Fiscal Year 2002 Budget Policy Guidelines
CITY OF DUBUQUE, IOWA
MEMORANDUM
December 4, 2000
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Fiscal Year 2002 Policy Guidelines
The purpose of this memorandum is to transmit draft Fiscal Year 2002 Fiscal
Guidelines for your review and adoption. The guidelines reflect City Council
direction given as part of the August 28 and 29, 2000, goal setting sessions.
During those sessions the City Council established goals for the next five years and
established City priorities in Fiscal Year 2002.
Dubuque 2006: City Council Goals
In five years the Council wants the following for the community:
1 . Improved Transportation Network
2. Strong Local Economy
3. A "Balanced" Community
4. Safe Community
5. Riverfront Development
6. Top Quality City Services
Fiscal Year 2002 Priorities: Our Targets
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 2002 are:
Top Priority
Affordable Housing
Highway 20
Incentives to Attract/Expand Businesses
Riverfront Land Acquisition/Condemnation
The Honorable Mayor and City Council
September 13, 1999
Page 2
High Priority
Riverfront Land Uses and Development Standards
Telephony: Infrastructure
Historic Preservation
Town Clock Plaza
Moderate Priority
Street Program
Traffic Synchronization Downtown
Compensation Policy for Professionals
As we develop a budget to achieve these priorities I believe it is important to begin
with an overview of the City's past performance in terms of growth in personnel
complement, tax asking, and changes in assessed valuations. This overview
summarizes the impact of fiscal guidelines established by prior City Councils as
they attempted to balance resources with community expectations.
Background Information
Since 1981, the City has reduced the number of full-time employees from 588 to
516 (including the addition of three temporary positions for the Lead Paint Grant).
This is a reduction in the full-time work force of 12.2 percent or 72 employees.
This has happened during a time when new or expanded City programs and
services have been added to meet increasing demands and mandates. Initiatives
during that time period have included:
. economic development efforts
. yard waste, recycling programs and household hazardous waste disposal
programs
. county-wide E911 dispatch
. comprehensive housing programs
. community oriented policing
. DARE and other drug related programs
. rental property inspections
. operation of leisure pools
. McAleece Recreation Complex operations
The Honorable Mayor and City Council
September 13, 1999
Page 3
. City Focus newsletter
. industrial pretreatment and lead and copper testing programs
. Fifth Street parking ramp
. Third Street parking ramp
. hazardous materials team
. advanced life support ambulance service
. government Channel 8 programming
. cable TV monitoring and regulation
. additional commissions including Long Range Planning, Environmental
Stewardship, Investment Oversight, Development Review Committee,
Police Advisory Panel and Community Based Task Force on Gangs, Drugs
and Youth Violence
. extension of Heritage hike and bike trails
. City operated FBO functions
. increased Zoning Code enforcement
. developers and builders round tables
. implementation of Riverfront Plan through America's River Partnership
. downtown circulation improvements
. coordination and public information programs related to the Highway 20
project
. implementation of the Neighborhood Reinvestment Strategy
. lead paint abatement program
. additional neighborhood parks and open spaces
. reinstatement of traffic accident investigations
The City continues to look for operating efficiencies through the program and
service review process. Those reviews currently underway include Operations and
Maintenance, Emergency Communications Center, Fire, Parking and Human Rights.
Reviews to be initiated during the balance of Fiscal Year 2001 include Airport,
Library, Engineering, City Clerk's Office and Finance. Reviews which have been
completed include Community and Economic Development, Housing, Park Patrol,
Water, Civic Center, Water Pollution Control Plant, Administrative Services,
Planning Services, Recreation, Police, Transit, City Manager's Office, Health
Services, Building Services and Parks.
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 who have eliminated city services, quality of life continues to be a high
priority of City Council and high service standards have been maintained by
The Honorable Mayor and City Council
September 13, 1999
Page 4
implementing operating efficiencies and using other resources such as sales tax,
gaming revenues, and user fees for property tax relief.
Property tax values have increased from $937,934,744 in Fiscal Year 1991
(January 1, 1989 values) to $1,402,309,002 for Fiscal Year 2001 (January 1,
1999 values) which represents an increase of $464,374,258 or 49.5 percent over
the ten year period. The City's portion of the property tax rate has gone from
$12.2660 in Fiscal Year 1991 to $11.0671 per thousand dollars of assessed value;
a decrease of $1.1989 or -9.8 percent over the same ten year period.
Why was the City able to reduce the tax rate over the past ten years? Some of the
factors which have affected the property tax rate include:
1. The use of sales tax for property tax relief has grown from $2,000,000 in
Fiscal Year 1991 to $3,112,608 in Fiscal Year 2001. This increase is the
equivalent of property tax relief of $.7934/$1,000 of assessed value. This
means that the local option sales tax has allowed a 6.5 percent reduction in
the City's portion of the tax rate from Fiscal Year 1991 to Fiscal Year 2001;
2. The net addition of only four property tax supported full-time positions from
Fiscal Year 1991 to Fiscal Year 2001 (the net increase has been held to only
four in spite of the fact that the City added seven police officer positions in
Fiscal Year 1994 and five in Fiscal Year 2000); and
3. The use of annual gaming revenues for property tax relief. This has avoided a
6.2 percent increase in the property tax rate. Also, the use of the annual
distribution of 50 percent of Dubuque Racing Association net profits to the City
of Dubuque which has been used to eliminate the City's annual General
Obligation borrowing to street, storm sewer and Airport capital improvements.
This analysis indicates that the City has used property tax valuation growth and
other important growth revenues like sales tax to maintain City services and has
not increased the tax rate to accomplish this. In fact the City has reduced the tax
rate over the past ten years.
A comparison of the City of Dubuque's property tax rate for Fiscal Year 2001 with
the other eight largest cities in Iowa shows Dubuque ranks eighth out of nine. This
comparison is summarized in table format as follows:
The Honorable Mayor and City Council
September 13, 1999
Page 5
RANK CITY TAX RATE POPULATION
1 Des Moines 16.57804 193,187
2 Waterloo 16.49097 66,467
3 Council Bluffs 15.78900 54,315
4 Iowa City 14.75759 60,148
5 Davenport 14.63000 95,333
6 Sioux City 14.40724 80,505
7 Cedar Rapids 12.74497 108,780
8 Dubuque 11.06712 57,538
9 Ames 9.60628 48,691
Proposed Budget Guidelines
Having reviewed this background information on where and how City functions and
finances have developed over the past ten years, it's now time to look forward and
establish the fiscal plan for the upcoming year.
The budget guidelines are developed and adopted by City Council early in the
budgeting process in order to provide targets or parameters within which the
budget recommendation will be formulated. The final budget presented by the City
Manager may not meet all of these targets due to changing conditions and updated
information during budget preparation. To the extent the recommended budget
varies from the guidelines, an explanation will be provided in the printed budget
document.
The budget guidelines for Fiscal Year 2002 that I am recommending to you can be
summarized as follows:
. Preliminary Citizen participation opportunities
Date
Wednesday, December 6
Starting Time
5:00 p.m. - City Manager's Public Input
Meeting
6: 15 p.m. - City Council Budget Worksession
6: 15 p.m. - City Council Budget Worksession
6: 15 p.m. - City Council Budget Worksession
6: 15 p.m. - City Council Budget Worksession
Wednesday, February 7
Monday, February 1 2
Thursday, February 1 5
Wednesday, February 21
The Honorable Mayor and City Council
September 13, 1999
Page 6
Date
Monday, February 26
Tuesday, February 27
Tuesday, March 6
Starting Time
6: 15 p.m. - City Council Budget Worksession
6: 15 p.m. - City Council Budget Worksession
6:30 p.m. - Public Hearing - City Council
. Service objectives
Each department will identify specific objectives that reflect City Council goals.
. Balanced budget
Expenditures will not exceed revenue.
. Limited resources
It is not possible to afford all of the services requested by individual citizens.
. Review of services
Existing service levels are maintained and reviewed for appropriateness.
. Improved productivity
Efforts will continue to become more efficient.
. Volunteers
Efforts to expand the use of volunteers will be maintained.
. Outside funding
Non-City funding sources, like federal grants, public-private partnerships and
coordination with other local governments will be aggressively pursued.
. General Fund Balance
To meet financial obligations prior to receiving certain tax revenues and to assist
in maintaining a AA bond rating, which reduces borrowing costs, the City will
maintain a cash reserve of 10 percent of the total General Fund operating
budget (excluding employee fringe benefits) or $2,386,000.
The Honorable Mayor and City Council
September 13, 1999
Page 7
. Nonrecurring Income
Nonrecurring income will only be spent on nonrecurring expenses to avoid future
funding problems for the operating budget.
. Revenue Assumptions
There are thirteen revenue assumptions in the attached document.
. Expenditure Assumptions
There are eleven expenditure assumptions in the attached document.
. The sales tax distribution formula will be maintained at 50 percent tax relief, 30
percent reduction of assessments and street construction and 20 percent
maintenance of City-owned property.
. Expansion or creation of new facilities that will increase the required operation
support, usually from property taxes, will only be considered with a
demonstrated need and a long-term plan to incorporate the increased costs into
the entire system.
. General Obligation borrowing is not anticipated if gaming distributions continue
at the projected levels. To the extent they do not meet projections, general
obligation borrowing may be necessary.
. Emphasis will be placed on funding projects in the CIP that reduce future
operating expenditures.
. Gaming revenues, excluding the annual surplus distribution, will continue to be
used 1/3 in the operating budget and 2/3 in the capital budget.
. Finally, the Policy Guidelines include a property tax guideline that provides no
increase in the "City" share of property taxes for the average homeowner.
At this time, I am respectfully requesting that the Mayor and City Council adopt the
budget guidelines which provides no increase in the "City" share of property taxes
for the average homeowner in Fiscal Year 2002.
The Honorable Mayor and City Council
September 13, 1999
Page 8
, ld. Ie > ij l
'Michael C. Van Milligen
City Manager
POLICY GUIDELINES FOR FY 2002
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 five work sessions in addition to the budget public hearing for the purpose
of reviewing the budget recommendations for each City department and
requesting public input following each departmental review.
The budget will be prepared in such a way as to maximize its understanding by
citizens. A limited number of the Citizens Guide to the Recommended Budget
will be made available to interested citizens and groups. Other budget
documents will be on file with the City Clerk and at the Carnegie Stout Public
Library in their government documents section.
An opportunity will be provided for citizen input prior to formulation of the City
Manager's recommended budget and again prior to finql 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.
Policy Guidelines
Fiscal Year 2002
Page 2
3. TWO TYPES OF BUDGET DOCUMENTS TO BE PREPARED
Guideline
The recommended City operating budget for Fiscal Year 2002 will consist of two
types of budget documents: a Recommended City Council Policy Budget that is
a collection of information that has been prepared for each department hearing
and is bound by hearing date. The second type of document is a Citizens Guide
to the Recommended FY 2002 Budget.
The Recommended City Council Policy Budget documents contain the following
information for each department: Highlights of Prior Year's Accomplishments
and Future Year's Initiatives, a financial summary, a summary of decision
packages requested and recommended, significant line items, index of capital
improvement projects recommended over the next five years, organizational
chart for larger departments, major goals, objectives and performance measures
for each cost center within that department, and line item expense and revenue
financial summaries. The purpose of these documents are to focus the attention
of the City Council and the public on policy decisions involving what services the
City government will provide, who will pay for them and the implications of such
decisions. They will emphasize objectives, accomplishments and associated
costs for the budget being recommended by the City Manager. It will clearly
show the level of service being proposed.
The Citizens Guide to the Recommended FY 2002 Budget is a composite of
tables, financial summaries and explanations, operating and capital budget
messages and the adopted City Council Budget Guidelines. It serves as a
handout for the general public which highlights the budget process, City
Manager's recommendations, departmental accomplishments and future
initiatives. Through graphs, charts and tables it presents financial summaries
which provide an overview of the total operating and capital budgets.
The City of Dubuque will continue to maintain comprehensive budget documents
which meet the standards for budget presentation established by the
Governmental Finance Officers Association.
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.
Policy Guidelines
Fiscal Year 2002
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? @ 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 or user fees or a
combination?
7. IMPROVED PRODUCTIVITY
Guideline
Efforts should continue to stretch the value of each tax dollar and the City
services that it buys through improved efficiency and effectiveness. Using
innovative and imaginative approaches to old tasks, reducing duplication of
service effort, creative application of new technologies and more effective
organizational arrangements are approaches to this challenge.
8. USE OF VOLUNTEERS
Discussion
As our financial capabilities decrease, we must seek to expand our resources by
continuing to get citizens directly involved in supplementing our service delivery
capability. Citizens must be encouraged to assume tasks previously performed
or provided by City government. This may require us to change our approach to
Policy Guidelines
Fiscal Year 2002
Page 4
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, 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 2002 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
nongovernment groups and sponsors (i.e., YMCANWCA, 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
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
Policy Guidelines
Fiscal Year 2002
Page 5
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, Refuse
Collection Fund, and Parking Fund. In other cases, a user charge is made after
the Council determines to what extent an activity is to be self-supporting.
Examples of this arrangement are fees for swimming, golf and recreation
programs and certain inspection programs.
Guideline
User fees and charges should be established where possible so that those who
utilize or directly benefit from a service, activity or facility also help pay for it.
User fees and charges for each utility fund (Water User Fund, Sewer User Fund,
Refuse Collection Fund, and Parking Fund) shall be set at a level that fully
supports the total direct and indirect cost of the activity, including the cost of
annual depreciation of capital assets and pay-as-you-go financing for future
capital improvement projects.
Policy Guidelines
Fiscal Year 2002
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).
FY1998 FY1999 FY 2000 FY 2001 FY 2002
ACTUAL ACTUAL ACTUAL ADOPTED RECOM'D
DEPARTMENT/DIVISION PERCENT PERCENT PERCENT PERCENT PERCENT
Leisure Services Department
Recreation Division
Adult Athletics* 91.3 85.6 86.0 87.0 87.0
Children's Activities 57.2 62.1 61.3 58.0 58.0
Therapeutic Recreation 11.4 14.6 15.3 18.0 18.0
Recreation Classes 45.2 41.5 46.7 42.0 42.0
Swimming* 76.5 95.4 86.4 83.0 83.0
Golf* 99.2 100.0 100.0 100.0 100.0
Park Division 14.9 10.4 12.2 10.0 11.0
Civic Center Division** 42.8 41.1 48.0 45.0 45.0
Library Department 8.6 9.4 8.3 9.0 8.0
Airport Department w/abated debt 87.2 86.7 79.8 85.0 85.0
Building Services Division 71.9 87.4 83.7 70.0 80.0
Planning Services Department 7.8 11.4 10.7 10.0 10.0
Health Services Department
Food/Environmental Insp. 56.7 56.8 66.8 68.0 68.0
Animal Control 82.0 90.7 100.0 90.0 90.0
Housing Services Department
General Housing Inspection 51.9 51.3 50.9 51.0 51.0
* Includes an amount to help cover indirect costs (administration)
** Excludes Self-Promotion Activity
13. OUTSIDE FUNDING
Discussion
The purpose of this guideline is to establish the policy that the City should
aggressively pursue outside funding to assist in financing its operating and
capital budgets. However, the long-term commitments required for such funding
must be carefully evaluated before any agreements are made. Commitments to
assume an ongoing increased level of service or level of funding once the
outside funding ends must be avoided.
Policy Guidelines
Fiscal Year 2002
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 budqet; they are
required for cash flow (i.e., to be able to pay our bills before taxes are collected).
The rule of thumb the state recognizes for determining a reasonable amount for
a working balance is (a) anticipated revenues for the first three months of the
fiscal year less anticipated expenditures or (b) 5% 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% was recommended for
Aa 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 $2,386,000.
Guideline
The guideline of the City of Dubuque is to maintain a General Fund working
balance or operating reserve of 10% of the total General Fund Operating budget
requirements or approximately $2,386,000 for FY 2002.
15. USE OF UNANTICIPATED, UNOBLIGATED. 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
Policy Guidelines
Fiscal Year 2002
Page 8
preparation. Several Iowa cities are in financial trouble because they spent
nonrecurring money for recurring expenses. Nonrecurring expenditures would
include capital improvements and equipment purchases.
Guideline
Nonrecurring unobligated 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 unobligated year end balances are in turn
"carried over" into the new fiscal year to help finance it.
The FY 2000-01 General Fund budget which went into effect July 1 st anticipated
a "carryover balance" of $200,000 or approximately 2% of the General Fund.
For multi-year budget planning purposes, these guidelines assume a carryover
balance of $200,000 in FY 2002 through FY 2006.
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 2001-02 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
2002 and each succeeding year to support the operating budget. In Fiscal
Year 2002, an additional amount of $145,878 in Pension Fund excess cash
balance will be used for retirement expense and free up tax support for the
additional police officers added in Fiscal Year 1994.
Policy Guidelines
Fiscal Year 2002
Page 9
b. State shared revenues will continue at the actual FY 2000 level of receipts,
except Machinery and Equipment Replacement taxes which are anticipated
to be eliminated in FY 2002.
c. Hotel/motel tax receipts will increase 2.5% per year over FY 2000 actual
receipts.
d. FTA and State Transit operating assistance will continue at the actual FY 00
levels of $501,000 and $149,700 respectively.
e. Miscellaneous revenue, excluding state shared revenues, has been
estimated at 2% growth per year over Budgeted FY 2001.
f. Revenues generated from Dubuque Greyhound Park have been estimated
based on the actual Fiscal Year 2000 level of activity for FY 2002 and held
constant in the out years.
g. Riverboat related receipts also reflect FY 2000 actual receipts and are
estimated at $605,000 from the 50 cent admission fee and $252,000 from %
of 1 % of adjusted gross receipts.
h. Interest earnings from the Self-Insurance Reserves (Health and Workers'
Compensation) will continue to be used to reduce tax askings for fringe
benefit expense. In addition, $120,000 in cash balance is being used each
year for the next five years to reduce the Health Self-Insurance Reserve
Fund balance based on recommended reserves.
I. The residential rollback factor has been adjusted from 54.8525% to
56.2651 % or an increase of 2.15% for FY 2002. An increase of 2.5% has
been estimated for Fiscal Years 2004 and 2006, the off years of equalization
orders.
Assessed valuations were increased 2% per year beyond FY2002.
Machinery & Equipment valuations have been reduced per the League of
Iowa Municipalities estimate and state replacement revenue has been
eliminated per the State's projection.
J. Debt Service Fund balances will be used over the next four years to reduce
property tax support for General Obligation debt service related expense.
No additional property tax supported General Obligation debt is anticipated
in the Five Year Projection.
Policy Guidelines
Fiscal Year 2002
Page 10
k. Sales tax projections anticipate 50% of four quarterly payments in the
General Fund for property tax relief. Sales tax projections for FY 2002 have
been estimated to increase 5% per year over actual FY 2000 revenues.
I. In Fiscal Year 2002 and beyond, 75% of the revenue from the Downtown
TIF District is anticipated to be used for downtown development projects in
order to support additional downtown parking, gateway improvements and
plaza amenities. To the extent these funds are not required to support debt
payments or project expense, the excess will be distributed per state code to
each taxing body.
m. For purposes of budget projections only, it is assumed that property taxes
will continue to increase at a rate necessary to meet additional requirements
over resources beyond Fiscal Year 2002.
Assumptions - Requirements
a. A wage adjustment is reflected in the projections for FY 2002 and each
succeeding year.
b. No increase is anticipated in FY 2002 for health insurance over the
FY 2001 budgeted rates. Estimates for FY 03-06 have been increased by
5% per year. The rates being charged to departments have been
decreased by $120,000 to reduce the Self-Insurance Reserve Fund balance
as noted above.
c. General operating supplies and services are estimated to increase 2.5%
over budget in FY 2002 and succeeding years.
d. Electrical energy expense is estimated to increase 2.5% per year over FY
2000 actual expense.
e. Natural gas expense is estimated to increase 30% over FY 2000 actual plus
13% for degree day adjustment.
f. The Convention and Visitors Bureau contract (including the Land of
Festivals) will continue at 50% of actual hotel/motel tax receipts.
g. Equipment costs are estimated at 2.5% per year over FY 2000 actual,
however, the final budget recommendation will be based on need, not on a
percentage over prior years.
h. Debt service is estimated based on no additional General Obligation bond
sales in FY 2002 - 2006.
Policy Guidelines
Fiscal Year 2002
Page 11
I. Unemployment insurance expense has been maintained at $15,000 per
year.
J. Motor vehicle fuel expense has been increased from 8 to 15% over FY 2000
actual expense and motor vehicle maintenance expense by 2.5% per year.
k. Postage rates are estimated to increase 2.5% per year over FY 2001
budgeted expense.
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 0.0% $ 0.00
CITY TAX PERCENT DOLLAR
PROJECTION CALCULATION INCREASE INCREASE
FY 2002 "City" Property Tax $ 511 .38 + 0.00% +$ 0.00
FY 2003 "City" Property Tax $ 517.34 + 1.17% +$ 5.96
FY 2004 "City" Property Tax $ 548.53 + 6.03% +$ 31.19
FY 2005 "City" Property Tax $ 558.99 + 1.91% +$ 10.47
FY 2006 "City" Property Tax $ 582.89 + 4.27% +$ 23.90
Policy Guidelines
Fiscal Year 2002
Page 12
IMPACT ON COMMERCIAL PROPERTY - EXAMPLE
CITY TAX PERCENT DOLLAR
ACTUAL - PAST HISTORY CALCULATION INCREASE INCREASE
FY 1989 "City" Property Tax $2,106.42 - 15.4% - $ 384.00
FY 1990 "City" Property Tax $2,086.50 .9% - $ 20.00
FY 1991 "City" Property Tax* $2,189.48 + 4.9% +$ 102.98
FY 1992 "City" Property Tax $2,280.18 + 4.1% +$ 90.70
FY 1993 "City" Property Tax* $2,231.05 - 2.2% -$ 49.13
FY 1994 "City" Property Tax $2,250.15 + 0.9% +$ 19.10
FY 1995 "City" Property Tax* $2,439.60 + 8.4% +$ 189.45
FY 1996 "City" Property Tax $2,439.60 + 0.0% +$ 0.00
FY 1997 "City" Property Tax* $2,659.36 + 9.0% +$ 219.76
FY 1998 "City" Property Tax $2,738.43 + 2.97% +$ 79.07
FY 1999 "City" Property Tax* $2,952.03 + 7.8% +$213.60
FY 2000 "City" Property Tax $2,934.21 - 0.6% -$ 17.82
FY 2001 "City" Property Tax $2,993.00 + 2.0% +$ 58.86
* Denotes year of State issued equalization order.
PROJECTION
FY 2002 "City" Property Tax $2,910.25 - 2 .77% -$ 82.83
FY 2003 "City" Property Tax $2,944.18 + 1 .17% +$ 33.93
FY 2004 "City" Property Tax $3,040.43 + 3.27% +$ 96.25
FY 2005 "City" Property Tax $3,098.44 + 1.91 % +$ 58.01
FY 2006 "City" Property Tax $3,144.47 + 1.49% +$ 46.03
IMPACT ON INDUSTRIAL PROPERTY - EXAMPLE
ACTUAL - PAST HISTORY
FY 1989 "City" Property Tax
FY 1990 "City" Property Tax
FY 1991 "City" Property Tax
FY 1992 "City" Property Tax
FY 1993 "City" Property Tax
FY 1994 "City" Property Tax
FY 1995 "City" Property Tax
FY 1996 "City" Property Tax
CITY TAX
CALCULATION
$5,900.35
$5,844.55
$6,133.00
$6,387.05
$6,249.45
$6,302.95
$5,891.05
$5,891.05
CITY TAX
PERCENT
INCREASE
-15.4%
- .9%
+ 4.9%
+ 4.1%
- 2.2%
+ 0.9%
- 6.5%
+ 0.0%
DOLLAR
INCREASE
-$1,074.65
-$ 55.80
+$ 288.45
+$ 254.05
-$ 137.60
+$ 53.50
-$ 411.90
+$ 0.00
PERCENT DOLLAR
Policy Guidelines
Fiscal Year 2002
Page 13
ACTUAL - PAST HISTORY (continued) CALCULATION INCREASE INCREASE
FY 1997 "City" Property Tax $5,690.75 -3.4% -$ 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
PROJECTION
FY 2002 "City" Property Tax $5,380.42 - 2.77% -$ 153.13
FY 2003 "City" Property Tax $5,443.15 + 1.17% +$ 62.73
FY 2004 "City" Property Tax $5,621.10 + 3.27% +$ 177.95
FY 2005 "City" Property Tax $5,728.35 + 1.91 % +$ 107.25
FY 2006 "City" Property Tax $5,813.45 + 1.49% +$ 85.10
History of Increases in Property Tax Askings
Fiscal
Year
"City" Property
Tax Askinas (000)
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
$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
*Without TIF Accounting change.
% Increase
-12.0% Sales Tax initiated
- 0.2%
+6.0%
+6.0%
+4.9%
+ 3.5%
+ 3.1%
+2.6%
+2.4%
+2.9%
+ 3.3%
- 0.3%
+ 1.9%
Impact on Tax Askings and Average Residential Property
To maintain the current level of service based on the previous assumptions will require the
following property tax asking increases:
Policy Guidelines
Fiscal Year 2002
Page 14
Year
"City" Property
Tax Askin~s (000)
% Increase
% I $ Impact on Avg.
Residential Property
FY 2002
FY 2003
FY 2004
FY 2005
FY 2006
15,380
15,543
16,358
16,998
17,588
- 1.3%
+ 1.1%
+5.2%
+3.9%
+3.5%
+ 0.00%/+$ 0.00
+ 1.17%/+$ 5.96
+ 6.03%/+$ 31.19
+ 1.91%/+$ 10.47
+ 4.27%/+$ 23.90
Guideline
The recommended guideline is to maintain no tax increase for the average residential property
owner.
Note: One percent increase in the tax rate will generate approximately $158,300 and a 1 %
increase in tax asking will generate approximately $155,700.
CIP BUDGET GUIDELINES
18. INTEGRATION OF CAPITAL RESOURCES
Guideline
In order to obtain maximum utilization, coordination and impact of ~ 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.
Policy Guidelines
Fiscal Year 2002
Page 15
20. RENOVATION AND MAINTENANCE
Guideline
Capital improvement expenditures should concentrate on renovating and
maintaining existing facilities to preserve prior community investment.
21. NEW CAPITAL FACILITIES
Guideline
Construction of new or expanded facilities which would result in new or
substantially increased operating costs will be considered only if: 1) their
necessity has been clearly demonstrated; 2) their operating cost estimates and
plans for providing those operating costs have been developed; 3) they can be
financed in the long term; and 4) they can be coordinated and supported within
the entire system.
22. COOPERATIVE PROJECTS
Guideline
Increased efforts should be undertaken to enter into mutually beneficial
cooperative capital improvement projects with the County, school district and
private groups. Cost-sharing to develop joint use recreation facilities and cost-
sharing to improve roads and bridges are examples.
23. USE OF GENERAL OBLIGATION BONDS
Discussion
The Iowa Constitution limits the General Obligation debt of any city to 5% 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 2000-01 taxable value for calculating the debt limit is $2,095,515,187
which indicates a total General Obligation debt capacity of $104,775,619.
Outstanding G.O. debt (including tax increment debt) on June 30, 2001 will be
$18,724,809 (18%) leaving an available debt capacity of $86,050,810 (82%).
Policy Guidelines
Fiscal Year 2002
Page 16
As we approach the preparation of the FY 2002-2006 Capital Improvement
Program (CIP) the problem is not our capacity to borrow money but (a) how to
identify, limit and prioritize projects which justify the interest payments and (b)
how to balance high priority projects against their impact on the property tax rate.
Guideline
There are many high priority capital improvement projects which need to be
constructed during the FY 2002-2006 period. Most of these projects will be
possible without borrowing the money (i.e., selling bonds) to help finance them.
This is based on the plan approved by City Council in 1997 that shifts Road Use
Tax funds from the operating budget to the capital budget and uses ORA
distributions of annual net surpluses to the City for capital improvements. In
determining whether a project should be financed in total or in part from bond
funds the City Council must consider and balance off: (a) the community impact
of not doing the project (poor streets, deteriorated park buildings, sewer
problems, higher operating costs); (b) possible operating budget cuts to offset
higher debt service payments; (c) anticipated interest rate; and (d) the impact on
the tax rate and taxpayer of issuing the bonds.
24. ROAD USE TAX FUND
Discussion
Actual Road Use Tax Fund receipts are as follows:
FY 1985 - $2,069,065
FY 1986 - $2,207,467
FY 1987 - $2,259,436
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
The FY 2001 budget was based on receiving $4,689,000 in Road Use Tax funds.
In FY 2001,46.6% of the Road Use Tax income is in the operating budget. In
FY 1997, the City Council adopted a plan to shift Road Use Tax funds from the
operating budget to the capital budget at a rate of $250,000 per year. As of FY
2001, $940,000 of Road Use Tax fund expense had been shifted to the General
Policy Guidelines
Fiscal Year 2002
Page 17
Fund per the guideline. The increase in the tax askings from this shift has been
offset by reduced debt service expense. Shifting additional funds was
discontinued in FY 2001, and $60,000 was actually shifted back to Road Use
Tax funds. This change reflected the continued growth of gaming receipts and
recognition that this appeared to be a much more certain revenue stream that
could be used to support the CIP budget.
Guideline
Since FY 1997 Road Use Tax funds have been shifted to the capital budget for
street maintenance and repair to reduce the need to borrow funds for routine
street maintenance and improvements. This shift will not occur again until such
time as there is increased revenues or reduced expense that would allow this
shift without a property tax impact.
25. COMMERCIAL AND INDUSTRIAL DEVELOPMENT
Guideline
Current City, commercial and industrial development efforts should be continued
to (a) preserve current jobs and create new job opportunities and (b) enlarge
and diversify our economic base. Financing these efforts and programs should
continue to be a high priority for Community Development funding.
26. HOUSING
Guideline
In order to maintain an adequate supply of safe and decent housing, the City
should strive to preserve existing single family and rental housing and provide
opportunities for development of new housing within the City's corporate limits for
all citizens, particularly for people of 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% 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,
Policy Guidelines
Fiscal Year 2002
Page 18
Library, Law Enforcement Center, City Hall, fire stations, parks and swimming
pools); (b) Transit equipment such as buses; (c) riverfront and wetland
development; and (d) economic development projects.
28. NET CASH PROCEEDS (SURPLUS DISTRIBUTION) FROM THE DUBUQUE
RACING ASSOCIATION
The contract with the Dubuque Racing Association calls for distribution at the
end of its fiscal year (November) of 50% of its net cash operating funds to the
City of Dubuque. In mid-December, the City will receive an unaudited 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.
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 2001 projections of operating surplus have been
anticipated as resources to support the Fiscal Year 2002 capital improvement
projects. This level has been maintained for the Fiscal Year 2003 resource
estimate and then has been reduced from 100% to 85% of the year 2003
projected surplus for FY 2004, 70% for FY 2005, and 55% for FY 2006
resources. This is the same assumption used to prepare the Fiscal Years 2001-
2005 CIP.
Guideline
In Fiscal Year 2002, 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 and will be used to reduce required General
Obligation borrowing.
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 type 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.
Policy Guidelines
Fiscal Year 2002
Page 19
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 is one-third of the total gaming tax and
lease revenues. It is felt that a fiscally sound policy is to continue to commit two
thirds of the gaming revenues to the capital budget, thereby providing a cushion
for future years, when gaming revenues may again fluctuate with the local
economy. Should gaming revenues begin to decline, the capital budget projects
can either be eliminated, deferred or funded from some other source if they are a
high priority.
To the extent possible within the property tax guideline, the City will minimize
dependence on gaming revenues in the operating budget.