07 FY08 FY09 FY10
Building Permit Valuations 2003 2004 2005 2006 2007 2008
January 2,390,790 8,965,432 16,973,708 10,364,161 14,015,895 11,402,748
February 5,216,781 1,914,220 7,220,097 8,282,557 8,717,398 6,703,811
March 7,544,427 14,866,153 14,123,278 8,698,559 16,809,034 11,556,247
April 24,687,186 11,914,992 18,558,581 18,676,979 16,094,245 14,475,650
May 13,833,452 22,486,236 11,584,111 21,313,667 40,888,511 11,170,821
June 11,474,478 10,374,439 17,578,203 23,896,568 22,543,323 6,171,918
July 8,957,383 16,205,792 18,497,786 28,422,803 20,093,045 11,716,579
August 11,913,504 13,043,140 19,497,505 14,379,734 19,188,855 10,821,826
September 14,822,630 12,953,323 22,019,443 13,703,822 28,924,777 14,370,690
October 11,512,019 15,473,989 26,782,470 23,693,201 13,149,796 8,588,947
November 5,982,666 10,709,202 17,632,046 10,282,928 12,459,581 2,485,615
December 14,860,019 16,112,357 8,580,985 10,962,014 11,802,228 3,831,004
133,195,335 155,019,275 199,048,213 192,676,993 224,686,688 113,295,856
% Increase in Taxable Value 6.9% 9.6% 8.9%9.1% 7.5%3.78%***Estimate
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business profits tax, or sales taxes. But, we have areas of concern this year. In addition to new
construction declines:
• Department of Revenue has indicated that we may see declining taxable value of
centrally assessed properties like Northwestern Energy, Qwest Corporation, and Montana
Rail Link. These are 3 of our top-ten taxpayers, making up 3% of our total tax base. The
Department anticipates giving local governments an update this spring on the status of
the centrally assessed companies.
• The Legislature is currently deciding how the new 2009 Property Tax Reappraisal will be
implemented. This may positively or negatively impact new construction value and tax
base calculations in the coming year. This issue promises to be a heated debate this
spring, and may not be resolved until the final weeks of the session.
Based on these uncertainties, we began discussions of “belt-tightening” in the General Fund in
November. We sought to increase the amount of General Fund Reserve at the end of this fiscal
year and better position ourselves for development of the FY2010 budget, which is now
underway. A number of ideas have been discussed and analyzed. We looked for ideas that
would increase efficiency and cut costs, not just defer purchases for one year. We also asked
departments to identify projects that they believe can be put off until the time that population
growth and building construction pick back up. This has been a collaborative effort, with all
levels of employees involved.
Staff Changes: Through attrition, we have been able to make staffing changes related to
declining workloads (when growth picks up, the positions will likely need to be filled.) When a
position becomes vacant, we have been looking to see if the work can be done by other staff
members; especially if the other’s traditional workloads have decreased due to declining
construction/subdivision activity. Taking the opportunity to not fill a position is much easier
than hiring a person now, only to have to lay them off in a few months. Also, spreading duties
among a number of people in an office or division is often manageable. However, we recognize
that not all departments are seeing a decline in service demands related to construction/economic
activity.
• Administrative Assistant – Finance
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• Administrative Assistant – Fire, Half Time
• Help Desk – IT, reduction of hours
• Inter-Library Loan Program, reduction of hours
From these positions, 1.62 Full-time-equivalents will not be included in the budget development
process for FY10. The half-time Fire position is currently being analyzed as to whether it can be
excluded in FY10, as well. We appreciate the directors and staff member’s willingness to take
this approach, but recognize that we may have to reconsider these positions in the future.
Projects Deemed Not Necessary in FY09: There are a number of projects funded in the budget
that, due to changing circumstances, we believe should not be pursued or are not necessary in
FY09. Some of those include:
• Wireless Access Points on Rouse Avenue
• Increased Advertising to Recruit Employees
• Mobile Data Terminal Replacement Program for Fire Vehicles (can adjust replacement
schedule due to changes in vehicle deployment.)
• Fire Station #3 utility, supply, and fuel costs for FY09 (due to the changing time-frame
for opening of the station, not opened until FY10)
• Self-Contained Breathing Apparatus Certifications (due to replacement this year.)
Operational Changes: We have implemented many operational changes that we believe will cut
costs without significantly changing our ability to provide service to citizens. Some of those
include:
• Purchase of extended warranty so that computers may be replaced every four years, not
three. This will allow us to continue, not increase, our PC replacement budget in coming
years.
• Utilization of internet-based publications to reduce reference materials budgets in many
departments.
• Retiring older, high-maintenance equipment when we also own a viable substitute.
• Using in-house staff to provide training to others rather than paid consultants/trainers.
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• Purchasing equipment to perform duties we were paying others to perform, with the
equipment cost recovered within the first year.
• Having existing staff, often from other departments, assist with work we were contacting
with others to perform (janitorial, snow removal, mowing, etc.)
Foundation Assistance: The Library Director has proposed that we ask the Library Foundation
to assist in funding materials and training for the Library next year, totaling roughly $26,000.
We will be working with her to pursue this budget assistance.
One-Time Vacancy Savings: We have identified vacancy savings through December 2008 in a
number of departments. However, we have not added vacancy savings from any of the newly
created Fire and Police levy positions. Because of our commitment to the community during the
public safety levy discussions, we aren’t proposing that the reserve be increased with levy
position vacancy savings.
FISCAL EFFECTS: We estimate the FY09 General Fund Cash Reserve will be increased
$256,000, as a result of these spending adjustments.
Projected Unreserved Fund Balance – With spending adjustments $3,999,186
As a % of FY09 Revenues 19.1%
We will also have 1.62 Full-Time Equivalent positions that will not be included in the budget
development process for FY10, and approximately $147,000 of identified items that will not be
requested in FY10.
ALTERNATIVES: As suggested by the City Commission.
Respectfully submitted,
Anna Rosenberry, Finance Director Chris Kukulski, City Manager
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FY09 General Fund Mid‐Year Spending ReductionsDepartment FY09 Savings FY10 Savings Notes:Cemetery 2,200.00 Reductions to reference materials, preparation materials, advertising and janitorial contract budgets.Facilities 6,000.00 Eliminate Facility Index Reports for FY10 (most needed reports have been completed), work with Streets Department and Facilities staff to see if snow removal and mowing can be done in‐house.Finance 21,500.00 34,600.00 Admin Assistant position not filled, old printer retired.Fire 44,700.00 21,000.00 Admin Assistant position not filled, certifications not required this year, purchase of in‐house equipment for laundry service, change in MDT program, Fire Station #3 costs not needed this year.IT 30,500.00 5,500.00 Help Desk Position hours reduction, change in PC replacement, eliminate Rouse Wireless plan.Legal 17,500.00 17,500.00 Net Vacancy Savings from Employee Deployment Library 7,000.00 40,000.00 Inter‐library loan staffing changes, materials, & training. Ask Foundation to assist with Materials and Training for FY10.Parks 13,300.00 Elimination of $2K City Contribution to Bridger Ski Foundation, reference materials, irrigation, computer supplies.Police 128,300.00 ‐ One patrol car & equipment (can do without in FY09), Jul‐Dec vacancy savings from Admin Staff and Existing Officer Positions.Recreation ‐ Aquatics 500.00 3,100.00 Move to in‐house training, reference materials, utility reduction due to no hot tub.Recreation ‐ Programs 2,200.00 Move to in‐house trainingCity Manager/HR/Neighborhoods 6,000.00 2,000.00 Reduced training, advertising & recruitment materialsTotal 256,000.00 147,400.00 30440