1. FY 14-15 Budget Presentation 19 May 2014

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

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

4. Live Within Our Means….
By law, NC localities must operate within a balanced budget
It is often said: …in tough times, government should tighten its belt and live within its means
When the City tightens its belt, citizens, customers and employees will inevitably feel the squeeze

5. FY15 Budget Development
Staff training in August-October on use of new, comprehensive MSExcel buget development workbooks
Departmental budget development from late October to first of January
Constrained, prioritized departmental budget requests submitted to CM first of January

6. FY15 Budget Development
CM review of budgets with Department Directors in mid-January
Analysis of revenue stream and projections developed in February
Budget balancing during March and April
Work Budget Book prepared April and May

7. The FY15 Budget is…
Seriously Constrained, particularly the General Fund
A No-Frills Budget

8. We’ve been in this mode since 1999
Henderson continues to endure a protracted period of austerity
The FY15 Budget does not have the elasticity and flexibility normally associated with good budgeting
This problem is particularly acute in the General Fund

9. Total Budget The Total Budget, adjusted for inter-fund transfers, is:
$37,053,400

10. Total Budget: Fee/Rate/Tax Increases
No Property Tax Increase
No Sanitation Fee Increase
Regional Water Rate Increase = 5%
Water Rate Increase = 5%
Sewer Rate Increase = 3%

11. Monthly Utility Impacts on Residential Customer
Customer using about 5,000 gpm
In City—Water = $0.69 increase
In City—Sewer = $1.65 increase
Out of City Water = $1.24 increase
Out of City Sewer = $3.16 increase

12. Total Budget: Personnel Impacts
No Cost of Living Adjustment
Career Development Continues
Phase 1 of 5-Year Plan to Implement Classification & Pay Plan
Unfreezing Two Positions:
Assistant Finance Director—General Fund
Public Services Director—Water and Sewer funds
Reduction-in-Force of 2 Full-Time & 4 Part-Time Positions
Main Street Director—General Fund
Police Office Assistant—General Fund
Four (4) School Crossing Guards—General Fund
Training for Employee Performance Evaluations for the Supervisory Staff

13. Pay Plan Implementation
On Average, the City’s compensation for employees is 22.67% less than its peers according to a Fall 2013 market survey done by The MAPS Group
$117,000 is provided across the four funds to provide for Phase 1 implementation (5-year plan)

14. Medical Insurance Utilization is Excellent!

15. Medical Insurance 10% Rate Reduction!

16. Medical Insurance Kudos!
Kudos to HR Director Cathy Brown and all employees/retirees that have worked hard to keep costs down
Wellness program working well
Kudos to Phil Burnette, City’s Health Plan Administrator, for negotiating this year’s rate reduction and helping us establish the wellness program 3 years ago

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

18. 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, transportation
General Administration of City
Archaic revenue structure: Property Tax

19. General Fund Revenues: Primary Revenue Sources
Property Tax: 38%
Sales Taxes: 15%
Sanitation Fee: 12%
65% of fund budget

21. Property Tax 38% of General Fund Budget
One of only two significant major revenue sources that is at the discretion of Council
Tax rate is currently 62 cents
No increase in tax rate is recommended

22. Property Tax Rate Trend

23. Property Tax Basics
Increases in property tax revenues have come primarily from
1) MPMC converting from non-profit to public;
2) tax rate increases in FY10 and 14;
3) Tax and Tag program for motor vehicle registration
4) Some limited natural growth
Property Tax Collection Rate for FY13
93.59%: Overall
94.30%: All Property Excluding Motor Vehicles
85.35%: Motor Vehicles

24. Property Tax Revenues

25. Sales Taxes
A small decline in FY15 due to loss of State Hold-Harmless payments and a lack-luster economy

26. Undesignated Fund Balance

27. General Fund: Expenditures Trend Analysis
Not keeping pace with inflation

28. Trend Analysis Part 2
FY15 less than FY14 and lower than FY09

29. General Fund Expenditures: Where Does the $ Go? —Part 1

30. Where Does the $ Go?
The community and Council have stated public safety is extremely important. Indeed it is!
One needs to understand how much of the General Fund budget is dedicated to Public Safety vis-à-vis all other services

31. Where Does the $ Go? —Part 2a
Public Safety requires 47% of Fund’s resources

32. Where Does the $ Go? –Part 2b
Current Year Property Tax Does Not Pay for Costs of Public Safety

33. Where Does the $ Go? –Part 2c
Public Safety Personnel Costs require 61% of the Fund’s Personnel Resources

34. Where Does the $ Go? –Part 3a
26% of General Fund Expenditures are restricted by State Statue, Federal Regulations, Contractual Agreements, Vested Benefits and Inter-Departmental Sales

35. Where Does the $ Go? – Part 3b
When one considers restricted and public safety expenditures which comprise 67% of the total General Fund, any remaining budget balancing would affect all other departments, which comprise only 33% of the Fund’s budget. Across the board cuts just don’t work.
Note: E-911 and Asset Forfeiture expenses are reflected in the Restricted Expenditures for the purposes of this pie chart

36. General Fund Expenditures: Gaps
Operating expenses are estimated to the bone—extremely limited flexibility
Streets and storm drainage improvements are terribly under funded
Vehicle and equipment replacement is lagging, particularly in Public Services
Employee compensation is lagging

37. Regional Water Fund: Revenues
99% 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 to help mitigate revenue losses from reduced consumption and to keep capital reserve contributions at near-projected levels

38. Regional Fund Revenue Sources

39. Regional Water Fund: Decreasing Water Sales

40. Regional Fund Rate Increase Trend

41. Regional Fund Expenditure Centers

42. Regional Water Fund 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
Continuation of rate stabilization/debt service plan

43. 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

44. Water Fund Revenue Centers

45. Water Fund Revenues: Rate Increase
Each 1% = about
$26,000

46. Water Fund Revenues: Rate Increase Comparison

47. Water Fund Expenditure Centers

48. Water Fund: Major Initiatives
Water Meter Replacement Program continues
2” Line Replacement continues
Rate Stabilization transfers to capital reserve
Re-establish Public Services Director Position

49. Sewer Fund: Revenues 91%, from sewer user fee
Operates as an enterprise fund

50. Sewer Fund Revenues

51. Sewer Fund Revenues: Rate Increase

52. Sewer Fund Revenues: Rate Impact Comparison

53. Sewer Fund Expenditure Centers

54. Sewer Fund Expenditures: Major Initiatives Underway
Renovation to Sewer Plant Underway
Sandy Creek Lift Station Replacement
Continued support of rate stabilization/debt service plan
Re-establish Public Services Director Position

55. 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

56. First Budget Review Tomorrow Night
Utility Enterprise Funds
30: Water, 31: Sewer, 64: Regional Water
Capital Reserve Funds
70: CR Utilities, 79: CR Rate Stabilization
Capital Projects Funds
43: CIP Water, 44: CIP Sewer, 46: CIP Regional

57. FY15 Budget Presentation: In Closing
Thank you for your time and patience this evening
Comments?
Questions?