2013 Budget Proposal Overview2013 Budget Proposal Overview

Rev. Ricky Burgess, Finance Chair

City Council Budget OfficeBill Urbanic, Director

November 27, 2012November 27, 2012

The 2013 Ravenstahl BudgetThe 2013 Ravenstahl Budget

Budgetary 892 Police Officers maintained

2.5% salary increase for non-union and some union employees, Implementation of other contracts

$470.1m Revenue and $469.5m Expenditure Budget

Departmental Expenditures increase by only $1m over 2012Departmental Expenditures increase by only $1m over 2012

City’s Total Portion of Pension will be $50m•$31 million MMO, $13 million Parking, $5 million MMO+

•Additionally $2.5m for OPEB Trust Fund

$36.8 million Capital Budget

$15 million transfer to PAYGO Budget 2014

$470 Million

Revenues 2013 - $470 MillionRevenues 2013 - $470 Million

2007 Expenditures2013 Proposed Expenditures2013 Proposed Expenditures

All Other Gov12%

Public Safety

31%

Debt 18.5%Benefits 18%

Pension 13%

Public Works

7%

$469.5 Million$469.5 Million

2013 Financial Outlook2013 Financial OutlookRevenues $ 470,210,172 Expenditures

Operating Departments $ 229,584,955 Pension $ 55,282,500

Healthcare, Workers Comp $ 88,422,993 Utilities, Judgments $ 9,087,950

Debt Service $ 87,135,417 Total Expenditures $ 469,513,815

Operating Result $ 696,357

Beginning Fund Balance $ 48,599,490

Tranfer to PayGo $ 15,000,000 Reserve Fund Balance Transfer $ -

Ending Reserve Fund Balance $ 34,295,847 Fund Balance as % of Expenditures 7.3%

Debt Service 18.5% of BudgetDebt Service 18.5% of Budget

• Debt service has been reduced significantly over past 5 years

• PayGo Capital set aside returns in 2013 for 2014

• 2012 Bond Deal

1. Allows for reasonable debt service payments

2. Allows for future responsible borrowing

3. Maintains debt cliff and goal of 12% debt ratio

• Council Debt Policy Objectives are met

• City can responsibly borrow every 3 yearsDebt

Current Capital StatusCurrent Capital Status

• The City budgeted $42.5 million of the $80 million bond proceeds in 2012. That leaves $37.5 million available for 2013.

• The final 2012 Community Development Block Grant allocation was just over $13 million. The City anticipates slightly less funding in 2013 but that depends on the actions of Congress. Federal entitlement programs may be reduced if there is no compromise on tax revenues and expenditure cuts.

• There is no PAYGO funding in the 2012 or 2013 capital budgets.

• The need for capital expenditures continue to exceed available resources. Paving, vehicle replacements, and demolition of condemned buildings are in perpetual backlog.

• The City continues to look for grants and other funding opportunities to add to our capital budget.

2014-2018 2014-2018 Capital Improvement PlanCapital Improvement Plan

• The Mayor proposes $25 million in general fund revenue (PAYGO) be transferred for the 2014 capital budget.

• The CIP also contemplates an annual $30 million in new bond issuance for 2015-2018.

• CDBG entitlement is estimated to be fairly steady at approximately $13 million a year.

Proposed 5 Year PlanProposed 5 Year Plan

2013 2014 2015 2016 2017

Expend   469,513,815 479,097,862 496,367,961 507,437,901 521,568,544

Revenue   470,210,172 479,455,533 497,004,242 508,517,110 522,135,999

Surplus / (Deficit)   696,357 357,671 636,281 1,079,209 567,455

Fund Balance $ 34,295,847 $ 29,653,518 $ 30,289,799 $ 31,369,008 $ 31,936,463

Transfer to Capital $ (15,000,000) $ (5,000,000) $ - $ - $ -

Pension 5 year planPension 5 year plan

Benefit Expense

Pension Contributions

= MMO+ Parking Tax+$5 Million

Employee Contributions

Revenues vs. Expenditures 2013-Revenues vs. Expenditures 2013-20172017

The need for additional revenue:The need for additional revenue:

In order to separate the lines of the previous slide the 2009 Act 47 Plan calls for the creation of new local revenue sources of $10 Million Dollars or expenditure cuts, or raise existing taxes

• Any excessive cuts will have an adverse effect on service delivery• City should look to lower local tax burden on residents and

businesses paying their share of fees and Payroll Tax to help create further growth

• Raising existing taxes would have an adverse effect

1. Billboard Tax $1.5 - $4m2. Non-Profit Payroll Tax* or legal challenges of tax exempt cost

centers $10-$40 Million3. Market Based Revenue Opportunities $1 to $3 Million

Potential new revenue sources:Potential new revenue sources:

* State action required

Who Paid in 2012?

City Taxpayers

43%

Government/Act7711%

City Business33%

Parking10%

Non-Profits0%

Suburban Workers2%

• We have addressed many of our underlying problems with the help of Act 47

• The 2013 Budget proposal shows this by once again staying balanced

• Revenue is still and will continue to be an issue out into the future

• $10 Million is needed annually for a cushion for pension, PayGo and uncertain economic conditions

• City should insist on a non-profit payroll tax (MegaHealthcare)• Any other options that do not increase resident taxes should

be considered: Billboard Tax, Increases of fees, State enabled taxation and relief through pension reform

• CDBG funding may be further reduced – need to replace those dollars

Summary Summary

• As Act 47 departs we need to take advantage of the plan and tools it has left us…

• Council should begin to reassume its oversight function

• Codify tools, processes and portions of the 47 plan that work and can be implemented – such as voting on a 5 year plan

• Improve communication process and approval process in 2013

• Lobby the state legislature with a plan of reform for pension and non-profit contribution (payroll tax)

Act 47Act 47