1. Acting City Manager
Overview
City Council Work Session
March 28, 2017

2. Forming the FY 2018 Operating Budget Impacts: Revenue and Expenses
Major Revenue Impacts
INCREASE in Real Estate Assessments for the third consecutive year; primarily driven by changes in the commercial and apartments & condominium markets
Continued signs of economic recovery
No new taxes, no changes in tax rates

3. Forming the FY 2018 Operating Budget Impacts: Revenue and Expenses
Major Expense Considerations
Increased Pension and Healthcare costs
Salary adjustments, employee investment
Contribution to Schools for salary adjustment
Maintenance of programs and services, fuel increases

4. City of Newport News FY 2018 Financial Plan Total Operating Budget
$1,005,803,187
Total Operating Budget
$866,865,256
Capital
Improvements
Plan
$138,937,931
General Fund
General Fund Supported Projects
Cash Capital
Debt Service
FY2014
FY 2014
FY2013 Operating Budget TOTAL $834.4m General Fund 414,521,000   Special Revenue Funds 235,632,712   Separate Funds 95,729,518   Waterworks   81,400,000 Vehicle and Equipment Services   12,951,600 CDBG   1,377,918 School Fund 281,041,170   Payments from other Funds -279,684,350   VES   -138,956,087
Special Revenue Funds -140,728,263     Total 747,240,050           Capital Improvement Plan     General Fund 49,782,000   User-Fee Funds 37,378,000       Total 87,160,000       Total Financial Plan 834,400,050   Add Back Payments from Other Funds 279,684,350 1,114,084,400
Separate Funds
Waterworks
Vehicle Services
CDBG Funds
Special Revenue Funds
24 Funds
User-fee Supported Projects
School Operating Fund

5. Total Operating Budget OVERVIEW

7. FY 2018 Operating Budget Composition
Increases in All Other Special Rev and Trust
Animal Shelter $1.6m
Debt Service $3.0m
EIDA $5.6m
Pension $2.7m
Total $12.9m

8. Real Estate Assessed Values
down ($1.6 billion) between
FY 2010 and FY 2015
Budget
Estimate

9. State Reimbursement for Mandated Programs
State Revenue
General Fund
State Reimbursement for Mandated Programs
State Revenue down ($8.4 m) between FY 2008 and FY 2015
-does not include State Grants funds beginning in FY 2016
Manager
Rec
Budget

10. General Fund Support to Schools
$2.380 m in NEW Operating Dollars for Schools in FY 2018
Bottom line total
City Funding remains level

11. Newport News Public Schools
State Support for
Newport News Public Schools
Since FY Includes $9.7 m more in new City funding – 10% growth
State support for NNPS down ($13m) between FY FY 2015
City Support
Manager
Rec
Budget

12. General Fund Revenue

13. Change in General Fund Revenues
Increases in All Other Special Rev and Trust
Animal Shelter $1.6m
Debt Service $3.0m
EIDA $5.6m
Pension $2.7m
Total $12.9m

14. General Fund Revenues Increases in All Other Special Rev and Trust
Animal Shelter $1.6m
Debt Service $3.0m
EIDA $5.6m
Pension $2.7m
Total $12.9m

15. FY 2018 Recommended Budget - $485.9 million
General Fund Revenue
FY 2018 Recommended Budget - $485.9 million
Impact of recession on the City’s revenue
State revenue mainly is for DHS and correctional facilities, not Schools which is shown as revenue on Schools income statement.

16. 77% or $374m comes from 2 revenue streams
Impact of recession on the City’s revenue
State revenue mainly is for DHS and correctional facilities, not Schools which is shown as revenue on Schools income statement.

17. Real Estate Tax Rate 17

18. Real Estate Tax Revenue
1.07% increase in overall Levy –
Growth in Commercial, Apartments, Condos
80% of Homeowners will not see change
Tax Rate to
$1.22
* Includes PSC/Tax Relief/Delinquencies
* Includes proposed Real Estate Tax Increase
Budget
Manager
Rec

19. General Fund Operating Budget Federal/State Grants – $4.15m
Tax Rate to
$1.22
Federal/State Grants – $4.15m
Fed/St
Grants – $3.4m
When we add a column for FY 2014 equal to $434m, will need to be able to explain components driving the $20m increase.
Manager
Rec
Budget 19

20. General Fund Expenses

21. Health Insurance Premium increase Salary Adjustment, Merit-based
General Fund
Expenditure Changes
Pension increase
Health Insurance Premium increase
Salary Adjustment, Merit-based
Local Support for Schools
Fuel Increase
Contractual Obligations
Limited Program Changes, Corrective Actions

22. General Fund Expenditures
Increases in All Other Special Rev and Trust
Animal Shelter $1.6m
Debt Service $3.0m
EIDA $5.6m
Pension $2.7m
Total $12.9m

23. FY 2018 Recommended Budget - $485.9 m
General Fund Expenditures
FY 2018 Recommended Budget - $485.9 m
Includes $2.380 m of new dollars
for salary increase
Community, Regional Support
$11.2m
Utilities, Vehicle Fuel
$8.1m
Contractual Services
$20.6m
Vehicle and IT Replacement
$4.0m

24. General Fund Expenditures FY 2018 Recommended Budget - $485.9 m

25. Pension Costs – All Funds
$18.9m increase from FY 2011
$39.7
What is the plan to fully fund the ARC?
What is the unfunded liability?
Pension Reform
Revised pension benefit
New employees to VRS
Manager
Rec
Budget

26. Healthcare Costs – General Fund
Manager
Rec
Budget

27. General Fund Positions

28. FY 2018 Position Changes General Fund Other Funds Schools
New 6 positions
No positions were eliminated
Other Funds
New 2 positions – one in Stormwater and one Wastewater
Schools
- Eliminate 36 positions through Attrition

29. FY 2018 Major Adjustments $3.8 million $3.3 million
These two items equal all new General Fund Revenue ($7.1 m) for FY 2018
Average 3% Salary Adjustment
$3.8 million
Health Care Cost Increase
$3.3 million
Retirement Increases – NNERF and VRS
$956,000 and $479,000
Homeless Day Service Center
$320,000
Vehicle Fuel Increase
$302,000
Increased HRT Costs – Operations & Route Changes
$92,000
Recruitment Incentive – Police New Hires
$50,000
Adjustment to Reclassification Pool Funding
($500,000)
Decrease in Local and Federal Grant Matching
($700,000)
Reduced One-Time Reserve for Fiber Purchase
($1.0 million)
Debt Service Decrease
($1.8 million)

30. FY 2018 Support for Strategic Priorities
Community Maintenance and Renewal
Continued funding for demolition, neighborhood cleanup investments
Economic Development and Redevelopment
Support Cultural Attractions Fund, CNI Grant Support, New Planning Position
Maximum Emphasis on Public Safety
Funding for Youth and Gang Violence Initiative
Create new EMS District for improved response time
Additional Juvenile Services Positions
Sustainable Local Governmental Policies
Fleet Replacement
Fiscal Management and Efficient Operations
Met Pension Obligations and Cash Contribution in CIP
Reorganization – Central Warehouse
Inclusion of Federal and State Grant Funds

31. Other Funds

32. Local Funding for Schools
$118,300,000
Increased Operations funding - $2.380 million
State revenue is estimated to increase by $917,635

33. Waterworks
$90,750,000
Operating increase of $2.0 m or 2.3% from the current fiscal year
Increased Retirement and Health Insurance costs, Salary Adjustment, Payment in Lieu of Taxes, and support for the Department’s implementation of monthly billing for residential customers
Demand for water becoming more stable
No change in Water Rates
Change to monthly service fee based on meter size - $17.40/$832 (Monthly) - $26.00/$1,657 (Bi-Monthly)

34. Solid Waste
$14,962,000
Operating increase of $19,000 or 0.13% from the current fiscal year
Increased Retirement and Health Insurance costs, Salary Adjustment
No change to the Solid Waste Fee is proposed in FY 2018

35. Solid Waste
$14,962,000

36. Wastewater
$22,599,000
Operating increase of $802,000 or 3.7% from the current fiscal year
Increased Retirement and Health Insurance costs, Salary Adjustment
Federally-mandated Regional Consent order continues to drive costs
Addition of a Senior Construction Inspector to address the increased number of wastewater projects as a result of HRSD regionalization efforts
Proposed change to the fixed monthly Wastewater Service Fee from a flat rate per month to a flat rate per meter size
No change to the volume based Sewer User Fee

37. Wastewater
$22,599,000
Current Rate is $4.00 per month for all meters, regardless of size
Proposed increase to the fixed monthly fee will increase the typical household annual cost for wastewater service by $6.00
Meter
Size
Wastewater
Service Fee
(month)
5/8”
$4.50 3”
$32.05
3/4"
$6.12 4”
$40.62 1”
$10.07 6”
$49.43
1.5”
$16.40 8”
$58.32 2”
$23.80
10”
$67.25

38. Stormwater
$21,783,000
Operating increase of $352,000 or 1.6% from the current fiscal year
Impact of Federal and State Stormwater Regulation
2 major components
MS4 – Municipal Separate Storm Sewer System
TMDL – Total Maximum Daily Load; Chesapeake Bay Preservation Act
One additional Crew Supervisor B position for the management and coordination of grass cutting at major outfalls
Increased Retirement and Health Insurance costs, Salary Adjustment

39. Stormwater $22,135,000 Stormwater Management Fee
Increase of $0.35 per Equivalent Residential Unit (ERU) per month; $4.20 per year

40. Impact on Typical Household

41. Next Steps

42. City Council adopts Public Hearing Schedule
Topic-specific presentations during April Work Sessions
Position Papers distributed by April 4th
Budget available on City’s webpage at
Print copies available at each public library and in the Budget & Evaluation Department
FY 2018 Budget Advertisement for Public Hearings will be in the Daily Press on April 2nd and April 3rd
Contact Department of Budget and Evaluation at

43. Questions

44. Thank You!

45. Appendix

46. Personal Property Taxes
Rate increase from
$4.25 to $4.50
for FY 2013
Manager
Rec
Budget

47. Machinery and Tools Taxes
Manager
Rec
Budget

48. Sales Tax
Manager
Rec
Budget

49. Meal Tax Rate increase from 6.5% to 7.5% for FY 2013 Manager Rec
Budget

50. Business, Professional and Occupational License Taxes
Manager
Rec
Budget