2020-2021 Proposed Budget and 2019-2028 Proposed Capital - - PowerPoint PPT Presentation

2020-2021 Proposed Budget and 2019-2028 Proposed Capital Improvement Program Department of Finance

June 2019

ZBB Background

City Council mission statement with goals

As an exceptionally well-run City we will: Keep Wichita safe Grow our Economy Build and maintain dependable Infrastructure Provide conditions for living well

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• May 13 – June 15
• Results will be available online
• Data will be compiled into a

report for consideration

• Themes will be used to build

Social Media Town Hall topics

Budget Simulator

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Proposed Budget Calendar

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June 15

• Online budget simulator closes

June 26

• Social Media Town Hall

July 23 - City Manager presents budget August 6

• Public hearing

August 13

• City Council adopts budget

Focus on the General Fund

• Main taxing fund; 1/3 of the City budget; main source

for funding City departments

• Due to technological and legal changes future growth

expected to be slower than past growth

• Revenues are economically sensitive and impacted

by assessed valuation (AV) changes

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General Fund Revenues

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Transfers $5,591,719 2% Other Sources $49,382,755 20% Property Tax $84,303,187 35% Sales Tax $29,124,388 12% Franchise Fees $47,661,298 20% Gas Tax $15,431,862 6% Motor Vehicle Tax $12,718,119 5% G E

NE RALF UND 2019 ADOPT E D BUDGE T

, $244,213,328

GF Adjusted Revenue Growth 2009 - 2018

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3.6%

• 0.9%

0.3% 8.1% 4.5% 5.0% 5.6% 5.1%

• 1.3%

0.5% 2.1%

• 1.2%

1.4% 3.0% 1.1% 2.6% 1.7% 3.8%

• 2.0%
• 1.0%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

10 Year Average 1.4% 5 Year Average 2.4%

Recession Impact on Revenues

• Recessions impact City revenues on a lagging

basis

• Property tax, sales tax, motor vehicle tax and

interest earnings are usually impacted negatively

• Total General Fund revenues usually are flat or

decline for one or two years

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General Fund Expenditures

• Salaries and benefits are 73% of total expenditures
• All other expenditures (27%) tend to grow slowly and

predictably (with volatility due to fuel)

• Expenditure growth has averaged 3.0% since 2009;

much slower than the previous decade

• Most growth has been in public safety

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Police and Fire Portion of GF

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Reserves

• General Fund reserves are important for

flexibility, for an emergency and for cash flow

• City policy is a reserve level of at least 10% of

expenditures

• Currently reserves are at 14.8% of

expenditures

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Reserves

• Reserves are important: they provide flexibility
• Rating agencies monitor reserves very closely,

and a change (decrease) in reserves is viewed negatively

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Looking Forward

• Moderate expenditure and revenue growth, with

moderate structural imbalance

• Continued emphasis on public safety
• Continued use of ZBB process to focus dollars
• n priority areas; identify process improvements

to better align expenditures with revenues

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New Projected Outlook

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Projected General Fund Revenues and Expenditures (in millions)

2019 2020 2021 2022 2023

Adopted Revenues

$244.2 $250.0 $255.7 $262.6 $268.7

On-going adjustments

$0.4 $0.8 $1.2 $1.8 $1.9

Interest earnings

$5.5 $3.5 $2.5 $1.5 $1.5

New Projected Revenues

$250.1 $254.3 $259.4 $265.9 $272.1

Adopted Expenditures

$244.2 $250.0 $256.8 $263.8 $271.0

On-going adjustments

$4.9 $4.3 $4.3 $3.7 $3.5

New Projected Expenditures

$249.1 $254.3 $261.1 $267.5 $274.5

Surplus (Deficit)

$1.0 $0.0 ($1.7) ($1.6) ($2.4)

CIP Development

• Develop prioritization score for each project
• Develop financial capacity models
• Consider operating budget impact
• Align with City Council direction

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CIP Project Prioritization

Prioritization model developed with Council input

• Community Investments Plan Alignment (20%)
• Consistency with Planning Processes (25%)
• Financial Considerations (30%)
• Other considerations (25%)

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Linking the CIP and Budget

• The Capital Improvement Program (CIP) is

linked to the operating budget

• Both are funded with a portion of the City’s

mill levy

• Both align strategically to the same mission

and goals

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Linking the CIP and Budget

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2012 2013 2014 2015 2016 2017 2018 2019 General Fund 24.839 24.443 24.003 24.114 24.177 24.117 24.156 25.186 Debt Service Fund 7.520 8.028 8.537 8.506 8.509 8.508 8.511 7.506 Total 32.359 32.471 32.540 32.620 32.686 32.625 32.667 32.692

The City mill levy has remained flat, but the allocation between the Debt Service Fund and General Fund has changed.

GO At-Large Background

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5 10 15 20 25 30 35 40 45 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2018

Mill Levy Rate

City of Wichita Mill Levy DSF GF

2019 Levy: General Fund 25.186 Debt Service Fund 7.506 Total Levy 32.692

Financing the CIP

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Funding CIP Projects

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GO at-large $340,372,102 Local Sales Tax $181,750,000 Airport $33,238,151 Sewer Utility $271,614,338 Water Utility $373,816,700 Special Assessments $304,750,000 State of Kansas $36,259,000 Federal Funds $111,181,367 Other Funds $107,077,763

Whe r e City of Wic hita CIP Dollar s Come F r

• m

2018- 2027 AL

LF UNDS R E VE NUE S $1,760,059,421

Flexible Funding Sources

Debt Service Fund – completely fungible, can be used for streets, parks, buildings, etc. Transient Guest Tax Fund – used for assets related to conventions and tourism Local Sales Tax Fund - used for roads, bridges and highways

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Determining Debt Capacity

Policies impacting the amount of additional debt that can be added include:

• Legal limit
• Bond covenants
• Coverage ratio / percent spent on debt service
• Rating agency analysis

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Legal Debt Limit

• Kansas State Statute KSA 10-308 limits

applicable City debt to 30% of the assessed valuation base

• The City is at 24.8% of the debt limit
• Debt margin is $853.2 million (Dec 31, 2018)

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City Policy - Debt Capacity

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Ratio of debt service payments to property tax revenues

Adopted CIP Update

• Aquatics Master Plan
• More street maintenance and rebuild

projects, fewer freeway projects

• Library Branch Study
• Police and Fire stations

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Finance Department 2020-2021 Proposed Budget and 2019-2028 Proposed Capital Improvement Program