FY 2016 Budget Workshop June 11, 2015 Brian Maxwell, City Manager Dan Buckley, Deputy City Manager Mike Loftin, Finance Director 1

Key Changes in FY 2016  Recognize that a Budget is equal parts Planning, Management, and Control  Planning – Establish priorities after considering long-term impact of decisions and address challenges by putting them in the context of time  Management – Proposed Budget will include goals and performance measures to define current service levels and correspond to Proposed Budget funding  Control – Add policy aspect of control to spending control in FY 2016  Budget Office has given each department baseline amounts for FY 2015 Estimated spending to provide a clearer picture of beginning fund balances available for FY 2016  Budget Office has also provided each department FY 2016 baseline budget based on historical patterns – Vacancy rates and anticipate vacancy lapses  Budgeting for and use of all Special Funds – New special fund budgets for Police, Fire, Legal, Municipal Courts  Separate five year CIP document – Description and summary form for each project  Use regular City Council workshops for Budget discussions – Schedule additional sessions as City Council so desires 2

FY 2016 Priorities  City Manager requests each City Council Member to provide top three priorities for FY 2016 by Wednesday June 17, 2015  Results to be presented at June 26 City Council Workshop  Results will guide development of FY 2016 Budget  City Manager asked City Department heads to provide top three priorities by June 10, 2015  FY 2016 process will seek convergence of goals with funding proposals that support specific goals 3

FY 2016 City Council Budget Process  June 11, 2015 Workshop – Budget Overview and Priorities Discussion  June 25, 2015 Workshop – Public Works and Infrastructure  June 25, 2015 – City Council considers changes to existing property tax exemptions  July 9, 2015 Workshop – Public Safety  July 23, 2015 Workshop – Other Programs  August 11 - City Manager files Proposed FY 2016 Budget with City Secretary  August 13 Workshop – City Manager presents Proposed Budget to City Council  August 27 – Public Hearings on Budget and tax rate  September 10 – Public Hearing number two on tax rate and Adopt the FY 2016 Budget and Capital Improvement Plan  September 23 – Special City Council meeting if needed to adopt FY 2016 Budget  September 24 – Adopt tax rate 4

Long Range Financial Forecast: FY 2016 “Pre-Budget”  A forecast, not a prediction: FY  Attempt to project existing commitments and likely revenues given current economic climate  First year, used to frame choices for FY 2016 Budget process – Impact in out years (FY 2017 and beyond) of trends underway is important factor to policy makers  Scope - General Fund and General Debt Service Fund  Starts with baseline for FY 2016 using FY 2015 Budget  Adjusts for one-time costs  Result: Revenue-expenditure gap for each of five years in the forecast 5

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Economic Assumptions 7

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General Fund Revenue Growth 9

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General Fund Revenue: Property Taxes 13

General Fund Revenue: Property Taxes 14

Property Tax Exemptions: Must adopt any desired changes at June 25 Council meeting 15

General Fund Forecast: Sales Tax 16

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General Fund FY 2016 Strategy  Address $1,034,000 gap of expenditures over revenue  Ensure realistic revenue and expenditure budget assumptions  Tighten up department budgets – Use vacancy rates for personnel budgets and use historical spending patterns to set baseline amounts for certain non-personnel accounts  FY 2015 year end spending – Consider new items requested to be purchased with underruns (vacancy lapse) as part of FY 2016 Budget Process  Priorities: Led by infrastructure, public safety and compensation  Use regular City Council Workshops in June and July to present major proposals including service impact and costs – Selected programs only 19

CIP and General Debt Service Fund Forecast  Capital Improvement Plan (CIP) – Includes individual programs: Streets, drainage, water, sewer, transit, parks, facilities  Bond election assumed for 2016  Expect to issue new tax supported bonds in FY 2017  Debt Service model starts with current debt service, show growth in property tax roll, uses current debt service tax rate, gradual increase in interest rates, conservative principal retirement approach that is between level principal and level payments  Applies Infrastructure and Debt Service fund monies transferred from General Fund in increasing amounts to pay debt service on new bonds beginning in FY 2017 – Half of set aside (4 of 8 percent) used annually from FY 2020 thereafter  Result: City can support $8 million in new bonds each year from FY 2017 to FY 2025 ($72 million over nine years), maintain healthy ending balances in Debt Service Fund and have $16.7 million for pay-as-you-go (PAYGO) projects  Because of continuing retirement of principal payments over the next ten fiscal years, the outstanding debt total would stand at $59.1 million in FY

General Debt Service Fund Forecast 21

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FY 2016 Budget Workshop: Wrap Up  City Manager requests each City Council Member to provide top three priorities for FY 2016 by Wednesday June 17, 2015  June 11, 2015 Workshop – Budget Overview and Priorities Discussion  June 25, 2015 Workshop – Public Works and Infrastructure  July 9, 2015 Workshop – Public Safety  July 23, 2015 Workshop – Other Programs  August 11 - City Manager files Proposed FY 2016 Budget with City Secretary  August 13 Workshop – City Manager presents Proposed Budget to City Council  Other workshops scheduled as needed or desired by City Council 23

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