Fiscal Year 2011 Budget Policy GuidelinesTHE CITY OF Dubuque
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.Masterpiece on the Mississippi
2007
December 14, 2009
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Budget and Fiscal Policy Guidelines for Fiscal Year 2011
Budget Director Jennifer Larson is recommending adoption of the Fiscal Year 2011 Budget
Policy Guidelines. The guidelines reflect City Council direction given as part of the August
25 and 26, 2009, goal setting sessions.
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 Fiscal Year 2011 budget guidelines call fora 2.47% property tax increase for the
average Dubuque homeowner and a property tax increase for commercial (1.72%) and
industrial (1.72%) properties. This assumes that the State of Iowa will fund the Homestead
Tax Credit at 100%, instead of the 72% funding the State provided in the current fiscal
year.
A significant cause of this property tax increase is the Municipal Fire and Police Retirement
System increase in City contribution. The current payment of 17% of Police and Fire
employee salary is mandated by the State to increase to 19.9% of salary, for an additional
cost of $360,516 in FY 2011 or a 1.85% property tax increase for the average homeowner.
This level of taxation includes funds for recurring improvement package requests and
funds for non-recurring improvement package requests. Elimination of the funds for
recurring improvement packages would reduce the impact on the average homeowner
from 2.47% to 1.44%.
The budget guidelines include an increase from 2% to 3% to the franchise fee that is
charged on gas and electric bills. The City Council passed a resolution in 1993 which
authorized the City to impose a franchise fee not to exceed 3 percent of gross revenue
generated from the sale of gas and electric within the City of Dubuque. In September
2003, the City Council approved the establishment of a 2% Utility Franchise Fee. The 1
increase in the franchise fee represents an estimated increase of revenue in FY 2011 of
$828,000. Without this franchise fee increase, the property tax increase for the City portion
of property taxes paid by the average homeowner would result in a 6.73% increase instead
of 2.47%.
Recognizing that there is a great deal of uncertainty around the national economy, which
has spilled over to negatively affect the local economy, these guidelines call for the
continued allocation of $1 million in the uncommitted cash reserve general fund balance
which was implemented in FY 2010, which is normally an amount that equals 10% of the
general fund, to help weather any economic downturn with a minimal impact on the
delivery of services. In addition, it is recommended that an additional $500,000 be added
to this one-time reserve in FY 2011 due to the health insurance claims this year exceeding
expectations and the possibility of needing to boost the health insurance reserve in FY
2011. Of the $1 million in additional reserves added in the current fiscal year, FY10,
$377,562 is recommended to be used for funding of equipment replacements previously
identified by departments through the FY 2011 budget process to be delayed and
$122,438 is being used for property tax relief. These funds are replenished in the FY11
budget.
As previously projected and approved, the monthly Stormwater Fee is recommended to
increase from $4.00 per month in FY 2010 to $5.25 per month in FY 2011.
The property tax rate will increase 1.72 percent from $9.8577 per thousand dollars of
assessed valuation in Fiscal Year 2010 to $10.0274 per thousand dollars of assessed
valuation in Fiscal Year 2011.
Preliminary citizen participation opportunities will be available. There will be six City
Council Work Sessions prior to the adoption of the FY 2011 budget before the state
mandated deadline of March 15, 2010.
I concur with the recommended Budget and Fiscal Policy Guidelines and respectfully
request Mayor and City Council approval.
Michael C. Van Milligen
MCVM/jml
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Jennifer Larson, Budget Director
Ken TeKippe, Finance Director
THE CITY OF Dubuque
DUB E A~~~
~ ~
Masterpiece an the Mississippi
2007
December 14, 2009
TO: Michael C. Van Milligen, City Manager
FROM: Jennifer Larson, Budget Director
SUBJECT: Budget and Fiscal Policy Guidelines for Fiscal Year 2011
I am recommending adoption of the Fiscal Year 2011 Budget Policy Guidelines. The
guidelines reflect City Council direction given as part of the August 25 and 26, 2009,
goal setting sessions.
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 Fiscal Year 2011 budget guidelines call fora 2.47% property tax increase for the
average Dubuque homeowner and a property tax increase for commercial (1.72%) and
industrial (1.72%) properties.
A significant cause of this property tax increase is the Municipal Fire and Police
Retirement System increase in City contribution. The current payment of 17% of Police
and Fire employee salary is mandated by the State to increase to 19.9% of salary, for
an additional cost of $360,516 in FY 2011 or a 1.85% property tax increase for the
average homeowner.
This level of taxation includes funds for recurring improvement package requests and
funds for non-recurring improvement package requests. Elimination of the funds for
recurring improvement packages would reduce the impact on the average homeowner
from 2.47% to 1.44%.
The budget guidelines include an increase from 2% to 3% to the franchise fee that is
charged on gas and electric bills. The City Council passed a resolution in 1993 which
authorized the City to impose a franchise fee not to exceed 3 percent of gross revenue
generated from the sale of gas and electric within the City of Dubuque. The 1 % increase
in the franchise fee represents an estimated increase of revenue in FY 2011 of
$828,000. Without this franchise fee increase, the property tax increase for the City
portion of property taxes paid by the average homeowner would result in a 6.73%
increase instead of 2.47%.
Recognizing that there is a great deal of uncertainty around the national economy,
which has spilled over to negatively affect the local economy, these guidelines call for
the continued allocation of $1 million in the uncommitted cash reserve general fund
balance which was implemented in FY 2010, which is normally an amount that equals
10% of the general fund, to help weather any economic downturn with a minimal impact
on the delivery of services. In addition, it is recommended that an additional $500,000
be added to this one-time reserve in FY 2011 due to the health insurance claims this
year exceeding expectations and the possibility of needing to boost the health insurance
reserve in FY 2011. Of the $1 million in additional reserves added in the current fiscal
year, FY10, $377,562 is recommended to be used for funding of equipment
replacements previously identified by departments through the FY 2011 budget process
to be delayed and $122,438 is being used for property tax relief. These funds are
replenished in the FY11 budget.
Some highlights of the document are:
- As reported last year, with the opening of the renovated Diamond Jo Casino,
there will be a decrease of $12.8 million in operating revenues for the City over
five years and a decrease of $2.2 million in the capital improvement budget over
five years. This adjustment to the City budget was made through last year's
budgeting process. The Diamond Jo expansion was projected to decrease the
Mystique gaming market and correspondingly the coin-in by just 21 percent. The
Diamond Jo has now been open a full year as a land based casino and the
reduction in the Mystique's coin-in has been almost 25 percent (24.85%), instead
of just over 21 percent.
- Gaming revenues generated from lease payments from the DRA will need to be
further adjusted in this budget process by a revised DRA projection of a reduction
of lease payments of just over $160,000 per year or $823,000 over the next five
years.
- The total decrease of gaming lease revenues over five years is $15.8 million, of
which eight-five percent ($13.4 million) impacts general property tax relief and
fifteen percent ($2.4 million) impacts the city's five year capital improvement
program.
- Gaming revenues from taxes and the DRA lease (not distributions) is
recommended to remain the same between operating and capital budgets at
85% / 15% in FY 2011.
- There are many high priority capital improvement projects, which need to be
constructed during the FY 2011-2015 period. Many of these projects will be
possible without borrowing (i.e., selling bonds) to help finance them. However,
debt will be required on several major capital projects, that being the Drainage
Basin Master Plan, Intermodal Facility, Airport Improvements, Park
Improvements, Sidewalk and Street Improvements, Sanitary Sewer Fund, and
Water Fund. Alternative sources of funds will always be evaluated (i.e. State
Revolving Loan Funds) to maintain the lowest debt service costs.
There is DRA distribution budgeted in this 5-Year Capital Improvement Program
budget cycle beginning in FY 2011. The DRA had renegotiated the City lease to
provide for no distribution in FY 2009, FY 2010 and FY 2011, however revised
projections from the DRA now provide for a distribution in FY 2011 based on their
successfully weathering the increased competition from the Diamond Jo by
improving their product, cutting costs and increasing net income. This change by
the DRA will reduce the negative impact on the City's five year capital
improvement budget by over $5 million.
All requested projects will not be recommended for funding.
- As previously projected and approved, the monthly Stormwater Fee is
recommended to increase from $4.00 per month in FY 2010 to $5.25 per month
in FY 2011.
- The Policy Guidelines include a property tax guideline that provides fora 2.47%
increase to the "City" share of property taxes for the average homeowner
assuming the Homestead Property Tax Credit is fully funded by the State of
Iowa.
- The property tax rate will increase 1.72 percent from $9.8577 per thousand
dollars of assessed valuation in Fiscal Year 2010 to $10.0274 per thousand
dollars of assessed valuation in Fiscal Year 2011.
- The "City" share of commercial property taxes will increase 1.72 percent.
- The "City" share of industrial property tax will increase 1.72 percent.
- The property tax asking will increase 4.40 percent from Fiscal Year 2010.
- The following table summarizes the impact of the Policy Guidelines:
FY 2011
Im act to Avera a Homeowner +2.47%
Im act to Avera a Commercial +1.72%
Im act to Avera a Industrial +1.72%
FY 2011 Tax Rate 10.0274 / +1.72%
FY 2011 Pro a Tax Askin $19,935,231 / +4.40%
Preliminary citizen participation opportunities will be available. There will be six City
Council Work Sessions prior to the adoption of the FY 2011 budget before the state
mandated deadline of March 15, 2010.
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Jennifer Larson, Budget Director
Ken TeKippe, Finance Director
BUDGET AND FISCAL POLICY GUIDELINES
FOR FY 2011
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.
1. CITIZEN PARTICIPATION
Guideline
To encourage citizen participation in the budget process, City Council will hold at least
six 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 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.cityofdubugue.org
and copies of the budget on CD will be available.
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.
2. 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 2011 Policy Guidelines
Page 2
3. TWO TYPES OF BUDGET DOCUMENTS TO BE PREPARED
Guideline
The recommended City operating budget for Fiscal Year 2011 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 2011 Budget.
The Recommended City Council Policy Budget includes 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 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.
The Citizens Guide section of the Recommended FY 2011 Budget is 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.
4. 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 2011 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
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 (through
SMG, Inc., the private management company hired by the City as of July 1, 2004),
Transit, and Police.
FY 2011 Policy Guidelines
Page 4
Guideline
In the future, the maintenance of City services may well depend on volunteer citizen
staffs. In FY 2011, 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, Transit, Police) or (b) services
can be "spun off' to non-government groups and sponsors (i.e., YMCA/YWCA, United
Way groups, Recreation Groups).
9. 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" 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.
Guideline
Salary increases over the amount budgeted for salaries shall be financed from
operating budget reductions in the department(s) of the benefiting employees.
FY 2011 Policy Guidelines
Page 5
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, 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
arrangement are fees for swimming, golf and recreation programs and certain
inspection programs.
FY 2011 will be the third fiscal year that 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% subsidy for the stormwater fee charged
to property tax exempt properties, low-to-moderate income residents, and 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 and financing for future capital
improvement projects.
FY 2011 Policy Guidelines
Page 6
In FY 2011, the Stormwater User Fund will be self-supporting. The schedule of rate
increases to make this guideline is proposed as follows:
FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
Current Rates $4.00 $5.25 $5.60 $6.85 $6.90 $7.00
Proposed
Rates $4.00 $5.25 $5.60 $6.85 $6.90 $7.00
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):
DEPARTMENT/DIVISION
Leisure Services Department
Recreation Division
Adult Athletics*
McAleece Concessions
Children's Activities
Therapeutic Recreation
Recreation Classes
Swimming*
Golf* Surplus to Golf Devel' Fund
Park Division
Library Department eXCi' Gift Trusts
Airport Department w~abatea debt
Building Services Division
Inspections
Planning Services Department
Health Services Department
Food/Environmental Insp.
Animal Control***
Housing Services Department
General Housing Inspection
Federal Building Maint.
FY 2007 FY 2008 FY 2009 FY 2010 FY 2011
ACTUAL ACTUAL ACTUAL BUDGETED RECOM'D
PERCENT PERCENT PERCENT PERCENT PERCENT
61.8** 61.4 60.1 59.6 59.5
146.9** 151.9 157.9 162.7 153.2
53.2 45.9 46.8 45.7 43.2
13.3 23.4 14.8 20.3 18.1
32.1 39.0 23.6 26.0 25.3
69.6 51.0 56.7 62.8 61.4
101.6 102.3 112.2 100.5 101.0
12.7 10.6 12.4 11.1 11.8
14.5 9.3 10.6 3.7 5.0
81.7 86.3 84.8 83.3 80.0
84.5 90.7 73.0 101.4 77.9
16.0 13.5 30.6 33.3 33.5
49.5 66.6 69.8 69.7 67.1
61.3 126.3 118.8 54.1 53.3
78.5 72.6 62.5 58.8 57.0
91.4 124.3 86.2 83.4 100.0
'` Includes an amount to help cover indirect costs (administration).
*'` McAleece concessions moved to a separate activity in FY 2007.
'`*'` Humane Society contract moved to the Purchase of Service activity in FY 2008.
FY 2011 Policy Guidelines
Page 7
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.
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 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 revenue sources are beyond the
City's control and therefore uncertain. In the case of Dubuque, 10% represents
approximately $4,017,317.
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 $4,017,317 for FY 2011. However, recognizing the
current economic uncertainties for FY 2010 and FY 2011 it is recommended that the
one-time General Fund operating reserve of one million dollars that was implemented
FY 2011 Policy Guidelines
Page 8
in FY 2010 be carried over into FY 2011. In addition, it is recommended that an
additional $500,000 be added to this one-time reserve in FY 2011 due to the health
insurance claims this year exceeding expectations and the possibility of needing to
boost the health insurance reserve in FY 2011. If these funds are not needed in FY
2010 or FY 2011, they would be available in FY 2012 for a capital project, or for an
important economic development initiative.
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 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.
16. USE OF "UNENCUMBERED FUND BALANCES"
Discussion
Historically a budget is not spent 100% 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 2009-10 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 2011 through FY 2015.
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
FY 2011 Policy Guidelines
Page 9
for FY 2010-11 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
a. Unencumbered funds or cash balances of $200,000 will be available in FY 2011
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. Sales tax projections for FY 2011 are projected to increase
2.0 percent over FY 2010 actual receipts, and then increase at an annual rate of
2.0 percent per year.
c. Hotel/motel tax receipts are projected to increase 2 percent over FY 2010 budget,
and then increase at an annual rate of 3 percent per year.
d. State Transit operating assistance is anticipated to decrease 10 percent from FY
2010 budget. Federal Transportation Administration (FTA) is anticipated to
increase 3.1 % from FY 2010 budget.
In addition, the City Council approved wrapping Transit fixed route and mini-
buses with advertisements. This would eliminate the four advertisements currently
on each fixed route bus which generates $12,684 annually. The advertisement
wraps would also eliminate the need to repaint the buses every ten years. This is
projected to increase operating revenue by a net $75,000 in FY 2011 and
$100,000 annually in FY 2012 and beyond.
e. Miscellaneous revenue, excluding state shared revenues, has been estimated at
2 percent growth per year over budgeted FY 2010.
f. Gaming revenues generated from lease payments from the DRA have been
decreased by $139,861 per year based on revised projections from the DRA.
In addition, in FY 2009, the Diamond Jo Casino paid a 50¢ patron fee. After
learning that the facility in Clinton stopped paying the patron fee after they
became land based, the FY 2011 projections assumed that after the November
2010 gaming referendum the Diamond Jo would stop paying. The 50¢ per patron
tax previously received from the Diamond Jo is now replaced by a $500,000 fixed
payment based on their revised parking agreement. The riverboat related tax on
bets has also been increased 2.5 percent ($11,015) in FY 2011.
FY 2011 Policy Guidelines
Page 10
h. Gaming revenues from taxes and the DRA lease (not distributions) remains
unchanged from the FY 2009 split of 85% / 15% between operating and capital
budgets. The operating portion of the split 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.
The Diamond Jo Patio lease ($25,000) and the Diamond Jo parking privileges
($503,927 in FY 2011 increased 3.3 percent thereafter) have not been included in
the split with gaming revenues. This revenue is allocated to the operating budget.
The residential rollback factor will increase from 45.589 percent to 46.909 percent
or a 2.90 percent increase for FY 2011. The rollback has been estimated to
increase 4% each year from Fiscal Years 2012 thru 2015 and a 10-year average
for equalization orders was used for Fiscal Years 2012 and beyond.
The increase in the residential rollback factor increases the value that each
residence is taxed on. This increased taxable value for the average homeowner
($130,367 assessed value) 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. Commercial and Industrial taxpayers normally are taxed at
100 percent of assessed value and benefit from the lower tax rate that is
recommended by the City when the residential rollback factor increases.
FY 2011 reflects this increased assessed value for the average homeowner.
Assessed valuations were increased 2 percent per year beyond FY 2011.
k. Gas and electric franchise fees have been projected to increase 4.0 percent over
FY09 actual collections based on four years trend data. Also, Alliant has applied
fora 17% increase and Black Hills Energy fora 7.6% increase with the State
Utility Board and this budget assumes that they will each get 50% of their
requested increase. The franchise fee increases at an annual rate of 2.5 percent
per year from FY 2013 thru FY 2015.
These estimates are based on increasing the franchise fee charged on gas and
electric bills from 2% to 3% in FY 2011.
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 2011, with the gaming revenue (from taxes and the DRA
lease) split at 85% operating budget and 15% capital budget based on note "g"
above.
FY 2011 Policy Guidelines
Page 1 1
m. FY 2011 reflects the third year that payment in lieu of taxes is charged to the
Water and Water Pollution Control funds for Police and Fire Protection. In FY
2011, the Water Pollution Control fund is charged 0.43% of building value and the
Water fund is charged 0.62% of building value, which increased 5.84%, 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.
n. FY 2011 anticipates the City receiving an Energy Efficiency and Conservation
Block Grant to fund the Sustainability Community Coordinator position ($77,339)
and the remainder of the grant to fund a portion of the annual Growing
Sustainable Conference and printing of sustainability materials. The current
federal allocation was for FY 2010, so congressional action to continue this
revenue source would be needed.
o. Industrial riverfront property lease revenue is projected to increase by $100,000 in
FY 2011.
Assumptions -Requirements
a. A wage increase is reflected in the projections for FY 2011 of 3.5 percent.
b. The Municipal Fire and Police Retirement System of Iowa Board of Trustees have
increased the City contribution for Police and Fire retirement from 17.00 percent to
19.90 percent (+17.06% or an increase of $360,516 in General Fund). Also, the
Iowa Public Employee Retirement System (IPERS) increased the City contribution
from 6.65 percent to 6.95 percent (+4.5% or an increase of $36,782 in General
Fund) and the employee contribution from 4.30% to 4.50% (which did not affect
the City's portion of the budget). The IPERS rate is anticipated to increase 0.3
percent each succeeding year according to IPERS.
c. The City portion of health insurance expense will increase from $665 per month
per contract to $725 per month per contract (based on 534 contracts) which is a 9
percent increase to fund health fund reserves. Estimates for FY 11-15 have been
increased by 6.5 percent per year.
d. General operating supplies and services are estimated to increase 2.5 percent
over actual in FY 2009. A 2.5 percent increase is estimated in succeeding years.
e. Electrical energy expense is estimated to increase 5 percent over FY 2009 actual
expense, then 2.5 percent per year beyond.
f. Natural gas expense is estimated to have no increase over FY 2009 actual, then
2.5 percent per year beyond. There is no degree-day adjustment this year.
FY 2011 Policy Guidelines
Page 12
g. The Convention and Visitors Bureau contract will continue at 50 percent of actual
hotel/motel tax receipts, less a $35,000 loan repayment.
h. Equipment costs for FY 2011 are estimated to decrease 23.4 percent under FY
2010 budget, then increase 5 percent per year beyond. Of the FY 2011 equipment
costs, $377,562 is funded by the one-time General Fund operating reserve that
was implemented in FY 2010.
Debt service is estimated based on the tax-supported unabated General Obligation
bond sale for fire truck and ambulance replacements in FY 2010.
j. Unemployment expense in the General Fund increased from $52,356 in FY 2010
to $58,478 based on past years actual experience.
k. Motor vehicle fuel, and low and high sulfur diesel fuel expense based on FY 2009
actual, then 2.5 percent per year beyond.
Postage rates for FY 2011 are estimated to have no increase over FY 2010 actual
expense. A 5.0 percent increase is estimated in succeeding years.
m. Vehicle maintenance expense for FY 2011 is estimated to decrease 10 percent
under FY 2009 actual expense due to the Garage Overhead Service Rate
decreasing from $53.40 per hour in FY 2009 to $48.40 in FY 2011, then 2.5
percent per year beyond.
n. Insurance costs are estimated to change as follows: Workers Compensation is
increasing 0.7 percent, General Liability is decreasing 0.26 percent, Property
insurance is decreasing 36.94 percent due to the City's insurance agent going out
for bid and receiving a lower contract price with a new carrier, and Boiler and
Machinery insurance is increasing 4.68 percent.
FY 2011 Policy Guidelines
Page 13
IMPACT ON AVERAGE RESIDENTIAL PROPERTY -EXAMPLE
CITY TAX PERCENT DOLLAR
ACTUAL -PAST HISTORY CALCULATION CHANGE 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 Taxi>> $ 494.27 + 1.72% +$ 8.34
FY 2006 With Homestead Adj. ~~> $ 504.62 + 1.90% +$ 9.41
FY 2007 "City" Property Tax*~z> $ 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. ~s> $ 538.07 + 5.41 % +$27.62
FY 2010 "City" Property Tax $ 538.07 + 0.00% +$ 0.00
FY 2010 With Homestead Adj. ~s~ $ 550.97 + 2.40% +$12.90
PROPOSED
FY 2011 "City" Property Tax*~a> $564.59 / ($578.54)" +2.47% / (+5.00%)^ +$13.62 / (+$27.57)^
Average FY 1989-FY 2011 with Homestead Adj. + 0.59% + $ 2.88
Average FY 1989 -FY 2011 without Homestead Adj. + 0.05% + $ 0.05
PROJECTION **
FY 2012 "City" Property Tax* $ 645.35 / ($660.33)" + 14.30% / (+14.14%)^ +$ 80.76 / (+$81.79)"
FY 2013 "City" Property Tax $ 677.97 / ($693.02)^ + 5.05% / (+ 4.95%)^ +$ 32.62 / (+$32.69)^
FY 2014 "City" Property Tax* $ 747.82 / ($763.71)" + 10.30% / (+10.20%)^ +$ 69.85 / (+$70.69)^
FY 2015 "City" Property Tax $ 779.21 / (.$795.06)^ + 4.20% / (+ 4.10%)" +$ 31.39 / (+$31.35)^
* Denotes year of State-issued equalization orders.
FY 2011 Policy Guidelines
Page 14
^ Impact to the average homeowner if the State funds the Homestead Property Tax Credit at 72%.
(1) The FY 2006 property tax calculation takes into account the 6.2% valuation increase for the average
residential homeowner as determined by the 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 2009 and 2010 that provided no increase to the average homeowner. The
State of Iowa under funded the Homestead Property Tax Credit in both years costing the average homeowner
additional $27.62 in FY 2009 and $12.90 in FY 2010. 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.
(4) Assumes State of Iowa funds 100% of Homestead Property Tax Credit in FY 2011 and beyond.
Homestead Property Tax Credit History
2002-2003
2003-2004
~~
2004-2005
2005-2006
2006-2007
a~
2007-2008
2008-2009
2009-2010
~` 2010-2011
State of Iowa Funded 100% of the Homestead
Property Tax Credit
State of Iowa Funded 85% of the Homestead
Property Tax Credit
State of Iowa Funded 81 % of the Homestead
Property Tax Credit
State of Iowa Funded 78% of the Homestead
Property Tax Credit
State of Iowa Funded 77% of the Homestead
Property Tax Credit
State of Iowa Funded 73% of the Homestead
Property Tax Credit
State of Iowa Funded 72% of the Homestead
Property Tax Credit
State of Iowa Funded 72% of the Homestead
Property Tax Credit
Assumed Homestead will be 100% Funded by
the State of Iowa
The Homestead Property Tax Credit was established by the state legislature to reduce the amount of property t
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 provide
tax relief for the average homeowner.
FY 2011 Policy Guidelines
Page 15
Beginning FY 2004, the State of Iowa 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.
In the FY 2011 budget, the City will not offset the prior year unfunded portion of the Homestead Tax Credit. FY
2011 reflects a 2.47% increase in property taxes paid by the average homeowner, however if the State continuE
to not fully fund the Homestead Property Tax Credit, this will increase the property taxes paid. This will not
provide any additional revenues to the City, however.
IMPACT ON COMMERCIAL PROPERTY -EXAMPLE
CITY TAX PERCENT DOLLAR
ACTUAL -PAST HISTORY CALCULATION CHANGE CHANGE
FY 1989 "City" Property Tax $2,106.42 -15.43% -$ 384.19
FY 1990 "City" Property Tax $2,086.50 - .95% - $ 19.92
FY 1991 "City" Property Tax* $2,189.48 + 4.94% +$ 102.98
FY 1992 "City" Property Tax $2,280.18 + 4.14% +$ 90.70
FY 1993 "City" Property Tax* $2,231.05 - 2.15% -$ 49.13
FY 1994 "City" Property Tax $2,250.15 + 0.86% +$ 19.10
FY 1995 "City" Property Tax* $2,439.60 + 8.42% +$ 189.45
FY 1996 "City" Property Tax $2,439.60 + 0.00% +$ 0.00
FY 1997 "City" Property Tax* $2,659.36 + 9.01 % +$ 219.76
FY 1998 "City" Property Tax $2,738.43 + 2.97% +$ 79.07
FY 1999 "City" Property Tax* $2,952.03 + 7.80% +$ 213.60
FY 2000 "City" Property Tax $2,934.21 - 0.60% -$ 17.82
FY 2001 "City" Property Tax $2,993.00 + 2.01 % +$ 58.86
FY 2002 "City" Property Tax $2,910.25 - 2.77% -$ 82.84
FY 2003 "City" Property Tax* $3,186.27 + 9.48% +$ 276.03
FY 2004 "City" Property Tax $3,278.41 + 2.89% +$ 92.15
FY 2005 "City" Property Tax* $3,349.90 + 2.18% +$ 71.48
FY 2006 "City" Property Tax ~~~ $3,152.52 - 5.89% -$ 197.38
FY 2007 "City" Property Tax* $3,538.03 +12.23% +$ 385.50
FY 2008 "City" Property Tax $3,668.64 + 4.26% +$ 150.62
FY 2009 "City" Property Tax* $3,524.48 - 3.63% -$ 133.94
FY 2010 "City" Property Tax $3,524.48 - 0.85% -$ 30.23
PROPOSED
FY 2011 "City" Property Tax $3,585.16 + 1.72% +$ 60.68
Average FY 1990-2010 + 1.77% +$ 47.59
PROJECTION **
FY 2012 "City" Property Tax* $3,927.38 + 9.55% +$ 342.22
FY 2013 "City" Property Tax $3,954.64 + .69% +$ 27.27
FY 2014 "City" Property Tax* $4,181.60 + 5.74% ~ + $ 226.95
FY 2015 "City" Property Tax $4,177.32 - 0.10% - $ 4.27
* Denotes year of State-issued equalization orders
(1) The FY 2006 property tax calculation takes into account the 3% valuation decrease for commercial property
as determined by the reappraisal.
FY 2011 Policy Guidelines
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IMPACT ON INDUSTRIAL PROPERTY -EXAMPLE
CITY TAX PERCENT DOLLAR
ACTUAL -PAST HISTORY CALCULATION CHANGE CHANGE
FY 1989 "City" Property Tax $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 "City" Property Tax $5,690.75 - 3.40% -$ 200.30
FY 1998 "City" Property Tax $5,700.56 + .17% +$ 9.81
FY 1999 "City" Property Tax $5,536.70 - 2.87% -$ 163.86
FY 2000 "City" Property Tax $5,358.00 - 3.23% -$ 178.70
FY 2001 "City" Property Tax $5,533.00 + 3.28% +$ 175.55
FY 2002 "City" Property Tax $5,380.42 - 2.77% -$ 153.13
FY 2003 "City" Property Tax $5,106.00 - 5.10% -$ 274.40
FY 2004 "City" Property Tax $5,136.50 + .60% +$ 30.50
FY 2005 "City" Property Tax $5,036.00 - 1.96% -$ 100.50
FY 2006 "City" Property Tax~~~ $5,814.61 +15.46% +$ 778.61
FY 2007 "City" Property Tax $5,983.21 + 2.90% +$ 168.60
FY 2008 "City" Property Tax $6,184.95 + 3.37% +$ 201.74
FY 2009 "City" Property Tax $5,976.44 - 3.37% -$ 208.51
FY 2010 "City" Property Tax $5,909.69 - 1.12% -$ 66.75
PROPOSED
FY 2011 "City" Property Tax $6,011.44 + 1.72% +$ 101.75
Average FY 1990-FY 2010 - 0.50% -$ 41.89
PROJECTION**
FY 2012 "City" Property Tax $6,585.25 +9.55% +$ 573.81
FY 2013 "City" Property Tax $6,630.97 + 0.69% +$ 45.72
FY 2014 "City" Property Tax $7,011.51 +5.74% +$ 380.54
FY 2015 "City" Property Tax $7,004.35 -0.10% -$ 7.16
(1)The FY 2006 property tax calculation takes into account the 19.9% valuation increase for industrial property
determined by the reappraisal.
FY 2011 Policy Guidelines
Page 17
History of Increases in Property Tax Askings
Change
Fiscal "City" Property in Tax Present Impact on
Year Tax Askings Askings Homeowner**
FY 1989 $10,918,759 -12.0% Sales Tax -11.4%
initiated
FY 1990 $10,895,321 - 0.2% - 0.9%
FY 1991 $11,553,468 + 6.0% + 3.8%
FY 1992 $12,249,056 + 6.0% + 3.6%
FY 1993 $12,846,296 + 4.9% + 5.0%
FY 1994 $13,300,756 + 3.5% + 0.3%
FY 1995 $13,715,850 + 3.1 % + 2.4%
FY 1996 $14,076,320 + 2.6% - 0.9%
FY 1997 $14,418,735 + 2.4% - 0.4%
FY 1998 $14,837,670* + 2.9% - 0.7%
FY 1999 $15,332,806* + 3.3% 0.0%
FY 2000 $15,285,754 - 0.3% - 0.2%
FY 2001 $15,574,467 + 1.9% 0.0%
FY 2002 $15,686,579 + 0.7% 0.0%
FY 2003 $15,771,203 + 0.5% - 5.0%
FY 2004 $16,171,540 + 2.5% 0.0%
FY 2005 $16,372,735 + 1.2% 0.0%
FY 2006 $16,192,215 - 1.1% + 1.7%
FY 2007 $17,179,994 + 6.1% - 1.7%
FY 2008 $18,184,037 + 5.8% 0.0%
FY 2009 $18,736,759 + 3.0% +2.8%
FY 2010 $19,095,444 + 1.9% 0.0%
FY 2011 $19,935,231 + 4.4% +2.5%/ (+5.00%)^
Estimate
Average FY 1989-2011 + 2.13% +0.04%
"Without TIF Accounting change. "*Does not reflect State unfunded portion of Homestead Credit.
^ Impact to the average homeowner if the State funds the Homestead Property Tax Credit at 72%
FY 2011 Policy Guidelines
Page 18
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 Askings (000) % Increase Residential Property*
FY 2010 $19,095
FY 2011 $19,935 + 4.40% +2.47% / +$ 13.62
FY 2012 $22,732 + 14.03% +14.30% / +$80.76
FY 2013 $24,192 + 6.42% +5.05% / +$32.62
FY 2014 $26,656 + 10.18% +10.30% / +$69.85
FY 2015 $28,191 + 5.76% +4.20% / +$31.39
Guideline
The recommended guideline is a 2.47 percent increase for the average residential property
owner assuming the Homestead Property Tax Credit is fully funded, and the percent of
annual gaming revenues going into the operating budget at 85 percent.
Note: One percent increase in the tax rate will generate approximately $195,847.
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
projects are to be added and/or deleted from the CIP, the changes shall be
made only after approval by the City Council.
FY 2011 Policy Guidelines
Page 19
20. RENOVATION AND MAINTENANCE
Guideline
Capital improvement expenditures should concentrate on renovating and maintaining
existing facilities to preserve prior community investment.
21. 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 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 2009-10 assessable values for calculating the debt limit is $3,239,036,697,
which indicates a total General Obligation debt capacity of $167,243,676.
Outstanding G.O. debt (including tax increment debt) on June 30, 2010 will be
$94,014,545 (56.20 percent) leaving an available debt capacity of $73,229,131 (43.79
percent). 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 in the amount of $1,410,000
with debt service of $96,070 in FY 2011.
FY 2011 Policy Guidelines
Page 20
As we approach the preparation of the FY 2011-2015 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 2010-2014 period. Many of these projects will be possible
without borrowing the money (i.e., selling bonds) to help finance them. However, debt
may be required on some capital projects, that being the Drainage Basin Master Plan,
Intermodal Facility, Airport Improvements, Park Improvements, Sidewalk and Street
Improvements, Motor Grader Replacement, Sanitary Sewer Fund, and Water Fund.
In determining whether a project should be financed in total or in part from bond funds
the City Council must consider and balance: (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. Alternative sources of funds should always be evaluated (i.e. State Revolving
Loan Funds) to maintain the lowest debt service costs. All requested projects will not
be recommended for funding.
The following table shows the schedule of GO debt for CIP projects in FY 2011:
Project FY 2011
Intermodal Facility (TIF Abated) 1,472,900
Airport Improvements (Sales Tax Abated) 218,535
Park Improvements (Sales Tax Abated) 300,000
Fiber Optic Conduit -Paving Projects (Sales Tax Abated) 78,000
Public Works Equipment Replacement (RUT Abated) 519,640
Streetlight Replacement -City Owned (Sales Tax Abated) 40,000
Sidewalk Curb Catch Basin (Sales Tax Abated) 47,000
Sidewalk Program -City Owned (Sales Tax Abated) 105,000
Total 2,781,075
FY 2011 Policy Guidelines
Page 21
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
FY 1988 - $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 - $4,628,072
FY 2002 - $4,620,514
FY 2003 - $4,696,399
FY 2004 - $4,806,295
FY 2005 - $4,798,667
FY 2006 - $4,831,935
FY 2007 - $4,809,990
FY 2008 - $4,944,336
FY 2009 - $4,788,633
The FY 2010 budget was based on receiving $5,058,595 in Road Use Tax funds. In
FY 2010, 97.2 percent of the Road Use Tax income is in the operating budget.
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 such time as there are
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
the economic base. Financing these efforts and programs should continue to be a
high priority.
FY 2011 Policy Guidelines
Page ZZ
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, particularly owner occupied, within the City's
corporate limits for all citizens, particularly for people of low and moderate income.
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, December 31St, of 50 percent of its net cash operating funds to the City
of Dubuque. In mid-January, 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, when a distribution is projected.
The reduction in DRA Distribution will require some General Fund supported debt
issuances to support the Five Year Capital Improvement Program budget.
Guideline
In Fiscal Year 2011, the City does anticipate distribution of net cash proceeds for use
in the Capital Improvement Program based on revised DRA projections. In Fiscal
Years where there is anticipated distribution of a significant amount of net cash
FY 2011 Policy Guidelines
Page 23
proceeds, 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.
29. 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
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 '/Z% of
coin-in to 1 % 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
2009 the split was 76% operating and 24% capital.
In FY 2010, the budget was changed to reflect the actual split of 85% operating and
15% 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.
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 will not expect to receive a
distribution of cash flows from the Dubuque Racing Association (DRA) in Fiscal Year
2010.
Revised distribution projections from the DRA now show the distribution restarting in
FY 2011 instead of FY 2012. The DRA has decreased the distributions an additional
$1,039,725 over the next five years which will impact the City's five-year capital
improvement program.
FY 2011 Policy Guidelines
Page Z4
The reduction in the DRA's market share also 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 table drop from table games. In FY 2010, it was
estimated that the City would lose $9.5 million through FY 2014 in lease payments
based on what was originally projected to be received compared to the revised
projections. Eighty-five percent of the lease payments are used for general property
tax relief and fifteen percent is used to fund the City's five year capital improvement
program. The reduction of the lease payment over the next five years was estimated
to impact the operating budget by $8.1 million and the capital improvement budget by
$1.4 million.
The reduction in coin-in has been almost 25% (24.85%) instead of just over 21%. In
FY 2010, Gaming revenues generated from lease payments from the DRA were
further adjusted by a revised DRA projection of a reduction of lease payments of just
over one million dollars per year or $5,500,000 over the next five years.
In FY 2011, Gaming revenues generated from lease payments from the DRA have
been decreased by an additional $164,542 per year based on revised projections from
the DRA.
The total decrease of gaming lease revenue over five years is $15.8 million, of which
eighty-five percent ($13.4 million) impacts general property tax relief and fifteen
percent ($2.4 million) impacts the City's five year capital improvement program.
In addition, in FY 2009, the Diamond Jo Casino paid a 50¢ patron fee. After learning
that the facility in Clinton stopped paying the patron fee after they became land based,
the FY 2011 projections assumed that after the November 2010 gaming referendum
the Diamond Jo would stop paying. The 50¢ per patron tax previously received from
the Diamond Jo is now replaced by a $500,000 fixed payment based on their revised
parking agreement. The riverboat related tax on bets has also been increased 2.5
percent ($11,015) in FY 2011.