Budget Policy Guideline FY 2004MEMORANDUM
November 14, 2002
TO:
FROM:
SUBJECT:
The Honorable Mayor and City Council Members
Michael C. Van Milligen, City Manager
Fiscal Year 2004 Policy Guidelines
Prior to preparing a Fiscal Year 2004 budget recommendation, two very important
things need to come from the City Council. First, the City Council Goals and Priorities
must be established, and this was done in late August. Second, the Budget Policy
Guidelines must be adopted, and that is what is being recommended at this City Council
meeting.
The five-year goals of the City Council are:
2.
3.
4.
5.
Improved connectivity, including roads, air, and telecommunications
Strong diverse local economy
Riverfront development
Planned and managed growth
Partnership for a better Dubuque
The Fiscal Year 2004 priorities of the City Council are:
Top Priorities
· Air service strategy
Short-term actions, Highway 20
· America's Riverproject and development
Stormwater study
High Priorities · Arts policy and funding
· Downtown master plan
· Marketing riveffront and total community
· Gaming referendum
· Property acquisition at riverfront
O.
c~
Page I of 6
Other Priorities · Erosion policy
· School local option tax
· Marketing program - America's River
· Brewery project
Management Priorities · Telecommunications strategy
· Street program funding
· Southwest Arterial
· Julien Dubuque Bridge plan and design
· Zoning ordinance update
· Vacant property redevelopment
· River Valley Initiative
· State grant to extend road to industrial park
· Riverfront master plan implementation
· Federal strategies
Fiscal Year 2003 is the current fiscal year, with a budget that was approved by the City
Council in March 2002. During that process, I projected that the budget shortfall for
Fiscal Year 2004 would be $205,936, which I believed would be manageable and
anticipated avoiding a property tax increase on the average homeowner in Fiscal Year
2004 for the ninth consecutive year (five of those years seeing a property tax decrease).
However, there have been several changes to our revenue and expense projections for
Fiscal Year 2004, mostly caused by the State of Iowa and the softening economy, that
bring that budget shortfall to $1,038,421. This is $833,025 over the projections made
last year.
The statewide police and fire retirement system contribution will be increasing from 17%
of an employee's salary to between 21 and 23% in order to fund additional benefits
granted by the Legislature and to cover diminishing returns on the funds' investments.
This increase alone is $458,239. Another major cause of the increased shortfall is the
projection the City has received from the State showing that sales tax proceeds will
increase, but not as much as were projected. This revenue shortfall for Fiscal Year
2004 is $288,902.
A more detailed list of significant expense changes include:
· A projected 15% increase in health insurance costs based on Fiscal Year 2002
actual experience ($118,732);
· Police and Fire Retirement expense has been increased $458,239 based on
notification from the State of Iowa of an anticipated change in rates from
the current rate of 17% to between 21% and 23% for FY 2004;
Page 2 of 6
A more detailed list of significant revenue changes include:
Hotel/Motel Tax revenues (excluding new Hotel/VVater Park) estimated to
decrease by $76,827 based on actual Fiscal Year 2002 and year-to-date
experience;
· Municipal Assistance and Liquor Sales Tax are projected to be down $33,480
and $29,317 respectively;
· The State estimate for Local Option Sales Tax proceeds is down $288,902; and
· Other miscellaneous revenues are projected to increase $209,399 over adopted
Fiscal Year 2003.
In summary, these changes have increased the budget shortfall over last year's
projections by $652,021. In addition, last year's projections indicated a 1.41% increase
was necessary on the average home in order to support a maintenance level budget.
To reduce this to zero requires an additional need of $205,936, for a total budget
shortfall of $857,957.
To complicate matters even further, the State has just issued the new rollback factors
for residential and commercial property classes. These factors are very difficult to
project due to the linkage of residential to agricultural land value changes. The rollback
factor for residential property has been reduced by .5% from 51.6676 to 51.3874. The
rollback factor for commercial property has been increased from .9777 to 100% or a
.23% increase.
The reduction in residential rollback results in lower taxable valuations, generating less
taxes with the same property tax rate. The impact of the reduced rollback factor on
taxable values is a $180,464 loss in tax dollars generated from last year's projections.
The impact of the valuation changes together with the revised assumptions from
the previous page means cuts and/or increases of $1,038,42'1 would be necessary
to maintain a zero property tax increase on the average home, this is $833,025
over last year's projections.
Each 1% property tax increase on the average homeowner generates $160,482 in
revenue.
To avoid a property tax increase or a significant reduction in City programs and
services, Administrative Services Manager Pauline Joyce is recommending that each
department closely review their user fees and the City Council adopt the following
Budget Policy Guideline changes:
Currently one-third of gaming revenues are used to support the operating budget,
and two-thirds are used to support the Capital Improvement Program budget.
With the successful election for gaming facilities, it is reasonable to
change to 50% CIP and 50% operating budget. This change would provide
an additional $743,000 for the operating budget and reduce the shortfall
from $1,038,421 to $295,1 '15. This reallocation of gaming revenues does not
Page 3 of 6
impact the annual distribution of profits from the Dubuque Racing Association,
which will continue to go 100% to the Capital Improvement Program Budgetl
Each year the Dubuque Racing Association distributes 50% of its year-end
surplus to the City of Dubuque to support capital improvements. These funds are
received in early January. The City's past practice has been to budget the
January distributions as part of the following year's Capital Improvement
Program (effective July I following the receipt of funds). Beginning in Fiscal Year
2004, it is recommended that estimated annual distributions be budgeted in the
fiscal year received, rather than the following fiscal year. This is how most City
revenues are treated. This will allow the City to move forward on capital projects
that address City Council priorities.
Since 1981, the City has operated with greater efficiency and has reduced the number
of full-time employees from 588 to 524. This is a reduction in the full-time work force of
10.9%, or 64 employees. This has happened during a time when new or expanded City
programs and services have been added to meet increasing demands and mandates.
For example, 15 police officers have been added in the last ten years.
There has not been a property tax increase for the average homeowner for the past
eight years; in fact five of those years have seen decreases. The City compares
favorably when we look at the other large cities in Iowa when you look at the property
tax rate and fees:
Property Tax Rate
RANK CITY TAX RATE
9 Waterloo $18,37162
8 Des Moines $17.04857
7 Iowa City $16.81344
6 Council Bluffs $16.42850
5 Sioux City $15.95108
4 Davenport $14.63000
3 Cedar Rapids $12.82969
2 Dubuque $10.21200
1 Ames $9.63962
AVERAGE $14.65828
Page 4 of 6
Refuse Rates
RANK CITY MONTHLY FEE
7 Ames $20.50
6 Cedar Rapids $12.56
5 Iowa City $11.00
4 Waterloo $10.36
3 Des Moines $10.25
2 Sioux City $9.50
1 Dubuque $7.20
AVERAGE $11.62
PAY AS YOU THROW
No (average fee for private service)
Yes
Yes
Yes
No
No
Yes
Water Rates
RANK CITY WATER USED
5 Ames $18.42
4 Council Bluffs $14.15
3 Des Moines $12.86
2 Dubuque $12.00
1 Cedar Rapids $11.61
AVERAGE $13.81
Sewer Rates
RANK CITY SEWER FEE
9 Iowa City $31.82
8 Des Moines $22.22
7 Ames $16.78
6 Waterloo $16.55
5 Council Bluffs $15.12
4 Sioux City $14.98
3 Davenport $13.76
2 Dubuque $12.56
1 Cedar Rapids $10.93
AVERAGE $17.19
Not considering a Stormwater Utility Fee, which has not yet been approved by the City
Council, an average homeowner pays $25.57 less for City services in Fiscal Year
2003 than they paid in Fiscal Year 1995.
Page 5 of 6
I respectfully request Mayor and City Council approval of the recommended Fiscal Year
2004 Budget Policy Guidelines.
Michael C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
Pauline Joyce, Administrative Services Manager
Page 6 of 6
CITY OF DUBUQUE, IOWA
MEMORANDUM
November 14, 2002
TO: Michael C. Van Milligen, City Manager
FROM: Pauline Joyce, Administrative Services Manager~~/~'''-''~~
/
SUBJECT: Fiscal Year 2004 Policy Guidelines
The purpose of this memorandum is to transmit draft Fiscal Year 2004 Fiscal
Guidelines for your review and presentation to the Council. The guidelines reflect City
Council direction given as part of the August 27 and 29, 2002, goal setting sessions.
During those sessions the City Council established goals for the next five years and
established City priorities in Fiscal Year 2004.
Dubuque 2007: City Council Goals
In five years the Council wants the following for the community:
1. Improved connectivity, including reads, air, and telecommunications
2. Strong diverse local economy
3. Riverfront development
4. Planned and managed growth
5. Partnering for a better Dubuque
Fiscal Year 2004 Priorities: Our Tarqets
To begin the City on the path to achieving these five-year goals, the Council priorities
and the foundation of the City's work program for Fiscal Year 2004 are:
Top Priorities · Air service strategy
· Short-term actions- Highway 20
· America's River project and development
· Stormwater study
High Priorities · Arts policy and funding
· Downtown master plan
· Marketing riverfront and total community
November 18, 2002
· Gaming referendum
· Property acquisition at riverfront
Other Priorities · Erosion policy
· School local option
· Marketing program-America's River
· Brewery project
Management Agenda 2002-2004 · Telecommunications strategy
· Street program funding
· Southwest Arterial
· Julien Dubuque bridge plan and design
· Zoning ordinance update
· Vacant property redevelopment
· River Valley Initiative
· State grant to extend road to industrial park
· Riverfront master plan implementation
· Federal strategies
Significant Changes
1. As we develop a budget to achieve these priorities I believe it is important to begin
with an overview of the City's past performance in terms of growth in personnel
complement, tax asking, and changes in assessed valuations. This overview
summarizes the impact of fiscal guidelines established by prior City Councils as they
attempted to balance resources with community expectations.
In past years, the gaming revenue from facility rent and taxes have been split one-
third operating budget and two-thirds capital budget. Beginning in Fiscal Year 2004,
it is recommended that this split be changed to 50 percent operating budget and 50
percent capital budget. This will result in an additional $746,291 toward property tax
relief in Fiscal Year 2004. This is necessary to address the following cost increases
and/or declining revenue:
Significant expense changes include:
· A projected 15% increase in Health costs based on Fiscal Year 2002
actual experience ($118,732);
· In FY 04 there are 2096 versus 2088 hours ($60,125) earned based upon
the actual hours worked between July 1, 2003 and June 30, 2004;
· Police and Fire Retirement expense has been increased $458,239 based
on notification from the State of Iowa of an anticipated change in rates
from the current rate of 17% to between 21% and 23% for FY 2004;
2
November 18, 2002
· Property and Boiler Insurance are estimated to increase 15% and General
Liability costs to increase 12%; electrical expense increasing 15%; and
offset by savings in other areas of Supplies and Services for a net change
of -$144,117;
· Impact these same changes have on Transit tax support ($26,676);
Significant revenue changes include:
· Hotel/Motel Tax revenues (excluding new Hotel/VVater Park) estimated to
decrease by $76,827 based on actual FY 2002 and year-to-date
experience;
· Municipal Assistance and Liquor Sales Tax are projected to be down
$33,480 and $29,317 respectively;
· The State estimate for Local Option Sales Tax proceeds is down
$288,902; and
· Other miscellaneous revenues are projected to increase $209,399 over
adopted Fiscal Year 2003.
In summary, these changes have increased tax askings over last years projections
by $652,021. In addition, last years projections indicated a 1.41% increase was
necessary on the average home in order to support a maintenance level budget. To
reduce this to zero requires an additional reduction in tax askings of $205,936, for a
total reduction of $857,957.
To complicate matters even further, the State has just issued the new rollback
factors for residential and commercial property classes. These factors are very
difficult to project due to the linkage of residential to agricultural land value changes.
The rollback factor for residential property has been reduced by .5% from 51.6676
to 51.3874. The rollback factor for commercial property has been increased from
.9777 to 100% or a .23% increase.
The reduction in residential rollback results in lower taxable valuations, generating
less taxes with the same property tax rate. The impact of the reduced rollback
factor on taxable values is a $180,464 loss in tax dollars generated from last years
projections.
The impact of the valuation changes together with the revised assumptions
from the previous page means cuts and/or fee increases of $1,038,421 would
be necessary to maintain a zero tax increase on the average home, this is
$833,025 over last year's projections.
To address this sizable shortfall, I would recommend that each department closely
review their user fees to insure fees cover all related expense. Second, I believe we
will need to recommend a change to the current policy of using 1/3 of gaming
revenues to support operating budget and 2/3 for the capital budget. With the
successful election for gaming revenues, it is reasonable to recommend a
3
November 18, 2002
change to 50% CIP and 50% operating budget. This change would provide an
additional $743,000 for the operating budget and reduce the shortfall from
$1,038,421 to $295,115.
2. There will be a renewed emphasis on reviewing user fees to make sure they are
covering assorted costs and/or defraying a targeted percent of those costs. This is
being done to address budget issues discussed above.
Each year the Dubuque Racing Association distributes 50 percent of its year-end
surplus to the City of Dubuque to support capital improvements. These funds are
received in early January. The City's past practice has been to budget the January
distributions as part of the following years Capital Improvement Program (effective
July I of the year funds are received). There have been several years when funds
were spent before July I in order to finance urgent capital needs. Beginning in
Fiscal Year 2004, it is recommended that estimated annual distributions be
budgeted in the fiscal year received, rather than the following fiscal year. Since the
City's fiscal year (July 1-June 30) overlaps two construction seasons, this policy will
not cause cash flow problems and will allow the City to move forward on capital
projects that address City Council priorities.
Background Information
Since 1981, the City has reduced the number of full-time employees from 588 to 524.
This is a reduction in the full-time work force of 10.9 percent or 64 employees. This has
happened during a time when new or expanded City programs and services have been
added to meet increasing demands and mandates. Initiatives during that time period
have included:
· economic development efforts
· yard waste and recycling programs
· county-wide E911 dispatch
· comprehensive housing programs
· community oriented policing
· DARE and other drug related programs
· rental property inspections
· operation of leisure pools
· McAleece Recreation Complex operations
· City Focus newsletter
· industrial pretreatment and lead and copper testing programs
· Fifth Street parking ramp
· hazardous materials team
· advanced life support ambulance service
· government Channel 8 programming
· cable TV monitoring and regulation
4
November 18, 2002
· additional commissions including Long Range Planning, Environmental
Stewardship, Investment Oversight, Development Review Committee.
· extension of hike and bike trails
· City operated FBO functions
· increased Zoning Code enforcement
· developers and builders roundtables
· implementation of Riverfront Plan
· downtown circulation study
· coordination and public information programs related to the Highway 20
project
· implementation of the Neighborhood Reinvestment Strategy
· lead paint abatement program
· additional neighborhood parks and open spaces
· reinstatement of traffic accident investigations
· school resource officer program
· police canine unit
· Washington D.C. initiative
· Increased security operations at Airport
The City continues to look for operating efficiencies through the program and service
review process. Reviews, which have been completed include Community and
Economic Development, Housing, Park Patrol, Water, Civic Center, Water Pollution
Control Plant, Administrative Services, Planning Services, Recreation, Police, Transit,
City Manager's Office, Health Services, Building Services, Parks, Emergency
Communications Center, and Operations and Maintenance's Vehicle Maintenance and
Solid Waste Operations.
The City of Dubuque has been able to hold its property tax askings down while
continuing to provide the citizens with a very high level of City services. Unlike other
cities, which have eliminated city services, quality of life continues to be a high priority
of City Council and high service standards have been maintained by implementing
operating efficiencies and using other resources such as sales tax, gaming revenues,
and user fees for property tax relief.
Property tax values have increased from $1,023,003,527 in Fiscal Year 1993 (January
1, 1991 values) to $1,541,188,216 for Fiscal Year 2003 (January 1, 2001 values), which
represents an increase of $518,184,689 or 5.07 percent per year. The City's portion of
the property tax rate has gone from $12.6862 in Fiscal Year 1993 to $10.21203 per
thousand dollars of assessed value; a decrease of $2.47417 or 2.0 percent per year
over the same ten-year period.
Why was the City able to reduce the tax rate over the past ten years? Some of the
factors, which have affected the property tax rate include:
5
November 18, 2002
The use of sales tax for property tax relief has grown from $2,270,000 in Fiscal
Year 1993 to $3,454,941 in Fiscal Year 2003. This increase is the equivalent of
property tax relief of $.6519/$1,000 of assessed value. This means that the local
option sales tax has allowed a 5.1 percent reduction in the City's portion of the tax
rate from Fiscal Year 1993 to Fiscal Year 2003;
The net addition of only six property-tax-supported, full-time positions from Fiscal
Year 1993 to Fiscal Year 2003 (the net increase has been held to only six in spite
of the fact that the City added seven police officer positions in Fiscal Year 1994,
five in Fiscal Year 2000, one in Fiscal Year 2002, and one full-time security person
at the Airport in Fiscal Year 2003); and
The use of annual gaming revenues for property tax relief. This has avoided a 9.7
percent increase in the property tax rate for FY 2003. Also, the use of the annual
distribution of 50 percent of Dubuque Racing Association net profits to the City's
Five-Year Capital Improvement Program has eliminated the need for annual
General Obligation borrowing for street, storm sewer and Airport capital
improvements.
The increase in taxable value averaging five percent per year over the 10-year
period.
This analysis indicates that the City has used property tax valuation growth and other
important growth revenues like sales tax to maintain City services and has not
increased the tax rate to accomplish this. In fact, the City has reduced the tax rate over
the past ten years.
A comparison of the City of Dubuque's property tax rate for Fiscal Year 2003 with the
other eight largest cities in Iowa shows Dubuque ranks eighth out of nine. This
comparison is summarized in table format as follows:
RANK CITY TAX RATE POPULATION
1 Waterloo 18.37162 66,467
2 Des Moines 17.04857 193,187
3 Iowa City 16.81344 60,349
4 Council Bluffs 16.42850 54,315
5 Sioux City 15.95108 80,505
6 Davenport 14.63000 97,500
7 Cedar Rapids 12.82969 108,780
8 Dubuque 10.21200 57,546
9 Ames 9.63962 48,691
6
November 18, 2002
Proposed Budget Guidelines
Having reviewed this background information on where and how City functions and
finances have developed over the past ten years, it's now time to look forward and
establish the fiscal plan for the upcoming year.
The budget guidelines are developed and adopted by City Council early in the
budgeting process in order to provide targets or parameters within which the budget
recommendation will be formulated. 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.
The budget guidelines for Fiscal Year 2004 that I am recommending to you can be
summarized as follows:
· Preliminary Citizen participation opportunities
Date Startinq Time
Tuesday, November 19
Wednesday, February 5
Monday, February 10
Thursday, February 20
Monday, February 24
Wednesday, February 26
Thursday, February 27
5:15 p.m. - City Manager's Public Input Meeting
6:15 p.m. - City Council Budget Worksession
6:15 p.m. - City Council Budget Worksession
6:15 p.m. - City Council Budget Worksession
6:15 p.m. - City Council Budget Worksession
6:15 p.m. - City Council Budget Worksession
6:30 p.m. - Public Hearing - City Council
This schedule has been reduced by one hearing from past years per City Council
direction.
· Service objectives
Each department will identify specific objectives that reflect City Council goals.
· Balanced budget
Expenditures will not exceed revenue.
· Limited resources
It is not possible to afford all of the services requested by individual citizens.
· Review of services
Existing service levels are maintained and reviewed for appropriateness.
7
November 18, 2002
· Improved productivity
Efforts will continue to become more efficient.
· Volunteers
Efforts to expand the use of volunteers will be maintained.
Outside funding
Non-City funding sources, like federal grants, public/private partnerships and
coordination with other local governments will be aggressively pursued.
General Fund Balance
To meet financial obligations prior to receiving certain tax revenues and to assist
in maintaining an AA bond rating, which reduces borrowing costs, the City will
maintain a cash reserve of 10 pement of the total General Fund operating
budget (excluding employee fringe benefits) or $2,566,000.
Nonrecurring Income
Nonrecurring income will only be spent on nonrecurring expenses to avoid future
funding problems for the operating budget.
· Revenue Assumptions
There are thirteen revenue assumptions in the attached document.
· Expenditure Assumptions
There are eleven expenditure assumptions in the attached document.
The sales tax distribution formula will be maintained at 50 percent tax relief, 30
percent for reduction of street special assessments and street construction, and 20
percent for maintenance of City-owned property and facilities.
Expansion or creation of new facilities that will increase the required operation
support, usually from property taxes, will only be considered with a demonstrated
need and a long-term plan to incorporate the increased costs into the entire system.
General Obligation borrowing is not anticipated if gaming distributions continue at
the projected levels. To the extent they do not meet projections, general obligation
borrowing may be necessary.
· Emphasis will be placed on funding projects in the CIP that reduce future operating
expenditures.
· Gaming revenues, excluding the annual surplus distribution, will be used 50 percent
in operating budget and 50 percent in the capital budget.
8
November 18, 2002
Finally, the Policy Guidelines include a property tax guideline that provides no
increase in the "City" share of property taxes for the average homeowner. In order
to meet this guideline it is anticipated that tax-supported services will need to be
reduced and/or user fees increased by $295,115.
· The January DRA distributions of surplus funds will be committed to support current-
year capital projects.
At this time, I am respectfully requesting that the Mayor and City Council adopt the
budget guidelines, which provide no increase in the "City" share of property taxes for
the average homeowner in Fiscal Year 2004.
PJ/ksf
Attachments
CC:
Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
Randy Peck, Human Services Manager
Ken TeKippe, Finance Director
9
POLICY GUIDELINES FOR FY 2004
BUDGET PLANNING AND ADMINISTRATION
OPERATING BUDGET GUIDELINES
The Policy Guidelines are developed and adopted by City Council early in the
budgeting process in order to provide targets or parameters within which the budget
recommendation will be formulated. 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.
CITIZEN PARTICIPATION
Guideline
To encourage citizen participation in the budget process, City Council will hold at
least five work sessions 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 limited number of the Citizens Guide to the Recommended Budget
will be made available to interested citizens and groups. Other budget
documents will be on file with the City Clerk and at the Carnegie Stout Public
Library in their government documents section.
An opportunity will be provided for citizen input prior to formulation of the City
Manager's recommended budget and again prior to final Council adoption, both
at City Council budget work sessions and at the required budget public hearing.
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
administration and identify the level of service, which the citizen can anticipate.
FY 2004 Po[icy Guidelines
Page 2
3. TVVOTYPES OF BUDGET DOCUMENTS TO BE PREPARED
Guideline
The recommended City operating budget for Fiscal Year 2004 will consist of two
types of budget documents: a Recommended City Council Policy Budget that is
a collection of information that has been prepared for each department hearing
and is bound by hearing date. The second type of document is a Citizens Guide
to the Recommended FY 2004 Budget.
The Recommended City Council Policy Budget documents contain the following
information for each department: Highlights of Prior Year's Accomplishments
and Future Year's Initiatives, a financial summary, a summary of decision
packages requested and recommended, significant line items, index of capital
improvement projects 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 are to focus the attention
of the City Council and the public 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. It will clearly
show the level of service being proposed.
The Citizens Guide to the Recommended FY 2004 Budget is a composite of
tables, financial summaries and explanations, operating and capital budget
messages and the adopted City Council Budget Guidelines. It serves as a
handout for the general public, which highlights the budget process, City
Manager's recommendations, departmental accomplishments and future
initiatives. Through graphs, charts and tables it presents financial summaries,
which provide an overview of the total operating and capital budgets.
The City of Dubuque will continue to maintain comprehensive budget
documents, which meet the standards for budget presentation established by the
Governmental Finance Officers Association.
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.
FY 2004 Policy Guidelines
Page 3
5. 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 of the services requested by individual citizens. The City must consider the
ability of citizens to pay for services in setting service levels and priorities.
6. 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. Annually, however, 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? (f) What is the level of demand for the
service? (g) Should this service be supported by property tax, user fees, or a
combination?
7. 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.
8. USE OF VOLUNTEERS
Discussion
As our financial capabilities decrease, we must seek to expand our resources by
continuing to get citizens directly involved in supplementing our service delivery
capability. Citizens must be encouraged to assume tasks previously performed
or provided by City government. This may require us to change our approach to
service delivery, such as, providing organizational skills, training, coordinating
FY 2004 Policy Guidelines
Page 4
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, Cable TV (government channel camera operators) and Police. The City
initiated the Dubuque Volunteer Corps Program in FY 1998 to encourage citizen
involvement in the many programs offered by the City and in maintaining the
facilities for community betterment.
Guideline
In the future the maintenance of City services may well depend on volunteer
citizen staffs. In FY 2004 efforts shall continue through the Dubuque Volunteer
Corps 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, Cable TV, Police) or (b) services can be "spun off" to
non-government groups and sponsors (i.e., YMCA/YVVCA, United Way groups,
Recreation Groups).
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.
10. SALARY INCREASES OVER THE AMOUNT BUDGETED TO BE FINANCED
FROM BUDGET REDUCTIONS IN THE DEPARTMENT(S) OF THE
BENEFITING EMPLOYEES
Discussion
The recommended budget will include salary amounts for all City employees.
However, past experience shows that budgeted amounts are often exceeded by
fact finder and/or arbitrator awards. Such "neutrals" often do not take into
account 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 benefiting employees.
FY 2004 Policy Guidelines
Page 5
Guideline
Salary increases over the amount budgeted for salaries shall be financed from
operating budget reductions in the department(s) of the benefiting employees.
11. 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 particular 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.
12. 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, 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 arrangement are fees for swimming, golf and recreation
programs and certain inspection programs.
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,
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 and pay-as-you-go financing for future
capital improvement projects.
User fees and charges in the General Fund shall be established to cover not less
than the following percentages of direct operating costs (excluding debt service).
FY 2004 Policy Guidelines
Page 6
DEPARTMENT/DIVISION
Leisure Services Department
Recreation Division
Adult Athletics* 86.0 79,0 81.0 80.0 81.0
Children's Activities 61.3 57.0 41.6 58.0 57.0
Therapeutic Recreation 15.3 15.0 20.0 18.0 20,0
Recreation Classes 46.7 46.0 46.7 42.0 46.0
Swimming* 86.4 77.0 81.0 80.0 80.0
Golf* 100.0 100.0 100.0 100.0 100.0
Park Division 12.2 9.6 10.3 11.0 10.0
Civic Center Division** 48.0 43.9 42.1 45.0 45.0
Library Department 8.3 7.0 8.2 8.0 8.1
Airport Department w/abated debt79.8 84.1 89.6 80.0 85.0
Building Services Division 83.7 94.6 94.4 90.0 94.0
Planning Services Department 10.7 13.1 11.6 10.0 11.0
Health Services Department
Food/Environmental Insp. 66.8 62.5 58.6 60.0 60.0
Animal Control 100.0 96.2 94.3 85.0 90.0
Housing Services Department
General Housing Inspection 50.9 50.2 45.4 47.0 47.0
FY 2000 FY 2001 FY 2002 FY 2003 FY 2004
ACTUAL ACTUAL ACTUAL ADOPTED RECOM'D
PERCENT PERCENT PERCENT PERCENT PERCENT
* Includes an amount to help cover indirect costs (administration)
** Excludes Self-Promotion Activity
13. 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 avoided.
Guideline
In order 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 avoided.
FY 2004 Policy Guidelines
Page 7
14. 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 our bills before taxes are collected).
The rule of thumb the state recognizes for determining a reasonable amount for
a working balance is (a) anticipated revenues for the first three months of the
fiscal year less anticipated expenditures or (b) 5 percent of the total General
Fund operating budget (excluding fringes and tort liability expense). However, in
discussions with Moody's Investor Service a factor of 10 percent was
recommended for "A" rated cities. This is due to the fact that a large portion of
our revenue sources are beyond our control and therefore uncertain. In the case
of Dubuque, 10 percent represents approximately $2,556,000
Guideline
The guideline of the City of Dubuque is to maintain a General Fund working
balance or operating reserve of 10 percent of the total General Fund Operating
budget requirements or approximately $2,556,000 for FY 2004.
15. USE OF UNANTICIPATED, UN-OBLIGATED, NONRECURRING INCOME
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 you even start 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.
FY 2004 Policy Guidelines
Page 8
16. USE OF "UNENCUMBERED" FUND BALANCES
Discussion
Historically a budget is not spent 100 pement by the end of the year and a small
unencumbered balance remains on June 30th. In addition, income sometimes
exceeds revenue estimates 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 2002-03 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 2004 through FY 2008.
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 2003-04 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.
17. PROPERTY TAX DISCUSSION
Assumptions - Resources
Unencumbered funds or cash balances of $200,000 will be available in FY
2004 and each succeeding year to support the operating budget. In Fiscal
Year 2003 through 2008, an additional amount of $80,000 in Pension Fund
excess cash balance will be used each year for retirement expense and free
up tax support for the additional police officers added in Fiscal Year 1994.
State shared revenues will be reduced by 4.27 pement from FY 2002 Actual
to arrive at the FY 2004 estimate; FY 2005 and beyond will return to the
actual FY 2002 level of receipts.
Hotel/motel tax receipts will increase 2 pement per year over FY 2002 actual
receipts for FY 2004, and then increase at an annual rate of 3 pement per
year.
State Transit operating assistance will also be reduced by 4.27 percent from
FY 02 Actual for FY 04 and then continue at the Actual FY 02 level of
$155,596 beyond FY 2004.
FY 2004 Policy Guidelines
Page 9
Miscellaneous revenue, excluding state shared revenues, has been
estimated at two percent growth per year over budgeted FY 2003.
Revenues generated from Dubuque Greyhound Park have been estimated
based on the FY 2002 actual receipts plus 5 percent per year. Riverboat
related receipts also reflect the FY 2002 actual receipts plus 2.5 percent per
year and are estimated at $564,373 from the 50-cent admission fee and
$257,127 from ~ of I percent of adjusted gross receipts for FY 2004.
Gaming revenues have been split 50 percent for operating budget support
and 50 percent capital budget support.
Interest earnings from the Self-Insurance Reserves (Health and Workers'
Compensation) will continue to be used to reduce tax askings for fringe
benefit expense. Cash balances are no longer available to help reduce
property tax support.
The residential rollback factor will decrease from 51.6676 percent to
51.3874 percent or -.5 for FY 2004. Fiscal Years 2005 and beyond a 10-
year average for rollbacks and equalization orders was used.
Assessed valuations were increased 2 percent per year beyond FY 2004.
Debt Service Fund balances will be used over the next two years to reduce
property tax support for General Obligation debt service related expense.
No additional property tax supported General Obligation debt is anticipated
in the Five Year Projection.
Sales tax projections anticipate 50 percent of four quarterly payments in the
General Fund for property tax relief. Sales tax projections for FY 2004 have
been estimated to increase 3 percent per year over the revised FY 2003
state revenue estimate.
It is anticipated that in FY 2004 and beyond, 75 percent of the revenue from
the Downtown TIF will be used for downtown development projects in order
to support additional downtown parking, gateway improvements and plaza
amenities. To the extent these funds are not required to support debt
payments or project expense, the excess will be distributed per state code to
each taxing body. Certain economic development grants require 100
percent of the revenue from a particular project.
For purposes of budget projections only, it is assumed that property taxes
will continue to increase at a rate necessary to meet additional requirements
over resources beyond FY 2004.
FY 2004 Policy Guidelines
Page 10
Assumptions - Requirements
a. A wage adjustment is reflected in the projections for FY 2004 and each
succeeding year.
b. Health insurance costs are estimated to increase 15 percent over the
FY 2003 budgeted rates. Estimates for FY 05-08 have been increased by 7
percent per year.
c. General operating supplies and services are estimated to increase 2 percent
over budget in FY 2004 and succeeding years.
d. Electrical energy expense is estimated to increase 15 percent over FY 2002
actual expense, then 2.5 percent per year beyond.
e. Natural gas expense is estimated to increase 17.8 percent from FY 2002
actual due to a 12.3 percent degree-day adjustment and a projected 2.5
percent inflation adjustment.
f. The Convention and Visitors Bureau contract will continue at 50 percent of
actual hotel/motel tax receipts.
g. Equipment costs are estimated at 2 percent per year over the FY 2003
budget; however, the final budget recommendation will be based on need,
not on a percentage over prior years.
h. Debt service is estimated based on no additional tax-supported General
Obligation bond sales in FY 2004 - 2008.
I. Unemployment insurance expense has been maintained at $15,000 per
year.
j. Motor vehicle fuel expense has been increased 3 percent over FY 2002
actual expense and motor vehicle maintenance expense by 3 percent per
year.
k. Postage rates are estimated to increase 8.5 percent per year over FY 2003
budgeted expense for FY 2004 then +3 percent beyond.
FY 2004 Policy Guidelines
Page ii
IMPACT ON AVERAGE RESIDENTIAL PROPERTY - EXAMPLE
ACTUAL - PAST HISTORY
CITY TAX
CALCULATION
PERCENT
INCREASE
FY 1989 "City" Property Tax $ 453.99 -11.4%
FY 1990 "City" Property Tax $ 449.94 .9%
FY 1991 "City" Property Tax* $ 466.92 + 3.8%
FY 1992 "City" Property Tax $ 483.63 + 3.6%
FY 1993 "City" Property Tax* $ 508.73 + 5.0%
FY 1994 "City" Property Tax $ 510.40 + .3%
FY 1995 "City" Property Tax* $ 522.65 + 2.4%
FY 1996 "City" Property Tax $ 518.10 .9%
FY 1997 "City" Property Tax* $ 515.91 .4%
FY 1998 "City" Property Tax $ 512.25 .7%
FY 1999 "City" Property Tax* $ 512.25 0.0%
FY 2000 "City" Property Tax $ 511.38 .2%
FY 2001 "City" Property Tax* $ 511.38 0.0%
FY 2002 "City" Property Tax $ 511.38 0.0%
FY 2003 "City" Property Tax $ 485.79 - 5.00%
DOLLAR
INCREASE
~ $ 58.51
- $ 4.05
+$16.98
+$16.71
+$ 5.10
+$ 1.51
+$12.41
-$ 4.54
- $ 2.19
- $ 3.66
-$ 0.00
- $ 0.87
$ 0.00
+$ 0.00
-$ 25.59
PROPOSED
FY 2004 "City" Property Tax
Average FY 1989-FY 2004
$494.65 + 1.82% +$ 8.86
.16% -$ 1.82
PROJECTION
FY 2005 "City" Property Tax* $ 523.72
FY 2006 "City" Property Tax $ 501.28
FY 2007 "City" Property Tax* $ 491.62
FY 2008 "City" Property Tax $ 503.51
*denotes year of State-issued equalization orders
+ 5.88%
- 4.29%
- 1.93%
+ 2.42%
-$ 29.07
-$ 22.44
-$ 9.66
+$ 11.89
IMPACT ON COMMERCIAL PROPERTY - EXAMPLE
ACTUAL-PAST HISTORY
CITY TAX
CALCULATION
PERCENT
INCREASE
FY 1989 "City" Property Tax $2,106.42 -15.4%
FY 1990 "City" Property Tax $2,086.50 .9%
FY 1991 "City" Property Tax* $2,189.48 + 4.9%
FY 1992 "City" Property Tax $2,280.18 + 4.1%
FY 1993 "City" Property Tax* $2,231.05 - 2.2%
FY 1994 "City" Property Tax $2,250.15 + 0.9%
FY 1995 "City" Property Tax* $2,439.60 + 8.4%
FY 1996 "City" Property Tax $2,439.60 + 0.0%
DOLLAR
INCREASE
-$ 384.00
- $ 2O.OO
+$102.98
+$ 90.70
-$ 49.13
+$ 19.10
+$189.45
+$ 0.00
FY 2004 Policy Guidelines
Page ]2
FY 1997
FY 1998
FY 1999
FY 2000
FY 2001
FY 2002
FY 2003
*denotes year
"City" Property Tax*
"City" Property Tax
"City" Property Tax*
"City" Property Tax
"City" Property Tax
"City" Property Tax
"City" Property Tax*
of State-issued equalization
PROPOSED
FY 2004 "City" Property Tax
Average FY 1989-2004
PROJECTION
FY 2005
FY 2006
FY 2007
FY 2008
"City" Property Tax*
"City" Property Tax
"City"PropertyTax*
"City~ Property Tax
$2,659.36 + 9.0% +$ 219.76
$2,738.43 +2.97% +$ 79.07
$2,952.03 + 7.8% +$ 213.60
$2,934.21 -0.6% -$ 17.82
$2,993.00 + 2.0% +$ 58.86
$2,910.25 -2.77% -$ 82.83
$3,186.27 + 9.48% +$276.03
o~er
$3,285.85 + 3.13% +$ 99.58
+ 1.93% +$ 49.71
$3,325.88 + 1.22% +$ 40.03
$3,422.81 + 2.91% +$ 96.94
$3,482.94 + 1.76% +$ 60.12
$3,534.03 + 1.47% +$ 51~09
IMPACT ON INDUSTRIAL PROPERTY - EXAMPLE
ACTUAL - PAST HISTORY
FY 1989
FY 1990
FY 1991
FY1992
FY 1993
FY 1994
FY 1995
FY 1996
"City" Property Tax
"City"PmpertyTax
"City"PropertyTax
"City" Property Tax
"City"PropertyTax
"City" PmpertyTax
"City"Property Tax
"City" Property Tax
CITY TAX
CALCULATION
$5,900.35
$5,844.55
$6,133.00
$6,387.05
$6,249.45
$6,3O2.95
$5,891.05
$5,891.05
PERCENT
INCREASE
DOLLAR
INCREASE
-15.4% -$1,074.65
.9% -$ 55.80
+ 4.9% +$ 288.45
+4.1% +$ 254.05
-2.2% -$ 137.60
+0.9% +$ 53.50
- 6.5% -$ 411.90
+ 0.0% +$ 0.00
ACTUAL - PAST HISTORY (cont.)
FY 1997
FY 1998
FY 1999
FY 2000
FY 2001
FY 2002
FY 2003
"City" Property Tax
"City"Proper-b/Tax
"City" Property Tax
"City" P~pertyTax
"City" Property Tax
"City"PmpertyTax
"City"Property Tax
CITY TAX
CALCULATION
PERCENT
INCREASE
DOLLAR
INCREASE
$5,690.75 - 3.4% -$ 200.30
$5,700.56 + .17% +$ 9.81
$5,536.70 -2.87% -$ 163.86
$5,358.00 - 3.23% -$ 178.70
$5,533.00 + 3.28% +$ 175.55
$5,380.42 -2.77% -$ 153.13
$5,106.00 - 5.10% -$274.40
FY 2004 Policy Guidelines
Page 13
PROPOSED
FY 2004 "City" Property Tax
Average FY 1989-FY 2004
$5,148.16
PROJECTION
FY 2005
FY 2006
FY 2007
FY 2008
"City"Pmpe~yTax
"City" Prope~yTax
"City" Prope~yTax
"City'PmpertyTax
$5,210.88
$5,362.75
$5,456.95
$5,537.00
History of Increases in Property Tax Askings
Fiscal "City" Property
Year Tax Askings (000) % Increase
FY1998 $10,918,759 -12.0%
FY1990 $10,895,321 - 0.2%
FY1991 $11,553,468 + 6.0%
FY 1992 $12,249,056 + 6.0%
FY1993 $12,846,296 + 4.9%
FY1994 $13,300,756 + 3.5%
FY 1995 $13,715,850 + 3.1%
FY 1996 $14,076,320 + 2.6%
FY 1997 $14,418,735 + 2.4%
FY 1998 $14,837,670' + 2.9%
FY1999 $15,332,806' + 3.3%
FY2000 $15,285,754 - 0.3%
FY2001 $15,574,467 + 1.9%
FY 2002 $15,686,579 + .8%
FY 2003 $15,771,203 +.55
FY 2004 est. $16,446,271 +4.28
Average FY 1989-2004 + 1.9%
*Without TIF Accounting change.
Impact on Tax Askings and Average Residential Property
+ .83%
- 1.76%
+ 1.22%
+ 2.91%
+ 1.76%
+1.47%
Sales Tax initiated
+$ 42.16
-$114.18
+$ 62.71
+$151.88
+$ 94.20
+$ 80.05
FY 2004 Policy Guidelines
Page ~4
To maintain the current level of service based on the previous assumptions would
require the following property tax asking increases:
"City" Property
Year Tax Askin.qs (000) % Increase
FY 2003 $15,771
FY 2004 $16,446 +4.28%
FY 2005 $16.970 +3.19%
FY 2006 $17.807 +4.93%
FY 2007 $18,403 +3.80%
FY 2008 $19,130 +3.50%
% / $ Impact on Avg.
Residential Property*
+3.60% / +$17.50
+1.22% / +$6.13
+2.9% / +$14.85
+1.76% / +$9.21
+1.47 / +$7.83
*Assumes no changes in residential rollback factor beyond FY 04.
Guideline
The recommended guideline is to maintain no tax increase for the average residential
property owner, which will require budget cuts and/or revenue increase in the tax
supported operations of $295,115, and a change in the use of gaming revenues from
one-third operating budget to one-half operating budget. Without the change in gaming
revenue split, the reduction and/or revenue increase needed to maintain no property tax
increase would be $1,041,406
Note: One percent increase in the tax rate will generate approximately $163,001 and a
1 percent increase in tax asking will generate approximately $157,712. Each one
percent increase in property taxes on the average home generates $160,482.
CIP BUDGET GUIDELINES
18. INTEGRATION OF CAPITAL RESOURCES
Guideline
In order 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.
19, 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
FY 2004 Policy Guidelines
Page ]5
projects are to be added and/or deleted from the CIP, the changes
shall be made only after approval by the City Council.
20.
RENOVATION AND MAINTENANCE
Guideline
Capital improvement expenditures should concentrate on renovating and
maintaining existing facilities to preserve prior community investment.
2'1. 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.
22. COOPERATIVE PROJECTS
Guideline
Increased efforts should be undertaken to enter into mutually beneficial
cooperative capital improvement projects with the County, school district and
private groups. Cost sharing to develop joint-use recreation facilities and cost
sharing to improve roads and bridges are examples.
23. USE OF GENERAL OBLIGATION BONDS
Discussion
The Iowa Constitution limits the General Obligation debt of any city to 5 percent
of the actual value of the taxable property within the city. The Iowa legislature
has determined that the value for calculating the debt limit shall be the actual
value of the taxable property prior to any "rollback" mandated by state statute.
The FY 2002-03 taxable value for calculating the debt limit is $2,399,324,846,
which indicates a total General Obligation debt capacity of $119,966,242.
FY 2004 Policy Guidelines
Page ]6
Outstanding G.O. debt (including tax increment debt) on June 30, 2003 will be
$25,779,757 (21.5 percent) leaving an available debt capacity of $94,186,485
(79.5 percent).
As we approach the preparation of the FY 2004-2008 Capital Improvement
Program (CIP) the problem is not our 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 2004-2008 period. Most of these projects will be
possible without borrowing the money (i.e., selling bonds) to help finance them.
This is based on the plan approved by City Council in 1997 that shifts Road Use
Tax funds from the operating budget to the capital budget and uses DRA
distributions of annual net surpluses to the City for capital improvements. In
determining whether a project should be financed in total or in part from bond
funds the City Council must consider and balance off: (a) the community impact
of not doing the project (poor streets, deteriorated park buildings, sewer
problems, higher operating costs); (b) possible operating budget cuts to offset
higher debt service payments; (c) anticipated interest rate; and (d) the impact on
the tax rate and taxpayer of issuing the bonds.
24. ROAD USE TAX FUND
Discussion
Actual Road Use Tax Fund receipts are as follows:
FY 1985- $2,069,065
FY 1986- $2,207,467
FY 1987- $2,259,436
FY1988-$2,379,592
FY 1989- $2,617,183
FY 1990-$3,037,587
FY 1991 - $3,122,835
FY 1992- $3,119,087
FY 1993- $3,121,357
FY 1994- $3,343,678
FY 1995- $3,484,524
FY 1996-$3,841,921
FY 1997- $3,977,528
FY 1998- $4,072,296
FY 1999- $4,415,192
FY 2000-$4,671,656
FY 2001- $4,689,000
FY 2001 -$4,628,122
FY 2002-$4,620,514
The FY 2003 budget was based on receiving $4,429,000 in Road Use Tax
funds. In FY 2003, 74.3 percent of the Road Use Tax income is in the operating
budget.
FY 2004 Policy Guidelines
Page 17
In FY 1997, the City Council adopted a plan to shift Road Use Tax funds from
the operating budget to the capital budget at a rate of $250,000 per year. As of
FY 2001, $940,000 of Road Use Tax fund expense had been shifted to the
General Fund per the guideline. The increase in the tax askings from this shift
was offset by reduced debt service expense. Shifting additional funds was
discontinued in FY 2001, and $60,000 was actually shifted back to Road Use
Tax funds. This change reflected the continued growth of gaming receipts and
recognition that this appeared to be a much more certain revenue stream that
could be used to support the CIP budget. In FY 2003, the shift of $940,000 to
the General Fund was shifted back to RUTF to support the multi-year pay plan
approved by City Council in FY 2002.
Guideline
Since FY 1997 Road Use Tax funds have been shifted to the capital budget for
street maintenance and repair to reduce the need to borrow funds for routine
street maintenance and improvements. This shift will not occur again until such
time as there is increased revenues or reduced expense that would allow this
shift without a property tax impact.
25. 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 our economic base. Financing these efforts and programs should
continue to be a high priority for Community Development funding.
26. HOUSING
Guideline
In order to maintain an adequate supply of safe and decent housing, the City
should strive to preserve existing single family and rental housing and provide
opportunities for development of new housing within the City's corporate limits for
all citizens, particularly for people of Iow and moderate income.
FY 2004 Policy Guidelines
Page ].8
27. 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.
28. 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 (November) of 50 percent of its net cash operating funds to
the City of Dubuque. In mid-December, the City will receive an un-audited
estimate of proceeds to be distributed. These proceeds were allocated
beginning with the next fiscal year through the capital improvement process with
the highest priority given to reducing the City's annual borrowing. This policy is
being changed to allow for use of the proceeds to support the current capital
improvement budget (versus the next fiscal years' budget).
In addition, 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.
One hundred percent of the January 2003 and 2004 projections of operating
surplus have been anticipated as resources to support the Fiscal Year 2005
capital improvement projects. This level has been maintained for the Fiscal Year
2005 resource estimate and then has been reduced from 100 percent to 90
percent of the year 2005 projected surplus for FY 2006, 80 percent for FY 2007,
and 70 percent for FY 2008 resources.
Guideline
In Fiscal Year 2004, 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 ClP in the year they are received and will be used
to reduce required General Obligation borrowing.
FY 2004
Page ]9
29.
Policy Guidelines
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.
30. USE OF GAMING RELATED RECEIPTS
Guideline
The amount of total gaming receipts from taxes and rent committed annually in
support of the annual operating budget has historically been one-third of the total
gaming tax and lease revenues. It was felt that a fiscally sound policy was to
commit two thirds of the gaming revenues to the capital budget, thereby
providing a cushion for future years, when gaming revenues could fluctuate with
the local economy. Should gaming revenues begin to decline, the capital budget
projects would be eliminated, deferred or funded from some other source if they
were a high priority.
The City has always tried to minimize dependence on gaming revenues in the
operating budget. This was maintained over years, while still meeting the
property tax guideline of no increase for the average residential property.
However, FY 2004 has brought new financing challenges including double-digit
inflation in key areas (health costs, liability, and property insurance, electrical
costs), a 5 percent increase in Police and Fire Pension costs, decreasing State
revenues and reduced sales tax projections. This year's guideline reflects the
impact of the changes and recommends a change to a 50/50 split of gaming
taxes and rents between the operating and capital budgets. This will result in an
additional $746,291 toward property tax relief in Fiscal Year 2004. It is felt that
this is still a fiscally responsible policy.