City 2001 Budget At $59.1 Million
It was a feeding frenzy. Like sharks going after red meat. The Manhattan
City Staff put out a $59.1 Million Budget Tuesday
night and the four Liberal Sharks took it all. Only Ed Klimek voted
against the largest budget in city history. The mill rate will
be 43.937 or 1.124 mills over this year.
The Budget is $59,111,294, an increase of $3,772,774 or 6.8% more than 2000.
Before the Commission voted on the Budget they approved an 85% raise
in the sewer rates. The new rates will start with a
36% increase in October and another 36% increase next April.
Last year the Commission approved a $55.5 Million Budget with a 42.198
mill rate. Those figures did not work because the
City brought in more than $58 Million. They are now planning on spending
$50 Million this year. The City will have an $8
Million carry-over. The Commissioners could have listened to Commissioner
Klimek when he called for a moratorium on
buying new vehicles but they didn’t.
Here is the Memo given to the Commission on the 2001 Budget:
CITY COMMISSION AGENDA MEMO
July 25, 2000
FROM: Curt Wood, Director of Finance
MEETING: July 25, 2000 SUBJECT: 2001 Proposed City Budget, Proposed
2001-2006 CIP, Amended 2000 City
Budget, and Proposed Ordinance Increasing Wastewater Rates
PRESENTER: City Administration
BACKGROUND
The budget is the single most important document the City will prepare
in a given year. The annual budget serves as a policy
document, financial plan, operations guide, and communications tool
for the City.
The six-year Capital Improvements Program (CIP) is also an important
planning document that contains projects and
equipment valued at more than $5,000 and having a life of over two
years.
Listed below is the series of events that have transpired or will transpire
in order to build the most effective budget and
Capital Improvements Program possible:
* On December 14, 1999, the City Commission held a Work Session on the proposed 2001 Budget process.
* On January 10, 2000, City Administration distributed Capital Improvements
Program citizen request forms to the public,
media, advisory boards, and City departments.
* During January, February, and March, advisory boards had the opportunity
to review citizen Capital Improvements
Program requests, as well as recommend Capital Improvements Programs
of their own.
* On April 25, 2000, the City Commission held a Work Session on the preliminary Capital Improvements Program.
* On June 19, 2000, the Manhattan Urban Area Planning Board determined
that the proposed 2001-2006 Capital
Improvements Program was in conformance with the Land Use Plan.
* On June 29, 2000, the City Commission held a Work Session on the proposed
2001 City Budget, which includes the
2001 Capital Improvements Program.
* On July 10, 2000, the City Commission held a second Work Session on the proposed 2001 City Budget.
* On July 14, 2000, the proposed City Budget was published in the official
City newspaper. At this point, the City may not
increase the budget or levy of any budgeted Fund.
* On July 25, 2000, City Commission will hold a public hearing on the
proposed 2001 City Budget, amended 2000 City
Budget, and the proposed 2001-2006 Capital Improvements Program, approve
first reading of a budget ordinance to adopt
the 2001 City Budget and amend the 2000 City Budget, approve the Capital
Improvements Program Resolution, and
approve first reading of an ordinance increasing wastewater rates.
* On August 1, 2000, the City Commission will approve second reading
of the budget ordinances and the ordinance
increasing wastewater rates.
* By August 25, 2000, City Administration will certify the adopted 2001
City Budget and the amended 2000 City Budget to
the Riley County Clerk, as required by law.
DISCUSSION
At the July 25, 2000, City Commission meeting, the City Commission should
consider the first reading of an ordinance
amending the 2000 City Budget, adopting the 2001 City Budget, and setting
higher wastewater rates. The City Commission
should also consider approving a Resolution adopting the 2001-2006
Capital Improvements Program.
Below is a summary of the 2001-2006 Capital Improvements Program, the
proposed 2001 City Budget, the proposed 2000
City Budget amendments, and the proposed ordinance increasing wastewater
rates.
Proposed 2001-2006 Capital Improvements Program
The proposed 2001-2006 Capital Improvements Program is realistic and
affordable. The proposed CIP has been included
in the long-range financial forecast and the forecast is in balance.
The total proposed 2001-2006 Capital Improvements Program is $86,763,524
for all funding sources with $40,865,368 of
this amount coming from the tax supported funds. The potential Quality
of Life projects make up $29,791,451 of that
amount. The total budget impact of the 2001-2006 proposed Capital Improvements
Program is $35,919,349, of which
$14,415,496 will be from the tax supported funds. If approved in its
current form, the budget impact of the Quality of Life
Projects will be $8,028,759 from 2004-2006.
The proposed 2001 Capital Improvements Program has been included in
the proposed 2001 City Budget. The total cost of
the 2001 Capital Improvements Program is $44,830,737, of which $29,791,451
is for the potential Quality of Life Projects.
The 2001 budget impact of the 2001 Capital Improvements program is
$8,506,761. About one-half of that impact is in the
Water Fund to finance the short term capital improvements recommended
by the Facilities Plan and Cost of Services Study.
Proposed 2001 City Budget
On Friday, July 14, the proposed 2001 City Budget was published in the
Manhattan Mercury. At this point, the City may not
increase the budget or property tax levy of any Fund. The published
property tax levy is $9,405,321, and the total published
2001 Budget is $59,173,585. The estimated mill rate for the published
budget is 44.298 mills, an increase of 1.485 mills
from the current rate.
At the July 10 Work Session, the City Commission asked City Administration
to examine the possibility of reducing 2001
expenditures by approximately $75,000, in order to further reduce the
mill rate. The City Commission was particularly
concerned about the level of personnel costs.
Thus, City Administration would like to recommend the following adjustments
to 2001 proposed expenditures. (These are
reductions from the previously proposed and published budget):
Property Tax Fund
Savings
* Eliminate Parks Maintenance Worker (was to be hired for 1/2 of the year for Northeast Park Improvements)
$12,105
(includes benefits)
* Converted Part-Time Parks Maintenance Worker to Seasonal
$4,525
(includes benefits)
* Converted Part-Time Airport Technician to Seasonal
$7,234
(includes benefits)
* Reduced Transfer from General Fund to Airport Fund Due to Higher Projection of Farm Income
$19,443
* Reduced General Services Expenditures in the General Fund (professional/insurance settlements/other)
$25,000
* Reduced Cash Reserves in Bond and Interest Fund
$6,693
TOTAL SAVINGS $75,000
Upon close examination of the animal shelter operation and careful consideration
of comments from prior meetings, City
Administration believes that it is in the community’s best interest,
from a health and safety perspective, to add two animal
shelter workers to the animal shelter staff. The animal shelter staff
currently consists of five employees: two animal shelter
workers, two animal patrol officers, and one shelter supervisor. These
employees cover 59 hours and 7 days per week of
operation of the shelter. Typically, there are 3 employees on duty
during the week (1 Supervisor, 1 Animal Shelter
Technician, and 1 Animal Control Officer) and 2 employees on the week-end
(1 Animal Shelter Technician and 1 Animal
Control Officer).
With the Animal Shelter expansion, which is to be completed later this
year, the Animal Shelter will increase in size three-fold.
This increase will simply be too large to absorb with the existing
staff. While there will be maximum efficiencies with the new
building design, there will be 11 additional cat cages and 40 additional
dog kennels to maintain as well as the addition of
visitation areas. This does not include the addition of an outdoor
exercise area, night drop boxes, grooming room,
vet/euthanasia room, and numerous support rooms. All of these areas
require daily cleaning to comply with state regulations
and inspections as well as to prevent the spread of disease and possible
infection of adoptable animals.
While it will be certainly appropriate to have the Humane Society and
other animal welfare organizations involved in volunteer
activities, it is probably unreasonable to assume that these organizations
will be available to provide assistance with daily
maintenance activities that will occur at the facility. Rather, these
organizations will probably most be interested in the
expansion of existing programs to provide outreach and adoption services,
rather than the core health and safety functions.
City Administration has had recent discussions with a representative
of the Humane Society and they believed it was
unrealistic to expect volunteers to provide the daily maintenance necessary
for the Animal Shelter
It should be emphasized that the Animal Shelter employees do not have
any property tax impact, except for employee
benefits, as they are supported by the new animal shelter fund. Therefore,
reducing the animal shelter workers would only
provide the small reduction in benefits as it relates to possible property
tax savings. In addition, the new fees which will be
charged to all of the regional participants in the shelter takes into
account two additional staff and the increased operating
expenses associated with the expanded facility. It would be inappropriate
to charge those agreed upon fees and not
implement the full intent of the fees.
As a result of these recommended adjustments, the property tax mill
levy can be reduced from $9,405,321 to $9,328,790, a
decrease of $76,531 (includes 2% delinquency factor) from what was
published. The estimated mill rate has gone from
44.298 mills to 43.937 mills, a decrease of .361 mills. The 43.937
mills is an increase of 1.124 mills over the current tax rate.
However, after the final valuation is determined this November, the
final mill rate is likely to increase to about 44.3 mills,
which would mean a 1.5 mill increase over the current tax rate.
Including the adjustments mentioned above, the proposed 2001 City Budget
is now $59,111,294, an increase of
$3,772,774, or 6.8% over 2000. The $59,111,294 is $62,291 lower than
what was published. The decrease in the Budget
from what was published can be accounted for as follows:
Fund Adjustments
General Fund ($46,122)
Employee Benefit Fund
($2,742)
Bond and Interest Fund
($6,693)
Airport Fund ($6,734)
Amended 2000 City Budget
The State budget laws require that a budget amendment be made to any
Fund when the expenditures will exceed the original
budgeted amount and there are sufficient revenues in the Fund to cover
the additional expenditures.
Library Fund
Normally, the City receives a motor vehicle tax payment from the County
in December. However, the City did not receive
the December 1999 motor vehicle payment until January of 2000, a different
fiscal year. Included in the January 2000
payment was about $21,451 due the Library. The Library has requested
that the City pay this money to them in 2000.
However, since this money was not budgeted to be spent in 2000, it
will be necessary to amend the 2000 Library Budget if
there is to be budget authority to make the payment to the Library
in 2000. In addition, City Administration projects the
Library Fund will receive $1,519 more in investment income than originally
budgeted.
Animal Shelter Fund
In 2000, the City assumed control of the Animal Shelter operation from
the Riley County-Manhattan Health Department. As
a result, the City has created a new Fund in 2000 called the Animal
Shelter Fund. Because this Fund was not included in the
original 2000 City Budget, it will be necessary to amend the 2000 City
Budget to include the Animal Shelter Fund. A 2000
budget amendment will grant the necessary authority to appropriate
money from this fund in 2000. The 2000 amended
expenditure budget is $176,486.
All revenues derived from the Animal Shelter, pet licenses, and inter-governmental
contracts are credited to the Fund. In
2000, revenues into the Fund are expected to be $260,053. City Administration
has projected a December 31, 2000,
carryover of $83,567, which will help provide resources in the 2001
proposed Animal Shelter Fund budget.
Proposed Ordinance to Increase Wastewater Rates
The 2000 revised and 2001 proposed Wastewater Fund Budget presented
to the City Commission at the July 10, 2000,
Work Session and published on July 14 includes a 36% rate increase
on October 1, 2000, and a 36% rate increase on July
1, 2001. This is defined as alternative one. The total 2001 Wastewater
Fund published Budget is $3,614,480. The published
budget also includes a debt service payment of $224,361 in 2001 on
a $2,043,464 revenue bond issue to finance the
short-term capital improvements recommended by the consultant. The
short-term improvements include $800,000 to
purchase additional land for the sludge operation. Approximately $102,000
of the total debt service payment can be
attributed to the land. The published Budget anticipates there will
be approximately $109,000 in cash reserves the end of
fiscal 2001, $145,000 the end of 2002, $505,000 the end of 2003, and
$1,047,000 the end of 2004.
At the July 10 Work Session there was considerable discussion about
leasing the land needed for the wastewater operations
instead of purchasing the land. First, it may not be possible to purchase
the land. Second, leasing the land would cost much
less each year than servicing the debt on the land. The net savings
would be about $78,000 each year. Consequently, City
Administration has prepared two alternative scenarios, assuming the
land would be leased, which the City Commission
should consider at the July 25, 2000, City Commission meeting.
A second alternative increases wastewater rates the same as those published
on July 14, and uses the net annual savings from
leasing land to build cash reserves. Estimated cash reserves the end
of 2001 would be $187,000, $305,000 the end of 2002,
$746,096 the end of 2003, and $1,372,570 the end of 2004. Total 2001
revenues and expenditures would not change from
the published Budget. Budgeted funds would simply be moved from debt
service to cash reserves.
The third alternative envisions taking the net annual savings from the
lease of the land to lower the rate increase in 2001.
Instead of rates going up 36%, the rate increase on July 1, 2001 would
be 31%. Anticipated cash balance would be
$109,000 the end of 2001, $98,000 the end of 2002, $389,000 the end
of 2003, and $855,000 the end of 2004. If this
alternative were chosen by the City Commission, the total 2001 revenues
and expenditures would decline by $77,565 from
what was published on July 14.
The current wastewater rate is $4.78 per month for the first 200 cubic
feet of water used, and $.72 per 100 cubic feet for
water used thereafter. A 36% increase in rates on October 1, 2000 would
increase the cost for the first 200 cubic feet to
$6.50 and the cost per 100 cubic feet thereafter to $.98 per month.
Another 36% rate increase on July 1, 2001 would
increase the cost for the first 200 cubic feet of water used to $8.84
per month, and $1.33 per 100 cubic feet thereafter. If the
second rate increase on July 1, 2001 was 31% instead of 36%, the cost
of the first 200 cubic feet of water used would be
$8.52, and the cost of each additional 100 cubic feet would be $1.28
per month. Wastewater rates used for residential
customers are based on the average water used each month during December,
January, and February, when water usage is
at the lowest. Wastewater rates used for commercial customers are based
on actual water used each month.
City Administration has implemented an extensive educational campaign
about the Facilities Plan and Cost of Services Study.
The following actions have been taken:
* On April 26, 2000, the Public Advisory Team met to discuss an overview
of the Facilities Plan and Cost of Services
Study. The public was invited to attend that meeting.
* On May 9, 2000, the consultant gave a presentation to the City Commission
at a Work Session. At that meeting, the
consultant recommended short term water and wastewater system improvements
and the potential need to evaluate
wastewater rates.
* On June 28, 2000, the Utilities Department and the consultant facilitated
a Public Open House regarding the proposed
improvements for the water and wastewater facilities, and the budgetary
impacts, including a proposed wastewater rate
increase. Following the Open house, the Public Advisory Team conducted
a second meeting. The public was also invited to
this meeting.
* Advertisements have been placed in the Manhattan Mercury concerning
the Facilities Plan and proposed rate increase in
the wastewater fund.
* An informational flyer was sent out in the July utility bills, informing customers about the Study.
* Wastewater customers with monthly bills in excess of $200 have been
sent a letter about the potential for a rate increase
and about the July 25 public hearing.
* The City web site has been updated to inform the public about the Study.
* City Administration will promote the Study and public meeting dates during the July 18 and 25 City Commission meetings.
* The City issued a news release to all media concerning the proposed wastewater rate increase.
* Information regarding the proposed wastewater rate increase has been
broadcast on the City’s local cable channel 2 since
July 19, 2000.
ALTERNATIVES
The City Commission has the following alternatives concerning the issue
at hand. After the Public Hearing, the Commission
may:
1. Approve first reading of an ordinance adopting the 2001 City Budget,
amending the 2000 City Budget, and approving a
wastewater rate increase effective October 1, 2000, and July 1, 2001,
as proposed by City Administration; and approve
Resolution No. 072500-A adopting the 2001-2006 Capital Improvements
Program as proposed.
2. Modify the proposed budget ordinances, wastewater rate increase ordinance,
and/or proposed CIP resolution to meet the
needs of the City Commission.
3. Table the item.
RECOMMENDATIONS
City Administration recommends the approval of the 2001-2006 Capital
Improvements Program Resolution as proposed,
first reading of the proposed 2000 Budget amendment ordinance, and
first reading of the proposed ordinance adopting the
2001 City Budget which has been modified from the July 14 publication.
City Administration believes the modified 2001 City
Budget achieves the goals and expectations of the City Commission.
City Administration recommends the City Commission approve option two
of the Wastewater Scenario Report (see
attached). Option two includes a 36% increase in wastewater rates on
October 1, 2000, a 36% rate increase on July 1,
2001, leasing land instead of purchasing land, and using the net annual
savings from the lease to build cash reserves.
Purchasing the land (option 1) appears to be more difficult at this
time and also more costly. Applying the net annual savings
from leasing land to a smaller increase in rates on July 1, 2001, (a
31% increase instead of 36% proposed in option 3), does
not increase cash reserves quickly enough. Cash reserves remain inadequate
until the end of 2004 under option three. Option
two builds cash reserves to a minimum acceptable level of $746,000
or about 20% of total expenditures by the end of 2003,
a year earlier than option one or three.
City Administration has prepared a draft wastewater increase ordinance
for City Commission approval incorporating the
option two proposed rate increase of 36% on October 1, 2000, and a
36% increase on July 1, 2001.
POSSIBLE MOTION
Approve first reading of an ordinance adopting the 2001 City Budget,
amending the 2000 City Budget, and approving a
wastewater rate increase effective October 1, 2000, and July 1, 2001,
as proposed by City Administration; and approve
Resolution No. 072500-A adopting the 2001-2006 Capital Improvements
Program as proposed.