FY 2024-25 Budget Workshop #2 Presentation
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FY 2024-25 Budget Workshop #2 City Council Conference Room Monday, March 18, 2024 Making it Happen Our Brand A safe, diverse, equitable and inclusive community that connects people, chooses innovation and inspires excellence FY 2024-25 Budget Theme 01. FY 2024-25 Budget Overview and General Fund Operating Budget Update 04. Key Budget Dates and Questions 02. Proposed 5-Year One-time General Fund Balance Forecast 03. Assessed Valuation and Property Tax Update Agenda New Fiscal Year 2024-25 starts 7/1/2024 “Making it Happen” Council/Resident Process Staff Process Chandler Budget Process Timeline Strategic Framework Guides Our Decision Making Focus Areas •Economic Vitality •Innovation and Technology •Mobility •Neighborhoods •Quality of Life •Good Governance FY 2024-25 Budget Overview and General Fund Operating Budget Update FY 2024-25 Budget Drivers (all funds) Revenues • Revenues reflect actual economic environment with additional analysis on sustainable level • Increases coming from continued development & decrease from Residential Rental revenue • State Shared revenues updated with latest projections using State and League forecasts Expenditures • Funding to convert one-time funded positions to ongoing, maintain service delivery after adjusting for inflation, and ensure enhancements are in strategic focus areas • Personnel costs increasing to invest in city workforce and retain employees; market, merit, and healthcare. Reflects ongoing savings from PSPRS employer contribution • Capital projects increased to address aging infrastructure, inflation and new infrastructure Grants Ongoing Savings with One-time $ • Continued focus on finding Grant opportunities and having “shovel ready” projects that may qualify. • Maintain funded status of PSPRS to ensure unfunded liability does not grow • Solar energy investment for utility cost savings • Turf to Xeriscape for utility cost savings Major Ongoing Expenditures •Personnel (62% of GF budget) •O&M to support services Major Revenues •55% Transaction Privilege Tax •33% State Shared Revenues General Fund Forecast Revenues and Expenditures Drivers •Economy showing slow growth •Development still occurring Resetting ongoing/one-time •Sustainable portion to support higher expenditures Revenues Ongoing vs. One-Time Expenditures Ongoing vs. One-Time Current Budget •Anticipate closer alignment with revenues Drivers •Competitive wages & benefits •Continued inflation reset on some goods & services Maintain services vs. new •Spending more to just maintain •O&M for new CIP planned Current Budget Impacted •Inflation and areas of slow supply chain for capital & operating Ongoing/One-Time Local Sales Tax (TPT) Revenues 55% of General Fund revenue Residential Rental Removed beginning FY 2024-45 and offset from higher Utility TPT Sales tax revenues fluctuate due to economic volatility, including increased development State Shared Revenues (in Millions) 33% of General Fund Priorities for Ongoing Dollars 1. Maintain existing service levels within core programs and strategic focus areas and honor labor and personnel commitments 4. Continue to ensure Chandler remains an employer of choice in wages and benefits 3. Enhance existing or new services specifically targeting Strategic Framework priorities 2. Continue converting successful one- time-funded programs and personnel to ongoing, sustainable sources 5. Other service enhancements or additions, considering the option of one-time pilot programs first FY 2024-25 Ongoing Decision Package Recommendations (All Funds) All Funds $29M in ongoing requests $17.5M recommended net of offsets General Fund (GF) $18.9M in ongoing requests $10.9M recommended net of offsets Significant Recommendations Contract increases for services and goods Maintenance costs related to new capital projects Public Safety Personnel Programs and Services Navigator position conversion Continued investments in cybersecurity Costs associated with new personnel (vehicles, IT, etc.) Neighborhoods funding Surface water delivery increases Utility Chemical increases FY 2024-25 Workforce Needs FY 2023-24 Adopted 1,756 FTE + FTE Proposed for FY 2024-25 FTE converted from one-time funded to ongoing (26): DEI Management Assistant - DEI Digital Media Producer - CAPA Downtown Operations & Special Event Coordinator - Cultural Outside Plant Fiber System Sr. Analyst – Development Services (4) Peak Time Engine Staffing - Fire (2) Community Navigators - Neighborhoods Crime & Intelligence Analyst - Police (10) Grant funded Police Officers - Police (5) Police Aides - Police Other Non-GF funded FTE (3): Principal Engineer – Public Works & Utilities Utility Mechanic Sr – Public Works & Utilities Water Resource Analyst – Public Works & Utilities FTE Added with Revenue Offsets (8): Development & Communications Program Manager (100%) – Cultural; Center for the Arts Performing Arts Program Manager (50%)– Cultural; Center for the Arts (2) Fire Inspectors (75%) – Fire Housing Quality Inspector (75%) - Neighborhoods Business Compliance Representative (100%)– Management Services Utility Mechanic Sr (100%) – Public Work & Utilities Utility Plant Operator III (100%) – Public Works & Utilities FTE added related to CIP projects (5): (2) Tumbleweed Multi-generational facility expansion – Community Services (2) Real-time Crime Center Personnel – Police Support Senior Analyst (O365) - IT Other General Fund (GF) funded FTE (6): Emergency Manager - Fire Information Security Analyst – IT Sr. Budget Analyst – Management Services Digital Forensic Examiner - Police Construction Project Manager – Public Works & Utilities Systems Technician II – Public Works & Utilities Maximized reallocations & repurposing of existing positions prior to adding positions to address needs General Fund Ongoing Forecast- Structurally Balanced Total revenues changes with the ebbs and flows of the economy impacting primarily one-time revenues. Ongoing revenue is increasing at a gradual pace. Modest wage changes are estimated for years 2-5 and ongoing revenues continue to be within current revenue assumptions for structural balance. Proposed 5-Year One –Time General Fund Balance Forecast Priorities for One-Time Dollars 1. Maintain PSPRS pay-off and reinvest in existing aging infrastructure, neighborhoods & systems and projects that generate ongoing savings 4. New initiatives and capital, including sustainability 3. Maintain reserves sufficient to meet financial policies 2. Operating and capital spending to advance Strategic Framework goals Paid down large unfunded PSPRS liability to generate ongoing savings 2024-25 One-Time Decision Package Recommendations (All Funds) Significant Recommendations Citywide Technology Projects Enhanced Citywide Marketing Park Irrigation Improvements Continued Transit Services One-time contract/chemical increases Airport enhancements to expand development area General area plan update Police Wellness, Behavioral Health, Academy, and Real Time Crime Center Equipment & Technology Human Services Allocations and Operation Open Door Sustainability projects: Urban Forestry Program and increased funding for water conservation All Funds $22.4M in one-time requests $21M recommended net of offsets General Fund (GF) $18.8M in one-time requests $15.7M recommended net of offsets Maintain Funded Status of PSPRS to Ensure Unfunded Liability Does not Grow Supports use of additional one-time funds to payoff any remaining unfunded liability on an annual basis Note: PSPRS has not released the modeler to confirm effect of actual rate of return to show impact to liability Unfunded Liability decreased $36.4M from Prior Year’s total of $136.5M Police $68.4M Fire $31.7M Total $100.1M Note: $73M payment not yet reflected 5-Year One-Time General Fund Balance Forecast Appropriated 15% Contingency ($53.8M of fund balance), Council Contingency $350K ($75K ongoing), and other reserves Proposed 5-Year One-Time General Fund Balance Forecast Assessed Valuation and Property Tax Update $1.000 $1.050 $1.100 $1.150 $1.200 $1.250 $1.300 0 500,000,000 1,000,000,000 1,500,000,000 2,000,000,000 2,500,000,000 3,000,000,000 3,500,000,000 4,000,000,000 4,500,000,000 Primary Secondary Limited Combined Rate 22 Property Valuation and Tax Rate History Tax rate was increased during declining values, and decreased during periods of increasing values Property Tax Rate Comparison FY 2023-24 (per $100 of Assessed Valuation) Dollars Breakdown of $1 of Typical Chandler Property Tax Bill City of Chandler 11 cents Public Schools and Community College Districts 70 cents Maricopa County & Special Districts 19 cents *Based on 2023 Tax Bill information. Exact split will vary depending on the school district and any other special taxing districts on the bill. Levy with Rates Unchanged Council direction at 02/8/24 Workshop #1: 1. Leave secondary rate alone 2. Bring options on primary Impact to Median Value Homeowner Primary Tax Rate Options $0.01 change to Property Tax Rate equals $410,805 Current budget draft assumes primary tax rate remain flat, allowing for capture of ongoing revenue which will require a Truth-in-Taxation process (Note: FY 2009-10 was last time Truth-in-Taxation process was required) Budget Event Date Council Budget Kickoff Completed Resident Budget Survey with Council Videos Completed Council Workshop #1 Completed Council Workshop #2 Tonight Council Workshop #3 Capital Improvement Program 3/21/2024 All Day Budget Briefing 4/26/2024 Council Meetings Tentative Adoption 05/23/2024 Public Hearing and Final Adoption 06/13/2024 Adoption of Tax Levy & Fee Action 06/27/2024 Key Budget Dates Questions?