City of Lawrence
City Commission
MEMORANDUM
DATE: July 6, 2008
TO: Dave Corliss – City Manager
Lawrence City Commission
FROM: Rob Chestnut
Vice Mayor
CONSIDERATIONS FOR 2009 BUDGET DISCUSSION
I have a number of questions and comments in response to the City Manager’s recommended budget. I thought it best to provide these questions comprehensively to the City Manager and other commissioners in order not to duplicate staff efforts if other commissions have similar inquiries. I want to express my appreciation to all staff members who have participated in the development of a budget during these difficult economic times.
Spreadsheet roll-forward of projected fund balance
I spoke with staff on Friday about providing a sheet we used last year that rolls forward estimated fund balance with estimated expenditures for 2008 and estimated 2009 expenditures by department in order to understand our situation versus the 15% target for fund reserve.
Sales tax proposals
The sales tax proposals will be discussed at a later date. One proposal I made was to include a transfer from the general fund to the library fund if the sales tax for transit passed. This recognized the challenge for the library being totally property tax dependent for
funding. They will continue to have funding challenges as assessed valuation remains relatively flat. Was this considered in the deliberations?
Solid waste rates and revenues
I would like to see a 5-year history of sanitation rates. The recommended increase should be considered in the context of rate increases made in recent history. I could not find any information to that end in the materials.
There is no split between residential and commercial revenues in the budget. However, the budget does split expenditures between residential and commercial locations. Is revenue split possible to understand the relationship between revenue and expenditure by each segment? That may also lend to a better understanding of reviewing sanitation rates. I am assuming the recommended increase is across all segments.
Roll off revenues and extra pickups have had a big reversal for the 2009 budget in revenues. I am assuming this is a change in classification of revenues. Can you provide some discussion of these items?
Public Parking
The City Manager’s letter mentions consideration of increases in parking rates. Based on review of the numbers, I would agree. The recommended budget for 2009 shows a $154k deficit spend prior to any transfers to the reserve fund for maintenance and repairs. Our ability to continue beautification efforts will be reduced without increased revenues. I would suggest staff recommend increases that they see as appropriate.
It is unclear why we are projecting meter revenues to be less in 2009 than actual for 2007. Are we seeing a trend that suggests revenues might be very elastic based on rates? If not, do we have less metered traffic downtown? This assumption may require some review.
Personal Property Taxes
As noted in the transmittal letter from the City Manager, assessed personal property is lower based on the exemption for new machinery and equipment. Has the state provided any offset to these revenues to date?
Debt Service
A-15 highlights expenditures by category. Debt service represents 15.6% of total expenditures for 2009 versus 14.4% in 2007. Do we have any estimates on what these percentages might be in future years? Does this have long-term impact on our bond rating?
I would suggest that we consider this factor when setting a target for bonding expenditures in the bond and interest fund as well as utilities going forward.
Full-time Equivalents (FTEs)
A-19 displays a reduction in authorized positions for the 2009 plan. I would like to know by department and in total what is our current staffing expressed by FTEs. This analysis will give some insight into our current recruiting and possible discussion regarding staff levels.
Performance Indicators
A review of performance indicators raises questions in several areas:
Ø Planning – Do we have any thoughts regarding the improvement of a 32% satisfaction rate for services? Other indicators are all fairly close to target. Are we measuring the right indicators that would tell us about the issues that are creating dissatisfaction?
Ø Code enforcement – What are we targeting 400 blight inspections when the department did 680 in 2007? Is this a staffing issue?
Ø Building safety – With low permit levels in recent years, why are we still at 52-53% on permits issues for residential and commercial applications? These performances are still well below our goals.
Ø HR – Turnover was 6.4% in 2007, yet our goal for 2009 is 8.5%. Are there concerns that need to be discussed?
General Overhead
We have $1,445k of contractual services expenditures going to outside agencies. Can we get detail of the balance that makes up expenditures for the balance of the $3,016k total?
Fire and Medical
We have an increase in contractual services from $867k to $1,020 that equals an 18% increase. What is driving this increase?
Airport Maintenance
There is an increase of $18k in personal services that equates to an increase of over 40%. What is driving this increase?
Guest Tax
The funding for DMI/CVB estimated for 2008 is substantially lower than the budget. Reserve funds have been increased commensurately. This trend is continuing for 2009. What was the change in assumption that drove this reallocation?
The City puts money into reserve based on City Charter Ordinance 30. What is the current balance of the reserve fund? What do we estimate the balance to be at the end of 2008 and the end of 2009?
Rental registration
It is unclear what our current cost is associated with the existing rental registration program for rentals in single-family zoned neighborhoods. Do we have current revenue and expenditures for this program? I am assuming revenue is approximately $90,000 based on stating we will generate $110,000 in incremental revenue by increases existing fees and creating new fees with this program.
Based on the City Manager’s memo, estimated annual revenue will be approximately $200,000. I want to make sure I understand the budget impact. Here is my estimate based on the memo:
Incremental revenue $110,000
New inspectors (94,000)
New admin staff (42,000)
Associated costs ( 8,420)
Cost for 2009 $(34,420)
Does the addition of personnel include costs for medical benefits, pension and other related benefit costs? Do you believe this deficit will be balanced in the future?
Street Maintenance
I agree with the recommendation to ensure street maintenance expenditures are maintained at their current level. If the infrastructure sales tax passes in November, does staff believe these expenditures will mitigate in future years as problematic stretches of our grid are reconstructed?
The submittal letter commented on spending over $5 million on street maintenance. I want to make sure I understand where these numbers are derived.
The total amount of expenditures in the special gas tax dedicated to street maintenance is $2,953k and the amount in the general fund is $3,294k for a combined total of $6,247k. How is the $5 million plus figure derived?
Special Recreation Fund
The recommended budget for the Arts Center scholarships and the arts commission total $51k. Is this comparable to 2007 and 2008?
Bond and Interest Fund
The schedule on J-5 shows a roll forward of debt in 2007. Can we see that schedule for 2008 and 2009? The trend shows that we issued $14,190k more debt than what was retired during the year. I would like to know how much our $140,465k outstanding indebtedness will grow over the next few years. Does our legal debt margin take into consideration whether indebtedness is GO or revenue in nature? Have we considered the impact of water and wastewater project indebtedness if we move forward on the significant portion of the wastewater plant construction?
Water/Wastewater Funds
I would request we break out the impact of moving expenses and merit increases for all divisions from administration in order to see the true year-over-year increase in personal services. I would also request a consolidation of all the divisions that roll into the water/wastewater division to understand the overall increase in funding for the entire enterprise year-over-year.
The budget recommends a 5% increase in water and sewer rates. Like sanitation rates, it would be helpful to have a 5-year trend on increases in these rates to have historic context. Secondly, do we have any information about rates in comparison to surrounding communities?
Public Golf Course
Based on the proposed budget, it would appear that we will show a small surplus for 2009 less contingency as presents below:
Revenues for 2009 $980,500
Expenditures less contingency 913,172
Surplus (prior to debt service) $ 67,320
Can you provide the annual debt service for the bonds associated with Eagle Bend, and the retirement date?
CIP
The list of all projects through 2013 does not appear in this material. Do we have a comprehensive list of projects and their score based on the scoring matrix on P-3?
I note that we have included the Carnegie Library project in recommended 2009 expenditures? Has this project been scored on the matrix? If so, how does it compare to others? Is the recommended list the highest scored projects?
The Carnegie rehab amount shown on P-4 totals $1,349k. There are no offsets for federal or state aid. Are we assuming the federal grant money will be foregone? If so, is there the possibility of reapplying for federal grant money at a higher amount?
Health Care
A memo was published on May 19, 2008 discussing different options for health care funding. It is unclear in the budget materials what option was selected and integrated into the recommendation. The committee laid out 3 different funding options. I would like to know which was selected.
Thank you for the time and effort spent to finalize the 2009 budget. I look forward to the discussions in the coming weeks.