1. Overview of 2011 proposed budget

2.  Defunded Five Positions  Maintained Service Levels  Continued Infrastructure Improvements  Cut spending early to avoid impacting services  Avoided layoffs and furloughs by leaving non- essential positions open when possible  Added Debt Service Fund and Capital Improvement Fund and Merged Smaller Departments

3.  Department Name Changes  Parks is now Parks & Recreation  Data Processing is now Finance  Reclassifying Accounting Tech. Position to Finance Director  No Merit Raises Planned for 2011  Significant Cuts in Operating Expenses  Funding for Capital Projects Maintained

4. Continue to Build Reserves

5.  Strengths  Location, Location, Location  Quality of Life  Electric Utility  4A & 4B

6.  Weaknesses  Dependence on Property Tax  Ratio of Residential to Commercial  Median Home Price  Water CCN

7.  Opportunities  Industrial Development  Residential Development  Commercial Development  Threats  Depreciation of Property Values  Decreased Sales Tax Revenues  Increased Cost of Goods & Services  Lack of Emergency and Operating Reserves

8.  Six Semi-Autonomous Funds  General Fund  Enterprise Fund  4A Economic Development Funds  4B Economic Development Fund  Debt service Fund*  Capital Improvement Fund* * New Funds

9.  Budget Process  Spring – Staff begins estimating revenues and expenses and researching the cost of capital projects and equipment  Early Summer – Staff submits proposed budget to City Manager – City Manager balances revenues and expenditures  Summer – Council holds workshops and public hearings on the budget

10.  Budget Process Continued  September Final Budget is Adopted  October First – New budget begins  January Property Tax revenue starts coming in and Capital purchases begin  April – Process starts again for next year

11.  Revenues are estimates  Revenues do not appear in the bank October First – they come in over the year  Revenue shortfalls mean cutting expenditures  City Operates on a Cash Basis  Conservative revenue estimates  Control of costs and budget management

12.  A large proportion of our costs are set costs and are unchangeable. This includes bond and lease payments  Another large portion of our costs are “automated”, meaning that we do not control the increases. This includes all insurance and water purchases  The bulk of the rest is “current” costs or what it takes to maintain current service levels  What little, if any, that is left can be used for capital improvements, increased personnel benefits or increased service levels

13.  Property Taxes Collected in January 2011 are based on Property Values from 2009  Property Tax is Made up of Two Components  Interest & Sinking Rate (I&S)  Maintenance and Operation Rate (M&O)  I&S Rate is Determined By Debt Obligations  M&O Rate is Determined By Council  I&S Rate is About 19 ¢  M&O Rate is About 43¢

14.  Effective Rate – Rate that will service the debt (I&S) and generate the same amount of operating money (M&O) as last year  Rollback Rate – 108% of Effective Rate. Any increase over the rollback rate is subject to challenge by petition  Setting a rate below the Effective Rate means a decrease in revenue. That decrease comes 100% from the M&O rate

15.  Property Tax Varies Widely from City to City Based on Many Factors  Sanger’s is About Average for the Area and for Cities With a Similar Size and Valuation  Lowering the Property Tax Long Term Requires  A Higher Ratio of Commercial to Residential  Higher Residential Values  Carefully Managing Debt

16.  Expenditures  Revenues  Property Tax  Sales Tax  Court Fees  Fire and EMS fees  Franchise Fees  Enterprise fund Transfers

17.  Composed of revenue generating utilities (Water, Wastewater, Electric)  Intended to generate revenues in excess of costs  Excess Revenues can be used for infrastructure improvements and help support the General Fund  Currently only Electric generates significant excess revenues

18. REVENUES VS EXPENSES NO RATE INCREASE 2010-2011 Proposed Water Wastewater Electric Total Operation Cost $ 1,143,594.00 $ 820,632.00 $ 6,661,290.00 Total Capital Cost $ 458,361.00 $ 139,278.00 $ 419,739.00 Projected Revenue $ 1,245,333.00 $ 1,045,333.00 $ 7,795,333.00 Revenue over (under) $ (356,622.00) $ 85,423.00 $ 714,304.00 Balance $ 443,105.00

19.  Water currently operates at a deficit  Wastewater barely breaks even  Electric is supporting the other enterprise utilities  Water and wastewater rates need to be raised incrementally over the next few years to lessen the impact on customers

20.  To bring water out of operating at a deficit  To save money toward the new wastewater plant (Save 10% of wastewater revenues)  To help pay for the new wastewater plant when it is built  To help pay for some water and wastewater capital improvements without having to go into debt

21.  Water and Wastewater – 10% increase except for residential base rate increase of 6%  Will work out to be a 7% to 8% increase for residential customers  This is the same as last year  Will still leave us generally below the average on utility rates of cities in the area of similar size

22. Impact Current Proposed% Change $ Change Residential Water Residential customers using: 4000 gallons a month $ 23.80 $ 25.557% $ 1.75 Wastewater Residential customers using: 4000 gallons a month $ 23.75 $ 25.507% $ 1.75

23.  Revenues from Sales tax (1/2c each)  4A Expenditures  Warehouse  4B Expenditures  Sports Park  Administrative Costs – Requesting $18,000 from each this year

24.  Created to make general fund budget more understandable  Also helps track project costs  Debt Service Fund is funded by the I&S Rate  Capital Improvement Fund is an internal service fund where bond proceeds are deposited and expended on projects

25. The goose and the Golden Egg

27.  Used for expenses that do not fit inside one department  Includes Postage, Property and Liability Insurance and Tax Collections  Also includes line items for Keep Sanger Beautiful and Park Board for better tracking of expenses

28.  Split 50/50 between GF & EF  No major changes this year

29.  Split 50/50 between GF & EF  Moved TML Insurance and Tax Collections to Non-Departmental  Moved Administrative Assistants Salary from Data Processing (Finance) to Administration

30.  Split 50/50 between GF & EF  No Major Changes

31.  Includes $7000 to support the Child Advocacy Center  Funds to purchase and equip only one vehicle next year  Includes $38,000 for Dispatch Services from the County

32.  No Major Changes

33.  Includes two grants totaling $40,000 in matching funds if grants are awarded  Does not include SAFER grant  Adds funds for dispatch services

34.  No Major Changes

37.  $100,000 for street improvements to be used for leveraging County funds  $50,000 for continued sidewalk expansion  Moved two positions from Parks to Streets to reflect new workforce structure

38.  Moved two positions to Streets  Now includes the Sullivan Center and Community Center budgets

39.  No Major Changes

41.  Pared back to reduce Transfers from 4A & 4B

43.  Includes Safety & Incentive and One Plus Fund  Includes line item for reimbursement of Damage Claims  Includes $50,000 in contingency reserve to hedge against revenue shortfalls and for emergencies

44.  Used to be Data Processing  Reclassified Accounting Clerk to Finance Director  Moved Administrative Assistant to Administration

45.  $40,000 in contingency reserve for unexpected repairs  $50,000 in water line improvements

46.  $150,000 for Wastewater system improvements including I&I study

47.  Includes $125,000 for lighting at the Sports Park  Includes $90,000 for system Improvements  Includes funds for a stump grinder that will be shared with other departments

48.  Looking at funding significant utility improvements in the industrial area  Approximately $400,000 fund balance  Requesting Transfer of $18,000 to Economic Development Department

49.  Pledged $180,000 to Sports Park  Fund Balance of Approximately $500,000  Requesting $18,000 for Transfer to Economic Development Department

50.  Planning on another lean year  Continue to fund capital improvements to aging infrastructure  Continue to build reserves  Continue planning and preparing for the future