FY 2009 Budget and Policy GuidelinesTx~ crrY of Dubuque
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2007
December 12, 2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Budget and Fiscal Policy Guidelines for Fiscal Year 2009
Budget Director Jennifer Larson is recommending adoption of the Fiscal Year 2009
Budget Policy Guidelines. The guidelines reflect City Council direction given as part of
the August 28 and 29, 2007, 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.
Some highlights of the document are:
- With the opening of the renovated Diamond Jo Casino, based on a consultant's
study commissioned by the Dubuque Racing Association, there will be a
decrease of $5.5 million in operating revenues for the City over the next five
years, and a decrease of $15.9 million in the capital improvement budget over
the next five years.
- There are many high priority capital improvement projects, which need to be
constructed during the FY 2009-2013 period. Many of these projects will be
possible without borrowing (i.e., selling bonds) to help finance them. However,
debt will be required on 4 major capital projects, that being the Library
Renovation, Drainage Basin Master Plan, Sanitary Sewer Fund, and Water Fund.
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.
- When the Stormwater User Fund was created in FY 2004, it was intended that
this fund would be funded from a number of sources, which included the existing
level of General, Sales Tax, and DRA Distribution funds, as well as stormwater
user fees. A number of factors have impacted the need to have the stormwater
utility fund exist as aself-supporting enterprise fund, including the projected
decrease of DRA funding, lack of State and Federal Grants, and an increase in
the original costs to implement the Bee Branch Drainage Master Plan. FY 2009
will be the first fiscal year that the Stormwater User Fund is fully funded by
stormwater use fees. The General Fund will continue to provide funding for the
stormwater fee subsidies which provide a 50% subsidy for the stormwater fee
charged to property tax exempt properties, low-to-moderate income residents,
and residential farms.
- FY 2009 reflects the first year that payment in lieu of taxes is charged to the
Water and Water Pollution Control funds for Police and Fire Protection. In FY
2009, 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.
- The Policy Guidelines include a property tax guideline that provides a 4 percent
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.
- FY 2009 reflects a 12.03% increase in residential assessed value for the average
homeowner due to a voluntary revaluation (which is a local substitute for a state
equalization order). This results in increased taxable valuation for the average
homeowner which increases the City's tax base and allows the City to collect the
same amount of property tax revenue at a lower tax rate. The property tax rate
will decline from 10.3169 in FY 08 to 10.0895 in FY 09. This guideline proposes
dropping the property tax rate so that the cost to the average homeowner for the
City portion of their property tax payment increases only 4% and not by the
12.03% increase in assessed valuation.
- In addition, the "City" share of commercial property taxes will decrease 2.47
percent and industrial property tax will decrease 2.2 percent. This is the result of
the increase of 12.03 percent in residential assessed values due to the voluntary
revaluation with no change to assessed values for commercial or industrial
property. In the effort to keep the increase of property tax paid by the average
homeowner low, it is necessary to reduce the City's property tax rate which
results in the reduction of property taxes paid by commercial and industrial
taxpayers, who are not impacted by the equalization order.
- The property tax rate will decline 2.2 percent from $10.3169 per thousand dollars
of assessed valuation in Fiscal Year 2008 to $10.0895 per thousand dollars of
assessed valuation in Fiscal Year 2009.
- The property tax asking will increase 3.2 percent from Fiscal Year 2008.
The following table summarizes the impact of the Policy Guidelines:
FY 2009
Impact to Avera e Homeowner +4.00%
Impact to Commercial - 2.47%
Im act to Industrial -2.20%
FY 2009 Tax Rate 10.0895 / -2.20%
FY 2009 Propert Tax Askin $18,765,760 / +3.20%
Preliminary citizen participation opportunities will be available. There will be 5 City
Council Work Sessions prior to the adoption of the FY 2009 budget before the state
mandated deadline of March 15, 2008.
I concur with the recommended Budget and Fiscal Policy Guidelines and respectfully
request Mayor and City Council adoption.
,~ (/l
Mich el C. Van Milligen
MCVM/jml
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Jennifer Larson, Budget Director
Ken TeKippe, Finance Director
BUDGET AND FISCAL POLICY GUIDELINES
FOR FY 2009
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.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 2009 Policy Guidelines
Page Z
3. TWO TYPES OF BUDGET DOCUMENTS TO BE PREPARED
Guideline
The recommended City operating budget for Fiscal Year 2009 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 2009 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 2009 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 2009 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
FY 2009 Policy Guidelines
Page 4
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.
Guideline
In the future, the maintenance of City services may well depend on volunteer
citizen staffs. In FY 2009, 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 2009 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.
- When the Stormwater User Fund was created in FY 2004, it was intended that
this fund would be funded from a number of sources, which included the existing
level of General, Sales Tax, and DRA Distribution funds, as well as stormwater
user fees. A number of factors have impacted the need to have the stormwater
utility fund exist as aself-supporting enterprise fund, including the projected
decrease of DRA funding, lack of State and Federal Grants, and an increase in
the original costs to implement the Bee Branch Drainage Master Plan. FY 2009
will be the first fiscal year that the Stormwater User Fund is fully funded by
stormwater use fees. The General Fund will continue to provide funding for the
stormwater fee subsidies which provide a 50% subsidy for the stormwater fee
charged to property tax exempt properties, low-to-moderate income residents,
and residential farms.
Guideline
User fees and charges should be established where possible so that those who
utilize or directly benefit from a service, activity or facility also help pay for it.
FY 2009 Policy Guidelines
Page 6
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.
In FY 2009, the Stormwater User Fund will be self-supporting. The schedule of
rate increases to make this guideline is proposed as follows:
FY 2009 FY 2010 FY 2011 FY 2012 FY 2013
Current Rates $4.00 $4.25 $4.25 $5.00 $5.00
Proposed Rates $4.00 $5.00 $5.50 $6.35 $7.00
User fees and charges in the General Fund shall be established to cover not less
than the following percentages of direct operating costs (excluding debt service):
FY 2005
ACTUAL
DEPARTMENT/DIVISION PERCENT
Leisure Services Department
Recreation Division
Adult Athletics* 77.9
McAleece Concessions
Children's Activities 54.7
Therapeutic Recreation 13.6
Recreation Classes 38.8
Swimming* 72.4
Golf* Surplus to Golf Devel' Fund 111.2
Park Division 13.4
Library Department exci' Gift Trusts 6.1
Airport Department wlabated debt 82.2
Building Services Division
Inspections 111.5
Planning Services Department 18.5
Health Services Department
Food/E nvi ro n m e nta I Insp. 54.4
Animal Control*** 70.2
Housing Services Department
General Housing Inspection 88.7
Federal Building Maint.
FY 2006 FY 2007 FY 2008 FY 2009
ACTUAL ACTUAL BUDGETED RECOM'D
PERCENT PERCENT PERCENT PERCENT
60.9 60.4** 61.6 59.7
146.9** 148.5 154.5
53.5 52.9 52.8 50.1
11.6 14.7 17.8 18.5
40.9 35.8 29.8 26.8
70.8 69.4 68.6 66.8
107.6 103.5 99.9 100.6
11.5 12.2 11.0 11.6
5.8 5.3 3.9 3.9
85.3 81.7 73.0 81.6
85.2 84.5 72.3 91.8
18.1 16.0 13.8 13.5
57.6 53.0 51.9 63.5
62.7 61.3 113.7 104.6
77.5 78.5 69.0 74.0
91.4 98.8 100.0
* Includes an amount to help cover indirect costs (administration).
*" McAleece concessions moved to a separate activity in FY 2007.
'"'" Humane Society contract moved to the Purchase of Service activity in FY 2008.
FY 2009 Policy Guidelines
Page 7
13. OUTSIDE FUNDING
Discussion
The purpose of this guideline is to establish the policy that the City should
aggressively pursue outside funding to assist in financing its operating and
capital budgets. However, the long-term commitments required for such funding
must be carefully evaluated before any agreements are made. Commitments to
assume an ongoing increased level of service or level of funding once the
outside funding ends must be avoided.
Guideline
In order to minimize the property tax burden, the City of Dubuque will make every
effort to obtain federal, state and private funding to assist in financing its
operating and capital budgets. However, commitments to guarantee a level of
service or level of funding after the outside funding ends shall be avoided.
14. GENERAL FUND OPERATING RESERVE OR WORKING BALANCE
Discussion
An operating reserve or working balance is an amount of cash, which must be
carried into a fiscal year to pay operating costs until tax money, or other
anticipated revenue comes in. Without a working balance there would not be
sufficient cash in the fund to meet its obligations and money would have to be
borrowed. Working balances are not available for funding a budget they are
required for cash flow (i.e., to be able to pay bills before taxes are collected).
The rule of thumb the state recognizes for determining a reasonable amount for
a working balance is (a) anticipated revenues for the first three months of the
fiscal year less anticipated expenditures or (b} 5 percent of the total General
Fund operating budget (excluding fringes and tort liability expense). However, in
discussions with Moody's Investor Service, a factor of 10 percent was
recommended for "A" rated cities. This is due to the fact that a large portion of
revenue sources are beyond the City's control and therefore uncertain. In the
case of Dubuque, 10% represents approximately $3,545,950.
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 $3,545,950 for FY 2009.
FY 2009 Policy Guidelines
Page 8
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 2007-08 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 2009 through FY 2013.
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 2008-09 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.
FY 2009 Policy Guidelines
Page 9
17. PROPERTY TAX DISCUSSION
Assumptions -Resources
a. Unencumbered funds or cash balances of $200,000 will be available in FY
2009 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 2009 are projected
to increase 3.0 percent over FY 2008 budgeted receipts, and then increase
at an annual rate of 2.7 percent per year.
c. Hotel/motel tax receipts are projected to increase 3 percent over FY 2008
budget, and then increase at an annual rate of 3 percent per year.
d. State Transit operating assistance is anticipated to remain unchanged from
FY 2008 budget. Federal Transportation Administration (FTA) is anticipated
to increase 9% from FY 2008 budget.
e. Miscellaneous revenue, excluding state shared revenues, has been
estimated at 2 percent growth per year over budgeted FY 2008.
Gaming revenues generated have been estimated based on the impact of
the Diamond Jo's anticipated expansion beginning FY 2009 (11/1/08), which
includes a decrease to the DGP&C gaming market of 20.9 percent. This
would impact the City's five year capital program by a reduction of $13.5
million in distribution payments and $2.4 million in lease payments for a total
reduction to the CIP of $15.9 million. The reduction of the lease payment
over the next five years would impact the operating budget by $5.5 million.
In addition, the $.50 per patron tax received from the Diamond Jo is
anticipated to increase 71 percent ($145,000) in FY 2009 and then 2.5
percent in FY 2010 and beyond. The riverboat related tax on bets has also
been increased 71 percent ($178,481) in FY 2009 and then 2.5 percent in
FY 2010 and beyond to reflect the shift in the market share to the Diamond
Jo.
g. Gaming revenues from taxes and the DRA lease (not distributions) changed
from the FY 2008 split of 70% / 30% between operating and capital budgets
to 76% / 24% in FY 2009. 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
FY 2009 Policy Guidelines
Page 10
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 ($475,000 beginning in FY 2009 in connection with the expansion
of the Diamond Jo Casino) have not been included in the split with gaming
revenues from taxes and lease which is a change from the prior year. This
revenue is allocated to the operating budget.
h. The residential rollback factor will decrease from 45.560 percent to 44.080
percent or a 1.48 percent reduction for FY 2009. The rollback has been
estimated to increase of 4% each year from Fiscal Years 2010 thru 2013
and a 10-year average for equalization orders was used for Fiscal Years
2010 and beyond.
FY 2009 reflects a 12.03% increase in residential assessed value for the
average homeowner due to a voluntary revaluation. This results in an
increased taxable valuation for the average homeowner which increases the
City's tax base and allows the City to collect the same amount of property
tax revenue at a lower tax rate. Assessed valuations were increased 2
percent per year beyond FY 2009.
Gas and electric franchise fees have been projected to increase 4 percent
over FY07 actual collections based on three year's trend data. In FY 2010 the
franchise fee has been projected to increase from a 2% to a 3% fee due to
the City anticipating a positive outcome of the franchise fee litigation or a
legislative change during FY 2009. Then the franchise fee increases at an
annual rate of 2.5 percent per year from FY 2010 thru FY 2013. The City is
currently undergoing a franchise fee study. These guidelines assume the 2%
franchise fee will continue in FY 2009 and increase to 3% in FY 2010.
k. 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 2009, with the gaming revenue (from
taxes and the DRA lease) split changing to 76% operating budget and 24%
capital budget based on note g above.
FY 2009 reflects the first year that payment in lieu of taxes is charged to the
Water and Water Pollution Control funds for Police and Fire Protection. In FY
2009, 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.
FY 2009 Policy Guidelines
Page 1 I
Assumptions -Requirements
a. A wage increase is reflected in the projections for FY 2009 of 3.35 percent.
b. The Municipal Fire and Police Retirement System of Iowa Board of Trustees
has decreased the City contribution for Police and Fire retirement from 25.48
percent to 18.75 percent (-22.7% or a decrease of $606,951 in General
Fund). Also, the Iowa Public Employee Retirement System (IPERS)
increased the City contribution from 6.05 percent to 6.35 percent (+9.62% or
an increase of 60,143 in General Fund) and the employee contribution from
3.9% to 4.10% for the second time since 1979. The IPERS rate is
anticipated to increase 3 percent each succeeding year according to (PERS.
c. The City portion of the health insurance budgeted premium will decrease
from $900 per contract to $715 per contract (based on 514 contracts). FY
2009 represents the 4th year employees are contributing towards their health
insurance premium. Estimates for FY 09-13 have been increased by 6.5
percent per year.
d. General operating supplies and services are estimated to increase 5 percent
over actual in FY 2007 or 2.5 percent over FY 2008 budget, depending on
which year reflects expenditures more accurately. 2.5 percent increase is
estimated in succeeding years.
e. Electrical energy expense is estimated to increase 8 percent over FY 2007
actual expense, then 2.5 percent per year beyond.
Natural gas expense is estimated to increase 10 percent over FY 2007
actual, then 2.5 percent per year beyond. There is no degree-day
adjustment this year.
g. The Convention and Visitors Bureau contract will continue at 50 percent of
actual hotel/motel tax receipts, less a $35,000 loan repayment.
h. Equipment costs for FY 2009 are estimated to increase 28.9 percent under
FY 2008 budget, then 5 percent per year beyond.
Debt service is estimated based on no additional tax-supported unabated
General Obligation bond sales in FY 2009 - 2013.
Unemployment expense in the General Fund has been increased from
$50,000 to $52,356 for FY 2009 based on past years actual experience.
FY 2009 Policy Guidelines
Page 1 Z
k. Motor vehicle fuel, and low and high sulfur diesel fuel expense is estimated
to increase 6 percent over FY 2007 actual expense, then 2.5 percent per
year beyond.
I. Postage rates for FY 2009 are estimated to increase 13 percent over FY
2007 actual expense and remain at that level per year beyond.
m. Vehicle maintenance expense for FY 2009 is estimated to increase 7
percent over FY 2007 actual expense, then 2.5 percent per year beyond.
n. Insurance costs are estimated to change as follows: Workers Compensation
is increasing 23.1 percent, General Liability is increasing 4.9 percent,
Property insurance is increasing 7.1 percent, and Boiler and Machinery
insurance is increasing 8.2 percent.
FY 2009 Policy Guidelines
Page 13
IMPACT ON AVERAGE RESIDENTIAL PROPERTY -EXAMPLE
CITY TAX PERCENT DOLLAR
ACTUAL -PAST HISTORY CALCULATION CHANGE CHANGE
FY 1989 "City" Property Tax $ 453.99 -11.40% - $ 58.39
FY 1990 "City" Property Tax $ 449.94 - 0.89% - $ 4.04
FY 1991 "City" Property Tax* $ 466.92 + 3.77% +$ 16.98
FY 1992 "City" Property Tax $ 483.63 + 3.58% +$ 16.71
FY 1993 "City" Property Tax* $ 508.73 + 5.19% +$ 25.10
FY 1994 "City" Property Tax $ 510.40 + 0.30% +$ 1.51
FY 1995 "City" Property Tax'` $ 522.65 + 2.43% +$ 12.41
FY 1996 "City" Property Tax $ 518.10 - 0.87% - $ 4.54
FY 1997 "City" Property Tax* $ 515.91 - 0.42% - $ 2.19
FY 1998 "City" Property Tax $ 512.25 - 0.71 % - $ 3.66
FY 1999 "City" Property Tax* $ 512.25 - 0.00% $ 0.00
FY 2000 "City" Property Tax $ 511.38 - 0.17% - $ 0.87
FY 2001 "City" Property Tax $ 511.38 0.00% $ 0.00
FY 2002 "City" Property Tax $ 511.38 0.00% $ 0.00
FY 2003 "City" Property Tax* $ 485.79 - 5.00% -$ 25.58
FY 2004 "City" Property Tax $ 485.79 0.00% $ 0.00
FY 2004 With Homestead Adj. $ 493.26 + 1.54% +$ 7.46
FY 2005 "City" Property Tax* $ 485.93 + 0.03% +$ 0.14
FY 2005 With Homestead Adj.* $ 495.21 + 0.40% +$ 1.95
FY 2006 "City" Property Tax~,~ $ 494.27 + 1.72% +$ 8.34
FY 2006 With Homestead Adj. ~~~ $ 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. ~s> $ 510.45 + 2.72% +$13.52
PROPOSED
FY 2009 "City" Property Tax*~a> $530.88 +4.00% $ 20.43
Average FY 1989-FY 2009 with Homestead Adj. + 0.19% +$ 0.71
Average FY 1989-FY 2009 without Homestead Adj. - 0.01 % -$ 0.24
PROJECTION **
FY 2010 "City" Property Tax $ 566.80 + 6.77% +$ 35.92
FY 2011 "City" Property Tax* $ 622.96 + 9.91 % +$ 56.16
FY 2012 "City" Property Tax $ 677.42 + 8.74% +$ 54.46
FY 2013 "City" Property Tax'` $ 719.42 + 6.20% +$ 42.00
~' Denotes year of State-issued equalization orders.
(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.
FY 2009 Policy Guidelines
Page 14
(2) Offsets the impact of the State reduced Homestead Property Tax Credit in FY 2005 & 2006.
(3) The City adopted a budget in FY 2008 that provided no increase to the average homeowner. The State
of Iowa under funded the Homestead Property Tax Credit costing the average homeowner an additional
$13.52. The average homeowner then paid $510.45 to the City, instead of $496.97. This provided no
additional revenues to the City.
(4) Assumes State of Iowa funds 100% of Homestead Property Tax Credit in FY 2009 and beyond.
Homestead Property Tax Credit History
~ State of Iowa Funded 100% of the Homestead
2002-2003 Property Tax Credit
~ State of Iowa Funded 85% of the Homestead
2003-2004 Property Tax Credit
~ State of Iowa Funded 81 % of the Homestead
2004-2005 Property Tax Credit
~~ State of Iowa Funded 78% of the Homestead
2005-2006 Property Tax Credit
~ State of Iowa Funded 77% of the Homestead
2006-2007 Property Tax Credit
State of Iowa Funded 73% of the Homestead
2007-2008 ~~ Property Tax Credit
~ Assumed Homestead will be 100% Funded by
2008-2009 the State of Iowa
The Homestead Property Tax Credit was established by the state legislature to reduce the amount of
property tax 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 provides 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 the average homeowner paying the unfunded portion. Again this has no impact on what the City
receives, however as a result has caused the average homeowner to pay more taxes. Since FY 2004, the
City has decreased the average homeowner's property taxes to offset the unfunded portion of the
homestead tax credit.
FY 2009 Policy Guidelines
Page 15
In the FY 2009 budget, the City will not offset the prior year unfunded portion of the Homestead Tax Credit.
FY 2009 reflects no increase in property taxes paid by the average homeowner, however if the State
continues to not fully fund the Homestead Property Tax Credit, this will increase the property taxes paid.
This will not provide any additional revenues to the City, however.
IMPACT ON COMMERCIAL PROPERTY -EXAMPLE
CITY TAX PERCENT DOLLAR
ACTUAL -PAST HISTORY CALCULATION CHANGE CHANGE
FY 1989 "City" Property Tax $2,106.42 -15.43% -$ 384.19
FY 1990 "City" Property Tax $2,086.50 - .95% - $ 19.92
FY 1991 "City" Property Tax* $2,189.48 + 4.94% +$ 102.98
FY 1992 "City" Property Tax $2,280.18 + 4.14% +$ 90.70
FY 1993 "City" Property Tax* $2,231.05 - 2.15% -$ 49.13
FY 1994 "City" Property Tax $2,250.15 + 0.86% +$ 19.10
FY 1995 "City" Property Tax* $2,439.60 + 8.42% +$ 189.45
FY 1996 "City" Property Tax $2,439.60 + 0.00% +$ 0.00
FY 1997 "City" Property Tax* $2,659.36 + 9.01 % +$ 219.76
FY 1998 "City" Property Tax $2,738.43 +2.97% +$ 79.07
FY 1999 "City" Property Tax* $2,952.03 + 7.80% +$ 213.60
FY 2000 "City" Property Tax $2,934.21 - 0.60% -$ 17.82
FY 2001 "City" Property Tax $2,993.00 + 2.01 % +$ 58.86
FY 2002 "City" Property Tax $2,910.25 -2.77% -$ 82.84
FY 2003 "City" Property Tax* $3,186.27 + 9.48% +$ 276.03
FY 2004 "City" Property Tax $3,278.41 + 2.89% +$ 92.15
FY 2005 "City" Property Tax* $3,349.90 + 2.18% +$ 71.48
FY 2006 "City" Property Tax ~,~ $3,152.52 - 5.89% -$ 197.38
FY 2007 "City" Property Tax* $3,538.03 +12.23% +$ 385.50
FY 2008 "City" Property Tax $3,668.64 + 4.26% +$ 150.62
PROPOSED
FY 2009 "City" Property Tax $3,597.66 -2.47% -$ 90.98
Average FY 1989-2009 + 1.95% +$ 52.72
PROJECTION **
FY 2010 "City" Property Tax $3,504.19 - 2.60% - $ 93.47
FY 2011 "City" Property Tax $3,385.26 - 3.39% - $ 118.92
FY 2012 "City" Property Tax $3,465.02 + 2.36% +$ 79.76
FY 2013 "City" Property Tax $3,417.97 - 1.36% - $ 47.05
* Denotes year of State-issued equaliza tion orders
(1) The FY 2006 property tax calculation takes into account the 3% valuation decrease for commercial
property as determined by the reappraisal.
FY 2009 Policy Guidelines
Page 16
IMPACT ON INDUSTRIAL PROPERTY -EXAMPLE
CITY TAX PERCENT DOLLAR
ACTUAL -PAST HISTORY CALCULATION CHANGE CHANGE
FY 1989 "City" Property Tax $5,900.35 -15.40% -$1,074.65
FY 1990 "City" Property Tax $5,844.55 - .90% -$ 55.80
FY 1991 "City" Property Tax $6,133.00 + 4.90% +$ 288.45
FY 1992 "City" Property Tax $6,387.05 + 4.10% +$ 254.05
FY 1993 "City" Property Tax $6,249.45 - 2.20% -$ 137.60
FY 1994 "City" Property Tax $6,302.95 + 0.90% +$ 53.50
FY 1995 "City" Property Tax $5,891.05 - 6.50% -$ 411.90
FY 1996 "City" Property Tax $5,891.05 + 0.00% +$ 0.00
FY 1997 "City" Property Tax $5,690.75 - 3.40% -$ 200.30
FY 1998 "City" Property Tax $5,700.56 + .17% +$ 9.81
FY 1999 "City" Property Tax $5,536.70 - 2.87% -$ 163.86
FY 2000 "City" Property Tax $5,358.00 - 3.23% -$ 178.70
FY 2001 "City" Property Tax $5,533.00 + 3.28% +$ 175.55
FY 2002 "City" Property Tax $5,380.42 - 2.77% -$ 153.13
FY 2003 "City" Property Tax $5,106.00 - 5.10% -$ 274.40
FY 2004 "City" Property Tax $5,136.50 + .60% +$ 30.50
FY 2005 "City" Property Tax $5,036.00 - 1.96% -$ 100.50
FY 2006 "City" Property Tax~~> $5,814.61 +15.46% +$ 778.61
FY 2007 "City" Property Tax $5,983.21 + 2.90% +$ 168.60
FY 2008 "City" Property Tax $6,184.95 + 3.37% +$ 201.74
PROPOSED
FY 2009 "City" Property Tax $6,048.66 -2.20% -$ 136.30
Average FY 1989-FY 2009 - 0.52% -$ 44.11
PROJECTION**
FY 2010 "City" Property Tax $5,875.66 - 2.86% -$ 172.99
FY 2011 "City" Property Tax $5,786.19 - 1.52% -$ 89.47
FY 2012 "City" Property Tax $5,809.99 + 0.41 % +$ 23.80
FY 2013 "City" Property Tax $5,731.10 - 1.36% -$ 78.89
(1 )The FY 2006 property tax calculation takes into account the 19.9% valuation increase for industrial
property as determined by the reappraisal.
FY 2009 Policy Guidelines
Page 17
History of Increases in Property Tax Askings
Change
Fiscal "City" Property in Tax
Year Tax Askings Askings
Present Impact
on Homeowner**
FY 1989 $10,918,759 -12.0%
FY 1990 $10,895,321 - 0.2%
FY 1991 $11,553,468 + 6.0%
FY 1992 $12,249,056 + 6.0%
FY 1993 $12,846,296 + 4.9%
FY 1994 $13,300,756 + 3.5%
FY 1995 $13,715,850 + 3.1
FY 1996 $14,076,320 + 2.6%
FY 1997 $14,418,735 + 2.4%
FY 1998 $14,837,670* + 2.9%
FY 1999 $15,332,806* + 3.3%
FY 2000 $15,285,754 - 0.3%
FY 2001 $15,574,467 + 1.9%
FY 2002 $15,686,579 + 0.7%
FY 2003 $15,771,203 + 0.5%
FY 2004 $16,171,540 + 2.5%
FY 2005 $16,372,735 ± 1.2%
FY 2006 $16,192,215 - 1.1
FY 2007 $17,179,994 + 6.1
FY 2008 $18,184,037 + 5.8%
FY 2009 $18,765,760 +3.2%
Estimate
Sales Tax initiated
-11.4%
- 0.9%
+ 3.8%
+ 3.6%
+ 5.0%
+ 0.3%
+ 2.4%
- 0.9%
- 0.4%
- 0.7%
0.0%
- 0.2%
0.0%
0.0%
- 5.0%
0.0%
0.0%
+ 1.7%
- 1.7%
0.0%
4.0%
Average FY 1989-2009 + 2.05% - 0.02%
'Without TIF Accounting change.'*Does not reflect State unfunded portion of Homestead Credit.
Impact on Tax Askings and Average Residential Property
To maintain the current level of service based on the previous assumptions would
require the following property tax asking increases:
"City" Property % / $ Impact on Avg.
Year Tax Askings (000) % Increase Residential Property*
FY 2008 $18,184
FY 2009 $18,766 + 3.20% +4.00% / $ 20.43
FY 2010 $19,436 + 3.57% +6.77% / +$35.92
FY 2011 $20,668 + 6.34% +9.91 % /+$56.16
FY 2012 $22,044 + 6.65% +8.74% / +$54.46
FY 2013 $23,398 + 6.14% +6.20% / +$42.00
FY 2009 Policy Guidelines
Page 18
Guideline
The recommended guideline is no tax increase for the average residential property
owner assuming the Homestead Property Tax Credit is fully funded, and the percent of
annual gaming revenues going into the operating budget at 76 percent.
Note: One percent increase in the tax rate will generate approximately $180,440.
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 2009 Policy Guidelines
Page 19
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 2007-08 taxable value for calculating the debt limit is $2,976,480,060,
which indicates a total General Obligation debt capacity of $148,824,003.
Outstanding G.O. debt (including tax increment debt) on June 30, 2008 will be
$76,149,916 (51.17 percent) leaving an available debt capacity of $72,674,087
(48.83 percent). It should be noted that none of the City of Dubuque's
outstanding debt is paid with property taxes (except TIF), but is abated from
other revenues.
As we approach the preparation of the FY 2009-2013 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 2009 Policy Guidelines
Page ZO
Guideline
There are many high priority capital improvement projects, which need to be
constructed during the FY 2009-2013 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 4 major capital projects, that being the Library
Renovation, Drainage Basin Master Plan, Sanitary Sewer Fund, and Water
Fund. In determining whether a project should be financed in total or in part from
bond funds the City Council must consider and balance: (a) the community
impact of not doing the project (poor streets, deteriorated park buildings, sewer
problems, higher operating costs); (b) possible operating budget cuts to offset
higher debt service payments; (c) anticipated interest rate; and (d) the impact on
the tax rate and taxpayer of issuing the bonds. Alternative sources of funds
should always be evaluated (i.e. State Revolving Loan Funds) to maintain the
lowest debt service costs. All requested projects will not be recommended for
funding.
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
The FY 2008 budget was based on receiving $4,741,789 in Road Use Tax funds.
In FY 2008, 90.6 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
FY 2009 Policy Guidelines
Page Z 1
maintenance and improvements. This shift cannot occur until such time as there
are increased revenues or reduced expense that would allow this shift without a
property tax impact.
25. COMMERCIAL AND INDUSTRIAL DEVELOPMENT
Guideline
Current City, commercial and industrial development efforts should be continued
to (a) preserve current jobs and create new job opportunities and (b} enlarge and
diversify the economic base. Financing these efforts and programs should
continue to be a high priority.
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.
FY 2009 Policy Guidelines
Page zz
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 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
payment of proceeds to be distributed. These proceeds will then be allocated for
capital improvements, 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 January 2009 projections of operating surplus have
been anticipated as resources to support the Fiscal Year 2009 capital
improvement projects. This level will be maintained for the Fiscal Year 2010
surplus for the FY 2010 resource estimate and then reduced by 5 percent for the
January 2011 projected surplus for FY 2011, 10 percent for FY 2012, and 15
percent for FY 2013 resources.
Guideline
In Fiscal Year 2009, the City does not anticipate distribution of a significant
amount of net cash proceeds for use in the Capital Improvement Program.
However, in Fiscal Years where there is anticipated distribution of a significant
amount of net cash proceeds, these amounts will be budgeted in the Five Year
CIP in the year they are received and will be used to reduce required General
Obligation borrowing. The three out-years will be discounted by 5 percent, 10
percent, and 15 percent respectively.
29. EMPHASIS ON INITIATIVES THAT REDUCE FUTURE OPERATING BUDGET
EXPENSE
Guideline
Capital improvement expenditures that will reduce future maintenance and
operating expense will receive priority funding and these types of initiatives will
be encouraged in all departments and funding sources as a means of
maximizing the use of available resources. This emphasis reflects fiscally
responsible long range planning efforts.
FY 2009 Policy Guidelines
Page 23
30. USE OF GAMING RELATED RECEIPTS
Guideline
The amount of total gaming receipts from taxes and rent committed annually in
support of the annual operating budget has historically been one-third of the total
gaming tax and lease revenues. It was felt that a fiscally sound policy was to
commit two thirds of the gaming revenues to the capital budget, thereby
providing a cushion for future years, when gaming revenues could fluctuate with
the local economy. Should gaming revenues begin to decline, the capital budget
projects would be eliminated, deferred or funded from some other source if they
were a high priority.
The City has always tried to minimize dependence on gaming revenues in the
operating budget. This was maintained over years, while still meeting the
property tax guideline of no increase for the average residential property.
However, FY 2004 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 '/2% 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 37.28% capital and 62.72% operating in FY 2006. FY 2007
changed to 70% capital and 30% operating, and FY 2008 remained the same.
FY 2009 reflects the actual split of 76% operating and 24% capital. The
operating portion of the split now includes the debt service required on the 2002
FY 2009 Policy Guidelines
Page ~4
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 2007, the Diamond Jo announced their intentions of expanding in the fall
of 2008 (assumed 11/1/08) to a land based barge casino facility and increasing
to 1,100 slots. Maintaining the 24% operating / 76% capital split of gaming
receipts, this expansion creates a decrease to the DGP&C gaming market of
20.9 percent. Based on the projected market share loss, the City is not expected
to receive a distribution of cash flows from the Dubuque Racing Association
(DRA) in Fiscal Years 2009 through 2013. This would impact the City's five year
capital program by a reduction of $13.5 million. In addition, there is the possibility
that the budgeted distribution from the DRA in the current fiscal year is in
jeopardy, which would amount to an additional loss of $4.3 million. The DRA will
decide by January 2008 if there will be distributions to the City and Charities in
Fiscal years 2008 through 2013.
The reduction in the DRA's market share also impacts the City's lease payment
from the DRA. The current lease requires the DRA to pay the City 1 percent of
coin in from slot machines and 1 percent of table drop from table games. It is
currently estimated that the City will lose $7.9 million over the next five years in
lease payments based on what was originally projected to be received compared
to the revised projections. Seventy-six percent of the lease payments is used for
general property relief and twenty-four percent is used to fund the City's five year
capital improvement program. The reduction of the lease payment over the next
five years would impact the operating budget by $5.5 million and the capital
improvement budget by $2.4 million.
In addition, the $.50 per patron tax received from the Diamond Jo is anticipated
to increase 71 percent ($145,000) in FY 2009 and then 2.5 percent in FY 2010
and beyond. The riverboat related tax on bets has also been increased 71
percent ($178,481) in FY 2009 and then 2.5 percent in FY 2010 and beyond to
reflect the shift in the market share to the Diamond Jo.