HomeMy WebLinkAboutResolution No. 4318, Adopting the City Manager's Recommended Budget for Fiscal Year 2012.pdf
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Chris Kukulski, City Manager
Anna Rosenberry, Finance Director
SUBJECT: Resolution No. 4318 - A RESOLUTION ADOPTING THE CITY
MANAGER’S RECOMMENDED BUDGET FOR FISCAL YEAR 2012
AS THE PRELIMINARY BUDGET FOR FISCAL YEAR 2012, AND
ADOPTING THE CHANGES IN FINANCIAL POLICIES CONTAINED
THEREIN.
**Reminder: Bring the Budget Document that you received on May 27, 2011.
MEETING DATE: June 13, 2011
AGENDA ITEM TYPE: Action
RECOMMENDATION: Adopt Resolution No. 4318.
BACKGROUND: On June 6, 2011, the City Manager’s (CM) Recommended Budget for
Fiscal Year 2012 was presented during the public meeting. The entire “City Manager’s
Recommended Budget” document is available online at http://www.bozeman.net/Departments-
(1)/Finance/Budgets-and-Financials . Copies are also available to the public at the Bozeman
Library and City Clerk’s office.
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Adoption as Preliminary Budget: State property tax timelines prohibit the City from adopting
a final budget and tax levy before the fiscal year begins. Specifically, the property tax levy
cannot be established prior to receiving certified tax values from the Department of Revenue –
which will occur in early August.
Between the time the fiscal year begins (July 1) and the final budget is adopted (August 23), the
City Manager’s Recommended Budget will be in effect. However, the following operational
conditions are recommended and will be followed by staff:
1. No newly recommended Capital Projects, Personnel Positions, Contracted Services or
Equipment will be purchased or entered into prior to final budget adoption in August,
except:
a. We will be purchasing the Capital Improvements Plan (CIP) item WW27: Skid
Steer, $45,000. This critical piece of equipment is needed at the new Water
Reclamation Facility to lift polymer totes in the new bio-nutrient treatment
process.
b. We will be entering into an agreement for the engineering and design work
related to the Bogert Pool gutter and pool shell repairs contained in this budget.
This is expected to help ensure the work is properly planned and time for next
year’s summer swim season, once the full construction project is approved.
These restrictions are meant to retain maximum flexibility in budget decisions for the
Commission prior to final budget adoption. Any other restrictions the Commission deems
necessary can be added.
Financial Policy Changes:
We have changed our Financial Policy sections regarding Expenditures and Fund Balances to
comply with the new Governmental Accounting Standards Board (GASB) Statement No. 54.
You’ll find discussion of the required policy changes in the Budget Message. There will be an
additional step, outside of the budget’s Financial Policies, to complete our implementation of the
Statement. This added resolution will be on the Commission’s consent agenda, on June 13,
2011. We have met with our external auditors to review these changes that help ensure our
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compliance with the new standard. It is important that these changes be adopted prior to June
30, 2011.
Hearings and Work Sessions before Final Budget Adoption: The Budget and Tax Levy
Hearings are tentatively scheduled for August 22, 2011, and can be opened-and-continued, as
necessary.
The process that is used to get us from Preliminary to Final Budget adoption has changed from
year to year. Our goal each year is to meet the needs of the Commission and the public – which
often change given economic or programmatic circumstances. Last year, we successfully used a
series of budget work sessions to review detailed areas of the City’s recommended budget. They
usually lasted 1-2 hours, and allowed us to delve more specifically into the finances and
operational plans for our various programs. We propose the following dates for work sessions
during this summer:
Monday, July 18 – Budget Work Session on Water and Sewer Funds, and their associated
5-year rate models.
Monday, July 25 – Budget Work Session on Special Revenue Funds, including Street &
Tree Maintenance Assessments.
Monday, August 8 – Budget Work Session on General Fund
Monday, August 16 – Budget Work Session – only if needed.
UNRESOLVED ISSUES: Because this is the beginning of the formal budget process, there
are many unresolved issues. We will be identifying and discussing those during this presentation
and the budget workshops and hearings this summer.
ALTERNATIVES: Delay adoption of the City Manager’s Recommended Budget as the
Preliminary Budget; or, adopt it as the Preliminary Budget with changes or additional
restrictions.
FISCAL EFFECTS: The adoption of the final budget in August will have far-reaching
fiscal effects.
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ALTERNATIVES: As suggested by the City Commission.
Report compiled on: June 3, 2011
Attached Documents: Resolution No. 4318
Budget Message (excerpt from Budget Document)
Documents on File: City Manager’s Recommended Budget for Fiscal Year 2012
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NOTICE OF PUBLIC HEARING
NOTICE IS HEREBY GIVEN that, pursuant to the provisions of Section 7-6-4021, Montana
Code Annotated, the City Commission of the City of Bozeman, Montana will conduct a public
hearing on the preliminary municipal budget for Fiscal Year 2012, embodied in Commission
Resolution No. 4318, at 6:00 pm on Monday, June 13, 2011 at City Hall, 121 N. Rouse
Avenue, Bozeman, Montana.
Copies of Commission Resolution No. 4318, are on file in the office of the City Clerk, City Hall,
121 N. Rouse Avenue, and may be examined by all interested citizens.
Any and all interested persons are invited to attend the public hearing and to submit testimony
in support or in opposition to the proposed budget or to submit written testimony prior to or
during the public hearing. Written testimony can be submitted to the City Clerk, PO Box 1230,
Bozeman, Montana 59771.
If you have a disability that requires assistance, please contact the City of Bozeman’s ADA
Coordinator, James Goehrung, at 582-3232 (TDD 582-2301). If you have questions about the
budget proposal, please contact Finance Director Anna Rosenberry at 582-2303.
Dated this 3rd day of June, 2011
__________________________________
Stacy Ulmen, City Clerk
Legal Ad
Publish: Monday, June 6, 2011
Monday, June 13, 2011
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COMMISSION RESOLUTION NO. 4318
A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF
BOZEMAN, MONTANA, ADOPTING THE CITY MANAGER’S
RECOMMENDED BUDGET FOR FISCAL YEAR 2012 AS THE
PRELIMINARY BUDGET FOR FISCAL YEAR 2012 AND ADOPTING THE
CHANGES IN FINANCIAL POLICIES CONTAINED THEREIN.
WHEREAS, the City Commission did, on the 6th day of June, 2011, hear the City Manager’s
presentation of the Budget Recommendations for Fiscal Year 2011-2012 (Fiscal Year 2012, also FY12);
and
WHEREAS, the City Manager’s Recommended Budget contains changes to the City’s
Financial Policies that bring the City in compliance with the new requirements of the Governmental
Accounting Standards Board’s Statement No 54 “Fund Balance Reporting and Certain Governmental
Fund Types,”
NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of Bozeman,
Montana, to wit:
Section 1
That the City Manager’s Recommended Budget for Fiscal Year 2012 will serve as the City’s
preliminary annual operating budget, pursuant to Sections 7-6-4021, M.C.A.
Section 2
That budget information contained in the "City Manager's Recommended Budget for Fiscal
Year 2012" document pertaining to Policy Direction, Financial Policy, and the specific information
concerning budgeting for each department are hereby adopted.
Section 3
This resolution shall become effective upon passage.
Section 4
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- 3 -
That upon this resolution becoming effective, as provided in Section 3 above, all resolutions
and parts thereof in conflict herewith are hereby repealed.
Section 5
That should it be found by any court of competent jurisdiction that any section, clause, portion,
sentence, word, or phrase of this resolution is deemed to be contrary to any existing law or regulations,
that in this instance, it is the intent of the City Commission of the City of Bozeman, Montana, that all
other portions, sections, words, clauses, phrases, or paragraphs of this document shall remain in full
force and effect.
PASSED AND APPROVED by the City Commission of the City of Bozeman, Montana, at a
regular session thereof held on the 13th day of June, 2011
________________________________________
JEFFREY K. KRAUSS
Mayor
ATTEST:
_____________________________________
STACY ULMEN, CMC
City Clerk
APPROVED AS TO FORM:
________________________________________
GREG SULLIVAN
City Attorney
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FY12 City Manager’s Recommended Budget City of Bozeman, Montana
CITY MANAGER’S BUDGET MESSAGE
___________________________________________________________
June 6, 2011
Bozeman City Commission:
I am pleased to present the City Manager’s Recommended Budget for Fiscal Year 2011-
2012 (FY12).
This fiscal year marks the fourth year of our belt-tightening efforts; what started in March
and April of 2008 (FY09 budget development) is now carrying into the FY12 budget. Over
this time period, property owners in the City have benefitted by over $4 Million in reduced
property tax levies related to operating budget and grant savings.
While the local and national economies have certainly declined from 2007 levels, we
continue to see modest growth in the city: Additional commercial construction, regional
and national businesses planning to locate and locating in Bozeman, and a small number of
residential housing projects moving forward. From these indicators, we believe we must
continue forward with a number of the critical infrastructure and community development
efforts:
Water Treatment Plant Expansion
South 8th Avenue Street Reconstruction
Gallatin College Support
Expanded Economic Development Program
As for existing operations, we continue to seek opportunities to invest in projects that
improve efficiency, and we continue to make the difficult funding and staffing choices that
these times require of all local governments.
Commission Goals (Work Plan)
On April 11, 2011, the Commission adopted a work plan of new initiatives and second-tier
priorities for 2011 and 2012, in an effort to inform policy discussions and assist staff in
allocating resources and time. All four top priorities are addressed in this budget, along
with a number of the 2nd tier initiatives. Below is a list of the top 4 priorities; the full plan
can be found on page 26.
1. Enhance Downtown Development Opportunities.
2. Implement the Adopted Economic Development Plan.
3. Adopt Plans to Address Deferred Infrastructure Maintenance.
4. Develop an Integrated Water Resource Plan.
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FY12 City Manager’s Recommended Budget City of Bozeman, Montana
Changes during the past 12 months
Building Activity: Local building activity has many impacts on the operations and
finances of the City; from the workload and revenues in the Planning and Building
Inspection Divisions to the amount of funding available for Impact Fee programs and
increases in Property Tax dollars due to new construction.
As with the rest of the nation, credit and other economic factors began affecting the amount
of subdivision and construction activity we were seeing come through the doors of our
Planning and Building Inspection Divisions in early 2008. This trend continued through
FY09.
During FY10 & FY11, Planning and Building activities continued at levels below FY09;
however, we continued to see moderate building activity in our City. During FY11, the
Kohl’s and Safeway projects provided noticeable increases in planning and building
activity. Building and planning activity related to the June 30, 2010 hail storm also
boosted activity in these departments. However, we don’t anticipate a number of similar
projects or weather events in the coming year. For that reason, our FY12 estimates for
Building and Planning revenues mirror the FY10 actual receipts. We continue to monitor
the revenue and workload status of the Building Inspection and Planning Departments on
a monthly basis, and report to the Commission on a quarterly basis.
Property Tax Revenues from New Construction: The City’s certified taxable value
for the previous year shows that our local tax base grew 3.2% from January 1, 2010 to
December 30, 2010. This is the lowest increase in taxable value that the city has seen since
2001. It is markedly below the average of 6.9% we had seen each year over the past 5
years. For the coming year, we are estimating that the local tax base will grow by 2%.
Actual certified taxable values will be received in early August from the Montana
Department of Revenue.
State Entitlement Share: During the 2011 State Legislative session, which ended in
early May, the State eliminated the statutory growth factor for our Entitlement Share
dollars for FY12. Under the prior statute, the City would have seen approximately
$150,000 in increased revenue in the General Fund. Instead, FY12 will see no growth in
Entitlement Share in the general fund, and a 10% decrease (-$3,100) for the Downtown Tax
Increment District.
2010 Census Information: The 2010 Census information for the City of Bozeman shows
that we are now the 4th most populous city in the state; increasing from our rank of 5th in
the 2000 census. Our actual 2010 census population of 37,280 is lower than the census
estimate of 2009 by 5.1%, but shows a 32.7% increase over our 2000 census population.
Gallatin College Funding: In January 2011 the Commission committed to assist with
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FY12 City Manager’s Recommended Budget City of Bozeman, Montana
funding the start-up of new Gallatin College programs at Montana State University. They
committed the equivalent of 1.5 mills (estimated $123,600) in each of FY11, FY12, and
FY13. We have budgeted for this expenditure in the Economic Development section of our
Community Development budget.
Economic Development & Public Relations Director: In concert with Commission
Goals, the Economic Development & Public Relations position is now a director-level
position, has been moved out of the City Manager’s department, and moved to its own
division in the Community Development department of the budget. This position is leading
the city’s Economic Development Team to “assist in diversifying our local economy by
creating sustainable, high paying jobs without sacrificing Bozeman’s quality of life.”
GASB Statement 54 Implementation: Along with local governments across the country,
this year the City is required to implement the Governmental Accounting Standards
Board’s (GASB) Statement No 54 – Fund Balance Reporting and Certain Governmental
Fund Types. While this statement has minor implications for the mechanics of budgeting,
we need to revise portions of our Financial Polices. We added a “Spending Policy,” and
revised our “Reserves and Fund Balance” policy, beginning on page 32.
In the past, the spendable portions of fund balances have generally been described as
“reserved” and “unreserved.” The new standard is to describe the spendable portions as
“restricted”, “committed”, “assigned”, and “unassigned.” Definitions of these categories are
included in the Financial Policies section.
To comply with the Statement, we will also be adopting a resolution related to
commitments of revenues and special revenue funds later in June.
Solvent Site Active Remediation: The city is awaiting the issuance of the Record of
Decision from the Montana Department of Environmental Quality regarding the clean-up
of the Bozeman Solvent Site. A decades-long effort, we anticipate the Decision being issued
within the next few months. This budget contains approximately $700,000 in planned
expenditures in the Wastewater Fund for active remediation of the Site. This multi-year
remediation project is being undertaken with CVS Pharmacy.
Mandeville Farm Judgment: In December 2009, the Montana Supreme Court ruled
against the City in our appeal of Delaney v. City of Bozeman. At issue was the City’s
purchase of the Mandeville Farm property in 2003. Delaney was awarded $3 Million. The
City and MMIA are working towards a judicial determination as to whether the City or the
MMIA is responsible for the payment. Currently the MMIA has paid the judgment, subject
to a non-waiver provision that could require the City to reimburse the MMIA, if a court
finds the City is obligated. The costs associated with this legal process are estimated to be
$20,000 for FY12 and are included in the Attorney’s Budget. We anticipate a judicial
determination sometime during FY12.
Sewer Plant Construction: Substantial completion of this $54 million project is
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FY12 City Manager’s Recommended Budget City of Bozeman, Montana
estimated to occur in October 2011. During the past 3 years, we have fully budgeted for the
plant construction, and will utilize carry-over budget authority to complete the project in
FY12. (No additional budgeted expenditures in FY12.)
Water Plant Construction: The slowdown in community growth gave us a bit of
headway in our existing water capacity. As a result, we delayed bid of the Water Plant
project for approximately 12 months. We are now set to open the bids on June 7, 2011
(Tomorrow!) This budget includes $15 million in construction spending on the project,
which is expected to cost $40.1 Million and span 3 fiscal years.
Staffing Levels and Changes
Prior Year’s Reductions: During the course of this extra-ordinary recession, we have
made a concerted effort to balance the needs of the community with our available resources.
The table below shows FY09-FY11 position reductions that have been made in order to
balance staffing levels with workloads, and conserve resources where possible.
Position Reductions—Economic Downturn Number of Full-Time Equivalent Positions
Building Inspection 6.0 FTE
City Manager's Office 1.0 FTE
Finance Department 1.25 FTE
Fire Department 0.5 FTE
Information Technology 0.12 FTE
Library 0.5 FTE
Planning Department 3.85 FTE
Total Reductions 13.22 Full Time Equivalent Positions
Public Safety Positions (Police & Fire): Prior to the recession, in November 2007, local
voters approved increasing our tax levy to add staff to both the Police and Fire
Departments. FY11 marked the final year of adding Police Officers funded by the Levy.
We have budgeted for, and continue to strive to fill all of the authorized positions in FY12.
The levy also approved funding three Battalion Chief positions within the Fire Department,
as a result of adding a third Fire Station to the City. After careful consideration and
operation of the three stations for nearly two years, we have decided to not hire the
Battalion Chief positions in the coming year. We will analyze the need for these positions
going forward but will not be levying taxpayers to fund the positions in FY12.
In addition to delaying the hiring of Battalion Chiefs, this budget recommends re-allocating
duties and eliminating positions related to the Code Enforcement Officer in the Planning
Department, and the Recreation Superintendent in the Recreation Department.
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FY12 City Manager’s Recommended Budget City of Bozeman, Montana
Recommended Staffing Changes for FY12 Number of Full-
Time Equivalent
Positions
Planning - Code Enforcement Officer (1.0) FTE
Recreation - Recreation Superintendent (1.0) FTE
Net Change (2.0) FTE
The General Fund: The City’s General Fund supports the majority of administration,
public safety and public welfare operations. It’s most significant source of revenue comes
from local property taxes. As a result, the General Fund’s operating budget and fund
balance are critically important to the financial health of the City. This year’s General
Fund budget totals $24.1 Million in expenditures, in the following areas:
General Fund FY12 Budget
Commission $187,466.00
City Manager/Admin 819,576.00
Courts 623,850.00
Attorney 734,555.00
Finance 823,492.00
Facilities 1,416,600.00
Information Technology 982,986.00
Police 7,124,664.00
Fire 5,038,421.00
Public Services Admin 195,352.00
Cemetery 511,756.00
Parks 1,127,817.00
Library 1,702,893.00
Recreation 1,603,550.00
Community Development 349,105.00
Other 879,891.00
TOTAL Expenditures $24,121,974.00
As shown in the following graph, Police and Fire services comprise over 50% of the General
Fund’s spending. Funding for the Library and the Recreation facilities and programs are
second highest, at 7% each. Recreation funding is boosted this year by the Bogert Pool
Capital Improvement project, $382,000.
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FY12 City Manager’s Recommended Budget City of Bozeman, Montana
General Fund Unreserved Fund Balance: The City’s Charter requires an
established minimum level of General Fund Unreserved Fund Balance, in accordance with
the Government Finance Officers’ Association (GFOA) Best Practices. The GFOA
significantly changed their Best Practice Recommendation in October 2009. As a result, in
May 2010, the Commission increased the required minimum from 12% to 16 2/3%. Under
the new GASB 54 requirements, this minimum level becomes the General Fund’s
“Committed” Fund Balance.
We propose to utilize the amount of General Fund cash above the minimum reserve amount
to decrease the FY12 property tax levy. As a result, this budget has in an ending
Unreserved Fund Balance of $3.9 Million, or 16.67% of budgeted General Fund revenues.
General Fund Concerns:
Property Tax Levy: As was done last year, this budget continues to utilize one-time
cash (vacancy savings and grant revenue) to lower the property tax levy. While this
is often a very prudent use of resources, it is important to note that it is not expected
to be available to lower the levy in future years.
General Fund Reserve Levels: The Commission has expressed a desire to spend
cash savings (amounts above the minimum general fund reserve requirement) to
lower the property tax levy (lower property tax revenues.) The effect of this is to
also lower the required amount of cash reserve, since reserves are calculated based
Commission
1%
CM Admin
3%Courts
3%
Attorney
3%
Finance
3%
Facilities
6%
IT
4%
Police
30%
Fire
21%
Public Svc
1%
Cemetery
2%
Parks
5%
Library
7%
Recreation
7%
Other
4%
FY12 General Fund Budget
Commission
CM Admin
Courts
Attorney
Finance
Facilities
IT
Police
Fire
Public Svc
Cemetery
Parks
Library
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FY12 City Manager’s Recommended Budget City of Bozeman, Montana
on the total annual revenues. When money is no longer available to “buy down” the
tax levy, we will also be required to increase our amount of reserves. For example,
using $500,000 of vacancy savings to lower property taxes, also lowers our cash
reserve requirement by $83,335 (16.67% of $500,000.) At the time the vacancy
savings is no longer available, we will also need to increase our cash reserves.
Capital Funding: We are making headway with significant capital projects outside
of the general fund. However, we continue to make cuts to general fund capital
expenditures when it comes time to balance the budget. Even though we increased
our general fund capital expenditures compared to last year, we fell short of our
Capital Improvement Plan goal of 5% of general fund revenues. This budget spends
approximately 4% of the general fund resources on capital projects, roughly $1
million. The Capital Plan for next year calls for $1,350,000 in capital spending;
and, $1,550,000 in FY14. We are uncertain as to how we’ll be able to fund that level
of capital, given our current track-record.
Additional Debt: We anticipate borrowing $1.3 Million for the Reconstruction of South
8th Avenue, and approximately $150,000 for the related Special Improvement District bonds
for adjacent property owners.
While the new Water Treatment Plant will require substantial borrowing through
completion (estimated $20M total), we don’t anticipate needing to borrow funds in FY12.
We will complete loan documents in FY12 and likely begin borrowing in FY13. This
borrowing will be secured by water-system rate-payers.
Mill Levy Comparisons
Given the City’s measures to return budget savings to the taxpayers, our levy has dropped
to 7th for comparable communities in our state. The table below shows the city tax levy for
a number of communities in Montana.
City 2010 Census
Populations
FY2011 Mills Levy Rank As a % of Bozeman
Levy
Missoula 66,788 225.56 1 134%
Havre 9,310 219.85 2 130%
Livingston 7,044 210.83 3 125%
Great Falls 58,505 173.10 4 103%
Billings 104,170 171.42 5 102%
Kalispell 19,927 170.34 6 101%
Bozeman 37,280 168.75 7 100%
Belgrade 7,389 152.58 8 90%
Helena 28,190 150.69 9 89%
Whitefish* 6,357 105.28 10 62%
West Yellowstone* 1,271 88.49 11 52%
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FY12 City Manager’s Recommended Budget City of Bozeman, Montana
West Yellowstone and Whitefish both utilize Local Option Resort Taxes as an alternative or
supplement to property taxes, which the City of Bozeman is currently prohibited from by
state law.
Residential City Property Taxes for FY10, FY11 and FY12
At the time voters approved the increase in tax levies for Police & Fire positions, the city’s
tax levy was 154.18 mills. Adding the approved 30 mills, which were to gradual increased
to a total of 30 mills by FY11, would leave taxpayers with an estimated mill levy of 184
mills. The City’s total tax levy has never reached this level, and has been substantially
lower than the maximum allowed by law, due to the following items:
The City did not immediately utilize the full amount of the 12 Mill Fire Department
Staffing Increase due to award of a $948,825 SAFER Grant; that levy will increase
to its maximum level in FY13, upon full expiration of the 4-year grant.
The City’s FY10 city tax levy was adopted at 170.19 Mills. This was a decrease of
0.97 mills from the prior year. Although the SAFER grant for the year was
declining, we credited approximately $510,000 of Police and Fire vacancy savings
and mid-year budget cuts, and temporary equipment reductions to reducing the levy
in FY10 by 7.44 mills.
For FY11, we reduced the adopted levy for the FY11 Safer Grant and Battalion
Chief positions, 911 related mills, and an additional $578,990 (7.16 mills.) This
resulted in a tax levy of 168.75 mills, over 29 mills ($2.3 Million) lower than our
statutory limit.
For the FY12 tax year, we have developed the budget with a tax level of 177.75 mills. This
is based on the following assumptions:
1. Our property tax valuation increases by 2% over last year.
2. Police Department FY11 vacancy savings totals $567,000, reducing the FY12 levy
(6.88 mills).
3. Battalion Chiefs are not hired in FY12, reducing the FY12 levy (3.35 mills).
4. General Fund cash available of $240,000 reduces the FY12 levy (2.91 mills).
5. SAFER Grant benefits the taxpayers ($113,000), reducing the FY12 levy (1.38 mills).
6. 911 Mill reduction is maintained ($741,600), reducing the FY12 levy (9.00 mills).
Assessed Market
Value
FY10
Taxable
Value
FY10 City
Tax Levy =
170.19
FY11
Taxable
Value
FY11 City
Tax Levy =
168.75
FY12
Estimated
Taxable
Value
FY12
Estimated
City Tax
Levy =
177.75
Median Home ~
$94,000
$2,754 $469 $2,651 $447 $2,651 $471
$150,000 $4,395 $748 $4,230 $714 $4,230 $752
$200,000 $5,860 $997 $5,640 $952 $5,640 $1,003
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FY12 City Manager’s Recommended Budget City of Bozeman, Montana
The median home “assessed market value” represents the value on the tax roll for a home
within the Bozeman city limits. This is the value of the property after the “homestead
exemption” is applied. Median simply means that half of the homes in the city have a
higher value and half have a lower value. The median value taxable value is estimated at
last year’s level. We anticipate receiving an updated median value from the County
Treasurer’s Office this summer.
General Taxes - Cost per Mill
For FY11, the value of one mill increased 3.2% to $80,783. Taxable values for the city have
had an average annual increase of 6.9% for the past 5 years. We are estimating continued
decline in growth, to an increase of 2% this year.
City residents living in the median residential home will pay approx $2.65 for each mill the
city levies. In FY12, that is estimated to total $471 in annual property taxes on the median
home. While this is an increase of $24 over last year (5.3% increase), it is still
approximately $62.35 (23.53 mills) lower that our statutory maximum.
City-wide Street and Tree Maintenance Assessments
City property owners pay annual street and tree assessments based on the square footage
of the lot they own. These assessments are the major funding for Street Maintenance and
Forestry Divisions. With the Commission’s focused goal of addressing deferred
maintenance, we are recommending a substantial increase to the Street Maintenance
Assessment. The recommended budget is based on a 20% increase in the Street
assessment, resulting in an annual assessment of $106.44 for the average sized lot. This
increase will fund the following:
Continued increase to Curb Replacement Fund (2%)
Debt Service Payments for the Reconstruction of South 8th Avenue (7%)
Establishment of a Street Reconstruction Fund (8%, ~$230,000 annually)
Increase in Operating Budget (3%)
The budget recommends no increase to the Tree Maintenance Assessment maintaining an
annual assessment of $16.86 for the average sized city lot.
Combined, the annual increase over the previous year is $17.74 for owners of an averaged
sized lot in the city.
Lot Size
FY10 Approved
2% Streets & 0% Trees
FY11 Approved
5% Streets & 4% Trees
FY12 Recommended
20% Streets & 0% Trees
Small= 5,000 sq ft. Streets—$56.31 Streets—$59.12 Streets—$70.95
Trees—$10.81 Trees—$11.24 Trees—$11.24
Average = 7,500 sq ft. Streets—$84.48 Streets—$88.70 Streets—$106.44
Trees—$16.22 Trees—$16.86 Trees—$16.86
Large = 10,000 sq ft. Streets—$112.64 Streets—$118.27 Streets—$141.93
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FY12 City Manager’s Recommended Budget City of Bozeman, Montana
Trees—$21.63 Trees—$22.50 Trees—$22.50
Water & Sewer Rates
City property owners are by-and-large required to utilize the city’s water and sewer
treatment systems. The adopted facility plans outline large capital projects will need to be
funded in the coming years.
With the near-completion of the Water Reclamation Facility construction, and the
beginning of the Water Treatment Plant construction, we have updated our 5-year study of
both Water and Sewer Rates. We will be presenting this detailed analysis the Commission
during the summer, for decision making on rate changes effective September 1, 2011. As
with the Street system, we have developed a recommendation that aggressively addresses
the issue of deferred pipe maintenance. We have also developed rates that would continue
to fund pipe maintenance at currently approved Capital Improvement Plan level, which is
what has been incorporated into the FY12 Recommended Budget.
Rate Increase Needed Amount Dedicated to
Deferred Maintenance
Water Rates Sewer Rates
Option A: To Fund Current
Operations, Capital &
Deferred Maintenance
*** Budgeted***
~$600,000/year 3% each year, for the
next 5 years
5% each year, for
the next 5 years
Option B: To Fund Current
Operations, Capital &
Address Deferred
Maintenance over 20 years.
~$900,000/year 5% each year, for the
next 5 years
7% each year, for
the next 5 years
For FY12, a residential customer utilizing 10 hundred cubic feet of water each month, will
see an estimated combined monthly increase for these services of $3.06/month, or $36.72
per year, without aggressively addressing the system’s deferred pipe maintenance (Option
A.) The financial effects are also described for Option B, below. Because of our inclined-
block rate schedules for water services, the increase that residents experience will relate to
their individual patterns of water usage (peaks, etc.)
Average
Residential
Customer
FY10 Monthly Bill
3.2% Increase Water
10.2% Increase Sewer
FY11 Monthly Bill
3.2% Increase Water
10.2% Increase Sewer
Option A:
FY12 Monthly Bill
3% Increase Water
5% Increase Sewer
Option B:
FY12 Monthly Bill
5% Increase Water
7% Increase Sewer
Water $35.64 per month $36.78 per month $37.88 per month $38.62 per month
Sewer $35.57 per month $39.20 per month $41.16 per month $41.95 per month
Total $71.21 per month $75.98 per month $79.04 per month $80.57 per month
Capital Improvements and their Impact on our Operating Budget
115
19
FY12 City Manager’s Recommended Budget City of Bozeman, Montana
The City annually prepares a 5 Year Capital Improvement plan, most recently adopted this
past January. The items that are scheduled in that plan each spring become the starting
point for budget requests at budget development time. This year, capital expenditures total
over $21 Million. These purchases will have varying effects on our operations this year and
into the future. See page 218 for a listing of approved capital improvement items.
The largest expenditure is $15 Million for construction of the Water Treatment Plant
(WTP.) Construction of the Water Treatment Plant will occur at the existing plant site;
the existing plant will continue to operate without major modifications or additional
staff.
Mechanical Improvements at Bogert Pool are expected to lower electricity and chemical
costs from their current levels. The construction will be timed for as little “down-time”
as possible for pool users.
The Reconstruction of South 8th Avenue marks the City’s efforts to correct an
infrastructure problem that dates back more than 40 years in our community.
In Conclusion
There is no doubting the significant impacts this prolonged recession is having on our
country and our community. It has required us to cut-back and make-do in areas across the
organization. At the same time, we continue to be incredibly optimistic about the future of
Bozeman.
As a result, you can see that this budget presses forward and provides funding options that
can reduce our backlog of deferred maintenance in Water, Sewer, and Street infrastructure.
While it may be hard to imagine that Bozeman could be “booming” again sometime soon, we
feel we owe it to the community to bring forward options and solutions that will lay the
groundwork for continued economic and community development.
As always, this spending plan could not have been developed without the input and advice
of hundreds of people, from citizens to staff members to Commissioners. We greatly
appreciate their assistance in this process, and their participation in the meetings and
work-sessions that will lead to its final adoption.
Respectfully,
_______________________________________
Chris Kukulski, City Manager
_______________________________________
Anna Rosenberry, Finance Director
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47
FY12 City Manager’s Recommended Budget City of Bozeman, Montana
FINANCIAL SUMMARY – FY2012
______________________________________________________________________________________________
CITY OF BOZEMAN
FINANCIAL SUMMARY - FISCAL YEAR 2011-2012
General Special Debt Capital Enterprise Internal Permanent All
Fund Revenue Service Projects Funds Service Funds Funds
Projected Beginning
Fund Balance/Working Capital 4,505,743$ 13,538,889$ 3,275,768$ -$ 26,136,613$ 19,185$ 581,071$ 48,057,269$
Estimated Revenues 23,587,268 12,628,429 2,728,815 - 16,092,910 4,274,164 92,000 59,403,586
Less Appropriations 24,121,974 12,326,101 2,669,076 - 30,197,694 4,238,716 - 73,553,561
Increase/(Decrease) in
Fund Balance/Working Capital (534,706) 302,328 59,739 - (14,104,784) 35,448 92,000 (14,149,975)
Projected Ending
Fund Balance/Working Capital 3,971,037$ 13,841,217$ 3,335,507$ -$ 12,031,829$ 54,633$ 673,071$ 33,907,294$
117
51
FY12 City Manager’s Recommended Budget City of Bozeman, Montana
APPROPRIATIONS BY TYPE
___________________________________________________________________
Expenditures, often called “Appropriations,” are classified under one of five major categories: Salaries,
Operating Expense, Capital, Debt Service, and Transfers. The graph below shows the relative percentage
of FY12 budgeted expenditures for these five major categories for all funds, combined.
In governmental agencies, salaries, wages and benefits normally represent the largest of these
categories. However, due to the significant investment in infrastructure, cities have a much higher
percentage of the budget devoted to operating costs than most other governmental agencies.
Transportation projects are often included under contracted services, which is an operating cost.
APPROPRIATIONS BY TYPE, GENERAL FUND ONLY—Using those same classifications of expenditure
type, the relative percentages of budgeted expenditures for the General Fund are shown below.
As you can see, the General Fund is comprised of a much higher percentage of Personnel & Benefit costs
compared to all funds, as a whole. The General Fund supports very little capital improvements,
compared to all funds, as a whole.
Salaries &
Benefits
32%
Operating
28%
Capital
29%
Debt
Service
7%
Transfers
4%
Appropriations by Type -All Funds -FY12
Salaries &
Benefits
64%
Operations
28%
Capital
4%
Debt
Service
1%
Transfers
3%
Appropriations by Type -General Fund -FY12
118
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FY12 City Manager’s Recommended Budget City of Bozeman, Montana
APPROPRIATIONS BY FUND
___________________________________________________________________
As shown, Enterprise Funds and the General Fund account for 74% of the total expenditures of the city.
The General Fund is the city’s primary operating account for general government operations. Enterprise
funds consist of water, wastewater, solid waste, and parking funds. These funds operate on a self-
supporting basis.
Special revenue funds, totaling 17% of appropriations, include a variety of tax supported funds including
funds supporting major employer retirement contributions, health insurance premiums, impact fees and
liability insurance. Community development block grant monies, the city’s gas tax allocation, and street
and tree maintenance districts are also included.
Debt service, internal service, and trust and agency funds make up the remainder of the city’s
appropriations.
General
Fund
33%
Special
Revenue
17%
Debt
Service
3%
Capital
Projects
0%
Enterprise
Funds
41%
Internal
Service
6%
Permanent
Funds
0%
Appropriations by Fund -FY12
119
53
FY12 City Manager’s Recommended Budget City of Bozeman, Montana
REVENUES BY SOURCE
___________________________________________________________________
As shown, Charges for Services and Property Taxes account for 72% of the total revenues of the city.
The majority of Charges for Services (44%) are derived from the City’s utilities (Enterprise funds)
consisting of water, wastewater, solid waste, and parking services.
Property Taxes (28%) are primarily to the benefit of the General Fund. This year, due to the
construction of the Water Treatment Plant, Other Financing Sources are a large source of cash (8%).
REVENUES BY SOURCE, GENERAL FUND ONLY—Using those same classifications of revenue sources, the
relative percentages of estimated revenues for the General Fund are shown below.
As you can see, the General Fund is comprised of a much more reliant on Property Taxes and
Intergovernmental revenue than all funds, as a whole.
Property
Taxes
28%
Special
Assessments
3%
Licenses &
Permits
2%
Inter-
governmental
11%
Charges for
Services
44%
Fines and
Forfeitures
3%Interest
Income
1%
Other
Revenues
0%Other
Financing
Sources
8%
Revenues by Source -All Funds -FY12
Property
Taxes
51%
Licenses &
Permits
1%
Inter-
governmental
25%
Charges for
Services
9%Fines and
Forfeitures
5%
Other
Financing
Sources
9%
Revenues by Source -General Fund -FY12
120
85
FY12 City Manager’s Recommended Budget City of Bozeman, Montana
GENERAL GOVERNMENT
___________________________________________________________________
The City’s General Government section includes the following departments:
City Commission
City Manager
Municipal Court
City Attorney
Finance
Planning
Facilities Management
Information Technology
These functions generally provide administrative and technical services across the organization, and
deliver related services to citizens. The combined financial information for this section is summarized
below:
GENERAL GOVERNMENT TOTALS FY10
ACTUALS
FY11
APPROVED
FY11
AMEND
FY12
RECOMM
$ CHANGE %
CHANGE
Staffing: Full-Time Equivalents 56.85 58.48 58.48 0%
EXPENDITURES BY CATEGORY
Category
1000 - 1199 Salaries, Benefits & Overtime
3,599,996
3,853,549
-
3,866,688
13,139
0%
2000 - 7599 Operating
1,792,743
2,085,867
-
2,040,861
(45,006)
-2%
8000 - 8999 Capital
44,823
198,800
-
301,500
102,700
52%
9000 - 9699 Debt Service
81,054
150,000
-
150,000
-
9900 - 9999 Transfers -
-
-
-
-
Total All Categories $5,518,616 $6,288,216 $ - $6,359,049 $ 70,833 1%
The details of each department are included on the following pages.
Salaries,
Benefits &
Overtime
61%
Operating
32%
Capital
5%
Debt
Service
2%
Transfers
0%
GENERAL GOVERNMENT
121
120
FY12 City Manager’s Recommended Budget City of Bozeman, Montana
PUBLIC SAFETY
___________________________________________________________________
The City’s Public Safety section includes the following functions:
• Police
• Fire
• Building Inspection
• Parking
These functions serve to protect lives and property in the city, and deliver related services to citizens.
The combined financial information for this section is summarized below:
PUBLIC SAFETY FY10 ACTUALS FY11 APPROVED FY11 AMEND FY12 RECOMM $ CHANGE %
CHANGE
Staffing: Full‐Time Equivalents
122.30 127.80
1.00 128.30 0%
EXPENDITURES BY CATEGORY
Category
1000 ‐ 1199 Salaries & Benefits
$10,081,112
$9,856,300 -
$9,918,223
$61,923
1%
2000 ‐ 7599 Operating
2,595,144 1,787,939
18,630 1,584,099
(222,470)
-12%
8000 ‐ 8999 Capital
809,700 804,000 - 156,000
(648,000)
-81%
9000 ‐ 9699 Debt Service - - - -
-
9900 ‐ 9999 Transfers
112,806 250,000 - 390,000
140,000
56%
Total All Categories $13,598,762 $12,698,239 $18,630 $12,048,322 ($668,547) -5%
Salaries &
Benefits
83%
Operating
13%
Capital
1%
Debt Service
0%Transfers
3%
PUBLIC SAFETY
122
139
FY12 City Manager’s Recommended Budget City of Bozeman, Montana
PUBLIC SERVICES
___________________________________________________________________
The City’s Public Services section includes the following functions, oftentimes described as “public
works”:
Public Services Administration
Streets
Water Plant
Water Operations
Wastewater Operations
Water Reclamation Facility
(Wastewater Plant)
Solid Waste Collection
Solid Waste Recycling
Vehicle Maintenance
These functions serve to maintain and provide public infrastructure within in the city, and deliver related
services to citizens. The combined financial information for this section is summarized below:
PUBLIC SERVICES FY10
ACTUALS
FY11
APPROVED
FY11
AMEND
FY12 RECOMM $ CHANGE %
CHANGE
Staffing: Full-Time Equivalents 96.52 97.52
-
96.52 -1%
EXPENDITURES BY CATEGORY
Category
1000 - 1199 Salaries & Overtime
$6,185,096
$6,191,387
-
$6,269,707
$78,320
1%
2000 - 7599 Operating
20,879,041
7,893,973
18,700 8,056,913
144,240
2%
8000 - 8999 Capital
22,019,344
30,681,124
550,750 20,203,996
(11,027,878)
-35%
9000 - 9699 Debt Service
631,263
517,916
- 1,904,000
1,386,084
9900 - 9999 Transfers 17,529,841 10,515 - 59,550 49,035
Total All Categories $67,244,585 $45,294,915 $569,450 $36,494,166 ($9,370,199) -20%
Salaries,
Benefits &
Overtime
17%Operating
22%
Capital
56%Debt Service
5%
Transfers
0%
FY12 PUBLIC SERVICES
123
182
FY12 City Manager’s Recommended Budget City of Bozeman, Montana
PUBLIC WELFARE
___________________________________________________________________
The City’s Public Welfare section includes the following functions:
Cemetery
Parks
Forestry
Library
Recreation
Community Development
These functions serve to maintain facilities and provide services to citizens in areas often described as
“quality of life.” The combined financial information for this section is summarized below:
PUBLIC WELFARE FY10
ACTUALS
FY11
APPROVED
FY11
AMEND
FY12 RECOMM $ CHANGE %
CHANGE
Staffing: Full-Time Equivalents
62.46
60.96 1.00 62.46 2%
EXPENDITURES BY CATEGORY
Category
1000 - 1199 Salaries & Overtime $2,985,090 $3,334,530 - $3,620,189 $285,659 9%
2000 - 7599 Operating 1,871,492 3,175,398 14,850 3,378,359 188,111 6%
8000 - 8999 Capital
2,009,583 332,000
50,300
540,000
157,700
41%
9000 - 9699 Debt Service
- - - - -
0%
9900 - 9999 Transfers
535,636 442,188 -
424,878
(17,310)
-4%
Total All Categories
$7,401,801
$7,284,116
65,150
$7,963,426
614,160
8%
Salaries &
Benefits
46%
Operating
42%
Capital
7%Debt Service
0%
Transfers
5%
FY12 PUBLIC WELFARE
124
207
FY12 City Manager’s Recommended Budget City of Bozeman, Montana
OTHER
___________________________________________________________________
This section of the budget includes the following functions:
Non-Departmental
General Obligation Bonds
Special Improvement District & Tax
Increment District Bonds
Many of these budgeted items are not specific to an existing city department or function, or are related
to bond payments for community infrastructure. The combined financial information for this section is
summarized below:
OTHER FY10
ACTUALS
FY11
APPROVED
FY11
AMEND
FY12
RECOMM
$ CHANGE %
CHANGE
Staffing: Full-Time Equivalents - - - -
EXPENDITURES BY
CATEGORY
Category
1000 - 1199 Salaries & Overtime - - - - - 0%
2000 - 7599 Operating $3,717,831 $5,631,646 - $5,809,291 $177,645 3%
8000 - 8999 Capital
55,198 - - - -
9000 - 9699 Debt Service
1,818,157
2,664,864 -
2,669,076 4,212
0%
9900 - 9999 Transfers
5,888,166
4,188,285 -
2,355,219
(1,833,066)
-44%
Total All Categories
$11,479,352
$12,484,795 -
$10,833,586
($1,651,209)
-13%
Salaries,
Benefits &
Overtime
0%
Operating
53%
Capital
0%
Debt Service
25%
Transfers
22%
FY12 OTHER
125