Fiscal Year 2019 Budget and Fiscal Policy Guidelines Copyrighted
December 18, 2017
City of Dubuque Action Items # 8.
ITEM TITLE: Fiscal Year 2019 Budget and Fiscal Policy Guidelines
SUMMARY: City Manager recommending adoption of the Fiscal Year
2019 Budget Policy Guidelines.
SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Approve
ATTACHMENTS:
Description Type
NNM Memo City Manager Memo
Staff Memo Staff Memo
FY19 Budget and Fiscal Policy Guidelines Supporting Documentation
Dubuque
THE CITY OF
U� � All-America City
1 /
Masterpiece on the Mississippi �
200�•zolz•zois•zoi�
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Budget and Fiscal Policy Guidelines for Fiscal Year 2019
DATE: December 14, 2017
I am recommending adoption of the Fiscal Year 2019 Budget Policy Guidelines.
The budget guidelines are developed and adopted by City Council during the budgeting
process in order to provide targets or parameters within which the budget
recommendation will be formulated within the context of the City Council Goals and
Priorities established in August 2017. The final budget recommendation may not meet
all of these targets due to changing conditions and updated information during budget
preparation. To the extent the recommended budget varies from the guidelines, an
explanation will be provided in the printed budget document.
The Fiscal Year 2019 budget guidelines call for a 2.71% reduction in the property tax
rate, which would be a +2.0% property tax increase (+$15.11) for the average Dubuque
homeowner and a property tax decrease for commercial (-3.84%, -$126.05), industrial
(-3.46%, -$170.39) and multi-residential (-7.13%, -$143.72) properties.
Residential property was revalued by the City Assessor by neighborhood for the
January 1, 2017 property assessments, which impacts the Fiscal Year 2019 budget.
The average residential property value increased 7 percent. This revaluation of
residential property resulted in the taxable value for the average homeowner calculation
to increase from $130,357 to $139,493 (+7%).
The projected property tax asking and impact on the average residential property owner
($139,493) projected in these budget guidelines is as follows:
The City property tax rate projected in these budget guidelines is as follows:
Fiscal "City" % Chanqe
Year Tax Rate in Tax Rate
FY 2019 10.5972 -2.71%
FY 2020 10.7446 +1.39%
FY 2021 10.7408 -0.04%
FY 2022 10.6988 - 0.39%
FY 2023 10.9802 +2.63%
"City" Property % /$ Impact on Avg.
Year Tax Askinqs (000) % Increase Residential Propertv"
FY 2018 $25,872
FY 2019 $26,579 +2.7% +2.00%/ +$15.11
FY 2020 $27,124 +2.0% +1.39% / +$10.72
FY 2021 $27,288 +0.6% -0.04%/ -$0.27
FY 2022 $27,356 +0.3% -0.39%/ -$3.06
FY 2023 $28,254 +3.3% +2.63% / +$20.47
The recommended guideline is a 2.0 percent increase for the average residential
property owner assuming the Homestead Property Tax Credit is fully funded. In FY
2019, the City's taxable valuations increased 5.62°k or $133,319,392. If the City had
kept the FY 2018 tax rate of$10.8922, the City would have generated $1 ,452,141 in
additional property taxes. A one percent decrease in the tax rate will reduce property tax
askings approximately $274,960, so the 2.71 °k percent decrease in the tax rate reduced
property tax askings by $745,141 , resulting in a net increase of property tax askings of
$707,000 in FY 2019.
Dubuque is the SECOND LOWEST in the state for property tax rate. The highest
ranked city (Council Bluffs) is 68.98°k higher than Dubuque's rate, and the average is
44.30°k higher than Dubuque.
2
City Property Tax Rate Comparison for Eleven Largest lowa Cities
Rank City Tax Rate
11 Council Bluffs $17.91
10 Des Moines $17.86
9 Waterloo $17.60
8 Davenport $16.78
7 lowa City $16.33
6 Sioux City $15.77
5 Cedar Rapids $15.22
4 West Des Moines $12.78
3 Ankeny $12.29
2 Dubuque (FY 2019) $10.60
1 Ames $10.38
AVERAGE w/o Dubuque $15.29
These guidelines include $126,207 for recurring and $463,205 for non-recurring
improvement packages.
A significant cause of the FY 2019 property tax increase includes the following:
Significant issues impacting the FY 2019 budget include the following:
1 . Tax Increment Financing Subareas Retired
a. On June 30, 2018, three subareas of tax increment financing districts will
retire, Subarea B of Dubuque Industrial Center West and Subareas A and
B of Technology Park. This is consistent with major amendments to
Chapter 403 of the Code of lowa enacted in 1994 which changed
economic development tax increment requirements for areas established
after January 1 , 1995 and limited those districts to a twenty-year life.
There is $76,526,204 of incremental value created by these subareas that
will be redistributed to all taxing bodies in FY 2019. In FY 2019, the City of
Dubuque will receive approximately $579,000 in general fund tax revenue
from Subarea B of Dubuque Industrial Center West and $171 ,000 in
general fund tax revenue from Subareas A and B of Technology Park.
3
The following is a chart that shows the amount of tax revenue to be distributed to
each taxing body due to the subareas retiring:
Retiring TIF - New Tax Money to Taxing Bodies in
Fiscal Year 2019
$soo,000
$795,174
$800,000
$700,000
$600,000 $579,086
$500,000
$400,000 $337,744
$300,000 $234,752
$200,000 $770,958
$99,532
$100,000 . $58,478
$17,264 $9,854 _ $33,377
$• � —
Tech Park South-2019 DICW-Subarea B-2019
■DCSD ■City ■County ■NICC ■Other
2. State Funded Backfill on Commercial and Industrial Property Tax
a. Elements of the property tax reform passed by the lowa Legislature in
2013 have created a tremendous amount of uncertainty in the budget
process. While the State has committed to provide some funding for the
City revenue reductions caused by the decrease in taxable value for
commercial and industrial properties, key legislators have been quoted in
the media as casting doubt on the reimbursements continuing. In addition,
the state's previous budget shortfall and need to replenish general fund
reserves could cause legislators to reduce or eliminate the backfill in a
special legislative session. Beginning in FY 2019, it is assumed that the
State will eliminate the backfill over a five-year period.
4
The projected reduction of State backfill revenue to the general fund is as
follows:
State Backfill
Fiscal Year Reduction
2019 -$206,540
2020 -$206,540
2021 -$206,540
2022 -$206,540
2023 -$206,540
Total -$1 ,032,700
3. Gaming Revenue Reduction.
a. Gaming revenues generated from lease payments from the Dubuque
Racing Association (DRA) have barely stayed the same (+$1 ,906) based
on revised projections from the DRA. This follows a $159,046 decrease
from budget in FY 2018 and a $405,767 decrease from budget in FY
2017.
b. The Fiscal Year 2019 projections are based on five months of actual
experience and gross gaming revenues are down 2.1 °k. The Dubuque
gaming market was significantly impacted beginning in May 2016 when
Rhythm City Casino off Interstate 80 opened in Davenport. The DRA has
projected a 0.50°k increase in gross gaming revenue for Calendar Year
2018.
c. The State of Illinois passed a Video Gaming Act on July 13, 2009 which
legalized the use of Video Gaming Terminals in liquor licensed
establishments including bars, restaurants, truck stops and certain
fraternal and veterans' organizations. In the part of Illinois that impacts the
Dubuque market, the first year of operation of video gaming terminals
generated $1 million in revenue monthly. The use of video gaming
terminals has now grown to $7.5 million monthly for the five counties
closest to Dubuque and in a direct line with Rockford, IL, which has
caused a reduction to the gaming market in Dubuque. The Mystique
Casino and Diamond Jo Casino average monthly revenue is $9.5 million.
This is a similar impact as if approximately one and a half more casinos
combined were built half-way between Dubuque and Rockford. In
addition, the recession has also impacted the gaming market.
5
4. New multi-residential property class in Fiscal Year 2017.
a. Beginning in FY 2017 (July 1 , 2016), new State legislation created a new
property tax classification for rental properties called multi-residential,
which requires a rollback, or assessment limitations order, on multi-
residential property which will eventually equal the residential rollback.
Multi-residential property includes apartments with 3 or more units.
Rental properties of 2 units were already classified as residential
property. The State of lowa will not backfill property tax loss from the
rollback on multi-residential property. The rollback will be 86.25 percent
($331 ,239) in FY 2017, 82.50 percent ($472,127) in FY 2018, 78.75
percent ($564,913) in FY 2019, 75.00 percent ($670,862) in FY 2020,
71 .25 percent ($771 ,786) in FY 2021 , 67.50 percent ($904,711) in FY
2022, 63.75 percent ($1 ,008,719) in FY 2023 and will equal the
residential rollback in FY 2024 which is currently 55.621 percent
($1 ,205,292). This annual loss in tax revenue of$564,913 in FY 2019
and $1,205,292 from multi-residential property when fully
implemented in FY 2024 will not be backfilled by the State. From
Fiscal Year 2017 through Fiscal Year 2024 the City will lose $5,929,148
in total, meaning landlords will have paid that much less in property
taxes. The state did not require landlords to charge lower rents or to
make additional investment in their property.
5. Fiscal Year 2019.
The hiring freeze will end during June 30, 2019 (Fiscal Year 2019
budget). The positions that have been unfrozen will be further evaluated
to determine if they should be reinstated as part-time positions (25 hours
per week or 0.625 FTE), full-time positions, or supplemented with
contracted services.
In addition, at least four positions will be recommended to be eliminated, a
full-time Building Inspector II position (-1 .00 FTE), Water Plant Manager
position (-1 .00 FTE), Assistant Water & Resource Recovery Plant
Manager (-1 .00 FTE), and a full-time Parking Division Manager position (-
1 .00 FTE).
6
The positions being recommended to be unfrozen and the dates unfrozen in Fiscal
Year 2019 are as follows:
Date FY 2019
De artment Position T e Unfrozen Cost FTE
Human Rights Community Engagement Full-Time 03/01/2019 $27,261 1 .00
Coordinator
Human Rights TrainingM/orkforce Full-Time 03/01/2019 $27,261 1 .00
Develo ment
Park Assistant Horticulturalist Full-Time 03/01/2019 $22,959 1 .00
Park/Public Assistant Horticulturalist Full-Time 03/01/2019 $22,959 1 .00
Works
Park Maintenance Worker Full-time 03/01/2019 $23,427 1 .00
City Management Intern Part-Time 05/01/2019 $6,295 0.60
Manager's
Office
City Secretary Full-Time 05/01/2019 $9,681 1 .00
Manager's
Office
Information Help DeskTechnical Full-Time 05/01/2019 $10,507 1 .00
Services Su ort
Engineering Traffic Engineering Full-Time 03/01/2019 $29,867 1 .00
Assistant
Police Records Clerk Full-Time 01/01/2019 $29,489 1 .00
Total FY 2019 Cost $209,706 9.60
6. Debt Reduction
a. Outstanding G.O. debt (including tax increment debt, economic
development TIF rebates remaining payments and general fund lease
agreement) on June 30, 2018 will be $132,383,576 (63.33 percent of the
statutory debt limit) leaving an available debt capacity of$76,665,131
(36.67 percent). In FY 2017 the City was at 69.41°k of statutory debt limit,
so 63.33°k in FY 2018 is an 8.76 percent decrease in use of the statutory
debt limit.
The City also has debt that is not subject to the statutory debt limit. This
debt includes revenue bonds. Outstanding revenue bonds payable by
water, sewer and stormwater fees on June 30, 2018 will have a balance of
$140,744,200. The total City indebtedness as of June 30, 2018, is
projected to be $273,127,776. The total City indebtedness as of June 30,
2017, was $283,732,002. In FY 2018, the City will have a projected
$10,604,226 (-3.7%) less in debt. The Fiscal Year 2019 review of
Capital Improvement Budget requests is not yet complete, so there
are no Fiscal Year 2019 debt projections as of yet.
7
b. In August 2015, the Mayor and City Council adopted a debt redudion
strategy which targeted retiring more debt each year than was issued by
the City. The FY 2018 budget achieved that target throughout the 5-year
CIP and also substantially beat overall debt redudion targets over the next
five and ten-year periods. The FY 2019-2023 Capital Improvement
Program is currently being balanced and it is unknown at this time if the
statutory debt limit usage will be less than previously projected for the five-
year capital improvement program.
You can see that the Mayor and City Council have significantly impacted
the City's use of the statutory debt limit established by the State of lowa.
In Fiscal Year 2015, the City of Dubuque used 90% of the statutory debt
limit. In Fiscal Year 2018, the use of the statutory debt limit would be
63%, and by the end of the current recommended 5-Year Capital
Improvement Program (CIP) budget in Fiscal Year 2022, the City of
Dubuque would be at 43% of the statutory debt limit. Projections out 10
years to Fiscal Year 2027 show the City of Dubuque at 24% of the
statutory debt limit. This is an improvement on the debt reduction plan
adopted in August 2015, that first began implementation in Fiscal Year
2016.
Statutory Debt Limit Used
�oo^ra (as of June 30th)
90°/a �. 90°/a
9�% o �% &2%
$0% � gs�o o eo
0 4%
70% -� 69 0 72
60% 6 a—
66% � 66%
58,0
50% ��
46 io
40% 3qa
39°ro
30% 35 io
� o
27°0
20% .,. , . . . , , , , , , , ,2 �o
FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 FY 25 FY 26 FY 27
�FYSBRevisd ti�FY16Adopted
8
c. The following chart demonstrates that the relative position pertaining to
use of the statutory debt limit of the City of Dubuque for Fiscal Year 2018
to the other cities in lowa for Fiscal Year 2017 with a population over
50,000:
Legal Debt Limit Comparison for Eleven Largest lowa Cities
Amount of Debt Percentage of
Against 5% Legal legal debt limit
Rank Cit Debt Limit utilized
11 Des Moines $386,535,000 71 .20°k
10 Davenport $220,310,280 68.00°k
9 Dubuque (FY18) $132,383,576 63.33%
g Sioux City $132,145,000 g2.2g��
7 Ankeny $129,162,000 55.89°k
g Waterloo $106,013,702 55.82°k
5 Cedar Rapids $276,385,000 55.42°k
4 Ames $68,230,000 33.64°k
3 West Des Moines $114,130,000 32.79°k
2 lowa City $66,845,000 24.99°k
� Council Bluffs $48,723,175 2p.g2��
In March 2017, the projected use of the statutory debt limit as of June
30, 2018, was 64.54%. That projection is now reduced to 63.33%.
9
d. The total amount of debt for the City of Dubuque by the end of the FY
2018 5 Year Capital Improvement Program (CIP) budget would be $235.0
million (43% of the statutory debt limit) and the projection is to be at
$151.9 million (24% of statutory debt limit) within 10 years.
Total Debt
$320 53os.�
$302.3 (In Millions)
$300
$295.6 282.0 $279.9
$280 .
$283.7 $267.4
$260 $��z �-"a� .
$261.8 $244.3$241.4
$240 �
$22s.2
$220 $235.0
$219.6
$200 $203.5
$180
$160 $169.5\.
$140 $151.9
FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 FY 25 FY 26 FY 27
—�—FYSBFevised tFY16Adop[ed
Some highlights of the document are:
Sales tau funds are set by resolution to be used 50 percent in the General Fund
for property tax relief in FY 2019. Sales tax receipts are projected to decrease
2.3 percent under FY 2018 budget (-$103,966) and 1.00 percent over FY 2018
actual of $4,362,537 based on FY 2018 revised revenue estimate of $4,362,539
which includes a reconciliation payment from the State of lowa of $77,018
received in November 2017, increased 1.0 percent to calculate the FY 2019
budget, and then increased at an annual rate of 1.0 percent per year beginning in
FY 2020. The estimates received from the State of lowa show a 2.13% decrease
in the first hnro payments estimated for FY 2019 as compared to the first two
payments budgeted for FY 2018.
Building fees (Building Permits, Electrical Permits, Mechanical Permits and
Plumbing Permits) are anticipated to decrease from $667,180 in FY 2018 to
$629,547 in FY 2019 based on Fiscal Year 2018 building adivity to-date.
Natural Gas franchise fees have been projected to increase 5 percent over FY17
adual of $942,886 based on the projeded rate increases. Also, Eledric franchise
fees have been projeded to increase 12.5 percent over FY17 actual of
10
$3,530,308 based on the projected rate increases. The franchise fee revenues
are projected to increase at an annual rate of 4 percent per year from FY 2020
thru FY 2023.
The split of gaming revenues from taxes and the DRA lease (not distributions) in
FY 2019 is recommended to be changed to reflect a split of gaming taxes and
rents between operating and capital budgets of 96 percent operating and 4
percent capital. In FY 2018, the split of gaming taxes and rents between
operating and capital budgets was 97 percent operating and 3 percent capital. In
FY 2017, the split of gaming taxes and rents between operating and capital
budgets was 99 percent operating and 1 percent capital. In FY 2016, the split of
gaming taxes and rents between operating and capital budgets was 100 percent
operating and 0 percent capital. In FY 2015, the split of gaming taxes and rents
between operating and capital budgets was 97 percent operating and 3 percent
capital.
The Municipal Fire and Police Retirement System of lowa Board of Trustees City
contribution for Police and Fire retirement increased from 25.68 percent in FY
2018 to 26.02 percent in FY 2019 (general fund cost of$49,828). Also, the lowa
Public Employee Retirement System (IPERS) City contribution increased from
8.93 percent in FY 2018 to 9.44 percent in FY 2019 (general fund cost of
$82,269). The IPERS employee contribution increased from 5.95°k in FY 2018 to
6.29°k in FY 2019 (which did not affect the City's portion of the budget). The
IPERS rate is anticipated to increase 1 percent each succeeding year.
Consistent with the already approved collective bargaining agreement for
Teamsters Local Union 120, Teamsters Local Union 120 Bus Operators,
Dubuque Professional Firefighters Association, and International Union of
Operating Engineers, in FY 2019 there is a 1 .5°k employee wage increase for
represented and non-represented employees at a cost of$529,622 to the
General Fund.
The City portion of health insurance expense is projected to decrease from
$1 ,325 per month per contract to $1 ,108 per month per contract (based on 562
contracts) in FY 2019 (general fund savings of$986,278). The City of Dubuque is
self-insured, and actual expenses are paid each year with the City only having
stop-loss coverage for major claims. The City went out for bid for third party
administrator in FY 2017 and the estimated savings has resulted from the new
contract and actual claims paid. In addition, police officers and firefighters begin
paying an increased employee health care premium sharing from 10°k to 15°k on
July 1 , 2018. During FY 2018, the City went out for bid for third party
administrator for the prescription drug plan and there will be savings resulting
from the bid award. Estimates for FY 20-23 have been increased by 6.32 percent
per year.
11
Electrical energy expense is estimated to have a 12.5 percent increase over FY
2017 actual expense, then 2 percent per year beyond. Alliant Energy has
proposed rate increases over two years.
Natural gas expense is estimated to increase 5 percent over FY 2017 actual
expense, then 2 percent per year beyond.
Motor vehicle fuel is estimated to decrease 16.7 percent under FY 2018 budget (-
$104,636), then increase 2.0 percent per year beyond.
The increase in property tax support for Transit from FY 2018 to FY 2019 is
$71 ,031 , which reflects increased expense for replacement of onboard bus
computers ($95,643); increase in motor vehicle maintenance and diesel fuel
($88,108); increase in employee expense ($4,240); and increased FTA operating
revenue ($154,581).
The following is a ten-year history of the Transit subsidy:
Fiscal Year Amount °k Chan e
2019 Pro�ection $1 ,643,856 +4.5°k
2018 Bud et $1 ,572,825 +34.1 °k
2017Actual $1 ,172,885 +24.4°k
2016 Actual $942,752 -13.2°k
2015Actual $1 ,086,080 +30.2°k
2014 Actual $833,302 -20.2°k
2013Actual $1 ,044,171 +45.5°k
2012 Actual $717,611 -33.5°k
2011 Actual $1 ,078,726 -7.1 °k
2010Actual $1 ,161 ,393 -7.4°k
2009Actual $1 ,253,638 +17.2°k
The Enterprise Funds have contributed to the administrative overhead of the City
operation, but the General Fund has always carried most of the financial burden.
In FY 2013, a multi-year process to more equitably distribute those costs across
all funds was implemented. The remaining overhead recharge will be increased
each year until reaching the total overhead recharge percentage. In FY 2018, the
administrative overhead calculation administrative overhead formula was
modified. The modification removed Neighborhood Development, Economic
Development and Workforce Development from all recharges to utility funds. In
addition, the Landfill calculation was modified to remove GIS and Planning.
There was a reduction in metered water usage in FY 2014 and water and sewer
revenue bond covenants calculated on the accrual basis of accounting that have
required a reduction in both the water and sewer administrative overhead
recharges in FY 2016 and 2017. The sanitary sewer administrative overhead was
partially reinstated in FY 2017 and fully reinstated in FY 2018. The Water
12
administrative overhead was partially reinstated in FY 2018 at 6.12 percent of full
implementation.
In November 2017, City staff hosted an evening public budget input meeting at the City
Council Chambers in the Historic Federal Building. During November 2017, an online
survey was made available to the public to submit budget input.
By December 1 , 2017, a total of 43 community members shared their budget input. Out
of the 30 community participants, staff reached 17 individuals through the in-person
meetings and 26 participants took the online survey.
The input provided will be analyzed by City staff and evaluated by the City Manager for
inclusion in the Fiscal Year 2019 budget recommendation as deemed appropriate.
During Fiscal Year 2016, the City launched a web based open data platform which can
be found at www.dollarsandcents.cityofdubuque.org. The City of Dubuque's Open
Budget application provides an opportunity for the public to explore and visually interact
with Dubuque's operating and capital budgets. This application is in support of the five-
year organizational goal of a financially responsible city government and high-
performance organization and allows users with and without budget data experience, to
better understand expenditures in these categories.
During Fiscal Year 2017, an additional module was added to the open data platform
which included an interactive checkbook which will allow citizens to view the City's
payments to vendors. The final step will be adding performance measures to the open
data platform to allow citizens to view outcomes of the services provided by the City.
There will be six City Council special meetings prior to the adoption of the FY 2019
budget before the state mandated deadline of March 15, 2018.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
���� ��^t
Michael C. Van Milligen
MCVM:jml
Attachment
cc: Crenna Brumwell, City Attorney
Cori Burbach, Assistant City Manager
Teri Goodmann, Assistant City Manager
Jennifer Larson, Budget Director
13
Dubuque
THE CITY OF
U� � All-America City
1 /
Masterpiece on the Mississippi �
200�•zolz•zois•zoi�
TO: Michael C. Van Milligen, City Manager
FROM: Jennifer Larson, Budget Director
SUBJECT: Budget and Fiscal Policy Guidelines for Fiscal Year 2019
DATE: December 14, 2017
I am recommending adoption of the Fiscal Year 2019 Budget Policy Guidelines. The
guidelines reflect City Council direction given as part of the goal setting sessions.
The budget guidelines are developed and adopted by City Council during the budgeting
process in order to provide targets or parameters within which the budget
recommendation will be formulated within the context of the City Council Goals and
Priorities established in August 2017. The final budget presented by the City Manager
may not meet all of these targets due to changing conditions and updated information
during budget preparation, for example, the final property assessed valuations are not
available until January 2018. To the extent the recommended budget varies from the
guidelines, an explanation will be provided in the printed budget document. By State
law, the budget that begins July 1 , 2018 must be adopted by March 15, 2018.
The Fiscal Year 2019 budget guidelines call for a 2.71% reduction in the property tax
rate, which would be a +2.0% property tax increase (+$15.11) for the average Dubuque
homeowner and a property tax decrease for commercial (-3.84%, -$126.05), industrial
(-3.46%, -$170.39) and multi-residential (-7.13%, -$143.72) properties. Since 1989, the
average homeowner has averaged an annual increase in costs in the City portion of
their property taxes of 1 .39%, or about $8.34 a year. If the State had been fully funding
the Homestead Tax Credit, the increase would have averaged about $5.15 a year.
Residential property was revalued by the City Assessor by neighborhood for the
January 1, 2017 property assessments, which impacts the Fiscal Year 2019 budget.
The average residential property value increased 7 percent. This revaluation of
residential property resulted in the taxable value for the average homeowner calculation
to increase from $130,357 to $139,493 (+7%).
These guidelines include $126,207 for recurring and $463,205 for non-recurring
improvement packages.
Significant issues impacting the FY 2019 budget include the following:
1 . Tax Increment Financing Subareas Retired
a. On June 30, 2018, three subareas of tax increment financing districts will
retire, Subarea B of Dubuque Industrial Center West and Subareas A and
B of Technology Park. This is consistent with major amendments to
Chapter 403 of the Code of lowa enacted in 1994 which changed
economic development tax increment requirements for areas established
after January 1 , 1995 and limited those districts to a twenty-year life.
There is $76,526,204 of incremental value created by these subareas that
will be redistributed to all taxing bodies in FY 2019. In FY 2019, the City of
Dubuque will receive approximately $579,000 in general fund tax revenue
from Subarea B of Dubuque Industrial Center West and $171 ,000 in
general fund tax revenue from Subareas A and B of Technology Park.
The following is a chart that shows the amount of tax revenue to be distributed to
each taxing body due to the subareas retiring:
Retiring TIF - New Tax Money to Taxing Bodies in
Fiscal Year 2019
$900,000
$795,774
$80Q000
$700,000
$600,000 $579,086
$500,000
$400,000 $337,144
$300,000 $234,752
$200,000 $170,958
1 .$99,532— —
$100,000 $58,478
$17,264 $9,854 � �,377
$-
Tech Park South -2019 DICW-Subarea B -2079
■DCSD ■City ■County ■N ICC ■Other
2. State Funded Backfill on Commercial and Industrial Property Tax
a. Elements of the property tax reform passed by the lowa Legislature in
2013 have created a tremendous amount of uncertainty in the budget
process. While the State has committed to provide some funding for the
City revenue reductions caused by the decrease in taxable value for
commercial and industrial properties, key legislators have been quoted in
the media as casting doubt on the reimbursements continuing. In addition,
2
the state's previous budget shortfall and need to replenish general fund
reserves could cause legislators to reduce or eliminate the backfill in a
special legislative session. Beginning in FY 2019, it is assumed that the
State will eliminate the backfill over a five-year period.
The projected reduction of State backfill revenue to the general fund is as
follows:
State Backfill
Fiscal Year Reduction
2019 -$206,540
2020 -$206,540
2021 -$206,540
2022 -$206,540
2023 -$206,540
Total -$1 ,032,700
3. Gaming Revenue Reduction.
a. Gaming revenues generated from lease payments from the Dubuque
Racing Association (DRA) have barely stayed the same (+$1 ,906) based
on revised projections from the DRA. This follows a $159,046 decrease
from budget in FY 2018 and a $405,767 decrease from budget in FY
2017.
b. The Fiscal Year 2019 projections are based on five months of actual
experience and gross gaming revenues are down 2.1 °k. The Dubuque
gaming market was significantly impacted beginning in May 2016 when
Rhythm City Casino off Interstate 80 opened in Davenport. The DRA has
projected a 0.50°k increase in gross gaming revenue for Calendar Year
2018.
c. The State of Illinois passed a Video Gaming Act on July 13, 2009 which
legalized the use of Video Gaming Terminals in liquor licensed
establishments including bars, restaurants, truck stops and certain
fraternal and veterans' organizations. In the part of Illinois that impacts the
Dubuque market, the first year of operation of video gaming terminals
generated $1 million in revenue monthly. The use of video gaming
terminals has now grown to $7.5 million monthly for the five counties
closest to Dubuque and in a direct line with Rockford, IL, which has
caused a reduction to the gaming market in Dubuque. The Mystique
Casino and Diamond Jo Casino average monthly revenue is $9.5 million.
This is a similar impact as if approximately one and a half more casinos
combined were built half-way between Dubuque and Rockford. In
addition, the recession has also impacted the gaming market.
3
4. New multi-residential property class in Fiscal Year 2017.
a. Beginning in FY 2017 (July 1 , 2016), new State legislation created a new
property tax classification for rental properties called multi-residential,
which requires a rollback, or assessment limitations order, on multi-
residential property which will eventually equal the residential rollback.
Multi-residential property includes apartments with 3 or more units.
Rental properties of 2 units were already classified as residential
property. The State of lowa will not backfill property tax loss from the
rollback on multi-residential property. The rollback will be 86.25 percent
($331 ,239) in FY 2017, 82.50 percent ($472,127) in FY 2018, 78.75
percent ($564,913) in FY 2019, 75.00 percent ($670,862) in FY 2020,
71 .25 percent ($771 ,786) in FY 2021 , 67.50 percent ($904,711) in FY
2022, 63.75 percent ($1 ,008,719) in FY 2023 and will equal the
residential rollback in FY 2024 which is currently 55.621 percent
($1 ,205,292). This annual loss in tax revenue of$564,913 in FY 2019
and $1,205,292 from multi-residential property when fully
implemented in FY 2024 will not be backfilled by the State. From
Fiscal Year 2017 through Fiscal Year 2024 the City will lose $5,929,148
in total, meaning landlords will have paid that much less in property
taxes. The state did not require landlords to charge lower rents or to
make additional investment in their property.
5. Fiscal Year 2019.
a. The hiring freeze will end during June 30, 2019 (Fiscal Year 2019 budget).
The positions that have been unfrozen will be further evaluated to
determine if they should be reinstated as part-time positions (25 hours per
week or 0.625 FTE), full-time positions, or supplemented with contracted
seroices.
In addition, at least four positions will be recommended to be eliminated, a
full-time Building Inspector II position (-1 .00 FTE), Water Plant Manager
position (-1 .00 FTE), Assistant Water & Resource Recovery Plant
Manager (-1 .00 FTE), and a full-time Parking Division Manager position (-
1 .00 FTE).
4
The positions being recommended to be unfrozen and the dates unfrozen in Fiscal
Year 2019 are as follows:
Date FY 2019
De artment Position T e Unfrozen Cost FTE
Human Rights Community Engagement Full-Time 03/01/2019 $27,261 1 .00
Coordinator
Human Rights TrainingM/orkforce Full-Time 03/01/2019 $27,261 1 .00
Develo ment
Park Assistant Horticulturalist Full-Time 03/01/2019 $22,959 1 .00
Park/Public Assistant Horticulturalist Full-Time 03/01/2019 $22,959 1 .00
Works
Park Maintenance Worker Full-time 03/01/2019 $23,427 1 .00
City Management Intern Part-Time 05/01/2019 $6,295 0.60
Manager's
Office
City Secretary Full-Time 05/01/2019 $9,681 1 .00
Manager's
Office
Information Help DeskTechnical Full-Time 05/01/2019 $10,507 1 .00
Services Su ort
Engineering Traffic Engineering Full-Time 03/01/2019 $29,867 1 .00
Assistant
Police Records Clerk Full-Time 01/01/2019 $29,489 1 .00
Total FY 2019 Cost $209,706 9.60
6. Debt Reduction
a. Outstanding G.O. debt (including tax increment debt, economic
development projects TIF rebates remaining payments and general fund
lease agreement) on June 30, 2018 will be $132,383,576 (63.33 percent
of the statutory debt limit) leaving an available debt capacity of
$76,665,131 (36.67 percent). In FY 2017 the City was at 69.41 °k of
statutory debt limit, so 63.33°k in FY 2018 is an 8.76 percent decrease in
use of the statutory debt limit.
The City also has debt that is not subject to the statutory debt limit. This
debt includes revenue bonds. Outstanding revenue bonds payable by
water, sewer and stormwater fees on June 30, 2018 will have a balance
of$140,744,200. The total City indebtedness as of June 30, 2018, is
projected to be $273,127,776. The total City indebtedness as of June 30,
2017, was $283,732,002. In FY 2018, the City will have a projected
$10,604,226 (-3.7%) less in debt. The Fiscal Year 2019 review of
Capital Improvement Budget requests is not yet complete, so there
are no Fiscal Year 2019 debt projections as of yet.
5
Some highlights of the document are:
Sales tax funds are set by resolution to be used 50 percent in the General Fund
for property tax relief in FY 2019. Sales tax receipts are projected to decrease
2.3 percent under FY 2018 budget (-$103,966) and 1 .00 percent over FY 2018
actual of$4,362,537 based on FY 2018 revised revenue estimate of$4,362,539
which includes a reconciliation payment from the State of lowa of$77,018
received in November 2017, increased 1 .0 percent to calculate the FY 2019
budget, and then increased at an annual rate of 1 .0 percent per year beginning in
FY 2020. The estimates received from the State of lowa show a 2.13°k decrease
in the first two payments estimated for FY 2019 as compared to the first two
payments budgeted for FY 2018.
Building fees (Building Permits, Electrical Permits, Mechanical Permits and
Plumbing Permits) are anticipated to decrease from $667,180 in FY 2018 to
$629,547 in FY 2019 based on Fiscal Year 2018 building activity to-date.
Natural Gas franchise fees have been projected to increase 5 percent over FY17
actual of$942,886 based on the projected rate increases. Also, Electric franchise
fees have been projected to increase 12.5 percent over FY17 actual of
$3,530,308 based on the projected rate increases. The franchise fee revenues
are projected to increase at an annual rate of 4 percent per year from FY 2020
thru FY 2023.
The split of gaming revenues from taxes and the DRA lease (not distributions) in
FY 2019 is recommended to be changed to reflect a split of gaming taxes and
rents between operating and capital budgets of 96 percent operating and 4
percent capital. In FY 2018, the split of gaming taxes and rents between
operating and capital budgets was 97 percent operating and 3 percent capital. In
FY 2017, the split of gaming taxes and rents between operating and capital
budgets was 99 percent operating and 1 percent capital. In FY 2016, the split of
gaming taxes and rents between operating and capital budgets was 100 percent
operating and 0 percent capital. In FY 2015, the split of gaming taxes and rents
between operating and capital budgets was 97 percent operating and 3 percent
capital.
The Municipal Fire and Police Retirement System of lowa Board of Trustees City
contribution for Police and Fire retirement increased from 25.68 percent in FY
2018 to 26.02 percent in FY 2019 (general fund cost of$49,828). Also, the lowa
Public Employee Retirement System (IPERS) City contribution increased from
8.93 percent in FY 2018 to 9.44 percent in FY 2019 (general fund cost of
$82,269). The IPERS employee contribution increased from 5.95°k in FY 2018 to
6.29°k in FY 2019 (which did not affect the City's portion of the budget). The
IPERS rate is anticipated to increase 1 percent each succeeding year.
Consistent with the already approved collective bargaining agreement for
Teamsters Local Union 120, Teamsters Local Union 120 Bus Operators,
Dubuque Professional Firefighters Association, and International Union of
Operating Engineers, in FY 2019 there is a 1 .5°k employee wage increase for
6
represented and non-represented employees at a cost of$529,622 to the
General Fund.
The City portion of health insurance expense is projected to decrease from
$1 ,325 per month per contract to $1 ,108 per month per contract (based on 562
contracts) in FY 2019 (general fund savings of$986,278). The City of Dubuque is
self-insured, and actual expenses are paid each year with the City only having
stop-loss coverage for major claims. The City went out for bid for third party
administrator in FY 2017 and the estimated savings has resulted from the new
contract and actual claims paid. In addition, police officers and firefighters begin
paying an increased employee health care premium sharing from 10°k to 15°k on
July 1 , 2018. During FY 2018, the City went out for bid for third party
administrator for the prescription drug plan and there will be savings resulting
from the bid award. Estimates for FY 20-23 have been increased by 6.32 percent
per year.
Electrical energy expense is estimated to have a 12.5 percent increase over FY
2017 actual expense, then 2 percent per year beyond. Alliant Energy has
proposed rate increases over two years.
Natural gas expense is estimated to increase 5 percent over FY 2017 actual
expense, then 2 percent per year beyond.
Motor vehicle fuel is estimated to decrease 16.7 percent under FY 2018 budget (-
$104,636), then increase 2.0 percent per year beyond.
The increase in property tax support for Transit from FY 2018 to FY 2019 is
$71 ,031 , which reflects increased expense for replacement of onboard bus
computers ($95,643); increase in motor vehicle maintenance and diesel fuel
($88,108); increase in employee expense ($4,240); and increased FTA operating
revenue ($154,581).
The following is a ten-year history of the Transit subsidy:
Fiscal Year Amount °k Chan e
2019 Pro�ection $1 ,643,856 +4.5°k
2018 Bud et $1 ,572,825 +34.1 °k
2017Actual $1 ,172,885 +24.4°k
2016 Actual $942,752 -13.2°k
2015Actual $1 ,086,080 +30.2°k
2014 Actual $833,302 -20.2°k
2013Actual $1 ,044,171 +45.5°k
2012 Actual $717,611 -33.5°k
2011 Actual $1 ,078,726 -7.1 °k
2010Actual $1 ,161 ,393 -7.4°k
2009Actual $1 ,253,638 +17.2°k
The Enterprise Funds have contributed to the administrative overhead of the City
operation, but the General Fund has always carried most of the financial burden.
7
In FY 2013, a multi-year process to more equitably distribute those costs across
all funds was implemented. The remaining overhead recharge will be increased
each year until reaching the total overhead recharge percentage. In FY 2018, the
administrative overhead calculation administrative overhead formula was
modified. The modification removed Neighborhood Development, Economic
Development and Workforce Development from all recharges to utility funds. In
addition, the Landfill calculation was modified to remove GIS and Planning.
There was a reduction in metered water usage in FY 2014 and water and sewer
revenue bond covenants calculated on the accrual basis of accounting that have
required a reduction in both the water and sewer administrative overhead
recharges in FY 2016 and 2017. The sanitary sewer administrative overhead was
partially reinstated in FY 2017 and fully reinstated in FY 2018. The Water
administrative overhead was partially reinstated in FY 2018 at 6.12 percent of full
implementation.
In November 2017, City staff hosted an evening public budget input meeting at the City
Council Chambers in the Historic Federal Building. During November 2017, an online
survey was made available to the public to submit budget input.
By December 1 , 2017, a total of 43 community members shared their budget input. Out
of the 30 community participants, staff reached 17 individuals through the in-person
meetings and 26 participants took the online survey.
The input provided will be analyzed by City staff and evaluated by the City Manager for
inclusion in the Fiscal Year 2019 budget recommendation as deemed appropriate.
During Fiscal Year 2016, the City launched a web based open data platform which can
be found at www.dollarsandcents.cityofdubuque.org. The City of Dubuque's Open
Budget application provides an opportunity for the public to explore and visually interact
with Dubuque's operating and capital budgets. This application is in support of the five-
year organizational goal of a financially responsible city government and high-
performance organization and allows users with and without budget data experience, to
better understand expenditures in these categories.
During Fiscal Year 2017, an additional module was added to the open data platform
which included an interactive checkbook which will allow citizens to view the City's
payments to vendors. The final step will be adding performance measures to the open
data platform to allow citizens to view outcomes of the services provided by the City.
There will be six City Council special meetings prior to the adoption of the FY 2019
budget before the state mandated deadline of March 15, 2018.
JML
Attachment
cc: Crenna Brumwell, City Attorney
Cori Burbach, Assistant City Manager
Teri Goodmann, Assistant City Manager
8
BUDGET AND FISCAL POLICY GUIDELINES
FOR FY 2019
OPERATING BUDGET GUIDELINES
The Policy Guidelines are developed and adopted by City Council during the budgeting
process to provide targets or parameters within which the budget recommendation will be
formulated within the context of the City Council Goals and Priorities established in August
2017. The final budget presented by the City Manager may not meet all of these targets due
to changing conditions and updated information during budget preparation. To the extent the
recommended budget varies from the guidelines, an explanation will be provided in the
printed budget document. By State law, the budget that begins July 1 , 2018 must be adopted
by March 15, 2018.
A. CITIZEN PARTICIPATION
Guideline
To encourage citizen participation in the budget process, City Council will hold multiple
special meetings in addition to the budget public hearing for the purpose of reviewing
the budget recommendations for each City department and requesting public input
following each departmental review.
The budget will be prepared in such a way as to maximize its understanding by
citizens. A copy of the recommended budget documents will be made available with
the City Clerk and in the government documents section at the Carnegie Stout Public
Library. The budget can be reviewed on the City's website at www.citvofdubuque.orq
and copies of the budget on CD will be available upon request.
Opportunities were provided for citizen input prior to formulation of the City Manager's
recommended budget and will be provided again prior to final Council adoption, both
at City Council budget special meetings and at the required budget public hearing.
In November 2017, City staff hosted an evening public budget input meeting at the
City Council Chambers in the Historic Federal Building. During November 2017, an
online survey was made available to the public to submit budget input.
By December 1 , 2017, a total of 43 community members shared their budget input.
Out of the 30 community participants, staff reached 17 individuals through the in-
person meetings and 26 participants took the online survey.
The input provided will be analyzed by City staff and evaluated by the City Manager
for inclusion in the Fiscal Year 2019 budget recommendation as deemed appropriate.
During Fiscal Year 2016, the City launched a web based open data platform which
can be found at www.dollarsandcents.citvofdubuque.orq. The City of Dubuque's Open
Budget application provides an opportunity for the public to explore and visually
interact with Dubuque's operating and capital budgets. This application is in support of
the five-year organizational goal of a financially responsible city government and high-
FY 2019 Policy Guidelines
Page 2
performance organization and allows users with and without budget data experience,
to better understand expenditures in these categories.
During Fiscal Year 2017, an additional module was added to the open data platform
which included an interactive checkbook which will allow citizens to view the City's
payments to vendors. The final step will be adding performance measures to the open
data platform to allow citizens to view outcomes of the services provided by the City.
B. SERVICE OBJECTIVES, ALTERNATIVE FUNDING AND SERVICE LEVELS
Guideline
The budget will identify specific objectives to be accomplished during the budget year,
July 1 through June 30, for each activity of the City government. The objectives serve
as a commitment to the citizens from the City Council and City organization and
identify the level of service which the citizen can anticipate.
C. TWO TYPES OF BUDGET DOCUMENTS TO BE PREPARED
Guideline
The recommended City operating budget for Fiscal Year 2019 will consist of a
Recommended City Council Policy Budget that is a collection of information that has
been prepared for department hearings and a Citizens Guide to the Recommended
FY 2019 Budget. These documents will be available in early February.
The Recommended City Council Policy Budget will include the following information
for each department: Highlights of Prior Year's Accomplishments and Future Year's
Initiatives, a financial summary, a summary of improvement packages requested and
recommended, significant line items, capital improvement projects in the current year
and those recommended over the next five years, organizational chart for larger
departments, major goals, objectives and performance measures for each cost center
within that department, and line item expense and revenue financial summaries. The
purpose of these documents is to focus attention on policy decisions involving what
services the City government will provide, who will pay for them and the implications of
such decisions. They will emphasize objectives, accomplishments and associated
costs for the budget being recommended by the City Manager.
The Citizens Guide section of the Recommended FY 2019 Budget will be a composite
of tables, financial summaries and explanations, operating and capital budget
messages and the adopted City Council Budget Policy Guidelines. Through graphs,
charts and tables it presents financial summaries, which provide an overview of the
total operating and capital budgets.
FY 2019 Policy Guidelines
Page 3
D. BALANCED BUDGET
Guideline
The City will adopt a balanced budget in which expenditures will not be allowed to
exceed reasonable estimated resources. The City will pay for all current expenditures
with current revenues.
E. BALANCE BETWEEN SERVICES AND TAX BURDEN
Guideline
The budget should reflect a balance between services provided and the burden of
paying for those services. It is not possible or desirable for the City to provide all the
services requested by individual citizens. The City must consider the ability of citizens
to pay for seroices in setting seroice levels and priorities.
F. MAINTENANCE OF EXISTING SERVICES
Guideline
To the extent possible with the financial resources available, the City should attempt to
maintain the existing level of services. As often as reasonably possible, each service
should be tested against the following questions: (a) Is this service truly necessary?
(b) Should the City provide it? (c) What level of service should be provided? (d) Is
there a better, less costly way to provide it? (e) What is its priority compared to other
services? (� What is the level of demand for the service? (g) Should this service be
supported by property tax, user fees, or a combination?
G. IMPROVED PRODUCTIVITY
Guideline
Efforts should continue to stretch the value of each tax dollar and the City services
that it buys through improved efficiency and effectiveness. Using innovative and
imaginative approaches to old tasks, reducing duplication of service effort, creative
application of new technologies and more effective organizational arrangements are
approaches to this challenge.
FY 2019 Policy Guidelines
Page 4
H. USE OF VOLUNTEERS
Discussion
Out of the respect for citizens that must pay taxes, the City must seek to expand
resources by continuing to get citizens directly involved in supplementing service
delivery capability. Citizens are encouraged to assume tasks previously performed or
provided by City government. This may require the City to change the approach to
service delivery, such as, providing organizational skills, training, coordinating staff,
office space, meeting space, equipment, supplies and materials, but not directly
providing the more expensive full-time staff. Activities where citizens can continue to
take an active role include: Library, Recreation, Parks, Five Flags Center, and Police.
Guideline
In the future, the maintenance of City services may well depend on volunteer citizen
staffs. In FY 2019, efforts shall continue to identify and implement areas of City
government where (a) volunteers can be utilized to supplement City employees to
maintain service levels (i.e., Library, Recreation, Parks, Police) or (b) services can be
"spun off' to non-government groups and sponsors, usually with some corresponding
financial support.
I. RESTRICTIONS ON INITIATING NEW SERVICE
Guideline
No new service will be considered except (a) when additional revenue or offsetting
reduction in expenditures is proposed or (b) when mandated by state or federal law.
J. SALARY INCREASES OVER THE AMOUNT BUDGETED TO BE FINANCED FROM
BUDGET REDUCTIONS IN THE DEPARTMENTIS) OF THE BENEFITING
EMPLOYEES
Discussion
The recommended budget will include salary amounts for all City employees.
However, experience shows that budgeted amounts are often exceeded by fact finder
and/or arbitrator awards. Such "neutrals" do not consider the overall financial
capabilities and needs of the community and the fact that the budget is a carefully
balanced and fragile thing. Such awards have caused budgets to be overdrawn,
needed budgeted expenditures to be deferred, working balances to be expended and,
in general, have reduced the financial condition or health of the City government. To
protect the financial integrity of the City government, it is recommended that the cost
of any salary adjustment over the amount provided in the budget (that is, not financed
in the budget) come from reductions in the budget of the department(s) of the
FY 2019 Policy Guidelines
Page 5
benefiting employees. The City has five collective bargaining agreements. The current
contracts expire as follows:
Contract
Expiration
Bargaining Unit Date
Teamsters Local Union No 120 June 30, 2022
Teamsters Local Union No 120 Bus Operators June 30, 2022
Dubuque Professional Firefighters Association June 30, 2022
Dubuque Police Protective Association June 30, 2018
International Union of Operating Engineers June 30, 2022
Guideline
Salary increases over the amount budgeted for salaries shall be financed from
operating budget reductions in the department(s) of the benefiting employees.
K. THE AFFORDABLE CARE ACT
Guideline
The Affordable Care Act is a health care law that was signed into law on March 23,
2010 that aims to improve the current health care system by increasing access to
health coverage for Americans and introducing new protections for people who have
health insurance.
Employers with more than 50 full-time equivalent employees must provide affordable
"minimum essential coverage" to full-time equivalent employees. The definition of a
full-time equivalent employee under the Affordable Care Act is any employee that
works 30 hours per week or more on average over a twelve-month period (1 ,660
hours or more). There is a twelve-month monitoring period for part-time employees. If
a part-time employee meets or exceeds 30 hours per week on average during that
twelve-month period, the City must provide health insurance.
On July 2, 2013, the Treasury Department announced that it will postpone the
employer shared responsibility mandate for one year. Based on the initial
requirements of the Affordable Health Care Act, the Fiscal Year 2014 budget provided
for insurance coverage effective February 1 , 2014 for several part-time employees. In
addition, the Fiscal Year 2014 budget provided for making several part-time positions
full-time on June 1 , 2014.
Due to the delay of the employer shared responsibility mandate for the Affordable
Health Care Act, the City delayed providing insurance coverage for eligible part-time
FY 2019 Policy Guidelines
Page 6
employees and delayed making eligible part-time positions full-time until January 1 ,
2015.
The Standard Measurement Period was delayed from January 1 , 2013 through
December 31 , 2013 to December 1 , 2013 through November 30, 2014 with the first
provision of health insurance date being January 1 , 2015.
The Affordable Care Act increased employee expense in Fiscal Year 2016 by
$290,493 and $271 ,605 in Fiscal Year 2017, with incremental increases each year
thereafter.
L. HIRING FREEZE
Guideline
The hiring freeze will end during Fiscal Year 2019 budget. The positions that have
been unfrozen will be further evaluated to determine if they should be reinstated as
part-time positions (25 hours per week or 0.625 FTE), full-time positions, or
supplemented with contracted services.
In addition, at least four positions will be recommended to be eliminated, a full-time
Building Inspector II position (-1 .00 FTE), Water Plant Manager position (-1 .00 FTE),
Assistant Water & Resource Recovery Plant Manager (-1 .00 FTE), and a full-time
Parking Division Manager position (-1 .00 FTE).
FY 2019 Policy Guidelines
Page 7
The positions being recommended to be unfrozen and the dates unfrozen in Fiscal
Year 2019 are as follows:
Date FY 2019
De artment Position T e Unfrozen Cost FTE
Human Rights Community Engagement Full-Time 03/01/2019 $27,261 1 .00
Coordinator
Human Rights TrainingM/orkforce Full-Time 03/01/2019 $27,261 1 .00
Develo ment
Park Assistant Horticulturalist Full-Time 03/01/2019 $22,959 1 .00
Park/Public Assistant Horticulturalist Full-Time 03/01/2019 $22,959 1 .00
Works
Park Maintenance Worker Full-time 03/01/2019 $23,427 1 .00
City Manager's Management Intern Part-Time 05/01/2019 $6,295 0.60
Office
City Manager's Secretary Full-Time 05/01/2019 $9,681 1 .00
Office
Information HelpDeskTechnical Full-Time 05/01/2019 $10,507 1 .00
Services Su ort
Engineering Traffic Engineering Full-Time 03/01/2019 $29,867 1 .00
Assistant
Police Records Clerk Full-Time 01/01/2019 $29,489 1 .00
Total FY 2019 Cost $209,706 9.60
M. BALANCE BETWEEN CAPITAL AND OPERATING EXPENDITURES
Guideline
The provision of City services in the most economical and effective manner requires a
balance between capital (with emphasis upon replacement of equipment and capital
projects involving maintenance and reconstruction) and operating expenditures. This
balance should be reflected in the budget each year.
N. USER CHARGES
Discussion
User charges or fees represent a significant portion of the income generated to
support the operating budget. It is the policy that user charges or fees be established
when possible so those who benefit from a service or activity also help pay for it. This
is easy in some cases and municipal utility funds have been established for certain
activities, which are intended to be self-supporting. Examples of utility funds include
Water User Fund, Sewer User Fund, Stormwater User Fund, Refuse Collection Fund,
and Parking Fund. In other cases, a user charge is made after the Council
determines to what extent an activity is to be self-supporting. Examples of this
FY 2019 Policy Guidelines
Page 8
arrangement are fees for swimming, golf and recreation programs and certain
inspection programs, like rental inspections and Building Department licensing.
The Stormwater User Fund is fully funded by stormwater use fees. The General Fund
will continue to provide funding for the stormwater fee subsidies which provide a 50°k
subsidy for the stormwater fee charged to property tax exempt properties and low-to-
moderate income residents and a 75°k subsidy for residential farms.
Guideline
User fees and charges should be established where possible so that those who utilize
or directly benefit from a service, activity or facility also help pay for it.
User fees and charges for each utility fund (Water User Fund, Sewer User Fund,
Stormwater User Fund, Refuse Collection Fund, and Parking Fund) shall be set at a
level that fully supports the total direct and indirect cost of the activity, including the
cost of annual depreciation of capital assets, the administrative overhead to support
the system and financing for future capital improvement projects.
The following chart shows activities with user charges and to what extent the activity is
self-supporting:
FY 2016 FY 2017 FY 2018 FY 2019
ACTUAL ACTUAL ADOPTED RECOMM'D
DEPARTMENT/DIVISION PERCENT PERCENT PERCENT PERCENT
Leisure Services Department
Recreation Division
Adult Athletics 80.3 85.6 72.6 74.3
McAleece Concessions 141 .0 113.9 133.9 140.9
Youth Sports 17.7 21 .3 18.0 17.4
Therapeutic & After School 8.2 5.4 7.6 8.2
Recreation Classes 91 .1 90.3 85.8 81 .9
Swimming 64.4 59.1 63.9 66.0
Golf Surplus to Golf Devel' Fund 97.0 98.8 100.6 104.6
Port of Dubuque Marina 64.5 64.1 72.5 74.4
Park Division 16.7 16.7 16.7 16.9
Library Department excf Gift Trusts 5.0 5.0 3.8 3.2
AirportDepartmentw/abateddebt 80.9 82.2 82.4 84.1
Building Services Division
Inspections 68.9 84.3 86.3 74.8
Planning Services Department 36.7 43.3 41 .4 43.4
Health Services Department
Food/Environmentallnsp. 57.6 57.6 52.1 53.1
Animal Control 75.1 57.7 61 .6 61 .7
Housing Services Department
General Housing Inspection 93.7 86.6 93.1 87.4
Federal Building Maint. 85.2 80.2 52.1 78.5
FY 2019 Policy Guidelines
Page 9
O. ADMINISTRATIVE OVERHEAD RECHARGES
Discussion
While the Enterprise Funds have contributed to administrative overhead, the majority
has been paid by the General Fund. This is not reasonable and unduly impacts
property taxes causing a subsidy to the Enterprise Funds. Prior to FY 2013, the
administrative overhead was charged by computing the operating expense budget for
each enterprise fund and dividing the result by the total City-wide operating expense
budget which resulted in the following percentages of administrative overhead
charged to each enterprise fund: Water 5.32°k; Sanitary Sewer 4.84°k; Stormwater
0.55°k; Solid Waste 2.83°k; Parking 1 .71°k; and Landfill 2.71 °k. The adopted Fiscal
Year 2013 budget changed the administrative overhead to be more evenly split
between the general fund and enterprise funds and is phased in over many years.
The Fiscal Year 2018 administrative overhead formula was recommended modified.
The modification removed Neighborhood Development, Economic Development and
Workforce Development from all recharges to utility funds. In addition, the Landfill
calculation is modified to remove GIS and Planning.
In Fiscal Year 2019, the general fund is recommended to support $3,575,736 in
administrative overhead using the recharge method adopted in Fiscal Year 2013 and
revised in Fiscal Year 2018.
Guideline
Beginning in FY 2013, additional overhead recharges to the utility funds is being
phased in over several years. Engineering administrative and project management
expenses that are not recharged to capital projects will be split evenly between the
Water, Sewer, Stormwater and General Funds. Finance accounting expenses and all
other administrative departments such as Planning, City Clerk, Legal Services and
City Manager's Office will be split evenly between Water, Sewer, Stormwater, Refuse
Collection and General Funds, with overhead costs being shared by the Landfill and
Parking. This will be fully implemented over time.
Beginning in Fiscal Year 2018, Neighborhood Development, Economic Development
and Workforce Development expenses will not be recharged to utility funds. In
addition, the Landfill will not be recharged GIS and Planning expenses.
When the overhead recharges are fully implemented, the split of the cost of
administrative overhead excluding Engineering will be as follows:
FY 2019 Policy Guidelines
Page 10
Water 16.67°k Refuse 16.67°k General Fund 16.67°k
Sewer 16.67°k Parking 8.33°k
Stormwater 16.67°k Landfill 8.32°k
Engineering Administration and Engineering Project Management will be split evenly
between General Fund (25°k), Water (25°k), Sewer (25°k) and Stormwater (25°k).
P. OUTSIDE FUNDING
Discussion
The purpose of this guideline is to establish the policy that the City should
aggressively pursue outside funding to assist in financing its operating and capital
budgets. However, the long-term commitments required for such funding must be
carefully evaluated before any agreements are made. Commitments to assume an
ongoing increased level of service or level of funding once the outside funding ends
must be minimized.
Guideline
To minimize the property tax burden, the City of Dubuque will make every effort to
obtain federal, state and private funding to assist in financing its operating and capital
budgets. However, commitments to guarantee a level of service or level of funding
after the outside funding ends shall be minimized. Also, any matching funds required
for capital grants will be identified.
Q. GENERAL FUND OPERATING RESERVE OR WORKING BALANCE
Discussion
An operating reserve or working balance is an amount of cash, which must be carried
into a fiscal year to pay operating costs until tax money, or other anticipated revenue
comes in. Without a working balance, there would not be sufficient cash in the fund to
meet its obligations and money would have to be borrowed. Working balances are
not available for funding a budget; they are required for cash flow (i.e., to be able to
pay bills before taxes are collected).
Moody's Investor Service recommends a factor of 20 percent for "AA" rated cities. In
May 2015, Moody's Investors Service downgraded Dubuque's general obligation bond
rating from Aa2 to Aa3 and removed the negative outlook. This followed two bond
rating upgrades in 2003 and 2010, and one bond rating downgrade in 2014. In
announcing the bond rating downgrade, Moody's noted that the City's general fund
balance/reserve declines. Dubuque's general fund reserve declined from 21 percent of
general fund revenues in fiscal year 2013 to 14.9 percent in FY 2014. This decline in
the general fund reserve was due to planned capital expenditures of$4.1 million in FY
2014. Dubuque's general fund reserve remained unchanged from 14.9 percent of
general fund revenues in FY 2014 to 14.9 percent in FY 2015. Dubuque's general
FY 2019 Policy Guidelines
Page 11
fund reserve increased from 14.9 percent of general fund revenues in FY 2015 to 17.5
percent in FY 2016 due to capital projects not expended by the end of the fiscal year
and an increase in general fund revenue in FY 2016. Dubuque's general fund reserve
increased from 17.5 percent in FY 2016 to 19.75 percent in FY 2017 due to capital
projects not expended by the end of the fiscal year and additional contributions made
to the general fund reserve.
The general fund reserve is projected to decrease to 18.23 percent of general fund
revenues in FY 2018 due to spending some of the balance for planned capital projects
that were not completed in FY 2017.
The City of Dubuque has historically adopted a general fund reserve policy as part of
the Fiscal and Budget Policy Guidelines which is adopted each year as part of the
budget process. During Fiscal Year 2013, the City adopted a formal Fund Reserve
Policy. Per the policy for the General Fund, the City will maintain a minimum fund
balance of at least 10 percent of the sum of (a) annual operating expenditures not
including interfund transfers in the General Fund less (b) the amounts levied in the
Trust and Agency fund and the Tort Liability Fund ("Net General Fund Operating
CosY'). The City may increase the minimum fund balance by a portion of any operating
surplus above the carryover balance of$200,000 that remains in the General Fund at
the close of each fiscal year. The City may continue to add to the General Fund
minimum balance when additional funds are available until 20 percent of Net General
Fund Operating Cost is reached.
After all planned expenditures and an additional $1 ,050,000 added to fund balance in
FY 2018, the City of Dubuque will have a general fund reserve of 18.03 percent of
general fund expenses as computed by the methodology adopted in the City's general
fund reserve policy or 18.23 percent of general fund revenues as computed by the
methodology used by Moody's Investors Service. The general fund reserve fund
balance is projected to be $8,805,048 on June 30, 2018.
Guideline
The guideline of the City of Dubuque is to increase the General Fund working balance
or operating reserve by a minimum of$1 ,050,000 in FY 2019. In subsequent years,
the City should add to the operating reserve until 20°k is maintained consistently. In
Fiscal Year 2017, the City had projected reaching this consistent and sustainable 20°k
reserve level in Fiscal Year 2022. Now this projection is this level will be reached in
Fiscal Year 2020, two years ahead of schedule.
FY 2019 Policy Guidelines
Page 12
General Fund Reserve Projections:
FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023
Contribution $600 000 $1 050 000 $1 050 000 $1 000 000 $100 000 $100 000 $100 000
City's Spendable
General Fund Cash $14,254,184 $12,914,253 $13,964,253 $14,964,253 $15,064,253 $15,164,253 $15,264,253
Reserve Fund
Balance
% of Projected 19.75% 18.03% 19.53% 20.84% 20.92% 21.40% 21.48%
Revenue Mood 's
R. USE OF UNANTICIPATED, UN-OBLIGATED, NONRECURRING WCOME
Discussion
Sometimes income is received that was not anticipated and was not budgeted. Often
this money is not recurring and reflects something, which happened on a one-time
basis to generate the "windfall".
Nonrecurring income must not be spent for recurring expenses. To do so causes a
funding shortfall the next budget year before even starting budget preparation.
Nonrecurring expenditures would include capital improvements and equipment
purchases.
Guideline
Nonrecurring un-obligated income shall be spent only for nonrecurring expenses.
Capital improvement projects and major equipment purchases tend to be nonrecurring
expenditures.
S. USE OF "UNENCUMBERED FUND BALANCES"
Discussion
Historically a budget is not spent 100°k by the end of the year and a small
unencumbered balance remains on June 30th. In addition, income sometimes
exceeds revenue estimates or there are cost savings resulting in some unanticipated
balances at the end of the year. These amounts of un-obligated, year-end balances
are in turn "carried over" into the new fiscal year to help finance it.
The FY 2018 General Fund budget, which went into effect July 1 , anticipated a
"carryover balance" of$200,000 or approximately 2 percent of the General Fund. For
multi-year budget planning purposes, these guidelines assume a carryover balance of
$200,000 in FY 2019 through FY 2023.
FY 2019 Policy Guidelines
Page 13
Guideline
The available carryover General Fund balance to help finance the budget and to
reduce the demand for increased taxation shall be anticipated not to exceed $200,000
for FY 2019 and beyond through the budget planning period. Any amount over that
shall be programmed in the next budget cycle as part of the capital improvement
budgeting process.
T. PROPERTY TAX DISCUSSION
1. Assumptions - Resources
a. Unencumbered funds or cash balances of$200,000 will be available in FY
2019 and each succeeding year to support the operating budget.
b. Sales tax funds are set by resolution to be used 50 percent in the General Fund
for property tax relief in FY 2019. Sales tax receipts are projected to decrease
2.3 percent under FY 2018 budget (-$103,966) and 1 .00 percent over FY 2018
actual of$4,362,537 based on FY 2018 revised revenue estimate of
$4,362,539 which includes a reconciliation payment from the State of lowa of
$77,018 received in November 2017, increased 1 .0 percent to calculate the FY
2019 budget, and then increased at an annual rate of 1 .0 percent per year
beginning in FY 2020. The estimates received from the State of lowa show a
2.13°k decrease in the first two payments estimated for FY 2019 as compared
to the first two payments budgeted for FY 2018. The following chart shows the
past four years of actual sales tax funds and projected FY 2019 for the General
Fund:
Sales Tax Funds FY15 FY16 FY17 FY18 FY19
PY Quarter 4 Hal $658,915 $818,018 $748,170 $748,108 $732,174
Quarter1 $1 ,014,069 $1 ,102,922 $1 ,112,755 $1 ,080,294 $1 ,096,499
Quarter2 $1 ,030,040 $1 ,136,167 $1 ,146,296 $1 ,109,978 $1 ,126,628
Quarter 3 $926,237 $960,705 $960,626 $939,923 $954,021
Quarter 4 Hal $340,685 $374,085 $374,054 $366,087 $371 ,578
Reconciliation $251 ,076 $255,657 $103,185 $77,018 $81 ,639
Total $4,221 ,022 $4,647,554 $4,445,085 $4,321 ,408 $4,362,539
% Chan e +2.60% +10.10% �.36% -2.78% +1.0%
c. Hotel/motel tax receipts are projected to increase 6.02 percent ($134,296) over
FY 2018 budget and 3.0 percent over FY 2018 re-estimated receipts of
$2,304,745 based on an estimated increase of 4.45 percent from FY 2017
actual to FY 2018 re-estimated, and then increase at an annual rate of 3
percent per year.
FY 2019 Policy Guidelines
Page 14
d. Federal Transportation Administration (FTA) transit operating assistance is
anticipated to increase 13.16 percent or $154,581 from FY 2018 budget based
on the revised FY 2018 budget received from the FTA.
e. Miscellaneous revenue has been estimated at 2 percent growth per year over
budgeted FY 2018.
f. Building fees (Building Permits, Electrical Permits, Mechanical Permits and
Plumbing Permits) are anticipated to decrease from $667,180 in FY 2018 to
$629,547 in FY 2019 based on Fiscal Year 2018 building activity to-date.
g. Gaming revenues generated from lease payments from the Dubuque Racing
Association (DRA) have barely stayed the same (+$1 ,906) based on revised
projections from the DRA. This follows a $159,046 decrease from budget in FY
2018 and a $405,767 decrease from budget in FY 2017.
The following is a ten-year history of DRA lease payments to the City of
Dubuque:
$ Chanqe °k Chanqe
FY 2019 $4,901 ,176 estimate +$1 ,906 +0.04°k
FY 2018 $4,876,792 revised budget +$3g,660 +0.82°k
FY 2018 $4,899,270 budget +$62,138 +1 .28°k
FY 2017 $4,837,132 actual -$195,083 -3.88°k
FY 2016 $5,032,215 actual -$155,297 -2.99°k
FY 2015 $5,187,512 actual -$158,104 -2.96°k
FY 2014 $5,345,616 actual -$655,577 -10.92°k
FY 2013 $6,001 ,193 actual +$3,305 +0.06°k
FY 2012 $5,997,888 actual -$345,242 -5.44°k
FY 2011 $6,343,130 actual -$477,153 -7.00°k
FY 2010 $6,820,283 actual -$1 ,586,647 -18.87°k
FY 2009 $8,406,930 actual -$1 ,346,480 -13.80°k
The Diamond Jo fixed payment remains at $500,000 based on the revised
parking agreement.
h. The split of gaming revenues from taxes and the DRA lease (not
distributions) in FY 2019 is recommended to be changed to reflect a split of
gaming taxes and rents between operating and capital budgets of 96 percent
operating and 4 percent capital. In FY 2018, the split of gaming taxes and
rents between operating and capital budgets was 97 percent operating and 3
percent capital. In FY 2017, the split of gaming taxes and rents between
operating and capital budgets was 99 percent operating and 1 percent
capital. In FY 2016, the split of gaming taxes and rents between operating
and capital budgets was 100 percent operating and 0 percent capital. In FY
2015, the split of gaming taxes and rents between operating and capital
budgets was 97 percent operating and 3 percent capital. When practical in
FY 2019 Policy Guidelines
Page 15
future years, additional revenues will be moved to the capital budget from
the operating budget.
i. The Diamond Jo Patio lease ($25,000 in FY 2019) and the Diamond Jo
parking privileges ($500,000 in FY 2019) have not been included in the split
with gaming revenues. This revenue is allocated to the operating budget.
j. The residential rollback factor will decrease from 56.939 percent to 55.621
percent or a 2.32 percent decrease for FY 2019. The rollback has been
estimated to remain the same from Fiscal Years 2020 thru 2023.
The percent of growth from revaluation is to be the same for agricultural and
residential property; therefore, if one of these classes has less than 3°k
growth for a year, the other class is limited to the same percent of growth. A
balance is maintained between the two classes by ensuring that they
increase from revaluation at the same rate. In FY 2019, agricultural property
had less growth than residential property which caused the rollback factor to
decrease.
Residential property was revalued by the City Assessor by neighborhood for
the January 1 , 2017 property assessments, which impacts the Fiscal Year
2019 budget. The average residential property value increased 7
percent. This revaluation of residential property resulted in the taxable
value for the average homeowner calculation to increase from $130,357
to $139,493 (+7%).
The decrease in the residential rollback factor decreases the value that each
residence is taxed on. This increased taxable value for the average
homeowner ($130,367 total assessed value in FY 2018 and $139,493 in
2019) results in more taxes to be paid per $1 ,000 of assessed value. In an
effort to keep property taxes low to the average homeowner, the City
calculates the property tax impact to the average residential property based
on the residential rollback factor and property tax rate. In a year that the
residential rollback factor increases, the City recommends a lower property
tax rate than what would be recommended had the rollback factor remained
the same.
The residential rollback in Fiscal Year 1987 was 75.6481 percent as
compared to 55.621 percent in Fiscal Year 2019. The rollback percent had
steadily decreased since FY 1987, which has resulted in less taxable value
and an increase in the City's tax rate. However, that trend began reversing in
FY 2009 when the rollback reached a low of 44.0803 percent. If the rollback
had remained at 75.6481 percent in FY 2018, the City's tax rate would have
been $8.06 per $1 ,000 of assessed value instead of$10.89 in FY 2018.
FY 2019 Policy Guidelines
Page 16
k. On June 30, 2018, three subareas of tax increment financing districts will
retire, Subarea B of Dubuque Industrial Center West and Subareas A and B
of Technology Park. This is consistent with major amendments to Chapter
403 of the Code of lowa enacted in 1994 which changed economic
development tax increment requirements for areas established after January
1 , 1995 and limited those districts to a twenty-year life. There is $76,526,204
of incremental value created by these subareas that will be redistributed to
all taxing bodies in FY 2019. In FY 2019, the City of Dubuque will receive
approximately $579,000 in general fund tax revenue from Subarea B of
Dubuque Industrial Center West and $171,000 in general fund tax
revenue from Subareas A and B of Technology Park.
The following is a chart that shows the amount of tax revenue to be
distributed to each taxing body due to the subareas retiring:
Retiring TIF - New Tax Money to Taxing Bodies in
Fiscal Year 2019
$900,000
$795,174
$800,000
$700,000
$600,000 $579,086
$500,000
$400,000 $337,144
$300,000 $234,752
$200,000 $770,958
$99,532
$700,000 $58,478
$77,264 $9,854 . _ —377
$• � —
Tech Park South-2019 DICW - Subarea B-2019
■DCSD ■City ■County ■N ICC ■Other
I. There was not an equalization order for commercial or industrial property in
Fiscal Year 2019. The lowa Department of Revenue is responsible for
"equalizing" assessments every two years. Also, equalization occurs on an
assessing jurisdiction basis, not on a statewide basis.
Commercial and Industrial taxpayers previously were taxed at 100 percent of
assessed value; however due to legislative changes in FY 2013, a 95
percent rollback factor was applied in FY 2015 and a 90 percent rollback
factor will be applied in FY 2016 and beyond. The State of lowa will backfill
the loss in property tax revenue from the rollback and the backfill 100
percent in FY 2015 through FY 2017 and then the backfill will be capped at
FY 2019 Policy Guidelines
Page 17
the FY 2017 level in FY 2018 and beyond. The FY 2018 State backfill for
property tax loss is estimated to be $1,032,700.
Elements of the property tax reform passed by the lowa Legislature in 2013
have created a tremendous amount of uncertainty in the budget process.
While the State has committed to provide some funding for the City revenue
reductions caused by the decrease in taxable value for commercial and
industrial properties, key legislators have been quoted in the media as
casting doubt on the reimbursements continuing. In addition, the state's
previous budget shortfall and need to replenish general fund reserves could
cause legislators to reduce or eliminate the backfill in a special legislative
session. Beginning in FY 2019, it is assumed that the State will eliminate
the backfill over a five-year period.
The projected reduction of State backfill revenue to the general fund is as
fol lows:
State Backfill
Fiscal Year Reduction
2019 -$206,540
2020 -$206,540
2021 -$206,540
2022 -$206,540
2023 -$206,540
Total -$1 ,032,700
FY 2015 was the first year that commercial, industrial and railroad properties
were eligible for a Business Property Tax Credit. The Business Property Tax
Credit will be deducted from the property taxes owed and the credit is funded
by the State of lowa. Eligible businesses must file an application with the
Assessor's office to receive the credit with a deadline of January 15, 2018 for
applications to be considered for FY 2019. The calculation of the credit is
dependent on the number of applications that were received and approved
statewide versus the amount that was appropriated for the fiscal year, the
levy rates for each parcel and the difference in the commercial/industrial
rollback compared to residential rollback. In FY 2015, the lowa Legislature
has appropriated $50 million for FY15; $100 million for FY16; and $125
million for FY17 and thereafter. The estimated initial amount of value that will
be used to compute the credit in FY 2015 is $33,000, FY 2016 is $183,220,
FY 2017 is $255,857, and FY 2018 is $266,340. The basic formula is the
value multiplied by the difference in rollbacks of commercial and residential
property then divided by one thousand and then multiplied by the
corresponding levy rate. The average commercial and industrial properties
($432,475 Commercial / $599,500 Industrial) will receive a Business
Property Tax Credit from the State of lowa for the City share of their property
taxes of$148 in FY 2015, $693 in FY 2016, $982 in FY 2017, and $959 in
FY 2018. Projected at $951 in FY 2019.
FY 2019 Policy Guidelines
Page 18
m. Beginning in FY 2017 (July 1 , 2016), new State legislation created a new
property tax classification for rental properties called multi-residential, which
requires a rollback, or assessment limitations order, on multi-residential
property which will eventually equal the residential rollback. Multi-residential
property includes apartments with 3 or more units. Rental properties of 2
units were already classified as residential property. The State of lowa will
not backfill property tax loss from the rollback on multi-residential property.
The rollback will be 86.25 percent ($331 ,239) in FY 2017, 82.50 percent
($472,127) in FY 2018, 78.75 percent ($564,913) in FY 2019, 75.00 percent
($670,862) in FY 2020, 71 .25 percent ($771 ,786) in FY 2021 , 67.50 percent
($904,711) in FY 2022, 63.75 percent ($1 ,008,719) in FY 2023 and will equal
the residential rollback in FY 2024 which is currently 55.621 percent
($1 ,205,292). This annual loss in tax revenue of$564,913 in FY 2019 and
$1,205,292 from multi-residential property when fully implemented in
FY 2024 will not be backfilled by the State. From Fiscal Year 2017
through Fiscal Year 2024 the City will lose $5,929,148 in total, meaning
landlords will have paid that much less in property taxes. The state did not
require landlords to charge lower rents or to make additional investment in
their property.
In addition, the State of lowa eliminated the Machinery and Equipment Tax
Replacement in FY 2003 (-$200,000); Personal Property Tax Replacement
in FY 2004 (-$350,000); Municipal Assistance in FY 2004 (-$300,000); Liquor
Sales Revenue in FY 2004 (-$250,000); and Bank Franchise Tax in FY 2005
(-$145,000). The combination of the decreased residential rollback, State
funding cuts and increased expenses has forced the City's tax rate to
increase since 1987 when the citizens passed a referendum to establish a
one percent local option sales tax with 50°k of the revenue gong to property
tax relief.
n. FY 2019 will reflect an increase of 5.65 percent in taxable value for
residential; an increase of 0.01 percent in taxable value for commercial; an
increase of 2.37 percent in taxable value for industrial; and a decrease of
1 .71 percent in taxable value for multi-residential. Overall taxable value
increased 5.62 percent after deducting Tax Increment Financing values.
Assessed valuations were increased 2 percent per year beyond FY 2020.
o. Natural Gas franchise fees have been projected to increase 5 percent over
FY17 actual of$942,886 based on the projected rate increases. Also,
Electric franchise fees have been projected to increase 12.5 percent over
FY17 actual of$3,530,308 based on the projected rate increases. The
franchise fee revenues are projected to increase at an annual rate of 4
percent per year from FY 2020 thru FY 2023.
The franchise fee charged on gas and electric bills increased from 3°k to 5°k,
the legal maximum, on June 1 , 2015.
FY 2019 Policy Guidelines
Page 19
p. For purposes of budget projections only, it is assumed that City property
taxes will continue to increase at a rate necessary to meet additional
requirements over resources beyond FY 2019.
q. FY 2019 reflects the eleventh year that payment in lieu of taxes is charged to
the Water and Sanitary Sewer funds for Police and Fire Protection. In FY
2019, the Sanitary Sewer fund is charged 0.43°k of building value and the
Water fund is charged 0.62°k of building value, for payment in lieu of taxes
for Police and Fire Protection. This revenue is reflected in the General Fund
and is used for general property tax relief.
r. Riverfront property lease revenue is projected to increase by $170,297 in FY
2019 due to the new Hodge lease payment effective November 2018.
2. Assumptions — Requirements
a. The Municipal Fire and Police Retirement System of lowa Board of Trustees
City contribution for Police and Fire retirement increased from 25.68 percent
in FY 2018 to 26.02 percent in FY 2019 (general fund cost of$49,828). Also,
the lowa Public Employee Retirement System (IPERS) City contribution
increased from 8.93 percent in FY 2018 to 9.44 percent in FY 2019 (general
fund cost of$82,269). The IPERS employee contribution increased from
5.95°k in FY 2018 to 6.29°k in FY 2019 (which did not affect the City's
portion of the budget). The IPERS rate is anticipated to increase 1 percent
each succeeding year.
b. Consistent with the already approved collective bargaining agreements for
Teamsters Local Union 120, Teamsters Local Union 120 Bus Operators,
Dubuque Professional Firefighters Association, and International Union of
Operating Engineers, in FY 2019 there is a 1 .5°k employee wage increase
for represented and non-represented employees at a cost of$529,622 to the
General Fund.
c. The City portion of health insurance expense is projected to decrease from
$1 ,325 per month per contract to $1 ,108 per month per contract (based on
562 contracts) in FY 2019 (general fund savings of$986,278). The City of
Dubuque is self-insured, and actual expenses are paid each year with the
City only having stop-loss coverage for major claims. The City went out for
bid for third party administrator in FY 2017 and the estimated savings has
resulted from the new contract and actual claims paid. In addition, police
officers and firefighters begin paying an increased employee health care
premium sharing from 10°k to 15°k on July 1 , 2018. During FY 2018, the City
went out for bid for third party administrator for the prescription drug plan and
there will be savings resulting from the bid award. Estimates for FY 20-23
have been increased by 6.32 percent per year.
FY 2019 Policy Guidelines
Page 20
d. FY 2013 was the first year that eligible retirees with at least twenty years of
continuous service in a full-time position or retired as a result of a disability
and are eligible for pension payments from the pension system can receive
payment of their sick leave balance with a maximum payment of one-
hundred twenty sick days payable bi-weekly over a five-year period. The sick
leave payout expense budget in the General Fund in FY 2018 was $215,984
as compared to FY 2019 of$164,649 based on qualifying employees
officially giving notice of retirement.
e. General operating supplies and services are estimated to increase 2 percent
over actual in FY 2017. A 2 percent increase is estimated in succeeding
years.
f. Electrical energy expense is estimated to have a 12.5 percent increase over
FY 2017 actual expense, then 2 percent per year beyond. Alliant Energy has
proposed rate increases over two years.
g. Natural gas expense is estimated to increase 5 percent over FY 2017 actual
expense, then 2 percent per year beyond.
h. The Dubuque Area Convention and Visitors Bureau contract will continue at
50 percent of actual hotel/motel tax receipts.
i. Equipment costs for FY 2019 are estimated to decrease 7.16 percent under
FY 2017 budget, then remain constant per year beyond.
j. Debt service is estimated based on the tax-supported unabated General
Obligation bond sale for fire truck and franchise fee litigation settlement.
k. Unemployment expense in the General Fund decreased from $69,078 in FY
2018 to $67,502 in FY 2019 based on past years' actual experience.
I. Motor vehicle fuel is estimated to decrease 16.7 percent under FY 2018
budget (-$104,636), then increase 2.0 percent per year beyond.
m. Motor vehicle maintenance is estimated to decrease 1 .59 percent under FY
2018 budget based on FY 2017 actual, then increase 2.0 percent per year
and beyond.
n. The increase in property tax support for Transit from FY 2018 to FY 2019 is
$71 ,031 , which reflects increased expense for replacement of onboard bus
computers ($95,643); increase in motor vehicle maintenance and diesel fuel
($88,108); increase in employee expense ($4,240); and increased FTA
operating revenue ($154,581).
FY 2019 Policy Guidelines
Page 21
The following is a ten-year history of the Transit subsidy:
Fiscal Year Amount °k Chan e
2019 Pro�ection $1 ,643,856 +4.5°k
2018 Bud et $1 ,572,825 +34.1 °k
2017 Actual $1 ,172,885 +24.4°k
2016 Actual $942,752 -13.2°k
2015 Actual $1 ,086,080 +30.2°k
2014 Actual $833,302 -20.2°k
2013 Actual $1 ,044,171 +45.5°k
2012 Actual $717,611 -33.5°k
2011 Actual $1 ,078,726 -7.1 °k
2010 Actual $1 ,161 ,393 -7.4°k
2009 Actual $1 ,253,638 +17.2°k
2008 Actual $1 ,070,053 +15.9°k
o. Postage rates for FY 2019 are estimated to increase 5.78 percent over FY
2017 actual expense due to postage inventory levels at year-end. A 2.0
percent increase is estimated in succeeding years.
p. Insurance costs are estimated to change as follows: Workers Compensation
is decreasing 15.55 percent based on the lowa Workers Compensation law
changed effective July 1 , 2017. This law change reduced the amount of
liability employers incur for certain work-related injuries; General Liability is
decreasing 6.52 percent due to a new contract; damage claims is increasing
5.63 percent, and Property insurance is decreasing 2.81 percent.
q. The Section 8 Housing subsidy payment from the General Fund is estimated
to increase $152,989 in FY 2019. The amount of Family Self Sufficiency
Housing Assistance Payment revenue was inadvertently included twice in
the Housing Assistance Payment revenue line in prior years. In FY 2011 ,
the City approved reducing the number of allowed Section 8 Housing
Vouchers from 1 ,060 to 900 vouchers. This reduction in vouchers was
estimated to reduce Section 8 administrative fees from HUD by $100,000
per year. However, in the transition, the number of vouchers dropped to 803
vouchers. HUD has based the Section 8 administrative fees for FY 2019 on
the lower number of vouchers held in FY 2018 which has decreased the
amount of revenue received by the Section 8 program in FY 2019. The City
is in the process of increasing the Section 8 Housing Vouchers back to
1 ,072.
r. The Cable TV Fund no longer funds Police and Fire public education,
Information Services, Health Services, Building Services, Legal Services,
and City Manager's Office due to reduced revenues from the cable
franchise. This is due to Mediacom's conversion from a Dubuque franchise
to a state franchise in October 2009 which changed the timing and
calculation of the franchise fee payments.
FY 2019 Policy Guidelines
Page 22
s. Greater Dubuque Development Corporation support of$780,613 is budgeted
to be paid mostly from Dubuque Industrial Center Land Sales in FY 2019,
with a $100,000 increase in FY 2018 to implement the True North strategy
paid from the Greater powntown TIF. In FY 2020 and beyond Greater
Dubuque Development Corporation will be paid from the Greater powntown
TIF and Dubuque Industrial Center West land sales.
t. The Enterprise Funds have contributed to the administrative overhead of the
City operation, but the General Fund has always carried most of the financial
burden. In FY 2013, a multi-year process to more equitably distribute those
costs across all funds was implemented. The remaining overhead recharge
will be increased each year until reaching the total overhead recharge
percentage. In FY 2018, the administrative overhead calculation
administrative overhead formula was modified. The modification removed
Neighborhood Development, Economic Development and Workforce
Development from all recharges to utility funds. In addition, the Landfill
calculation was modified to remove GIS and Planning. There was a
reduction in metered water usage in FY 2014 and water and sewer revenue
bond covenants calculated on the accrual basis of accounting that have
required a reduction in both the water and sewer administrative overhead
recharges in FY 2016 and 2017. The sanitary sewer administrative overhead
was partially reinstated in FY 2017 and fully reinstated in FY 2018. The
Water administrative overhead was partially reinstated in FY 2018 at 6.12
percent of full implementation.
PROPERTY TAX IMPACT
The recommended Fiscal Year 2019 property tax rate decrease of 2.71°k will have the
following impact:
% $
FY 2019 Chan e Chan e
Pro ert Tax Rate $10.5972 -2.71 °k -$0.295
Avera e Residential Pa ment $770.81 +2.00°k +$15.11
Avera e Commercial Pa ment $3,154.39 -3.84°k -$126.05
Avera e Industrial Pro ert $4,747.39 -3.46°k -$170.39
Avera e Multi-Residential Pro ert $1 ,871 .76 -7.13°k -$143.72
FY 2019 Policy Guidelines
Page 23
Impact on Tax Askings and Average Residential Property
The following is a historical City tax rate comparison:
Fiscal "City" % Chanqe
Year Tax Rate in Tax Rate
FY 1987 14.5819
FY 1988 13.9500 -4.33°�
FY 1989 11.8007 -15.41°�
FY 1990 11.6891 -0.95°�
FY 1991 12.2660 4.94°�
FY 1992 12.7741 4.14°�
FY 1993 12.4989 -2.15°�
FY 1994 12.6059 0.86°�
FY 1995 11.7821 -6.54°�
FY 1996 11.7821 0.00°�
FY 1997 11.3815 -3.40°�
FY 1998 11.4011 0.17°�
FY 1999 11.0734 -2.87°�
FY 2000 10.7160 -3.23°�
FY 2001 11.0671 3.28°�
FY 2002 10.7608 -2.77°�
FY 2003 10.2120 -5.10°�
FY 2004 10.2730 0.60°�
FY 2005 10.0720 -1.96°�
FY 2006 9.6991 -3.70°�
FY 2007 9.9803 2.90°�
FY 2008 10.3169 3.37°�
FY 2009 9.9690 -3.37°�
FY 2010 9.8577 -1.12°�
FY 2011 10.0274 1.72°�
FY 2012 10.4511 4.22°�
FY 2013 10.7848 3.19°�
FY 2014 11.0259 2.23°�
FY 2015 11.0259 0°�
FY 2016 11.0259 0°�
FY 2017 11.1674 1.28°�
FY 2018 10.8922 -2.46°�
Average FY 1987-2018 -0.85°�
PROJECTION
Fiscal "City" % Chanqe
Year Tax Rate in Tax Rate
FY 2019 10.5972 -2.71°�
FY 2020 10.7446 +1.39°�
FY 2021 10.7408 -0.04°�
FY 2022 10.6988 - 0.39°�
FY 2023 10.9802 +2.63°�
FY 2019 Policy Guidelines
Page 24
IMPACT ON AVERAGE RESIDENTIAL PROPERTY - EXAMPLE
ACTUAL CHANGEIF
CITY TAX PERCENT HTC 100% DOLLAR
ACTUAL - PAST HISTORY CALCULATION CHANGE FUNDED CHANGE
FY 1989 "City" Property Tax $ 453.99 -11.40°� - $ 58.39
FY 1990 "City" Property Tax $ 449.94 - 0.89°� - $ 4.04
FY 1991 "City" Property Tax' $ 466.92 + 3.77°� +$ 16.98
FY 1992 "City" Property Tax $ 483.63 + 3.58°� +$ 16.71
FY 1993 "City" Property Tax' $ 508.73 + 5.19°� +$ 25.10
FY 1994 "City" Property Tax $ 510.40 + 0.30°� +$ 1.51
FY 1995 "City" Property Tax' $ 522.65 + 2.43°� +$ 12.41
FY 1996 "City" Property Tax $ 518.10 - 0.87°� - $ 4.54
FY 1997 "City" Property Tax' $ 515.91 - 0.42°� - $ 2.19
FY 1998 "City" Property Tax $ 512.25 - 0.71°� - $ 3.66
FY 1999 "City" Property Tax' $ 512.25 - 0.00°� $ 0.00
FY 2000 "City" Property Tax $ 511.38 - 0.17°� - $ 0.87
FY 2001 "City" Property Tax $ 511.38 0.00°� $ 0.00
FY 2002 "City" Property Tax $ 511.38 0.00°� $ 0.00
FY 2003 "City" Property Tax' $ 485.79 - 5.00°� -$ 25.58
FY 2004 "City" Property Tax $ 485.79 0.00°� $ 0.00
FY 2004 With Homestead Adj. $ 493.26 + 1.54°� +$ 7.46
FY 2005 "City" Property Tax' $ 485.93 + 0.03°� +$ 0.14
FY 2005 With Homestead Adj.' $ 495.21 + 0.40°� +$ 1.95
FY 2006 "City" Property Tax (1) $ 494.27 + 1.72°� +$ 8.34
FY 2006 With Homestead Adj. (1) $ 504.62 + 1.90°� +$ 9.41
FY 2007 "City" Property Tax'(2) $ 485.79 - 1.72°� -$ 8.48
FY 2007 With Homestead Adj.' $ 496.93 - 1.52°� -$ 7.69
FY 2008 "City" Property Tax $ 496.93 0.00°� $ 0.00
FY 2008 With Homestead Adj. $ 510.45 + 2.72°� +$13.52
FY 2009 "City" Property Tax $ 524.53 + 2.76°� +$14.08
FY 2009 With Homestead Adj. $ 538.07 + 5.41°� +$27.62
FY 2010 "City" Property Tax $ 538.07 + 0.00°� +$ 0.00
FY 2010 With Homestead Adj. $ 550.97 + 2.40°� +$12.90
FY 2011 "City" Property Tax $ 564.59 + 2.47°� +$13.62
FY 2011 With Homestead Adj. (3) $ 582.10 + 5.65°� +$31.13
FY 2012 "Cit�!' Property $ 611.19 + 5.00°� +$2g.09
FY 2012 With Homestead Adj. (3) $ 629.78 + 8.19°� +$47.68
FY 2013 "Cit�!' Property $ 661.25 + 5.00°� +$31.47
FY 2013 With Homestead Adj. (3) $ 672.76 + 6.82°� +$42.98
FY 2014 "Cit�!' Property $ 705.71 + 4.90°� +$32.95
FY 2015 "Cit�!' Property $ 728.48 + 3.23°� +$22.77
FY 2016 "Cit�!' Property $ 747.65 + 2.63°� +$19.17
FY 2017 "Cit�!' Property $ 755.70 + 1.08°� +$ 8.05
FY 2018 "Cit�!' Property $ 755.70 + 0.00°� +$ 0.00
Average FY 1989-FY 2018 with Homestead Adj. + 1.37°� + $ 8.11
Average FY 1989-FY 2018 without Homestead Adj. + 0.76°� + $ 4.82
FY 2019 Policy Guidelines
Page 25
PROJECTION CITY TAX PERCENT DOLLAR
CALCULATION CHANGE CHANGE
FY 2019 "Cit�!' Property Tax' $ 770.81 +2.00°� +$15.11
FY 2020 "Cit�!' Property Tax $ 781.53 +1.39°� +$10.72
FY 2021 "Cit�!' Property Tax' $ 781.26 -0.04°� -$ 0.27
FY 2022 "Cit�!' Property Tax $ 778.20 -0.39°� -$ 3.06
FY 2023 "Cit�!' Property Tax $ 798.66 +2.63°� +$20.47
' Denotes year of State-issued equalization orders.
^ Impact to the average homeowner if the State funds the Homestead Property Tax Credit at 62°�.
(1) The FY 2006 property tax calculation considers the 6.2°� valuation increase for the average residential
homeowner as determined bythe reappraisal.
(2) Offsets the impact of the State reduced Homestead Property Tax Credit in FY 2005 & 2006.
(3) The City adopted a budget in FY 2011 and 2012 that provided no increase to the average homeowner.
The State of lowa underfunded the Homestead Property Tax Credit in both years costing the average
homeowner an additional $18.59 in FY 2012 and $11.51 in FY 2013. This provided no additional
revenues to the City, as this money would have come to the City from the State if they appropriated the
proper amount of funds.
State of lowa Homestead Property Tax Credit History
" 2002-2003 � Funded 100°� of the Homestead Property Tax Credit
" 2003-2004 � Funded 85°� of the Homestead Property Tax Credit
" 2004-2005 � Funded 81°� of the Homestead Property Tax Credit
" 2005-2006 � Funded 78°� of the Homestead Property Tax Credit
" 2006-2007 � Funded 77°� of the Homestead Property Tax Credit
" 2007-2008 � Funded 73°� of the Homestead Property Tax Credit
" 2008-2009 � Funded 72°� of the Homestead Property Tax Credit
" 2009-2010 � Funded 72°� of the Homestead Property Tax Credit
" 2010-2011 � Funded 64°� of the Homestead Property Tax Credit
" 2011-2012 � Funded 62°� of the Homestead Property Tax Credit
" 2012-2013 � Funded 78°� of the Homestead Property Tax Credit
2013-2018 � Funded 100°� of the Homestead Property Tax Credit
The Homestead Property Tax Credit was established by the state legislature to reduce the amount
of property tax collected. The intent of the credit was to be a form of tax relief and provide an
incentive for home ownership. The State Homestead Property Tax Credit works by discounting the
tax collected on the first $4,850 of a property's taxable value. This has no impact on what the City
receives from property tax collections, but provides tax relief for the average homeowner.
Beginning FY 2004, the State of lowa did not fully fund the State Homestead Property Tax Credit
resulting in the average homeowner paying the unfunded portion. Again, this has no impact on
what the City receives, however as a result has caused the average homeowner to pay more taxes.
FY 2019 Policy Guidelines
Page 26
IMPACT ON COMMERCIAL PROPERTY - EXAMPLE
CITY TAX PERCENT DOLLAR
ACTUAL - PAST HISTORY CALCULATION CHANGE CHANGE
FY 1989 "Cit�!' Property Tax $2,106.42 -15.43°� -$ 384.19
FY 1990 "Cit�!' Property Tax $2,086.50 - .95°� - $ 19.92
FY 1991 "Cit�!' Property Tax' $2,189.48 + 4.94°� +$ 102.98
FY 1992 "Cit�!' Property Tax $2,280.18 + 4.14°� +$ 90.70
FY 1993 "Cit�!' Property Tax' $2,231.05 - 2.15°� -$ 49.13
FY 1994 "Cit�!' Property Tax $2,250.15 + 0.86°� +$ 19.10
FY 1995 "Cit�!' Property Tax' $2,439.60 + 8.42°� +$ 189.45
FY 1996 "Cit�!' Property Tax $2,439.60 + 0.00°� +$ 0.00
FY 1997 "Cit�!' Property Tax' $2,659.36 + g.01°� +$ 219.76
FY 1998 "Cit�!' Property Tax $2,738.43 + 2.g7°� +$ 79.07
FY 1999 "Cit�!' Property Tax' $2,952.03 + 7.80°� +$ 213.60
FY 2000 "Cit�!' Property Tax $2,934.21 - 0.60°� -$ 17.82
FY 2001 "Cit�!' Property Tax $2,993.00 + 2.01°� +$ 58.86
FY 2002 "Cit�!' Property Tax $2,910.25 - 2.77°� -$ 82.84
FY 2003 "Cit�!' Property Tax' $3,186.27 + g.48°� +$ 276.03
FY 2004 "Cit�!' Property Tax $3,278.41 + 2.8g°� +$ 92.15
FY 2005 "Cit�!' Property Tax' $3,349.90 + 2.18°� +$ 71.48
FY 2006 "Cit�!' Property Tax (1) $3,152.52 - 5.89°� -$ 197.38
FY 2007 "Cit�!' Property Tax' $3,538.03 +12.23°� +$ 385.50
FY 2008 "Cit�!' Property Tax $3,688.64 + 4.26°� +$ 150.62
FY 2009 "Cit�!' Property Tax' $3,554.71 - 3.63°� -$ 133.94
FY 2010 "Cit�!' Property Tax $3,524.48 - 0.85°� -$ 30.23
FY 2011 "Cit�!' Property Tax $3,585.16 + 1.72°� +$ 60.68
FY 2012 "Cit�!' Property Tax $3,736.64 + 4.23°� +$ 151.48
FY 2013 "Cit�!' Property Tax $3,855.96 + 3.19°� +$ 119.32
FY 2014 "Cit�!' Property Tax $3,942.14 + 2.24°� +$ 86.20
FY 2015 "Cit�!' Property Tax'(2) $3,896.93 - 1.15°� -$ 45.21
FY 2016 "Cit�!' Property Tax (3) $3,139.16 -19.45°� -$ 757.77
FY 2017 "Cit�!' Property Tax' (4) $3,364.61 +7.18°� +$ 225.45
FY 2018 "Cit�!' Property Tax' (5) $3,280.44 -2.50°� -$ 84.16
Average FY 1989-2018 + 1.15°� +$ 26.33
FY 2019 Policy Guidelines
Page 27
PROJECTION CITY TAX PERCENT DOLLAR
CALCULATION CHANGE CHANGE
FY 2019 "City" Property Tax $ 3,154.39 - 3.84°� -$126.05
FY 2020 "City" Property Tax' $ 3,198.27 +1.39°� +$43.88
FY 2021 "City" Property Tax $ 3,197.15 -0.04°� -$ 1.12
FY 2022 "City" Property Tax' $ 3,184.62 - 0.39°� -$12.53
FY 2023 "City" Property Tax $ 3,268.38 +2.63°� +$83.76
* Denotes vear of State-issued equalization orders
(1) The FY 2006 property tax calculation considers the 3°� valuation decrease for commercial property as
determined bythe reappraisal.
(2) The Business Property Tax Credit was $148 and rollback to 95°� in FY 2015.
(3) The Business Property Tax Credit estimated at$693 and rollback to 90°� in FY 2016.
(4) The Business Property Tax Credit estimated at $982 and rollback to 90°� in FY 2017.There was
a State issued equalization order of 12°� for commercial property in FY 2017 which raised the
average assessed value from $386,139 to $432,475.
(5) The Business Property Tax Credit estimated at $959 and rollback to 90°� in FY 2018.
FY 2019 Policy Guidelines
Page 28
IMPACT ON INDUSTRIAL PROPERTY - EXAMPLE
CITY TAX PERCENT DOLLAR
ACTUAL - PAST HISTORY CALCULATION CHANGE CHANGE
FY 1989 "City" PropertyTax $5,900.35 -15.40°� -$1,074.65
FY 1990 "City" Property Tax $5,844.55 - .90°� -$ 55.80
FY 1991 "City" Property Tax $6,133.00 + 4.90°� +$ 288.45
FY 1992 "City" Property Tax $6,387.05 + 4.10°� +$ 254.05
FY 1993 "City" Property Tax $6,249.45 - 2.20°� -$ 137.60
FY 1994 "City" Property Tax $6,302.95 + 0.90°� +$ 53.50
FY 1995 "City" Property Tax $5,891.05 - 6.50°� -$ 411.90
FY 1996 "City" Property Tax $5,891.05 + 0.00°� +$ 0.00
FY 1997 "Cit�!' Property Tax $5,690.75 - 3.40°� -$ 200.30
FY 1998 "Cit�!' Property Tax $5,700.56 + .17°� +$ 9.81
FY 1999 "Cit�!' Property Tax $5,536.70 - 2.87°� -$ 163.86
FY 2000 "Cit�!' Property Tax $5,358.00 - 3.23°� -$ 178.70
FY 2001 "Cit�!' Property Tax $5,533.00 + 3.28°� +$ 175.55
FY 2002 "Cit�!' Property Tax $5,380.42 - 2.77°� -$ 153.13
FY 2003 "Cit�!' Property Tax $5,106.00 - 5.10°� -$ 274.40
FY 2004 "Cit�!' Property Tax $5,136.50 + .60°� +$ 30.50
FY 2005 "Cit�!' Property Tax $5,036.00 - 1.96°� -$ 100.50
FY 2006 "Cit�!' Property Tax (1) $5,814.61 +15.46°� +$ 778.61
FY 2007 "Cit�!' Property Tax $5,983.21 + 2.g0°� +$ 168.60
FY 2008 "Cit�!' Property Tax $6,184.95 + 3.37°� +$ 201.74
FY 2009 "Cit�!' Property Tax $5,976.44 - 3.37°� -$ 208.51
FY 2010 "Cit�!' Property Tax $5,909.69 - 1.12°� -$ 66.75
FY 2011 "Cit�!' Property Tax $6,011.44 - 1.72°� +$ 101.75
FY 2012 "Cit�!' Property Tax $6,265.43 + 4.23°� +$ 254.00
FY 2013 "Cit�!' Property Tax $6,465.48 + 3.19°� +$ 200.04
FY 2014 "Cit�!' Property Tax $6,610.00 + 2.24°� +$ 144.53
FY 2015 "Cit�!' Property Tax (2) $6,131.80 - 7.23°� -$ 478.20
FY 2016 "Cit�!' Property Tax (3) $5,256.41 - 14.28°� -$ 875.39
FY 2017 "Cit�!' Property Tax' (4) $5,043.36 - 4.05°� -$ 213.05
FY 2018 "Cit�!' Property Tax' (5) $4,917.78 - 2.49°� -$ 125.58
Average FY 1989-FY 2018 - 1.11°� -$ 68.57
PROJECTION CITY TAX PERCENT DOLLAR
CALCULATION CHANGE CHANGE
FY 2019 "Cit�!' Property Tax $ 4,747.39 -3.46°� -$170.39
FY 2020 "Cit�!' Property Tax' $ 4,813.42 +1.39°� +$66.04
FY 2021 "Cit�!' Property Tax $ 4,811.73 -0.04°� -$1.69
FY 2022 "Cit�!' Property Tax' $ 4,792.88 -0.39°� -$18.85
FY 2023 "Cit�!' Property Tax $ 4,918.94 +2.63°� +$126.06
(1) The FY 2006 property tax calculation considers the 19.9°� valuation increase for industrial property as
determined bythe reappraisal.
(2) The Business Property Tax Credit was $148 and rollback to 95°� in FY 2015.
(3) The Business Property Tax Credit estimated at $693 and rollback to 90°� in FY 2016.
(4) The Business Property Tax Credit estimated at $982 and rollback to 90°� in FY 2017.
(5) The Business Property Tax Credit estimated at $959 and rollback to 90°� in FY 2018.
FY 2019 Policy Guidelines
Page 29
IMPACT ON MULTI-RESIDENTIAL PROPERTY - EXAMPLE
CITY TAX PERCENT DOLLAR
ACTUAL - PAST HISTORY CALCULATION CHANGE CHANGE
FY 2015 "City" Property Tax $2,472.99
FY 2016 "City" Property Tax $2,225.69 -10.00°� -$247.30
FY 2017 "City" Property Tax' $2,160.39 - 2.93°� -$65.30
FY 2018 "City" Property Tax' $2,015.48 - 6.71°� -$144.91
Average FY 2016-FY 2018 - 6.55°� -$152.50
PROJECTION CITY TAX PERCENT DOLLAR
CALCULATION CHANGE CHANGE
FY 2019 "Cit�!' Property Tax' $ 1,871.76 -7.13°� -$143.72
FY 2020 "Cit�!' Property Tax $ 1,807.42 -3.44°� -$64.33
FY 2021 "Cit�!' Property Tax' $ 1,716.45 -5.03°� -$90.97
FY 2022 "Cit�!' Property Tax $ 1,619.74 -5.63°� -$96.91
FY 2023 "Cit�!' Property Tax $ 1,569.99 -3.07°� -$49.75
Beginning in FY 2017 (July 1, 2016), new State legislation created a new property tax classification
for rental properties called multi-residential, which requires a rollback, or assessment limitations
order, on multi-residential property which will eventually equal the residential rollback. Multi-
residential property includes apartments with 3 or more units. Rental properties of 2 units were
already classified as residential property. The State of lowa will not backfill property tax loss from
the rollback on multi-residential property. The rollback will be 86.25 percent ($331,239) in FY 2017,
82.50 percent ($472,127) in FY 2018, 78.75 percent ($564,913) in FY 2019, 75.00 percent
($670,862) in FY 2020, 71.25 percent ($771,786) in FY 2021, 67.50 percent ($904,711) in FY 2022,
63.75 percent ($1,008,719) in FY 2023 and will equal the residential rollback in FY 2024 which is
currently 55.621 percent ($1,205,292). This annual loss in tax revenue of$564,913 in FY 2019 and
$1,205,292 from multi-residential propertywhen fully implemented in FY 2024 will not be backfilled
by the State. From Fiscal Year 2017 through Fiscal Year 2024 the City will lose $5,929,148 in total,
meaning landlords will have paid that much less in property taxes.
There were reappraisals done in Fiscal Year 2016 that may have increased the taxable value for
the properties considered multi-residential; however, the overall assessments for multi-residential
property has remained relatively flat except for twelve large properties that increased significantly.
The assessed value for multi-residential properties in Fiscal Year 2017 did not increase and
landlords began receiving tax breaks with their September 2016 tax payments.
FY 2019 Policy Guidelines
Page 30
History of Increases in Property Tax Askings
% Chanqe
Fiscal "City" Property in Tax Present Impact on
Year Tax Askinqs Askinqs Homeowner""
FY 1989 $10,918,759 -12.0% Sales Tax -11 .4%
initiated
FY 1990 $10,895,321 - 0.2°k - 0.9°k
FY 1991 $11 ,553,468 + 6.0°k + 3.8°k
FY 1992 $12,249,056 + 6.0°k + 3.6°k
FY 1993 $12,846,296 + 4.9°k + 5.0°k
FY 1994 $13,300,756 + 3.5°k + 0.3°k
FY 1995 $13,715,850 + 3.1 °k + 2.4°k
FY 1996 $14,076,320 + 2.6°k - 0.9°k
FY 1997 $14,418,735 + 2.4°k - 0.4°k
FY 1998 $14,837,670' + 2.9°k - 0.7°k
FY 1999 $15,332,806' + 3.3�� 0.0°k
FY 2000 $15,285,754 - 0.3°k - 0.2°k
FY 2001 $15,574,467 + 1 .9°k 0.0°k
FY 2002 $15,686,579 + 0.7°k 0.0°k
FY 2003 $15,771 ,203 + 0.5°k - 5.0°k
FY 2004 $16,171 ,540 + 2.5°k 0.0°k
FY 2005 $16,372,735 + 1 .2°k 0.0°k
FY 2006 $16,192,215 - 1 .1 °k + 1 .7°k
FY 2007 $17,179,994 + 6.1 °k - 1 .7°k
FY 2008 $18,184,037 + 5.8°k 0.0°k
FY 2009 $18,736,759 + 3.0°k +2.8°k
FY 2010 $19,095,444 + 1 .9°k 0.0°k
FY 2011 $19,878,962 + 4.1 °k +2.5°k
FY 2012 $21 ,284,751 + 7.1 °k +5.0°k
FY 2013 $22,758,753 + 6.9°k +5.0°k
FY 2014 $23,197,623 + 1 .9°k +4.9°k
FY 2015 $24,825,015 +7.0°k +3.2°k
FY 2016 $24,906,544 +0.3°k +2.6°k
FY 2017 $26,375,291 +5.9°k +1 .1 °k
FY 2018 $25,871 ,726 -1 .9°k +0.0°k
Average FY 1989-2018 + 2.53°k +0.76°k
*Without TIF Accounting change. **Does not reflect State unfunded portion of Homestead Credit.
FY 2019 Policy Guidelines
Page 31
Impact on Tax Askings and Average Residential Property
To maintain the current level of service based on the previous assumptions would require
the following property tax asking increases:
"City" Property % / $ Impact on Avg.
Year Tax Askinqs (000) % Increase Residential Propertv"
FY 2018 $25,872
FY 2019 $26,579 +2.7°� +2.00°� / +$15.11
FY 2020 $27,124 +2.0°� +1.39°� / +$10.72
FY 2021 $27,288 +0.6°� -0.04°� / -$0.27
FY 2022 $27,356 +0.3°� -0.39°� / -$3.06
FY 2023 $28,254 +3.3°� +2.63°� / +$20.47
Guideline
The recommended guideline is a 2.0 percent increase for the average residential property
owner assuming the Homestead Property Tax Credit is fully funded. In FY 2019, the City's
taxable valuations increased 5.62°k or $133,319,392. If the City had kept the FY 2018 tax
rate of$10.8922, the City would have generated $1 ,452,141 in additional property taxes.
A one percent decrease in the tax rate will reduce property tax askings approximately
$274,960, so the 2.71 °k percent decrease in the tax rate reduced property tax askings by
$745,141 , resulting in a net increase of property tax askings of$707,000 in FY 2019.
These guidelines include $126,207 for recurring and $463,205 for non-recurring
improvement packages.
CIP BUDGET GUIDELINES
U. INTEGRATION OF CAPITAL RESOURCES
Guideline
To obtain maximum utilization, coordination and impact of all capital
improvement resources available to the City, state and federal block and
categorical capital grants and funds shall be integrated into a
comprehensive five-year Capital Improvement Program (CIP) for the City
of Dubuque.
FY 2019 Policy Guidelines
Page 32
V. INTEGRITY OF CIP PROCESS
Guideline
The City should make all capital improvements in accordance with an
adopted Capital Improvement Program (CIP). If conditions change and
projects are to be added and/or deleted from the CIP, the changes shall
be made only after approval by the City Council.
W. RENOVATION AND MAINTENANCE
Guideline
Capital improvement expenditures should concentrate on renovating and
maintaining existing facilities to preserve prior community investment.
X. NEW CAPITAL FACILITIES
Guideline
Construction of new or expanded facilities which would result in new or substantially
increased operating costs will be considered only if: 1) their necessity has been
clearly demonstrated; 2) their operating cost estimates and plans for providing
those operating costs have been developed; 3) they can be financed in the long
term; and 4) they can be coordinated and supported within the entire system.
Y. COOPERATIVE PROJECTS
Guideline
Increased efforts should be undertaken to enter mutually beneficial cooperative
capital improvement projects with the county, school district and private groups.
Cost sharing to develop joint-use facilities and cost sharing to improve roads and
bridges are examples.
Z. USE OF GENERAL OBLIGATION BONDS
Discussion
The lowa Constitution limits the General Obligation debt of any city to 5 percent of
the actual value of the taxable property within the city. The lowa legislature has
determined that the value for calculating the debt limit shall be the actual value of
the taxable property rp ior to any "rollback" mandated by state statute.
FY 2019 Policy Guidelines
Page 33
On October 15, 2012, the City Council adopted a formal Debt Management Policy
for the City of Dubuque. While this debt management policy just put into writing
what the City of Dubuque was already doing in practice, there were some changes
to those policies. The most significant components of the Debt Management Policy
include an internal policy of maintaining the City's general obligation outstanding
debt at no more than 95°k (except as a result of disasters) of the limit prescribed by
the State constitution as of June 30th of each year. It is projected as of June 30,
2018 the City will be at 63.33°k. City will not use short-term borrowing to finance
operating needs except in the case of an extreme financial emergency which is
beyond its control or reasonable ability to forecast.
Currently there is no such debt, and none will be recommended in this process.
Recognizing that bond issuance costs (bond counsel, bond rating, and financial
management fees) add to the total interest costs of financing, bond financing
should not be used if the aggregate cost of projects to be financed by the bond
issue does not exceed $500,000; City will consider long-term financing for the
construction, acquisition, maintenance, replacement, or expansion of physical
assets (including land) only if they have a useful life of at least six years; City shall
strive to repay 20 percent of the principal amount of its general obligation debt
within five years and at least 40 percent within ten years. The City shall strive to
repay 40 percent of the principal amount of its revenue debt within ten years.
Total annual debt service payments on all outstanding debt of the City shall not
exceed 25°k of total annual receipts across all the City's funds. As of June 30,
2018, it is projected the City will be at 15.74°k.
It shall be the goal of the City to establish an internal reserve equal to maximum
annual debt service on future general obligation bonds issued that are to be abated
by revenues and not paid from ad-valorem property taxes in the debt service fund
starting with debt issued after July 1 , 2013. This reserve shall be established by the
fund or revenue source that expects to abate the levy, and shall be carried in said
fund or revenue source on the balance sheet as a restricted reserve. This reserve
does not exist now, except where required by bond covenants. This internal reserve
would be implemented by adding the cost of the reserve to each debt issuance.
The FY 2018 assessable value of the community for calculating the statutory debt
limit is $4,180,974,139, which at 5°k, indicates a total General Obligation debt
capacity of$209,048,707. Outstanding G.O. debt (including tax increment
debt, economic development projects TIF rebates remaining payments and
general fund lease agreement) on June 30, 2018 will be $132,383,576 (63.33
percent of the statutory debt limit) leaving an available debt capacity of
$76,665,131 (36.67 percent). In FY 2017 the City was at 69.41% of statutory
debt limit, so 63.33% in FY 2018 is an 8.76 percent decrease in use of the
statutory debt limit. It should be noted that most of the City of Dubuque's
outstanding debt is not paid with property taxes (except TIF), but is abated from
other revenues, except for one issuance for the replacement of a Fire Pumper truck
FY 2019 Policy Guidelines
Page 34
in the amount of $1,410,000 with debt service of $89,934 in FY 2018 and one
issuance for the franchise fee litigation settlement in the amount of $2,800,000 with
debt service of $202,906 in FY 2018. Included in the debt is $11,762,186 of
property tax rebates to businesses creating and retaining jobs and investing in their
businesses.
Statutory Debt Limit
Fiscal Year Statutory Debt Amount of Debt % Debt Limit
Limit SubjecttoStatutory Used
Debt Limit
2017 $207,174,109 $143,800,280 69.41%
2018 $209,048,707 $132,383,576 63.33%
Statutory Debt Limit Used
(as of June 30th)
100°/a
90% 90%
9�% o �% 82%
80% 86/o
0 0
0 4%
70% II 69 0 72
60% 6 n—
66% � 66%
58�o
50% ��
46 io�\
40% »��o
39°ro
30% � 35,'�\�
. �1%�
27°/0�/0
20% �, � . . . , . . . , , �, �
FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 FY 25 FY 26 FY 27
tFY18Revisd ti�LY16Adopted
The City also has debt that is not subject to the statutory debt limit. This debt
includes revenue bonds. Outstanding revenue bonds payable by water, sewer and
stormwater fees on June 30, 2018 will have a balance of $140,744,200. The total
City indebtedness as of June 30, 2018, is projected to be $273,127,776. The total
City indebtedness as of June 30, 2017, was $283,732,002. In FY 2018, the City
will have a projected $10,604,226 (-3.7%) less in debt. The City is using debt to
accomplish the projects that need to be done and to take advantage of the
attractiveness of interest rates in the current market.
FY 2019 Policy Guidelines
Page 35
Total Debt
$320 53os.�
$302.3 (In Millions)
$300
$295.6 282.0 $279.9
$280 $ .
$283.7 $267.4
$260 $��z �-"a� .
$261.8 $244.3$241.4
$240 �
$22s.2
$220 $235.0
$219.6
$200 $203.5
$180
$160 $169.5\.
$140 $151.9
FY 15 FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 FY 25 FY 26 FY 27
—�—FYSBRevised tFY16Adop[ed
Part of the City's FY 2014 debt was in the form of a grant from the lowa Flood
Mitigation Program. Through a new state program, the City is able to issue $28.25
million in revenue bonds payable from the 5 percent State Sales Tax increment for
projects in the Bee Branch Watershed allowing the City to complete the Bee Branch
Creek Restoration, construct permeable alleys, replace the Bee Branch flood gates,
complete North End Storm Sewers, construct a Flood Control Maintenance Facility,
install Water Plant Flood Control and complete 17�° Street Storm Sewer over the
next twenty years.
During the FY 2018 budget process, a projection of the statutory debt limit usage
was presented at the public hearing to adopt the Fiscal Year 2018 budget. The
following was the projection that was previously shown:
FY17 FY18
70.59% 64.54%
These statutory debt limit usage projections have changed due to the amount of
outstanding tax increment financing rebates decreased from $12,964,901 to
$11,762,186 due to change in property assessments and consolidated tax
increment finance rate and early payment of principal on the lowa Finance Authority
loan for the Schmid Innovation Center by the developer ($760,803).
FY 2019 Policy Guidelines
Page 36
The revised projection of the statutory debt limit usage is as follows:
FY17 FY18
69.41 °k 63.33°k
In March 2017, the projected use of the statutory debt limit as of June 30,
2018, was 64.54%. That projection is now reduced to 63.33%.
The FY 2019-2023 Capital Improvement Program is currently being balanced and it
is unknown at this time if the statutory debt limit usage will be less than previously
projected for the five-year capital improvement program.
As we approach the preparation of the FY 2019-2023 Capital Improvement
Program (CIP) the problem is not the city's capacity to borrow money but (a) how to
identify, limit and prioritize projects which justify the interest payments and (b) how
to balance high priority projects against their impact on the property tax rate.
Guideline
There are many high priority capital improvement projects, which need to be
constructed during the FY 2019-2023 period. The reductions in DRA rent and
distribution over the years may impact the need to borrow for projects. As in the
past, debt will be required on several major capital projects, that being the Bee
Branch Watershed Project, Airport Improvements, Park Improvements, Sidewalk
and Street Improvements, Sanitary Sewer Fund, Parking Fund and Water Fund. In
FY 2019-2023 borrowings will also include smaller projects and equipment
replacements such as Park developments and Public Works equipment. These
smaller borrowings will be for a term not exceeding the life of the asset and not less
than six years in accordance to the Debt Management Policy. Alternative sources of
funds will always be evaluated (i.e. State Revolving Loan Funds) to maintain the
lowest debt service costs.
FY 2019 Policy Guidelines
Page 37
AA. ROAD USE TAX FUND
Discussion
Actual Road Use Tax Fund receipts are as follows:
FY 2008 - $4,944,336
FY 2009 - $4,788,633
FY 2010 - $5,105,327
FY 2011 - $5,253,650
FY 2012 - $5,469,256
FY 2013 - $5,521 ,744
FY 2014 - $5,755,518
FY 2015 - $5,993,239
FY 2016 - $7,122,738
FY 2017 - $7,155,269
The FY 2018 budget was based on receiving $7,122,738 in Road Use Tax funds. In
FY 2018, 93.3 percent of the Road Use Tax income is in the operating budget. The
State of lowa increased the gas tax 10 cents per gallon in FY 2016.
With increases in City DMATS and State Road Use Tax funds, the City will be able
to substantially add to the number of street lights, keep the Southwest Arterial
project moving and continue with major road improvements like North Cascade
Road, Central and White Streets.
Guideline
It is preferable to shift Road Use Tax funds to the capital budget for street
maintenance and repair to reduce the need to borrow funds for routine street
maintenance and improvements. This shift cannot occur until there are increased
revenues or reduced expense that would allow this shift without a property tax
impact.
BB. COMMERCIAL AND INDUSTRIAL DEVELOPMENT
Guideline
Current City, commercial and industrial development efforts should be continued to
(a) preserve current jobs and create new job opportunities and (b) enlarge and
diversify the economic base. Financing these efforts and programs should continue
to be a high priority.
FY 2019 Policy Guidelines
Page 38
CC. HOUSING
Guideline
To maintain an adequate supply of safe and decent housing, the City should strive
to preserve existing single family and rental housing that is not substandard and
provide opportunities for development of new housing, including owner occupied,
within the City's corporate limits for all citizens, particularly for people of low and
moderate income. Workforce rental housing is becoming increasingly important and
the City provides incentives for building rehabilitations.
DD. SALES TAX
Guideline
Thirty percent of projected sales tax receipts will be used for: (a) the reduction by at
least 75 percent of street special assessments and (b) the maintenance and repair
of streets. Twenty percent will be used for: (a) the upkeep of City-owned property
such as sidewalks, steps, storm sewers, walls, curbs, traffic signals and signs,
bridges and buildings and facilities (e.g., Airport, Five Flags Center, Library, Law
Enforcement Center, City Hall, fire stations, parks and swimming pools); (b) Transit
equipment such as buses; (c) riverfront and wetland development; and (d)
economic development projects. The remaining 50 percent is used for property tax
relief.
EE. NET CASH PROCEEDS (SURPLUS DISTRIBUTION) FROM THE DUBUQUE
RACING ASSOCIATION
The contract with the Dubuque Racing Association calls for distribution at the end
of its fiscal year, December 31 S�, of 50 percent of its net cash operating funds to the
City of Dubuque. In early-February, the City receives payment of proceeds to be
distributed. These proceeds are then allocated for capital improvements, with the
highest priority given to reducing the City's annual borrowing.
The Dubuque Racing Association provides the City with projections of future
distributions since gaming is a highly volatile industry the estimates are discounted
prior to including them in the City's Five-Year CIP.
Consistent with past use of DRA distributions, one hundred percent of the February
2019 projections of operating surplus have been anticipated as resources to
support the Fiscal Year 2019 capital improvement projects. This level will be
maintained for the Fiscal Year 2020 surplus estimate and then estimates received
from the DRA will be reduced by 5 percent for FY 2021 resources, 10 percent for
FY 2022, and 15 percent for FY 2023 resources, provide a margin of error in case
the estimates are not realized.
FY 2019 Policy Guidelines
Page 39
Guideline
In Fiscal Year 2019, the City anticipates distribution of a significant amount of net
cash proceeds for use in the Capital Improvement Program. These amounts will be
budgeted in the Five-Year CIP in the year they are received and will be used to
reduce required General Obligation borrowing. The three out-years will be
discounted by 5 percent, 10 percent, and 15 percent respectively.
FF. EMPHASIS ON INITIATIVES THAT REDUCE FUTURE OPERATING BUDGET
EXPENSE
Guideline
Capital improvement expenditures that will reduce future maintenance and
operating expense will receive priority funding and these types of initiatives will be
encouraged in all departments and funding sources as a means of maximizing the
use of available resources. This emphasis reflects fiscally responsible long-range
planning efforts.
GG. USE OF GAMING RELATED RECEIPTS
Guideline
On April 1 , 2004, a new lease took effect with the Dubuque Racing Association for
lease of the Dubuque Greyhound Park and Casino. This new lease was negotiated
after the FY 2005 budget was approved and raised the lease payment from YZ°k of
coin-in to 1 °k of coin-in. This new lease and the expansion of gaming at Dubuque
Greyhound Park and Casino, from 600 gaming positions to 1 ,000 gaming positions,
effective August 1 , 2005, provided additional revenues to the City of Dubuque.
In FY 2004 the split of gaming taxes and rents between operating and capital
budgets was 50°k operating and 50°k capital. In FY 2005 this split was changed to
75°k operating and 25°k capital. In FY 2009 the split was 76°k operating and 24°k
capital.
In FY 2010, the budget was changed to reflect the actual split of 85°k operating and
15°k capital. The operating portion of the split now includes the debt service
required on the 2002 general obligation bonds for the America's River Project that
was previously considered as part of the capital portion of the DRA lease. Debt
obligations are considered a continuing annual expense and are more accurately
reflected as part of the operating portion of the DRA lease.
In FY 2011 , the budget was changed to reflect a split of gaming taxes and rents
between operating and capital budgets of 86.5°k operating and 13.5°k capital. FY
2013 changed the split to 90.0°k operating and 10.0°k capital.
FY 2019 Policy Guidelines
Page 40
In FY 2015, the budget was changed to reflect a split of gaming taxes and rents
between operating and capital budgets of 97°k operating and 3.0°k capital.
In FY 2016, the budget was changed to reflect a split of gaming taxes and rents
between operating and capital budgets of 100°k operating and 0.0°k capital. A
reduction in revenue in the Greater powntown TIF urban renewal area resulted in
reduced revenues to make debt payments and it was necessary for the general
fund to support $84,104 in FY 2015 and $78,242 in FY 2016 of debt service
payments, which were funded by reducing the amount of gaming revenues from
taxes and DRA lease that goes to capital recommended in FY 2016.
In FY 2017, the budget was changed to reflect a split of gaming taxes and rents
between operating and capital budgets of 99 percent operating and 1 percent
capital. In FY 2018, the budget was changed to reflect a split of gaming taxes and
rents between operating and capital budgets of 97.0 percent operating and 3.0
percent capital.
In FY 2019, the budget is recommended to be changed to reflect a split of gaming
taxes and rents between operating and capital budgets of 96.0 percent operating
and 4.0 percent capital.
The split of gaming taxes and rents between operating and capital budgets is
recommended to change to 95.0 percent operating and 5.0 percent capital in FY
2020; 94.0 percent operating and 6.0 percent capital in FY 2021 ; 93.0 percent
operating and 7.0 percent capital in FY 2022; and 92.0 percent operating and 8.0
percent capital in FY 2023.
The Diamond Jo expanded to a land based barge casino facility and increased to
1 ,100 slots on December 1 , 2008. This expansion was projected to decrease the
Mystique gaming market and correspondingly the coin-in by just over 21 percent.
Based on the projected market share loss, the City did not receive a distribution of
cash flows from the Dubuque Racing Association (DRA) in Fiscal Years 2009 and
2010.
DRA distributions restarted in FY 2011 instead of the projected year of FY 2012.
The reduction in the DRA's market impacts the City's lease payment from the DRA.
The current lease requires the DRA to pay the City 1 percent of coin in from slot
machines and 4.8 percent of gross revenue from table games.
FY 2019 Policy Guidelines
Page 41
The following chart shows the impact of the reduction of lease payments on the
City's five-year projections based on revised projections from the DRA each year:
Impact of Revised
Five-Year DRA
Fiscal Years Pro�ections
2009-2013 -$7,000,000
2010-2014 -$4,800,000
2011-2015 -$1 ,000,000
2012-2016 -$3,200,000
2013-2017 -$2,900,000
2014-2018 No Chan e
2015-2019 -$3,200,000
2016-2020 -$3,100,000
2017-2021 -$1 ,300,000
2018-2022 -$1 ,400,000
2019-2023 +$308,076
Total Im act -$27.7 million
From FY 2009 thru FY 2023, the City's lease payments have been reduced $27.7
million.
In Calendar Year 2017, gross gaming revenues at the Mystique Casino are down
2.1 °k. The Dubuque gaming market was significantly impacted beginning in May
2016 when Rhythm City Casino off Interstate 80 opened in Davenport. The DRA
has projected a 0.50°k increase in gross gaming revenue for Calendar Year 2018.
The State of Illinois passed a Video Gaming Act on July 13, 2009 which legalized
the use of Video Gaming Terminals in liquor licensed establishments including
bars, restaurants, truck stops and certain fraternal and veterans' organizations. In
the part of Illinois that impacts the Dubuque market, the first year of operation of
video gaming terminals generated $1 million in revenue monthly. The use of video
gaming terminals has now grown to $7.5 million monthly for the five counties
closest to Dubuque and in a direct line with Rockford, IL, which has caused a
reduction to the gaming market in Dubuque. The Mystique Casino and Diamond Jo
Casino average monthly revenue is $9.5 million. This is a similar impact as if
approximately one and a half more casinos combined were built half-way between
Dubuque and Rockford. In addition, the recession has also impacted the gaming
market. The revised DRA gaming projections include minimal growth in revenues
over the next five years with a growth rate of 0.50°k in FY 2019 and FY 2020 and a
growth rate of 1°k in FY 2021 and beyond.
The 50¢ per patron tax previously received from the Diamond Jo was replaced by a
$500,000 fixed payment based on their revised parking agreement which expires
June 16, 2029. The riverboat related tax on bets increased from $305,702 in FY
2018 to $330,429 in FY 2019.
Debt Reduction Plan
2
$320
$300
$280
$260
$240
$220
$200
$180
$160
$140
Debt is being issued each year, but
more is being retired than issued.
�y2°.L2 F.41% f.20
FY2018 Adopted Budget
fr 820:9
100%
90% -
80%
70%
60%
50%
40%
30%
20%
Statutory Debt Limit Used (as of June 30)
90%
This chart shows the percentage of statutory debt limit
in the Fiscal Year (FY) 2018 adopted budget. By FY2027,
the City will be at 24% of the statutory debt limit.
01p1 ft1°,6 01° 01p15' 1..41p2, ft1p11 0
1-
6
3 f41p11: QOp26 0166
075'1
FY2018 Adopted Budget
# Project Description
1 Water and Resource Recovery Center
2 Stormwater Management
3 Parking Improvements
4 Water Improvements
5 TIF Rebates/Bonds to Businesses
6 GDTIF Incentives/Improvements
7 Sanitary Sewer Improvements
8 DICW Expansions
9 Street Improvements*
10 Airport Improvements
Total
* $117 million was spent on street improvements from
Amount Outstanding
$67.8 million
$74.2 million
$30.5 million
$30.8 million
$20.9 million
$22.8 million
$14.0 million
$9.7 million
$4.2 million
$3.6 million
$218.5 million
1997-2016
The City of Dubuque's use of debt can be
compared to many average homeowners
who borrow to buy their home. The City
has borrowed money at low interest rates to
invest in infrastructure. Unlike the federal
government, the City does not borrow money
to cover operating expenses.
Parking improvements
Stormwater management
Rev. 5/2/17
HhCI1Y Of
Dubuque DUg . E
l[nshapirce ou the Mississlppi
R CENTS
City Portion of Property Taxes
$20
818
$16
$14
612
610
$8
$6
$4
$2
$0
FY2018 City Property Tax Rate Comparison
$10.37 $10.89
$12.29 $12.78
$15.22 $15.31
Ames Dubuque Ankeny West Des Cedar
Moines Rapids
City of Dubuque FY2018 Property Tax Rate
$17.52 $17.86 $17.91 • $10.89 per thousand dollars of assessed value
$16.07 $16.33 $16.78
• A 2.47% reduction from FY2017's rate of $11.17
Average Sioux City Iowa City Davenport Waterloo Des Council
w/o Moines Bluffs
Dubuque
Dubuque has the SECOND LOWEST FY2018 property tax rate
($10.89 per thousand assessed value) of Iowa's 11 cities with
populations over 50,000.
• Highest -ranked city (Council Bluffs, $17.91) is 64% higher
than Dubuque
• Average ($15.31) is 41% higher than Dubuque
Where do your property taxes go?
Property taxes are collected by the County and distributed monthly to the
City of Dubuque and other taxing bodies. Property taxes are are distributed
among the Dubuque Community School District (44.04%), City of Dubuque
(32.84%), Dubuque County (18.51%), Northeast Iowa Community College
(2.76%), and independent authorities* (1.86%).
Property taxes are certified July 1 with the first half due on or before
September 30 and the second half due on or before March 31. For more
information, contact the City Assessor at 563-589-4416.
* "Independent Authorities" includes City Assessor, County Hospital
(Sunnycrest Manor), Dubuque County Agriculture Extension, and the
Tuberculosis and Brucellosis Eradication Fund.
• No property tax increase for average residential property
owner, 2.47% decrease for average commercial property,
2.47% decrease for average industrial property, 6.71%
decrease for average multi -residential property
Property
Type
Average Property
Tax Cost Change
from FY2017
Percent Property
Tax Cost Change
from FY2017
Residential
Commercial
Industrial
Multi -
Residential
No Change
$83.20 Tess
$124A3 Tess
$144.91 less
No Change
2.47% decrease
2.47% decrease
6.71% decrease
Property Tax Split: FY2016-2017
NICC%1.86%
INDEPENDENT
City Budget
The City's approved budget provides estimated revenues and expenditures
for programs and services to be provided during the fiscal year, from
July 1 through June 30. The budget has two primary components: the
operating budget and the capital budget.
The City's total budget for fiscal year 2018 is $169,712,947, an 8.34
percent reduction from FY2017. The operating budget ($129,366,969)
is a 0.14 percent reduction from FY2017 while the capital budget
($40,268,319) represents a 27.47 percent reduction from FY2017.
The capital budget funds major improvements to City facilities and
infrastructure, and is based on the first year of needs in the five-year
Capital Improvements Program (CIP) Plan. The CIP Plan is an annually
revised document that guides the City's investments in public facilities
General Fund
and infrastructure during a five-year time horizon. The capital
budget is supported through multiple funding sources.
The operating budget includes personnel costs and annual facility
operating costs. It is funded primarily through local property and
sales taxes; revenue transfers between departments; licenses,
such as building and development fees; franchise fees for a
company's use of the City's rights-of-way; charges for services
(like sewer and water); fines and other smaller sources of revenue
such as interest on investments.
The general fund is the general operating fund of the City for general service
departments. The general fund has an operating budget of $61 million and a capital
budget of $1.4 million. This fund encompasses the bulk of activities that are
traditionally considered basic governmental services such as public safety, culture &
recreation, health & social services, and general government.
How General Fund Money is Spent
Public Safety
Culture & Recreation
General Government
Public Works
Community & Economic
Development
Transfers Out
Capital Projects
Health & Social Services
Debt Service
Fiscal Year 2018 City Budget
CAPITAL
BUDGET
$40,268,319
Description
(animal control, building inspections, crime prevention, emergency
management, flood control, fire, police, etc.)
(AmeriCorps, arts & cultural affairs, civic center, conference center, library,
marina, parks, recreation, etc.)
(city attorney & legal services, city clerk, city council, city hall & general
buildings, city manager, finance, information services, etc.)
(airport, maintenance of streets, bridges, and sidewalks; snow removal, street
cleaning, street lighting, traffic control, etc.)
(economic development, housing and community development, neighborhood
development, planning and zoning, etc.)
(to funds other than General Fund)
(City infrastructure improvements or major equipment purchases)
(community health, health regulation and inspection, human rights, etc.)
(government capital projects, tax -increment financing [TIF] capital projects)
OPERATING
BUDGET
$129,444,628
Portion of General Fund
43.6%
17.7%
12.4%
9.6%
6.1
0/0
5.8%
2.1
1.3%
1.3%
General Fund Reserve Projections
The City maintains a general fund reserve, or working balance, to allow for unforeseen expenses that may occur. The reserve
will increase by $5.925 million (54.24%) over the next seven years.
FY2016 FY2011 FY2018 FY2019 FY2020
Contribution $1,000,000 $600,000 $1,050,000 $1,050,000 $1,050,000
City's Spendable General Fund Cash
Reserve Fund Balance
of Projected Revenue (Moody's)
$11,924,435 $9,866,669 $10,916,669 $11,966,669 $13,016,669
17.52% 14.20% 15.60% 17.11% 18.54%
FY2021 FY2022
$1,050,000 $100,000
$14,091,669 $14,191,669
20.00% 20.49%
Utility Customer Rates & Fees for Fiscal Year 2018 (July 1, 2017 -June 30, 2018)
What's included in your monthly utility bill?
Curbside Collection - Basic Rate = $15.11/month
(2.3% increase from FY2017 or $0.34 per month)
Curbside collection includes one 35 gallon container per week. Weekly curbside
recycling is no extra charge.
Sanitary Sewer - Avg. Household Rate* = $39.24/month
(3% increase from FY2017 or $4.14 per month)
*Average household rate based on 6,000 gallons per month at $0.00635 per gallon.
When you wash your hands, wash the dishes, flush the toilet, or take a shower,
the "wastewater" that goes down the drain flows through the interior plumbing,
out of the house, and eventually into the City's sanitary sewer system. The City's
wastewater collection and treatment system operates as a self-supporting enterprise
fund which means that it is funded only with revenue from user fees.
Stormwater - Avg. Household Rate* = $7.27/month
(6.75% increase from FY2017 or $0.46 per month)
*Monthly rate for majority of Dubuque households based on usage of one single
family unit. Stormwater fees are based on the amount of impervious ground
coverage on a property. Fees collected are only used for stormwater management
activities such as the construction, maintenance and operation of the public
stormwater management system.
Water - Avg. Household Rate* = $28.43/month
(3% increase from FY2017 or $0.83 per month)
*Average household rate based on 6,000 gallons per month at $0.0047 per gallon
For additional information, visit www.cityofdubuque.org/utilitybilling or call 563-589-4144
DID YOU KNOW?
Residents have access to the City's
budget, revenue, and spending via
user-friendly websites.
Check them out!
Making Sense of
Dollars and Cents
Explore Dubuque's'
Open Expenses
Understanding
Expenses
OPEN BUDGET: OPEN EXPENSES:
dollarsandcents.cityofdubuque.org expenses.cityofdubuque.org