1. FY 14 Budget Presentation 20 May 2013

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 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

5. 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)

6. 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

7. 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

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

9. 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%

10. 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

11. 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

12. 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

13. 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)

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

16. 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

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

18. 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

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

20. General Fund Revenues: Undesignated Fund Balance

21. General Fund: Expenditures

22. General Fund Expenditures: Where Does the $ Go?

23. General Fund Expenditures: Public Safety

24. 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)

25. 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

26. 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

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

28. 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

29. 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

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

31. Water Fund Revenues: Rate Increase Comparison

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

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

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

35. Sewer Fund Revenues: Rate Impact Comparison

36. 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

37. Insurance Utilization is Excellent: 5% rate decrease

38. 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

39. 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

40. 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

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