1. Maumelle’s Financial Future
RJ Mazzoni
“Sound Financial Planning for a Prosperous Maumelle”

2. General Fund Revenue
Sanitation and Street Fund are independent of the General Fund
Not included in this analysis
Planned Revenue is income estimate to plan the next year’s budget
All taxes, grants, franchise fees, building permits, etc
Slightly conservative to provide for unplanned city expenses throughout the year
Arkansas law mandates every city has a balanced budget
If our expenditures exceed our planned revenue, we must draw from the City Reserve Fund
The City Reserve Fund is used to fund major projects or meet budget deficits
Audited Revenue is the actual total funding Maumelle received

3. General Fund Revenue Sources

4. Revenue Sources

5. Actual operational expenses must be below actual revenue

6. Actual Annual Revenue Averages $215,000 above initial Mayor’s estimate

7. Expenditures The General Fund supports daily City operations
All salaries, benefits, utilities, supplies, equipment purchases, and capital improvements
Does not include street repair or sanitation costs
Cities must have balanced budget
Spending in excess of annual income must come from the City’s Reserve Fund
City Reserve Fund
Maumelle’s “Savings Account”
Used if revenue is less than forecast or city commits to major capital improvement project
City Ordnance requires maintaining at least 20% of our annual budget (2018 = $2.68M)
Maumelle’s fund ended 2017 with $5.25M

8. Where our Money is Spent
General Fund:
Includes all salaries, benefits, utilities, supplies, small equipment purchases, etc
Capital improvements are also funded
Does not include street repair, or sanitation costs

9. How our Money is Spent

10. (Actual—Top 3 Departments)
Annual Spending
(Actual—Top 3 Departments)
As Maumelle has grown, our need for
premier first responders has also increased

11. (Actual—Daily City Operations ONLY)
Annual Spending
(Actual—Daily City Operations ONLY)
Avg Revenue Growth: 2.2%
Avg Expenditure Growth (2012 – 2015): 2.3%
Avg Expenditure Growth (2016 – 2018): 4.0%
$621,000
Capital Project Funding
Estimated—Added only 2018 salary
increases to 2017 year-end expenses
$867,000
All salaries, benefits, utilities, supplies, small equipment purchase, etc
Does not include major projects, street repair, or sanitation costs

12. Good Remaining money after operational expenses are fulfilled
Used for major equipment purchases and unplanned expenses throughout the year
Good

13. Salary & Benefits vs Operations (Excludes Capital Projects)
Spending increases are linked to our growth in
personnel--primarily our First Responders

14. If current spending increase trends continue (4%),
our expenditures will exceed our revenue in 2022

15. The Way Ahead Sound Annual Budgeting
Maumelle’s 2.2% annual revenue increase insufficient to keep up with our growth
Limit future annual budget increases to 3% (maximum of 3.5%)
Prioritize competitive salaries (we need to retain our quality people)
Pre-2016 annual budget increases was 2.3%
Maximum annual spending increase to ensure operating expenses do not exceed annual revenue
Identify Future Large Expenditures & Develop Funding Plan
Create Capital Project Fund
Develop 5 Year Plan to ensure our economic health
Economic Development of Annexed area and North Maumelle
$76M of Maumelle resident’s money spent outside of our city annually
Increased Tax Base from Annexed area is critical to our economic prosperity
Reduce Existing Debt and NO NEW BONDS

16. If current spending increase trends continue (4%),
our expenditures will exceed our revenue in 2022
Current Spending
Trend
3.5% Increase
My Plan
(3% Increase)

17. The Way Ahead But we have a HUGE City Reserve fund! Or Do We?????
Current Reserve: (EOY 2017)
$5.25M
Required Reserve (20% Budget)
$2.68M
Available Reserve
$2.57M
Fire Station
$2.20M
Fire Truck
$1.20M
Bottomline:
($830,000)
3% expenditure growth will fund these requirements with $1.8M extra over 5 years
We need to create a Capital Fund to provide overall awareness
of our Economic Status and Capital Investment Capability

18. Capital Project Fund
Current City Reserve Fund is confusing and consists of many “parts”
Unallocated Expenses--Funds spent, but not collected….(think uncashed checks)
Excess capital from previous years
Required Reserve (20% of Current Budget mandated by City ordnance)
Currently, $6M is in our Reserve Fund, but < $2.6M is usable
Create Capital Project Fund
Use the $2.6M excess in the City Reserve to create a Capital Project Fund
Would also fund Annual budget revenue shortfalls giving visibility on spending impacts
Prioritize all major projects for future funding
Capital Fund Priorities
Immediate Health and Safety
Economic Development
Quality of Life Improvements
Parks, facilities, etc

19. Economic Development
Need to increase tax base to keep pace with population growth
Maumelle has grown significantly over the years with little growth in city businesses
Larger tax base will increase city revenue without raising sales tax!
North Maumelle
Will be ready for immediate growth once sewer pipe installation is complete
Installation can be funded through Capital Project Fund
Will not require any additional city infrastructure (Police/Fire Stations)
Develop Annexed Area
Longer term growth, but greater potential
Will need to attract smaller businesses first—their success will lure big box stores
Will eventually require city investment (e.g. Fire Station, Fire Truck)
Fire Station and Fire Truck can be funded through Capital Project Fund
Separate a percentage of tax revenue from initial area growth to fund future projects
We either save money for them now, or need more bonds/taxes later

20. Third Interchange Economic Development
Effective commercial development is critical for our economic prosperity
Big Box Stores will be slow to commit
Online shopping’s success has impacted traditional retailers
Reluctant to invest limited capital for store construction
Supreme Court decision allowing states to collect sales tax from online retailers will help us
We must make this a “Proof of Concept” to ensure future participation
Make the area a “destination” or “go-to” location
Initially concentrate on small business organizations
Nicer restaurants, specialized retail shops
Recruit businesses to geared towards younger generation
Once this area generates a profit, larger businesses will be lured in
Plan for 3-5 years before we see major commercial development

21. Debt Reduction Maumelle residents pay $3.2M for debt payments annually
$490,000 payment for 2012 Bonds until 2037
$1,550,000 payment for 2015 Bonds until 2030
$1,200,000 payment for 2018 Bonds until 2038 (Estimated)
Commit to pay off early
With historical increase in sales tax only, we can pay city debt off in 15 years
With moderate economic development from the third interchange we can pay debt in 12.5 years
Once debt is paid off, our city sales tax will be lower than our neighboring cities
Will fuel additional economic growth in the annexed area
To succeed, we need to commit to sound budgets & NO NEW BOND DEBT

22. Conclusion Failing to plan is no different than planning to fail!
Maumelle is in a healthy position financially right now, but we need to improve
Population Growth with little economic expansion has whittled away our resources
Sound financial planning now will ensure a successful Maumelle in the future
Failing to plan is no different than planning to fail!