FY 14 Budget Presentation 20 May 2013

Mission Statement: To provide value added services in a customer friendly, cost efficient and effective manner resulting in a safe and prosperous community

Positive Focus Honored to work with a progressive, forward thinking and committed Mayor, City Council, Department Directors and dedicated employees

Live Within Our Means…. By law, NC localities must operate within a balanced budget It is often heard that in tough times, government should tighten its belt and live within its means When governments tighten their belts, citizens, customers and employees feel the squeeze

Approach to FY14 Budget Development Constrained Operating Budget Requests from Department Directors Requests included CIP items Analysis of Revenue Stream Prioritizing expenditure requests (as with business and citizens, costs to government also increases each year)

The FY14 Budget is… Seriously Constrained and Does Not fully address the needs of the municipal organization, particularly capital improvements and repairs, and/or all of the City Council’s initiatives and strategic objectives. A No-Frills Budget

We’ve been in this mode since 1999 Henderson has been in the Recessionary mode for several years A great deal of the elasticity and flexibility that normally exists within a budget has already been utilized

Total Budget The Total Budget, adjusted for inter-fund transfers, is: $35,751,900

Major Budgetary Impacts at a Glance: Fee/Rate/Tax Increases 8.3 Cents Property Tax Increase 50 Cents Monthly Sanitation Fee Increase Regional Water Rate Increase = 5% Water Rate Increase = 8% Sewer Rate Increase = 2.5%

Impacts on Residential Customers For in-city homeowner with $200,000 home and using 800 cf of water a month, estimated annual impact of increases would be $194.73

Budgetary Impacts at a Glance: Personnel No Cost of living increase Career Development is funded Unfreeze 1 position—Firefighter No new positions are recommended. Proposed new CD Director position not funded Provision for pay & classification study Medical insurance decreased 5% Provision of wellness program incentive

Individual Funds Now that we’ve taken a look at the global budget issues, let’s look at the four operating funds: General Fund Regional Water Fund Water Fund Sewer Fund

General Fund Work Horse of all City Budgets Provides for GENERAL services including Public Safety: Police, Fire, E-911 Cultural: Library, Recreation, Public Health & Welfare: code enforcement, sanitation, Planning/Zoning General Administration of City Archaic revenue structure (property tax and sales taxes based on products; not services)

General Fund Revenues: Primary Revenue Sources Property Tax: 39% Sales Taxes: 15% Sanitation Fee: 11% 65%

Property Tax 39% of General Fund Budget One of only two major revenue sources that is at the discretion of Council Recommended to increase from 58.5 cents to 66.8 cents per hundred dollar valuation

Property Tax Increase About 3 cents of increase due to not utilizing undesignated fund balance to balance the budget

Property Tax Increase Part of 5.3 cents increase to cover decreased revenue estimates for: Prior years’ tax collections Serious reduction in Privilege License revenues due to loss of inter-net cafés, and other sources. Part of 5.3 cents to cover reduction in Powell Bill Transfer Part of 5.3 cents increase to cover increased costs of operations, including State’s new Unemployment Tax on positions

General Fund Revenues: Sales Taxes Recovery began in FY12, remained flat in FY13 and projected 2% increase for FY14.

General Fund Revenues: Undesignated Fund Balance

General Fund: Expenditures

General Fund Expenditures: Where Does the $ Go?

General Fund Expenditures: Public Safety

General Fund: Areas of Largest Increase Increased costs for Joint Programs ($40,300) E-911 Tax Billing and Collections Board of Elections Recreation Fire & Police ($433,800)(non-asset forfeiture) Garage Sales (M/R) ($81,870) Human Resources ($58,740) Recreation Services ($45,535)

General Fund Expenditures: Gaps Many Capital improvements not addressed in all departments; however, funding is provided for contracted services for Recreation CIP study No funding for Grant Writer with COG No funding for proposed CD Director position Heavy reliance on asset forfeiture to purchase police cars

Regional Water Fund: Revenues 97% of revenues come from the sale of water to the three regional partners: Henderson, 60%, and Warren County and Oxford at 20% each 5% rate increase for increased costs for operations and capital improvements

Regional Water Fund: Revenues 5% Increase Each % of increase = about $38,000

Regional Water Fund Expenditures: Major Initiatives Obtain Inter-Basin Transfer of Water Permit to 20mgd that will provide for expansion of plant Physical Expansion of Plant to 20mgd Capital improvements: Chemical Pit and Clearwell Roof Development of rate stabilization/debt service plan

Water Fund: Revenues 97% of revenues come from the sale of water to 8,800 customers Four governmental customers Vance County 1A comes on-line this year Granville County not yet active customer Operates as an Enterprise Fund

Water Fund Revenues: Rate Increase Each 1% = about $25,000

Water Fund Revenues: Rate Increase Comparison

Water Fund: Major Initiatives Water Meter Replacement Program continues 2” Line Replacement continues

Sewer Fund: Revenues 87%, from sewer user fee Operates as an enterprise fund

Sewer Fund Revenues: Rate Increase 2.5% rate increase (less than projected last year) Each 1% = about $37,700

Sewer Fund Revenues: Rate Impact Comparison

Sewer Fund Expenditures: Major Initiatives Underway Renovation to Sewer Plant Sandy Creek Basin Sewer Line Rehab Sandy Creek Lift Station Replacement Development of rate stabilization/debt service plan

Insurance Utilization is Excellent: 5% rate decrease

Health Insurance Kudos to HR Director Cathy Brown and all employees/retirees that have worked hard to keep costs down Wellness program working well $23,000 in General Fund for new wellness initiative in FY14

Tighten the Belts Belt tightening affects not only the City, it also affects its customers and citizens through reductions in levels of service or elimination of certain services The staff and I look forward to working with Mayor and Council as we begin the budget review/adoption processes

First Budget Review This Thursday Night 64: Regional Water Fund 46: Regional Capital Improvements Fund 78: Capital Reserve Regional Fund 30: Water Fund 43: Water Capital Improvements Fund 70: Capital Reserve Utilities Fund 79: Water Rate Stabilization Fund

FY14 Budget: In Closing Thank you for your time and patience this evening First Budget Work Session is this Thursday, Questions?