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HomeMy WebLinkAbout199-02 RESOLUTIONRESOLUTION NO. 199-02 A RESOLUTION TO APPROVE AND ADOPT THE 2003 CITY OF FAYETTEVILLE ANNUAL BUDGET AND WORK PROGRAM AS AMENDED AND ACCEPTING 2002 HAY PAY PLAN RECOMMENDATION FOR POLICE AND FIRE PAY RANGES WHEREAS, the City Council of the City of Fayetteville, Arkansas, after careful study of the City's financial condition and needs, has determined that the 2003 City of Fayetteville Annual Budget and Work Program as amended (attached) is the best possible budget during this period of financial uncertainty. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the City Council of the City of Fayetteville, Arkansas hereby approves and adopts the 2003 City of Fayetteville Annual Budget and Work Program as amended which is attached hereto marked Exhibit "A" and made a part hereof. Section 2. That the City Council of the City of Fayetteville, Arkansas hereby accepts the 2002 Hay Pay Plan recommendations for Police and Fire pay ranges and make the pay changes effective with the beginning of the first pay period in 2003 or January 6, 2003 PASSED and APPROVED this the 17th day of December, 2002. ,t .FAYErr� eather Woodruff, City Ce By: _/ ... APPROVED: By: NAME OF FILE: CROSS REFERENCE: Item # Date Resolution No.199-02 Document • 1 12/17/02 Resolution # 199-02 2 12/26/02 Memo from Heather Woodruff, City Clerk to Michelle Bechhold, human Resources NOTES: T D m co 0 m N co Ag E 8 • a3lHOId3Hld O O m 0 > n D D ma r0 m r D a a -0 a < < O < m m -0 < N + > O 0 - • CO cN V 03 t°gamm - 0oS 0 0 NIV1dV3 BtJId 0 0 O-1 0 m 0> a s. 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O W A W 0 0 A A A W 0 A 01 0 0) A_s_s O N a -• 0 W- N 0 V+ N W W N -• O N CO CO N -+ A N CO A N N a 0 N W N N 01 0 A V CO 0 a CO 0 0 CO 0) 000J01 0 0 V -• J J V O) 0 0 V N O N CD 0 J 0 y 0' A 6 N J O (O CO N0 0 N W tD (0 N 0 O A O N i0 J N 0 0 0 0 (O 0 0 0 -• J- - co O N 'co O A O 0 0 0 co 0 (D Co 0 0 W A Co W J 0 A -• A CO x 0 0 0 0 a 0 • N m - 13 N m W N m 0 N 1 m 0 N m m N -1 m m OZ 21V3A Sl 21V3A OL 21V3A S31b21 d2lS 30110d £00Z FAYETTEVILII.E THE CITY OF FAYETTEVILLE, ARKANSAS DEPARTMENTAL CORRESPONDENCE • To: From: Date: Michele Bechhold Human Resources Heather Woodruff, City Clerk December 27, 2002 Attached is a copy of Resolution 199-02 approving and adopting the 2003 City of Fayetteville's annual budget and work program as amended and accepting the 2002 Hay Pay Plan recommendation for police and fire pay ranges. The original resolution will be microfilmed and filed with the City Clerk. cc: Nancy Smith, Internal Auditor Kevin Springer, Budget Rick Hoyt, Police Chief Chris Bosch, Fire Chief i AGENDA REQUEST CONTRACT REVIEW GRANT REVIEW • STAFF REVIEW FORM • /9911 91-1 For the Fayetteville City Council Meeting of: December3,2002 FROM: Stephen Davis Name Budget & Research Administrative Services Division Department ACTION REQUIRED: Approve a resolution adopting the Proposed 2003 Annual Budget & Work Program. COST TO CITY: Cost of this request Account Number Project Number Category/Project Budget Program Category / Project Name Funds Used to Date Program / Project Category Name Remaining Balance Fund Name BUDGET REVIEW: X Budgeted Item Budget Adjustment Attached Budget a er Date Administrative Services Director Date CONTRACT/GRANT/LEASE REVIEW: GRANTING AGENCY: 4//t/i02-- Date //t/OZDate Date Internal Auditor ADA Coordinator Date Date Purchasing Manager Date Grant Coordinator Date STAFF RECOMMENDATION: Staff recommends approval of the Proposed 2003 Annual Budget & Work Program. Division Head Department Director Date Date Cross Reference New Item: Yes No Previous Ord/Res#: -/ 9-02 Orig. Contract Date Date Orig. Contract Number ay: . Date • Staff Review Form - Page 2 Description 2003 Annual Budget & Work Program • Meeting Date December3,2002 Comments: Reference Comments: Budget Manager Accounting Manager City Attorney Purchasing Manager ADA Coordinator Internal Auditor Grants Coordinator RESOLUTION NO. A RESOLUTION TO APPROVE AND ADOPT THE 2003 CITY OF FAYETTEVILLE ANNUAL BUDGET AND WORK PROGRAM AS AMENDED WHEREAS, the City Council of the City of Fayetteville, Arkansas, after careful study of the City's financial condition and needs, has determined that the 2003 City of Fayetteville Annual Budget and Work Program as amended (attached) is the best possible budget during this period of financial uncertainty. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FAYETTEVILLE, ARKANSAS: Section 1. That the City Council of the City of Fayetteville, Arkansas hereby approves and adopts the 2003 City of Fayetteville Annual Budget and Work Program as amended which is attached hereto marked Exhibit "A" and made a part hereof. PASSED and APPROVED this the 3rd day of December, 2002. ATTEST: By: Heather Woodruff, City Clerk APPROVED: DRAFT By: DAN COODY, Mayor 1 1 IGq-o 1 1 1 1 City Clerk's Office Storage #1 1 1 1 1 1 1 City of Fayetteville, Arkansas 1 Annual Budget 1 and 1 Work Program 1 1 1 MICR bll Lkf6��� 2003 MICROFILM$ly City of Fayetteville, Arkansas 2003 Annual Budget and Work Program City Council and Other Elected Officials Robert Reynolds, Ward 1 - Position 1 Brenda Thiel, Ward 1 - Position 2 Kyle Cook, Ward 2 - Position 1 Don Marr, Ward 2 - Position 2 Robert Rhoads, Ward 3 - Position 1 Bob Davis, Ward 3 - Position 2 Shirley Lucas, Ward 4 - Position 1 Lioneld Jordan, Ward 4 - Position 2 Kit Williams, City Attorney Sondra Smith, City Clerk/Treasurer Rudy Moore, Distnct Judge Submitted by Dan Coody, Mayor Hugh Earnest, Urban Development Director Ray Boudreaux, Aviation & Economic Development Director Tim Conklin, Community Planning & Engineering Services Director Gary Dumas, Operations Director Stephen Davis, Finance & Internal Services Director Rick Hoyt, Police Chief Chris Bosch, Fire Chief Greg Boettcher, Water & Wastewater Director Prepared by Stephen Davis, Finance & Internal Services Director Kevin Springer, Budget Manager Barbara Fell, Senior Research Analyst GOVERNMENT FINANCE OFFICERS ASSOCIATION Distinguished Budget Presentation Award PRESENTED TO City of Fayetteville Arkansas For the Fiscal Year Beginning January 1, 2002 'a iehtadt. /iia -a President Executive Director The Government Finance Officers Association of the United States and Canada (GFOA) presented an award of Distinguished Budget Presentation to the City of Fayetteville, Arkansas for its annual budget for the fiscal year beginning January 1, 2002. In order to receive this award, a governmental unit must publish a budget document that meets program cnteria as a policy document, as an operations guide, as a financial plan, and as a communications device. The award is valid for a period of one year only We believe our current budget continues to conform to program requirements and we are submitting it to GFOA to determine its eligibility for another award. MISSION STATEMENT The City of Fayetteville's mission statement is a direct result of a volunteer team of employees charged with creating a mission statement that expressed the service core of City operations, reflected our beliefs concerning City services, and was easy to remember. All City employees were given an opportunity to provide input for the mission statement. The mission statement was then adopted by the City Council and is as follows: To protect and improve our quality of life by listening to and serving the people with pride and fairness. N cu N c co L Q ft W °>cu CD *cl mal (d LL O O A V District Judge U c 0 V U T 2 E E c C City Clerk/Treasurer w L U 0 a U '—Cable Administrati W' m C c C m a y a 0 E E 2 8w` —Accounting & Audit — Building Safety —Billing & Collections —Budget & Research — Building Services 8 0 aE co coo E_ 'a 0 • .co6 o N o co c 6 0¢0 w` a i ater & Wastewater a �a m m 3j — Meter Operations 3 o y c ad m co 3s 0 0 —Fleet Operations —Prevention — Parks & Recreation pNp C C.2 .6 o J O U — Animal Services —Central Dispatch '—Support Services —Solid Waste & Recycling -Drug Enforcement a -J City of Fayetteville, Arkansas Table of Contents Budget Message Transmittal Memo from the Mayor to Council Fayetteville Vision 2020: Guiding Principles Budget Resolution I -XI X -XX XXI Community Overview Miscellaneous Statistical Data Budget Process and Policies XXII-XXIV XXV-XXVI Budget Process 1-2 Budget Flowchart 3 Financial Policies: Revenue Policy 4 Expenditure Policy 4-5 Debt Policy 5 Reserve Policy 5 Investment and Cash Management Policy 5-6 Capital Improvement Policy 6 Financial Reporting Policy 6 Administrative Procedures to Adjust the Approved Budget 7-8 Budget Organizational Structure 9 Consolidated Fund - Department - Program Structure 10 Fund Summaries Chart of Fund Types - Govemmental 11 Combined Statement of Fund Position - Governmental (Shown by Department) 12 Chart of Fund Types - Proprietary & Fiduciary 13 Combined Statement of Fund Equity - Proprietary & Fiduciary (Shown by Department) 14-15 Sources and Uses of Funds 16 Multi -Year Comparison - Adopted Budget Expenditures 17 Governmental Funds General Fund: Sources and Uses of Funds 20 Revenue & Expenditure Summary 21 Expenditure Detail 22-23 Special Revenue Funds Street Fund: Sources & Uses of Funds 24 Revenue & Expenditure Summary 25 City Advertising & Promotion Fund: Revenue & Expenditure Summary 26 Off Street Parking Fund: Revenue & Expenditure Summary 27 City of Fayetteville, Arkansas Table of Contents (continued) Community Development Block Grant Fund: Revenue & Expenditure Summary 28 Parks Development Fund: Revenue & Expenditure Summary 29 Drug Law Enforcement Fund: Revenue & Expenditure Summary 30 Debt Service Funds Arts Center Bond Fund: Revenue & Expenditure Summary 31 Wastewater Improvements Sales Tax Bond Fund: Revenue & Expenditure Summary 32 Capital Projects Funds Library Construction Fund: Revenue & Expenditure Summary 33 Replacement & Disaster Recovery Fund: Revenue & Expenditure Summary 34 Sales Tax Capital Improvements Fund: Revenue & Expenditure Summary 35 Capital Project Detail 36-37 Wastewater System Improvements Project Fund: Revenue & Expenditure Summary 38 Enterprise Funds Water & Sewer Fund: Sources & Uses of Funds 40 Revenue & Expenditure Summary 41 Solid Waste Fund: Sources & Uses of Funds 42 Revenue & Expenditure Summary 43 Airport Fund: Sources & Uses of Funds 44 Revenue & Expenditure Summary 45 Town Center and Parking Facility Fund: Revenue & Expenditure Summary 46 Continuing Education Center and Parking Facility Fund: Revenue & Expenditure Summary 47 Trust Funds Police Pension Fund: Revenue & Expenditure Summary 48 Fire Pension Fund: Revenue & Expenditure Summary 49 Municipal Judge Retirement Fund: Revenue & Expenditure Summary 50 Internal Service Funds Shop Fund: Revenue & Expenditure Summary 51 Major Revenue Sources 52-55 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 City of Fayetteville, Arkansas Table of Contents (continued) General Government: Organizational Structure 57 Overview 58 Program Expenditure Summary 59-62 Personnel Summary 63-64 Mayor's Administration 65 City Council 66 City Attorney 67 City Prosecutor 68 Hot Check 69 District Court - District Judge 70 Economic Development 71 Chief Administrative Officer 72 Cable Administration 73 Internal Audit 74 City Clerk/Treasurer 75 District Court - Criminal Cases 76 District Court - Probation & Fine Collection 77 District Court - Small Claims & Civil Cases 78 Library 79 Yvonne Richardson Community Center 80 Miscellaneous 81 Airport - Administration 82 Airport - Maintenance 83 Airport - Operations 84 Airport - Capital Expenditures 85 Community Planning & Engineering Services: Organizational Structure Overview Program Expenditure Summary Personnel Summary Public Lands Maintenance Engineering - Operations & Administration Engineering - Right -of -Way Acquisition Engineering - Public Construction Planning Building Safety Community Resources & Code Compliance Community Resources & Code Compliance Community Resources & Code Compliance Community Resources & Code Compliance Community Resources & Code Compliance 87 88 89-90 91-92 93 94 95 96 97 98 - Community Code Enforcement 99 - Administration & Planning 100 - Housing Services 101 - Public Services 102 - Public Facilities & Improvements 103 City of Fayetteville, Arkansas Table of Contents (continued) Operations: Organizational Structure 105 Overview 106 Program Expenditure Summary 107-111 Personnel Summary 112-114 Operations Director 115 Parking & Telecommunications - Utilities Management 116 Parks & Recreation - Administration 117 Parks & Recreation - Swimming Pool 118 Parks & Recreation - Administration/Recreation Programs 119 Parks & Recreation - Lake Maintenance 120 Parks & Recreation - Parks Maintenance 121 Parking & Telecommunications - Parking Management Program 122 Transportation - Traffic Engineering & Planning (General Fund) 123 Transportation - Traffic Control & Maintenance 124 Transportation - Operations & Administration 125 Transportation - Rights -of -Way Maintenance 126 Transportation - Street Maintenance 127 Transportation - Drainage Maintenance 128 Transportation - Engineering & Planning (Street Fund) 129 Transportation — Sidewalks 130 Parks & Recreation - Parks Development 131 Parks & Recreation - Parks Development Capital 132 Solid Waste & Recycling - Operations & Administration 133 Solid Waste & Recycling - Commercial Collections 134 Solid Waste & Recycling - Residential Collections 135 Solid Waste & Recycling - Commercial Drop Box Collections 136 Solid Waste & Recycling - Recycling 137 Solid Waste & Recycling - Composting 138 Fleet Operations - Vehicle Maintenance 139 Fleet Operations - Capital Expenditures 140 Finance & Internal Services: Organizational Structure 141 Overview 142 Program Expenditure Summary 143-144 Personnel Summary 145-146 Finance & Internal Services Director 147 Human Resources 148 Accounting & Audit 149 Budget & Research 150 Billing and Collections (General Fund) 151 Building Services - General Maintenance 152 Building Services - Janitorial 153 Purchasing 154 City of Fayetteville, Arkansas Table of Contents (continued) Information Technology 155 Billing and Collections (Water & Sewer Fund) 156 Police Department: Organizational Structure 157 Overview 158 Program Expenditure Summary 159-160 Personnel Summary 161 Central Dispatch 162 Animal Services - Patrol/Emergency Response 163 Animal Services - Animal Shelter 164 Animal Services - Veterinarian/Clinic 165 Police - Support Services 166 Police - Patrol 167 Police - Drug Enforcement 168 Fire Department: Organizational Structure 169 Overview 170 Program Expenditure Summary 171 Personnel Summary 172 Fire - Prevention. 173 Fire - Operations 174 Fire - Training 175 Water & Wastewater Organizational Structure 177 Overview 178 Program Expenditure Summary 179-181 Personnel Summary 182 Water & Wastewater Director 183 Meter Operations - Meter Reading 184 Meter Operations - Meter Maintenance & Backflow Prevention 185 Water & Sewer Maintenance - Water Purchased 186 Water & Sewer Maintenance - Operations & Administration 187 Water & Sewer Maintenance - Water Distribution Maintenance 188 Water & Sewer Maintenance - Water Storage & Pump Maintenance 189 Water & Sewer Maintenance - Sewer Main Maintenance 190 Wastewater Treatment Plant 191 Water & Sewer Maintenance - Capital Water Mains 192 Water & Sewer Maintenance - Capital Expenditures 193 Water & Sewer Maintenance - Water & Sewer Connections 194 Water & Sewer Maintenance - Sewer Mains Construction 195 City of Fayetteville, Arkansas Table of Contents (continued) Wastewater Treatment Plant - Capital 196 Water & Sewer Maintenance - Debt Service 197 Capital and Debt Capital Improvements Program Introduction 199-200 Capital Improvement Program Directional Information 201-205 Summary of Project Requests & Project Resources 206 Capital Improvement Projects by Project Area - All Sources 207 Sales Tax Capital Improvements Funding - By Project Category 208 Capital Improvements Program Comprehensive Detail 209-212 2003 Capital Budget 213-215 Debt Position 216 Description of Outstanding Bonds 217-218 Schedule of Bonds Outstanding 219 Debt Service Payment Schedule 220 Legal Debt Margin Calculation 221 Debt to Maturity Schedule 222 Appendix City of Fayetteville Organizational Chart 223 List of Elected Officials, Administrative Officials, and Management Staff 224 Personnel Summary 225 Personnel Variation Summary 226-227 Acronyms 228-229 Glossary 230-235 Index 236-239 CITY OF FAYETTEVILLE, ARKANSAS THE BUDGET DOCUMENT The City of Fayetteville's budget document is a six -part presentation consisting of the following sections: Budget Message Budget Process and Policies Fund Summaries Department Summaries: - General Government - Community Planning and Engineering - Operations - Finance & Internal Services - Police - Fire - Public Works Capital and Debt Appendix Budget Message This section begins with a brief review setting forth the budgetary plan and objectives, as proposed by the Mayor, for 2003. The budget message section gives the reader the synopsis of the work program for the City in the next year and provides a guide to the budget document. Budget Process and Policies The budget process and policies section gives the reader the procedural insight into the preparation of the Proposed 2003 Budget and Work Program and financial policies for the City. These policies include: Budget Adjustrtient Policy, Revenue Policy, Expenditure Policy, Debt Policy, Reserve Policy, Investment and Cash Management Policy, Capital Improvement Policy, and Financial Reporting Policy. Fund Summaries The Fund Summaries section contains information concerning fund types and fund position that depicts the financial activity projected for the City during the coming year for each fund. Department Summaries This section consists of the seven major departments: General Government, Community Planning and Engineering, Operations, Finance & Internal Services, Police, Fire, and Public Works. The Department Summaries section contains the following: (1) Department Overview - This section provides a brief summary of total expenditures and significant changes for each department. (2) Goals and Objectives - This section provides a listing of upcoming goals and objectives for the next budget year. In addition, a results section is provided on the goals developed for the previous year. (3) Program Expenditure Summaries - This section reflects expenditures by category for each program in a Department for Actual 2001, Budgeted 2002, Estimated 2002, and Budgeted 2003. (4) Personnel Summaries - This section provides a comparison of staffing levels during the past four years for each department. (5) Program Performance Pages - These pages reflect the individual performance pages for each program. Capital and Debt This section contains: a synopsis of the 2002-2006 Capital Improvements Program and planned capital expenditures for 2003; a synopsis of the City's projected debt position as of December 31, 2002; and general information concerning general obligation and revenue bond debt. Appendix The Appendix contains a City organization chart, a list of elected City officials and City management staff, a personnel variation summary for all City departments, an acronym listing, a glossary, and an index. The glossary provides definitions of frequently used budgeting and accounting terms. The index cross-references the budget document by division or activity/program Printed on recycled and recyclable paper with a minimum of 20 percent postcosumer content. 1 FAYETTEVILLE 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 THE CITY OF FAYETTEVILLE, ARKANSAS March 31, 2003 Members of the City Council and Citizens of Fayetteville: I hereby submit the 2003 Adopted Budget for the City of Fayetteville, Arkansas that was approved, by City Council, on December 17, 2002. It has been prepared and submitted in accordance with Arkansas Statutes and City Ordinances, which require that the Mayor, under the aldermanic form of government, submit to the City Council the annual budget for approval. This budget allocates necessary funding for all municipal operations including the 2003 capital projects set forth in the Adopted 2002-2006 Capital Improvements Program, as amended. This adopted budget reflects the discussion and amendments made by City Council during their review of the 2003 Proposed Budget. This budget also lists the Fayetteville Vision 2020 Guiding Principles as well as the City of Fayetteville Goals for 2008. A discussion of some of the goals and actions for 2003 are discussed in this letter. The Guiding Principles and Goals were developed as a result of the Strategic Plan 2003- 2008. The Strategic Plan development consisted of a Citizen's Summit conducted in January and culminated in a City Council and Mayor retreat in March. The Fayetteville Vision 2020 Guiding Principles and the staff developed goals for 2003 are listed immediately following the conclusion of this letter. 2002 - A REVIEW During this past year, the City has undertaken several significant projects that can generate long-term benefits for the Community. A partial listing of these projects includes: an impact fee study (City Council has approved an ordinance to establish impact fees); obtained re -authorization of the City sales tax; initiated an interactive voice response system, enhanced the City's web -site, and rolled out a municipal management system project; secured approval of a residential trash cart collection program; secured approval of a sales tax bond issue for the Wastewater System Improvements Project; significant segments of the City's trail system were constructed during the year; the new Library began construction and is on schedule; commenced the construction of Dickson Street Enhancement Project; and continued progress on the Walker Park Senior Center. City operations were improved during the year. The more significant changes were: City Council authorized a 2002 pay -plan and benefit plan review and received the reports and recommendations; the Fire Department rearranged staffing to address findings contained in the NIOSH report. The staffing changes resulted in transferring six firefighters to address administrative and safety duties; the Police Department added two Police Captain positions and reduced two Lieutenants positions; and moved Code Enforcement from the Building Safety Division to place more emphasis on code I enforcement activities. Also during 2002, City Council authorized enhanced retirement benefits for the uniform Fire and Police department employees. Economics continues to play a significant role in the City's ability to provide services for Citizens. Several financial briefings were developed and presented to City Council on sales tax funding for capital investment and General Fund operations during this past year; an economic development strategy plan was developed and distributed; a position paper on the need for a viable and active central business district was developed and distributed; the economic development plan for Fayetteville Municipal Airport is underway and showing positive results; Wilson Springs Business Park has been provided guiding principles for development by City Council; and a renewed spirit of cooperation between the City, the University of Arkansas, the Fayetteville School District and the Fayetteville Chamber of Commerce has been solidified over the past twelve months. 2003 - THE YEAR AHEAD The focus of the 2003 Adopted Budget for the City of Fayetteville is directed toward implementation of the Goals 2008 statement developed from the Strategic Plan. In addition to focusing the 2003 Annual Budget & Work Program toward implementation of the Goals 2008, this budget was developed to build on philosophies of enhanced customer relations and cost-effective public service, and responsive government. With the continued focus of the City Council, the Citizens of Fayetteville and Staff, a number of projects, programs, and initiatives will be accomplished. Together, we must face the challenges to be met in 2003 and beyond to improve the quality of life in Fayetteville. The following is a discussion of some of the issues, challenges, and goals incorporated into in the 2003 Adopted Budget. Principle: Issue: Guiding Principles, Issues and Challenges Financially sustainable City Government Providing Top Quality, Responsive Services Use of Reserves to Fund Ongoing Operations for General Fund During the budget briefing conducted for City Council November 12, Staff identified the projected use of approximately $2.3 million of reserves to fund on-going operations, disregarding funding the pay range adjustments identified by Hay Management Consultants for the City. After City Council review and Staff spending adjustments, the adopted budget for General Fund has a use of reserves for 2003 that is expected to be approximately $1.9 million. Projections made, beginning in 1999 for General Fund, anticipated the use of reserves to fund on-going operations. The General Fund projections developed in May 2002 anticipated using reserves in 2004 and 2005 to fund on-going operations To offset the use of reserves for on-going operations, Staff adopted shifting expenses from General Fund to Street Fund and the Parks Development Fund. These cost shifts are included in this budget and reduce the use of reserves in General Fund by approximately $250,000. Additionally, City Council approved a reallocation of the II Principle(s): Issue: Principle: Issue: City's 1% sales and use tax to provide increased operations funding. This reallocation of the sales and use tax will provide the opportunity to balance future budgets. Also, Cox Communications provided to the City an estimate of cable franchise fees for 2003 that is approximately $91,000 more revenue than has previously been estimated. Court fines and fee revenues have been increased approximately $100,000 based on collections through October. Finally, in the Proposed Budget submitted to City Council, Staff recommended that revenue enhancements be enacted to stabilize the fiscal picture for General Fund. Staff determined that the most viable revenue enhancement is to increase all utility franchise fees to 4.25% unless the current utility franchise fee already exceeded 4.25%. During City Council budget deliberations and discussions, the utility franchise fee was increased for the Water & Sewer utility only. This fee increase will generate an additional $180,900 in new revenue for General Fund in 2003. Staff, in compliance with City Council instructions, identified $428,633 in budget reductions and presented the listing of proposed budget reductions prior to City Council approving the franchise fee increase. The budget reductions and franchise fee increase are in General Fund. Reputation as a "Safe Community" and Financially Sustainable City Government Providing Top Quality, Responsive Services Funding Options for Pay Range Adjustments and Pay Compression Adjustments Prior to the November 12 budget briefing, Hay Group had identified Police and Fire pay range adjustments that, if enacted, would cost approximately $987,000 to fully fund in 2003. Subsequent to the November 12 meeting, Hay also identified an additional $600,000 to $800,000 in pay compression issues for all non-uniform employees. The General Fund portion of the pay compression issue is between $355,000 and $472,000. This budget includes sufficient funding to fully fund the pay range adjustment for Police and Fire uniform employees and the non-uniform pay compression issues. Approximately one third of funding for these issues is from a group benefit cost savings that is discussed later in this letter. The City will perform a salary survey in 2003 that will require funding in 2004. City Council will be presented options of where the funding could come from to fully fund the 2002 pay range adjustment, salary compression and the 2003 pay range adjustments, if any. Financially Sustainable City Government Providing Top Quality, Responsive Services Evaluate Group Benefits Costs III Principle: Issue: Principle: Issue: The City contracted with Ramsey, Krug, Farrell & Lensing to market the City's group benefit plan to obtain better pricing and more options. The consultants reported that they have negotiated two proposals that can reduce the City's cost of group benefits between $77,000 and $280,000. Staff recommended that the City accept the larger savings and use the money to fully fund the remaining cost of the 2002 pay range adjustment and pay compression issues identified by Hay Group. City Council accepted Staff's proposal and applied the savings to provide the funds needed to fully address the uniformed Police and Fire employees pay range adjustment and to provide funding to fully address non-uniform pay compression issues. Diverse, Growing Local Economy Economic Development During the past year the City has issued two economic development reports that identify the City's commitment to continued economic growth of the Downtown/Dickson Street area and identify the City's commitment to establishing a community -wide economic development strategy. The economic development efforts included in this budget are continued emphasis on sustaining the Fayetteville Municipal Airport, continued efforts to more fully utilize the South Industrial Park, and to market Wilson Springs Business Park. Once the Dickson Street Enhancement Project is completed, the City will be incurring additional maintenance costs for landscape maintenance, litter control, parking enforcement and public safety. This budget contains increased funding for Parking Management that will partially address the increased City cost in the Dickson Street corridor. This budget contains funding for a six-month contract with the Downtown -Dickson Enhancement Project, Inc (DDEP). During the third quarter of 2003, City Council is scheduled to review the contract performance through the first six months and determine the City's future funding for DDEP. Financially Sustainable City Government Providing Top Quality, Responsive Services Unfunded mandates Unfunded federal and state mandates continue to place a burden on local governments nationwide and Fayetteville is no exception. In addition to allocating resources to meet the requirements of the Clean Water Act, conduct a water supply vulnerability assessment and the Americans with Disabilities Act (ADA), the City must allocate funds to comply with the regulations for commercial driver license holders, licensing requirements for solid waste transfer station workers, and licensing requirements in the water and wastewater areas. The United States Environmental Protection Agency posted regulations governing storm water management requirements for smaller cities in November 1999. Based IV Principle: Challenge: Principle(s): Challenge: on population, the City has to comply with the regulations. These regulations are commonly referred to as the Phase II Storm Water Management regulations. Early in 2003 the City will secure a permit with a 5 -year compliance implementation requirement. During 2003, City staff will be converting all of the City's financial reporting, in order to comply with the Governmental Accounting Standards Board (GASB) Statement No. 34. For more than a decade and a half, GASB has been working on a project designed to change the framework of financial reporting for state and local governments. In June 1999, the GASB marked the completion of this project with the issuance of GASB Statement No. 34, Basic Financial Statements -and Management's Discussion and Analysis -for State and Local Governments. Without a doubt, GASB Statement No. 34 represents the most important single change in the history of accounting and financial reporting for state and local governments. The Statement was developed to make annual reports easier to understand and more useful to the people who use governmental financial information to make decisions (or who may do so in the future): legislators, their staff, and members of oversight bodies; investors, creditors, and others who provide resources to governments; and citizen groups and the public in general. Since the City of Fayetteville is a government with total revenues of $10 million or more but less than $100 million, implementation of the new pronouncement will be required for the fiscal years beginning after June 15, 2002 (i.e. Fiscal Year 2003). Well Maintained City Infrastructure and Facilities Implementation of the Wastewater System Improvements Project (WSIP) The WSIP is a project valued at $120 million that will provide the City with a second wastewater treatment plant, improvements to the existing wastewater treatment plant, improvements to the sewer collection system, and the elimination of several lift stations. Additional engineering contracts will have to be approved by City Council before the consulting engineers can proceed with design development. These contracts are expected to be submitted for City Council review and approval in the first quarter of 2003. Additionally, the financing documents must be approved by City Council and are expected to be ready in the first quarter of 2003. The project is anticipated to be ready for construction by mid -year 2004. Financially Sustainable City Government Providing Top Quality, Responsive Services and Well Maintained City Infrastructure and Facilities Continued Waste Stream Diversion, Revenue Enhancements and Cost Savings in Solid Waste The Solid Waste Division is implementing a cart based collection system for residential customers beginning in January 2003. The Solid Waste Division will be developing comprehensive plans to implement a commercial recycling program, a V Principle: Opportunity: Principle(s): Opportunity: food recycling program, a glass recycling program, and developing the business plans that will need to be authorized before these services can be offered to businesses and citizens. Each of these new program offerings require additional equipment and staff as well as a revenue stream that will support the service. The Solid Waste Division will also be proposing options concerning either implementing an exclusive franchise on commercial waste on September 1, 2003 in compliance with City Council authorization granted in 2002 or developing franchising agreements for commercial waste haulers. Financially Sustainable City Government Providing Top Quality, Responsive Services Leadership Retreat and Fayetteville Focus During the first quarter of 2003, a leadership retreat has been scheduled that will enable City Council to establish immediate (2 year) priorities as well as long-term (up to 8 year) priorities. These priorities will Lead to specific projects with implementation beginning within the next 12 to 36 months. The City contracted with a strategic leadership facilitator in 2002 to conduct the leadership retreat during the first quarter of 2003. Financially Sustainable City Government Providing Top Quality, Responsive Services, Well Maintained City Infrastructure and Facilities Improved Resource Utilization During 2002, the City invested approximately $750,000 in several systems that will result in improvements in citizen and customer service delivery. Additionally, significant Staff time has also been invested in these projects. With this investment and continued maintenance of these new tools, citizens and customers will be able to access City services as never before possible. These systems were authorized by City Council in early 2002 and all of them were operational in early December. During 2003, Staff will be focused on developing the reporting and data validation procedures that will enable full utilization of these new resources. VI Personnel Changes The 2003 Budget adds a Meter Reader for Meter Operations, . a Sewer Maintenance Crew Leader and two Sewer Maintenance Workers for Water & Sewer Maintenance. These positions are funded in Water & Sewer Fund. A Parking Maintenance Worker is added 169.43 to provide additional maintenance of parking facilities for the Downtown and Dickson Street areas. This position is needed due to the improvements along Dickson Street coupled with changing parking along Dickson Street from a metered parking arrangement to a timed parking arrangement and will be partially funded by Off Street Parking Fund. This budget also adds a Police Officer that is primarily funded by the Drug Enforcement Grant and a half time District Court Clerk. The District Court Clerk is funded in General Fund and will be assigned collection duties. 2003 Personnel Summary 653.03 Total Employees (Full Time Equivalent Basis) Police Finance & Internal Services 59.75 Fire 89.00 Water & Wastewater 69.00 Operations 165.85 General Government 53.75 Community Planning & Engineering Services 46.25 As decisions are made by City Council during 2003 concerning the Solid Waste Division's service changes, additional staff positions funded in Solid Waste Fund may be requested. Capital Improvements This budget contains funding for the 2003 projects included in the 2002-2006 Adopted Capital Improvements Program with the following exceptions: funding of $1,995,000 was added for the Mount Sequoyah Water & Sewer Replacement Project funded in Water & Sewer Fund; $59,450 was added for a replacement vehicle in the Parking & Telecommunications Division, for an expansion pickup truck for the Transportation Division, and for an Expansion Backhoe for the Water & Sewer Maintenance Division funded in Shop Fund; ($33,000) was reduced in the Bulk Containers and Commercial Cart Program funded in Solid Waste Fund; $1,559,500 increase in capital overall by eliminating the Ernest Lancaster Drive -Phase II, the Hanger Rehabilitation, and the Runway Sealcoating projects, increasing Professional Services, and adding three East Corporate hangers, the Taxiway A Extension - Phase I, and the East Side Fuel Station projects funded in Airport Fund; $568,000 of funding was added for the Fire Computer System Improvements, the Emergency Gas Generator, the Exhaust Removal System, the Building Improvements, the Microcomputer Replacements, the Municipal Management System - Conversion/Training, and the Local Area Networking projects funded in Sales Tax Capital Improvements Fund; and a ($51,000) reduction in the Lights of the Ozarks Project funded in Parks Development Fund. VII 2003 FINANCIAL ACTIVITY SUMMARY The 2003 Annual Budget and Work Program includes approximately $143.6 million in expenditures. All City funds are budgeted to comply with the City's policy of maintaining 10% of budgeted operating expenditures in unrestricted fund balance or cash and investments. Summary of Fund Expenditures Category Personnel Materials & Supplies Services & Charges Maintenance Internal Charges Debt Service Purchased Water W.W.T.P. Operations Total Before Transfers/Capital/Depreciation Transfers Capital Depreciation Adopted 2002 $ 28,040,955 4,540,630 11,128,895 1,205,241 3,469,000 1,828,200 4,928,000 4,374,152 59,515,073 4,914,403 64,156,438 7,817,718 Adopted 2003 $ 31,142,490 4,725,136 14,357,575 1,774,881 3,222,829 11,101,000 4,928,000 4,044,794 75,296,705 6,322,681 53,400,402 8,541,056 % Change 11.06% 4.06% 29.01% 47.26% -7.10% 507.21% 0.00% -7.53% 26.52% 28.66% -16.77% 9.25% $ 136,403,632 $ 143,560,844 5.25% The City's adopted budget increased approximately $7.2 million when compared to the Adopted 2002 Annual Budget. The majority of the increase in expenditures is in Debt Service with $8,874,140 in the Wastewater System Improvements Sales Tax Bond Fund is newly budgeted for 2003. Services & Charges increased by $3,228,680 due to the following: cost reimbursements decreased by $305,682 in General Fund due to the Billing & Collections Division moving to the Water & Sewer Fund; the transfer to the Advertising & Promotion Commission account increased by $211,101 because of projected Hotel, Motel, & Restaurant Tax revenue; reclassified $822,500 to the Services & Charges category in the Sales Tax Capital Improvements Fund that was previously shown in the Capital Category; the Water & Sewer In Lieu of Taxes account increased by $236,100 in 2003 over 2002 due to General Fund increasing the level of Franchise Fees charged and normal growth; and $279,000 in the Airport Fund was reclassiflied to Services & Charges that were previously shown in the capital category. Personnel costs increased by $3,101,535 mostly due to normal merit and step range increases that occur throughout the year. $987,000 of the increase was attributed to a Police and Fire pay range adjustment identified by the Hay Group in 2002. Transfers increased by $1,408,278 in the Sales Tax Capital Improvements Fund due to the sales tax revenue reallocation from 25% to 50%. Depreciation increased by $723,338 partly attributed to fleet purchases in 2002. VIII Maintenance increased by $569,640 partially due to Software Maintenance of $49,140 in General Fund with the Municipal Management System (Hansen) being activated in late 2002 and $332,000 in the Sales Tax Capital Improvements Fund being reclassiflied to Maintenance from previously charged in the capital category. Capital decreased $10,756,036 due to the Library Construction project being budgeted in 2002 for $20,417,000 and only $3,485,628 in 2003. This one-time project represents a $16,931,372 decrease in capital. Overview of City's Major Funds: General Fund includes all activities of the City not accounted for in other funds. These activities are funded primarily by the City's share of the county sales tax - $8.8 million; a portion of the City's sales and use tax - $4.5 million; franchise fees - $3.6 million; charges for services - $1.1 million; and intergovernmental - $1.4 million. The functions financed by the General Fund include general government, finance and internal services, animal services, parking and telecommunications services, fire and police, parks and recreation, cable, library, traffic, engineering, planning, and building safety. The chart below compares actual revenues and expenditures from 2000 through 2001, estimated revenues and expenditures for 2002, budgeted revenues and expenditures for 2003, and projected revenues and expenditures through 2006. The City's sales and use tax projections are compiled with the 50/50 split between capital and General Fund that begins July 1, 2003. General Fund 28,500,000 26,000,000 23,500,000 / 21,000.000 18.500,000 16,000,000 13,500,000 / 11,000.000 / 2000 2001 2002 2003 2004 2005 2006 • Revenues • Expenses The Street Fund is primarily financed by turnback revenues received from the State of Arkansas and turnback monies received from the County Road Millage Tax. These monies are utilized to maintain and repair City streets, rights-of-way, drainage, and City owned sidewalks. Currently, the Street Fund has use of reserves in 2003. The turnback from the State of Arkansas is apportioned on a per capita basis. The projection for 2003 is that cities throughout Arkansas will receive $46.00 per person. The Street Fund budget for County Road Millage Tax is based on a 1.16 mil levy with a maximum 3.0 mil levy for property located within the city limits. IX