1. Presented By: Budget & Research Department FY 2012-13 STATUS REPORT & THREE-YEAR FINANCIAL FORECAST SUMMARY (FY 2013-2016)

2. THREE-YEAR FINANCIAL FORECAST  Presented to provide the City with the opportunity to take A Look Ahead into the future, identifying the challenges and opportunities facing the City over the next three years.  Every annual budget adopted by City Council is statutorily required to be balanced.  Fund deficits are assumed to be rectified in the year projected.

3. THREE-YEAR FINANCIAL FORECAST General Fund

4. THREE-YEAR FORECAST GENERAL FUND SUMMARY 2013-2016

5. BUDGET SUMMARY OF DEFICIT PROJECTED 2014-15 & 2015-16 CIP Projects coming on-line in FY 12-13. Scheduled to add 15 Fire Rescue Specialist for the development and implementation of the new Fire Rescue Squad program, totaling $2.3 million and effective Aug. 1. CIP Projects coming on-line during the forecast period include the addition of 9 Fire Rescue Specialists and 6 Lieutenants to enhance the Rescue Squad program. Total CIP Projects coming on-line total $5.2 million for the entire forecast. Revised Capital Reserve funding policy increases transfer from $10.5 million to $17 million in FY 2016-17. Sales tax cap limits our collection amount to a three-year average to be projected in the forecast.

6. ASSESSED PROPERTY VALUATIONS  Existing Property Value Growth Projections: 2014 = Increase 1.0% 2015 = Increase 1.0% 2016 = Increase 2.0%  New Property Value Growth Projections: 2014 = $250.0 million 2015 = $300.0 million 2016 = $300.0 million Tax Rate 48.86 cents per $100 of Assessed Property Value * Projected

7. ANNUAL SALES TAX COLLECTIONS *Projected In Millions * Projected

8. BUILDING AND DEVELOPMENT REVENUE In Millions *Projected

9. BUDGET EXPENDITURE ASSUMPTIONS FY 2013-16  No salary increases are included in any of the three forecast periods for Civil Service or Non-Civil Service employees.  Attrition has been included at a rate of 3.0% for the General Fund and 1.0% for all other funds.  No inflation has been added to any of the O & M expenditures during the forecast even though we are currently at a 2% inflation rate. Municipal Garage Charges have been projected to increase 5% to account for higher fuel costs.  Health Insurance is projected to remain constant due to a healthy fund balance and TMRS is funded at the full phase-in rate of 18.75%.  Funding for the Economic Development Incentive Program is projected at the two (2) cents on the tax rate at $5.2M for 2013-14, $5.3M for 2014-15 and $5.5M for 2015-16.  Funding totaling $1M is included for Library Books.

10. BUDGET EXPENDITURE ASSUMPTIONS FY 2013-16  The transfer to the Capital Reserve Fund is projected to increase from $12.5M in FY 2012-13 to $17.0M in FY 2015-16 based on the recently updated Capital Reserve Policy goal.  Community Investment Projects (CIP) proposed to come on-line are projected to be absorbed within the existing tax rate. Includes the hiring of 9 Fire Rescue Specialists and 6 Lieutenants to develop and implement a Fire Rescue Squad.  Total CIP O & M coming on-line during the forecast totals $5.2 million and equates to a 1.89 cent tax rate impact.  The forecast includes issuing $30M in new debt in FY 2013-14, and $40M in both FY 2014-15 and FY 2015-16. Also, a Bond Referendum will be held in May 2013. Additional bond authority is needed for street improvements in 2014.  Not included in the fund projections are program enhancements relating to increases for mandates, growth, increased services, information services requests, and other causes for the three-year period. All discretionary items will be examined on their individual merit during the budget development process in each year.

11. UNFUNDED MANDATE FY 2013-16  Regulations within the Patient Protection and Affordable Care Act (ACA) require employers to offer health insurance coverage to employees working on average 30 hours per week or more during the “measurement period”.  Guidance on managing this regulation has only just recently been released.  The requirement to offer part-time employee health insurance coverage begins January 1, 2014.  Reducing part-time hours from their regular hours worked down to 25 to 30 hours worked will reduce service levels offered in several areas including Parks and Recreation and Libraries.  We will be assessing the need of some employees to work their current hours and offer them part-time health insurance over the next several weeks. Health insurance cost per employee is $12,400 an employee  This will be considered an unfunded mandate and is NOT INCLUDED in the fund projections located in the forecast.

12. THREE-YEAR FINANCIAL FORECAST Other Funds

13. WATER & SEWER FUND  NTMWD has notified us that both water and sewer will increase significantly during the forecast period.  NTMWD water rate to increase 8.7% to 10.6% in each year of the forecast. 2013-14 at $1.88 cents, 2014-15 at $2.06 cents, and 2015-16 at $2.24 cents.  NTMWD wastewater rate to increase 4.3% to 6.4% in each year of the forecast. 2013-14 at $1.55 cents, 2014-15 at $1.61 cents, and 2015-16 at $1.66 cents.  The forecast proposes passing through all water and sewer rate increases proposed by NTMWD effective November 1 st of each year. Currently in the process of updating the rate model.  The forecast assumes the water usage to return to a more normal consumption at 22 to 23 billion gallons for each year of the forecast.

14. THREE-YEAR FORECAST WATER & SEWER FUND SUMMARY 2013-2016

15. THREE-YEAR FORECAST MUNICIPAL DRAINAGE FUND 2013-2016 * Includes New Drainage Rate Effective April 1, 2013

16. THREE-YEAR FORECAST CONVENTION & TOURISM FUND 2013-2016

17. OTHER FUNDS THREE-YEAR FORECAST SUMMARY Sustainability & Environmental Services Fund Recreation Revolving Fund Municipal Golf Course Fund

18. CONCLUSION – NEXT STEPS Budget Calendar

19. KEY DATES ON THE BUDGET CALENDAR FISCAL YEAR 2013-14 March 18 Budget & Research Department meets with City Manager and Deputy City Managers to present mid-year revenue and expenditure forecast, including the Three-Year Financial Forecast (FY 2013-16). Status of CIP discussed. March 25Budget presents 2012-13 Status Report and Three-Year Forecast to City Council for review and input. Made available on the City’s web site. March 27At Management Team meeting, Budget gives overview and distributes instructions, forms and department targets. Apr 15- May 3Citizen input meetings in community with specific groups, including the Chamber of Commerce and Homeowners Council. By request. May 10Departmental Budgets due to Budget & Research. May 112013 Bond Referendum Election.

20. June 11, 12 City Manager reviews operating budget and CIP with department & 13th heads. July 24 City Manager submits Recommended Budget and CIP Program to City Council. Copies available on the City’s web site and libraries. August 7 Grant Funding – City Council Budget Worksession. August 12Presentation of the Proposed CIP to the City Council Public Hearing on Operating Budget and Community Investment Program Approval of Appraisal Roll Vote on proposed tax rate increase, if necessary August 17Council Work Session on the budget. August 261 st Public Hearing on tax rate. (If required) September 42 nd Public Hearing on tax rate. (If required) Sept. 9Council adopts operating budget and CIP, and sets tax rate. October 1New fiscal year begins. KEY DATES ON THE BUDGET CALENDAR FISCAL YEAR 2013-14

21. QUESTIONS Director of Budget & Research - Karen Rhodes-Whitley 972-941-7472 karenr@plano.gov Budget Manager – Casey Srader 972-941-5152 caseys@plano.gov