City of Decatur Budget Information
Budget Address
Nobody should be surprised that the FY 2012 budget is proving to be just as difficult as last year’s budget. We have continually cautioned the community that the recovery from the recession would take several years. I acknowledge that we are beginning to see consistent signs of the beginning of the economic recovery. However, history shows that the recoveries from recessions are typically slow and last much longer than the recession itself.
In crafting last year’s (FY 2011) budget, many difficult decisions were made. City services were eliminated, reduced, or delayed while funding of other agencies was reduced. Those of us working in city government for the residents of this community experienced something that has not been seen here in more than 15 years - the layoffs of some City employees.
The news is not all bad. Most of the City’s major revenues are seeing gains of approximately 4% over last year, and our major employers are in a hiring mode. These positive moves will benefit the City’s General Revenue Fund (GRF) balance as we expect to end the fiscal year with $2.4 million in the bank. This is a monumental step forward considering we began the fiscal year with a negative GRF balance of $600,000. That means we had a $3 million turn-around of the GRF balance. I am certain the positive direction of the fund balance was a key component in the recent upgrading of the City’s bond rating.
This improvement in the GRF balance is the result of Department Directors and other City staff making a consistent and deliberate effort to control costs. Current projections show that we expect GRF expenses to finish the fiscal year $2.5 million (~ 5%) below budget. It demonstrates a philosophy of examining all expenditures and avoiding the instinct to expend funds just because they are in the budget.
The increasing fund balance is certainly a positive sign for City finances. However, that fund balance will be offset by the significant impact of salary and benefit expense increases with pension contributions being the largest factor. Historically, pension contributions were funded by the City’s property tax levy, but taxpayers will not support a property tax levy that can meet all of the pension obligations. The past 3 years the City has used other funds (GRF, Capital, and Looking for Lincoln) to satisfy the pension obligations. This was done in an effort to avoid an increase in the City’s property tax rate. During FY 2012, the amount of money obligated from the GRF to satisfy pension obligations will increase $2.4 million. This limits our ability to utilize the projected revenue increases for other operating and capital improvement needs.
The City Council has taken the fiscally responsible lead in this community in its decision not to ask taxpayers to spend more to fund city government based on the community’s demand that we find a way to operate within our means. Therefore, we are proposing a balanced budget that does not contain any tax increases on the residents of our City. We have made a significant effort to become more efficient and effective in providing necessary services to our residents. The only way to offset the pressure of increasing expenses is to continue our efforts to become more efficient. We need to learn to operate city government with fewer employees and make investments in technology and infrastructure that generates long-term savings. That has been our direction the last 3 years, and that direction will continue during FY 2012.
Overall Budgetary Philosophies
There are several budget recap sheets attached to this memorandum. The first one focuses just on the GRF with other sheets showing a summary of all other funds. Detailed budget line item information is available in the Budget Detail report included with your packet. We will make all of this available to the public via the City website.
Expense targets were set at 2% over expected expenditures for this year. This means that most departments saw an approximately 3% reduction in their discretionary expenditures from last year since we expect to significantly under spend the budget this year. This is an overall philosophy with specific exceptions made for some known expenses. Also, the GRF has a summary of all expense variances in excess of $150,000. Total City headcount will reduce by 3 positions (1 Deputy Chief of Police, 1 Firefighter, and 1 Parking Meter Maintenance Worker) this year to a total of 516 funded positions. These are vacant positions, so no layoffs are necessary to achieve the headcount reductions.
This proposed budget allows for the replacement of only a minimal amount of equipment and vehicles. The budget to maintain the equipment and vehicles is fully funded, but replacement of equipment and vehicles will be at a bare minimum. This has been the direction for the last 2 years and has limited the fund balance available for replacement of equipment. It may be necessary to replace a piece of fire apparatus during the fiscal year. We are exploring the possibility of a lease-purchase arrangement because of the reduced balance in the Equipment Replacement Fund (ERF).
Projections for most major revenues were set at 2% above what we expect to receive this fiscal year. Some specific adjustments were made based on known conditions or where we have good reason to expect different revenue performance. We were not comfortable projecting a larger increase because some of our revenue increases for this fiscal year are the result of the State’s tax amnesty program. Amnesty revenue will not continue next year, so we feel that this conservative revenue approach is warranted.
Also attached is the most recent version of the City of Decatur Goals, Priorities, and Actions. I was asked to provide this as reference during the budget discussions.
New Initiative: Improve City Appearance and Quality of Housing Stock
We are proposing that the City make a concerted effort to improve the appearance of the city and the quality of its housing stock. Many residents have concern about properties in our city that are not adequately maintained. Furthermore, we expend significant resources on addressing these situations. Our efforts have not generated an acceptable outcome. Therefore, we are proposing that we institute new measures to address this problem. These efforts will be made on all types of properties in our city (owner occupied, rental, and commercial). We are suggesting several ways to reach this goal. Many of these will require approval of the City Council, so you should expect to have detailed discussions on them during upcoming meetings and study sessions. At this point, these are only proposals and are being made for discussion purposes only:
- Stricter enforcement of housing/property maintenance codes
- Increase fines for housing/property maintenance code violations (including grass and weed violations)
- Expansion of City Administrative Court to handle expanded volume of violations
- Utilize Administrative Court for housing/property maintenance code cases, weed/grass cases, some low level misdemeanors
- Continue use of Circuit Court for adjudication of some cases
- Creation of a Receivership Program to reduce demolition expenses
- Attempt to rehabilitate qualified houses and avoid demolition
- Provide assistance to homeowners who are not financially able to make repairs
- CDBG programs
- Development of a “Loan A Tool” program through a local social service agency
- Develop strategies for developing lots left vacant from structure demolition
- Develop a community beautification competition similar to the “Springfield in Bloom” program utilized by the City of Springfield
The goal of the program is to improve the quality of the housing stock and the appearance of the city, not to create revenue to fund City operations. In the long run, taking these measures can reduce the resources expended on inadequately maintained property in our city and improve the overall tax base for all governmental agencies. We believe that these proposals can be completed within the proposed budget allocations. This initiative is in response to Council Goals #1, #3, and #4: Strengthen the Quality of Life for our Residents, Foster a Sense of Pride in Place, and Sustain Balanced Land Conservation and Development.
New Initiative: Targeted Recruitment of Retail Establishments
Decatur has several vacant retail locations. Signs of stability in the local labor market combined with improvements in the economy provide an opportunity to recruit new retailers to our community. This can be done by targeting retailers who generally locate in areas similar to Decatur. I will work with our Economic Development staff to generate a plan of action for this recruitment and bring that to the Council for review and approval. Increasing retail operations will improve our revenue flow and help to diversify the city’s economy. This initiative is in response to Council Goal #2: Advance a Diversified Economy.
New Initiative: Lakefront/Nelson Park Development
Exciting plans have been made for the Nelson Park and Chandler Park areas along Lake Decatur. The final economic estimates are due to be completed in the coming weeks. City staff is working with the staff at the Decatur Park District to define the duties and responsibilities of both parties as it relates to this development. Those are both financial and operational responsibilities. Another combined meeting of both bodies will be scheduled in the near future to discuss a more specific phasing strategy for the development. The Park District plans to start construction on some park facilities this year.
The City will need to make a financial commitment to this development. The City receives revenues from lake activities through boating and dock fees along with sales and food/beverage tax revenues. Those revenues could be combined with expenditures from the Water Fund to make a financial commitment. This financial commitment can be made without raising taxes on our residents. This initiative is in response to Council Goal #2: Advance a Diversified Economy.
Summary
This proposed balanced budget represents the hard work and cooperation of the entire City staff to provide necessary public services with a reduced staff during difficult economic times. We are inspired by the signs of recovery in our economy, but still working hard to become more efficient and lower our cost of operations. Making these efforts now will allow us to take maximum advantage of an expanded economy. It will also allow us to keep the cost of living at a reasonable level for our current and prospective residents. Furthermore, it takes us closer to achieving the following Council priority: "Operate the City of Decatur under a sustainable financial plan".
Schedule of Hearings
Budget hearings are scheduled for March 21st and April 4th. We will review the budgets of specific departments at each of the hearing as listed below:
| March 21st: | Police (pages 20-22 & 49-52) Fire (pages 23, 24, 31, 32 & 54) and Administrative Departments - Finance (pages 10, 11, 12, 13, 14, 15, 33, 48 & 69-87), Legal (page 9), MIS (pages 102-104), Executive (pages 5 & 6), Management Services (pages 7 & 8) and Mass Transit (pages 105-115). |
| April 4th: | Public Works (pages 25-30, 61-64, 66, 92-96, 116-119), Water (120-136), Planning (pages 16, 17, 32, 43-47 & 137-144), Neighborhood Services (pages 18, 19, & 35-42), and outside agency funding (page 15). |
| April 18th: | Public hearing for FY 2012 Budget, Council vote on proposed budget. |