Minutes 03/31/2009 - Laserfiche WebLink

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March 31. 2009 Although local revenues are declining coupled with one-time economic stimulus funding the Portsmouth Public School System request for level funding for the biennial budget is recommended to be reduced by only 2.25%. Facing unprecedented cuts in funding from the Commonwealth for public education, we value the partnership with PPS through their initial efforts to trim more than $5 million from their initial budget proposal. This measure coupled with the infusion of federal stimulus funding restores the basic foundation of public education revenues. In light of Council's commitment to public education this budget sustains or enhances PPS's resources. This budget does not afford an opportunity to give general wage employees any pay increase. However, the proposed budget does not include any plans to furlough, lay-off, or require unpaid holidays based on the current financial forecast. Further, the City's method of overstating its potential vacancy savings has been more realistically proposed at 1 % versus the traditional Portsmouth model of projecting savings of 6% or greater in vacancy savings. The impact of this change is an increase of approximately $3.5 million in expenditures. City pension plans continue to struggle with large unfunded liabilities that are further exacerbated by the recent tumultuous stock market activity. In FY09 City Council commissioned a Retirement Blue Ribbon Committee (BRC) to study the benefit structure of the internal systems and make recommendations for potential enhancements of benefits while sustaining the fiscal integrity of the plans. While their deliberations are believed to be in the final stages, formal recommendations have not been issued yet by the BRC in time for consideration for the first year of the biennium. Capital Improvement Plan (CIP) In FY09 staff worked with Council to restructure the current CIP in order to comply with our 12% debt-service-to-revenue policy. With this measure staff under Council's direction sought and used creative financing tools, such as working with a venture capitalist developer for construction of the courts facilities, use of PPEA for construction of future facilities relative to schools, behavioral health services, and public safety facilities. Where we may have made a commitment for no new projects that require use of general obligation bonds, these tools may allow the City to meet its obligation in a different format. The use of master leasing is the tool that may be recommended to finance the much needed enhancements to public safety communications systems. Restructuring existing debt was accomplished in March 2009, giving cash flow relief in FY09, and the upcoming biennium. The administration recognizes this as a one-time opportunity to gain financial stability during the uncertain economic times. Finally with respect to CIP, the increased cost of providing court facilities for all three courts absorbs any additional debt capacity for the next several years. Thus, it is unlikely that any new projects will be added to the plan over the next several years. Other Expenditures Real Estate Tax Relief for the Elderly and Disabled property owners is budgeted at $3 million dollars, an increase of $600,000 over the current fiscal year. The golf fund is expected to run a $1.2 million deficit in FY10 and another $1.2 million deficit in FY11 and as a result will require general fund subsidies each of the next two years. General Fund Debt Service payments for FY10 are $20.7 million and $21.1 million for FY11. The annual required contributions for City pension plans and VRS/LEOS amount to $18.6 for FY10 and $20.5 for FY11. The City opted to reduce its contribution toward the OPEB ARC based on the current economic condition; this transcends FY09, FY10, and FY11. The administration recognizes the importance of funding this liability and plans to ramp- up recommended contributions in future years.