Fiscal Year 2012 Policy GuidelinesMasterpiece on the Mississippi
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Budget and Fiscal Policy Guidelines for Fiscal Year 2012
DATE: December 15, 2010
Dubuque
kited
All- Mmerlcacity
f
2007
Budget Director Jennifer Larson is recommending adoption of the Budget and Fiscal
Policy Guidelines for Fiscal Year 2012.
The City of Dubuque property tax rate in Fiscal Year 1987 was $14.58 per thousand
dollars of assessed valuation. This is the year before the citizens passed a referendum
in 1987 to establish a one percent local option sales tax with 50% of the revenue going
to property tax relief. The property tax rate for Fiscal Year 2012 recommended in these
guidelines is $10.46 which is a 28% decrease from Fiscal Year 1987 and a 4.34%
increase from the FY 2011 rate of $10.0274.
The Fiscal Year 2012 budget guidelines call for a 5.00% property tax increase for the
average Dubuque homeowner and a property tax increase for commercial (4.34 %) and
industrial (4.34 %) properties. Since 1989, the average homeowner has averaged an
annual increase in costs in the City portion of their property taxes of Tess than 1%, or
about $4.68 a year. If the State had been fully funding the Homestead Tax Credit, the
increase would have averaged about $1.26 a 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 19.9% of
Police and Fire employee salary is mandated by the State to increase to 24.76% of
salary, for an additional cost of $611,055 in FY 2012 or a 3.00% property tax increase
for the average homeowner. In addition, the Iowa Public Employees' Retirement System
increased the required City contribution rate from 6.95% to 8.07 %, which is an
additional cost of $141,362 in FY 2012 or a 0.69% property increase for the average
homeowner. Therefore, increased pension costs account for 3.69% of the 5% property
tax increase for the average Dubuque homeowner.
The City has been able to minimize the impact of the cost of City services to the
average homeowner in spite of the fact that gaming lease revenues have decreased
$16.1 million from FY2009 through FY2016. When the Diamond Jo expanded, it was
projected that Dubuque Racing Association lease revenues would decrease 21%, but
the actual decrease has been 32 %.
The fact that the City of Dubuque and East Central Intergovernmental Association has
received two federal grants totally $3.8 million to replace the entire KeyLine (The Jule)
bus fleet will be of great assistance to the annual operating budget. The reduced fuel
and maintenance costs in FY2012 are estimated at $325,000, which avoids an
additional property tax impact of 1.59 %.
The City Council will conduct six public meetings prior to the adoption of a City budget
in March 2011.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
MCVM:jk
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Jennifer Larson, Budget Director
Michael C. Van Milligen
Masterpiece on the Mississippi
December 10, 2010
TO: Michael C. Van Milligen, City Manager
FROM: Jennifer Larson, Budget Director 441
SUBJECT: Budget and Fiscal Policy Guidelines for Fiscal Year 2012
Dubuque
All- AmdicaCity
1
2007
am recommending adoption of the Fiscal Year 2012 Budget Policy Guidelines. The
guidelines reflect City Council direction given as part of the August 17 and 18, 2010,
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 City of Dubuque property tax rate in Fiscal Year 1987 was $14.58 per thousand
dollars of assessed valuation. This is the year before the citizens passed a referendum
in 1987 to establish a one percent local option sales tax with 50% of the revenue going
to property tax relief. The property tax rate for Fiscal Year 2012 recommended in these
guidelines is $10.46 which is a 28% decrease from Fiscal Year 1987 and a 4.34%
increase from the FY 2011 rate of $10.0274.
The Fiscal Year 2012 budget guidelines call for a 5.00% property tax increase for the
average Dubuque homeowner and a property tax increase for commercial (4.34 %) and
industrial (4.34 %) properties. Since 1989, the average homeowner has averaged an
annual increase in costs in the City portion of their property taxes of less than 1 %, or
about $4.68 a year. If the State had been fully funding the Homestead Tax Credit, the
increase would have averaged about $1.26 a 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 19.9% of
Police and Fire employee salary is mandated by the State to increase to 24.76% of
salary, for an additional cost of $611,055 in FY 2012 or a 3.00% property tax increase
for the average homeowner. In addition, the Iowa Public Employees' Retirement System
increased the required City contribution rate from 6.95% to 8.07 %, which is an
additional cost of $141,362 in FY 2012 or a 0.69% property increase for the average
homeowner. Therefore, increased pension costs account for 3.69% of the 5% property
tax increase for the average Dubuque homeowner.
This level of taxation includes $57,241 for recurring improvement package requests and
some funds for non - recurring improvement package requests.
Recognizing that there is still 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, these guidelines call for the continued allocation
of $500,000 be added to this one -time reserve in FY 2012 due to the health insurance
claims this year exceeding expectations and the possibility of needing to boost the
health insurance reserve in FY 2012.
Some highlights of the document are:
➢ The reduction in the DRA's market share due to the Diamond Jo's expansion and
the downturn in the local economy impact the City's lease payment from the
DRA. The current lease requires the DRA to pay the City 1 percent of coin in
from slot machines and 4.8 percent of gross revenue from table games. In FY
2009, the City's estimated lease payments through FY 2013 were reduced $7.1
million based on projections from the DRA. In FY 2010, gaming revenues
generated from lease payments from the DRA were decreased an additional $4.8
million through FY 2014 based on revised projections from the DRA. In FY 2011,
the City's estimated lease payments through FY 2015 were reduced an
additional $1 million based on updated projections from the DRA.
➢ Gaming revenues generated from lease payments from the DRA will need to be
further adjusted in this budget process by a FY 2012 revised DRA projection of a
reduction of lease payments of $3.2 million over the next five years.
➢ From FY 2009 thru FY 2016, the City's lease payments have been reduced a
total of $16.1 million.
➢ The reduction in coin -in is estimated to be 32% instead of the 21% originally
projected due to the expansion of the Diamond Jo Casino as well as the
economic downturn which was not projected.
➢ The split of gaming revenues from taxes and the DRA lease (not distributions) is
recommended to remain the same between operating and capital budgets at
86.5% / 13.5% in FY 2012.
D The replacement of the Transit fleet in FY 2011 is estimated to reduce fuel and
maintenance costs in FY 2012 by $325,000 which avoids an additional 1.59%
property tax increase for the average homeowner.
D There are many high priority capital improvement projects, which need to be
constructed during the FY 2012 -2016 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,
Parking 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. Based on revised projections received from the DRA, distributions
have been reduced approximately $497,000 over the next five years.
All requested projects will not be recommended for funding.
D The Policy Guidelines include a property tax guideline that provides for a 5.00%
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.
D The property tax rate will increase 4.34 percent from $10.0274 per thousand
dollars of assessed valuation in Fiscal Year 2011 to $10.4626 per thousand
dollars of assessed valuation in Fiscal Year 2012.
D The "City" share of commercial property taxes will increase 4.34 percent.
D The "City" share of industrial property tax will increase 4.34 percent.
D The property tax asking will increase 7.11 percent from Fiscal Year 2011.
D The following table summarizes the impact of the Policy Guidelines:
Preliminary citizen participation opportunities will be available. There will be six City
Council Work Sessions prior to the adoption of the FY 2012 budget before the state
mandated deadline of March 15, 2011.
FY 2012
Impact to Average Homeowner
+5.00%
Impact to Average Commercial
+4.34%
Impact to Average Industrial
+4.34%
FY 2012 Tax Rate
10.4626 /
+4.34%
FY 2012 Property Tax Asking
$21,293,092 /
+7.11%
D The replacement of the Transit fleet in FY 2011 is estimated to reduce fuel and
maintenance costs in FY 2012 by $325,000 which avoids an additional 1.59%
property tax increase for the average homeowner.
D There are many high priority capital improvement projects, which need to be
constructed during the FY 2012 -2016 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,
Parking 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. Based on revised projections received from the DRA, distributions
have been reduced approximately $497,000 over the next five years.
All requested projects will not be recommended for funding.
D The Policy Guidelines include a property tax guideline that provides for a 5.00%
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.
D The property tax rate will increase 4.34 percent from $10.0274 per thousand
dollars of assessed valuation in Fiscal Year 2011 to $10.4626 per thousand
dollars of assessed valuation in Fiscal Year 2012.
D The "City" share of commercial property taxes will increase 4.34 percent.
D The "City" share of industrial property tax will increase 4.34 percent.
D The property tax asking will increase 7.11 percent from Fiscal Year 2011.
D The following table summarizes the impact of the Policy Guidelines:
Preliminary citizen participation opportunities will be available. There will be six City
Council Work Sessions prior to the adoption of the FY 2012 budget before the state
mandated deadline of March 15, 2011.
JML
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Jennifer Larson, Budget Director
Ken TeKippe, Finance Director
OPERATING BUDGET GUIDELINES
1. CITIZEN PARTICIPATION
Guideline
BUDGET AND FISCAL POLICY GUIDELINES
FOR FY 2012
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.
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.cityofdubuque.orq
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 2012 Policy Guidelines
Page 2
3. TWO TYPES OF BUDGET DOCUMENTS TO BE PREPARED
Guideline
The recommended City operating budget for Fiscal Year 2012 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 2012 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 2012 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 2012 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 2012 Policy Guidelines
Page 4
Guideline
In the future, the maintenance of City services may well depend on volunteer citizen
staffs. In FY 2012, 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 2012 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 2012 will be the fourth 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 and low -to- moderate income residents and a 75%
subsidy for residential farms.
Guideline
User fees and charges should be established where possible so that those who utilize
or directly benefit from a service, activity or facility also help pay for it.
User fees and charges for each utility fund (Water User Fund, Sewer User Fund,
Stormwater User Fund, Refuse Collection Fund, and Parking Fund) shall be set at a
level that fully supports the total direct and indirect cost of the activity, including the
cost of annual depreciation of capital assets and financing for future capital
improvement projects.
FY 2012 Policy Guidelines
Page 6
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 2008 FY 2009 FY 2010 FY 2011 FY 2012
ACTUAL ACTUAL ACTUAL BUDGETED RECOM'D
DEPARTMENT /DIVISION PERCENT PERCENT PERCENT PERCENT PERCENT
Leisure Services Department
Recreation Division
Adult Athletics* 61.4 60.1 59.0 59.5 59.0
McAleece Concessions 151.9 157.9 142.0 153.2 147.0
Children's Activities 45.9 46.8 47.0 43.2 46.0
Therapeutic Recreation 23.4 14.8 13.0 18.1 17.0
Recreation Classes 39.0 23.6 25.0 25.3 27.0
Swimming* 51.0 56.7 51.0 61.4 58.0
Golf* Surplus to Golf Devel' Fund 102.3 112.2 116.0 101.0 100.0
Park Division 10.6 12.4 11.3 11.8 11.0
Library Department excl' Gift Trusts 9.3 10.6 15.6 12.8 11.7
Airport Department w /abated debt 86.3 84.8 82.3 80.0 80.5
Building Services Division
Inspections 90.7 73.0 72.4 81.2 86.7
Planning Services Department 13.5 30.6 34.2 40.2 40.1
Health Services Department
Food/Environmental Insp. 66.6 69.8 69.8 67.1 66.9
Animal Control * ** 126.3 118.8 59.5 53.3 55.8
Housing Services Department
General Housing Inspection 72.6 62.5 74.8 57.0 73.0
Federal Building Maint. 124.3 86.2 104.2 100.0 100.0
* Includes an amount to help cover indirect costs (administration).
* ** Humane Society contract moved to the Health Services from Purchase of Service activity in FY 2010.
FY 2012 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 Tong -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 $3,987,725.
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 $3,987,725 for FY 2012. However, recognizing the
current economic uncertainties for FY 2011 and FY 2012 it is recommended that the
one -time General Fund operating reserve of one million dollars that was implemented
FY 2012 Policy Guidelines
Page 8
in FY 2010 and FY 2011 be carried over into FY 2012. In addition, it is recommended
that the additional $500,000 one -time reserve implemented in FY 2011 for health
insurance claims exceeding expectations and the possibility of needing to boost the
health insurance reserve be carried over into FY 2012. If these funds are not needed
in FY 2011 or FY 2012, the funds would be available in FY 2013 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 2010 -11 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 2012 through FY 2016.
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 2012 Policy Guidelines
Page 9
for FY 2011 -12 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 2012
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 2012 are projected to increase
2.5 percent over FY 2011 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 actual
receipts, and then increase at an annual rate of 3 percent per year.
d. State Transit operating assistance is anticipated to decrease 30.5 percent from
FY 2011 budget based on the estimate provided by the State. Federal
Transportation Administration (FTA) is anticipated to increase 2.5% from FY 2011
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 $11,632 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 $40,638 in FY 2012.
e. Miscellaneous revenue, excluding state shared revenues, has been estimated at
2 percent growth per year over budgeted FY 2011.
f. Gaming revenues generated from lease payments from the DRA have been
decreased by $609,171 per year based on revised projections from the DRA.
The Diamond Jo fixed payment remains at $500,000 based on the revised parking
agreement. The riverboat related tax on bets has also been increased 2.5
percent ($9,013) in FY 2012.
h. Gaming revenues from taxes and the DRA lease (not distributions) remains at a
split of 86.5% / 13.5% in FY 2012 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
FY 2012 Policy Guidelines
Page 10
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
($490,675 in FY 2012 increased 3.3 percent thereafter) have not been included in
the split with gaming revenues. This revenue is allocated to the operating budget.
i. The residential rollback factor will increase from 46.909 percent to 48.530 percent
or a 3.45 percent increase for FY 2012. The rollback has been estimated to
increase 3.50% each year from Fiscal Years 2012 thru 2016. No equalization
orders were estimated for Fiscal Years 2012 and beyond due to the City Assessor
voluntarily increasing assessments to equal the two year sale average.
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.
The residential rollback in Fiscal Year 1987 was 75.6481 percent as compared to
48.530 percent in Fiscal Year 2012. The rollback percent has steadily decreased
since FY 1987, which has resulted in less taxable value and an increase in the
City's tax rate. If the rollback had remained at 75.6481 percent in FY 2012, the
City's tax rate would have been $8.04 per $1,000 of assessed value instead of
$10.46 in FY 2012.
In addition, the State of Iowa eliminated the Machinery and Equipment Tax
Replacement in FY 2003 (- $200,000); Personal Property Tax Replacement in FY
2004 (- $350,000); Municipal Assistance in FY 2004 (- $300,000); Liquor Sales
Revenue in FY 2004 (- $250,000); and Bank Franchise Tax in FY 2005
($145,000). The combination of the decreased residential rollback and State
funding cuts have forced the City's tax rate to increase since 1987 when the
citizens passed a referendum to establish a one percent local option sales tax
with 50% of the revenue gong to property tax relief.
FY 2012 reflects this increased assessed value for the average homeowner.
Assessed valuations were increased 2 percent per year beyond FY 2012.
k. Gas franchise fees have been projected to increase 3.5 percent over FY11
budget based on a rate increase that Black Hills Energy has applied for with the
State Utility Board. Also, Electric franchise fees have been projected to increase
FY 2012 Policy Guidelines
Page 1 1
5.0 percent over FY11 budget based on a rate increase that Alliant has applied
for with the State Utility Board. The franchise fee increases at an annual rate of
2.5 percent per year from FY 2013 thru FY 2016.
The franchise fee charged on gas and electric bills increased from 2% to 3% in
FY 2011. While State law allows a 5% fee, the City of Dubuque's two utility
franchise fee agreements limits the fee to 3 %.
I. 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 2012, with the gaming revenue (from taxes and the DRA
lease) split at 90% operating budget and 10% capital budget based on note "g"
above.
m. FY 2012 reflects the fourth year that payment in lieu of taxes is charged to the
Water and Water Pollution Control funds for Police and Fire Protection. In FY
2012, the Water Pollution Control fund is charged 0.43% of building value and the
Water fund is charged 0.62% of building value, for payment in lieu of taxes for
Police and Fire Protection. This revenue is reflected in the General Fund and is
used for general property tax relief.
n. FY 2012 reflects the City receiving the Climate Showcase Grant to fund a portion
of the Sustainability Community Coordinator position ($40,000) for two years and
the remainder of the grant to fund the Smarter City initiative ($393,136).
o. The transient boat docks in Ice Harbor will be completed near the end of FY
2011. The net revenue from leasing the boat slips is estimated to be $1,857 in FY
2012; $10,131 in FY 2013; $20,978 in FY 2014; $31,741 in FY 2015; and $55,698
in FY 2016.
p. Industrial riverfront property lease revenue is projected to increase by $175,000 in
FY 2012.
q.
American Airlines added a fourth flight out of the Dubuque Regional Airport during
FY 2011. This fourth flight will generate an estimated additional $40,000 in
parking revenue in FY 2012. The existing agreement with American Airlines
requires the City to provide jet fuel, deicer and marketing for the fourth flight which
will be paid for thru an Iowa Department of Transportation grant.
Assumptions — Requirements
a. The Municipal Fire and Police Retirement System of Iowa Board of Trustees have
increased the City contribution for Police and Fire retirement from 19.90 percent to
24.76 percent ( +24.42% or an increase of $611,055 in General Fund). Also, the
Iowa Public Employee Retirement System (IPERS) increased the City contribution
FY 2012 Policy Guidelines
Page 12
b. The City portion of health insurance expense will increase from $725 per month
per contract to $770 per month per contract (based on 548 contracts) which is a
6.5 percent increase to fund health fund reserves. Estimates for FY 12 -16 have
been increased by 10 percent per year.
d. General operating supplies and services are estimated to increase 2.5 percent
over actual in FY 2010. A 2.5 percent increase is estimated in succeeding years.
e. Electrical energy expense is estimated to increase 5.0 percent over FY 2010 actual
expense, then 2.5 percent per year beyond.
f. Natural gas expense is estimated to increase 3.5 percent over FY 2010 actual,
then 2.5 percent per year beyond.
g.
from 6.95 percent to 8.07 percent ( +16% or an increase of $141,362 in General
Fund) and the employee contribution from 4.50% to 5.40% (which did not affect
the City's portion of the budget). The IPERS rate is anticipated to increase 7
percent each succeeding year according to IPERS. In FY 2012 increased pension
costs account for 3.69% of the 5% property tax increase of the average
homeowner.
The Convention and Visitors Bureau contract will continue at 50 percent of actual
hotel /motel tax receipts, less a $35,000 loan repayment which will be paid in full in
FY 2014.
h. Equipment costs for FY 2012 are estimated to decrease 17.69 percent under FY
2011 budget, then increase 5 percent per year beyond.
i. 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 $58,478 in FY 2011
to $70,085 based on past years actual experience.
k. Transit motor vehicle fuel, and low and high sulfur diesel fuel expense is
estimated to decrease 54 percent (- $148,832) under FY 2010 actual expense due
to the Transit bus fleet being replaced in FY 2011 with new clean - diesel buses.
Motor vehicle fuel, and low and high sulfur diesel fuel expense for all other
General Fund departments is based on a three year average of FY 2008, 2009
and 2010 actual, then 2.5 percent per year beyond.
Postage rates for FY 2012 are estimated to increase 5.0 percent over FY 2010
actual expense. A 5.0 percent increase is estimated in succeeding years.
m. Transit vehicle maintenance expense for FY 2012 is estimated to decrease 58
percent (- $206,288) under FY 2010 actual expense due to the Transit bus fleet
being replaced in FY 2011 with new clean - diesel buses. Beyond FY12 increases
FY 2012 Policy Guidelines
Page 13
2.5 percent each year. The Garage Overhead Service Rate increased from
$48.40 per hour in FY 2011 to $53.27 in FY 2012.
n. Insurance costs are estimated to change as follows: Workers Compensation is
increasing 14.0 percent based on actual history, General Liability is decreasing
2.61 percent due to an increase in automobile deductibles, Property insurance is
increasing 27.45 percent and Boiler Insurance is increasing 51.92 percent due to
the addition of the Multicultural Family Center and Mystique Community Ice
Center as well as the renovation of the Carnegie Stout Public Library.
o. The Section 8 Housing Corporal can no longer be supported by Section 8
administrative funds in FY 2012. This is an impact of $94,106 to the General Fund.
p. UDAG expenses were projected to be spent by FY 2012 and $346,730 of
expenses shifted to the General Fund. There is sufficient cash balance in the
UDAG fund to support almost all of the expense in FY 2012. This is a decrease in
expense of $260,630 to the General Fund.
FY 2012 Policy Guidelines
Page 14
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 Tax(1) $ 494.27 + 1.72% +$ 8.34
FY 2006 With Homestead Adj. (1) $ 504.62 + 1.90% +$ 9.41
FY 2007 "City" Property Tax *(2) $ 485.79 - 1.72% -$ 8.48
FY 2007 With Homestead Adj.* $ 496.93 - 1.52% -$ 7.69
FY 2008 "City" Property Tax $ 496.93 0.00% $ 0.00
FY 2008 With Homestead Adj. $ 510.45 + 2.72% +$13.52
FY 2009 "City" Property Tax $ 524.53 + 2.76% +$14.08
FY 2009 With Homestead Adj. (3) $ 538.07 + 5.41 % +$27.62
FY 2010 "City" Property Tax $ 538.07 + 0.00% +$ 0.00
FY 2010 With Homestead Adj. (3) $ 550.97 + 2.40% +$12.90
FY 2011 "City" Property Tax $564.59 + 2.47% +$13.62
FY 2011 With Homestead Adj. $582.10 + 5.65% +$31.13
PROPOSED
FY 2012 "City" Property Tax *(4) $611.19 / ($629.46)^
Average FY 1989 -FY 2012 with Homestead Adj.
Average FY 1989 -FY 2012 without Homestead Adj.
+5.00% / ( +8.14 %)^ +$29.09 / ( +$47.36)^
+ 0.90% + $ 4.68
+ 0.25% + $ 1.26
FY 2012 Policy Guidelines
Page 15
PROJECTION **
FY 2013 "City" Property Tax*
FY 2014 "City" Property Tax
FY 2015 "City" Property Tax*
FY 2016 "City" Property Tax
* 2002 -2003
* 2003 -2004
* 2004 -2005
* 2005 -2006
* 2006 -2007
* 2007 -2008
* 2008 -2009
* 2009 -2010
CITY TAX
CALCULATION
$ 665.40 / ($684.56)A
$ 735.62 / ($756.03)^
$ 784.78 / ($805.77)A
$ 821.17 / ($848.49)'
Homestead Property Tax Credit History
•
"" > State of Iowa
n
n
•
•
+ 8.87% / ( +12.00 %)'
+ 10.55% /( +13.62 %)'
+ 6.68% / (+ 9.54 %)A
+ 5.40% / (+ 8.12 %)'
State of Iowa
Property Tax Credit
Property Tax Credit
State of Iowa
Property Tax Credit
State of Iowa
Property Tax Credit
State of Iowa
Property Tax Credit
State of Iowa
Property Tax Credit
State of Iowa
I. > State of Iowa
PERCENT
CHANGE
Property Tax Credit
Property Tax Credit
DOLLAR
CHANGE
+$ 54.21 / ( +$73.37)A
+$ 70.22 / ( +$90.63)^
+$ 49.16 / ( +$70.15)'
+$ 42.39 / ( +$63.71)'
* Denotes year of State - issued equalization orders.
^ 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 2012 and beyond.
Funded 100% of the Homestead
Funded 85% of the Homestead
Funded 81% of the Homestead
Funded 78% of the Homestead
Funded 77% of the Homestead
Funded 73% of the Homestead
Funded 72% of the Homestead
Funded 72% of the Homestead
FY 2012 Policy Guidelines
Page 16
Homestead Property Tax Credit History
N. > State of Iowa Funded 64% of the Homestead
* 2010 -2011 Property Tax Credit
u > Assumed Homestead will be 100% Funded by
* 2011 -2012 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.
Beginning FY 2004, the State of Iowa did not fully fund the State Homestead Property Tax Credit resulting in thi
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 2012 budget, the City will not offset the prior year unfunded portion of the Homestead Tax Credit. FY
2012 reflects a 5.65% increase in property taxes paid by the average homeowner, however if the State continu(
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 (1) $3,152.52 - 5.89% -$ 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
FY 2011 "City" Property Tax $3,585.16 + 1.72% +$ 60.68
FY 2012 Policy Guidelines
Page 17
PROPOSED
FY 2012 "City" Property Tax
Average FY 1989 -2012
PROJECTION **
FY 2013 "City" Property Tax* $3,923.81 + 4.89% +$ 155.60
FY 2014 "City" Property Tax $4,179.84 + 6.53% +$ 256.04
FY 2015 "City" Property Tax* $4,297.23 + 2.81% + $ 117.39
FY 2016 "City" Property Tax $4,365.20 + 1.58% + $ 67.96
* 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.
PROPOSED
FY 2012 "City" Property Tax
Average FY 1989 -FY 2012
$3,740.76
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(1) $5,814.61 +15.46% +$ 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
FY 2011 "City" Property Tax $6,011.44 - 1.72% +$ 101.75
$6,272.34
+ 4.34%
+ 1.87%
+$ 155.60
+$ 52.09
+ 4.34% +$ 260.91
- 0.44% -$ 29.28
FY 2012 Policy Guidelines
Page 18
PROJECTION **
CITY TAX PERCENT DOLLAR
ACTUAL - PAST HISTORY CALCULATION CHANGE CHANGE
FY 2013 "City" Property Tax $6,579.26 +4.89% +$ 306.92
FY 2014 "City" Property Tax $7,008.57 + 6.53% +$ 429.31
FY 2015 "City" Property Tax $7,205.41 +2.81% +$ 196.83
FY 2016 "City" Property Tax $7,319.36 +1.58% +$ 113.96
(1)The FY 2006 property tax calculation takes into account the 19.9% valuation increase for industrial property ;
determined by the reappraisal.
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 $19,878,962 + 4.1% +2.5%
FY 2012 $21,293,092 + 7.1% +5.0 %/ (+8.1%)^
Estimate
Average FY 1989 -2012 + 2.33% +0.25%
*Without TIF Accounting change. * *Does not reflect State unfunded portion of Homestead Credit.
A Impact to the average homeowner if the State funds the Homestead Property Tax Credit at 64 %.
FY 2012 Policy Guidelines
Page 19
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:
Year
FY 2011
FY 2012
FY 2013
FY 2014
FY 2015
FY 2016
"City" Property
Tax Askinqs (000)
$19,878
$21,293
$23,259
$25,811
$27,654
$29,286
Average FY 1987 -2012
% Increase
+ 7.21%
+ 9.23%
+ 10.97%
+ 7.14%
+ 5.90%
The following is a historical City tax rate comparison:
Fiscal "City" % Change
Year Tax Rate in Tax Rate
FY 1987 14.5819
FY 1988 13.9500 -4.33%
FY 1989 11.8007 -15.41%
FY 1990 11.6891 -0.95%
FY 1991 12.2660 4.94%
FY 1992 12.7741 4.14%
FY 1993 12.4989 -2.15%
FY 1994 12.6059 0.86%
FY 1995 11.7821 -6.54%
FY 1996 11.7821 0.00%
FY 1997 11.3815 -3.40%
FY 1998 11.4011 0.17%
FY 1999 11.0734 -2.87%
FY 2000 10.7160 -3.23%
FY 2001 11.0671 3.28%
FY 2002 10.7608 -2.77%
FY 2003 10.2120 -5.10%
FY 2004 10.2730 0.60%
FY 2005 10.0720 -1.96%
FY 2006 9.6991 -3.70%
FY 2007 9.9803 2.90%
FY 2008 10.3169 3.37%
FY 2009 9.9690 -3.37%
FY 2010 9.8577 -1.12%
FY 2011 10.0274 1.72%
FY 2012 10.4626 4.34%
% / $ Impact on Avg.
Residential Property*
+5.00% / +$29.09
+8.87% / +$ 54.21
+10.55% / +$ 70.22
+6.68% / +$ 49.16
+5.40% / +$ 42.39
-1.22%
FY 2012 Policy Guidelines
Page 20
PROJECTION **
Fiscal "City" % Change
Year Tax Rate in Tax Rate
FY 2013 10.9746 4.89%
FY 2014 11.6907 6.53%
FY 2015 12.0190 2.81%
FY 2016 12.2091 1.58%
Guideline
The recommended guideline is a 5.00 percent increase for the average residential property
owner assuming the Homestead Property Tax Credit is fully funded, which would be a 4.34
percent increase in the property tax rate.
Note: One percent increase in the tax rate will generate approximately $203,923.
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.
20. RENOVATION AND MAINTENANCE
Guideline
Capital improvement expenditures should concentrate on renovating and maintaining
existing facilities to preserve prior community investment.
FY 2012 Policy Guidelines
Page 21
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 2010 -11 assessable values for calculating the debt limit is $3,349,823,065,
which indicates a total General Obligation debt capacity of $174,325,144.
Outstanding G.O. debt (including tax increment debt, TIF rebate remaining payments
and general fund lease agreement) on June 30, 2011 will be $92,443,077 (53.03
percent) leaving an available debt capacity of $81,882,067 (46.97percent). 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
$207,140 in FY 2012.
As we approach the preparation of the FY 2012 -2016 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.
Grant
Project
Award
Amount
Transportation Investment Generating
Economic Recovery (TIGER)
Millwork District Complete
Streets
$ 5,600,000
State of Iowa I -JOBS
Lower Bee Branch
$ 3,965,000
U.S. Department of Transportation State of
Good Repair
Bus Replacements
$ 2,300,000
U.S. Department of Transportation Clean
Fuels
Bus Replacement
$ 1,500,000
Iowa Power Fund
Smarter City Initiative
$ 1,400,000
State Revolving Loan Fund Green Project
Smart Water Meters
$ 1,000,000
Energy Efficiency Conservation Block Grant
Comprehensive Strategy
$ 574,700
Homeless Prevention Funds
Homeless Prevention
$ 500,000
State Competitive EECBG
US 52 Traffic Flow
Optimization
$ 500,000
FY 2012 Policy Guidelines
Page 22
Guideline
There are many high priority capital improvement projects, which need to be
constructed during the FY 2012 -2016 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, Sidewalk and Street Improvements,
Sanitary Sewer Fund, Stormwater Fund, Parking 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 2012:
Project FY 2012
Intermodal Facility (TIF Abated) $2,062,592
Airport Improvements (Sales Tax Abated) 441,707
Streetlight Replacement — City Owned (Sales Tax
Abated) 41,000
Refuse Replacement Trucks (Refuse Abated) 36,000
Total $2,581,299
The City is applying for State and Federal grants to minimize the amount of local dollars
needed for City projects. The following is a list of recent grants received:
Grant
Project
Award
Amount
Neighborhood Stabilization Program
Purchase of Foreclosed
Homes
$ 444,000
Federal Transit Administration
3 Bus Replacements
$ 384,939
Justice Assistance Grant
Police Initiatives
$ 360,320
Federal Highway Infrastructure
1 Bus Replacement
$ 349,000
Community Development Block Grant
Formula Funds
Homeownership
Rehabs /Green Alleys
$ 328,269
State Revolving Loan Funds
North Fork Catfish Creek
Stormwater and Sanitary
Sewer
$ 270,579
AmeriCorps Grant
Various Programs
$ 186,201
State Energy Program
18` & Central Energy
Improvements
$ 13,000
Total
$19,676,008
FY 2012 Policy Guidelines
Page 23
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
FY 2010 - $5,105,327
The FY 2011 budget was based on receiving $5,162,897 in Road Use Tax funds. In
FY 2011, 83.1 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
FY 2012 Policy Guidelines
Page 24
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.
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 31 of 50 percent of its net cash operating funds to the City
of Dubuque. In early- February, the City receives payment of proceeds to be
distributed. These proceeds are then allocated for capital improvements, with the
highest priority given to reducing the City's annual borrowing.
FY 2012 Policy Guidelines
Page 25
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 February 2012 projections of operating surplus have been
anticipated as resources to support the Fiscal Year 2012 capital improvement
projects. This level will be maintained for the Fiscal Year 2013 surplus for the FY
2013 resource estimate and then reduced by 5 percent for the February 2014
projected surplus for FY 2014, 10 percent for FY 2015, and 15 percent for FY 2016
resources.
Guideline
In Fiscal Year 2012, the City anticipates distribution of a significant amount of net cash
proceeds for use in the Capital Improvement Program. These amounts will be
budgeted in the Five Year CIP in the year they are received and will be used to reduce
required General Obligation borrowing. The three out -years will be discounted by 5
percent, 10 percent, and 15 percent respectively.
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 '/% 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 2004 the split of gaming taxes and rents between operating and capital budgets
was 50% operating and 50% capital. In FY 2005 this split was changed to 75%
operating and 25% capital. In FY 2009 the split was 76% operating and 24% capital.
FY 2012 Policy Guidelines
Page 26
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.
In FY 2011, the budget was changed to reflect a split of gaming taxes and rents
between operating and capital budgets of 86.5% operating and 13.5% capital. FY
2012 remains at the split of 86.5% operating and 13.5% capital.
The Diamond Jo expanded to a land based barge casino facility and increased to
1,100 slots on December 1, 2008. This expansion was projected to decrease the
Mystique gaming market and correspondingly the coin -in by just over 21 percent.
Based on the projected market share loss, the City did not receive a distribution of
cash flows from the Dubuque Racing Association (DRA) in Fiscal Years 2009 and
2010.
Revised distribution projections from the DRA now show the distribution restarting in
FY 2011 instead of FY 2012.
The reduction in the DRA's market share and the downturn in the local economy
impact the City's lease payment from the DRA. The current lease requires the DRA to
pay the City 1 percent of coin in from slot machines and 4.8 percent of gross revenue
from table games. In FY 2009, the City's estimated lease payments through FY 2013
were reduced $7.1 million based on updated projections from the DRA. In FY 2010,
gaming revenues generated from lease payments from the DRA were decreased an
additional $4.8 million through FY 2014 based on revised projections from the DRA. In
FY 2011, the City's estimated lease payments through FY 2015 were reduced $1
million based on updated projections from the DRA.
In FY 2012, it is estimated that the City's lease payments through FY 2016 will be
reduced an additional $3.2 million based on the updated projections from the DRA.
From FY 2009 thru FY 2016, the City's lease payments have been reduced $16.1
million.
The reduction in coin -in is estimated to be 32% instead of the 21% originally projected
due to the expansion of the Diamond Jo Casino as well as the economic downtown
which was not projected.
The 50¢ per patron tax previously received from the Diamond Jo was replaced by a
$500,000 fixed payment based on their revised parking agreement. The riverboat
related tax on bets has also been increased 2.5 percent ($9,013) in FY 2012.
CITY COUNCIL'S FISCAL YEAR 2012
BUDGET PUBLIC MEETING SCHEDULE
DATE DAY TIME PLACE TOPIC
February 7 Monday 6:30 p.m. Council Budget document presentation to
Chambers City Council at Council Meeting
February 9 Wednesday 6:30 p.m. Council Health Services
Chambers Legal
City Manager
City Council
City Clerk
Cable
Adjournment
February 15 Tuesday 6:30 p.m. Council Water
Chambers Water Pollution Control
Public Works
Engineering
Adjournment
February 17 Thursday 6:30 p.m. Council Human Rights
Chambers Information Services
Five Flags Center
Conference Center
Recreation
Park
Adjournment
February 24 Thursday 6:30 p.m. Council Emergency Communications
Chambers Emergency Management
Fire
Police
Building Services
Adjournment
March 1 Tuesday 6:30 p.m. Council Housing /Community Development
Chambers Library
Finance
Airport
Adjournment
March 3 Thursday 6:30 p.m. Council Purchase of Services
Chambers Planning Services
Economic Development
Parking
Transit
Adjournment
March 10 Thursday 6:30 p.m. Council Public Hearing to Adopt FY 2012
Chambers Budget
DUBUQUE CITY COUNCIL
MAYOR
Roy D. Buol
2640 Becker Ct.
Dubuque, Iowa 52001
Home: (563) 564 -5455
rdbuol @cityofdubuque.org
Term Expires: Dec. 31, 2013
AT - LARGE
Ric W. Jones
1270 Dunleith Ct.
Dubuque, Iowa 52003
Home: (563) 556 -3490
rjones @cityofdubuque.org
Term Expires: Dec. 31, 2013
AT - LARGE
David T. Resnick
375 Alpine Street
Dubuque, Iowa 52001
Home: (563) 582 -9217
dresnick @cityofdubuque.org
Term Expires: Dec. 31, 2011
FIRST WARD
Kevin J. Lynch
824 Council Hill Drive
Dubuque, Iowa 52003
Home: (563) 582 -6382
klynch @cityofdubuque.org
Term Expires: Dec. 31, 2013
SECOND WARD
Karla A. Braig
1795 Loras Blvd.
Dubuque, Iowa 52001
Home: (563) 582 -0595
kbraig @cityofdubuque.org
Term Expires: Dec. 31, 2011
THIRD WARD
Joyce E. Connors
660 Edith Street
Dubuque, Iowa 52001
Home: (563) 582 -3843
jconnors @cityofdubuque.org
Term Expires: Dec, 31, 2013
FOURTH WARD
Dirk N. Voetberg
779 University Avenue
Dubuque, Iowa 52001
Home: (563) 556 -5252
dvoetberg @cityofdubuque.org
Term Expires: Dec. 31, 2011
Masterpiece on the Mississippi
2025 VISION STATEMENT
Dubuque is a city of .
History
Beauty
Opportunities
Excitement
The Masterpiece on the Mississippi
The city of Dubuque is a progressive, sustainable city with a
strong diversified economy and expanding global connections;
the Dubuque community is an inclusive community celebrating
culture and heritage and has actively preserved our Masterpiece
on the Mississippi;
Dubuque citizens experience healthy living and active retirement
through quality, livable neighborhoods and an abundance of fun
things to do and they are engaged in the community, achieving
goals through partnerships; and
Dubuque City government is financially sound and providing
services with citizens getting value for their tax dollars.
FIVE -YEAR GOALS
Diverse, strong Dubuque economy
• Sustainable city - economic prosperity, social /cultural
vibrancy, environmental integrity
• Planned and managed growth
• Partnering for a better Dubuque
• Improved connectivity - transportation and
telecommunications
2010 -2012 POLICY AGENDA
TOP PRIORITY
• Develop a master plan for the South Port and Chaplain Schmitt Island
• Develop a human relations strategy
• Continue work on the City's Sustainability Plan
• Provide direction for the IBM /Smarter City Partnership
• Historic Millwork District Plan
• Continue work with the Safe Community Task Force
• Pursue Southwest Arterial funding
HIGH PRIORITY
• FEMA flood plain maps
• Every Child 1 Every Promise
• Partnering with Community Foundation of Greater Dubuque
• Collaboration between the Leisure Services Department and the school district
• Expand air service
• Project HOPE (Helping Our People Excel)
2010 -2012 MANAGEMENT AGENDA
These issues represent short -term projects for the City Manager and City of Dubuque staff.
Included in the Management Agenda are items that are considered major projects that involve
significant city resources and may span more than one year for completion:
TOP PRIORITY
• Workforce housing
• DubuqueWorks programs
• Washington Neighborhood
• Intermodal facility
• Street improvement program
• Bee Branch Creek reconstruction
HIGH PRIORITY
• West End fire station
• Riverfront leases
• Destination for Opportunity
• Dubuque 2.0
• Passenger rail
CITY OF DUBUQUE, IOWA
City Manager's Office, 50 West 13th Street, Dubuque, IA 52001
Phone: (563)589 -4110 E -mail: ctymgr @cityofdubuque.org
www.cityofdubuque.org