Thursday, May 3, 2012

Budget Narrative from Council meeting May 2, 2012

For those of you die-hard budget fans, here is the budget narrative that Mayor Wall read during the council meeting last night. We will continue to post more information about the 2012-2013 budget.

The 2012-2013 total budget is $22,321,405 in both Revenue and Expenditures. General Fund Operating Expenditures total $21,460,705, with $200,000 being transferred to the Capital Improvement Fund, and $660,700 being budgeted for debt service. This is an increase in total General Fund spending of $30,761 over last year. Although we have an increase in revenue, dipping into last year’s fund balance and using $800,541 to hire two additional police officers, to provide needed infrastructure maintenance, and to fund Economic Development activities, has put us in a bind this year. In as much as this was money from savings and is not available to pay for these ongoing expenses it must be made up with other tax revenue. This budget recommends an increase in the property tax rate over the current fiscal year of approximately $6.48 per month on a residential property with a value of $197,000 (the actual increase will vary with the assessed value of the property).  This increase is necessary to continue to provide the essential levels of public safety, public works municipal services, pay for increased fuel and materials costs, and to invest in economic development activities that will revitalize our commercial base. We anticipate the investment will, in time, offset the need for future property tax increases. 
While sales tax revenues have started to rebound, the cost of providing services has also increased with an inflation rates. The annual inflation rate for transportation costs (gasoline being the biggest component) increased by 16%. Increasing fuel costs impact virtually all of the municipal services. In order to provide the same level of Fire, Medical, Police, Animal Control, Snow Plowing and Road Maintenance services, we need to pay these or risk reducing the level of these services.
Cost increases in the proposed budgets are for fuel, construction materials, utility rates, completing deferred projects that can no longer wait, and a moderate adjustment to employee compensation on an average of three percent, based on the Pay-for-Performance Plan. Additional inflationary costs incurred with our contract services providers include increases in health care ranging from 5.6 percent to 10 percent and mandated increased cost for retirement of approximately 2.5 percent. These increases are reflected in the department’s budgets and in the contract prices for fire and medical services, animal control services, and public works.
Recently, the Utah Taxpayers’ Association released a report that names Taylorsville as having the lowest cost of government per capita. We are the fifth lowest property tax rate out of 17 Salt Lake County municipal service entities. Three of the four with lower tax rates, Alta, Sandy, and Murray, have made significant investments in alternative revenue enhancements in previous decades. Those enhancements now yield significant returns on their investments, reducing the respective entities’ dependency on property taxes to finance both operations and capital improvement projects. Cities with tax rates that are higher than Taylorsville are also actively pursuing and investing in Economic Development activities in a competing effort to attract the limited number of commercial enterprises to their respective cities.   
For Taylorsville homeowners, the property taxes paid to the City are approximately 13.8% of their total property tax assessment. This amounts to approximately $16.97 per month per residential property. 
This budget allocates resources in a manner consistent with the City’s Ten Year Strategic Plan. We take seriously the charge to carefully manage tax dollars entrusted to the city, and have looked for alternatives for providing two of the more costly services to the City: Law Enforcement and Public Works services.
For the 2012-2013 Budget, we have proposed contracting for Law Enforcement Services with the Unified Police Department at an anticipated savings to the City of $557,331 over the proposed in-house budget request jointly prepared by the Police Department and the City Administration. Our current police department is second to none, and we have had extensive discussions with other cities currently served by the Unified Police Department, and are convinced that the City will retain control of the law enforcement functions after consolidation with the UPD through the directed enforcement precinct model. The initial budget request from the Police Department was constructed with the goal of “fully funding” the essential needs of the police department. As we all struggled through the recession with decreased revenues, the police budgets were cut and essential tools and training were forgone; the most notable being the timely replacement of police vehicles. We are compelled to use the full-cost models for both options in order to assess the true “apples to apples” comparison of contracting versus self-providing law enforcement services in the long-term.
Over the past several years the Administration has investigated the feasibility of contracting for Public Works services with private contractors, or partnering with other cities in an effort to take advantage of economies of scale. Three years ago, the City joined with Holladay and Cottonwood Heights Cities to self-provide street sweeping services after investigating alternatives. The three Cities were able to provide the service more often at a greatly reduced expenditure. We are looking at bids to privatize Public Works services and will have more information on this within the next several months. It may positively impact the next mid-year budget.
The City Council and Mayor Wall in several previous meetings have identified Economic Development activities to be one of the City’s highest priorities. The challenge we face is in working with commercial property owners and in attracting the type of retail stores that will not only encourage Taylorsville residents to shop in Taylorville, but will also attract non-Taylorville residents to import their sales tax dollars to our City.
We believe that the time is right for additional bold action by our City in the area of Economic Development. Our economic development activities must seek partnerships with commercial property owners and retail storeowners that may include a complete renovation of certain properties to improve the access and functionality of the properties. This budget asks the City Council to consider bonding for an additional $5 million to support the economic development project areas. This bond would be for the installation of the Taylorsville signature walls throughout the City. This enhancement will help to bring additional business and revenue to the City and improve the corridors leading to our commercial districts and our neighborhoods. 
As an Add Package, we would like to discuss potentially funding the acquisition of software and equipment for electronic plan review, thus greatly reducing or eliminating hard copy submittal of plans, and expediting the turn around of plan sets to architects, builders and developers.
 We have charged the Community Development Department with the major initiatives of instigating a Neighborhood Revitalization Plan and a comprehensive update of the General Plan. Both of these projects will be performed in-house, saving taxpayers tens of thousands of dollars for professional consultants. The Neighborhood Revitalization Program has been discussed with council members, citizens and in our strategic planning sessions. The program will bring together and utilize various disciplines; law enforcement, code enforcement, the health department, housing experts and others in an effort to stop the decline of certain neighborhoods, and encourage reinvestment to maintain and advance property values and quality neighborhoods.
The proposed budget provides opportunities for discussion on alternatives to the proposed budget activities and projects through Add Packages. The Add Package tab lists various projects and initiatives total $9 million.
A potential Add Package for the cemetery is the construction of an equipment structure, estimated to cost $30,000.
Two years ago the Economic Development Fund was established to account for activities related to the recruitment and infrastructure development of the City’s commercial tax base. The 2012-2013 Fiscal Year Budget identifies $4.3 million in Revenue, with $4 million from bond proceeds to be drawn as certain projects come on line. The Expenditures Tab in the Economic Development Fund includes a line for Economic Projects for roughly $4 million.
Funding priorities, capital projects and municipal services goals targeted for accomplishment in the proposed budget include, but are not limited to: Taylorsville Family Center - between $8-10 million; Plaza 5400 - $1-2 million; Nelson Labs expansion - $1-1.5 million; Access to Swain property - $450K; North Point CDA - $400K; UDOT property - $7-9 million
A large portion of infrastructure expenditure is $5 million to construct roadway walls throughout the City. The walls will be the cast concrete stone faced walls previously installed along 5400 South from 2200 West to 3600 West. We have identified several locations throughout the City were travel corridors next to residential back lot property lines create safety and health hazards for the residents. In the City’s Strategic Plan, these projects have been identified, and the alternatives are to budget for one or two projects each year, or to bond for $5 million and complete all of the projects this year. Included in the budget is $100,000 for the first year interest on the bonds. The bond payments in subsequent years will likely be about $448,000 annually depending on the interest rates.
This year we anticipate on expending $2 million of the Fund Balance carried over from previous periods as proceeds from the Storm Water Bond, for capital projects totaling $2.5 million. One million dollars is being rolled-over and budgeted for the repair of the 5350 South 1300 West project where excessive storm water destabilized the canal bank and threatened the integrity of the 1300 West roadway. Another $1,000,000 is being budgeted for projects that are included in the Storm Water Master Plan and previously approved by the Council.
The 2012-2013 Fiscal Year Tentative Budget is our recommendation for the efficient and effective allocation of resources that will bring our City closer to accomplishing our common established vision.

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