1. CITY OF COTTONWOOD City Council FY 2009 Budget Overview City Council Chambers June 24 & 25, 2008 – 6:00 p.m.

2. Glossary of Acronyms ADOT – Arizona Department of Transportation ASRS – Arizona State Retirement System CAF – Capital Accumulation Fund CATS – Cottonwood Area Transit System CDBG – Community Development Block Grant CIP – Capital Improvements Plan/Program COLA – Cost Of Living Adjustment DS – Debt Service E-MOD – Experience Modifier FAA – Federal Aviation Administration FmHA – Farmers Home Administration FY – Fiscal Year GADA – Greater Arizona Development Authority GASB – Governmental Accounting Standards Board GF - General Fund GFOA – Government Finance Officers Association HURF – Highway User Revenue Fund IT – Information Technology LP – Lease Purchase M&O – Maintenance and Operations MPC – Municipal Property Corporation PSPRS – Public Safety Personnel Retirement System WIFA – Water Infrastructure Finance Authority WWTP – Wastewater Treatment Plant

3. Building the Proposed Budget Guidance Governed by a multitude of State Statutes Arizona League of Cities and Towns assistance – Municipal Budget & Finance Manual Process (This is an evolving document) Review Revenues & Projections Review Expenditures & Estimates Review the Reserve Levels Prepare a Budget Calendar Meetings! Meetings! Meetings! Staffs Department Heads Administration City Council Goal - Balanced budget

4. Budget Process - Calendar Distribute Budget Worksheets & Instructions February 6, 2008 Distribute Goals & Performance Measures Forms & InstructionsFebruary 11, 2008 Distribute Personnel Request & Reclassification Forms February 11, 2008 Capital Improvements Meeting (Finance & City Manager)February 26, 2008 Budget Worksheets Due to FinanceFebruary 20, 2008 Distribute CIP Schedules, Forms, & Instructions February 22, 2008 Goals & Performance Measures due to FinanceFebruary 22, 2008 Potential Budget Issues Meeting - City ManagerFebruary 26, 2008 Goal Setting Meeting - City Manager February 29, 2008 Capital Improvement Forms due back to Finance March 05, 2008

5. Budget Process - Calendar Council Annual Goal Setting WorkshopMarch 12, 2008 Review of 1st. Budget Draft with Finance & AdministrationMarch 17-21, 2008 1st. Round Departmental Budget MeetingsMarch 24-April 4, 2008 Revenue Update WorkshopApril 15, 2008 Capital Improvements Workshop- ½ Day (Staff)April 17, 2008 Review of 2nd Budget Draft - Finance & AdministrationApril 21-25, 2008 Economic Issues Facing the 2009 Budget – Administration & Finance April 28, 2008 Dept’l Budget Meeting - Economic Issues: Dealing with a DeficitApril 28-May 2, 2008 Strategic Bdgt Mtg – The Budget Deficit – Administration & Finance May 15, 2008 Budget Work Session – Declining Local Economy & Service Levels May 29, 2008

6. Budget Process - Calendar Finance Budgetary Meeting – Working Through the DeficitMay 29, 2008 Budget Work Sessions with City Council @ Council ChambersJune 2008 Department Head Budgetary Update Meeting (Pre-Council Workshops)June 23, 2008 Introduction to the Budget / Personnel Matters / Capital RequestsJune 24, 2008 Departmental Presentations / Budgetary Wrap-upJune 25, 2008 Reserved for additional Budget MeetingJune 30, 2008

7. Budget Process – Calendar Remaining Present Tentative FY 2009 Budget to City Council July 11, 2008 Public Hearings on Tentative Budget July 15, 2008 Adopt Tentative FY 2008-09 Budgets, set Expenditure LimitationJuly 15, 2008 Present Final FY 2009 Budget to City Council August 8, 2008 Public Hearing on Final Budget August 12, 2008 Adopt Final FY 2008-09 Budget August 12, 2008 Budget Due to GFOA for Award Review November 12, 2008

8. Budget Meetings Council Review of the FY 2009 Proposed Budget Personnel Issues Capital Requests Revenue Discussions Overall Budget Overview Review & Wrap-up Council Meeting Structure About 2 hours long Ask questions as they arise Staff will keep notes of open issues (Open issues will be dealt with at the wrap-up session)

9. Structure of the Proposed Budget Cottonwood follows the Government Finance Officers Association (GFOA) Guidelines and serves as a: Policy Document, A Financial Plan, An Operations Guide, and A Communication Device. Budgeted vs. Revised Budgeted amounts are planned revenues and expenditures when preparing the budget, including reserves Revised are more up to date estimates that are closer to what will actually happen through the close of the fiscal year – necessary to project a starting point for the new year’s budget Reserves available to Council for allocation Undesignated reserves$266,745 Council contingency $35,000

10. City Manager’s Transmittal Letter Good place to Start Reading this document Introduces the budget document to its readers Highlights important data about the document Discusses Key Issues Touches on Staffing and benefits Reviews New Programs being introduced Reviews the budget process Finally, lays out the City’s Capital Expenditures for the following year

11. Budget Highlights Total Budget is $86,941,470 4% Cost Of Living Adjustment Planned at mid-year, contingent on revenues meeting estimates Estimated cost is $200,000 Merit Program is fully funded Workman’s Comp e-mod is stable at 0.95x Budgeted compensation study Contingent on revenues meeting estimates Planned for last fiscal quarter To be implemented July 1, 2009

12. Budget Highlights ASRS contributions declined slightly from 9.6% to 9.45% Fire Department is going to a 24/48 work schedule Health Insurance costs remained stable for FY 2009 Sales tax revenues were budgeted with an anticipated increase from 2.2% to 3.0%

13. Budget Challenges PSPRS contributions increased: Police went from 17.30% to 22.07% - increase of 27.6% Fire went from 10.32% to 14.83% - increase of 43.7% $689,310 in new staffing and reclassification requests Sales tax, our main source of revenue is estimated to be down by 3% An increase in the sales tax rate from 2.2% to 3.0% is budgeted AZ Average fuel prices are up 37.4% over last year (regular gasoline) Capital & Staffing needs to continue to increase dramatically Compression and Structure issues still plague Public Safety

14. Major Items Budget Summary New Staffing & Reclassifications $ 81,983 New Programs $ 68,800 Capital Outlay <$35,000 $212,580

15. Personnel Issues $81,983 Budgeted

16. Personnel Requests

17. Personnel Reclassification Requests

18. Personnel/Reclassification Requests Funded

19. FY 2009 New Programs $68,800 Budgeted

20. FY 2009 New Programs Request / Budgeted

23. FY 2009 Capital Outlay & Improvements $34,770,125 Budgeted

24. FY 2009 Capital – General Fund

28. FY 2009 Capital - HURF

29. FY 2009 Capital – Enterprise Funds

30. FY 2009 Capital - Grants

31. FY 2009 Capital – Capital Projects Fund

33. Reserves Status Restricted Fund Balance $1,899,670 From 45 to 60 days coverage FY 08 - $1,656,720 Capital Accumulation Fund$1,000,000 Council capped until economy improves Any excess over $1M for O&M Undesignated Reserves $322,410 0.2% Public Safety Capital Fund $266,745 1% Portion Sales Tax CIP Reserve $827,265

34. Sales Tax Sales Tax revenue is estimated to decline by an additional 3% in FY 2009 Retail Sales is 10% below last year – ($5.1M FY 2008 to $5.7M in FY 2007) Real Estate and Rental is up 10% - ($807K FY 2008 to $731K in FY 2007) 0.8% is estimated to bring in only $1.8M due to the implementation, collection and disbursement Use of fiscal responsibility All capital purchases are minimal and will be scheduled Minimal additional staffing and reclassifications Already have changes in Financial Operations Guide policies: Wireless Communication Device Policy Travel Policy Less patrol cars driving and more use of the MDTs COLA was delayed until 01/2009 and only if revenues meet estimates Compensation Study delayed until last fiscal quarter of 2009 Compensation Study implementation is delayed until 1 st quarter FY 2010 Will be back to the Council in November for Sales Tax update

35. Question and Answer Time

36. Department Scheduling General Fund  Administration  Legal  Personnel  City Council  Natural Resources  Community Development Planning & Zoning Building Inspection  Municipal Court  Engineering General Fund  Finance Service Finance IT Services Non-Departmental Debt Service Internal Services Fiduciary Fund  Police/Dispatch/Animal Ctrl  Fire

37. Department Scheduling General Fund  Police  Dispatch  Animal Control  Fire Enterprise Funds  Water Utility  Wastewater Utility Special Revenues  Library  HURF  CAT  Grants  Airport  CIP Fund