Item Coversheet
Item Number:Workshop Items- X.-A. 
Committee Meeting Date:7/17/2017
  
City of Roeland Park
Action Item Summary
Date:6/1/2017 
Submitted By: Keith Moody 
Committee/Department: Admin.
Title:2018 Budget Review – Continued (est. time 30 min.)
Item Type:Discussion



Recommendation:

Staff recommends Council provide direction on further development of the 2018 Budget, the CIP and the Objectives. 

Details:

Attached is the working budget document.  It starts with a Summary of All Funds Page.  This shows total revenue and expenditures for each fund as well as ending fund balance for each fund.

 

Reading from left to right you will see the account number, account title, 2014-2016 actuals, 2017 Budget (adopted), 2017 YTD Actuals (through the end of March), 2017 Projected (the revised budget for 2017), 2018 Budget (proposed), 2019 Budget (projected) and 2020 Budgeted (projected). In this version of the budget we actually projected out to 2023 in order to gain a better picture of our cash flow in out years.

 

The General Fund (100) is the first fund.  Cash Carry Forward is shown as the first revenue line, you may also consider this the Beginning Fund Balance.  Revenues are shown at the beginning (top) of each fund sheet, subtotals are shown for each major segment of revenue.  Expenses follow revenues, these are separated into departments (Police, Admin, Public Works).  Department line item expenses are also subtotaled into major type (Personnel, Contractual Services, Commodities, Capital, Debt Service, Transfers).  At the end of each fund is the Ending Fund Balance line.  The ending fund balances are positive looking out through 2020 for each fund, however two of the TIF funds reflect a loan from the General Fund in order to overcome short term cash flow constraints.  The TIF's have ample funds to repay the General Fund, the timing of the projects being funded with these TIF dollars is not flexible.

 

Please make notes as you review and have questions.  Even though this budget document contains more information than those used previously we recognize that it will not answer all questions.  We have developed the document in excel and staff has included comments in cells to serve as a detail in many instances.

 

Staff has reduced the mill by 2.  This is assumed to be a reduction in the debt service portion of the mill.  This approach maintains flexibility related to mill changes in the future.  The 2 mill decrease is roughly a $144,000 decrease in property tax revenue reflected in the Debt Service Fund.  This reduction in revenue is close to the annual debt service anticipated for the 2018 GO bond, thus it is close to a push.  The debt service fund balance is shown being drawn down as are the fund balances of the variety of capital improvement funds in order to employ all excess reserves on capital projects that anticipated bond support.  A transition to a cash funded (pay as you go) approach to the CIP appears sustainable with the 2 mill reduction and the use of TIF funds on some of the street projects.

 

Attached is the CIP document that reflects no bonding. We have confirmed that the projects shown in the 10 year CIP can be funded out of reserves and annual revenue vs. bonding.  The attached 10 year CIP reflects the same amount and same year of construction as the prior CIP, the only change is the source of funding.

 

The dead tree removal objective cost has been added.  The objectives showing revisions in Red line are also attached.

 

Revenues have been estimated conservatively (we expect they will be higher than budget).  Expenses continue to be refined to be closer to our actual history, but again conservative (we expect they will be lower than budget).

 

Personnel budgets for 2016 reflect a 4% pool for merit increases and a $38,000 pool for market adjustments (2%). A specific method of employing market adjustments will be developed in November of 2017 for Council approval (implementation anticipated 1/1/18). For a point of reference the market adjustment pool would support 9 of 27 full time employees receiving a $2/hr adjustment.

 

The following mill information is provided as an attempt to address the question of how Roeland Park's tax structure (sales and property tax) compares to other NEJC communities.  Each 1 mill of the City levy equates to $75,000 of revenue.  Each quarter of a cent sales tax equates to $386,000 of revenue. The deicision pending on the year round operation of the pool could afford around a 3 mill reduction (if the pool were to operated as summer only). Roeland Park's sales tax rate of 1.25% is a quarter of a cent lower than most of the Johnson County communities, a quarter of a cent increase in sales tax would equal around a 5 mill decrease.  These items along with the 2 mill decrease currently reflected could bring the mill down to 24, the average mill for JOCO cities served by CFD#2 is 22.

 

 



Financial Impact

Amount of Request:  
Budgeted Item?  Budgeted Amount:  
Line Item Code/Description:  

Additional Information

Ways to reduce the budget by 7 mills:

 

Option 1: Leave wage expenses in leaf pick up assessment (equal to .6 mills), Reduce Mill by 7, reduce annual street maintenance/improvements.

  • 2.0 mills (DS) - As originally included in budget submission
    • 0.6 mills (GF) - Include wages in leaf assessment 2.8 mills (GF) - Eliminate $210k for contract street maintenance in the General Fund
  • 1.53 mills (DS) - Eliminate $115k street maintenance in the Sp. Infrastructure Fund, transfer those funds to the debt service fund. 

TOTAL: 6.93 mills

 

Option 2: Take wage expenses out of leaf pick up assessment (as current version of budget reflects), Reduce Mill by 7, reduce annual street maintenance/improvements.

  • 2.0 mills (DS) - As originally included in budget submission
  • 2.8 mills (GF) - Eliminate $210k for contract street maintenance in the General Fund
  • 1.53 mills (DS) - Eliminate $115k street maintenance in the Sp. Infrastructure Fund, transfer those funds to the debt service fund. 
  • 0.67 mills (DS) - Eliminate $50,250 of the $70k budgeted for design of street reconstruction in the Sp. Infrastructure fund, transfer those funds to debt service.

TOTAL: 7 mills

 

Option 3: Leave wage expenses in leaf pick up assessment (equal to .6 mills), Reduce Mill by 7, switch to summer only pool operations (equal to 3 mills in 2020), reduce annual street maintenance/improvements.

  • 2.0 mills (DS) - As originally included in budget submission
  • 0.6 mills (GF) - Include wages in leaf assessment
  • 2.8 mills (GF) - Eliminate $210k for contract street maintenance in the General Fund
  • 1.4 mills (DS) - Eliminate $105k street maintenance in the Sp. Infrastructure Fund, transfer those funds to the debt service fund. 

TOTAL: 6.8 mills

Starting in 2020, 3 mills ($225k) can be reduced from the General Fund for a summer-only pool operation and the $210k for contract street maintenance in the General Fund could be restored for a total of 7 mills.

 

Option 4: Take wage expenses out of leaf pick up assessment (as current version of budget reflects), Reduce Mill by 7, switch to summer only pool operations (equal to 3 mill), reduce annual street maintenance/improvements by $131,250.

  • 2.0 mills (DS) - As originally included in budget submission
  • 2.8 mills (GF) - Eliminate $210k for contract street maintenance in the General Fund
  • 1.53 mills (DS) - Eliminate $115k street maintenance in the Sp. Infrastructure Fund, transfer those funds to the debt service fund.

TOTAL: 6.33 mills

Starting in 2020, 3 mills ($225k) can be reduced from the General Fund for a summer-only pool operation and $159,750 of the $210k currently budgeted for contract street maintenance in the General Fund could be restored for a total of 7 mills.

 

Option 5: Leave wage expenses in leaf pick up assessment (equal to .6 mills), reduce mill by 7, spend down reserves built up in the general fund (this would occur in future years as well, thus the $1.4 million built up would be depleted in roughly 4.8 years).

  • 2.0 mills (DS) - As originally included in budget submission
  • 0.6 mills (GF) - Include wages in leaf assessment
  • 4.4 mills (GF) - Reduce Fund balance in the General fund by $330,000 annually

TOTAL: 7 mills

 

Option 6: Take wage expenses out of leaf pick up assessment (as current version of budget reflects), Reduce Mill by 7, spend down reserve built up in the general fund by $356,250 (this would occur in future years as well, thus the $1.4 million built up would be depleted in roughly 3.8 years).

  • 2.0 mills (DS) - As originally included in budget submission
  • 5 mills (GF) - Reduce Fund balance in the General fund by $375,000 annually

TOTAL: 7 mills

 

Each 1% of wage increase equates to .25 mills.

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Below are tables with additional information on salary and benefits history as well as street maintenance/improvements net expenditures in the General and Sales Tax Funds.

 

 

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Updates Made to Budget Since Last Review:

 

1.     A $44,000 decrease in solid waste assessment revenue has been reflected in the General Fund (related to elimination of staff expense from the solid waste assessment).

 

2.     Property Tax from state assessed property and personal property are now available and have been reflected in the General Fund and Debt Service Fund.  This and the impacts of item 1 result in the General Fund ending fund balance being $19,000 above the target ending fund balance of $2.585 million. A $19,000 decrease in property tax revenue is equal to .25 mill.

 

3.  The 2 mill decrease anticipated in 2018 will decrease the motor vehicle personal property taxes in 2019 by $14,400, impact is reflected in the 2019 projected budget. 

 

4.  The $180k estimated annually for the new County Courthouse sales tax was reduced to $156,550 in 2018, $158,116 in 2019 and $159,697 in 2020 which aligns with the revenues received by the Public Safety Sales and Use taxes.  This reduction in revenue in the Special Street Fund led to staff shifting $50,000 for the cost of the 2019 CARS street project to the Special Highway Fund, which is also available for street reconstruction and maintenance.

 

Staff also received the following questions from Council which will hopefully guide our discussion on Monday.

 

1) What is the City's historic mill levy?

  • You can find the CIty's historic mill levy on pg. 37 of the presentation included in this staff report.

 

2)  How much does a mill impact a resident's property taxes?

  • Pg. 39 of the presentation shows the average single family home value (in RP its $166,287) and City property taxes on that value ($640). It also provides this information for neighboring cities. Each mill reduction is a $19/household reduction for the average home in Roeland Park.

 

3)  What are the mills for surrounding Cities? City mill levy is shown on the bar segment in the graph below.

 


How does item relate to Strategic Plan?



How does item benefit Community for all Ages?

ATTACHMENTS:
DescriptionType
2018 Budget No Bond and 2 Mill DecreaseCover Memo
10 Year CIPExhibit
Budget Forum PresentationCover Memo
Newsletter Article - 2018 BudgetExhibit
2018 Objectives- RedlinedCover Memo