Overview and Discussion Proposed Budget Fiscal Year-End June 30, 2016

Government Budgets  Citizens, taxpayers, governing bodies, government employees collaborating with each other to have scarce government resources allocated to their programs.  The budget is a plan and guide to meeting the future needs of the City.

Developed to Accomplish  Sound financial management practices through short and long-term planning.  Annually, the City’s financial position is carefully evaluated by reviewing costs and services.  A government’s annual operating budget is formally enacted into law through the passage of an ordinance. This ordinance adopts the budget at the fund level for the City.

Developed to Accomplish  This ordinance becomes the legal authority for all government spending.  Dollars budgeted each fiscal year lapse at year end unless specifically carried over.  While the ordinance is passed at the Fund level the City monitors expenditures at the Department level.

Funds  In government, individual resources are allocated to and accounted for in separate accounting entities known as funds.  These separate fiscal accounting entities report its own set of financial statements and budgets.

General Fund  Accounts for all financial resources except those required to be accounted for in another fund. This fund tends to account for the general operations of the unit of government.  This includes administration, community and economic development, finance, human resources, IT, police, fire, and public works.

Enterprise Funds  The Water Fund accounts for the cost of providing water service to the community. The accounting and budgeting for this fund is very similar to the private sector. Operations are financed with user fees and charges for service.

Enterprise Funds  The Airport Fund accounts for the cost of providing services at the airport. The accounting and budgeting for this fund is very similar to the private sector. Operations are primarily financed with hangar rental charges.

GENERAL FUND BUDGET ASSUMPTIONS REVENUES  General Fund actual revenues are trending in slightly higher than budget by $243,474.  In total this is less 1.0% of total General Fund Revenues.

GENERAL FUND BUDGET ASSUMPTIONS REVENUES  Property Tax revenue equals the 2014 tax levy filed with the County at the end of December  Sales tax revenue showed a slight increase but is still fairly flat.  Losing two stores, JC Penney and Barnes & Noble account for about 1% of annual sales tax dollars received or approximately $130,000.

GENERAL FUND BUDGET ASSUMPTIONS REVENUES  Broke out Telecommunication Tax from Gas & Electric Utility Tax. This tax has been trending downward due to more data plans and bundling.  Gas & Electric Utility tax will vary depending on a hot summer or a cold winter.

GENERAL FUND BUDGET ASSUMPTIONS REVENUES  Used the most recent IML projections for Income Tax revenue. $99/capita = $4,358,970.  Road & Bridge Tax Dropping. This is tax collected through the townships (Afton, Cortland & DeKalb). DeKalb Township lowered the portion of their levy that goes for Road & Bridge last year. Therefore less money was distributed to the local municipalities.

GENERAL FUND BUDGET ASSUMPTIONS REVENUES  Admin Tow Fine revenue showing a drop. However budgeting for a true 12-months in revenue.  Liquor License revenue appears to be dropping from FY 14, however this is due to the collection cycle going from once a year to three times per year. FY 16 shows revenue in line with previous years.

GENERAL FUND BUDGET ASSUMPTIONS REVENUES  Decreased transfer in from Water ($702,518) to the EPI Payment in Lieu of Taxes (PILOT) calculation ($258,965). Directly hit water fund with salaries = $560,929. Net to the good of the GF $117,376.  Transferred $250,000 out of Workers’ Compensation Fund, in to the General Fund, to keep the fund balance at $1.0 million as stated in the City’s’ Fund Balance Policy.

GENERAL FUND BUDGET ASSUMPTIONS REVENUES  Phasing out TIF transfers to the General Fund based on number of years remaining.  Losing over $900,000 in revenues by FY22. See Handout #1

PROPERTY TAX HISTORY CITY OF DEKALB

 While residents live within the City limits, their property tax bill is comprised of no less than ten separate taxing districts. Each taxing district determines the total dollar amount to levy on the property which resides within the taxing district boundaries. About 8% of a resident’s current tax bill goes to the City.  See Handout #2 for a history of the City’s Tax Levy.

PROPERTY TAX HISTORY CITY OF DEKALB While the City only levies dollars to cover a portion of the City’s mandated pension obligations, a resident with an average home value of $150,000 is receiving police protection, fire protection, street maintenance including snowplowing and street sweeping for $ per year. Note: Median Home Value based on the 2009 – 2013 census ranges from $150, ,999

GENERAL FUND FYE 2015 PROJECTED EXPENDITURES  General Fund actual expenditures are trending in below budget by just over $1.17 million.  FY 15 was the first year the County Tax Sharing Agreement was shown as an expense vs. incorporating it in with revenues. Budget vs. estimate difference for FY 15 is over $548,000. Note all payments to the County have been made correctly.

GENERAL FUND FYE 2015 PROJECTED EXPENDITURES  The transfer to the Public Safety Building Fund did not have to be done since the project was completed June 30, No retainage payable should have been booked as outstanding. New lien waivers have been received. $400,000  This will help to improve our General Fund reserve and get us closer to our 25% fund balance policy. See handout #3.

GENERAL FUND BUDGET ASSUMPTIONS EXPENDITURES  The Economic Development Fund was rolled in to the General Fund, both the revenues and expenditures.  Expenditures included under Development Services (8343) include:  DCEDC$45,000  DCCVB$50,000  DeKalb Chamber$45,000  Egyptian Theatre$25,000

GENERAL FUND BUDGET ASSUMPTIONS EXPENDITURES  Health Insurance Savings based on plan changes = $205,572 for the General Fund Employer Contribution portion. New/vacant positions budgeted at family coverage.  No transfer to the Airport Fund. The Airport is an Enterprise Fund and should be self supporting.

GENERAL FUND BUDGET ASSUMPTIONS EXPENDITURES  Phasing out Department 35 (General Fund Support) and directly hitting departments with these expenditures.  Decreased regular wages in this department from $541,000 in FY15 to $350,000 in FY16.  Wellness benefit payments dropping from $39,000 to $30,000.

GENERAL FUND BUDGET ASSUMPTIONS EXPENDITURES  Tuition Reimbursement separated out from training and centralized in HR - $40,000.  IMRF rate dropped from 21.83% to 15.92%.  Combined Community Development Administration Division and Planning & Economic Development Division into one.

GENERAL FUND BUDGET ASSUMPTIONS EXPENDITURES  Two Police Department vehicles budgeted in Police Patrol Services Division using “restricted” revenue from FY15.  Legal Contracted Services was moved up to contractual services cost center, instead of under “other” services cost center.

GENERAL FUND BUDGET ASSUMPTIONS SALARIES  Police Union Contract cost of $241,275. This contract has been ratified.  AFSCME Union Contract cost of $34,374. This contract has been ratified.

GENERAL FUND BUDGET ASSUMPTIONS SALARIES  Fire Union Contract cost of $218,943. This contract has not yet been approved by the City Council.  Non-Bargaining Unit Employees cost of $226,722. This incorporates the changes approved through the pay and comp study pertaining to the conversion to the 40 hour work week. It also assumes the economic adjustment being pushed back from July 1, 2015 to January 1, 2016.

GENERAL FUND BUDGET ASSUMPTIONS STAFFING  Hiring a temporary summer employee in Engineering.  Hiring an intern to assist in the Fire Department.  Filling the IT Director position and HR Director Position.  Promoted a Police Officer to a Detective and eliminated a vacant Police Officer position within the budget.

GENERAL FUND BUDGET ASSUMPTIONS NEW REQUESTS  Secondary Connection to Public Safety - $7,000  Solarwinds Network Monitor - $6,000  I9-E Verify Software-HR - $3,000  Code Red Notification module - $5,000  Agenda Program - $16,000  Shredding/Scanning Services - $5,000

GENERAL FUND BUDGET ASSUMPTIONS NEW REQUESTS Architectural & Engineering Services (A & E)  A & E Services Structural - $10,000  A & E Services Parking Lot Design - $7,500  A & E Services Permits/Planning - $5,000

GENERAL FUND BUDGET ASSUMPTIONS NEW REQUESTS  Get Fired Up for Safety Program - $10,800  Crowd Control Training - $9,400  Camp Power Annual Contribution - $7,500  Economic Development Strategies - $50,000

GENERAL FUND BUDGET ASSUMPTIONS NEW REQUESTS  Neighborhood 3 Plans - $40,000  Protano’s Grant Preparation - $10,000  Minute Contracted Services - $5,000  Planning Contracted Services - $20,000

See Handout #3

UNIQUE CHALLENGES FOR THE CITY OF DEKALB  Sales Tax Incentive Rebate with DeKalb County Sharing $1.56 million of Sales Tax Revenue.  Five Debt Issuances being paid from General Fund Transfers. All Property Tax Dollars Levied for these Issuances are Abated in Full Annually. FY16 $1.52 million

UNIQUE CHALLENGES FOR THE CITY OF DEKALB  Retiree Health Insurance Coverage Costing $800,000 Annually.  For FY 16 this Dollar Amount = $3,850,526

ILLINOIS MUNICIPAL LEAGUE INCOME TAX FORECASTS  The City has been closely monitoring pending legislation at the state and federal levels to stay abreast of any issues that may have an impact on the City. Illinois lawmakers have begun to address the numerous challenges that are afflicting our state.

ILLINOIS MUNICIPAL LEAGUE INCOME TAX FORECASTS  At this time there is no reliable information to indicate how much the reduction will be or, more importantly, when that reduction will take place or for what period of time. Conversely, the possibility of expanding the use of sales taxes is also being discussed.

ILLINOIS MUNICIPAL LEAGUE INCOME TAX FORECASTS  While difficult to predict what will be included in the state’s budget, a decision should be known sometime during the month of June. City staff will continue to monitor this situation and come back to Council in the event any reduction in the Local Government Distribution Fund (LGDF) has been decided upon by the State.

“BEST PRACTICES”  Best Practices identify specific policies and procedures as contributing to improved government management. It aims to promote and facilitate positive change rather than merely to codify current accepted practice.

TRANSITIONING TO A FISCAL YEAR CALENDAR YEAR  Next budget pass a 6-month budget ending December 31,  Begin a new calendar/fiscal year budget starting January 1, 2017 and ending December 31, 2017.

QUESTIONS