Minutes 03/31/2009 - Laserfiche WebLink

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March 31. 2009 Our Obligations Where our financial DNA establishes who we are as a City, it does not provide an excuse to escape from our obligations. A recent law suit brought by the Commonwealth of Virginia on the City of Portsmouth to provide adequate facilities for all courts will further stress the City's ability to levy enough revenue to provide service to our residents. This action combined with ongoing efforts to wrestle with an unpredictable solid waste disposal costs caused by the erosion of Southeastern Public Service Authority (SPSA), response to a Environmental Protection Agency (EPA) regional consent order for Sanitary Sewer Overflow (SSO), and long term commitments to funding public education and competitive public safety pay are all key elements that must be addressed in this budget and shall be required in most cases by law regardless of our financial hardship. Where our commitment to handling our affairs has been reaffirmed by our ability to sustain the grade of our financial report card (Standard and Poor's: AA-; Moody's: A 1; and Fitch: AA-) tomorrow's challenges represent the perfect storm capable of wiping out our economic vitality as well as our core existence. Historical Context Even before the close of the first quarter in FY09, the Administration advised Council that FY09 would be yet another year of potential shortfalls. Council carefully deliberated on enacting certain measures to end FY09 with a balanced budget, many of which carried forward to the FY10/FY11 biennial budget. Our ability to present this balanced budget to Council is a direct result of Council's willingness to accept the following recommendations from the Administration: right-sizing the City's workforce through implementation of the Management Efficiency Study recommendations; restructuring of outstanding debt to achieve cash-flow relief; offering retirement incentives to further reduce the workforce; elimination of certain vacant positions; 11 % across-the-board reductions for all departments and agencies other than public safety and public schools; elimination of take-home vehicles for out-of-City employees and non-essential personnel; and, reduction of work-hours or complete elimination of certain of part-time positions. Revenues In preparing our revenue forecasts for the biennial budget, staff took a different approach to first confirm our methodology for revenue forecasting. In this, adjustments were made to our collection rate previously budgeted at 100% now down to an industry standard of 96%. Staff retooled the revenue forecast for FY09 in order to develop a solid, dependable foundation on which to build the FY10 and FY11 forecasts. A by- product of this process yielded a modified collection rate of 96% in lieu of the unrealistic projection of 100%. Additionally, in order to be more transparent with actual revenues, tax relief is no longer netted from revenue projections. As such, revenues are reflected as the gross amount expected to be collected in each of the upcoming fiscal years and tax relief is reflected as an expenditure, thereby clearly reflecting the amount of tax relief programmed each year. This budget's real estate tax rate has a recommended increase of eight cents from $1.21 to $1.29. This increase reflects the additional unforeseen costs for solid waste disposal, the settlement of the courts facilities lawsuit requiring new facilities for all three courts in lieu of the original plan for only the circuit court, and the public safety retention pay plan. Introduced in this budget is also a variety of small increases in certain excise taxes and fees, such as cigarette tax increase of ten cents per pack, increased development and permitting fees, as well as increased ambulance fees. This is expected to generate additional revenue in the amount of $1.4 million. Expenditures In sustaining Council's long-term commitment to public safety retention, this budget includes $2.3 million for the public safety compensation program. This program provides a market-competitive step increase salary scale for sworn police and fire personnel. Adjustments for compression in preparation for this program were granted in FY09. An additional 2.5% for anniversary increases relative to the new pay program are also programmed for FY11.