HomeMy WebLinkAboutJ1. SP CM Budget
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Chris Kukulski, City Manager
Anna Rosenberry, Administrative Services Director
SUBJECT: Presentation of the FY2016-2017 (FY17) City Manager’s Recommended
Budget
MEETING DATE: May 9, 2016
AGENDA ITEM TYPE: Presentation/Discussion
RECOMMENDATION: Listen to presentation, ask questions, and provide comments.
BACKGROUND: This presentation will outline the FY2016-2017 (FY17) City Manager’s
(CM) Recommended Budget, on a “large scale” view. We will be getting into further details
over the next weeks, with Final Adoption scheduled for June 20, 2016. Following are the
tentatively schedule dates of budget discussions, along with their topics:
May 9: City Manager’s Recommended Budget, overall May 16: Special Revenue Funds
May 23: Enterprise Funds
June 6: General Fund
June 13 Tax Increment District and Business Improvement District Work-plans and Budgets June 20: Final Budget Hearing, Appropriation Resolution Hearing
June 27: Tentative: Could potentially schedule meeting if necessary.
Attached to this memo is a copy of the Budget Message, which is included in the online
document itself (it is attached separately to the spiral-bound document.) It is a general summary
of the budget and its implications for citizens and property owners.
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The entire “FY2016-2017 City Manager’s Recommended Budget” document is available online
at http://www.bozeman.net/Business/Budgets-and-Financials. Copies are also available to the
public at the Bozeman Library and City Clerk’s office.
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 in May and June.
ALTERNATIVES: If the Commission would like to make suggestions for changes to the
planned Budget Work Sessions, please do so tonight.
FISCAL EFFECTS: This presentation has no immediate fiscal effects. The adoption of
the final budget in June will have far-reaching fiscal effects. The Recommended Budget has the
following impacts on the Typical Resident:
Typical Resident: Annual Increase Recommended
Budget
Street Maintenance Assessment $22.07
Forestry Assessment $5.10
Arterial Street Assessment $19.79
Property Taxes $48.00
Water Services $12.36
Sewer Services $17.28
Storm Water Services -
Annual Increase $124.60
Monthly Increase $10.38
The details surrounding these increases will be discussed at length through the budget-adoption
process.
Report compiled on: May 4, 2016
Document on File: City Manager’s Recommended Budget for Fiscal Year 2017-2016
Attached Documents: Budget Message (excerpt from Budget Document)
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May 9, 2016
Bozeman City Commission:
I am pleased to present to you the City Manager’s Recommended Budget for Fiscal
Year 2016-2017 (FY17). This budget represents the thoughtful work of dozens of
people in developing the spending plan for our organization for the coming year.
Overview: While it is always difficult to balance the needs of our growing
community with the resources we have available, we have arrived at a
recommendation that fits within our maximum mill levy requirement and
maintains our minimum General Fund reserve.
Owing to the significant ongoing costs associated with Story Mill Landfill
monitoring systems, we are recommending a new mill levy, within the City’s levy
cap, that will be dedicated to funding landfill monitoring. We have also moved
forward with the planned increases in Street Maintenance and Arterial & Collector
District assessments; as well as the water and sewer rate increases that were
adopted last year.
Commission Goals and the Recommended Budget
We continue to look to the Commission’s adopted goals as guidance for development
of the budget. Updated this past spring, many priorities will require significant
financial and human resources to accomplish. Budgetary support for numerous
goals has been incorporated into our recommended spending plan for FY17.
1. Joint Law & Justice Center: During the summer of 2016 the City Commission will consider
action to place the item on the November 2016 ballot. Once placed on the ballot, the City
Commission and administration will spend considerable time educating the community on
the effects of the ballot election. This budget contains the City’s estimated share of
election costs for this ballot measure ($10,000).
2. Landfill: The installation of the remediation system at the Story Mill Landfill is under
construction and has an anticipated completion date of June 2016. For the next 20 years,
the City has an ongoing obligation to monitor the system. This is a new cost that would
have been paid from a post-closure monitoring fund, but ours was depleted due to the
costs associated with coverage and system design. Going forward, we recommend that
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the Commission levy 4 mills from the all-purpose taxing authority to fund the annual
post-closure monitoring that is required by the landfill and remediation system.
This budget contains no additional money for legal defense. The budget does include
appropriations of $750,000 from the Post-Closure Monitoring Fund that is currently
being considered for settlement.
3. Unified Development Code Rewrite: The project is currently underway and is anticipated to
be completed in late 2017. This was fully budgeted in FY16 ($300,000), and funds not
expended in FY16 will be allocated for spending in FY17, per the professional services
agreement.
4. Vision & Strategic Plan: The project is currently underway and is scheduled to be completed
in October 2016. Similar to the UDC Rewrite, the project was fully budgeted in FY16
($125,000), and funds not expended in FY16 will be allocated for spending in FY17, per the
professional services agreement.
5. 2017 Legislative Agenda: The City will host an introductory meeting for legislative
candidates in May, and identify legislative priorities between May and September. This
budget includes $25,000 in the City Commission’s contracted services budget to hire a
lobbyist to work on behalf of the City’s goals.
6. Parks Maintenance District: The calendar year of 2016 is essentially data gathering and
preparatory work for extensive work throughout 2017. This budget contains $32,000 for a
feasibility study of the Parks Maintenance District project (as well as an update of the
PROST Plan, $100,000).
7. Broadband Expansion: The expansion plan will be presented to the City commission no
later than December 2016. Economic Development, Public Works, Finance, City
Management and Legal involvement will focus on accomplishing this task in late summer
2016. This budget includes the General Fund contributing $15,000 towards development
of a conduit leasing policy and specifications, and $40,000 for conduit capital.
8. Impact Fee Updates: Updated analysis of our development impact fee programs are a
priority in the coming months. This budget includes $100,000 of Street Impact Fees, and
$50,000 of Water Impact Fees, and $50,000 of Wastewater Impact Fee funding for
updates to these three impact fee calculations. The Fire Impact Fee study is scheduled to
take place in FY18, after the Fire Master Plan has been updated. The Fire Master Plan is
funded in both the General Fund ($35,000) and Fire Impact Fee Fund ($25,000) in this
budget.
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Significant changes during the past 12 months
Creation of the Arterial & Collector Assessment District – In August 2015, the City
Commission created a new assessment district to fund reconstruction and maintenance of the City’s backbone street network – the arterial and collector streets. The District issued
its first assessment in October. We have been working to build the assessment from
approximately $550,000/year up to $2 Million/year over a three year period. This is a
critical funding portion of our Street Maintenance program and capital improvement plan.
Implementation of Impervious Area charges and credits in the Storm Water Utility – This
past December marked the last of numerous changes in the structure of our Stormwater
Utility rates. We initially established the Utility with a flat rate based on the size of a
property’s water meter. We now have a rate system that includes system base charges,
credits for properties that have on-site or related stormwater systems, and charges for the
amount of impervious area contained on a lot. This new rate structure is a better match
between “cost-causer” and “cost-payer,” in recognition of the city’s long-standing fiscal
policies.
Continued Growth in Construction Sector - Our Building Inspection division has seen
strong permit issuance in the past 36 months.
Building Permit Construction Value Chart 1
While never completely stopping, building construction significantly slowed during
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the recession. For the current fiscal year to date (July-March), the total value of
Building Permits for New Construction is 15% less of the same time frame during
the previous year, but still 24% higher than the 5-year average value, and three-fold
what they were in 2010. Numerous positions were added to the Building
Inspection division in Fiscal Year 2015. The department continues to operate with
those same staffing levels.
State-wide Reappraisal of Property Values - Last year, the State projected a dramatic
decrease in assessed values for both commercial (19.25% decrease) and residential
(3.52% decrease) property in Bozeman. They attributed this change to the timing of
the 6-year appraisal cycles and the Great Recession. The State estimated that the
value of one mill, levied city-wide after Tax Increments are excluded, to be $80,331
in FY16. We prepared for an 8.6% decrease in the city’s mill value. Upon final
certification, the city’s value of one mill was determined to be $86,564, a 1.5%
decrease from the prior year. For the coming year, we are estimating a 2% growth
in the value of one mill. Final certification values won’t be known until August
2016.
For the following year’s budget (FY18), the State will implement a new market
valuation under its new 2-year reappraisal cycle.
Staffing Level Changes
General Fund/Community Development Positions
We are recommending the addition of the following positions in the General Fund and the
Community Development Fund:
Department/Division Position Full-Time Equivalents
Recreation - Aquatics FIVE .46 FTE in Aquatics 2.30
Recreation - Aquatics Assistant Aquatics Manager 1.00
Human Resources Human Resources Generalist 1.00
Library Bookmobile & Outreach
Librarian I - Supervisory
1.00
Police Digital Forensic Examiner 1.00
Planning Historic Preservation Officer 0.40
Recreation - Programs Short Term - Rec Leader Winter 0.25
Total 6.95 Full-Time
Equivalents
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Enterprise & Special Revenue Fund Positions
We are recommending the addition of the following positions in the Enterprise and
Special Revenue Funds:
Department/Division Position Full-Time Equivalents
Engineering Short-Term Worker for Data
Collection
1.25
Solid Waste City Service Worker 1.00
Str/Signs City Service Worker 1.00
Water Sewer Ops Short-Term Worker for Data
Collection
0.75
Forestry Forestry Superintendent, Start
1/1/2017.
0.50
Stormwater Short-Term Worker for Data
Collection
0.25
Total 4.75 Full-Time
Equivalents
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 has $29.8 Million in expenditures, in the following
areas:
Department/Division General Fund Amount
Commission 205,001
City Manager 803,043
Courts 770,495
Attorney 1,206,490
Admin Svcs (Fin/IT/HR) 2,542,094
Facilities 1,332,312
Police (incl. State Ret.) 8,615,216
Fire (incl. State Ret.) 5,948,496
Public Services/Streets 140,331
Cemetery 490,889
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Department/Division General Fund Amount
Parks 2,161,670
Library 1,868,293
Recreation 2,026,743
Economic Development 413,429
Sustainability 166,883
Non-Departmental 1,190,816
TOTAL Expenditures 29,882,201
FY17 Recommended - General Fund Budget 1
As shown in the above graph, Police and Fire services combined comprise 49%
($14.6 Million) of the General Fund’s spending. The next largest departments are
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grouped together, each spending roughly $1.3 - $2.5 Million and each comprising
4.5-9% of the budget: Administrative Services, Recreation, Library, Parks, and
Facilities Maintenance. Nine other departments/areas comprise the balance of
General Fund Expenditures.
General Fund Undesignated Fund Balance:
The City’s charter requires an established minimum level of General Fund
Undesignated Fund Balance, in accordance with the Government Finance Officers’
Association (GFOA) Best Practices. GFOA’s Best Practice Recommendation was
adopted and our required minimum reserve balance is 16 2/3% of budgeted
revenues. As discussed in more detail on page 59, this budget exceeds the required
minimum reserve of approximately $4,900,000 (16.67%) at the end of Fiscal Year
2017. Estimated ending Undesignated Fund Balances is $5,044,294 (17.2%).
Residential City Property Taxes for FY14, FY15, and FY16
In November 2012, the voters approved this issuance of up to $15 Million in
General Obligation Bonds under for the purpose of expanding, creating new, and
improving existing parks, trails, athletic fields and natural areas. At the time of
the vote, we estimated that a $15 Million bond will cost the typical household less
than $45/year. For the FY17 tax year, we are estimating the cost to the typical
household to be $42.30.
In total, the Approved Budget would levy an estimated 223.96 mills on all taxable
property within the City limits. Details of the estimated levy can be found on page
37. This represents an increase of 13.8 mills over last year. This increased levy is
attributable to numerous issues, including:
• Addition of 4 mills for Landfill Monitoring.
• Increase in the Permissive Medical Levy of 2.94 mills.
• Calculation of maximum mill levy with estimated increase in inflation factor,
and estimate of newly taxable property increase of 2%.
Assessed Market Value Estimated Taxable
Value
FY14 City Tax Levy = 173.08
mills
FY15 City Tax Levy = 188.76
mills
FY16 City Tax Levy = 210.16
mills
FY17 Estimated
City Tax Levy = 223.96
mills
Median Home
~$256,000
$3,468 $622 $678 $729 $777
$200,000 $2,820 $762 $831 $593 $632
$300,000 $4,230 $1,142 $1,246 $889 $947
* Median Value changed due to reappraisal in FY16
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The median home “assessed market value” represents the value on the tax roll for a
home within the Bozeman city limits. Median simply means that half of the homes
in the city have a higher value and half have a lower value. Each year the Median
Home value changes slightly. Last tax year, the Department of Revenue and the
State Legislature made significant changes to tax policy. Due to those changes in
tax policy and the implementation of new market values in a statewide reappraisal,
the City’s median home value dropped slightly from $279,000 in FY14 to $256,000
in FY15. The median home will pay $3.47 in City property taxes for every mill
levied in Fiscal Year 2017. Residents living in the median home are estimated $777
in annual property taxes to the City, an increase of $48 above last year.
General Taxes - Cost per Mill
For the coming fiscal year, we are estimating a 2% increase in the value of taxable
property across the city. Taking into account the 1.5% reduction in values we
experienced last year, taxable values for the City have an average increase of only
1.5% per year for the past 5 years. However, given the continued strong building
permit activity, we believe this estimate is appropriate.
Citywide Street and Tree Maintenance Assessments
City property owners pay an annual street maintenance, arterial street, and tree
assessment based on the square footage of the lot they own. These assessments are
the major funding for Street Maintenance, Arterial Street capital, and Forestry
Divisions.
The recommended budget is based on a 15% increase in the Street Maintenance
assessment, resulting in an annual assessment of $169.24 for the average sized lot.
The majority of this increase is attributed to the second year phase-in of an added
$1 Million in annual pavement maintenance.
The new Arterial and Collector Street Assessment District is recommended to
proceed with the original plan: to phase-in assessments that will total $2 Million
annually in construction on arterial and collector streets over 3 years. For FY17
(second year), we are recommending a 90% increase in the assessment from last
year. For the average sized residential lot, the annual assessment would be $41.33
for the year.
The Tree Maintenance District is in need of a 30% increase to support the addition
of a Forestry Superintendent and to implement the Urban Forestry Management
Plan. There was no increase to this assessment in FY13-15. There was actually a
small decrease to the assessment in FY15, based on revised assessment methods
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adopted in July 2014. For the average sized residential lot, the annual assessment
would be $22.10 for the year.
Combined, property owners of an average sized city lot would pay $232.67 in annual
assessments. This is an increase over the previous year of $46.96, or $3.91 per
month.
Lot Size FY15 Approved 6.39% Streets & -
1.2% Trees
FY16 Approved 10% Streets & 2% Trees,
with Arterial Street District
FY17 Recommended 15% Streets & 30% Trees,
90% Arterial Street District
Small= 5,000 sq ft. Streets - $89.18 Streets - $98.10 Streets - $112.81
Trees - $11.11 Trees - $11.33 Trees - $14.73
New! Arterial Streets - $14.36 Arterial Streets - $27.55
Average = 7,500 sq ft. Streets - $133.79 Streets - $147.17 Streets - $169.24
Trees - $16.67 Trees - $17.00 Trees - $22.10
New! Arterials Streets – $21.54 Arterials Streets – $41.33
Large = 10,000 sq ft. Streets - $178.39 Streets - $196.23 Streets - $225.66
Trees - $22.23 Trees - $22.67 Trees - $29.47
New! Arterial Streets – $28.73 Arterial Streets – $55.10
Utility Rates
Water & Sewer: City property owners are by and large required to utilize the City’s
water and sewer treatment systems. Last year, we updated our 5 year funding
models for both Water and Sewer Rates. The Commission approved a 2.5% increase
in Water rates and a 3% increase in sewer rates, for each of FY16 and FY17. The
Recommended Budget incorporates these rate increases that have already been
approved.
Stormwater: The Stormwater rates were adopted in April 2015. The new base
charges took effect in May 2015 and the variable charges and credits took effect in
December 2015, based on impervious area and existing infrastructure. We are not
recommending a rate increase this year.
In Total: A residential customer utilizing 10 hundred cubic feet (HCF) of water
each month will see an estimated combined monthly increase for these services of
$2.47/month.
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Average Residential
Customer
Approved FY15 Monthly Bill
Jan. 2015-June 2015 0% Increase Water 3% Increase Sewer Stormwater, Revised
Approved FY16 Monthly Bill 2.5% Increase Water 3% Increase Sewer Stormwater, Revised
Recommended FY16 Monthly Bill 2.5% Increase Water 3% Increase Sewer 0% Stormwater
Water $40.15 per month $41.15 per month $42.18 per month
Sewer $46.73 per month $48.13 per month $49.57 per month
Stormwater $ 3.23 per month $ 5.91 per month $ 5.91 per month
Total $90.11 per month $95.19 per month $97.66 per month
In Conclusion
We understand the This Recommended Budget was developed to preserve and
improve property values and the quality of life around town, while trying to
minimize the financial impacts to residents, businesses, and property owners. To
summarize, a typical residential property owner will likely see taxes and
assessments increase by $124.60 for the year, or $10.38 per month.
Typical Resident: Annual Increase Recommended Budget
Street Maintenance Assessments $22.07
Forestry Assessments $5.10
Arterial Street Assessment $19.79
Property Taxes $48.00
Water Services $12.36
Sewer Services $17.28
Storm Water Services -
Annual Increase $124.60
Monthly Increase $10.38
We look forward to Commission and community discussions regarding its
improvement and adoption.
Respectfully,
Chris Kukulski, City Manager
Anna Rosenberry, Administrative Services Director
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