2. Briefing Purpose
To submit the amended FY11 City Manager’s proposed FY10/FY11 Biennium Operating Budget and NEW five-year Capital Improvement Plan (CIP) for Council’s consideration. 2

3. 3

4. 4

5. 5

6. (Adopted by Council September 2009)
Financial Policies
(Adopted by Council September 2009)
Revenues – Diversified and stable; fees and changes set to cover expense of attendant services; restricted use of one-time revenues; conservative estimation
Budget – Balanced; restricted use of fund balance; quarterly monitoring; multi-year forecast
Fund Balance – Policy minimum of 15% 6

7. Financial Policies (continued) (Adopted by Council September 2009)
Debt Management Principles and Administration –Debt capacity and affordability limits • Debt Service to General Fund revenues <= 12% • Debt Service to Market Value <= 4% • 10 year payout ration >= 50%
Utility Fund Debt – Annual water and sewer rates set to generate sufficient revenues to meet bond covenants and capital replacement
Refunding Bonds – On-going monitoring with a minimum of 3% Net Present Value (NPV) savings 7

8. Financial Policies (continued) (Adopted by Council September 2009)
Capital Improvement Program Guidelines – Five-Year Capital Improvement with enhanced pay-as-you go funding –Adequate maintenance of physical assets to protect investment
Other Post Employment Benefits (OPEB) Funding • Set aside resources to pre-fund OPEB liabilities on an actuarially-sound basis over time
Special Revenue/Enterprise Funds – Avoid designation of discretionary funds in order to maintain maximum financial flexibility
Independent Audit –Conduct an annual independent audit 8

9. Credit Rating Agencies
March 2009—rating analysts outlined certain expectations of the City to sustain ratings:
No additional debt restructuring for cash flow benefits
Conservative revenue projections; structurally balanced budget with recurring revenues
Reduction of discretionary expenditures and strong expenditure controls
Restoration of general fund undesignated unreserved fund balance to 15% of revenues
Continued progress in eliminating Risk Management Fund deficit
Continued compliance with 12% debt-service-to-revenues policy 9

10. 10

11. 11

12. 12

13. Budget Assumptions
Submit a balanced budget for each year of the FY10/11 biennium without use of fund balance
No consideration of equalization tax rate in response to declining real estate assessed values
Continue to manage FY10 revenue shortfall without using fund balance through tight expenditure controls
Include public safety retention pay plan and anniversary increase as first priority 13

14. Budget Assumptions (continued)
Fund Courts Complex and Capital Reserve to maintain policy compliance
Include level funding for education among priorities
Continue $3M funding for Tax Relief for Elderly and Disabled
No new capital projects for the biennium except Council’s reprogramming of Holiday Inn to Admiral’s Landing Seawall and Crawford Pkwy. bulkhead projects 14

15. 15

16. 16

17. Cost of Service Highlights
FY2010
FY2011
Change
Residential Water Charges
$4.03/1,000 gallons
$4.24/1,000 gallons
$0.21
Residential Sewer Charges
$3.15/1,000 gallons
$3.31/1,000 gallons
$0.16
Stormwater Fees
$6.50/month per ERU
$7.00/month per ERU
$0.50
Proposed FY11 rate increases set at 5.2%, per Council consensus during utility plan of finance discussions with Financial Advisors 17

18. Biennium Budgeting Methodology
Historical Practice (<FY08) Revised Approach
Collections projected at % Projections set at usual and customary 96% collection rate
Silo projections from Finance Collaboration with Assessor, Treasurer & Commissioner
6% vacancy savings 4.4% vacancy savings
Tax Relief netted against revenue Tax Relief reflected as expenditure; revenues projected as gross amount
Departments budgeted in silos Collaboration among and between departments to create efficiencies and savings 18

19. FY11 Budget Highlights
Implement Public Safety Retention Pay Plan and Anniversary step increase
Continued level funding of Portsmouth Public Schools
Redeployment of Solid Waste Fund workforce from weekly to monthly bulk waste removal and add more street sweeping services
Funding of capital reserve for new courts facility at $1.8M
$834,310 golf fund subsidy, down from $1.2M
No equalization tax rate or increase tax rate
Total General Fund Budget = $218,361,390
Total Budget = $547,938,307 19

20. FY11 PROPOSED BUDGET Investment in Employees
No furloughs
No unpaid holidays
No layoffs
No elimination of vacant positions
Birthday Holiday added
Fund public safety retention pay and anniversary step increase 20

21. Remaining FY10 Calendar
March 30 City Manager’s FY11 Budget Presentation*
April 6 Public Work Session–FY11 Budget
April 8 State of the City Luncheon
April 12 Public Work Session–Five-Year CIP (FY11–FY15)
April 13 Public Work Session – FY11 Budget and CIP
Public Hearing • 7 p.m.
April 26 Public Work Session–Economic Development
April 27 Public Work Session Regular City Council Meeting
May 10 Public Work Session
May 11 Regular City Council Meeting – FY11 Budget and CIP
Public Hearing • 7 p.m Budget Adoption 21

22. Remaining FY10 Calendar
May 17 Community Meeting: I.C. Norcom High School
May 24 Public Work Session–Economic Development
May 25 Public Work Session Regular City Council Meeting
May 31 Memorial Day Parade
June 7 Public Work Session
June 8 Public Work Session Regular City Council Meeting
June 21 Public Work Session–Economic Development
June 22 Public Work Session Regular City Council Meeting 22