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Budget Fiscal Year 2007 (FY07) July 1, 2006 to June 30, 2007
Manager's Budget Message December 14, 2005 To the Honorable Mayor Hooper & City Council Members, Presented herewith is the City Manager’s recommended FY07 Budget for operating the functions of the City of Montpelier. The General Fund and all proprietary funds (Water, Sewer, Parking, Capital, Cemetery and Parks) are included and balanced. The General Fund budget includes appropriations for the Cemetery Commission, as well as funding for community agencies that may be placed on the ballot pending the Council’s decision. The budget does not include requests for funding which may be placed on the ballot by petition or any non-agency ballot items which may approved by the City Council. The recommendation includes two bond issues; $485,000 for bridges and infrastructure and $380,000 for city facilities. Introduction: This year’s budget preparation had severe challenges. Major increases in fuel and electrical costs have had heavy impact throughout our operations. Inflation jumped up to 4.3% after hovering in the low to mid 2’s and low 3’s for quite a while. Employee pension costs had an unplanned increase. Our fund balance reserves, which have been used to hold the tax rate down in recent years, were not available this year. We have continued equipment needs, demands for expanded capital projects, increased demands for services on our work force, and a stagnant pool of available revenue sources. In the meantime, we have been steadily trimming the city’s budget since the 1980’s so our choices become fewer each year. I will detail the key budget drivers later on in this letter. Offsetting those challenges were a much lower than normal change in employee health insurance costs. Insurance rates still increased but at a much lower level than we’d anticipated. That coupled with a 5% increase in employee contributions to insurance help hold our insurance costs steady for a year. We also continue to reap some benefit from anticipated employee retirements and the ability to bring some (but not all) newer employees in at lower pay rates. Other factors for consideration were that the city has held its budget to an average of less than 1 cent tax increase over the last five years (including three years with no increase at all) which has been well below inflation, tax delinquencies are at an all time low meaning that people are making tax payments in a timely fashion, and the city’s budget has received very high approval votes (71%) over the last ten years. Overview: This Budget recommendation contains the following:
The General Fund budget totals $8,573,826, which is an increase of $580,815 (7.3%) from the comparable FY06 spending plan. While this is a big increase, its fair to note that the two prior year budgets only increased a combined total of 3.2% making the three year average only 3.5%. I don’t like to resort to rationalization but point out that many if not most municipal budgets have exceeded a 3.5% annual increase in this same time frame. Major items in the budget include an increase of $178,060 (5.2%) in salary and wage costs (including a new Code Enforcement position, a restored Finance Director position, a restored Community Development position, a restored School Resource Officer position) and $100,030 (7.4%) in employee benefit costs mostly due to pension increases. $50,000 (5.3%) increase in the capital program; $25,605 (10.4%) increase in the Equipment Plan; and an increase of $295,082 (18.7%) in other operating expenses. Community Expenses decreased $67,961 (-16.1%) due to the reduction of the Student Assistance Program and the lack of inclusion of the Housing Trust Fund. Operating expenses include no general fund transfer to the Parking Fund, level tax funding for the Green Mount Cemetery, Parks Commission, Green Mountain Transit and Kellogg-Hubbard Library. These changes are supported by the substantial $245,213 (9.6%) increase in projected non-tax revenues. The other major sources of revenue are tax related income (interest and penalties), fees for services, transfers from the proprietary funds. In addition the grand list value is estimated to grow by about one percent for next year. $49,984 in new revenue has been budgeted for state inspection and plans reading service fees. The net effect is that $5,767,133 in property taxes must be raised to finance the base municipal budget. The tax rate to support these revenues would be $1.100, which is 4.9 cents, and 4.7% higher than the $1.051 tax rate for comparable programs in FY05. Services: This budget maintains the level of service in most areas. Administration - This includes Council, Manager, Clerk/Treasurer, Finance, Assessor, Technology and Tax Collection. A part time position in Technology has been added. This includes first full year funding of the contracted Assessor’s position and restoration of the full time Finance Director position. Planning & Development – No changes in departmental structure are proposed. The budget calls for the CD/Housing Specialist to be funded at 100% (up from 60%) with grant funded revenue to offset the increase. Code Enforcement – Includes $70,466 in expenses, $49,894 in new revenue from, state inspections through a contract with the Department of Labor & Industry and local health inspections, additional revenue from local building permits and a cut in the health officer account of $8,772 requiring no net new taxes for this position. This will be to implement a full time Code Enforcement program operated within the Fire Department which includes rental housing inspections, building inspections, health inspections and permit administration. Police/Dispatch - Contains funding for the highly successful School Resource Officer position in partnership with the school department. Funding anticipates transition of two senior sergeant positions due to retirement. Fire/EMS - No changes in staffing or service levels are proposed. In the past year, the department has taken on building inspection duties. Public Works – Basic staffing and service levels have been maintained. Anticipates retirement of senior personnel and a potential re-allocation of supervisory assignments. Capital Projects - Funded at the target level of $1,000,000. In FY07, annual project funding totals $388,696, which is an increase of $41,997. This is anticipated to be the highest level of annual funding until after FY12. The budget includes $611,304 in anticipated debt payments. Outside Agencies - The School Department will place the Student Assistance program in their budget. No other changes in outside agencies are proposed and no funding increases recommended. Community Enhancements - All community enhancement programs, events and agencies funded in FY06 are included within the city’s budget. Small increases in event funding have been made as a re-allocation of funds which formerly went to the Onion River Arts Council. Kellogg-Hubbard Library - I have included $99,660 in funding for the library which is the same amount they received last year. The library has requested an additional $6,135. Green Mountain Transit – I have included $27,972 in funding for GMTA which is the same amount as last year and what they requested this year. Parking Fund - Contains no transfer from the General Fund and is presently balanced on paper as a result of cost allocation changes and recently approved fee increases. Parks Fund – Maintains basic level of services. Increase in tax funding of $8,480 is to address overdue repair (Hubbard Tower Stairs) and equipment needs. Cemetery Fund – The Cemetery Commission requested the same amount of tax funding from the city as in FY06. Water/Sewer Funds - These budgets have recently been reviewed carefully in conjunction with the rate increases. They are balanced and in good shape. As a result of the rate increases, we are not recommending a one cent increase in the CSO benefit charge this year as had been originally planned. We will assess revenues under the new rate structure and determine whether this increase needs to be implemented with next year’s budget. Key Areas of Focus: There were some very identifiable costs and issues which impacted this year’s budget. I’d like to call them specifically to your attention and also mention some additional challenges that you will face. Specific key problems are:
It is my honor to recommend my eleventh budget to you. We have become accustomed to budget challenges over the years. This year, however, presented an accumulation of factors – some unexpected and some building from prior years - which together created some major hurdles. At the same time, we are trying to successfully position the city government for the many transitions in personnel and leadership that we expect over the next two years. I am concerned, as I have been the last two year, that the city government will not be able to meet the accumulated expectations of high services. This budget represents hard work on the part of the entire city team to address the many goals that you, the Council, have articulated for us. While the final proposed tax increase would the highest that we’ve seen since 7 cents in FY99, 6 cents in FY00 and 5 cents in FY01 it represents perhaps some of the most difficult work to achieve under the circumstances. It also needs to be placed in context – in the last five years since FY01, the municipal budget has only gone up 4 cents in total. This proposed increase would mean the average annual increase over 6 years has been only 1.5 cents. Its my professional opinion that this tax proposal can only be reduced if we re-visit policy choices in areas like the capital plan, the equipment plan, use of fund balance and direct service levels to the community. I sincerely thank the department heads and city staff for their many diligent efforts and sacrifices on behalf of the City. I would like to particularly recognize the efforts of outgoing Finance & Administration Director Jana Bagwell. She has made extraordinary contributions to the final budget recommendations and presentation, working above and beyond the call of duty after her retirement date. By the same token, I’d like to recognize the contributions of incoming Finance Director Sandy Gallup who worked long and hard on this budget before actually beginning work here. These were truly extraordinary efforts by these two individuals. I’ll also note that this is the final budget that Public Works Director Steve Gray will work on. His wisdom, insight, knowledge and common sense have added untold value to this effort and all of the city’s budgets presented before this. He is one of a kind and will be sorely missed. I look forward to the Council’s discussions on all of these budget issues and hope that the public will participate fully as well. Respectfully submitted, William J. Fraser, City Manager For More Information
Contact information for other departments. Updated January 25, 2006 |
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