Resource Management Plan FY 2015-16 Operating Budget and Six Year - - PowerPoint PPT Presentation

Resource Management Plan

FY 2015-16 Operating Budget and Six Year Capital Improvement Plan

Agenda

What is Planned for Next Fiscal Year Where the funding Comes From OpenVB Next Steps

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The Proposed Operating Budget Compared to FY 2015

FY 2015 FY 2016 Proposed % Change $ Change

Personnel

$ 822.4 $ 838.6 2.0% $16.2

Fringe Benefits

312.6 305.4

• 2.3%

(7.2)

Operating Expenses

450.4 442.2

• 1.8%

(8.2)

Capital Outlay

13.8 15.8 14.8% 2.0

Debt Service

163.8 166.8 1.8% 3.0

Pay-go CIP

48.1 58.1 20.8% 10.0

Reserves

20.4 44.7 119.4% 24.3

Total:

$ 1,831.5 $ 1,871.6 2.2% 40.1

 Includes 3% pay increase for both City and School employees  Reduces staff by 242.8 positions  Increases pay-as-you-go commitment to CIP

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Budget and Budget Adjusted for Population and Inflation

200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 In Millions

Budget Adj for Pop & Inflation

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Demand for Services Index

90 100 110 120 130 140 150 160 170 180 190

00 01 02 03 04 05 06 07 08 09 10 11 12 13 14

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It Takes Staff to Deliver Services

To address service demands, this budget includes:

• 2,383 public safety positions
• 1,161 positions to assist families
• 996 positions providing recreation, parks and

cultural activities

• 1,320 positions to maintain roadways, water pipes,

storm water and other infrastructure

• 10,263 library and school personnel

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Change in Relationship with State and Federal Governments

Unfunded Mandates

• No Child Left Behind
• Type of Voting Machines
• Virginia Public Records Act
• Federal Consent Decree

Reduction in State and Federal Revenues

• Shared ABC and Wine Profits
• Reduced funding for education
• Eliminated funding for road construction

Cost shift to the City

• Dropped state Line Of Duty Program on localities
• Requires localities to subsidize fringe benefits for Constitutional Officers
• Shifted Storm Water Regulations to localities

$91 million in lost revenue/ increased expense each year

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Sheriff Funding

Sheriff’s Fund required an additional $4.5 million in City funding Drivers

• Flat State Funding
• Underfunding of state compensation

 Very low state salaries requiring an average city supplement of $32,000 to attract and retain qualified deputies and other staff  State only funds 10% of the 36% the city pays in fringe benefits

• Medical contract costs increased
• 5.0

10.0 15.0 20.0

FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 (Bdgt) FY 16 (Bdgt)

Millions of Dollars

State and City Financing for the Sheriff's Department

City State 8

Compensation

3% Pay Increase

• 1.34% related to the VRS mandated requirement that employees pay

5% of their retirement costs and that the City and Schools provide a pay raise to cover the employee’s increased cost

• 1.66% general increase provided in July rather than the fall as in the

past

Health Care

• Maintains defined contribution strategy for the employer’s

contribution

VRS

• employer’s contribution rate is the same as last year for city, slight

decrease for schools based on final State Budget

Other Compensation Adjustments

• Second year of three year commitment to address horizontal

compression

• Partial adjustments for school employees on the Unified Pay Scale

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School Funding

School Board requested an additional $20.3 million, understanding that this would require a tax increase. This budget recommends that the dedication of real estate tax to Schools be increased from the current 4 cents, to 6 cents to allow for the following:

• Provided needed funding for a 3% increase on July 1st to School
• employees. This is less than the School Board’s request for funding

for a 5% increase.

• Provide $2 million to make partial adjustments to the unified pay

scale – no change from the School Board request

• Provide $4 million to reduce the School’s reliance on reversion

funding and transfer the School Budget use of these funds back to the School Special Reserve fund. This will provide a “fund balance” for School’s use if needed.

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Bio-Medical Task Force

Based on the recommendations of the City Council appointed Bio-Medical Task Force, the Operating Budget includes $500,000 to match state funding of $500,000. This will provide funding to create a thriving health care complex dedicated to advancing research and development in diabetes, cardiovascular disease, neuroscience, and traumatic brain injury.

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ViBe District

This district located on and around 17th Street would promote and support creative businesses located in the district to add jobs, expand the city’s economy, and enhance quality of life. Included in the Proposed Operating Budget is

• $50,000 for a micro-loan grant program
• $50,000 to brand and promote the district.

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Storm Water Enhancements

Reallocation of the existing storm water fee allows for the following:

• Additional street sweeping --The budget includes funds

for the first phase, purchasing 4 street sweepers and 7 staff.

 Based on City Council direction on March 10, 2015, staff is preparing an RFP to solicit private vendors to provide this

• service. No action will be taken on the funding until the results
• f the RFP are known.
• Addressing the backlog of lake dredging projects

NO Rate Increase!

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Reducing Programs and Saving Costs

Decreased positions by 242.8

• Increases class size by one student
• Closure of Pendleton Child Care
• Elimination of D.A.R.E Program

In 2014 the city reduced its costs or avoided incurring costs by $10.4 million without reducing services Using volunteers to provide services rather than staff, saved over $19 million

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Capital Improvement Program Funding

Capital Budget Years 2-6 Total CIP Schools $ 36.5 $ 187.0 $ 223.5 Roadways1 52.1 421.8 473.9 Buildings 51.6 84.4 136.0 Parks and Recreation 21.1 33.8 54.9 Utilities 63.6 311.4 375.0 Coastal 12.7 51.8 64.5 Economic and Tourism2 65.0 46.1 111.1 Communications and Information Technology 13.5 42.8 56.3 Total $ 316.1 $ 1,179.1 $ 1,495.2

Note: 1 Includes funding for transit related projects 2 Includes funding for arena infrastructure

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Arena Infrastructure

The CIP includes $78.5 million for the infrastructure needed to support the privately constructed and financed Arena

• The city’s cost will be funded through the use of public facility

bonds

There are three projects

• Proposed Arena Infrastructure Development
• Birdneck Road/17th Street Intersection Improvements (offsite)
• 19th Street Infrastructure Improvements

These projects are primarily funded from current revenues within the Tourism Investment Program Fund, with a five year increase in the dollar per room night charge

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Arena Infrastructure Financing

(in millions) FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Fund Balance(June 2015) $ 1.10 Current Revenues $ 36.80 $ 37.90 $ 39.09 $ 40.32 $ 41.60 $ 42.81 Current Expenditures $ 36.80 $ 33.50 $ 33.74 $ 33.79 $ 32.87 $ 31.66 Debt Service on Arena $ - $ 2.50 $ 4.80 $ 4.97 $ 6.70 $ 8.84 Arena Related Expenditures $ - $ 3.40 $ 3.50 $ 3.62 $ 3.74 $ 3.86 Total Expenditures $ 36.80 $ 39.40 $ 42.04 $ 42.38 $ 43.31 $ 44.36 Cumulative Balance $ 1.10 $ (1.50) $ (2.95) $ (2.06) $ (1.71) $ (1.55) Addition of $1 per room night $ 0.96 $ 2.11 $ 2.11 $ 2.11 $ 2.11 $ 1.16 Cumulative Balance with $1 per room night $ 2.06 $ 2.67 $ 1.83 $ 1.88 $ 2.28 $ 1.89

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Light Rail

Does not preclude the City Council decision on which, if any, locally preferred option to select

• The proposed capital projects matches the State’s funding of $155

million with city debt for a total project cost of $310 million

There are three projects

• Virginia Beach Transit Extension Project (#2.092)
• Light Rail Corridor Shared Use Path – again funded on a 50/50 basis

with state. Total project is $17.7 million

• Bus for Virginia Beach Transit Extension – funded through a state

grant at 68% state and 32% city. City’s portion is $3.6million, HRT will receive the grant

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Light Rail Financing

(in millions)

FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Debt Service $5.97 $12.17 $12.17 $12.17 Operations $3.5 $7.2 $7.4 Total Expenses $5.97 $15.67 $19.37 $19.57 ARP redirection $1.74 $1.79 $1.83 $1.87 $1.92 $1.96 Open Space redirection $2.42 $2.47 $2.52 $2.57 $2.62 $2.68 General Fund Support $10.76 $11.03 $11.30 $11.58 $11.87 $12.10 Total Revenues: $14.92 $15.29 $15.65 $16.02 $16.41 $16.74 Revenues less Expenses $14.92 $15.29 $9.68 $0.35 ($2.96) ($2.83) Cumulative Balance $30.21 $39.89 $40.24 $37.28 $34.45

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New Capital Projects

Bus Stop Infrastructure Accessibility Improvement Electronic Procurement System West Neck Road Phase IV Fire Mobile Radio Repeaters Central Plant Generator Maintain and Secure Corporate Data Pleasure House Point Mitigation Princess Anne Athletic Commons Multi Purpose Athletic Field Renovation

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Net Debt Per Capita

• 500

1,000 1,500 2,000 2,500 3,000 3,500

2016 2017 2018 2019 2020 2021

Fiscal Year

Projected Current Standard New Standard

$2,800 $3,000 21

Can we take

• n this much

debt?

Staff met with the Rating Agencies in the Fall to request Credit Evaluations from each on the impact of doing these large transformational projects  Light Rail and the Arena Infrastructure would require $233.5 million in additional city debt over the next three years ($155 million for Light Rail and $78.5 million for the Arena Infrastructure) Credit evaluations provided by the rating agencies generally were favorable, but there was concern that taking on these projects could negatively impact our bond rating The ultimate impact will depend upon the business terms and

• ther risk factors of these projects

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Where the Funding Comes From

Fund Balance 1.4% Real Estate| 28.2% Personal Property| 7.7% General Sales 3.2% Utility Taxes| 2.7% Business License| 2.5% Restaurant Tax 3.2% Hotel, Amusement, Cigarette| 2.6% Charges for Service| 14.6% Permits, Fines, & Use of Money/Property| 1.2% Other Revenue 2.1% State Revenue| 24.5% Federal Revenue 6.1%

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Adjustments to Current Dedications

Agriculture Reserve Program – dedication reduced from 0.9 cent to 0.56 cent of Real Estate Tax Rate Open Space Program – dedication reduced to 0.22% of Restaurant Meals Tax Rate

FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Debt Service 3.05 3.15 3.25 3.38 3.45 3.59 Operations 0.23 0.23 0.24 0.24 0.25 0.26 Total Expenses 3.28 3.38 $3.49 $3.62 $3.70 $3.85 ARP Dedication $2.87 $2.94 $3.01 $3.09 $3.16 $3.22 Revenues less Expenses ($0.41) ($ 0.44) ($0.48) ($0.53) ($0.54) ($0.63) Cumulative Balance $11.13 $10.69 10.21 9.68 9.14 8.51 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Debt Service $2.57 $2.59 $2.57 $2.60 $2.59 $2.51 Operations $0.52 $0.55 $0.58 $0.61 $0.64 $0.67 Total Expenses $3.09 $3.14 $3.15 $3.21 $3.23 $3.18 Open Space Dedication $2.42 $2.50 $2.52 $2.57 $2.62 $2.68 Revenues less Expenses ($0.67) ($0.64) ($0.63) ($0.64) ($0.61) ($0.50) Cumulative Balance $7.83 $7.19 $6.56 $5.92 $5.31 $4.81

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Proposed Rate Increases

Real Estate Tax -- 6 cents; from 93 cents to 99 cents

• 2 cents dedicated to Schools

Hotel dollar per room-night rate, increases to $2 for five years Cigarette Tax – 5 cents per pack; from 70 cents to 75 cents Automobile Licenses -- $5 per vehicle; from $25 to $30 Residential Parking Permits at Resort – from $25 per year to $20 per month

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Tax Rate Comparisons

Virginia Beach Chesa- peake Norfolk Ports- mouth Suffolk Hampton Newport News

Real Estate (per $100 /A.V.)

$ 0.99 $ 1.05 $ 1.15 $ 1.27 $ 1.03 $ 1.24 $ 1.22

Personal Property (Vehicles & Business)

$ 4.00 $ 4.08 $ 4.33 $ 5.00 $ 4.25 $ 4.50 $ 4.50

Personal Property (Machinery & Tools)

• $ 0.64

$ 1.70 $ 1.50 0.63 $ 1.23 $ 1.25

Automobile License

$ 30.00 $ 23.00 $ 26.00 $ 25.00 $ 26.00 $ 35.00 $ 26.00

Cigarette (per pack)

$ 0.75 $ 0.50 $ 0.75 $ 0.60 $ 0.50 $ 0.80 $ 0.85

Solid Waste Fee

$ 21.36

• $ 27.01

$ 35.36 $ 17.50 $18.42 $ 27.08

Meals

5.5% 5.5% 6.5% 6.5% 6.5% 7.5% 7.5%

Admissions

10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%

Hotel

8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% Note: City Council eliminated the personal property tax on Machinery and Tools

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Tax burden on Virginia Beach Family of 4

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 Proposed 2015-16

Real Estate Tax

$2,308.66 $2,201.86 $2,110.19 $2,054.12 $2,089.05 $2,001.36 $2,054.37 $2,230.47

Personal Property

208.62 163.65 160.99 190.72 231.70 238.29 291.67 310.57

Electricity Utility

36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00

Gas Utility

36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00

VA Telecom.

70.68 70.68 70.68 70.68 70.68 70.68 70.68 70.68

Water Utility Tax

36.00 36.00 36.00 36.00 36.00 36.00 36.00 36.00

Restaurant Tax

275.00 263.03 263.03 263.03 263.03 263.03 263.03 263.03

Admissions Tax

25.69 25.69 25.69 25.69 25.69 25.69 25.69 25.69

Vehicle License

50.00 50.00 50.00 50.00 50.00 50.00 50.00 60.00

Storm Water Utility Fee

73.37 80.67 87.97 115.34 133.59 151.84 158.05 158.05

Residential Refuse Fee

None None None 60.00 120.00 256.32 256.32 256.32

Water & Sewer

509.52 529.69 552.00 582.96 615.84 650.64 687.24 687.24

Total Tax Impact

$3,629.53 $3,473.83 $3,428.55 $3,520.54 $3,707.58 $3,815.85 $3,965.05 4,170.05

Annual Change

$0.00 ($155.70) ($45.28) $92.00 $187.03 $108.27 $149.20 $205.00

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Relative Measures of Tax Burden

Per Capita Expenditures as a % of Per Capita Income Real Estate Taxes as a % of Median Household Income Virginia Beach 6.1% 3.1% Chesapeake 7.2% 3.3% Norfolk 8.6% 3.5% Portsmouth 9.1% 3.5% Suffolk 8.1% 3.9% Hampton 8.3% 3.9% Newport News 9.1% 3.3%

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Total Budget $ 2,596,380,202 Less: Internal Service Funds $ 198,066,313 Transfers between Funds $ 526,672,314

Net Budget $ 1,871,641,575

http://www.vbgov.com

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Next Steps

Workshops

• Tuesday April 7th
• Tuesday April 14th
• Tuesday April 21st
• Tuesday April 28th (special meeting)
• Tuesday May 5th - Reconciliation

Public Hearings

• Thursday April 23rd at Green Run High School at 6pm (special meeting)
• Tuesday April 28th in the City Council Chambers at 6pm (special meeting)

Vote –Tuesday May 12th (special meeting)

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