Decatur Budget 03-04

Proposed Budget -- Fiscal Year 2003-2004

Table of Contents

Budget Message

Budget detail tables (164k Acrobat Reader file),
Includes the following information:
General Fund:
- Summary of Revenues
- Revenue Estimate Detail
- Summary of Expenditures
2003-04 Proposed Budgets by Department:
- Governmental Control
- General Government
- Community & Economic Development
- Development
- Accounting, Collections and Records
- General Management Division of Public Safety
- Public Safety
- Sanitation and Facilities Maintenance
- Solid Waste Enterprise Fund (540-4520) 2002-03 Revised and 2003-04 Proposed Budget Estimates
- Engineering
- Stormwater Utility Fund (505) 2002-03 Revised and 2003-04 Proposed Budget Estimates
- Recreation and Community Services
Non-Departmental Expenses
Budget Comparison Summary
Total Department Expenditures
Capital Projects Fund 2001-02 Revised and 2002-03 Proposed Budget Estimates:
- Capital Improvement
- Cemetery Capital Improvement
Greenspace Trust Fund
Public Safety Department Drug Fund
Debt Service Fund
Economic Development Fund
Conference Center Parking Deck Fund

Summary

2002-2003 Revised General Fund Budget Estimate

2003-2004 Proposed General Fund Budget Expenditures

2003-2004 Proposed General Fund Budget Revenues

Other Funds

Millage Rate Adoption

Conclusion

Budget Message

Attached for your consideration are the 2002-2003 Revised Budget Estimates and the 2003-2004 Proposed Budget Estimates. Public hearings have been scheduled for June 2, 2003; June 9, 2003; and, June 16, 2003. You will be asked to take final action on June 16, 2003.

Summary

The 2003-2004 Proposed Budget Estimates basically reflect a continuation of current City services. Highlights of the proposed budget include:

• The overall millage rate remains the same at 11.52 mills.
• Due to under performance in the financial markets, the City's required contribution to the pension fund must increase to cover long-term retirement benefit liabilities. The proposed budget increases the City's retirement contribution from 5% to 6%.
• Medical insurance costs are expected to increase at least 13%.
• Federal funding for the 21st Century Learning Center initiative has been exhausted, so City financial support has been reinstated for various after-school programs for children and youth at the same level that existed before the grant was received.

2002-2003 Revised General Fund Budget Estimate

The 2002-2003 Revised Estimate is approximately $375,760 less than the approved 2002-2003 Budget Estimate. This is approximately a 3% decrease. The reduced expenditures are mostly accounted for by reduced personnel services expenditures, particularly for unfilled positions in police and recreation.

The 2002-2003 Revised General Fund revenue estimates show additional revenue in some categories, including taxes (basically in intangibles and a one-time collection of a past due business personal property tax); the electric franchise fee; increased penalty and interest revenue on real property and on personal property, reflecting efforts by the revenue collection staff to collect past due accounts; and, fees and charges, including additional revenue from E-911 fees.

However, there are some revenue categories that are of concern. The estimate of fees that will be received from the telephone franchise has decreased significantly, from $225,000 to $168,000. The telephone franchise fee is based on the number of landlines throughout the City and the industry is maintaining that the number of wireless telephones has reduced the fee. We are currently in the process of gathering information to determine how to proceed with an audit of the franchise fee. This will be a major project assigned to the graduate intern.

Other revenue categories show decreases. Income from construction permits is less due to a reduction in immediate building activity. Grants for public safety activities and fines from Municipal Court are reduced due to fewer staff positions being filled. Grants for services provided by the Recreation and Community Services Department were significantly reduced particularly due to funding reductions at the United Way and from the State of Georgia. Interest income is reduced due to lower interest rates and increased fees for banking and financial services.

In spite of unplanned decreases in several revenue sources, a combination of some revenue increases and expenditure decreases will result in an estimated contribution to the general fund balance of $426,360 instead of a planned use of $37,170. This will allow the City to increase the fund balance to approximately $5,312,600 or 39% of general fund expenditures.

The City's auditors have recommended that the City maintain a general fund balance between 25%-30% of revenues; therefore, it will be recommended to use part of the fund balance in the 2003-2004 Proposed General Fund Budget in lieu of recommending a millage rate increase.

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2003-2004 Proposed General Fund Budget Expenditures

The 2003-2004 Proposed General Fund Budget Estimate is approximately $1,333,290 more than the 2002-2003 Revised Estimate. This represents a 10% increase.

Personnel Services

Most of the increase can be accounted for by a $1,131,800 increase in the personnel services estimate.

This includes $688,750 to fully fund all positions and to fund regular merit increases. A general salary adjustment is not included in the 2003-2004 proposed general fund budget estimate. This means that approximately 33% of all employees will not receive a salary increase this year. It is estimated that it would cost approximately $70,000 to offer these employees a one-week merit based bonus. Should the City end the current fiscal year with additional revenue, it is recommended that the bonus be a primary item considered for funding.

Temporary wages increase $186,170, of which $136,510 is for funding temporary staff positions in the Recreation and Community Services Department at the same level that existed before grant funding was obtained to expand the after-school and camp programs. In addition, there is a $0.25 per hour increase for temporary recreation positions. This adjustment costs approximately $1,900 and is based on a survey of current wages paid for comparable positions in agencies offering similar services.

Additional temporary wage costs include funding for a full year graduate intern in the City Manager's Office and costs for covering maternity leave for the Administrative Services Director. Additional revenues in parking fees offset the additional costs for the full year intern because the intern will work with the parking management staff eight hours a week.

Previous attempts to control health care costs have included implementation of several cost containment measures such as a preferred provider arrangement for surgical and hospital expenses, a generic drug option for prescription medicines and funding for preventive care. In addition, a participant's out of pocket expense paid at the time of service has been increased from $15 to $20 per physician's visit and the non-generic prescription drug payment has increased from $15 to $25 plus 20% per prescription. In spite of these and other efforts, it is anticipated that medical insurance costs will increase approximately 13% resulting in $105,610 of additional expense.

Employee and retiree contributions for medical cost coverage were increased approximately 20% in 2000, 20% in 2001, 10% in 2002 and part of the anticipated increase will be offset by a 13% increase in employee and retiree contributions effective July 2, 2003.

The City is required to make contributions to the City of Decatur Employees' Retirement System equal to the actuarial requirement to fund current and future estimated benefits. The City is required to have the contribution calculated every two years. As of the January 1, 2000 system valuation, the City's required contribution was .78%. However, during that period, the City continued to dedicate 5% of payroll to required system contributions and to offset retiree medical coverage costs. Due to the downturn in the financial markets, the retirement system assets have lost some value and as of the January 1, 2002 valuation, the City's actuarially required contribution has increased to 5.35%. The 2003-2004 proposed budget includes an increase of $109,470 to cover the required contribution.

Due to the existing economy, the City did not conduct a general salary survey. Three positions are recommended for reclassification in order to recognize increased responsibilities and market rate conditions.

It is recommended that these changes be effective on July 2, 2003.

Other Expenditures

Costs of services and supplies increased approximately 4.5% or by $175,760. Instruction fees increase by approximately $52,730. These expenses depend on classes, camps and special programs in the Recreation and Community Services Department and expenditures and revenues are reduced depending on whether the classes are actually held.

Other contractual services increases are mostly accounted for by full year implementation of the red-light camera program. Additional program revenues cover additional costs for this program.

The 2003-2004 Proposed Budget Estimate does not anticipate any new programs and there are very limited service delivery improvements mostly related to repair and maintenance of City facilities.

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2003-2004 Proposed General Fund Budget Revenues

Growth in the City's 2003 residential real property tax digest was approximately 6.7% over 2002 values. The 2003 commercial real property digest declined slightly as compared to 2002 values. The total real estate property digest increased approximately 5.6% over 2002 values. The total digest (real estate, business/personal property, public utilities and motor vehicle) showed a 5% increase.

Estimates of revenue from real property taxes for the 2003-2004 Proposed General Fund are based on the 5% growth in the digest and retaining the 2002 millage rate at 9.8 mills, the same rate as 2002. The 2002 Georgia General Assembly amended the Governor's Homeowners Tax Relief Grant to include municipalities. Revenue is included in both the revised and proposed budgets to account for this grant. The 2002 grant funded an $8,000 homestead exemption and the 2003 grant will fund a $10,000 homestead exemption.

Recently, the Georgia Supreme Court issued a ruling that has the potential to impact how cities and counties bill and collect professional tax certificates for attorneys. It is possible that the City will have a maximum one-time exposure of approximately $50,000 for either refunds or delayed billing. Currently, revenue is included at the current collection level but a revision may be recommended in the revised 2003-2004 budget.

Revenue from construction permits and fees will increase slightly in the 2003-2004 Proposed Budget Estimate in anticipation of issuing permits for several large projects. Parking meter fees are anticipated to increase due to the graduate intern working with the PALS staff eight hours a week.

It is also anticipated that all police officer positions will be filled by January 1, 2004, so that the City will be eligible for grant funding for two additional police officer positions as well as being able to fulfill the City's contractual obligation to provide two police officers to the Decatur Housing Authority.

In 2002, the City initiated a red-light camera enforcement program. Both revenues and expenses for the program are accounted for in the 2003-2004 Proposed budget. Revenues from violations must be used to sustain the program or to fund safety programs. It is also anticipated that with full staffing of police officer positions, the traffic enforcement unit can be reactivated and with additional personnel available for patrol and enforcement, revenues from fines and forfeitures will also increase.

Revenue from cemetery lot sales will be limited to sales in the cinerarium because there are no lots currently available in the Cemetery. Recreation service fees are increased to show fees for after school programs and to account for additional league and program revenue. Generally, other sources of revenue show modest or no increases based on estimates using historic and economic trends.

There is an operating transfer of $550,000 from the general fund balance to the Capital Improvement Fund to cover the cost of the City's match for the MARTA Mall redevelopment project and to provide for a limited sidewalk repair and maintenance program.

There is also an operating transfer from the general fund balance to the Greenspace Trust Fund to assist with the purchase and maintenance of greenspace.

A transfer from the Downtown Development Authority Fund to the General Fund is shown as revenue consistent with the agreement between the City and the Downtown Development Authority for management services.

A transfer from the Solid Waste Fund to the General Fund is shown as revenue to cover the indirect costs of providing residential and commercial solid waste services.

A transfer from the Storm Water Utility Fund to the General Fund is shown as revenue to cover indirect costs of supporting storm water activities.

It is anticipated that the City will need to use $746,880 of general fund balance to provide enough revenue to cover 2003-2004 Proposed General Fund expenditures to avoid an increase in the millage rate. This will reduce the estimated general fund balance at June 30, 2004 to approximately $4,542,800, or 30% of expenditures. It is not likely that the City will be able to continue to repeatedly use fund balance in the future so we will have to continue to explore other options including increasing other revenue sources, controlling expenditures, changing service delivery options, or as a last resort, increasing the millage rate.

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Other Funds

The City Commission will also be asked to adopt 2002-2003 Revised and 2003-2004 Proposed Budgets for the Capital Improvement Fund, the Cemetery Capital Improvement Fund, the Debt Service Fund, the Economic Development Fund, three Enterprise Funds (Conference Center/Parking Deck, Solid Waste and Storm Water Utility), the Community Grant Fund, the Confiscated Drug Fund, the Greenspace Trust Fund and pass-through funds for the Downtown Development Authority and the Board of Education.

Capital Improvement Fund

The 2002-2003 Revised Capital Improvement Fund Budget Estimate includes $630,000 in tax revenue; $1,365,000 in intergovernmental revenue; $10,000 in interest revenue; and, $72,080 in revenue from gifts and contributions and miscellaneous sources. The bulk of the intergovernmental revenue is associated with reimbursement for streetscapes construction expenses.

Expenditures include $228,000 in professional and contractual services; $438,000 in debt service; and, $1,559,000 in capital outlay (after proceeds from capital leases are deducted).

Projects to date in the 2002-2003 Revised Capital Improvement Fund Budget Estimate include:

• Construction of phases II and III of the streetscapes improvement project.
• Moving the Decatur Depot
• Resurfacing Ebster Pool.
• Replacement of the roof and gutter system at City Hall.
• Design of traffic island improvements at Clairemont Avenue and Michigan Avenue and at Beaumont Avenue.

The 2003-2004 Proposed Capital Improvement Fund budget includes $650,000 in tax revenue. Additional revenue includes $10,000 in interest. Intergovernmental revenue in the amount of $2,000,000 for reimbursement of construction expenses for the MARTA Mall project is included. There is also miscellaneous revenue of $25,000 that is expected from the Decatur Preservation Alliance for reimbursement of expenses associated with moving the Decatur Depot.

Capital outlay projects in the 2003-2004 Proposed Capital Improvement Fund Budget Estimate include:

There is also a $359,000 expenditure for debt service.

In the 1999-2000 Capital Improvement Fund Budget, the City received an equalization distribution from DeKalb County's Homestead Option Sales Tax funds. The City is currently in dispute with DeKalb County regarding the correct amount of the grant for that year and for subsequent years. Should the City prevail, funds should become available.

It is recommended that the levy for capital improvement purposes be set at 0.77 mills.

Cemetery Capital Improvement Fund

The 2002-2003 Revised Cemetery Capital Improvement Fund reflects revenue of $49,500 from lot sales. The 2003-2004 Proposed Budget anticipates significantly reduced revenues from lot sales because no new lots remain available for purchase. Proposed expenditures in this fund are for maintenance and repair including repaving of drives in the Cemetery.

Debt Service Fund

The 2002-2003 Revised Debt Service Fund Budget shows revenues of $490,000 in tax revenue. In order to meet debt obligations associated with the construction of the Conference Center and Parking Deck, a transfer of $565,000 is included.

The 2003-2004 Proposed Debt Service Fund Budget shows revenues of $516,000 in tax revenue. A transfer of $545,000 to the Enterprise Fund is included to cover debt service payments for construction of the parking deck and conference center.

It is anticipated that the City will take advantage of the current low interest rates to refund the current debt issue.

It is recommended that the Debt Service Fund levy for capital purposes be set at 0.57 mills.

Economic Development Fund

The 2002-2003 Revised Economic Development Fund Budget shows revenues of $94,010 and expenditures of $99,600, part of which includes the City's match for development of the Avondale Decatur LCI Master Plan, the design phase of the MARTA Mall Master plan, as well as other contractual service. There is a reserve of $17,730 that is for tree plantings from the tree bank account. It is anticipated that $23,320 will be needed from unencumbered fund balance.

The 2003-2004 Proposed Economic Development Fund Budget shows revenues of $8,800 and expenditures of $10,000 for contractual services and $17,000 for landscaping. It is anticipated that $18,200 will be needed from unencumbered fund balance.

Enterprise Funds

Conference Center/Parking Deck

Both the 2002-2003 Revised Enterprise Fund Budget and the 2003-2004 Proposed Enterprise Fund Budget estimates include adequate revenues from the Hotel/Motel Tax, the Conference Center Management Agreement and commissions to cover operating costs associated with the Conference Center and Parking Deck and to cover the full debt cost for the Conference Center renovation project. A transfer of $565,000 in 2002-2003 Revised Budget and a transfer of $545,000 in the 2003-2004 Proposed Budget from the Debt Service Fund to cover part of the original construction bond repayment costs is included.

Solid Waste

Effective July 1, 2000, solid waste services began to be accounted for using an Enterprise Fund. As a result, sanitation fees and income from bag sales received after July 1, 2000 are shown in the Solid Waste Fund. Effective with the 2001-2002 Revised Budget, solid waste expenditures are accounted for in the solid waste fund instead of in the general fund.

A transfer of $360,000 will be made from the 2002-2003 Revised Solid Waste Fund to the 2002-2003 Revised General Fund Budget to cover the indirect cost of services provided by the general fund for solid waste management services. An estimated transfer of $374,000 will be made from the 2003-2004 Proposed Solid Waste Fund to the 2003-2004 Proposed General Fund Budget for the same purpose. Using an estimate of total solid waste costs included in the 2002-2003 Proposed Budget estimate, recommended user fees for various sanitation services were calculated earlier this year and the City Commission adopted the following schedule of fees:

• An annual assessment of $180 for residential properties to cover the fixed costs of sanitation service (personnel, benefits, equipment, yard waste collection, recycling, street sweeping, etc.);
• $3.50 per cubic yard for dumpster service;
• An annual assessment of $535 per single 95-gallon cart for once a week pick-up, with increased charges depending on the number of carts and the number of pick-ups per week;
• An annual assessment of $685 per 3 cubic yard dumpster collection with increased charges depending on the number of pick-ups per week;
• Continuation of the present charges paid by the user of $1.00 per 30-gallon bag, $.50 per 15-gallon bag, and $.30 per 8-gallon bag to cover disposal costs.

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Storm Water Utility

In March 2000, the City Commission set the storm water utility charge at $5.00 per month ($60 annually) per Equivalent Residential Unit(ERU). The first fees were billed in April 2000 and were due on June 1, 2000. The City is now in the fourth year of collections and should have an adequately established financial track record to consider using revenue bond financing for capital construction of projects in the near future. The major activity of this fund has been the development of a comprehensive storm water capital maintenance and construction master plan. Storm drainage improvements in the Downtown Streetscapes program are also being funded by the utility as are some immediate projects needed in the City's residential neighborhoods.

Revenue for the 2002-2003 Revised Storm Water Utility is $810,000 and expenditures are estimated to be $1,007,570. Revenue for the 2003-2004 Proposed Storm Water Utility is $676,000 and expenditures are estimated to be $1,092,910.

A transfer of $154,700 will be made from the 2002-2003 Revised Storm Water Utility Fund to the 2002-2003 Revised General Fund Budget to cover the indirect cost of services provided by the general fund for storm water management. A transfer of $170,000 will be made from the 2003-2004 Proposed Storm Water Fund to the 2003-2004 Proposed General Fund Budget for the same purpose.

Community Grants Fund

The 2002-2003 Revised Community Grants Fund Budget shows revenues of $600,280 and expenditures of $755,200. A transfer of $139,998 in program service fees will be made to the 2003-2004 General Fund to cover the cost of sustaining the program for one more year. Federal funding of the 21st Century Learning Center program has been exhausted. It is anticipated that there will not be a need for a 2003-2004 Community Grants Fund Budget.

Public Safety Department Confiscated Drug Fund

The purpose of this fund is to account for monies and goods confiscated when the Public Safety Department makes an arrest and obtains a conviction in a drug-related case. Funds are made available to the Department when the case has been successfully prosecuted. Expenditures from this fund can only be made for law enforcement purposes.

The 2002-2003 Revised Confiscated Drug Fund Budget shows revenues of $2,000 and no expenditures. The fund balance will increase to $98,084. The 2003-2004 Proposed Confiscated Drug Fund Budget Estimate shoes revenues of $2,000 and expenditures of $13,200 for debt service payments for purchase of a CID vehicle.

Greenspace Trust Fund

The purpose of this fund is to account for revenues received for the purchase of greenspace within the City of Decatur. The 2002-2003 Greenspace Trust Fund Budget shows revenues of $6,110 and expenditures of $96,910. There is a $20,000 transfer from the General Fund to assist with the maintenance and development of The Woodlands property. It is anticipated that unencumbered fund balance will be $96,982.

The 2003-2004 Greenspace Trust Fund Budget shows no revenues and no expenditures at this time, although it is anticipated that expenditures will have to made by the end of the fiscal year in order to comply with Department of Natural resources regulations. There is a $50,000 transfer from the General Fund to assist with the maintenance and development of The Woodlands property.

Downtown Development Authority and Board of Education Funds

These funds simply account for the collection of real property taxes for the Downtown Development Authority and the Board of Education and merely act as pass-throughs.

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Millage Rate Adoption

The 1999 General Assembly adopted O.C.G.A. � 48-5-32.1, known as the "Truth in Taxation" law. It requires every levying authority (i.e., the City) and every recommending authority (i.e., the School System) to take the percentage of the digest increase due to property reassessments and reduce the millage by that percentage. To the extent that the recommended millage rate exceeds the "roll-back" rate, certain advertisements and public hearings must be held. This requirement began with the certified 2000 digest.

Although DeKalb County will not receive the certified digest back from the State of Georgia until mid-June, the law does allow millage rate adoption based on an estimated digest as long as the estimated digest is within three percent of the certified digest. Because it is more convenient and because residents can have more impact on the budget and millage rate setting process when both are discussed at the same time, beginning with the 2002-2003 budget process, the budget and millage rate hearings are held at the same time. We believe that the certified digest will be well within three percent of the current estimated digest.

Funding for the 2003-2004 General Fund Proposed Budget Estimate is based on a 5% growth in the property digest and retention of the same millage rate from 2002, 9.80 mills.

Conclusion

The 2003-2004 General Fund Proposed Budget Estimate is basically a continuation of current service levels and does not anticipate any new program developments. Recommended 2003 property tax millage rates are as follows:

I will be glad to review the attached budget proposals with you at your convenience.

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