Mayor & Commission Meetings

FY23 GENERAL FUND BUDGET UPDATE (AKA…BUDGET ”BIG ROCKS”) (MARCH 22, 2022) INTRODUCTION The purpose of this Budget Update is to inform the Mayor and Commission of major expenditure or revenue challenges, changes or other issues (aka “Big Rocks”) potentially impacting the upcoming budget. Budget Timeline: Fall of 2021 Jan 11, 2022 Mar 22, 2022 Apr 30, 2022 May of 2022 Dept/Offices Manager Mar 1, 2022 Jan-2022 FY23 Budget Mayor submits Commission Jun 7, 2022 begin working on provided FY23 M&C adopts Budget Requests Status Update Recommended Budget Review Budget Adoption FY23 Budgets Budget Strategic Plan for Submitted provided to M&C FY23 Budget to and Public (scheduled) M&C work on Guidelines FY23-FY25 Comment (aka Big Rocks) Commission Strategic Plan memo to M&C At this stage in the budget development process, departments and offices have submitted operating and capital requests, preliminary estimates for pay and benefit costs have been developed and preliminary estimates for revenues have been generated. The Manager met and reviewed budget requests with department directors and the Manager and Mayor met and reviewed budget requests with constitutional / elected department heads. Mayor & Commission developed and approved a Strategic Plan for FY23-FY25 to help guide decision making and a Budget Update memo was provided. Next steps: The Manager will work with the Mayor to finalize the Mayor’s Recommended Budget, which must be submitted to the Commission and released to the public no later than the end of April. The Commission will review the budget in May and adopt a final budget in June. 2 BUDGET DEVELOPMENT GUIDELINES: Overall, the budget should consider prioritizing funding based on:  current services  ACCGov’s Strategic Plan  infrastructure and life cycle needs  service needs related to accommodate population growth  State and/or Federal mandates, and  initiatives consistent with the Mayor and Commission’s priorities STRATEGIC PLAN (FY23-FY25): The recently approved Strategic Plan should help guide decisions and is focused around six goal areas:  Good Neighbors;  Identify and Close Gaps in Partnership with the Community;  Organizational Improvement;  Quality, Stable, Affordable Housing for All;  Safely Move Around Athens; and  Built and Natural Infrastructure. 3 Expenditures (General Fund costs only) Pay: Unified Plan (~$2.9M) – Market increase of 7% along with funding for performance pay averaging an additional 2% - increasing current employees pay. A pay table increase of 4% is also planned to improve recruitment increasing pay for new hires. Public Safety Step Plan (~$2.3M) – increase of 6% to the step plan table for all public safety employees along with additional funding of $380,000 for step increases for eligible employees. (These numbers reflect Human Resources recommendations from the March 8 worksession.) Note on Budgeting for Pay: As a result of increased employee turnover, retirements and position vacancies, the difference between budgeted and actual expenditures for pay has been increasing. The FY23 budget for pay is being set informed by these trends in an attempt to better match the overall pay budget to actual expenditures. As a result, the overall budget for pay, before pay increases noted above, reflects a decline compared to prior year budgets. It should also be noted, over time, as turnover, retirements and vacancies decline and stabilize, pay budgets will raise. Benefits: Employee Healthcare ~$560k increase, Retiree Health (Other Post Employment Benefits or OPEB) ~$760k increase. Maintaining the current year’s contribution level to the Pension Fund continues to meet the actuarially required annual contribution (ARC) for FY23. The Pension Board recommended increasing the monthly pension payment to all retirees by $75/month. This change would add ~$864k annually to the General Fund contribution. (NOTE: A worksession is scheduled for April 12 for Human Resources to present on Benefits and Wellness programs and recommendations for FY23.) 4 Expenditures (General Fund costs only) (continued) Addressing Deferred Capital Maintenance and Replacements: Over the last several years, a number of facility maintenance needs and vehicle/equipment replacement needs have been deferred or delayed or otherwise gone unfunded. Many of these projects were not included (or only partially included) in the most recent TSPLOST and SPLOST programs. (See Appendix for additional information) To address these needs, it is recommended that any fund balance budgeted in FY23 be used to cover deferred facility maintenance, deferred vehicle/equip. replacements and other one-time capital needs. (Note: at the end of FY21, there was approximately $7.4M of General Fund balance available for appropriation.) Capital Budget: Departments and Offices requested over $40M for capital projects in FY23 – most of these requests to maintain, repair or replace existing facilities and equipment. It is estimated that between $10.0 - $11.0M will be needed in FY23. (The FY22 approved capital budget was $5.6M.). Currently, ~$5.3M of prior year fund balance would be used to address some of this capital funding deficit. Fleet Replacement Funding: Currently, the Fleet Replacement Program has a replacement backlog of ~ $10.5M while the Fleet Replacement Fund has ~$1.5M of available funding (at 06/30/21). The current contribution to the Fund is projected to be $2.6M in FY23 (up $354k from FY22), but below the $6.1M annual contribution projected by Fleet. Currently, ~$2.1M of prior year fund balance would be used to address a portion of the replacement backlog. 5 Expenditures (General Fund costs only) (continued) Transit Support: No General Fund support is currently projected in FY23 for Transit operations, similar to FY22, pending GDOT award of Federal Transit ARPA funds for operations and the upcoming TSPLOST referendum. Without Federal Transit ARPA funds (with no local match requirement) and TSPLOST funds for operations, annual General Fund support and/or farebox revenue of between $4 - $5M would be needed to maintain current services. ARPA for Budget Balancing: Based on the approved ARPA funding allocations, it is anticipated that $1.2M of the American Rescue Plan dollars will be utilized in FY23 as revenue replacement for “provision of government services”, roughly $1M less than budgeted in FY22. (Note: the General Fund expenditure budget would be reduced by $1.2M and those expenditures will be shifted to the ARPA Fund in FY23.) 6 Expenditures (General Fund costs only) (continued) Major Operational Increases and Maintaining Current Services: • Board of Elections: $221k funding for elections support poll workers for runoff elections and absentee ballot processing. • Annual maintenance for enterprise software systems: $255k increase in Information Technology and Police to cover annual increases in various software systems. • Fuel Prices: $319k increase due to higher fuel prices compared to previous years budget. • Fleet Replacement: $354k increase to annual contribution based on current replacement cycles and estimated current cost for vehicle replacements. • Sheriff/Jail Inmate Medical Services: $300k increase for inmate medical services at Jail. • Other Agencies: $332k to cover some requested increases for the Library, Public Defender, Council on Aging and Athens Cultural Affairs Commission. • Neighborhood Leaders Program: $750k. FY22 budget planned ARPA revenue replacement funds. 7 Expenditures (General Fund costs only) (continued) Other Major Operating Additions: • IT Security Enhancements: $278k to upgrade system security including multi-factor authentication. • Transfer Recycling costs from Landfill to General Fund: $300k cover the second of a three phase transfer of recycling costs to the General Fund (~$300k was shifted to Gen Fd in FY21). • Nonprofit Capacity Building Program: $250k funding in Housing and Community Development for a non-profit capacity building initiative. • Human Relations Commission: $139k to fund support for the recently approved Human Relations Commission. SPLOST facilities operating impacts - $462k: Costa Building facility maintenance and support ($103k); Beech Haven Park (Phase 1 support) ($156k) and facility support/maintenance for other Leisure Services SPLOST projects ($203k). 8 Expenditure (General Fund costs only) (continued) Many requests for additional funding and positions submitted by Departments/Elected Constitutional Offices for FY23 will likely not be funded. These initial requests totaled the following: • Department and Elected/Constitutional Offices submitted Operating Budget requests that total $6.6M above the current budget to maintain existing service levels. • In addition, Department and Elected/Constitutional Offices submitted Operating Budget requests that total $5.4M, adding 34+ fulltime positions for new initiatives, additional positions and S/TSPLOST impacts. • As noted earlier, Department and Elected/Constitutional Offices submitted General Fund Capital Budget requests that total over $40M for FY23 projects. 9 Expenditure Summary FY22 Orig. FY23 Change from FY22 (General Fund only) Budget Forecast Amount Percent Comments Includes March 8 recommendations from HR and budget adjustments for Compensation 68,750,077 70,824,369 2,074,292 3.0% higher turnover and vacancies. Pension Contribution 10,164,678 10,209,043 44,365 0.4% Includes Pension Board recommended increase for retirees. Employee Health 8,920,915 9,478,009 557,094 6.2% Retiree Health (OPEB) 6,065,200 6,826,400 761,200 12.6% All Other Benefits 7,225,000 7,736,671 511,671 7.1% Operating & Indirect 31,146,592 34,977,454 3,830,862 12.3% Increases to maintain current services Debt Service 1,315,141 1,315,241 100 0.0% Other Agencies 5,936,922 6,247,170 310,248 5.2% Operating Contingency 1,200,000 1,200,000 0 0.0% FY22 original budget included one-time transfer to Special Programs Fund Transfers to Other Funds 2,077,259 1,624,466 (452,793) -21.8% (for Disparity Study). Also, includes $500K for Econ Dev Capital Fund and $2.1M for one-time Transfers to Capital 5,651,000 13,199,300 7,548,300 133.6% Fleet Replacement Fund supplement Transfers to Transit 0 0 0 -- Budget Additions 0 2,520,366 2,520,366 -- New/expanded Initiatives, SPLOST Impacts ARPA (budget balancing) 0 (601,283) (601,283) -- $1.2M available Total Expenditures 148,452,784 165,557,206 17,104,422 11.5% 10  Revenues (General Fund only) Property Taxes: Property taxes are the largest revenue source accounting for roughly 50% of all General Fund revenues. Currently, the Finance department estimates the net growth in taxable property values to be 12.5%. (Note: tax digest estimates will not be completed by the Tax Assessors Office until the end of April, so this estimate may change). At the current millage rate or tax rate of 13.70 mills ($13.70 per $1,000 taxable or assessed value), property tax revenues for FY23 are estimated to generate ~$82.5M or $9.0M more than the FY22 Budget. (Note: it is estimated that each 0.10 mill change equals ~$556,000 and each 0.25 mill equals ~$1,390,000.) Sales Taxes: Local Option Sales Tax (LOST) revenues make up roughly 20% of all General Fund revenues. Over the last twelve months ending in December, LOST revenue was just under $29.9M. FY23 revenue is currently estimated to be a similar amount, which is $4M more than the FY22 Budget. 11  Revenue (General Fund only) (continued) Other Taxes: Revenues for all other taxes account for roughly 15% of all General Fund revenues. Overall, other tax revenues are estimated to grow roughly 5% based on current business trends and tax rates, generating ~$24.2M in FY23, a $1.2M increase over the FY22 Budget. The two largest taxes in this group, the Insurance Premium Tax and Franchise Taxes, are estimated to generate $9.9M and $8.4M, respectively. Other taxes in this group include, excise taxes on alcohol and the occupation tax (aka business licenses). All Other Revenues: All other General Fund revenues are estimated to be ~$21.6M, a 5% or $1.1M increase over the FY22 Budget. Charges for Services are estimated to be ~$12.6M, Fines and Forfeitures ~$2.2M, Intergovernmental ~$1.3M and Other revenues ~$700k. The total also includes $3.8M of Transfers In from other funds. Most all of this Transfer In amount is to cover the associated Pension and OPEB cost for positions in other funds. 12 Revenue (General Fund only) (continued) Use of Fund Balance: At the end of FY21, after deducting for the operating reserve and FY22 budgeted uses, there is ~$7.4M of available fund balance in the General Fund. The FY22 Budget planned the use of ~$5.6M. Fund balance is appropriate to cover one time expenditures, but not recommended for ongoing expenditures - non-recurring revenues should not be directed toward recurring expenditures. As discussed in the expenditure section, it is recommended that any fund balance budgeted in FY23 should only be used to cover deferred facility maintenance projects and deferred vehicle and equipment replacement needs or other capital projects not included (or only partially included) in the most recent TSPLOST and SPLOST programs. 13 Revenue Summary FY22 Orig. FY23 Change from FY22 (General Fund only) Budget Forecast Amount Percent Comments Based on preliminary information from Tax Assessors Office (Finance Property Taxes 73,488,850 82,466,250 8,977,400 12.2% Estimate) and no change in millage rate (currently 13.70). Sales Tax 25,900,000 29,900,000 4,000,000 15.4% Based on current 12 months improving Other Taxes 22,955,000 24,159,000 1,204,000 5.2% Driven by Insurance Premium Tax and Franchise Taxes Licenses & Permits 865,880 916,000 50,120 5.8% Intergovernmental 1,204,790 1,293,000 88,210 7.3% Charges/Fees 11,992,685 12,602,461 609,776 5.1% Program Fees, Parking Fees and Court Fees improving Fines 1,896,943 2,245,000 348,057 18.3% Courts and Parking Fines improving Other Revenues & Transfers In 4,566,500 4,575,495 8,995 0.2% Use of Prior Year Fund Balance 5,582,136 7,400,000 1,817,864 32.6% Includes $7.4M for Capital and Fleet. Total Revenue $148,452,784 $165,557,206 $17,104,422 11.5% 14 Appendix 15 ACCGov Life Cycle Funding Pro Forma 2023-2027 - DRAFT General Fund 5 year capital General Fund TSPLOST SPLOST ARPA Other Capital (1 year avg) 2022 Deficit requirement Capital 2023 (5 yrs) 2020 (13 yrs) Local (3 yrs) Grants/Funds Public Works Pavement Life Cycle (1,670 lane miles, 17 year avg. life) $ 3,000,000 under refinement $ 42,000,000 $ 15,000,000 $ 20,000,000 $ - $ - $ 7,000,000 Traffic Signals Life Cycle (91 ACCGov-owned signals, 13 year life cycle) $ 1,150,000 $ 14,000,000 $ 8,750,000 $ 5,750,000 $ 2,000,000 Roadway Signage Life Cycle (33,000 signs, 12 year life cycle) $ 675,000 under refinement $ 4,125,000 $ 3,375,000 $ 750,000 Roadway Safety Devices (Pavement markings, guardrails, etc-520 miles of markings-8.5 life) $ 380,000 under refinement $ 2,900,000 $ 1,900,000 $ 1,000,000 Roadway Bridges Life Cycle (Repairs only) 40 ACCGov-maintained bridges - 50 year life $ 63,000 under refinement $ 2,500,000 $ 315,000 $ 2,195,000 Pedestrian and Neighborhood Safety Devices (RRFBs, Radar Speed Signs) - 10 year life $ 50,000 under refinement $ 250,000 $ 250,000 Central Services Fleet Life Cycle (590 vehicles and 220 pieces of equipment) $ 6,122,664 $ 10,457,600 $ 32,417,720 $ 30,613,320 $ - $ 3,507,000 $ - 2 Facility Life Cycle (2 million+ ft across 300 structures) $ 2,979,336 $ 1,600,000 $ 16,771,680 $ 14,896,680 $ - $ 3,475,000 $ - Public Safety Police Equipment Life Cycle $ 1,500,000 under refinement $ 7,500,000 $ 7,500,000 $ - $ - $ - Public Safety Radio Life Cycle (1,100 radios, three towers, and equipment) $ 940,000 $ 875,000 $ 3,825,000 $ 4,700,000 $ - $ - $ - Fire Department Equipment Life Cycle under refinement under refinement $ - $ 2,739,800 $ - e911 Phone System Replacement $ 767,000 $ 767,000 Sheriff Equipment Life Cycle $ 300,000 under refinement $ 1,500,000 $ 1,500,000 $ - $ - $ - $ - Solid Waste Solid Waste Collection Equipment Life Cycle $ 200,000 under refinement $ 5,000,000 $ 1,000,000 Other Other ACCGov Life Cycle Equipment Capital - Current Services $ 1,000,000 under refinement $ 5,000,000 $ 5,000,000 $ - $ - $ - $ - Leisure Services Life Cycle $ 2,966,153 under refinement $ 23,258,763 $ 14,830,763 $ 1,728,000 $ 6,700,000 $ - Computer Information/Network Life Cycle $ 640,000 under refinement $ 3,200,000 $ 3,200,000 $ - $ - $ - $ - Airport Equipment Life Cycle $ 104,600 under refinement $ 5,760,000 $ 523,000 $ 5,237,000 Transit Equipment Life Cycle $ 100,000 under refinement $ 10,200,000 $ 500,000 $ 9,700,000 Public Art Life Cycle? under refinement under refinement Totals $ 22,170,753 $26,932,600 $ 175,725,163 $ 110,853,763 $ 42,610,000 $ 17,188,800 $ - $ 7,000,000 Resulting Annual Requirement from General Fund Capital $22,170,753 Average 5 year (FY18-22 -General Fund cap/Fleet Repl contribution to Capital $6,368,330 Difference Annual Requirement vs. Historic Annual Funding ($15,802,423) 16  FY23 Facility Equipment Life Cycle Program Highest Priority Projects Priority Building Project Cost Notes 1 Health Department Roof $1,034,880 2 Jail (older section) Roof $254,160 3 Fire Station #7 Generator $90,000  Proposed FY23 Funding Gets You Here 4 Courthouse UPS $45,153 5 Animal Services HVAC $10,000 6 East Athens Dance Center HVAC $250,000 7 Corrections HVAC $35,600 8 Sandy Creek Nature Center HVAC $80,000 9 Fire Station #5 HVAC $3,000 10 Athens Community Theater Roof $139,400  SPLOST 2020 Gets You Here 11 Athens Community Theater HVAC $18,700 12 Welcome Center Paint $13,594 13 Mental Health Paint $38,210 14 Fire Stations #3, #4, & #9 Flooring $45,360 15 Transit Shop Bus Lift $19,475 16 Diversion Center Flooring $44,315 17 Library Flooring $335,980 18 Corrections Paint $34,868 19 Courthouse Parking Deck Paint $112,134 20 Whitehall House Roof $52,100 21 Satula Building Roof $730,000 Significant Repairs Implemented in FY22 22 Dougherty Street Building Roof $790,320 Significant Repairs Implemented in FY22 23 Jail Paint $95,337  Leisure Services – Capital Projections (FY22-FY32) Expense: Avg/yr SPLOST: Avg/yr Avg/yr (10 yrs acounting for FY22-FY32 Total (10yrs) SPLOST 2020 (10yrs) Net Amount SPLOST) Bridge & Boardwalk $4,033,250 $403,325 $1,824,062 $182,406 $2,209,188 $220,918 Pavement $4,241,750 $424,175 $1,487,750 $148,775 $2,754,000 $275,400 EQUIPMENT $2,935,597 $293,559 $0 $0 $2,935,597 $293,559 Pool Repair $1,435,800 $143,580 $0 $0 $1,382,793 $143,580 FACILITY R&M 13,048,789 $1,304,878 $2,716,712 $333,158 $10,332,077 $1,033,207 Underfunded or unfunded SPLOST2020 proposals now listed as stand alone projects in capital budget proposal $83,531,000 $7,593,727 $0 $0 $83,531,000 $7,593,727 18