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2. 2003-2004 Budget DiscussionCity of Kalispell Post Office Box 1997 - Kalispell, Montana 59903-1997 - Telephone (406) 758-7000 Fax - (406) 758-7758 Y REPORT TO: Honorable Mayor and City Council FROM: Chris Kukulski, City Manager SUBJECT: 2004 Budget Discussion MEETING DATE: May 7, 2003 BACKGROUND: Attached is a copy of the Expenditure Detail Summary report for the proposed 2004 budget. There are four columns; the first is the current budget, the next three are the proposed budgets. The status quo budget column is basically the budget that I would present to the council for review if we do not make any large philosophical changes in how we finance and provide services. This budget attempts to finance the goals that were outlined during the budget goal setting meetings this past February. With very few exceptions, capital replacements and discretionary spending has been eliminated from the budget. Exceptions to this include: the replacement of two patrol vehicles, the salary study (1/3 of which is a carry over from the current budget), payroll software and financing of the boiler and chiller replacement at city hall. Goals/priorities that are NOT funded include: 50% of depreciation of capital equipment, 5% of the compensated absences liability and Chief Garners request to utilize a COPS grant for the hiring of a detective. The "move street" column proposes that we make a philosophical shift in how we finance street expenses. For many years the City has gradually been moving expenses out of the general fund and into special assessment funds. This column proposes that we move what's left in the street budget (approx. $115,000) completely out of the general fund and into the street assessment budget. This shift frees up $115,000 to fund priorities that were not funded in the status quo budget and or reduce the general fund mill levy. Based on the current years mill levy value you could reduce 4.8 mills ($115,000/$24,000 = 4.79). The street assessment would have to increase by approx. 28% in order to cover the new cost. The "move street and TSS" column shifts all direct costs for the financing of the street system out of the general fund and into the street assessment. This shift frees up $252,000 to fund priorities that were not funded in the status quo budget and or reduce the general fund mill levy. Based on the current years mill levy value you could reduce 10.5 mills ($252,000/$24,000 = 10.5). The street assessment would have to increase by approx. 46% in order to cover the new cost. Why would you consider making the changes contemplated in columns 3 or 4? First, the change allows the general fund to finance equipment depreciation and un-funded compensated absences both of which have been very poorly funded over the past decade. Second, the shift represents a philosophical belief that streets should be funded through two methods, tax assessments and gas taxes. Therefore, the general fund would focus its resources on police, fire, parks and general government. Some may view this a cleaning up the general fund, allowing citizens to more easily understand what their tax dollars are paying for. In speaking with city managers around the state, I am learning that several cities moved all of their street costs out of their general funds years ago. This does not mean that it is what Kalispell should be doing but does point out the fact that other cities have contemplated and made the philosophical switch. The purpose for the workshop is to have an open dialog regarding some of the options proposed. Thank you! RECOMMENDATION: None at this time. FISCAL EFFECTS: None at this time. Respectfully submitted, Chris A. Kukulski, City Manager Created May 6, 2003 GENERAL GOVERNMENT Personal Services M&O CITY MANAGER Personal Services (amended) M&O PERSONNEL SPECIALIST Personal Services (amended) M&O MAYOR/COUNCIL Personal Services M&O CITY CLERK Personal Services M&O FINANCE Personal Services M&O CITY ATTORNEY Personal Services (amended'02) M&O CITY COURT Personal Services M&O PUBLIC WORKS Personal Services M&O EXPENDITURE DETAIL SUMMARY GENERAL FUND move street status quo move street and TSS FY02/03 FY03/04 FY03/04 FY03/04 BUDGET BUDGET BUDGET BUDGET $0 $0 $0 $0 $344,997 $362,749 $362,749 $362,749 Subtotal $344,997 $362,749 $362,749 $362,749 $116,440 $122,591 $122,591 $122,591 $11,900 $12,800 $12,800 $12,800 Subtotal $128,340 $135,391 $135,391 $135,391 $37,215 $37,215 $37,215 $37,215 $16,330 $30,600 $30,600 $30,600 Subtotal $53,545 $67,815 $67,815 $67,815 $52,920 $52,920 $52,920 $52,920 $17,450 $16,150 $16,150 $16,150 Subtotal $70,370 $69,070 $69,070 $69,070 $35,112 $35,112 $35,112 $35,112 $4,650 $4,175 $4,175 $4,175 Subtotal $39,762 $39,287 $39,287 $39,287 $140,233 $140,963 $140,963 $140,963 $14,200 $14,450 $14,450 $14,450 Subtotal $154,433 $155,413 $155,413 $155,413 $140,359 $140,795 $140,795 $140,795 $18,750 $18,750 $18,750 $18,750 Subtotal $159,109 $159,545 $159,545 $159,545 $108,413 $110,988 $110,988 $110,988 $70,257 $60,637 $60,637 $60,637 Subtotal $178,670 $171,625 $171,625 $171,625 $47,054 $47,255 $47,255 $47,255 $10,850 $10,850 $10,850 $10,850 Subtotal $57,904 $58,105 $58,105 $58,105 I EXPENDITURE DETAIL SUMMARY - con't. GENERAL FUND - con't. move street status quo move street and TSS FY02/03 FY03/04 FY03/04 FY03/04 BUDGET BUDGET BUDGET BUDGET CENTRAL, GARAGE Personal Services $101,182 $104,278 $104,278 $104,278 M & O $193,450 $190,800 $190,800 $190,800 Capital Outlay $0 $0 $0 $0 Subtotal $294,632 $295,078 $295,078 $295,078 CITY HALL MAINTENANCE Personal Services $36,512 $10,010 $10,010 $10,010 M & O $98,600 $123,100 $123,100 $123,100 Capital Outlay $0 $152,000 $152,000 $152,000 Subtotal $135,112 $285,110 $285,110 $285,110 POLICE Personal Services $1,701,581 $1,660,922 $1,660,922 $1,660,922 M & O $125,250 $155,200 $155,200 $155,200 Capital Outlay $78,500 $63,500 $63,500 $63,500 Operating Transfers $37,775 $40,099 $40,099 $40,099 Subtotal $1,943,106 $1,919,721 $1,919,721 $1,919,721 FIRE Personal Services $891,058 $924,662 $924,662 $924,662 M & O $77,475 $106,540 $106,540 $106,540 Capital Outlay (amend'03) $19,889 $0 $0 $0 Operating transfers (amend'03) $65,320 $15,000 $15,000 $15,000 Debt Service $19,080 $19,186 $19,186 $19,186 Subtotal $1,072,822 $1,065,388 $1,065,388 $1,065,388 ZONING Personal Services $38,031 $38,031 $38,031 $38,031 M & O $4,522 $3,115 $3,115 $3,115 Subtotal $42,553 $41,146 $41,146 $41,146 PARK MAINTENANCE Personal Services $249,056 $264,383 $264,383 $264,383 M & O $91,275 $96,750 $96,750 $96,750 Capital Outlay $83,206 $0 $0 $0 Debt Service $14,400 $14,103 $14,103 $14,103 Subtotal $437,937 $375,236 $375,236 $375,236 RECREATION PROGRAMS Personal Services $53,943 $59,361 $59,361 $59,361 M & O $30,086 $32,635 $32,635 $32,635 Subtotal $84,029 $91,996 $91,996 $91,996 CITY OF KALISPELL 5/6/2003 4:24 PM EXPENDITURE DETAIL SUMMARY - con't. GENERAL FUND - con't. move street status quo move street and TSS FY02/03 FY03/04 FY03/04 FY03/04 BUDGET BUDGET BUDGET BUDGET OUTDOOR RECREATION(includes Seniors) Personal Services $85,084 $90,452 $90,452 $90,452 M & O $26,678 $26,378 $26,378 $26,378 Subtotal $111,762 $116,830 $116,830 $116,830 BASKETBALL Personal Services $4,063 $4,500 $4,500 $4,500 M & O $9,917 $10,132 $10,132 $10,132 Subtotal $13,980 $14,632 $14,632 $14,632 POOL Personal Services $94,545 $73,252 $73,252 $73,252 M & O $27,650 $24,700 $24,700 $24,700 Capital Outlay $0 $0 $0 $0 Subtotal $122,195 $97,952 $97,952 $97,952 STREET DEPARTMENT Personal Services $90,509 S91,878 $0 $0 M & O $17,225 $10,825 $0 $0 Capital Outlay $0 $0 SO $0 Subtotal $107,734 $102,703 SO $0 TRAFFIC SIGNALS & SIGNS Personal Services $76,080 $79,394 $79,394 $0 M & O $39,550 S35,300 $35,300 $0 Capital Outlay $27,000 SO $0 SO Debt Service $6,250 $5,027 $5,027 SO Subtotal $148,880 $119,721 $119,721 $0 TOTAL GENERAL FUND $5,701,872 $5,744,513 S5,641,810 $5,522,089 Personal Services 72% $4,099,390 $4,088,962 $3,997,084 $3,917,690 M & O 22% $1,251,062 $1,346,636 $1,335,811 $1,300,511 Capital Outlay 4% $208,595 $215,500 $215,500 $215,500 Debt service 1% $39,730 $38,316 $38,316 $33,289 Operating transfers 2% $103,095 $55,099 $55,099 $55,099 100% $5,701,872 $5,744,513 $5,641,810 $5,522,089 CASH & REVENUE AVAILABLE $ 6,602,570 $ 6,602,570 S 6,602,570 15% cash carry over requirement $ 861,677 $ 846,272 $ 828,313 OVER/(SHORT) ($3,620) $114,489 $252,168 designated for replacement--50% depreciation $ - $ 24,000 $ 24,000 designated for Compensated Absences-5% $ - $ 11,750 $ 11,750 Available for reserves or Tax Relief $ - $78,739 $216,418 5/6/2003 4:24 PM CITY OF KALISPELL PROGRAM OF SERVICES 2500 SPECIAL STREET MAINTENANCE ALL STREET AND TRAFFIC SIGN & SIGNAL REVENUE PROJECTION ACTUAL BUDGET ESTIMATED PROPOSED FY01/02 FY02/03 FY02/03 FY03/04 CASH: $150,060 $231,443 $231,443 $316,958 Public Works Charges $587 $0 $352 $350 Maintenance Assessments Billed $518,334 $524,650 $528,388 $856,000 Inception of Lease (carryover 52,000) $0 $161,000 $101,326 $52,000 Penalty & Interest $2,581 $2,000 $2,000 $2,000 Total Available $671,562 $919,093 $863,509 $1,227,308 10114011421113' ' ' • • Street Department $402,989 $456,437 $400,000 $711,636 Debt Service $33,996 $77,460 $35,225 $71,950 Capital Outlay $3,134 $171,000 $111,326 $52,000 Total Expenditures $440,119 $704,897 $546,551 $835,586 Cash Carry Over, OPERATING Cash, designated for REPLACEMENT $231,443 $214,196 $316,958 $356,722 $35,000 SET UP REPLACEMENT RESERVE $35,000 This is approximately 50% of depreciation expense for equipment that still has a useful life. 46% INCREASE Category 1 $0.0086 sq/ft. vacant land up to 2 acres. Maximum $187.30 Category 2 $0.0086 sq/ft. residential land up to 1/2 acre. Maximum $749.22 Category 3 $0.0126 sq/ft. Commercial 90% covered. Category 4 $0.0133 sq/ft. Commercial 100% covered. Rate adopted by Resolution A 10,000 SQ FT LOT would see an increase in assessment from $59 to $86 annually. 5/2/20031:31 PM CITY OF KALISPELL 13110GRAM OF SERVICES 2500 SPECIAL STREET MAINTENANCE INCLUDES STREET FUNCTION FROM GENERAL FUND REVENUE PROJECTION ACTUAL BUDGET ESTIMATED PROPOSED FY01/02 FY02/03 FY02/03 FY03/04 $150,060 $231,443 $231,443 $296,958 Public Works Charges $587 $0 $352 $350 Maintenance Assessments Billed $518,334 $524,650 $528,388 $706,800 inception of Lease (carryover 52,000) $0 $161,000 $101,326 $52,000 Penalty & Interest $2,581 $2,000 $2,000 $2,000 Total Available $671,562 $919,093 $863,509 $1,058,108 EXPENDITURE PROJECTION Street Department $402,989 $456,437 $420,000 $596,943 Debt Service $33,996 $77,460 $35,225 $66,923 Capital Outlay $3,134 $171,000 $111,326 $52,000 Total Expenditures $440,119 $704,897 $566,551 $715,866 Cash Carry Over Cash, designated for replacement $231,443 $214,196 $296,958 $287,817 $54,425 SET UP REPLACEMENT RESERVE $54,425 This is approximately 80% of depreciation expense for equipment that still has a useful life. 28% INCREASE Category 1 $0.00755 sq/ft. vacant land up to 2 acres. Maximum $164.43 Category 2 $0.00755 sq/ft. residential land up to 1/2 acre. Maximum $657.74 Category 3 $0.0110 sq/ft. Commercial 90% covered. Category 4 $0.0106 sq/ft. Commercial 100% covered. Rate adopted by Resolution XXXX A 10,000 SQ FT LOT would see an increase in assessment from $59 to $75.50 annually. CITY OF KALISPELL