Minutes 04/05/2012 - Laserfiche WebLink

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April 5, 2012 As a municipal entity, we have a fiscal responsibility to satisfy all incurred commitments and obligations. Our attentiveness to this principle is paramount. One of the more significant financial obligations is related to the City's construction of the new judicial complex brought about by a lawsuit filed by the Commonwealth of Virginia. At a projected cost of $78 million, this obligation encumbers a significant portion of the City's debt capacity limit. Council continues its commitment to the city's public education system as such; the recommended funding is consistent with the planned FY13 amount that was presented in the Biennial Budget for FY12/13. Additionally, having to respond to an Environmental Protection Agency (EPA) regional Consent Order for Sanitary Sewer Overflow (SSO) is a sizable challenge. As the City advances its efforts to maintain its water and sewer infrastructure, approximately $75.8 million in General Obligation Public Utility and Refunding Bonds were issued during the current fiscal year. Moody's Investors Service, Standard and Poor's Ratings Services, and Fitch, Inc. assigned these bonds the ratings of "Aa2," "AA," and "AA," respectively in recognition of the City's prudent fiscal management practices and policies. As additional affirmation of these practices the City's general obligation credit ratings are: (Moody's "Aa2," stable outlook; Standard and Poor's "AA," stable outlook and Fitch "AA, stable outlook). These ratings will only be sustained with the continuation of prudent financial decisions. The rating agencies noted that, adherence to the city's fiscal policy is vital, not only to sustain current ratings, but also to improved ratings in the future. Revenues The City's conservative method of revenue forecasting is continued in this budget as the recognition of a collection rate at the 96% level is utilized, consistent with an industry standard. A continuing practice of exhibiting gross revenues is sustained as the tax relief is exhibited independently and funded at a maximum of $2.5 million. Overall, the FY13 General Fund Revenue projections are $6.3 million less than the FY12 adopted budget and one of the primary reasons is the decreasing real estate assessed values. With no equalization of the rate, the FY 13 budget real estate tax rate has no recommended increase and will remain at $1.27 per $100 assessed value. The projected revenue it generates will contribute to sustaining the City's core services. Another contributing factor to the decline in revenues is the reduction of the state's composite index for education as well as the continued reduction of aid from the Commonwealth. These two elements respectively represent revenue losses of $2.5 million and $1.2 million. The budget exhibits various increases in fees for certain categories related to the operation of the public utilities and certain amenities. Conversely, a refuse fee reduction from $35.36 to $33.36 per month is proposed. This reduction is contingent upon the SPSA Board approving the new cost per ton disposal rate. This budget excludes any use of the unrestricted, unassigned fund balance for balancing purposes. The retention of the excess fund balance, at its current level or greater, is vital to address those needs or occurrences unique in nature and unbudgeted, such as inclement weather situations or other natural disasters which require funding in order to return the City to its pre-disaster state. Expenditures As the budget was formulated, all expenditures were scrutinized and reduced as warranted. The City departments as well as ancillary departments related to activities in the City reviewed their respective budgets for reductions in spending. Departments provided proposals that would decrease their operating budgets by 10% and 15% respectively; as a lower level of revenues are anticipated and as a means of closing the budget gap. With input from the departments, expenses were reduced by $1.2 million to balance the budget.