Fiscal Year 2017 Budget and Fiscal Policy Guidelines Copyright 2014
City of Dubuque Action Items # 1.
ITEM TITLE: Budget and Fiscal Policy Guidelines Fiscal Year 2017
SUMMARY: City Manager recommending adoption of the Fiscal Year
2017 Budget Policy Guidelines.
SUGGESTED DISPOSITION: Suggested Disposition: Receive and File; Approve
ATTACHMENTS:
Description Type
Budget and Fiscal Policy Guidelines for FY17-MVM City Manager Memo
Memo
Staff Memo Staff Memo
FY17 Budget& Fiscal Policy Guidelines Supporting Documentation
THE CITY OF Dubuque
U E I
erica .i
Masterpiece on the Mississippi 2007-2012-2013
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Budget and Fiscal Policy Guidelines for Fiscal Year 2017
DATE: December 31, 2015
1 am recommending adoption of the Fiscal Year 2017 Budget Policy Guidelines.
The budget guidelines are developed and adopted by City Council during the budgeting
process in order to provide targets or parameters within which the budget
recommendation will be formulated. The final budget recommendation may not meet all
of these targets due to changing conditions and updated information during budget
preparation. To the extent the recommended budget varies from the guidelines, an
explanation will be provided in the printed budget document.
The Fiscal Year 2017 budget guidelines call for a 2.25% property tax increase for the
average Dubuque homeowner, a property tax increase for the average commercial
(11.72%), a property tax decrease for the average industrial (-0.97%) and a property tax
decrease for the average multi-residential (-1.81%) properties.
In Iowa, cities and counties are forced to work in a crazy property tax system where the
average commercial property taxpayer in Dubuque saw a 19% property tax decrease
this year and then next year would see an 11 percent property tax increase. The
commercial increase is so significant because of a 12% equalization order issued by the
State of Iowa for commercial property. The Iowa Department of Revenue is responsible
for "equalizing" assessments every two years. Equalization occurs on an entire class of
property, not on an individual property. Also, equalization occurs on an assessing
jurisdiction basis, not on a statewide basis.
City Assessor Rick Engelken explains that the Department of Revenue issued a
tentative equalization order to increase Commercial property in Dubuque by 19% based
on sales in 2014 of Commercial property in Dubuque. Rick filed a written protest to the
Director of Revenue protesting some of the sales they were using. The Department of
Revenue removed three sales from the list leaving 13 Commercial sales in the City of
Dubuque with a median average of 88.2%. The City Assessor's office had increased
values by 1.26% so the final equalization order from the State of Iowa was to increase
all commercial values by 12% to raise the total value to 100%.
Commercial and Industrial taxpayers previously were taxed at 100 percent of assessed
value; however due to legislative changes in FY 2013, a 95 percent rollback factor was
applied in FY 2015 and a 90 percent rollback factor will be applied in FY 2016 and
beyond. The State of Iowa will backfill the loss in property tax revenue from the rollback
and the backfill is 100 percent in FY 2015 through FY 2017 and then the backfill will be
capped at the FY 2017 level in FY 2018 and beyond. The FY 2017 State backfill for
property tax loss is estimated to be $694,614.
The following chart shows the ten year impact on commercial property for City property
tax is $3.08 decrease on average with four of the ten years showing decreases:
IMPACT ON COMMERCIAL PROPERTY
CITY TAX PERCENT DOLLAR
ACTUAL - PAST HISTORY CALCULATION CHANGE CHANGE
FY 2008 "City" Property Tax $3,688.64 + 4.26% +$ 150.62
FY 2009 "City" Property Tax* $3,554.71 - 3.63% -$ 133.94
FY 2010 "City" Property Tax $3,524.48 - 0.85% -$ 30.23
FY 2011 "City" Property Tax $3,585.16 + 1.72% +$ 60.68
FY 2012 "City" Property Tax $3,736.64 + 4.23% +$ 151.48
FY 2013 "City" Property Tax $3,855.95 + 3.19% +$ 119.32
FY 2014 "City" Property Tax $3,942.14 + 2.24% +$ 86.20
FY 2015 "City" Property Tax* (1) $3,896.93 - 1.15% -$ 45.21
FY 2016 "City" Property Tax (2) $3,139.16 -19.45% -$ 757.77
PROJECTION
FY 2017 "City" Property Tax* (3) $ 3,507.22 + 11.72% +$ 368.06
Average FY 2008-2017 -$3.08
* Denotes year of State-issued equalization orders
(1) The Business Property Tax Credit was $148 and rollback to 95% in FY 2015.
(2) The Business Property Tax Credit estimated at $693 and rollback to 90% in FY 2016.
(3) There was a State issued equalization order of 12% for commercial property in FY 2017
which raised the average assessed value from $386,139 to $432,475 and Business
Property Tax Credit is expected to exceed $890 in FY 2017.
FY 2015 was the first year that commercial, industrial and railroad properties were
eligible for a Business Property Tax Credit. The Business Property Tax Credit will be
deducted from the property taxes owed and the credit is funded by the State of Iowa.
The Iowa Legislature appropriated $50 million for FY15; $100 million for FY16; and
$125 million for FY17 and thereafter. The average commercial and industrial properties
will receive a Business Property Tax Credit from the State of Iowa for the City share of
their property taxes of$148 in FY 2015, $693 in FY 2016 and $890 in FY 2017.
In Fiscal Year 2016 (the current budget year), the combination of the 90% State rollback
factor, no increase in the City property tax rate, and the $693 State Business Property
Tax Credit resulted in a reduction of City property taxes of 19.45% (-$758) for the
average commercial property. This followed Fiscal Year 2015, where no increase in the
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City property tax rate, the new state 95% rollback and a $148 State Business Property
Tax Credit resulted in a 1 .15% (-$45.21) savings in City property taxes as compared
with the Fiscal Year 2014 costs.
In Fiscal year 2017 and beyond, the state rollback will stay at 90%, but the State
Business Tax Credit is estimated to increase to $890. With the increased City property
tax rate, the average commercial property would see an $11 .72% (368.06) increase in
their City property taxes.
Looking at a five year period, the property tax costs for the average commercial
property in Dubuque in Fiscal Year 2017 ($3,507) would actually be less than the cost in
Fiscal Year 2011 ($3,585) by $78 (2.17%).
IMPACT OF BUDGET ON COMMERCIAL PROPERTY
N
$4,100 gi
$4,000 ro M
$3,900 n
$3,800-
$3,700-
3,800$3,700 M
$3,600 "' M�
$3,500
$3,400
$3,300
$3,200 w
$3,100
$3,000
2011 2012 2013 2014 2015 2016 2017
■Oty portion of property tax paid by the average commercial tax payer
Since 1989, the average homeowner has averaged an annual increase in costs in the
City portion of their property taxes of 1 .43 percent, or about $8.40 a year. If the State
had been fully funding the Homestead Tax Credit, the increase would have averaged
about $4.88 a year.
This will be the third consecutive year of property tax decreases for the average
industrial properties.
This will be the second consecutive year of property tax decreases for the average
multi-family residential properties.
There will be six City Council special meetings prior to the adoption of the FY 2017
budget before the state mandated deadline of March 15, 2016.
3
I respectfully recommend Mayor and City Council approval of the Fiscal Year 2017
Budget and Fiscal Policy Guidelines.
Mic ael C. Van Milligen'
MCVM:jml
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
Jennifer Larson, Budget Director
4
THE CITY OF Dubuque
UBE I
erica .i
Masterpiece on the Mississippi 2007-2012-2013
TO: Michael C. Van Milligen, City Manager
FROM: Jennifer Larson, Budget Director
SUBJECT: Budget and Fiscal Policy Guidelines for Fiscal Year 2017
DATE: December 31, 2015
1 am recommending adoption of the Fiscal Year 2017 Budget Policy Guidelines. The
guidelines reflect City Council direction given as part of the goal setting sessions.
The budget guidelines are developed and adopted by City Council during the budgeting
process in order to provide targets or parameters within which the budget
recommendation will be formulated within the context of the City Council Goals and
Priorities established in August, 2015. 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. By State
law, the budget that begins July 1, 2016 must be adopted by March 15, 2016.
The Fiscal Year 2017 budget guidelines call for a 2.25% property tax increase for the
average Dubuque homeowner and a property tax increase for commercial (11.72%) and
a property tax decrease for industrial (-0.97%) and multi-residential (-1.81%) properties.
Since 1989, the average homeowner has averaged an annual increase in costs in the
City portion of their property taxes of 1.43 percent, or about $8.40 a year. If the State
had been fully funding the Homestead Tax Credit, the increase would have averaged
about $4.88 a year.
The commercial increase is so significant because of a 12% equalization order issued
by the State of Iowa for commercial property. The Iowa Department of Revenue is
responsible for "equalizing" assessments every two years. The Iowa Department of
Revenue compares the assessors' abstracts to a "sales assessment ratio study" it has
completed independently of the assessors. If the assessment (by property class) is 5%
or more above or below the sales ratio study, the Department increases or decreases
the assessment. There is no sales ratio study for agricultural and industrial property.
Equalization occurs on an entire class of property, not on individual property. Also,
equalization occurs on an assessing jurisdiction basis, not on a statewide basis.
Equalization is important because it helps maintain equitable assessments among
classes of property and among assessing jurisdictions. This contributes to a more fair
distribution of state aid, such as aid to schools. It also helps to equally distribute the
total tax burden within the area.
The following chart shows the City property tax impact on commercial property:
IMPACT OF BUDGET ON COMMERCIAL PROPERTY
N
$4,100 h m
$4,000 m w m
$3,900 w
$3,800 N w
$3,700 m
$3,600 "' w
$3,500
$3,400
$3,300
$3,200 w
$3,100
$3,000
2011 2012 2013 2014 2015 2016 2017
■Qty portion of property tax paid by the average commercial tax payer
FISCAL YEAR 2015
January 1, 2013 Valuation $357,536
Equalization Order 8%
Fiscal Year 2015 Taxable Value 386,139
Less Rollback Factor 0.9500
Fiscal Year 2015 Taxable Value $366,832
Fiscal Year 2015 City Tax Rate $11.0259
Fiscal Year 2015 City Property Tax $4,044.65
Business Tax Credit ($147.72)
Net Fiscal Year 2015 City Property Tax $3,896.93
Dollar Decrease in Property Tax ($45.21)
Percent Decrease in Property Tax -1.15%
FISCAL YEAR 2016
January 1, 2014 Valuation $386,139
Less Rollback Factor 0.9000
Fiscal Year 2016 Taxable Value $347,525
Fiscal Year 2016 City Tax Rate $11.0259
Fiscal Year 2016 City Property Tax $3,831.78
Business Tax Credit ($692.62)
Net Fiscal Year 2016 City Property Tax $3,139.16
Dollar Decrease in Property Tax ($757.77)
Percent Decrease in Property Tax -19.45%
FISCAL YEAR 2017
January 1, 2015 Valuation $386,139
Equalization Order 12%
Fiscal Year 2017 Taxable Value 432,476
Less Rollback Factor 0.9000
Fiscal Year 2017 Taxable Value $389,228
Fiscal Year 2017 City Tax Rate $11.2973
Fiscal Year 2017 City Property Tax $4,397.21
Business Tax Credit ($889.99)
Net Fiscal Year 2017 City Property Tax $3,507.22
Dollar Increase in Property Tax $368.06
Percent Increase in Property Tax 11.72%
2
A significant cause of the FY 2017 property tax increase includes the following:
1 . Gaming Revenue Reduction.
a. Gaming revenues generated from lease payments from the Dubuque
Racing Association (DRA) have been decreased significantly (-$446,877)
based on revised projections from the DRA. This follows an $812,489
decrease from budget in FY 2015 and a $431 ,253 decrease from budget
in FY 2016.
b. The Fiscal Year 2017 projections are based on five months of actual
experience and gaming revenues are down 2.7%. The Dubuque gaming
market will be significantly impacted at the end of May 2016 when the
new casino off of Interstate 80 opens in Davenport. The DRA has
projected a 1% increase in total revenue and a 3% increase in expenses
(primarily driven by an increase in health insurance costs).
c. The State of Illinois passed a Video Gaming Act on July 13, 2009 which
legalized the use of Video Gaming Terminals in liquor licensed
establishments including bars, restaurants, truck stops and certain
fraternal and veterans' organizations. In the part of Illinois that impacts the
Dubuque market, the first year of operation of video gaming terminals
generated $1 million in revenue monthly. The use of video gaming
terminals has now grown to $6.7 million monthly for the five counties
closest to Dubuque (previous impact numbers were based on 13
counties) and in a direct line with Rockford, IL, which has caused a
reduction to the gaming market in Dubuque. The Mystique Casino and
Diamond Jo Casino average monthly revenue is $9.6. This is a similar
impact as if a casino the size of the Mystique Casino and the Diamond Jo
Casino combined was built half-way between Dubuque and Rockford. In
addition, the recession has also impacted the gaming market.
2. Equalization for Commercial Property Class.
a. There was an equalization order of 12% for commercial property after
removal of multi-residential property in Fiscal Year 2017. The average
commercial property taxable value increased from $386,139 to $432,475.
3. New multi-residential property class in Fiscal Year 2017.
a. Beginning in FY 2017 (July 1 , 2016), new State legislation created a new
property tax classification for rental properties called multi-family
residential, which requires a rollback, or assessment limitations order, on
multi-residential property which will eventually equal the residential
rollback. Multi-residential property includes apartments with 3 or more
units. Rental properties of 2 units were already classified as residential
property. The State of Iowa will not backfill property tax loss from the
rollback on multi-residential property. The rollback will be 86.25 percent
3
($326,208) in FY 2017, 82.50 percent ($415,174) in FY 2018, 78.75
percent ($504,139) in FY 2019, 75.00 percent ($593,105) in FY 2020,
71 .25 percent ($682,071) in FY 2021 , 67.50 percent ($771 ,037) in FY
2022, 63.75 percent ($860,003) in FY 2023 and will equal the residential
rollback in FY 2024 which is currently 55.63 percent ($1 ,052,643). This
annual loss in tax revenue of$1 ,052,643 from multi-residential property
when fully implemented in FY 2024 will not be backfilled by the State.
From Fiscal Year 2017 through Fiscal Year 2024 the City will lose
$5,204,380 in total, meaning landlords will have paid that much less in
property taxes. The state did not require landlords to charge lower rents
or to make additional investment in their property.
4. General Fund reserve.
a. In May 2015, Moody's Investors Service downgraded Dubuque's general
obligation bond rating from Aa2 to Aa3 and removed the negative outlook.
This followed two bond rating upgrades in 2003 and 2010, and one bond
rating downgrade in 2014. In announcing the bond rating downgrade,
Moody's noted that the City's general fund balance/reserve declines.
b. Dubuque's general fund reserve increased from 14.8 percent of general
fund revenues in FY 2014 to 20.23 percent in FY 2015 due to capital
projects not expended by the end of the fiscal year and a decline in
general fund revenue in FY 2015. The general fund reserve is projected
to decrease to 18.31 percent of general fund revenues in FY 2016 due to
spending some of the balance for planned capital projects that were not
completed in FY 2015.
c. Moody's prefers Aa2-rated organizations to have a general fund reserve
greater than 20 percent of general fund revenues. The City of Dubuque's
fund reserves policies require a 10 percent of general fund expense
general fund reserve and states the City may continue to add to the
minimum balance when additional funds are available until 20 percent is
consistently maintained.
d. It will be necessary for the City to begin increasing its general fund reserve
which will require tax and fee increases and reductions in the capital
improvement program.
5. Fiscal Year 2016/2017.
a. The hiring freeze has been extended through January 1 , 2018 (Fiscal
Year 2018 budget). The frozen positions will also be part of the Fiscal
Year 2017 budget recommendation. The frozen positions are being
further evaluated to determine if they should be reinstated as part-time
positions (25 hours per week or 0.625 FTE), full-time positions, or
supplemented with contracted services.
4
Some highlights of the document are:
➢ Sales tax funds are set by resolution to be used 50 percent in the General Fund
for property tax relief in FY 2017. Sales tax receipts are projected to increase
9.6% (+$405,484) over FY 2016 budget and 10.01 % over FY 2015 actual of
$4,221 ,022 based on FY 2016 revised revenue estimate of$4,647,554 which
includes a reconciliation payment from the State of Iowa of$255,657 received in
November 2015, and then increase at an annual rate of 2.0 percent per year
beginning in FY 2018. The estimates received from the State of Iowa show a
9.80% increase in the first two payments estimated for FY 2017 as compared to
the first two payments budgeted for FY 2016.
➢ Building Permits is anticipated to decrease from $555,000 in FY 2016 to
$474,400 in FY 2017 based on reduced construction and a recommended fee
increase.
➢ Natural Gas franchise fees have been projected to increase 15.5 percent over
FY16 budget of$1 ,133,164 based on the growth percentage from FY16 to FY17
(+$175,476 over FY16 Budget) and recording the gas franchise fees rebated
back to eligible customers to a separate expense account ($63,800) . Also,
Electric franchise fees have been projected to increase 12.8 percent over FY16
budget of$2,913,049 based on the growth percentage from FY 2016 and FY
2017 (+$374,044 over FY16 Budget) and recording the electric franchise fees
rebated back to eligible customers to a separate expense account ($837,000).
The franchise fee revenues increase at an annual rate of 2 percent per year from
FY 2018 thru FY 2021 .
➢ The Municipal Fire and Police Retirement System of Iowa Board of Trustees City
contribution for Police and Fire retirement decreased from 27.77 percent in FY
2016 to 25.92 percent in FY 2017 (general fund savings of$265,728). The
Municipal Fire and Police Retirement has projected that the City contribution is
expected to decrease 3.90% in FY18; 3.30% in FY19; 4.10% in FY20 and then
begin increasing in FY21 . Also, the Iowa Public Employee Retirement System
(IPERS) City contribution remained at 8.93 percent in FY 2017 and the employee
contribution remained at 5.95% in FY 2017 (which did not affect the City's portion
of the budget). The IPERS rate is anticipated to increase 1 percent each
succeeding year.
➢ Consistent with already approved collective bargaining agreements for
Teamsters Local Union No 120, Teamsters Local Union No. 120 Bus Operators,
Dubuque Professional Firefighters Association and International Union of
Operating Engineers, in FY 2017 there is a 2.5% employee wage increase for
represented and non-represented employees at a cost of$890,125 to the
General Fund. Non-represented employees did not receive an increase in FY
2016.
➢ The City portion of health insurance expense will increase from $1 ,040 per month
per contract to $1 ,325 per month (+27.40%) per contract (based on 560
contracts) in FY 2017 (general fund cost of$1 ,309,456). The City of Dubuque is
5
self-insured and actual expenses are paid each year with the City only having
stop-loss coverage for major claims. Estimates for FY 18-21 have been
increased by 6.32 percent per year.
➢ Natural gas expense is estimated to decrease 18 percent under FY 2015 actual
expense, no increase in FY 2018 and then 2 percent per year beyond. .
➢ Motor vehicle fuel is estimated to decrease 10 percent under FY 2015 actual,
decrease an additional 8 percent in FY 2018, then 2.0 percent per year beyond.
➢ The increase in property tax support for Transit from FY 2016 to FY 2017 is
$154,334, which reflects reduced revenue due to the Iowa Clean Air Attainment
grants ending for the Nightrider (March 2016) and the Midtown Loop and Feeder
(January 2017). In FY 2016, the Transit Division reconfigured bus routes,
modified the summer trolley service and changed to City management for a
savings of$374,236. This savings was used to offset the cost of funding the
Nightrider Route ($46,913 in FY16), operations of the Intermodal Facility
($29,962), Intercultural Competency training ($3,375), and increasing the
General Fund Reserve ($196,212).The following is a ten year history of the
Transit subsidy:
FY 2017 $1 ,051 ,186 projection
FY 2016 $ 896,852 budget
FY 2015 $1 ,086,080
FY 2014 $ 833,302
FY 2013 $1 ,044,171
FY 2012 $ 717,611
FY 2011 $1 ,078,726
FY 2010 $1 ,161 ,393
FY 2009 $1 ,253,638
FY 2008 $1 ,070,053
FY 2007 $ 923,384
FY 2006 $ 710,453
➢ The Enterprise Funds have contributed to the administrative overhead of the City
operation, but the General Fund has always carried most of the financial burden.
In FY 2013, a multi-year process to more equitably distribute those costs across
all funds was implemented. The remaining overhead recharge will be increased
ten percent each year for ten years until reaching the total overhead recharge
percentage. In FY17 the administrative overhead was increased $625,046. There
was a reduction in metered water usage in FY 2014 and water and sewer
revenue bond covenants calculated on the accrual basis of accounting that have
required a reduction in both the water and sewer administrative overhead
recharges in FY 2016 and 2017. The sanitary sewer administrative overhead was
partially reinstated in FY 2017.
In June of 2015, City staff asked the community what could be done to increase
resident participation in the budget process. The three main ideas submitted by
residents included the City Manager holding multiple meetings within neighborhoods,
6
increasing marketing for the public meetings and gathering public input prior to council
goals and priorities being finalized. The City Manager directed staff to pilot some
changes to the Fiscal Year 2017 budget input process.
Between October and November 2015, City staff hosted three evening public budget
input meetings at Comiskey Park, Prescott Elementary School and the Multicultural
Family Center. During November 2015, an online survey was made available to the
public to submit budget input. Kiosks were also placed in nine different locations which
had the same printed survey available.
By November 22, 2015, a total of 115 community members shared their budget input.
Out of the 115 community participants, staff reached 55 individuals through the in
person meetings, 35 participants took the online survey and 25 took the survey at one
of the community kiosks.
The input provided will be analyzed by City staff and evaluated by the City Manager for
inclusion in the Fiscal Year 2017 budget recommendation as deemed appropriate.
The Fiscal Year 2018 budget process will incorporate multiple public budget input
meetings prior to the City Council Goals and Priorities being set.
During Fiscal Year 2016, the City launched a web based open data platform which can
be found at www.doIlarsandcents.cityofdubuque.org. The City of Dubuque's Open
Budget application provides an opportunity for the public to explore and visually interact
with Dubuque's operating and capital budgets. This application is in support of the five
year organizational goal of a financially responsible city government and high-
performance organization and allows users with and without budget data experience, to
better understand expenditures in these categories.
In the near future, an additional module will be added to the open data platform which
will include an interactive checkbook which will allow citizens to view the City's
payments to vendors. The final step will be adding performance measures to the open
data platform to allow citizens to view outcomes of the services provided by the City.
There will be six City Council special meetings prior to the adoption of the FY 2017
budget before the state mandated deadline of March 15, 2016.
JML
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Teri Goodmann, Assistant City Manager
7
BUDGET AND FISCAL POLICY GUIDELINES
FOR FY 2017
OPERATING BUDGET GUIDELINES
The Policy Guidelines are developed and adopted by City Council during the budgeting
process in order to provide targets or parameters within which the budget recommendation
will be formulated within the context of the City Council Goals and Priorities established in
August, 2015. 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. By State law, the budget that begins July 1 , 2016
must be adopted by March 15, 2016.
A. CITIZEN PARTICIPATION
Guideline
To encourage citizen participation in the budget process, City Council will hold multiple
special meetings in addition to the budget public hearing for the purpose of reviewing
the budget recommendations for each City department and requesting public input
following each departmental review.
The budget will be prepared in such a way as to maximize its understanding by
citizens. A copy of the recommended budget documents will be made available with
the City Clerk and in the government documents section at the Carnegie Stout Public
Library. The budget can be reviewed on the City's website at www.cityofdubugue.org
and copies of the budget on CD will be available upon request.
Several opportunities were provided for citizen input prior to formulation of the City
Manager's recommended budget and will be provided again prior to final Council
adoption, both at City Council budget special meetings and at the required budget
public hearing.
In June of 2015, City staff asked the community what could be done to increase
resident participation in the budget process. The three main ideas submitted by
residents included the City Manager holding multiple meetings within neighborhoods,
increasing marketing for the public meetings and gathering public input prior to council
goals and priorities being finalized. The City Manager directed staff to pilot some
changes to the Fiscal Year 2017 budget input process.
Between October and November 2015, City staff hosted three evening public budget
input meetings at Comiskey Park, Prescott Elementary School and the Multicultural
Family Center. During November 2015, an online survey was made available to the
public to submit budget input. Kiosks were also placed in nine different locations which
had the same printed survey available.
By November 22, 2015, a total of 115 community members shared their budget input.
Out of the 115 community participants, staff reached 55 individuals through the in
FY 2017 Policy Guidelines
Page 2
person meetings, 35 participants took the online survey and 25 took the survey at one
of the community kiosks.
The input provided will be analyzed by City staff and evaluated by the City Manager
for inclusion in the Fiscal Year 2017 budget recommendation as deemed appropriate.
The Fiscal Year 2018 budget process will incorporate multiple public budget input
meetings prior to the City Council Goals and Priorities being set.
During Fiscal Year 2016, the City launched a web based open data platform which
can be found at www.doIlarsandcents.citvofdubuque.org. The City of Dubuque's Open
Budget application provides an opportunity for the public to explore and visually
interact with Dubuque's operating and capital budgets. This application is in support of
the five year organizational goal of a financially responsible city government and high-
performance organization and allows users with and without budget data experience,
to better understand expenditures in these categories.
In the near future, an additional module will be added to the open data platform which
will include an interactive checkbook which will allow citizens to view the City's
payments to vendors. The final step will be adding performance measures to the open
data platform to allow citizens to view outcomes of the services provided by the City.
B. 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.
C. TWO TYPES OF BUDGET DOCUMENTS TO BE PREPARED
Guideline
The recommended City operating budget for Fiscal Year 2017 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 2017 Budget. These documents will be available in early February.
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
FY 2017 Policy Guidelines
Page 3
purpose of these documents are to focus attention 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 2017 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.
D. 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.
E. 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.
F. 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. As often as reasonably possible, 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?
FY 2017 Policy Guidelines
Page 4
G. 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.
H. USE OF VOLUNTEERS
Discussion
Out of the respect for citizens that must pay taxes, the City must seek to expand
resources by continuing to get citizens directly involved in supplementing service
delivery capability. Citizens are encouraged to assume tasks previously performed or
provided by City government. This may require the City to change the approach to
service delivery, such as, providing organizational skills, training, coordinating staff,
office space, meeting space, equipment, supplies and materials, but not directly
providing the more expensive full-time staff. Activities where citizens can continue to
take an active role include: Library, Recreation, Parks, Five Flags Center, Transit, and
Police.
Guideline
In the future, the maintenance of City services may well depend on volunteer citizen
staffs. In FY 2017, 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, usually with some
corresponding financial support.
I. 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.
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J. 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. The City has five collective bargaining
agreements. The current contracts expire as follows:
Contract
Expiration
Bargaining Unit Date
Teamsters Local Union No 120 June 30, 2017
Teamsters Local Union No 120 Bus Operators June 30, 2017
Dubuque Professional Firefighters Association June 30, 2017
Dubuque Police Protective Association June 30, 2016
International Union of Operating Engineers June 30, 2017
Guideline
Salary increases over the amount budgeted for salaries shall be financed from
operating budget reductions in the department(s) of the benefiting employees.
K. THE AFFORDABLE CARE ACT
Guideline
The Affordable Care Act is a health care law that was signed into law on March 23,
2010 that aims to improve the current health care system by increasing access to
health coverage for Americans and introducing new protections for people who have
health insurance.
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Employers with more than 50 full-time equivalent employees must provide affordable
"minimum essential coverage" to full-time equivalent employees. The definition of a
full-time equivalent employee under the Affordable Care Act is any employee that
works 30 hours per week or more on average over a twelve month period (1 ,660 hours
or more). There is a twelve month monitoring period for part-time employees. If a part-
time employee meets or exceeds 30 hours per week on average during that twelve
month period, the City must provide health insurance.
On July 2, 2013, the Treasury Department announced that it will postpone the
employer shared responsibility mandate for one year. Based on the initial
requirements of the Affordable Health Care Act, the Fiscal Year 2014 budget provided
for insurance coverage effective February 1 , 2014 for several part-time employees. In
addition the Fiscal Year 2014 budget provided for making several part-time positions
full-time on June 1 , 2014.
Due to the delay of the employer shared responsibility mandate for the Affordable
Health Care Act, the City delayed providing insurance coverage for eligible part-time
employees and delayed making eligible part-time positions full-time until January 1 ,
2015.
The Standard Measurement Period was delayed from January 1 , 2013 through
December 31 , 2013 to December 1 , 2013 through November 30, 2014 with the first
provision of health insurance date being January 1 , 2015.
The Affordable Care Act increased employee expense in Fiscal Year 2016 by
$290,493 and $271 ,605 in Fiscal Year 2017, with incremental increases each year
thereafter.
L. HIRING FREEZE
Guideline
The hiring freeze has been extended through January 1 , 2018 (Fiscal Year 2018
budget). The frozen positions will also be part of the Fiscal Year 2017 budget
recommendation. The frozen positions are being further evaluated to determine if they
should be reinstated as part-time positions (25 hours per week or 0.625 FTE), full-time
positions, or supplemented with contracted services.
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The positions frozen in Fiscal Year 2017 are as follows:
FY 2017 Savings
-Department Position (Including Benefits
Park Full-Time Assistant Horticulturalist $69,739
Park/Public Works Full-Time Assistant Horticulturalist $40,449
Park Full-Time Maintenance Worker $76,249
Park Full-time Park $76,249
Ranger/Mai tenance Worker
City Manager's Part-Time Management Intern $24,040
Office
City Manager's Full-Time Secretary $59,229
Office
Information Full-Time Help Desk $64,058
Services
Engineering Full-Time Traffic Engineering $71 ,643
Assistant
Police Full-Time Records Clerk $60,142
Total FY 2017 Savings $541 ,798
M. 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.
N. 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, like rental inspections and Building Department licensing.
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The Stormwater User Fund is fully funded by stormwater use fees. The General Fund
will continue to provide funding for the stormwater fee subsidies which provide a 50%
subsidy for the stormwater fee charged to property tax exempt properties and low-to-
moderate income residents and a 75% subsidy for residential farms.
Guideline
User fees and charges should be established where possible so that those who utilize
or directly benefit from a service, activity or facility also help pay for it.
User fees and charges for each utility fund (Water User Fund, Sewer User Fund,
Stormwater User Fund, Refuse Collection Fund, and Parking Fund) shall be set at a
level that fully supports the total direct and indirect cost of the activity, including the
cost of annual depreciation of capital assets, the administrative overhead to support
the system and financing for future capital improvement projects.
The following chart shows activities with user charges and to what extent the activity is
self-supporting:
FY 2014 FY 2016 FY 2016 FY 2017
ACTUAL ACTUAL BUDGETED RECOMM'D
DEPARTMENT/DIVISION PERCENT PERCENT PERCENT PERCENT
Leisure Services Department
Recreation Division
Adult Athletics 46.5 50.1 80.3 75.7
McAleece Concessions 128.8 133.6 120.6 138.1
Youth Sports 36.4 27.2 15.1 17.1
Therapeutic & After School 11 .9 9.7 7.5 7.5
Recreation Classes 33.0 39.9 71 .5 78.3
Swimming 45.5 44.4 65.6 65.7
Golf Surplus to Golf Devel' Fund 90.8 102.0 97.0 100.0
Port of Dubuque Marina 35.7 48.3 44.6 60.6
Park Division 13.1 14.2 12.5 11 .0
Library Department excl'Gift Trusts 3.9 3.4 11 .2 9.9
Airport Departmentw/abated debt 85.9 91 .6 84.3 78.9
Building Services Division
Inspections 57.6 55.3 80.2 74.8
Planning Services Department 44.3 47.6 34.8 38.9
Health Services Department
Food/Environmentallnsp. 58.5 53.5 61 .0 50.1
Animal Control 64.4 70.5 62.7 63.0
Housing Services Department
General Housing Inspection 54.9 59.2 100.0 90.8
Federal Building Maint. 93.8 85.4 80.0 82.0
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O. ADMINISTRATIVE OVERHEAD RECHARGES
Discussion
While the Enterprise Funds have contributed to administrative overhead, the majority
has been paid by the General Fund. This is not reasonable and unduly impacts
property taxes causing a subsidy to the Enterprise Funds. Prior to FY 2013, the
administrative overhead was charged by computing the operating expense budget for
each enterprise fund and dividing the result by the total City-wide operating expense
budget which resulted in the following percentages of administrative overhead
charged to each enterprise fund: Water 5.32%; Sanitary Sewer 4.84%; Stormwater
0.55%; Solid Waste 2.83%; Parking 1 .71%; and Landfill 2.71 %. The adopted Fiscal
Year 2013 budget changed the administrative overhead to be more evenly split
between the general fund and enterprise funds and is phased in over many years. In
Fiscal Year 2017, the general fund is recommended to support $5,107,125 in
administrative overhead using the recharge method adopted in Fiscal Year 2013. If
the City had continued the old recharge method, the general fund would be
contributing $7,554,697 in administrative overhead in FY 2017.
Guideline
Beginning in FY 2013, additional overhead recharges to the utility funds is being
phased in over several years. Engineering administrative and project management
expenses that are not recharged to capital projects will be split evenly between the
Water, Sewer, Stormwater and General Funds. Finance accounting expenses and all
other administrative departments such as Economic Development, Planning,
Workforce Development, City Clerk, Legal Services and City Manager's Office will be
split evenly between Water, Sewer, Stormwater, Refuse Collection and General
Funds, with overhead costs being shared by the Landfill and Parking. This will be fully
implemented overtime.
When the overhead recharges are fully implemented, the split of the cost of
administrative overhead excluding Engineering will be as follows:
Water 16.67% Refuse 16.67% General Fund 16.67%
Sewer 16.67% Parking 8.33%
Stormwater 16.67% Landfill 8.32%
Engineering Administration and Engineering Project Management will be split evenly
between General Fund (25%), Water (25%), Sewer (25%) and Stormwater (25%).
P. 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
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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 minimized.
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 minimized. Also, any matching funds
required for capital grants will be identified.
Q. 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).
Moody's Investor Service recommends a factor of 20 percent for "AA" rated cities. In
May 2015, Moody's Investors Service downgraded Dubuque's general obligation bond
rating from Aa2 to Aa3 and removed the negative outlook. This followed two bond
rating upgrades in 2003 and 2010, and one bond rating downgrade in 2014. In
announcing the bond rating downgrade, Moody's noted that the City's general fund
balance/reserve declines. Dubuque's general fund reserve declined from 22 percent of
general fund revenues in fiscal year 2013 to 14.8 percent in FY 2014. This decline in
the general fund reserve was due to planned capital expenditures of$4.1 million in FY
2014. Dubuque's general fund reserve increased from 14.8 percent of general fund
revenues in FY 2014 to 20.23 percent in FY 2015 due to capital projects not expended
by the end of the fiscal year and a decline in general fund revenue in FY 2015. The
general fund reserve is projected to decrease to 18.31 percent of general fund
revenues in FY 2016 due to spending some of the balance for planned capital projects
that were not completed in FY 2015.
The City of Dubuque has historically adopted a general fund reserve policy as part of
the Fiscal and Budget Policy Guidelines which is adopted each year as part of the
budget process. During Fiscal Year 2013, the City adopted a formal Fund Reserve
Policy. According to the policy for the General Fund, the City will maintain a minimum
fund balance of at least 10 percent of the sum of (a) annual operating expenditures
not including interfund transfers in the General Fund less (b) the amounts levied in the
Trust and Agency fund and the Tort Liability Fund ("Net General Fund Operating
Cost"). The City may increase the minimum fund balance by a portion of any operating
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surplus above the carryover balance of$200,000 that remains in the General Fund at
the close of each fiscal year. The City may continue to add to the General Fund
minimum balance when additional funds are available until 20 percent of Net General
Fund Operating Cost is reached.
After all planned expenditures and an additional $608,480 added to fund balance in
FY 2016, the City of Dubuque will have a general fund reserve of 12.72 percent of
general fund expenses as computed by the methodology adopted in the City's general
fund reserve policy or 18.31 percent of general fund revenues as computed by the
methodology used by Moody's Investors Service. The general fund reserve fund
balance is projected to be $5,942,790 as of June 30, 2016.
Guideline
The guideline of the City of Dubuque is to increase the General Fund working balance
or operating reserve by a minimum of$600,000 in FY 2017. In subsequent years, the
City should add to the operating reserve until 20% is maintained consistently.
R. 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.
S. 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.
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The FY 2015-16 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 2017 through FY 2021 .
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 2016-17 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.
T. PROPERTY TAX DISCUSSION
1. Assumptions - Resources
a. Unencumbered funds or cash balances of$200,000 will be available in FY
2017 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 in FY 2017. Sales tax receipts are projected to increase
9.6% (+$405,484) over FY 2016 budget and 10.01 % over FY 2015 actual of
$4,221 ,022 based on FY 2016 revised revenue estimate of$4,647,554 which
includes a reconciliation payment from the State of Iowa of$255,657 received
in November 2015, and then increase at an annual rate of 2.0 percent per year
beginning in FY 2018. The estimates received from the State of Iowa show a
9.80% increase in the first two payments estimated for FY 2017 as compared to
the first two payments budgeted for FY 2016.
c. Hotel/motel tax receipts are projected to increase 2.5 percent ($52,759) over
FY 2016 budget and 3.0 percent over FY 2016 re-estimated receipts of
$2,133,113 based on an estimated increase of 3.49 percent from FY 2015
actual to FY 2016 estimated, and then increase at an annual rate of 3 percent
per year.
d. Federal Transportation Administration (FTA) transit operating assistance is
anticipated to increase 1 .58 percent or $17,249 from FY 2016 budget based on
the revised FY 2016 budget received from the FTA.
e. Miscellaneous revenue has been estimated at 2 percent growth per year over
budgeted FY 2016.
f. Building Permits is anticipated to decrease from $555,000 in FY 2016 to
$474,400 in FY 2017 based on reduced construction and a recommended fee
increase.
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g. Gaming revenues generated from lease payments from the Dubuque Racing
Association (DRA) have been decreased significantly (-$446,877) based on
revised projections from the DRA. This follows an $812,489 decrease from
budget in FY 2015 and a $431 ,253 decrease from budget in FY 2016.
The following is a ten year history of DRA lease payments to the City of
Dubuque:
Chane % Change
FY 2017 $5,058,316 estimate -$15,624 -0.31 %
FY 2016 $5,073,940 revised budget -$431 ,253 -7.83%
FY 2016 $5,505,193 budget +$317,681 +6.12%
FY 2015 $5,187,512 -$158,104 -2.96%
FY 2014 $5,345,616 -$655,577 -10.92%
FY 2013 $6,001 ,193 +$3,305 +0.06%
FY 2012 $5,997,888 -$345,242 -5.44%
FY 2011 $6,343,130 -$477,153 -7.00%
FY 2010 $6,820,283 -$1 ,586,647 -18.87%
FY 2009 $8,406,930 -$1 ,346,480 -13.80%
FY 2008 $9,753,410 -$4,048 -0.04%
FY 2007 $9,757,458 +$1 ,008,066 +11 .52%
The Diamond Jo fixed payment remains at $500,000 based on the revised
parking agreement. This agreement ends December 31 , 2018 and the revenue
has been reduced accordingly.
h. The split of gaming revenues from taxes and the DRA lease (not distributions)
in FY 2017 is split between operating and capital budgets at 99% /1 % which is
a change from 100.0% operating and 0% capital in FY 2016. A reduction in
revenue in the Greater Downtown TIF urban renewal area in FY 2016 resulted
in debt capacity issues and made it necessary for the general fund to support
$78,242 in FY 2016 of debt service payments, which was funded by reducing
the amount of gaming revenues from taxes and DRA lease that goes to capital
in FY 2016. In FY 2018, the split between operating and capital budgets will
change to 98.0% operating and 2% capital; in FY 2019 the split between
operating and capital budget will change to 97% operating and 3% capital; in
FY 2020 the split between operating and capital budget will change to 96%
operating and 4% capital; and in FY 2021 the split between operating and
capital budget will change to 95% operating and 5% capital.
i. The Diamond Jo Patio lease ($25,000 in FY 2017) and the Diamond Jo parking
privileges ($500,000 in FY 2017) have not been included in the split with
gaming revenues. This revenue is allocated to the operating budget.
j. The residential rollback factor will decrease from 55.733 percent to 55.626
percent or a 0.19 percent decrease for FY 2017. The rollback has been
estimated to remain the same from Fiscal Years 2018 thru 2021 .
FY 2017 Policy Guidelines
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The percent of growth from revaluation is to be the same for agricultural and
residential property; therefore, if one of these classes has less than 3% growth
for a year, the other class is limited to the same percent of growth. A balance is
maintained between the two classes by ensuring that they increase from
revaluation at the same rate. In FY 2017, agricultural property had less growth
than residential property which caused the rollback factor to decrease. The
agricultural assessed values declined for three reasons: first, the City Assessor
is now using CSR2 ratings; second, previously the City Assessor was
assessing the same agricultural property as the county 10% higher because of
a ruling made by the Department of Revenue. Because agricultural property is
valued on a productivity basis, the City Assessor effectively made the point that
City agricultural property be valued the same as the rest of the county, which
allowed the City Assessor to remove the 10% factor that had been previously
applied; third, as agricultural property goes from being used for agricultural
reasons to being used for residential subdivisions, the class changes from
agricultural to residential.
The decrease in the residential rollback factor decreases the value that each
residence is taxed on. This decreased taxable value for the average
homeowner ($130,367 assessed value in FY 2016 and 2017) results in less
taxes to be paid per $1 ,000 of assessed value. In an effort to keep property
taxes low to the average homeowner, the City calculates the property tax
impact to the average residential property based on the residential rollback
factor and property tax rate. In a year that the residential rollback factor
increases, the City recommends a lower property tax rate than what would be
recommended had the rollback factor remained the same.
The residential rollback in Fiscal Year 1987 was 75.6481 percent as compared
to 55.626 percent in Fiscal Year 2017. The rollback percent had steadily
decreased since FY 1987, which has resulted in less taxable value and an
increase in the City's tax rate. However, that trend began reversing in FY 2009
when the rollback reached a low of 44.0803 percent. If the rollback had
remained at 75.6481 percent in FY 2016, the City's tax rate would have been
$7.97 per $1 ,000 of assessed value instead of$11 .02 in FY 2016.
k. There was an equalization order of 12% for commercial property after removal
of multi-residential property in Fiscal Year 2017. The Iowa Department of
Revenue is responsible for "equalizing" assessments every two years. Also,
equalization occurs on an assessing jurisdiction basis, not on a statewide basis.
Commercial and Industrial taxpayers previously were taxed at 100 percent of
assessed value; however due to legislative changes in FY 2013, a 95 percent
rollback factor was applied in FY 2015 and a 90 percent rollback factor will be
applied in FY 2016 and beyond. The State of Iowa will backfill the loss in
property tax revenue from the rollback and the backfill 100 percent in FY 2015
through FY 2017 and then the backfill will be capped at the FY 2017 level in FY
FY 2017 Policy Guidelines
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2018 and beyond. The FY 2017 State backfill for property tax loss is estimated
to be $694,614.
FY 2015 was the first year that commercial, industrial and railroad properties
were eligible for a Business Property Tax Credit. The Business Property Tax
Credit will be deducted from the property taxes owed and the credit is funded
by the State of Iowa. Eligible businesses must file an application with the
Assessor's office to receive the credit with a deadline of January 15, 2016 for
applications to be considered for FY 2017. The calculation of the credit is
dependent on the number of applications that were received and approved
statewide versus the amount that was appropriated for the fiscal year, the levy
rates for each parcel and the difference in the commercial/industrial rollback
compared to residential rollback. In FY 2015, the Iowa Legislature has
appropriated $50 million for FY15; $100 million for FY16; and $125 million for
FY17 and thereafter. The estimated initial amount of value that will be used to
compute the credit in FY 2015 is $33,000 and FY 2016 is $183,220. The basic
formula is the value multiplied by the difference in rollbacks of commercial and
residential property then divided by one thousand and then multiplied by the
corresponding levy rate. The average commercial and industrial properties
($432,475 Commercial / $599,500 Industrial) will receive a Business Property
Tax Credit from the State of Iowa for the City share of their property taxes of
$148 in FY 2015, $693 in FY 2016, and exceeding $890 in FY 2017.
I. Beginning in FY 2017 (July 1 , 2016), new State legislation created a new
property tax classification for rental properties called multi-family residential,
which requires a rollback, or assessment limitations order, on multi-residential
property which will eventually equal the residential rollback. Multi-residential
property includes apartments with 3 or more units. Rental properties of 2 units
were already classified as residential property. The State of Iowa will not backfill
property tax loss from the rollback on multi-residential property. The rollback will
be 86.25 percent ($326,208) in FY 2017, 82.50 percent ($415,174) in FY 2018,
78.75 percent ($504,139) in FY 2019, 75.00 percent ($593,105) in FY 2020,
71 .25 percent ($682,071) in FY 2021 , 67.50 percent ($771 ,037) in FY 2022,
63.75 percent ($860,003) in FY 2023 and will equal the residential rollback in
FY 2024 which is currently 55.63 percent ($1 ,052,643). This annual loss in tax
revenue of$1 ,052,643 from multi-residential property when fully implemented
in FY 2024 will not be backfilled by the State. From Fiscal Year 2017 through
Fiscal Year 2024 the City will lose $5,204,380 in total, meaning landlords will
have paid that much less in property taxes. The state did not require landlords
to charge lower rents or to make additional investment in their property.
In addition, the State of Iowa eliminated the Machinery and Equipment Tax
Replacement in FY 2003 (-$200,000); Personal Property Tax Replacement in
FY 2004 (-$350,000); Municipal Assistance in FY 2004 (-$300,000); Liquor
Sales Revenue in FY 2004 (-$250,000); and Bank Franchise Tax in FY 2005 (-
$145,000). The combination of the decreased residential rollback, State funding
cuts and increased expenses has forced the City's tax rate to increase since
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1987 when the citizens passed a referendum to establish a one percent local
option sales tax with 50% of the revenue gong to property tax relief.
m. FY 2017 will reflect a decrease of 0.19 percent in taxable value for residential;
an increase of 12.0 percent in taxable value for commercial; no change in
taxable value for industrial; and a decrease of 13.75 percent in taxable value for
multi-residential . Overall taxable value increased 4.52 percent after deducting
Tax Increment Financing values. Assessed valuations were increased 2
percent per year beyond FY 2018.
n. Natural Gas franchise fees have been projected to increase 15.5 percent over
FY16 budget of$1 ,133,164 based on the growth percentage from FY16 to
FY17 (+$175,476 over FY16 Budget) and recording the gas franchise fees
rebated back to eligible customers to a separate expense account ($63,800) .
Also, Electric franchise fees have been projected to increase 12.8 percent over
FY16 budget of$2,913,049 based on the growth percentage from FY 2016 and
FY 2017 (+$374,044 over FY16 Budget) and recording the electric franchise
fees rebated back to eligible customers to a separate expense account
($837,000). The franchise fee revenues increase at an annual rate of 2 percent
per year from FY 2018 thru FY 2021 .
The franchise fee charged on gas and electric bills increased from 3% to 5%,
the legal maximum, on June 1 , 2015.
o. 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 2017.
p. FY 2017 reflects the ninth year that payment in lieu of taxes is charged to the
Water and Water Pollution Control funds for Police and Fire Protection. In FY
2016, 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.
q. Industrial and riverfront property lease revenue is projected to increase by
$12,254 in FY 2017 due to an additional month by month lease for Dubuque
Terminals Ice Harbor which was not budgeted in FY 2016 but is expected to
end during FY 2017.
2. Assumptions — Requirements
a. The Municipal Fire and Police Retirement System of Iowa Board of Trustees
City contribution for Police and Fire retirement decreased from 27.77 percent in
FY 2016 to 25.92 percent in FY 2017 (general fund savings of$265,728). The
Municipal Fire and Police Retirement has projected that the City contribution is
expected to decrease 3.90% in FY18; 3.30% in FY19; 4.10% in FY20 and then
FY 2017 Policy Guidelines
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begin increasing in FY21. Also, the Iowa Public Employee Retirement System
(IPERS) City contribution remained at 8.93 percent in FY 2017 and the
employee contribution remained at 5.95% in FY 2017 (which did not affect the
City's portion of the budget). The IPERS rate is anticipated to increase 1
percent each succeeding year.
b. Consistent with already approved collective bargaining agreements for
Teamsters Local Union No 120, Teamsters Local Union No. 120 Bus
Operators, Dubuque Professional Firefighters Association and International
Union of Operating Engineers, in FY 2017 there is a 2.5% employee wage
increase for represented and non-represented employees at a cost of $890,125
to the General Fund. Non-represented employees did not receive an increase
in FY 2016.
c. The City portion of health insurance expense will increase from $1,040 per
month per contract to $1,325 per month (+27.40%) per contract (based on 560
contracts) in FY 2017 (general fund cost of $1,309,456). The City of Dubuque is
self-insured and actual expenses are paid each year with the City only having
stop-loss coverage for major claims. Estimates for FY 18-21 have been
increased by 6.32 percent per year.
A ten year history of health costs follows:
Total Costs
July-June 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 2011/2012 2012/2013 2013/2014 2014/2015
Total Medical Claims 3,503,538 3,705,974 3,995,600 4,351,964 4,768,599 5,588,543 5,382,692 5,977,210 6,138,408 7,114,965_
Total Rx Claims 919,600 1,004,467 1,009 206 1,103,199 1,163,861 1,248 366 1,397 689 1,553,533 1,631,264 1,844 644
Total Claims Cost 4,423,139 4,710,441 5,004,807 5,455,163 5,932,460 6,836,909 6,780,382 7,530,743 7,769,672 8,959,609
StopLoss Premium 376,176 425,986 463,692 475,817 556,597 505,748 595,246 670,036 670,991 6161095
Health Choices Admin 101,409 110,1521 108,1961 115,871 121,5461 129,7931 131,181 135,087 138,007 140,332
Stop Loss
Reimbursement (70,309) (324,684) 222,409 (150,061) 256,547 621,905 (335,464) 149,018 (22,268) (484,136)
Total Cost 4,830,415 4,921,894 5,354,286 5,896,790 6,354,056i_ 6,850,545 75171,344 8,186,848 8,556,403 9,231,900
Total%Change -10.67% 1.89% 8.79% 10.13% 7.75% 7.81% 4.68% 14.16% 4.51% 7.89%
Medical Only%Change -16.7% 5.8% 7.8% 8.9% 9.6% 17.2% -3.7% 11.0% 2.7% 15.9%
Rx Only%Chane 3.6% 9.2% 0.5% 9.3% 5.5% 7.3%1 12.0% 11.2% 5.0% 13.1%
WEALTH CHOICES
FY 2017 Policy Guidelines
Page 18
d. FY 2013 was the first year that eligible retirees with at least twenty years of
continuous service in a full-time position or retired as a result of a disability and
are eligible for pension payments from the pension system can receive
payment of their sick leave balance with a maximum payment of one-hundred
twenty sick days payable bi-weekly over a five year period. The sick leave
payout expense budget in the General Fund in FY 2016 was $197,751 as
compared to FY 2017 of$230,454 based on qualifying employees officially
giving notice of retirement.
e. General operating supplies and services are estimated to increase 2 percent
over actual in FY 2015. A 2 percent increase is estimated in succeeding years.
f. Electrical energy expense is estimated to have an 8 percent increase over FY
2015 actual expense, then 2 percent per year beyond. Alliant Energy has
proposed rate increases over two years.
g. Natural gas expense is estimated to decrease 18 percent under FY 2015 actual
expense, no increase in FY 2018 and then 2 percent per year beyond.
h. The Dubuque Area Convention and Visitors Bureau contract will continue at 50
percent of actual hotel/motel tax receipts.
i. Equipment costs for FY 2017 are estimated to increase 7.18 percent over FY
2016 budget, then increase 5 percent per year beyond.
j. Debt service is estimated based on the tax-supported unabated General
Obligation bond sale for fire truck and franchise fee litigation settlement.
k. Unemployment expense in the General Fund increased from $60,931 in FY
2016 to $69,671 in FY 2017 based on past years actual experience.
I. Motor vehicle fuel is estimated to decrease 10 percent under FY 2015 actual,
decrease an additional 8 percent in FY 2018, then 2.0 percent per year beyond.
m. Motor vehicle maintenance is estimated to increase 10.00 percent over FY
2016 budget based on a 10.00 percent increase in the Public Works Garage
overhead rate, then 2.0 percent per year and beyond.
n. The increase in property tax support for Transit from FY 2016 to FY 2017 is
$154,334, which reflects reduced revenue due to the Iowa Clean Air Attainment
grants ending for the Nightrider (March 2016) and the Midtown Loop and
Feeder (January 2017). In FY 2016, the Transit Division reconfigured bus
routes, modified the summer trolley service and changed to City management
for a savings of$374,236. This savings was used to offset the cost of funding
the Nightrider Route ($46,913 in FY16), operations of the Intermodal Facility
FY 2017 Policy Guidelines
Page 19
($29,962), Intercultural Competency training ($3,375), and increasing the
General Fund Reserve ($196,212).
The following is a ten year history of the Transit subsidy:
FY 2017 $1 ,051 ,186 projection
FY 2016 $ 896,852 budget
FY 2015 $1 ,086,080
FY 2014 $ 833,302
FY 2013 $1 ,044,171
FY 2012 $ 717,611
FY 2011 $1 ,078,726
FY 2010 $1 ,161 ,393
FY 2009 $1 ,253,638
FY 2008 $1 ,070,053
FY 2007 $ 923,384
FY 2006 $ 710,453
o. Postage rates for FY 2017 are estimated to increase 5.0 percent over FY 2015
actual expense. A 5.0 percent increase is estimated in succeeding years.
p. Insurance costs are estimated to change as follows: Workers Compensation is
decreasing 1 .64 percent based on actual history, General Liability is decreasing
1 .11 percent and damage claims is increasing 28.97 percent, Property
insurance is decreasing 0.01 percent and Boiler Insurance is decreasing 40.41
percent. During FY 2016, the City increased the property insurance deductible
from $50,000 to $100,000 which reduced the annual premium by $21 ,730.
q. The Section 8 Housing subsidy payment from the General Fund is estimated to
decrease $78,653 in FY 2017. In FY 2011 , the City approved reducing the
number of allowed Section 8 Housing Vouchers from 1 ,060 to 900 vouchers.
This reduction in vouchers was estimated to reduce Section 8 administrative
fees from HUD by $100,000 per year. However, in the transition, the number of
vouchers dropped to 803 vouchers. HUD has based the Section 8
administrative fees for FY 2017 on the lower number of vouchers held in FY
2016 which has decreased the amount of revenue received by the Section 8
program in FY 2017. The City is in the process of increasing the Section 8
Housing Vouchers back to 1 ,060.
r. The Cable TV Fund no longer funds Police and Fire public education,
Information Services, Health Services, Building Services, Legal Services, and
City Manager's Office due to reduced revenues from the cable franchise. This
is due to Mediacom's conversion from a Dubuque franchise to a state franchise
in October 2009 which changed the timing and calculation of the franchise fee
payments.
FY 2017 Policy Guidelines
Page 20
s. Greater Dubuque Development Corporation support of$680,613 is budgeted to
be paid mostly from Dubuque Industrial Center Land Sales in FY 2017 and FY
2018. In FY 2019 and beyond Greater Dubuque Development Corporation will
be paid from the General Fund.
t. The Enterprise Funds have contributed to the administrative overhead of the
City operation, but the General Fund has always carried most of the financial
burden. In FY 2013, a multi-year process to more equitably distribute those
costs across all funds was implemented. The remaining overhead recharge will
be increased ten percent each year for ten years until reaching the total
overhead recharge percentage. In FY17 the administrative overhead was
increased $625,046. There was a reduction in metered water usage in FY
2014 and water and sewer revenue bond covenants calculated on the accrual
basis of accounting that have required a reduction in both the water and sewer
administrative overhead recharges in FY 2016 and 2017. The sanitary sewer
administrative overhead was partially reinstated in FY 2017.
FY 2017 Policy Guidelines
Page 21
IMPACT ON AVERAGE RESIDENTIAL PROPERTY - EXAMPLE
ACTUAL CHANGE IF
CITY TAX PERCENT HTC 100% DOLLAR
ACTUAL - PAST HISTORY CALCULATION CHANGE FUNDED CHANGE
FY 1989 "City" Property Tax T453.99 - 11.40% - $ 58.39
FY 1990 "City" Property Tax $ 449.94 - 0.89% - $ 4.04
FY 1991 "City" Property Tax' $ 466.92 + 3.77% +$ 16.98
FY 1992 "City" Property Tax $ 483.63 + 3.58% +$ 16.71
FY 1993 "City" Property Tax' $ 508.73 + 5.19% +$ 25.10
FY 1994 "City" Property Tax $ 510.40 + 0.30% +$ 1.51
FY 1995 "City" Property Tax' $ 522.65 + 2.43% +$ 12.41
FY 1996 "City" Property Tax $ 518.10 - 0.87% - $ 4.54
FY 1997 "City" Property Tax' $ 515.91 - 0.42% - $ 2.19
FY 1998 "City" Property Tax $ 512.25 - 0.71% - $ 3.66
FY 1999 "City" Property Tax' $ 512.25 - 0.00% $ 0.00
FY 2000 "City" Property Tax $ 511.38 - 0.17% - $ 0.87
FY 2001 "City" Property Tax $ 511.38 0.00% $ 0.00
FY 2002 "City" Property Tax $ 511.38 0.00% $ 0.00
FY 2003 "City" Property Tax' $ 485.79 - 5.00% -$ 25.58
FY 2004 "City" Property Tax $ 485.79 0.00% $ 0.00
FY 2004 With Homestead Adj. $ 493.26 + 1.54% +$ 7.46
FY 2005 "City" Property Tax' $ 485.93 + 0.03% +$ 0.14
FY 2005 With Homestead Adj.' $ 495.21 + 0.40% +$ 1.95
FY 2006 "City" Property Tax(1) $ 494.27 + 1.72% +$ 8.34
FY 2006 With Homestead Adj. (1) $ 504.62 + 1.90% +$ 9.41
FY 2007 "City" Property Tax'(2) $ 485.79 - 1.72% -$ 8.48
FY 2007 With Homestead Adj.' $ 496.93 - 1.52% -$ 7.69
FY 2008 "City" Property Tax $ 496.93 0.00% $ 0.00
FY 2008 With Homestead Adj. $ 510.45 + 2.72% +$13.52
FY 2009 "City" Property Tax $ 524.53 + 2.76% +$14.08
FY 2009 With Homestead Adj. $ 538.07 + 5.41% +$27.62
FY 2010 "City" Property Tax $ 538.07 + 0.00% +$ 0.00
FY 2010 With Homestead Adj. $ 550.97 + 2.40% +$12.90
FY 2011 "City" Property Tax $ 564.59 + 2.47% +$13.62
FY 2011 With Homestead Adj. (3) $ 582.10 + 5.65% +$31.13
FY 2012 "City" Property $ 611.19 + 5.00% +$29.09
FY 2012 With Homestead Adj. (3) $ 629.78 + 8.19% +$47.68
FY 2013 "City" Property $ 661.25 + 5.00% +$31.47
FY 2013 With Homestead Adj. (3) $ 672.76 + 6.82% +$42.98
FY 2014 "City" Property $ 705.71 + 4.90% +$32.95
FY 2015 "City" Property $ 728.48 + 3.23% +$22.77
FY 2016 "City" Property $ 747.65 + 2.63% +$19.17
Average FY 1989-FY 2016 with Homestead Adj. + 1.43% + $ 8.40
Average FY 1989-FY 2016 without Homestead Adj. + 0.90% + $ 4.88
FY 2017 Policy Guidelines
Page 22
PROJECTION CITY TAX PERCENT DOLLAR
CALCULATION CHANGE CHANGE
FY 2017 "Citi!' Property Tax' $ 764.46 + 2.25% +$ 16.81
FY 2018 "Citi!' Property Tax $ 786.18 + 2.84 % +$ 21.72
FY 2019 "Citi!' Property Tax' $ 813.55 + 3.48% +$ 27.37
FY 2020 "Citi!' Property Tax $ 859.64 + 5.67% +$ 46.09
FY 2021 "Citi!' Property Tax $ 858.63 - 0.12% -$1.01
Denotes year of State-issued equalization orders.
^ Impact to the average homeowner if the State funds the Homestead Property Tax Credit at 62%.
(1) The FY 2006 property tax calculation takes into account the 6.2% valuation increase for the average
residential homeowner as determined by the reappraisal.
(2) Offsets the impact of the State reduced Homestead Property Tax Credit in FY 2005 & 2006.
(3) The City adopted a budget in FY 2011 and 2012 that provided no increase to the average homeowner. The
State of Iowa under funded the Homestead Property Tax Credit in both years costing the average homeowner an
additional $18.59 in FY 2012 and $11.51 in FY 2013. This provided no additional revenues to the City, as this
money would have come to the City from the State if they appropriated the proper amount of funds.
State of Iowa Homestead Property Tax Credit History
2002-2003 Funded 100% of the Homestead Property Tax Credit
2003-2004 Funded 85% of the Homestead Property Tax Credit
2004-2005 Funded 81% of the Homestead Property Tax Credit
2005-2006 Funded 78% of the Homestead Property Tax Credit
2006-2007 Funded 77% of the Homestead Property Tax Credit
2007-2008 Funded 73% of the Homestead Property Tax Credit
2008-2009 Funded 72% of the Homestead Property Tax Credit
2009-2010 Funded 72% of the Homestead Property Tax Credit
2010-2011 Funded 64% of the Homestead Property Tax Credit
2011-2012 Funded 62% of the Homestead Property Tax Credit
2012-2013 Funded 78% of the Homestead Property Tax Credit
2013-2016 Funded 100% of the Homestead Property Tax Credit
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.
FY 2017 Policy Guidelines
Page 23
IMPACT ON COMMERCIAL PROPERTY - EXAMPLE
CITY TAX PERCENT DOLLAR
ACTUAL - PAST HISTORY CALCULATION CHANGE CHANGE
FY 1989 "City" Property Tax $2,106.42 -15.43% -$ 384.19
FY 1990 "City" Property Tax $2,086.50 - .95% - $ 19.92
FY 1991 "City" Property Tax* $2,189.48 + 4.94% +$ 102.98
FY 1992 "City" Property Tax $2,280.18 + 4.14% +$ 90.70
FY 1993 "City" Property Tax* $2,231.05 - 2.15% -$ 49.13
FY 1994 "City" Property Tax $2,250.15 + 0.86% +$ 19.10
FY 1995 "City" Property Tax* $2,439.60 + 8.42% +$ 189.45
FY 1996 "City" Property Tax $2,439.60 + 0.00% +$ 0.00
FY 1997 "City" Property Tax* $2,659.36 + 9.01% +$ 219.76
FY 1998 "City" Property Tax $2,738.43 + 2.97% +$ 79.07
FY 1999 "City" Property Tax* $2,952.03 + 7.80% +$ 213.60
FY 2000 "City" Property Tax $2,934.21 - 0.60% -$ 17.82
FY 2001 "City" Property Tax $2,993.00 + 2.01% +$ 58.86
FY 2002 "City" Property Tax $2,910.25 - 2.77% -$ 82.84
FY 2003 "City" Property Tax* $3,186.27 + 9.48% +$ 276.03
FY 2004 "City" Property Tax $3,278.41 + 2.89% +$ 92.15
FY 2005 "City" Property Tax* $3,349.90 + 2.18% +$ 71.48
FY 2006 "City" Property Tax (1) $3,152.52 - 5.89% -$ 197.38
FY 2007 "City" Property Tax* $3,538.03 +12.23% +$ 385.50
FY 2008 "City" Property Tax $3,688.64 + 4.26% +$ 150.62
FY 2009 "City" Property Tax* $3,554.71 - 3.63% -$ 133.94
FY 2010 "City" Property Tax $3,524.48 - 0.85% -$ 30.23
FY 2011 "City" Property Tax $3,585.16 + 11.72% +$ 60.68
FY 2012 "City" Property Tax $3,736.64 + 4.23% +$ 151 .48
FY 2013 "City" Property Tax $3,855.96 + 3.19% +$ 119.32
FY 2014 "City" Property Tax $3,942.14 + 2.24% +$ 86.20
FY 2015 "City" Property Tax*(2) $3,896.93 - 1.15% -$ 45.21
FY 2016 "City" Property Tax (3) $3,139.16 -19.45% -$ 757.77
Average FY 1989-2016 + 1.06% +$ 23.16
PROJECTION CITY TAX PERCENT DOLLAR
CALCULATION CHANGE CHANGE
FY 2017 "City" Property Tax*(4) $ 3,507.22 + 11.72% +$ 368.06
FY 2018 "City" Property Tax $ 3,606.85 + 2.84 % +$ 99.63
FY 2019 "City" Property Tax* $ 3,732.41 + 3.48% +$ 125.56
FY 2020 "City" Property Tax $ 3,943.87 + 5.67% +$ 211 .46
FY 2021 "City" Property Tax $ 3,939.23 - 0.12% -$4.64
* Denotes year of State-issued equalization orders
(1) The FY 2006 property tax calculation takes into account the 3% valuation decrease for commercial property
as determined by the reappraisal.
(2) The Business Property Tax Credit was $148 and rollback to 95% in FY 2015.
(3) The Business Property Tax Credit estimated at$693 and rollback to 90% in FY 2016.
(4) There was a State issued equalization order of 12% for commercial property in FY 2017 which
raised the average assessed value from $386,139 to $432,475 and Business Property Tax Credit is
estimated to exceed $890.
FY 2017 Policy Guidelines
Page 24
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 "Citi!' Property Tax $5,690.75 - 3.40% -$ 200.30
FY 1998 "Citi!' Property Tax $5,700.56 + .17% +$ 9.81
FY 1999 "Citi!' Property Tax $5,536.70 - 2.87% -$ 163.86
FY 2000 "Citi!' Property Tax $5,358.00 - 3.23% -$ 178.70
FY 2001 "Citi!' Property Tax $5,533.00 + 3.28% +$ 175.55
FY 2002 "Citi!' Property Tax $5,380.42 - 2.77% -$ 153.13
FY 2003 "Citi!' Property Tax $5,106.00 - 5.10% -$ 274.40
FY 2004 "Citi!' Property Tax $5,136.50 + .60% +$ 30.50
FY 2005 "Citi!' Property Tax $5,036.00 - 1.96% -$ 100.50
FY 2006 "Citi!' Property Tax(1) $5,814.61 +15.46% +$ 778.61
FY 2007 "Citi!' Property Tax $5,983.21 + 2.90% +$ 168.60
FY 2008 "Citi!' Property Tax $6,184.95 + 3.37% +$ 201.74
FY 2009 "Citi!' Property Tax $5,976.44 - 3.37% -$ 208.51
FY 2010 "Citi!' Property Tax $5,909.69 - 1.12% -$ 66.75
FY 2011 "Citi!' Property Tax $6,011.44 - 1.72% +$ 101.75
FY 2012 "Citi!' Property Tax $6,265.43 + 4.23% +$ 254.00
FY 2013 "Citi!' Property Tax $6,465.48 + 3.19% +$ 200.04
FY 2014 "Citi!' Property Tax $6,610.00 + 2.24% +$ 144.53
FY 2015 "Citi!' Property Tax(2) $6,131.80 - 7.23% -$ 478.20
FY 2016 "Citi!' Property Tax (3) $5,256.41 - 14.28% -$ 875.39
Average FY 1989-FY 2016 - 0.95% -$ 61.38
PROJECTION CITY TAX PERCENT DOLLAR
CALCULATION CHANGE CHANGE
FY 2017 "Citi" Property Tax' (4) $ 5,205.45 -0.97% -$50.96
FY 2018 "Citi" Property Tax $ 5,353.33 + 2.84 % +$ 147.88
FY 2019 "Citi" Property Tax' $ 5,539.68 + 3.48% +$ 186.35
FY 2020 "Citi" Property Tax $ 5,853.53 + 5.67% +$ 313.85
FY 2021 "Citi" Property Tax $ 5,846.64 - 0.69% -$6.89
(1)The FY 2006 property tax calculation takes into account the 19.9% valuation increase for industrial property as
determined by the reappraisal.
(2) The Business Property Tax Credit was $148 and rollback to 95% in FY 2015.
(3) The Business Property Tax Credit estimated at$693 and rollback to 90% in FY 2016.
(4) Decrease represents the increase in the City property tax rate in FY 2017 with a reduction for the
increase in the Business Property Tax Credit (increased from $693 in FY 2016 to $890 in FY 2017).
FY 2017 Policy Guidelines
Page 25
IMPACT ON MULTI-RESIDENTIAL PROPERTY - EXAMPLE
CITY TAX PERCENT DOLLAR
ACTUAL - PAST HISTORY CALCULATION CHANGE CHANGE
FY 2015 "City" Property Tax $2,472.99
FY 2016 "City" Property Tax $2,225.69 -10.00% -$247.30
PROJECTION CITY TAX PERCENT DOLLAR
CALCULATION CHANGE CHANGE
FY 2017 "City" Property Tax' $ 2,185.45 - 1.81% -$40.24
FY 2018 "City" Property Tax $ 2,149.82 - 1.63 % -$35.63
FY 2019 "City" Property Tax' $ 2,123.53 - 1.22% -$26.29
FY 2020 "City" Property Tax $ 2,136.99 + 0.63% +$13.46
FY 2021 "City" Property Tax $ 2,027.75 - 5.11% -$109.24
Beginning in FY2017 (July 1, 2016), new State legislation requires a rollback, or assessment
limitations order, on multi-residential property which will eventually equal the residential rollback. Multi-
residential property includes apartments with 3 or more units. The State of Iowa will not backfill
property tax loss from the rollback on multi-residential property. The rollback will be 86.25 percent
($326,208) in FY 2017, 82.50 percent ($415,174) in FY 2018, 78.75 percent ($504,139) in FY 2019,
75.00 percent ($593,105) in FY 2020, 71.25 percent ($682,071) in FY 2021, 67.50 percent ($771,037)
in FY 2022, 63.75 percent ($860,003) in FY 2023 and will equal the residential rollback in FY 2024
which is currently 55.63 percent ($1,052,643). This annual loss in tax revenue of$1,052,643 from
multi-residential property when fully implemented in FY 2024 will not be backfilled by the State. From
Fiscal Year 2017 through Fiscal Year 2024 the City will lose $5,204,380 in total, meaning landlords will
have paid that much less in property taxes.
There were reappraisals done in Fiscal Year 2016 that may have increased the taxable value for the
properties considered multi-residential; however the overall assessments for multi-residential property
has remained relatively flat except for twelve large properties that increased significantly. The
assessed value for multi-residential properties in Fiscal Year 2017 did not increase and landlords will
begin receiving tax breaks with their September 2016 tax payments.
FY 2017 Policy Guidelines
Page 26
History of Increases in Property Tax Askings
% Change
Fiscal "City" Property in Tax Present Impact on
Year Tax Askings Askings Homeowner"
FY 1989 $10,918,759 -12.0% Sales Tax -11 .4%
initiated
FY 1990 $10,895,321 - 0.2% - 0.9%
FY 1991 $11 ,553,468 + 6.0% + 3.8%
FY 1992 $12,249,056 + 6.0% + 3.6%
FY 1993 $12,846,296 + 4.9% + 5.0%
FY 1994 $13,300,756 + 3.5% + 0.3%
FY 1995 $13,715,850 + 3.1 % + 2.4%
FY 1996 $14,076,320 + 2.6% - 0.9%
FY 1997 $14,418,735 + 2.4% - 0.4%
FY 1998 $14,837,670* + 2.9% - 0.7%
FY 1999 $15,332,806* + 3.3% 0.0%
FY 2000 $15,285,754 - 0.3% - 0.2%
FY 2001 $15,574,467 + 1 .9% 0.0%
FY 2002 $15,686,579 + 0.7% 0.0%
FY 2003 $15,771 ,203 + 0.5% - 5.0%
FY 2004 $16,171 ,540 + 2.5% 0.0%
FY 2005 $16,372,735 + 1 .2% 0.0%
FY 2006 $16,192,215 - 1 .1 % + 1 .7%
FY 2007 $17,179,994 + 6.1 % - 1 .7%
FY 2008 $18,184,037 + 5.8% 0.0%
FY 2009 $18,736,759 + 3.0% +2.8%
FY 2010 $19,095,444 + 1 .9% 0.0%
FY 2011 $19,878,962 + 4.1 % +2.5%
FY 2012 $21 ,284,751 + 7.1 % +5.0%
FY 2013 $22,758,753 + 6.9% +5.0%
FY 2014 $23,197,623 + 1 .9% +4.9%
FY 2015 $24,833,951 +7.2% +3.2%
FY 2016 $24,916,013 +3.3% +2.6%
Average FY 1989-2016 + 2.69% +0.77%
*Without TIF Accounting change. **Does not reflect State unfunded portion of Homestead Credit.
The Diamond Jo expansion opened on December 2, 2008 tracking fairly closely to the need
to increase property tax revenues with the corresponding decreases in the Dubuque Racing
Association lease payments, also impacted by slot machines in taverns in Illinois beginning in
September 2012.
FY 2017 Policy Guidelines
Page 27
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 2015 $24,834
FY 2016 $24,916 + 3.3 % +2.6% / +$19.17
FY 2017 $26,681 + 7.1% +2.2% /+$16.41
FY 2018 $27,625 + 3.5% +2.8% / +$21.70
FY 2019 $29,623 + 7.2% +3.5% / +$27.37
FY 2020 $31,526 + 6.4% +5.7% / +$46.06
FY 2021 $32,528 + 3.3% -0.07% / -$0.56
Impact on Tax Askings and Average Residential Property
The following is a historical City tax rate comparison:
Fiscal "City" % Change
Year Tax Rate in Tax Rate
FY 1987 14.5819
FY 1988 13.9500 -4.33%
FY 1989 11.8007 -15.41%
FY 1990 11.6891 -0.95%
FY 1991 12.2660 4.94%
FY 1992 12.7741 4.14%
FY 1993 12.4989 -2.15%
FY 1994 12.6059 0.86%
FY 1995 11.7821 -6.54%
FY 1996 11.7821 0.00%
FY 1997 11.3815 -3.40%
FY 1998 11.4011 0.17%
FY 1999 11.0734 -2.87%
FY 2000 10.7160 -3.23%
FY 2001 11.0671 3.28%
FY 2002 10.7608 -2.77%
FY 2003 10.2120 -5.10%
FY 2004 10.2730 0.60%
FY 2005 10.0720 -1.96%
FY 2006 9.6991 -3.70%
FY 2007 9.9803 2.90%
FY 2008 10.3169 3.37%
FY 2009 9.9690 -3.37%
FY 2010 9.8577 -1.12%
FY 2011 10.0274 1.72%
FY 2012 10.4511 4.22%
FY 2013 10.7848 3.19%
FY 2014 11.0259 2.23%
FY 2015 11.0259 0%
FY 2016 11.0259 0%
Average FY 1987-2016 -0.87%
FY 2017 Policy Guidelines
Page 28
PROJECTION
Fiscal ..City" % Change
Year Tax Rate in Tax Rate
FY 2017 11.2973 + 2.46%
FY 2018 11.6182 + 2.84%
FY 2019 12.0226 + 3.48%
FY 2020 12.7038 + 5.67%
FY 2021 12.6888 - 0.12%
Guideline
The recommended guideline is a 2.25 percent increase for the average residential property
owner assuming the Homestead Property Tax Credit is fully funded, which would be a 2.46
percent increase in the property tax rate. A one percent increase in the tax rate will generate
approximately $260,038, so the 2.46% increase will generate $639,693 in additional property
tax revenues.
CIP BUDGET GUIDELINES
U. 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.
V. 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.
W. RENOVATION AND MAINTENANCE
Guideline
Capital improvement expenditures should concentrate on renovating and maintaining
existing facilities to preserve prior community investment.
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X. 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.
Y. 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.
Z. 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 propertyrp for to any "rollback" mandated by state statute.
On October, 15, 2012, the City Council adopted a formal Debt Management Policy for
the City of Dubuque. While this debt management policy just put into writing what the
City of Dubuque was already doing in practice, there were some changes to those
policies. The most significant components of the Debt Management Policy include an
internal policy of maintaining the City's general obligation outstanding debt at no more
than 95% (except as a result of disasters) of the limit prescribed by the State
constitution as of June 30th of each year; City will not use short-term borrowing to
finance operating needs except in the case of an extreme financial emergency which
is beyond its control or reasonable ability to forecast.
Currently there is no such debt and none will be recommended in this process.
Recognizing that bond issuance costs (bond counsel, bond rating, and financial
management fees) add to the total interest costs of financing, bond financing should
not be used if the aggregate cost of projects to be financed by the bond issue does
not exceed $500,000; City will consider long-term financing for the construction,
acquisition, maintenance, replacement, or expansion of physical assets (including
land) only if they have a useful life of at least six years; City shall strive to repay 20
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percent of the principal amount of its general obligation debt within five years and at
least 40 percent within ten years. The City shall strive to repay 40 percent of the
principal amount of its revenue debt within ten years.
Total annual debt service payments on all outstanding debt of the City shall not
exceed 25% of total annual receipts across all of the City's funds. As of June 30,
2016, it is projected the City will be at 11%.
It shall be the goal of the City to establish an internal reserve equal to maximum
annual debt service on future general obligation bonds issued that are to be abated by
revenues and not paid from ad-valorem property taxes in the debt service fund starting
with debt issued after July 1 , 2013. This reserve shall be established by the fund or
revenue source that expects to abate the levy, and shall be carried in said fund or
revenue source on the balance sheet as a restricted reserve. This reserve does not
exist now, except where required by bond covenants. This internal reserve would be
implemented by adding the cost of the reserve to each debt issuance.
The FY 2015-16 assessable value of the community for calculating the statutory debt
limit is $3,920,621 ,472, which at 5%, indicates a total General Obligation debt capacity
of$196,031 ,074. Outstanding G.O. debt (including tax increment debt, TIF rebate
remaining payments and general fund lease agreement) on June 30, 2016 will be
$165,838,102 (84.60 percent of the statutory debt limit) leaving an available debt
capacity of$30,192,972 (15.4 percent). In FY 2015 the City was at 89.89% of
statutory debt limit, so 84.60% in FY 2016 is a 5.9% decrease in use of the statutory
debt limit. It should be noted that most of the City of Dubuque's outstanding debt is
not paid with property taxes (except TIF), but is abated from other revenues, except
for one issuance for the replacement of a Fire Pumper truck in the amount of
$1 ,410,000 with debt service of$120,060 in FY 2016 and one issuance for the
franchise fee litigation settlement in the amount of$2,800,000 with debt service of
$108,375 in FY 2016. Included in the debt is $20,930,646 of property tax rebates to
businesses creating and retaining jobs and investing in their businesses.
Statutory Debt Limit
Fiscal Year Statutory Debt Amount of Debt % Debt Limit
Limit Subject to Statutory Used
Debt Limit
2015 $193,113,721 $173,597,304 89.89%
2016 $196,031 ,074 $165,838,102 84.60%
The City also has debt that is not subject to the statutory debt limit. This debt includes
revenue bonds. Outstanding revenue bonds payable by water, sewer and stormwater
fees on June 30, 2016 will have a balance of$126,635,443. The total City
indebtedness as of June 30, 2016 is $293,473,545. The total City indebtedness as of
June 30, 2015 was $295,561 ,181 . The City has $2,087,636 (-0.7%) less in debt. The
City is using debt to accomplish the projects that need to be done and to take
advantage of the attractiveness of interest rates in the current market.
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Part of the City's FY 2014 debt was in the form of a grant from the Iowa Flood
Mitigation Program. Through a new state program, the City is able to issue $28.25
million in revenue bonds payable from the 5 percent State Sales Tax increment for
projects in the Bee Branch Watershed allowing the City to complete the Bee Branch
Creek Restoration, construct permeable alleys, replace the Bee Branch flood gates,
complete North End Storm Sewers, construct a Flood Control Maintenance Facility,
install Water Plant Flood Control and complete 17th Street Storm Sewer over the next
twenty years.
During the FY 2016 budget process, a projection of the statutory debt limit usage was
presented at the public hearing to adopt the Fiscal Year 2016 budget. The following
was the projection that was previously shown:
FY15 1 FY16
90.49% 187.49%
These statutory debt limit usage projections have changed due to the amount of
outstanding tax increment financing rebates increased from $18,649,180 to
$20,130,646 based on increased assessed valuations; the loan guarantee for the
Roshek Building was reduced from $10,000,000 to $7,500,000 on December 31 ,
2014; the North Cascade Housing TIF borrowings have been delayed/reduced
$2,500,000; eliminated $1 ,762,000 in Tax Increment Financing debt in FY 2015 due to
reduced capacity; eliminated $190,000 in debt for endloader replacement, which is
being purchased without debt, and $460,000 in debt for curb ramp program due to
increased road use tax; and eliminated $590,000 in debt related to sanitary sewer in
green alleys.
The revised projection of the statutory debt limit usage is as follows:
FY15 1 FY16
89.89% 184.60%
The FY 2017-2021 Capital Improvement Program is currently being balanced and it is
anticipated that the statutory debt limit usage will be less than previously projected for
the five-year capital improvement program.
As we approach the preparation of the FY 2017-2021 Capital Improvement Program
(CIP) the problem is not the city's capacity to borrow money but (a) how to identify,
limit and prioritize projects which justify the interest payments and (b) how to balance
high priority projects against their impact on the property tax rate.
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Guideline
There are many high priority capital improvement projects, which need to be
constructed during the FY 2017-2021 period. The reductions in DRA rent and
distribution over the years has increased the need to borrow for projects. As in the
past, debt will be required on several major capital projects, that being the Bee Branch
Watershed Project, Airport Improvements, Park Improvements, Sidewalk and Street
Improvements, Sanitary Sewer Fund, Parking Fund and Water Fund. In FY 2017-
2021 borrowings will also include smaller projects and equipment replacements such
as Park developments and Public Works equipment. These smaller borrowings will be
for a term not exceeding the life of the asset and not less than six years in accordance
to the Debt Management Policy. Alternative sources of funds will always be evaluated
(i.e. State Revolving Loan Funds) to maintain the lowest debt service costs.
AA. ROAD USE TAX FUND
Discussion
Actual Road Use Tax Fund receipts are as follows:
FY 2006 - $4,831 ,935
FY 2007 - $4,809,990
FY 2008 - $4,944,336
FY 2009 - $4,788,633
FY 2010 - $5,105,327
FY 2011 - $5,253,650
FY 2012 - $5,469,256
FY 2013 - $5,521 ,744
FY 2014 - $5,755,518
FY 2015 - $5,993,239
The FY 2016 budget was based on receiving $5,947,427 in Road Use Tax funds. In
FY 2016, 99.7 percent of the Road Use Tax income is in the operating budget. In FY
2017, the budget is based on the State of Iowa increasing the gas tax 10 cents in FY
2016.
With increases in City DMATS and State Road Use Tax funds, the City will be able to
substantially add to the number of street lights, keep the Southwest Arterial project
moving and continue with major road improvements like North Cascade Road, Central
and White Streets.
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
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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.
BB. 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.
CC. 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 that is not substandard and
provide opportunities for development of new housing, including owner occupied,
within the City's corporate limits for all citizens, particularly for people of low and
moderate income. Workforce rental housing is becoming increasingly important and
the City provides assistance for building rehabilitations.
DD. 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. The remaining 50 percent is used for property tax relief.
EE. NET CASH PROCEEDS (SURPLUS DISTRIBUTION) FROM THE DUBUQUE
RACING ASSOCIATION
The contract with the Dubuque Racing Association calls for distribution at the end of
its fiscal year, December 31 st, of 50 percent of its net cash operating funds to the City
of Dubuque. In early-February, the City receives payment of proceeds to be
distributed. These proceeds are then allocated for capital improvements, with the
highest priority given to reducing the City's annual borrowing.
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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.
Consistent with past use of DRA distributions, one hundred percent of the February
2017 projections of operating surplus have been anticipated as resources to support
the Fiscal Year 2017 capital improvement projects. This level will be maintained for
the Fiscal Year 2018 surplus estimate and then estimates received from the DRA will
be reduced by 5 percent for FY 2019 resources, 10 percent for FY 2020, and 15
percent for FY 2021 resources, provide a margin of error in case the estimates are not
realized.
Guideline
In Fiscal Year 2017, the City anticipates distribution of a significant amount of net cash
proceeds for use in the Capital Improvement Program. These amounts will be
budgeted in the Five Year CIP in the year they are received and will be used to reduce
required General Obligation borrowing. The three out-years will be discounted by 5
percent, 10 percent, and 15 percent respectively.
FF. 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.
GG. USE OF GAMING RELATED RECEIPTS
Guideline
On April 1 , 2004, a new lease took effect with the Dubuque Racing Association for
lease of the Dubuque Greyhound Park and Casino. This new lease was negotiated
after the FY 2005 budget was approved and raised the lease payment from Y2% of
coin-in to 1 % of coin-in. This new lease and the expansion of gaming at Dubuque
Greyhound Park and Casino, from 600 gaming positions to 1 ,000 gaming positions,
effective August 1 , 2005, provided additional revenues to the City of Dubuque.
In FY 2004 the split of gaming taxes and rents between operating and capital budgets
was 50% operating and 50% capital. In FY 2005 this split was changed to 75%
operating and 25% capital. In FY 2009 the split was 76% operating and 24% capital.
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In FY 2010, the budget was changed to reflect the actual split of 85% operating and
15% capital. The operating portion of the split now includes the debt service required
on the 2002 general obligation bonds for the America's River Project that was
previously considered as part of the capital portion of the DRA lease. Debt obligations
are considered a continuing annual expense and are more accurately reflected as part
of the operating portion of the DRA lease.
In FY 2011 , the budget was changed to reflect a split of gaming taxes and rents
between operating and capital budgets of 86.5% operating and 13.5% capital. FY
2013 changed the split to 90.0% operating and 10.0% capital.
In FY 2015, the budget was changed to reflect a split of gaming taxes and rents
between operating and capital budgets of 97% operating and 3.0% capital.
In FY 2016, the budget was changed to reflect a split of gaming taxes and rents
between operating and capital budgets of 100% operating and 0.0% capital. A
reduction in revenue in the Greater Downtown TIF urban renewal area resulted in
reduced revenues to make debt payments and it was necessary for the general fund
to support $84,104 in FY 2015 and $78,242 in FY 2016 of debt service payments,
which were funded by reducing the amount of gaming revenues from taxes and DRA
lease that goes to capital in FY 2016.
In FY 2017, the budget is recommended to change to reflect a split of gaming taxes
and rents between operating and capital budgets of 99 percent operating and 1
percent capital. The split of gaming taxes and rents between operating and capital
budgets is recommended to change to 98 percent operating and 2 percent capital in
FY 2018; 97 percent operating and 3 percent capital in FY 2019; 96 percent operating
and 4 percent capital in FY 2020; and 95 percent operating and 5 percent capital in
FY 2021 .
The Diamond Jo expanded to a land based barge casino facility and increased to
1 ,100 slots on December 1 , 2008. This expansion was projected to decrease the
Mystique gaming market and correspondingly the coin-in by just over 21 percent.
Based on the projected market share loss, the City did not receive a distribution of
cash flows from the Dubuque Racing Association (DRA) in Fiscal Years 2009 and
2010.
DRA distributions restarted in FY 2011 instead of the projected year of FY 2012.
The reduction in the DRA's market impacts the City's lease payment from the DRA.
The current lease requires the DRA to pay the City 1 percent of coin in from slot
machines and 4.8 percent of gross revenue from table games. In FY 2009, the City's
estimated lease payments through FY 2013 were reduced $7.1 million based on
projections from the DRA. In FY 2010, gaming revenues generated from lease
payments from the DRA were decreased an additional $4.8 million through FY 2014
based on revised projections from the DRA. In FY 2011 , the City's estimated lease
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payments through FY 2016 were reduced $1 million based on updated projections
from the DRA. In FY 2012, the City's estimated lease payments through FY 2016 were
reduced an additional $3.2 million based on revised projections from the DRA. In FY
2013, The City's estimated lease payments through FY 2017 were reduced an
additional $2.9 million based on revised projections from the DRA. In FY 2014, the
City's estimated lease payments through FY 2018 were reduced $3.2 million based on
the updated projections from the DRA. In FY 2015, the City's estimated lease
payments through FY 2020 were reduced $3.1 million based on the updated
projections from the DRA.
In FY 2016, the DRA provided the City revised estimated lease payments for FY 2017
through FY 2021 which were reduced $1 ,291 ,376 from the prior year. From FY 2009
thru FY 2021 , the City's lease payments have been reduced $26.6 million.
In Calendar Year 2015, gross gaming revenues at the Mystique Casino are down
2.7%. The Dubuque gaming market will be significantly impacted at the end of May
2016 when the new casino off of Interstate 80 opens in Davenport. The DRA has
projected a 1 % increase in total revenue and a 3% increase in expenses (primarily
driven by an increase in health insurance costs).
The State of Illinois passed a Video Gaming Act on July 13, 2009 which legalized the
use of Video Gaming Terminals in liquor licensed establishments including bars,
restaurants, truck stops and certain fraternal and veterans' organizations. In the part of
Illinois that impacts the Dubuque market, the first year of operation of video gaming
terminals generated $1 million in revenue monthly. The use of video gaming terminals
has now grown to $6.7 million monthly for the five counties closest to Dubuque
(previous impact numbers were based on 13 counties) and in a direct line with
Rockford, IL, which has caused a reduction to the gaming market in Dubuque. The
Mystique Casino and Diamond Jo Casino average monthly revenue is $9.6. This is a
similar impact as if a casino the size of the Mystique Casino and the Diamond Jo
Casino combined was built half-way between Dubuque and Rockford. In addition, the
recession has also impacted the gaming market. The revised DRA gaming projections
include minimal growth in revenues over the next five years with the growth rate
remaining at 1 % through 2021 .
The 50¢ per patron tax previously received from the Diamond Jo was replaced by a
$500,000 fixed payment based on their revised parking agreement which expires
December 31 , 2018; future revenues have been adjusted accordingly. The riverboat
related tax on bets decreased from $305,469 in FY 2016 to $302,675 in FY 2017.