FY 2006 Policy Guidelines
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MEMORANDUM
December 2, 2004
TO:
The Honorable Mayor and City Council Members
FROM:
Michael C. Van Milligen, City Manager
SUBJECT: Fiscal Year 2006 Policy Guidelines
The purpose of this memorandum is to transmit draft Fiscal Year 2006 Fiscal
Guidelines for your review and presentation to the Council. The guidelines reflect City
Council direction given as part of the September 13 and 14, 2004, goal setting
sessions. During those sessions the City Council established goals for the next five
years and established City priorities in Fiscal Year 2006.
City Council Goals
In five years the Council wants the following for the community:
1. Improved connectivity: Transportation, Telecommunications
2. Planned and Managed Growth
3. Diverse, Strong Dubuque Economy
4. Riverfront Development
5. Partnering for a Better Dubuque
Fiscal Year 2006 Priorities
To begin the City on the path to achieving these five-year goals, the Council priorities
and the foundation of the City's work program for Fiscal Year 2006 are:
Top Priorities
. Southwest Arterial
. Opportunitylowa
. Stormwater Projects
. Street Improvement Programs
. Arts Policy and Funding
High Priorities
. East-West Corridor Study
. Air Service and Emplanement Strategy
. National Pollution Discharge Elimination System (NPDES)
. Annexation Study and Policy
. Newly Annexed Areas: Plan, Zoning, Services
. Property Maintenance Cases
. Water and Sewer Services to New Developments
Management Agenda 2004-2006
. Mediacom Franchise Agreement
. Zoning Ordinance: Update
. Adams Company Relocation Completion
. Collective Bargaining Negotiations
. Incident Tracking System
. Healthcare Cost Containment Strategy and Action
. Federal Strategy
. Dubuque Industrial Center West, Phase III
. Gaming Agreement: Protect City's Interest
. Star Brewery Completion
. Waterworks ParklPyatigorsk Park
. State Strategy
Major Projects 2004-2006
Municipal Services Center Project
Landscape Gateways Project
Pedestrian Signage Project
The City of Dubuque has been able to hold its property tax askings down while
continuing to provide the citizens with a very high level of City services. Unlike other
cities, which have eliminated city services, quality of life continues to be a high priority
of City Council and high service standards have been maintained by implementing
operating efficiencies, increasing the tax base, eliminating property tax supported debt
payment, and using other resources such as sales tax, gaming revenues, utility
franchise fee, and user fees for property tax relief.
Fiscal Year 2005 is the current fiscal year, with a budget that was approved by the City
Council in March 2004. During that process, I projected that the budget for Fiscal Year
2006 would require a 1.49% increase in taxes for the average homeowner based on no
equalization order and a rollback factor of 48.8622%. However, expenditure changes in
Fiscal Year 2006 that impact this projection include an increase in police and fire
retirement rates of 13.2% (this is in addition to the 21.7% increase in Fiscal Year 2005
and the 20.5% increase in Fiscal Year 2004), and increases in gas and electric expense
as high as 12%.
The increases have been offset by healthy sales tax revenues, hotel/motel tax receipts,
and increased gaming revenues estimated based on revised projections from the
implementation of a new lease agreement and expanded gaming operations from
2
increasing slot machines (600 to 1,000).
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 Fiscal Year 2005 budget was approved and raised the lease payment from
Y: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, allows the split between capital and operating
expenses to be adjusted from 25% capital and 75% operating, to 35% capital and 65%
operating and allows the City to avoid a property tax increase in Fiscal Year 2006.
Fiscal Year 2006 reflects changes to City of Dubuque assessed valuations. Property
reappraisals were completed by the Dubuque City Assessor's office and went into affect
January 1, 2004. The Fiscal Year 2006 assessed valuation for the City of Dubuque is
based on the reappraised valuations. Residential property valuations increased 6
percent, Commercial property valuations decreased 2.7 percent and Industrial property
valuations increased 19.4 percent. In order for the City to not increase the average
homeowner's property taxes for the eleventh consecutive year, in fact, in five of those
years there have been property tax decreases, the average home value was increased
6 percent when determining the Fiscal Year 2006 property tax rate of $9.6991/$1 ,000.
This means the property tax rate will decrease by 3.7%. Lowering the rate reflects
no property tax increase for the average homeowner.
The City's portion of the property tax rate has gone from $14.5819 in Fiscal Year 1987
to $9.6991 in Fiscal Year 2006 per thousand dollars of assessed value; a decrease of
$4.88 or 33.5 percent.
A comparison of the City of Dubuque's property tax rate as projected for Fiscal Year
2006 with the other eight largest cities in Iowa shows Dubuque ranks ninth out of nine,
an improvement from last year's position of eighth out of nine cities. This comparison is
summarized in table format as follows:
RANK
1
2
3
4
5
6
7
8
9
Average
CITY
Waterloo
Sioux City
Council Bluffs
Iowa City
Des Moines
Davenport
Cedar Rapids
Ames
Dubuque
TAX RATE
18.78999
17.78712
17.76669
17.31394
17.05539
15.24000
13.11797
9.94868
9.69910
15.19099
POPULATION
68,747
85,013
58,268
62,380
198,682
98,359
120,758
50,731
57,686
The average tax rate is 56.6% higher than Dubuque's and the highest comparable city,
Waterloo, is 93.7% higher.
3
The budget guidelines are developed and adopted by City Council early in the
budgeting process in order to provide targets or parameters within which the budget
recommendation will be formulated. The final budget presented by the City Manager
may not meet all of these targets due to changing conditions and updated information
during budget preparation. To the extent the recommended budget varies from the
guidelines, an explanation will be provided in the printed budget document.
The budget guidelines for Fiscal Year 2006 that are being recommended to you can be
summarized as follows:
. Preliminary Citizen participation opportunities
Date
Wednesday, December 8
Tuesday, February 15
Wednesday, February 16
Tuesday, February 22
Thursday, February 24
Monday, February 28
Wednesday, March 2
Wednesday, March 9
Startina Time
5:15 p.m. - City Manager's Public Input Meeting
6:30 p.m. - City Council Budget Worksession
6:30 p.m. - City Council Budget Worksession
6:30 p.m. - City Council Budget Worksession
6:30 p.m. - City Council Budget Worksession
6:30 p.m. - City Council Budget Worksession
6:30 p.m. - City Council Budget Worksession
6:30 p.m. - Public Hearing - City Council
. Gaming revenues, excluding the annual surplus distribution, will be used 65 percent
in operating budget and 35 percent in the capital budget. This is a change from last
year's guidelines of a 75/25 split and reflects a priority given to maintaining current
City services over capital improvement projects.
. The Policy Guidelines include a property tax guideline that provides no increase in
the "City" share of property taxes for the average homeowner.
. There are many high priority capital improvement projects, which need to be
constructed during the FY 2006-2010 period. Most of these projects will be possible
without borrowing the money (i.e., selling bonds) to help finance them. However,
debt will be required on 5 major capital projects, that being the Drainage Basin
Master Plan, the expansion of Dubuque Industrial Center West, Sanitary Sewer
Fund, Water Fund and the Parking Division.
I respectfully request Mayor and City Council adoption of the budget guidelines, which
provides for no increase in the "City" share of property taxes for the average
homeowner in Fiscal Year 2006, and reduces the property tax rate by 3.7%.
/l1,..V / ¿< I}l tL
I LI( Lv C,t!, l
Michael C. Van Milligen
4
MCVM:dll
Attachment
cc: Barry Lindahl, Corporation Counsel
Cindy Steinhauser, Assistant City Manager
Dawn Lang, Budget Director
Randy Peck, Human Services Manager
Ken TeKippe, Finance Director
5
POLICY GUIDELINES FOR FY 2006
BUDGET PLANNING AND ADMINISTRATION
OPERATING BUDGET GUIDELINES
The Policy Guidelines are developed and adopted by City Council early in the
budgeting process in order to provide targets or parameters within which the budget
recommendation will be formulated. The final budget presented by the City Manager
may not meet all of these targets due to changing conditions and updated information
during budget preparation. To the extent the recommended budget varies from the
guidelines, an explanation will be provided in the printed budget document.
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.citvofdubuaue.ora 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 2006 Policy Guidelines
Page 2
3.
TWO TYPES OF BUDGET DOCUMENTS TO BE PREPARED
Guideline
The recommended City operating budget for Fiscal Year 2006 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 2006 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 decision 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 2006 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 2006 Policy Guidelines
Page 3
5.
BALANCE BETWEEN SERVICES AND TAX BURDEN
Guideline
The budget should reflect a balance between services provided and the burden
of paying for those services. It is not possible or desirable for the City to provide
all of the services requested by individual citizens. The City must consider the
ability of citizens to pay for services in setting service levels and priorities.
6.
MAINTENANCE OF EXISTING SERVICES
Guideline
To the extent possible with the financial resources available, the City should
attempt to maintain the existing level of services. Annually, however, each
service should be tested against the following questions: (a) Is this service truly
necessary? (b) Should the City provide it? (c) What level of service should be
provided? (d) Is there a better, less costly way to provide it? (e) What is its
priority compared to other services? (f) What is the level of demand for the
service? (g) Should this service be supported by property tax, user fees, or a
combination?
7.
IMPROVED PRODUCTIVITY
Guideline
Efforts should continue to stretch the value of each tax dollar and the City
services that it buys through improved efficiency and effectiveness. Using
innovative and imaginative approaches to old tasks, reducing duplication of
service effort, creative application of new technologies and more effective
organizational arrangements are approaches to this challenge.
8.
USE OF VOLUNTEERS
Discussion
As our financial capabilities decrease, we must seek to expand our resources by
continuing to get citizens directly involved in supplementing our service delivery
capability. Citizens must be encouraged to assume tasks previously performed
FY 2006 Policy Guidelines
Page 4
or provided by City government. This may require us to change our 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), Cable TV (government channel camera operators) and
Police. The City initiated the Dubuque Volunteer Corps Program in FY 1998 to
encourage citizen involvement in the many programs offered by the City and in
maintaining the facilities for community betterment.
Guideline
In the future, the maintenance of City services may well depend on volunteer
citizen staffs. In FY 2006, efforts shall continue through the Dubuque Volunteer
Corps to identify and implement areas of City government where (a) volunteers
can be utilized to supplement City employees to maintain service levels (i.e.,
Library, Recreation, Parks, Cable TV, Police) or (b) services can be "spun off' to
non-government groups and sponsors (i.e., YMCAlYWCA, 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" often do not take into
account the overall financial capabilities and needs of the community and the
fact that the budget is a carefully balanced and fragile thing. Such awards have
caused budgets to be overdrawn, needed budgeted expenditures to be deferred,
working balances to be expended and, in general, have reduced the financial
FY 2006 Policy Guidelines
Page 5
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.
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.
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
FY 2006 Policy Guidelines
Page 6
at a level that fully supports the total direct and indirect cost of the activity,
including the cost of annual depreciation of capital assets and pay-as-you-go
financing for future capital improvement projects.
User fees and charges in the General Fund shall be established to cover not less
than the following percentages of direct operating costs (excluding debt service):
FY 2002 FY 2003 FY 2004 FY 2005 FY 2006
ACTUAL ACTUAL ACTUAL BUDGETED RECOM'D
DEPARTMENT/DIVISION PERCENT PERCENT PERCENT PERCENT PERCENT
Leisure Services Department
Recreation Division
Adult Athletics' 81.0 81.0 76.0 77.0 76.0
Children's Activities 41.6 54.0 52.0 57.0 55.0
Therapeutic Recreation 20.0 19.0 14.0 21.0 19.0
Recreation Classes 46.7 42.0 45.0 51.0 50.0
Swimming' 81.0 69.0 73.0 76.0 74.0
Golf* 100.0 100.0 100.0 100.00 100.00
Park Division 10.3 10.50 10.7 12.1 12.0
Library Department 8.2 6.1 6.1 5.2 6.0
Airport Department w/abated debt 89.6 79.8 79.4 72.7 77.0
Building Services Division 94.4 77.77 95.6 98.0 98.0
Planning Services Department 11.6 11.9 18.5 19.9 18,0
Health Services Department
Food/Environmental Insp. 58.6 57.6 52.7 52.7 58.0
Animal Control 94.3 81.7 100.0 90.4 90.0
Housing Services Department
General Housing Inspection 45.4 34.8 42.7 43.0 45.0
. Includes an amount to help cover indirect costs (administration)
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.
FY 2006 Policy Guidelines
Page 7
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. WorkinQ balances are not available for fundinQ a budaet: thev are
required for cash flow (i.e., to be able to pay our bills before taxes are collected).
The rule of thumb the state recognizes for determining a reasonable amount for
a working balance is (a) anticipated revenues for the first three months of the
fiscal year less anticipated expenditures or (b) 5 percent of the total General
Fund operating budget (excluding fringes and tort liability expense). However, in
discussions with Moody's Investor Service, a factor of 10 percent was
recommended for "A" rated cities. This is due to the fact that a large portion of
our revenue sources are beyond our control and therefore uncertain. In the case
of Dubuque, 10% represents approximately $2,796,000.
Guideline
The guideline of the City of Dubuque is to maintain a General Fund working
balance or operating reserve of 10 percent of the total General Fund Operating
budget requirements or approximately $2,796,000 for FY 2006.
15.
USE OF UNANTICIPATED, UN-OBLIGATED, NONRECURRING INCOME
Discussion
Sometimes income is received that was not anticipated and was not budgeted.
Often this money is not recurring and reflects something, which happened on a
one-time basis to generate the "windfall".
Nonrecurring income must not be spent for recurring expenses. To do so
causes a funding shortfall the next budget year before you even start budget
FY 2006 Policy Guidelines
Page 8
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 2004-05 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 2006 through FY 2010.
Guideline
The available carryover General Fund balance to help finance the budget and to
reduce the demand for increased taxation shall be anticipated not to exceed
$200,000 for FY 2005-06 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
2006 and each succeeding year to support the operating budget.
b.
State-shared revenues, such as Bank Franchise, Municipal Assistance,
Liquor Sales, Personal Property Replacement Taxes, and Monies and
Credits have been permanently cut from the City's resources in the last 2
budget years.
FY 2006 Policy Guidelines
Page 9
c.
Hotel/motel tax receipts will increase 10 percent over FY 2005 budgeted
receipts for FY 2006, and then increase at an annual rate of 5 percent per
year.
d.
State Transit operating assistance will also be maintained at its current level.
e.
Miscellaneous revenue, excluding state shared revenues, has been
estimated at 2 percent growth per year over budgeted FY 2005.
f. Gaming revenues generated have been estimated based on revised
projections from the implementation of a new lease agreement and expanded
gaming operations from increasing slot machines (600 to 1,000).
g.
Gaming revenues from taxes and the DRA lease (not distributions) have
been adjusted from the FY 2005 split of 75% / 25% between operating and
capital budgets, to a 65% percent operating and 35% capital budget split for
FY 2006.
h.
The residential rollback factor will decrease from 48.456 percent to 47.960
percent or a 1.02 percent reduction for FY 2006. For Fiscal Years 2007 and
beyond, a 10-year average for rollbacks and equalization orders was used.
Property reappraisals were completed by the Dubuque City Assessor's
office and went into affect January 1, 2004. The FY 2006 assessed
valuation for the City of Dubuque is based on the reappraised valuations.
Residential property valuations increased 6 percent, Commercial property
valuations decreased 2.7 percent and Industrial property valuations
increased 19.4 percent. The average home value was increased 6 percent
when determining the FY 2006 property tax rate, reflecting no property tax
increase for the average homeowner. Assessed valuations were increased
2 percent per year beyond FY 2006.
j.
Sales tax projections anticipate 50 percent of four quarterly payments in the
General Fund for property tax relief. Sales tax projections for FY 2006 have
been estimated to increase 10 percent over actual FY 2004 and then
increase at an annual rate of 4 percent per year.
k.
It is anticipated that in FY 2005 and beyond, 75 percent of the revenue from
the Downtown TIF will be used for downtown development projects in order
to support additional downtown parking, gateway improvements and plaza
amenities. To the extent these funds are not required to support debt
payments or project expense, the excess will be distributed per state code to
FY 2006 Policy Guidelines
Page 10
each taxing body. Certain economic development grants require 100
percent of the revenue from a particular project.
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 2006, with the gaming revenue (from
taxes and the DRA lease) split remaining at 65% operating budget and 35%
capital budget.
m. Gas and electric franchise fees have been adjusted based on one year's
trend data. The FY 2006 budget is estimated to increase about 7 percent
over 2003-2004 actual, and then increases at an annual rate of 2.5 percent
per year.
Assumptions - Reauirements
a. A wage adjustment is reflected in the projections for FY 2006 and each
succeeding year. Police and Fire retirement rates have been increased 13.2
percent, costing the City an additional $270,000 per year.
b.
Health insurance costs are estimated to increase 9 percent over the
FY 2005 budgeted rates. Estimates for FY 07-10 have been increased by 7
percent per year.
c.
General operating supplies and services are estimated to increase 6 percent
over actual in FY 2004 or 3 percent over budget in FY 2005, depending on
which year reflects expenditures more accurately. 2.5 percent increase is
estimated in succeeding years.
d.
Electrical energy expense is estimated to increase 12 percent over FY 2004
actual expense, then 2.5 percent per year beyond.
e.
Natural gas expense is estimated to increase 10 percent over FY 2004
actual, then 2.5 percent per year beyond. There is no degree-day
adjustment this year.
f.
The Convention and Visitors Bureau contract will continue at 50 percent of
actual hotel/motel tax receipts, less the loan repayment.
g.
Equipment costs are estimated higher for FY 2006 budget to get "back on
track"; due to the decreased approved replacements in FY 2005.
FY 2006 Policy Guidelines
Page 11
h. Debt service is estimated based on no additional tax-supported General
Obligation bond sales in FY 2006 - 2010.
I.
Unemployment expense in the General Fund has been increased from
$25,000 to $45,000 for FY 2006 based on past years actual experience.
j.
Motor vehicle fuel expense is estimated to increase 8 percent over FY 2004
actual expense and maintenance expense has been increased 6 percent
over FY 2004 actual expense.
k.
Postage rates are estimated to remain steady over the next few years.
I.
Travel Professional Conference and Strategic Planning expense are funded
in FY 2006.
FY 2006 Policy Guidelines
Page 12
IMPACT ON AVERAGE RESIDENTIAL PROPERTY - EXAMPLE
CITY TAX PERCENT DOLLAR
ACTUAL - PAST HISTORY CALCULATION INCREASE INCREASE
FY 1989 "City" Property Tax $ 453.99 -11.4% - $ 58.51
FY 1990 "City" Property Tax $ 449.94 - .9% -$ 4.05
FY 1991 "City" Property Tax' $ 466.92 + 3.8% +$ 16.98
FY 1992 "City" Property Tax $ 483.63 + 3.6% +$ 16.71
FY 1993 "City" Property Tax' $ 508.73 +5.0% +$ 5.10
FY 1994 "City" Property Tax $ 510.40 + .3% +$ 1.51
FY 1995 "City" Property Tax' $ 522.65 +2.4% +$ 12.41
FY 1996 "City" Property Tax $518.10 - .9% -$ 4.54
FY 1997 "City" Property Tax' $ 515.91 - .4% -$ 2.19
FY 1998 "City" Property Tax $ 512.25 - .7% -$ 3.66
FY 1999 "City" Property Tax' $ 512.25 - .0% -$ 0.00
FY 2000 "City" Property Tax $ 511.38 - .2% -$ 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 $ 493.24 + 1.53% +$ 7.45
Adjustment
FY 2005 "City" Property Tax' $ 485.93 - 1.48% -$ 7.32
FY 2005 With Homestead' $ 493.25 0.00% $ 0.01
Adjustment
PROPOSED
FY 2006 "City" Property Tax" $ 493.25 + 0.00% +$ 0.00
Average FY 1989-FY 2006 - .24% -$ 2.59
PROJECTION "
FY 2007 "City" Property Tax' $ 493.25 + 0.78% +$ 3.86
FY 2008 "City" Property Tax $497.11 + 4.00% +$ 19.91
FY 2009 "City" Property Tax' $ 517.01 + 3.90% +$ 20.14
FY 2010 "City" Property Tax $ 537.15 + 3.68% +$ 19.77
. Denotes year of State-issued equalization orders.
"The FY 2006 property tax calculation takes into account the 6% valuation increase for the average
residential homeowner as detenmined by the reappraisal.
FY 2006 Policy Guidelines
Page 13
IMPACT ON COMMERCIAL PROPERTY - EXAMPLE
CITY TAX
ACTUAL - PAST HISTORY CALCULATION
FY1989 "City"PropertyTax $2,106.42
FY 1990 "City" Property Tax $2,086.50
FY 1991 "City" Property Tax' $2,189.48
FY1992 "City"PropertyTax $2,280.18
FY1993 "City"PropertyTax' $2,231.05
FY1994 "City"PropertyTax $2,250.15
FY 1995 "City" Property Tax' $2,439.60
FY 1996 "City" Property Tax $2,439.60
FY 1997 "City" Property Tax' $2,659.36
FY 1998 "City" Property Tax $2,738.43
FY 1999 "City" Property Tax' $2,952.03
FY 2000 "City" Property Tax $2,934.21
FY 2001 "City" Property Tax $2,993.00
FY 2002 "City" Property Tax $2,910.25
FY 2003 "City" Property Tax' $3,186.27
FY 2004 "City" Property Tax $3,278.41
FY 2005 "City" Property Tax' $3,349.90
'denotes year of State-issued equalization order
PERCENT
INCREASE
-15.4%
- .9%
+4.9%
+4.1%
- 2.2%
+0.9%
+8.4%
+0.0%
+9.0%
+2.97%
+7.8%
-0.6%
+2.0%
-2.77%
+9.48%
+ 2.89%
+ 2.18%
DOLLAR
INCREASE
-$ 384.00
- $ 20.00
+$ 1 02.98
+$ 90.70
-$ 49.13
+$ 19.10
+$ 189.45
+$ 0.00
+$ 219.76
+$ 79.07
+$ 213.60
-$ 17.82
+$ 58.86
-$ 82.83
+$276.03
+$ 92.14
+$ 71.49
PROPOSED
FY 2006 "City" Property Tax" $3,162.27 - 5.60% -$187.63
Average FY 1989-2006 + 1.51% +$ 37.32
PROJECTION ..
FY 2007 "City" Property Tax' $3,163.02 + 0.02% +$ 0.75
FY 2008 "City" Property Tax $3,277.79 + 3.63% +$ 114.77
FY 2009 "City" Property Tax' $3,379.87 + 3.11 % +$ 102.08
FY 2010 "City" Property Tax $3,491.64 + 3.31% +$111.77
. Denotes year of State-issued equalization orders
"The FY 2006 property tax calculation takes into account the 2.7% valuation decrease for commercial
property as determined by the reappraisal.
FY 2006 Policy Guidelines
Page 14
IMPACT ON INDUSTRIAL PROPERTY - EXAMPLE
CITY TAX PERCENT DOLLAR
ACTUAL - PAST HISTORY CALCULATION INCREASE INCREASE
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
PROPOSED
FY 2006 "City" Property Tax" $5,790.36 + 14.98% +$ 754.36
Average FY 1989-FY 2006 - 0.86% -$ 65.81
PROJECTION"
FY 2007 "City" Property Tax $5,791.74 + 0.02% +$ 43.58
FY 2008 "City" Property Tax $6,001.88 + 3.63% +$ 20.78
FY 2009 "City" Property Tax $6,188.80 + 3.11% +$ 43.04
FY 2010 "City" Property Tax $6,393.45 + 3.31% +$ 20.54
"The FY 2006 property tax calculation takes into account the 19.4% valuation increase for industrial
property as determined by the reappraisal.
FY 2006 Policy Guidelines
Page 15
History of Increases in Property Tax Askings
Fiscal
Year
"City" Property
Tax Askinas /000)
$10,918,759
$10,895,321
$11,553,468
$12,249,056
$12,846,296
$13,300,756
$13,715,850
$14,076,320
$14,418,735
$14,837,670'
$15,332,806'
$15,285,754
$15,574,467
$15,686,579
$15,771,203
$16,171,540
$16,372,735
$16,019,435
FY 1989
FY 1990
FY 1991
FY 1992
FY 1993
FY 1994
FY 1995
FY 1996
FY 1997
FY 1998
FY 1999
FY 2000
FY 2001
FY 2002
FY 2003
FY 2004
FY 2005
FY 2006
Estimate
Average FY 1989-2006
*Without TIF Accounting change.
% Chanae
in Tax
Askinas
-12.0%
- 0.2%
+6.0%
+6.0%
4.9%
+ 3.5%
+ 3.1%
+2.6%
+2.4%
+2.9%
+3.3%
- 0.3%
+ 1.9%
+ .8%
+ .5%
+2.5%
+ 1.2%
- 2.2%
+ 1.49%
Present Impact
on Homeowner
Sales Tax initiated
-11.4%
- .9%
+ 3.8%
+ 3.6%
+5.0%
+ .3%
+2.4%
- .9%
- .4%
- .7%
.0%
- .2%
.0%
.0%
-5.0%
+ 1.5%
.0%
.0%
- .16%
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 Askinas ¡OOO) % Increase Residential Property'
FY 2005 $16,373
FY 2006 $16,019 - 2.16% 0% / $ 0.0
FY 2007 $16,344 + 2.03% +0.78% / +$ 3.86
FY 2008 $17,275 + 5.70% +4.00% / +$19.91
FY 2009 $18,170 + 5.18% +3.90% / +$20.14
FY 2010 $19,146 + 5.37% +3.68% / +$19.77
FY 2006 Policy Guidelines
Page 16
Guideline
The recommended guideline is no tax increase for the average residential property
owner, and to change the percent of annual gaming revenues going into the operating
budget from 75 percent to 65 percent.
Note: One percent increase in the tax rate will generate approximately $160,194.
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 2006 Policy Guidelines
Page 17
21.
22.
23.
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.
COOPERATIVE PROJECTS
Guideline
Increased efforts should be undertaken to enter into mutually beneficial
cooperative capital improvement projects with the County, school district and
private groups. Cost sharing to develop joint-use recreation facilities and cost
sharing to improve roads and bridges are examples.
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 2004-05 taxable value for calculating the debt limit is $2,647,847,961,
which indicates a total General Obligation debt capacity of $132,392.398.
Outstanding G.O. debt (including tax increment debt) on June 30, 2005 will be
$24,035,000 (18.2 percent) leaving an available debt capacity of $108,357,398
(81.8 percent).
As we approach the preparation of the FY 2006-2010 Capital Improvement
Program (CIP) the problem is not our capacity to borrow money but (a) how to
identify, limit and prioritize projects which justify the interest payments and (b)
how to balance high priority projects against their impact on the property tax rate.
FY 2006 Policy Guidelines
Page 18
Guideline
There are many high priority capital improvement projects, which need to be
constructed during the FY 2006-2010 period. Most of these projects will be
possible without borrowing the money (i.e., selling bonds) to help finance them.
However, debt will be required on 5 major capital projects, that being the
Drainage Basin Master Plan, the expansion of Dubuque Industrial Center West,
Sanitary Sewer Fund, Water Fund and the Parking Division. 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.
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
FY1991-$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
The FY 2005 budget was based on receiving $4,632,453 in Road Use Tax funds.
In FY 2005, 72.5 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
is increased revenues or reduced expense that would allow this shift without a
property tax impact.
FY 2006 Policy Guidelines
Page 19
25.
26.
27.
28.
COMMERCIAL AND INDUSTRIAL DEVELOPMENT
Guideline
Current City, commercial and industrial development efforts should be continued
to (a) preserve current jobs and create new job opportunities and (b) enlarge and
diversify our economic base. Financing these efforts and programs should
continue to be a high priority for Community Development funding.
HOUSING
Guideline
In order to maintain an adequate supply of safe and decent housing, the City
should strive to preserve existing single family and rental housing and provide
opportunities for development of new housing within the City's corporate limits for
all citizens, particularly for people of low and moderate income.
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.
NET CASH PROCEEDS (SURPLUS DISTRIBUTION) FROM THE DUBUQUE
RACING ASSOCIATION
The contract with the Dubuque Racing Association calls for distribution at the
end of its fiscal year, November 30th, of 40 percent (this was 50 percent, but
changed with the new lease agreement on April 1, 2004) of its net cash
operating funds to the City of Dubuque. In mid-December, the City will receive
FY 2006 Policy Guidelines
Page 20
an un-audited estimate of proceeds to be distributed. These proceeds will then
be allocated beginning with the next fiscal year through the capital improvement
process with the highest priority given to reducing the City's annual borrowing.
This policy was changed in FY 2004 to allow for use of the proceeds to support
the current capital improvement budget (versus the next fiscal year's budget).
In addition, the Dubuque Racing Association provides the City with projections of
future distributions since gaming is a highly volatile industry the estimates are
discounted prior to including them in the City's Five Year CIP.
One hundred percent of the January 2006 projections of operating surplus have
been anticipated as resources to support the Fiscal Year 2006 capital
improvement projects. This level will be maintained for the Fiscal Year 2007
surplus for the FY 2007 resource estimate and then reduced by 5 percent for the
January 2008 projected surplus for FY 2008, 10 percent for FY 2009, and 15
percent for FY 2010 resources.
Guideline
In Fiscal Year 2006, 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
The amount of total gaming receipts from taxes and rent committed annually in
support of the annual operating budget has historically been one-third of the total
FY 2006 Policy Guidelines
Page 21
gaming tax and lease revenues. It was felt that a fiscally sound policy was to
commit two thirds of the gaming revenues to the capital budget, thereby
providing a cushion for future years, when gaming revenues could fluctuate with
the local economy. Should gaming revenues begin to decline, the capital budget
projects would be eliminated, deferred or funded from some other source if they
were a high priority.
The City has always tried to minimize dependence on gaming revenues in the
operating budget. This was maintained over years, while still meeting the
property tax guideline of no increase for the average residential property.
However, FY 2004 brought new financing challenges including double-digit
inflation in key areas (health costs, liability and property insurance, and electrical
costs), a 20,5 percent increase in Police and Fire Pension costs, decreasing
State revenues, and reduced sales tax projections. The FY 2004 guideline
reflected the impact of the changes and included a change to a 50/50 split of
gaming taxes and rents between the operating and capital budgets.
The FY 2005 guideline again reflected increasing financing challenges and the
split was recommended to change from 50/50 to 75 percent operating and 25
percent capital. This change reflects priority being given to maintaining current
service levels in the operating budget and reduced resources in the capital
budget.
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 Y: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, allows the split between
capital and operating expenses to be adjusted from 25% capital and 75%
operating, to 35% capital and 65% operating.