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07-18-2017 City Council Study Session Packet City of Grand Island Tuesday, July 18, 2017 Budget Work Session Packet City Council: Linna Dee Donaldson Michelle Fitzke Chuck Haase Julie Hehnke Jeremy Jones Vaughn Minton Mitchell Nickerson Mike Paulick Roger Steele Mark Stelk Mayor: Jeremy L. Jensen City Administrator: Marlan Ferguson City Clerk: RaNae Edwards 7:00 PM Nebraska Building State Fair Board Room Suite 200, 501 E. Fonner Park Road Grand Island Budget Work Session - 7/18/2017 Page 1 / 17 City of Grand Island Tuesday, July 18, 2017 Call to Order This is an open meeting of the Grand Island City Council. The City of Grand Island abides by the Open Meetings Act in conducting business. A copy of the Open Meetings Act is displayed in the back of this room as required by state law. The City Council may vote to go into Closed Session on any agenda item as allowed by state law. Invocation Pledge of Allegiance Roll Call A - SUBMITTAL OF REQUESTS FOR FUTURE ITEMS Individuals who have appropriate items for City Council consideration should complete the Request for Future Agenda Items form located at the Information Booth. If the issue can be handled administratively without Council action, notification will be provided. If the item is scheduled for a meeting or study session, notification of the date will be given. B - RESERVE TIME TO SPEAK ON AGENDA ITEMS This is an opportunity for individuals wishing to provide input on any of tonight's agenda items to reserve time to speak. Please come forward, state your name and address, and the Agenda topic on which you will be speaking. Grand Island Budget Work Session - 7/18/2017 Page 2 / 17 City of Grand Island Tuesday, July 18, 2017 Budget Work Session Item -1 Fiscal Year 2018 Financial Review and Recommendations for General Fund Staff Contact: Marlan Ferguson, Mayor Jeremy Jensen Grand Island Budget Work Session - 7/18/2017 Page 3 / 17 CITY COUNCIL BUDGET WORK SESSION Tuesday, July 18, 2017 6:00 p.m. Nebraska Building State Fair Board Room AGENDA 1.Call to Order 2.Opening Remarks – Mayor Jensen 3.Budget Process – Marlan Ferguson 4.Discussion on Designated Revenue – Renae Jimenez 5.Estimated Fund Balance at Year End - Staff 6.5 Year Projections – No Changes 7.Recommendation for Staffing to Meet 70/30 Policy 8.Recommendation for Operational and Capital 9.Recommendation for Increasing Revenues to Balance the Budget 10.Public Comment 11.Adjournment Grand Island Budget Work Session - 7/18/2017 Page 4 / 17 BUDGET RETREAT 2018 Marlan Ferguson, City Administrator Since we became an MSA our labor costs have compounded significantly and additional staffing levels over the past few years have increased the pressure for our revenues to sustain and support our personnel costs. In order to address personnel costs, we need to look at how we can provide services while minimizing personnel costs (and operational costs). We need to look at our operations and determine if: - We are providing services that we are not required to provide. - We are providing services that the majority of the citizens want - We are providing services that are the core mission of the city - We are focusing on efforts that are not producing results or are not value added. - We are not getting the maximum efficiency out of our operations/workforce. - We have areas that experience too much down time. - We are not providing services at the right time. In addition we need to determine at what level of service the citizens want at what cost? Following last year’s budget session we implemented a program to review all new hires. Each Director was asked to complete a form to determine if a backfill is absolutely necessary and what fund the salary would come from. Directors were asked if they can make changes to the organizational structure, scheduling, use of overtime, reducing services provided, or outsourcing. This resulted in freezing several positions which we will discuss. As you recall we had study sessions on the major general fund departments: Public Works, Parks, Police and Fire. Since January staff has monitored the revenues and expenditures and continued to review the one and five year forecast. In April we had a City Council Budget Committee meeting to discuss a balanced budget for 2018 and a policy that personnel cost do not exceed 70% of the General Fund Budget. The City Council reviewed that and other budget issues at a Study Session on May 16th. In June we had two City Council Committee meetings, one for General Fund Revenue and the other for Expenditure and Personnel. Those resulted in the administration staff working with the department directors to review staffing levels and the result thereof and a recommendation for additional revenues to balance the budget with the recommended 70 /30 policy. This budget session (retreat) will give the city council an opportunity to discuss these issues in depth and direct staff on developing the 2018 budget. No official action will take place at this meeting. A schedule of future meetings is included in the packet. Grand Island Budget Work Session - 7/18/2017 Page 5 / 17 The City of Grand Island uses governmental accounting to track the various sources of services the City provides. The process of tracking those sources is referred to as fund accounting. There are different types of funds and the chart below is just a sample of what the City has. The primary discussion at this time are the special revenue funds. As noted these funds are used to track legally restricted revenue sources. What this means is that there is some restriction put into place on those revenues whether it be State law or even City Code that states what the revenue may be spent on. A State example is the State Highway Allocation (gas tax) money. That is approximately $5 million for FY18 and may only be used on streets. A further restriction on that money is that 50% must be used on street projects. There are multiple examples for City restricted revenue and they include the 2% hotel occupation tax (§23-55), 1 ½% food and beverage tax (§23-66), and the additional 2% phone occupation tax (§23-21 (B)). • The hotel tax is collected but then sent on to Fonner Park (§23-61) • The food and beverage tax may only be used to make the required payment to the State for the State Fair, promote events that will attract visitors, enhancement and development of recreation and athletic facilities, and invest in community development that stimulates growth for Grand Island (§23-65) • The phone tax is appropriated solely for payment of bonds for construction of a new primary 911 facility and other public safety purposes (§23-21 (B)) Grand Island Budget Work Session - 7/18/2017 Page 6 / 17 2017 2018 2019 2020 2021CommentsBeginning Cash13,093,254 10,001,611 6,589,921 2,723,737(2,086,883)Revenue35,842,372 33,758,114 34,933,277 35,631,942 36,344,581 Assumes a 2% increase each year, with most of Debt Serviceproperty tax coming to the General Fund in 2019Transfers In754,103 765,000 765,000 765,000 765,000 In lieu Utility paymentsTotal Revenue36,596,475 34,523,114 35,698,277 36,396,942 37,109,581 Personnel Services27,721,062 28,220,234 29,772,347 31,409,826 33,137,366 Assumes a 5.5% increase from 2019-2021Operating Expense5,748,639 6,158,683 6,158,683 6,158,683 6,158,683 No increasesTransfers Out3,535,778 1,635,000 1,635,000 1,635,000 1,635,000 ADDITIONAL Transfers Out- - - - - Department Equipment2,165,435 1,414,759 1,500,000 1,500,000 1,500,000 Debt Pymts517,204 506,129 498,431 504,053 498,349 For HEC paymentTotal Appropriations39,688,118 37,934,805 39,564,461 41,207,562 42,929,399 Unrestricted Cash10,001,611 6,589,921 2,723,737(2,086,883) (7,906,701)Restricted Cash- - - - - Ending Cash10,001,611 6,589,921 2,723,737(2,086,883) (7,906,701)General Fund Projection - Without recommendationsGrand IslandBudget Work Session - 7/18/2017Page 7 / 17 Categories2018 Starting Budgeted Exp.Budget % of Rev. Based on 2018 Projection2018 Balanced Exp.2018 % of Rev.2018 (Decrease)/IncreasePersonnel Services30,498,665 74.09% 28,813,248 70.00%(1,685,417.70)Operating Expenses11,192,783 27.19% 9,887,060 24.02%(1,305,722.84)Capital Outlay‐Departments1,883,5714.58% 1,955,185 4.75%71,613.67Capital Outlay‐Debt506,1291.23% 506,290 1.23%160.92TOTAL GENERAL FUND and STREETS44,081,148 107.09% 41,161,783 100.00%(2,919,365.95)Projected RevenueAvg. WageAvg. Loaded Cost# of people201857,876.83$ 75,239.88$ 22.40141,161,7832018 Budget ‐ Revenue WorksheetGrand IslandBudget Work Session - 7/18/2017Page 8 / 17 Fire Department Eliminate 2 additional positons PLUS 2 Firefighter positions, currently vacant 2 future retirements Police Department Eliminate 2 CSO FTE positions PLUS 2 Police Officers, currently vacant 3 future retirements 2 PT CSO positions, currently vacant Library Department 1 Library Assistant II, currently vacant 1 PT Library Page, currently vacant Parks Department Eliminate 1 Horticulturist FTE position Eliminate all seasonal workers at Greenhouse PLUS 1 Maintenance Worker, currently vacant 1 future retirement, leave vacant Increase to Gas Franchise Fee Add Stormwater surcharge Car Rental Occupation Tax, dedicated to Streets Dept. ($507,412) ($95,304) ($249,097) General Fund ‐ Other Changes ($150,000) TOTAL IMPACT ($1,415,289) TOTAL ‐ OTHER CHANGES ($1,833,968) Reduce total operating/capital equipment/transfers out budget ($1,233,968) ($300,000) ($300,000) Other Changes Increase in Property Tax, dedicated to capital projects ($1,000,000) Item Dollar Impact Summary of Major Changes to 2018 Budget General Fund Personnel Item Dollar Impact ($563,476) Grand Island Budget Work Session - 7/18/2017 Page 9 / 17 NATURAL GAS OCCUPATION TAX §23-1. Occupation Tax Except as provided in §23-2, any person engaged in the business of distributing, manufacturing or furnishing gas, either natural, manufactured or mixed gas, in the City, shall be required to pay to the City an occupation tax in an amount equal to three percent of the gross receipts such person derived from his business of distributing, manufacturing or furnishing gas to the inhabitants of the City. As the Natural Gas prices have declined over the years we have seen a substantial drop in our revenues as we charge a fee on gross receipts. Many cities, including Kearney which is in our rate area with Northwestern charges a fee on Therms, which is the amount of gas distributed. We recommend a fee of 3 cents on everyone except transport customers, which we recommend a 1 cent fee. Customer # Therms Receipts Increase Residential 17,950 $297,517 $232,213 $ 65,304 Commercial 2147 $297,251 $107,012 $190,206 Transport 34 $125,561 $ 9,738 $115,832 Grand Island Budget Work Session - 7/18/2017 Page 10 / 17 STORMWATER SURCHARGE Customer # Charge/Month Revenue/Annual Residential 14,500 $1.00 $174,000 Commercial 2,200 $5.00 $132,000 Industrial 85 $10.00 $10,200 It will offset general fund dollars by lowering amount of property tax we transfer to streets fund. There are three storm water related activities that could be covered: 1. Streets drainage work, such as flushing pipes, cleaning inlets, resetting flow lines, maintaining ditches and detention cells, etc. This work is not eligible for gas tax, and we should be doing more. 2. Capital projects such as the Moores Creek Drainage extension. The General Fund is usually, but not always the only source for these projects. 3. Stormwater program. This federally mandated program was mostly paid for by the General Fund. Grand Island Budget Work Session - 7/18/2017 Page 11 / 17 RENTAL CAR OCCUPATION TAX Lincoln and Omaha both have this tax. Lincoln is a % and Omaha is a fee per vehicle. A 6 % fee would generate approximately $150,000. We recommend this go to the Streets department and perhaps to Parking Lot rebuild. Grand Island Budget Work Session - 7/18/2017 Page 12 / 17 Categories2018 Starting Budgeted Exp.Budget % of Rev. Based on 2018 Projection2018 Balanced Exp.2018 % of Rev.2018 (Decrease)/IncreasePersonnel Services29,083,376 69.64% 29,233,248 70.00% 149,871.30Operating Expenses9,958,815 23.85% 10,031,180 24.02% 72,365.16Capital Outlay‐Departments1,883,571 4.51% 1,983,685 4.75% 100,113.67Capital Outlay‐Debt506,129 1.21% 513,670 1.23%7,540.92TOTAL GENERAL FUND and STREETS41,431,891 99.21% 41,761,783 100.00% 329,891.05Projected RevenueAvg. WageAvg. Loaded Cost# of people201857,876.83$ 75,239.88$ 0.00041,761,783Option Revenue IncreaseSwitch to Therms300,000 Stormwater Surcharge300,000 ‐ ‐ ‐ ‐ Estimated Mill Levy Increase0.0341Revenue Options2018 Budget ‐ Revenue WorksheetGrand IslandBudget Work Session - 7/18/2017Page 13 / 17 2017 2017 2018 Budget Forecast Budget CITY HALL/BUILDING INSPECTIONS BLDG Building improvement 10011701 85612 70,000 40,000 CITY HALL/BUILDING INSPECTIONS TOTAL 70,000 40,000 - FIRE/AMBULANCE SERVICES LAND IMP Training Tower 10022101 85608 533,364 533,364 19,000 LAND IMP Training Tower with burn room - match and ground work 10022101 85608 100,000 100,000 Subtotal 633,364 633,364 19,000 BLDG IMP Station #3 remodel 10022101 85612 - - 25,000 Subtotal - - 25,000 M & E Jaws 10022101 85615 40,000 37,717 M & E Cardiac Monitors (6 units)10022101 85615 150,000 141,977 M & E Radios 10022101 85615 32,000 31,184 M & E Compressor for Station 4 10022101 85615 48,500 35,342 M & E Lucas Device - Unexpected grant 10022101 85615 10,617 M & E Heart Monitor 10022101 85615 25,000 M & E SCBA Packs - 10% match of a grant 10022101 85615 29,545 Subtotal 270,500 256,837 54,545 VEH Shift Commander Vehicle 10022101 85625 - - 38,000 VEH 2016 Braun XL Chief Type 3 Ambulance 10022101 85625 220,000 220,000 248,000 VEH 75 foot Quint without CAFS 10022101 85625 750,000 749,208 Subtotal 970,000 969,208 286,000 FIRE/AMBULANCE SERVICES TOTAL 1,873,864 1,859,409 384,545 POLICE SERVICES VEH Police Vehicles - 4 Vehicles 10022301 85625 92,600 113,736 VEH Police Vehicles - 4 Vehicles 10022301 85625 118,000 VEH Ford Fusion - Administration 10022301 85625 22,200 20,433 VEH Replacement CID SUV 10022301 85625 18,200 2,725 POLICE TOTAL 133,000 136,894 118,000 EMERGENCY MANAGEMENT M&E Outdoor Warning Sirens (2)10022601 85615 30,000 33,000 32,696 M&E Radio Repeater 10022605 85615 50,000 50,000 27,000 EMERGENCY MANAGEMENT TOTAL 80,000 83,000 59,696 GENERAL FUND-CAPITAL Account Number Grand Island Budget Work Session - 7/18/2017 Page 14 / 17 2017 2017 2018 Budget Forecast Budget GENERAL FUND-CAPITAL Account Number LIBRARY OFF EQ IT Equipment 10044301 85620 25,000 13,187 15,000 LIBRARY TOTAL 25,000 13,187 15,000 M & E (2) 72" Mowers 10044403 85615 - - 55,000 M & E One 60" Mower 10044525 85615 - - 15,000 M & E Six 36" Mowers 10044405 85615 - - 26,000 M & E 30 Sporting Clay Target Throwing Machines 10044801 85615 120,000 M & E 20 Skeet/Trap Target Throwing Machines 10044801 85615 80,000 Subtotal - - 296,000 VEH Utility Vehicle 10044801 85625 - - 15,000 VEH 3/4 Ton 4x4 with snow plow 10044405 85625 45,000 - VEH 4x4 one ton dump truck with snow plow 10044403 85625 55,000 43,282 Subtotal 100,000 43,282 15,000 TOTAL PARKS & RECREATION 100,000 43,282 311,000 2,281,864 2,175,772 888,241 PARKS & RECREATION GENERAL FUND TOTAL Grand Island Budget Work Session - 7/18/2017 Page 15 / 17 Object No.2018 Planned Projects2018 Budget2018 Actuals(Over)/Under 2018 ProjectionsGas Tax Funded Projects ‐ 21040000 Capital Avenue ‐ Webb Rd to Broadwell Ave184,000.00$ ‐$ 184,000.00$ 184,000.00$ 40002 Stolley Park Rd Restriping/Rehab285,400.00$ ‐$ 285,400.00$ 285,400.00$ 40015 Handicap Ramp CDBG Project‐$ ‐$ ‐$ ‐$ 40004 Annual Handicap Ramp Installation (2018‐CR‐1)104,800.00$ ‐$ 104,800.00$ 104,800.00$ 40012 S Front St over Sycamore Underpass Rehab1,200,000.00$ ‐$ 1,200,000.00$ 1,200,000.00$ 40020 Adams St‐$ ‐$ ‐$ ‐$ Brookline Paving / Drainage‐$ ‐$ Old Potash; North Rd to E of Webb Rd Master Plan150,000.00$ ‐$ 150,000.00$ 150,000.00$ North Rd & 13th St1,945,775.00$ 1,945,775.00$ 40023 5 Points Traffic Sinal Improvements (OA = $72,550)‐$ ‐$ ‐$ ‐$ 40022 Highway 281 (NB) NDOR Project‐$ ‐$ ‐$ ‐$ 40011 Webb Rd Assessment Payments130,000.00$ ‐$ 130,000.00$ 130,000.00$ Unassigned Projects ($750k approved, not in spreadsheet)‐$ ‐$ ‐$ ‐$ Gas Tax Funded Projects Total 3,999,975.00$ ‐$ 2,054,200.00$ $ 3,999,975.00 Object No.2018 Planned Projects2018 Budget2018 Actuals(Over)/Under 2018 ProjectionsOther Funded Projects ‐ 40040009 Construction of NW Flood Control Project1,009,813.49$ ‐$ 1,009,813.49$ 1,009,813.49$ 40014 Moores Creek Drain Extension (Old Potash to Edna)1,041,200.00$ ‐$ 1,041,200.00$ 1,041,200.00$ 40025 Brookline Drainage‐$ ‐$ ‐$ ‐$ 40024 Shady Bend Drainage 2017‐D‐2‐$ ‐$ ‐$ ‐$ 40026 N Broadwell Drainage 2017‐D‐3‐$ ‐$ ‐$ ‐$ Grand Generation Center parking lot‐$ ‐$ ‐$ ‐$ City Owned Parking Lots‐$ ‐$ ‐$ ‐$ YMCA Parking Lot‐$ ‐$ ‐$ ‐$ 40010 Eagle Scout Detention Cell ‐ N of Eagle Scout Lake‐$ ‐$ ‐$ ‐$ Other Funded Project Total 2,051,013.49$ ‐$ 2,051,013.49$ 2,051,013.49$ Grand IslandBudget Work Session - 7/18/2017Page 16 / 17 Budget schedule – FY2018 budget March 31, 2017 Halfway point of fiscal year 2016-17 July 18 Budget retreat; general fund revenue and expense discussion along with capital/equipment requests in general fund along with 400 fund (6:00 p.m. Fonner Park State Fair Board room) July 25 BID budgets approved and set Board of Equalization meeting August 8 Agenda item for cleanup of o/s general fund items; review of enterprise funds August 15 Study session for any o/s items from August 1 August 20 County certifies valuation August 22 Approval of fee schedule August 29 Special meeting to open public hearing for budget and then leave open until meeting on 12th September 12 Continue public hearing for budget and approval of budget; salary ordinance approval September 20 Deadline for submittal to state and county October 1, 2017 New fiscal year begins Grand Island Budget Work Session - 7/18/2017 Page 17 / 17