1. 1 Presented to the City Council by Horatio Porter, Budget Officer January 14, 2010 FY2011 Budget Workshop

2. 2 Purpose Preview Economic Landscape Revisit FY2010 Investment Decisions Develop City Council Priorities Priorities will influence FY2011 Investment Decisions

3. 3 Survey Results –88% less able to meet fiscal needs in 2009 –Expenditure growth continues to outpace revenues –Property tax increased by 6% in 2008, declined by 2% in 2009 –Sales tax was down 4% compared to last year National League of Cities (NLC) City Fiscal Conditions in 2009

4. 4 Factors Influencing City Budgets –Employee wage costs (83%) –Health of local economy (81%) –Employee health benefits (79%) –Pension costs (75%) –Infrastructure needs (75%) –Public Safety costs (71%) National League of Cities (NLC) City Fiscal Conditions in 2009

5. 5 Primary Drivers –Real estate market –Consumer spending –Unemployment rate –Employee wages –State budget shortfalls National League of Cities (NLC) City Fiscal Conditions Beyond 2009

6. 6 Economic Lag - Time period between when economic conditions change and when those changes impact city revenues How long is the lag? –Most analysis suggests 18 months to several years before city revenues begin to recover. –In 1991 recession - 2 years –In 2001 recession - 18 months Current Recession (2007) – Unknown, likely to be years National League of Cities (NLC) Economic and City Fiscal Cycle - Recovery

7. 7 City of Fort Worth General Fund Year over Year Change Adopted Budget

8. 8 General Fund Overview Forecast - Based on FY2010 Adopted Budget } Gap = $30M } Gap = $55M Adjusted for FY2010 budget and preliminary sales tax projections

9. 9 Review of Citywide Expenditures* FY2010 Adopted Budget * Excludes Internal Service Funds and Insurance Funds

10. 10 Expenditure Allocation FY2010 Adopted Budget Includes General Fund, CCPD and Debt Service

11. 11 Includes CCPD Funding Compensation by Employee Group FY2010 Adopted Budget

12. 12 Current Investment* FY2010 Adopted Budget Includes General Fund, CCPD and Debt Service

13. 13 AP Reductions by Service Group FY2010 General Fund (Filled and Vacant)

14. 14 Current Assessment Effects of the recession will continue Significant budget reductions made in past 2 yrs Unlikely to get large scale reductions in non public safety departments “Only when declining revenues threaten an organization’s ability to operate do they typically respond with strategic analysis on what services should be provided.” ~ Government Finance Officers Association December 2009 Monthly Magazine

15. 15 How do we Proceed? Make incremental reductions OR Redefine what services we should provide and how they are delivered

16. 16 Policy vs. Priority Example of current financial policies: –Maintain a 10% General Fund unreserved fund balance –Discourage the use of one time revenues for ongoing expenditures –Pursue a diverse revenue base –Various policies on debt issuance

17. 17 Focus on Priorities Seek Council’s Direction on Priorities Use Priorities to Evaluate Programs Develop Budget recommendations based on Priorities

18. 18 Public Services Direct Impact on Residents 8 Priorities Administrative Services Indirect Impact on Residents 5 Priorities 18 Priority Classification

19. 19 Public Service Priority 1 - Immediate impact on public safety; emergency response Programs are targeted to safety problems, focused specifically on public safety or incidents of physical harm Immediate - w/in 48 hours, Short-term - w/in 30 days Severe impact on public safety: life-threatening situations or severe injuries Emergency response: a significant portion of the services delivered cannot be delayed, even by a few minutes Example: Fire suppression

20. 20 The City is legally obligated to perform the service Council has no authority to revoke the requirements for the service Contract that locks the City into a course of action for several years Example: Public meeting posting / records requirements Public Service Priority 2 - Meets a Charter / State / Federal mandate or is a long-term contract

21. 21 Programs are targeted to safety problems, focused specifically on public safety or incidents of physical harm Long-term: greater than 90 days Severe impact on public safety: life-threatening situations or severe injuries Widespread: occurs through much of the city; not tied to specific addresses Example: Police investigative units Public Service Priority 3 - Impact on public safety that is severe or widespread

22. 22 Programs are targeted to safety problems, focused specifically on public safety Long-term: greater than 90 days Not likely to be life-threatening Not widespread: confined to specific locations or addresses; not able to spread Example: Code Compliance Field Operations Public Service Priority 4 - Impact on public safety that is not severe nor widespread

23. 23 Physical maintenance of infrastructure –Neighborhood Streets –Arterials –Bridges –Facilities –Vehicles / equipment Example: Street maintenance Public Service Priority 5 - Necessary construction & maintenance of City owned assets

24. 24 Provides a product or service for which citizens or other entities must pay; secures grants for the City Collects revenues for which another program has billed citizens Example: Student Attendance Court Public Services Priority 6 - Provides funds through a direct revenue generating or collection function

25. 25 The program does not deal directly with hazardous situations or conditions City Council has the authority to terminate the activity through a routine M&C or the budget process There is no other organization that can provide this service to citizens of Fort Worth The program benefits large numbers of citizens Example: Libraries Public Services Priority 7 - Has a beneficial effect on the city and is not the core service of another entity

26. 26 The program is available to Fort Worth citizens through another entity The program does not meet any of the above priority Example: Cowboy Santas Public Services Priority 8 - Anything that does not meet the above priority is a complementary service

27. 27 The City is legally obligated to perform the service Council has no authority to revoke the requirements for the service Example: Legal advisors to Council, Audit functions Administrative Services Priority A - Meets a Charter / State / Federal mandate or is a long-term contract

28. 28 Administrative Services Priority B - Necessary in the short term for delivery of a core service The loss of the program would interrupt delivery of public services within 30 days Example: Utility payments for City facilities

29. 29 Administrative Services Priority C – Has a long-term impact on the organization The loss of the program would interrupt delivery of public services within one year The loss of the program could lead to financial losses greater than 10% of the general fund budget within one year The loss of the program could lead the City's bond rating to decline significantly within one year Example: Property Insurance

30. 30 The loss of the program would impact the quality of a core service The loss of the program could lead to small financial losses within one year The loss of the program would increase the operating costs of a core service Example: Employee recruitment services Administrative Services Priority D - Program is necessary in the delivery of a core service.

31. 31 Example: Vacation buyback Administrative Services Priority E - Program is beneficial but not critical in the delivery of a core service The program does not directly impact core service delivery The program does not prevent financial losses The program does not increase efficiency or decrease operating costs of core services

32. 32 Public Services Priorities 1.Has an immediate or near-term effect on public safety; emergency response 2.Meets a Charter / State / Federal mandate or is a long-term contract. 3.Has a long-term and potentially severe effect on the public. 4.Has a long-term effect on public safety, but is not severe 5.Required construction / maintenance of infrastructure owned by the City 6.Provides funds through a direct revenue generating or collection function 7.Has a beneficial effect on the lives of a significant segment of the population and is not the core service of any outside entity. 8.Any program, activity or service that does not meet the above priority is a complementary service.

33. 33 Administrative Services Priorities A.Meets a Charter / State / Federal mandate or is a long-term contract. B.Is necessary in the short term for delivery of a core service. C.Has a long-term and potentially severe effect on the organization D.Is necessary in the delivery of a core service E.Is beneficial but not critical in the delivery of a core service

34. 34 Next Steps 1.Identify Council directed priorities 2.Ensure programs we offer, address your priorities 3.Use available funding to guide the investment in your priorities 4.Present a budget that reflects your priorities

35. 35 Tentative Timeline Jan 21 st Budget Workshop (Resources) Feb 23 rd Q1 2010 Monthly Management Report and Sales Tax Update May 27 th Economic Forum (Updated 5 yr Financial Forecast) July 27 th Certified Tax Roll Presentation August 10 th Present Proposed FY2011 Budget August 12 th and 13 th City Council Retreat August – SeptemberFY2011 Budget Workshops September 7 th FY2011 Budget and Tax Rate Adoption

36. 36 Questions