Minutes 04/29/1986 - Laserfiche WebLink

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April 29, 1986 ~!,~De~_se~¢,;{~t~e~no~i~'d}~2i~e.$~o 2Fe~u~e~!u~r~r~a{~};hewe~er;~nF~s~gn~f~cant long term reduction would only be possible with increased, sustained growth. Without receiving additional support from some outside source, i.e., new investors, new residents, increased retail sales, introduction of new industry and business, we have no other alternative except reduction in services or to increase local taxes. Therefore, I am recommending additional personnel and increased marketing for tourism, conferences and retail business, as well as the introduction of Pertsmouth into the competitive market of first class office/industrial parks. Never before has Portsmouth been able to offer the quality of commerce park that will be avail- able in PortCentre or in the corporate headquarters park of River Pointe. The amenities and location of these two projects are second to none in Virginia. In my first budget message to City Council in 1983, I stated, "Much can be done to bring in additional sources of private revenue ~o relieve the real estate tax burden: however, public investments must be made in an effort to accomplish this fact. Unfortunately, such accomplish- ments do not come easy, quick, or cheaF, Every citizen must participate and recognize that in order for us to expand and diversify our tax base, bold moves need to be undertaken and hard dec~smons that may change the status quo will have to be made. Until such time as we can attra¢ additional, private investmen~ no our City, the financial burden ~o support the budget is going to have to be placed more upon our citizens." The City Council has made substantial public improvements. The stage has been sen. The marketing, the personnel, the reorganizations are in place and operating. Now is the time to bring in przvate investment to help reduce our tax rate. The Partnership must continue -- Citizens, Business, Government, working as one to allow Portsmouth no share the wealth of Hampco Roads. Indeed, during the last four years t~re were changes in the status quo, and at times they were difficult for c~t~zens to accept; however, I believe with constructive public input, growth will not only be connrolled, but will have quality. If we could have increases of new assessments (growth] of approximately three to four percent a year, I would anticipate that the~ could be tax rate reductions. Last year, even though our growth was better than it has ever beez it was only 1% of the assessed value. FUND BALANCE In order to balance the budge~, I propose usmng $3.1 million of available fund balance. Our total reserve estimated a~ the end of June 30, 1986, will be approximately $12.5 million. When using reserves which obviously do not recur to pay for antmcipated recurring expenditures, certain risks are taken. These risks entail the possibility that there will be no reserve ~n the ensuing year. Add%tional revenues will then be necessary, not only to offset the reserve, but for any additional expenses as well. In order to minimize this risk, ~ I do not recommend we use more of the fund balance for recurring operating expenses than proposed. Using non-recurring funding sources for non-recurring expenses, however, has little risks. Therefore, I have included $1.5 million as a form of local revenue sharing to fund non-recurrin~ capital expenditures. As Council is aware, revenue sharing at the Federal level will be phased out after the first quarter of 1986-87 fiscal year. Consequently, we will lose $2.8 million that was previously used for capital improvements. Using the funds. I have recommended for capital projects will help offset the loss of Federal Revenue Sharing and also expedite curb, gutter, and drainage projects in our neighborhoods. The loss of Federal Revenue Sharing is detrimental to our construction program; however, if we had not eliminated our dependency of t~is source of funding for the operating budget as I recommended last year, the loss of Revenue Sharing could have been devastating. The use of Federal Revenue Sharing to pay for budgetary expenses is a good example of ~he risks taken when non-recurring funding sources are used to pay for recurring expenses. If we had to offset the loss of Revenue Sha[ing through a recurring revenue today, such as general property taxes, we would have had to raise the tax ra by 15 cents! In short, of the total of the $12.5 million unappropriated fund balance, I am recommending we utilize $4.6 million with ~he remainder to be retained as a reserve for emergencies. If City Council adopted this recommendation, slightly less than S~ of the budget would be reserved for emergencies. In the best interest of sound financial management, the Municipal Finance Commission has recommended a minimum reserve of 5%, and I concur. I re61 that the current tax rate is the lowest possible unless other sources ~f recurring revenue are identified. I cannot recommend any further reduction in the reserve because of the uncertainty of two major considerations at the Congressional level. One is the ever present threat of a loss of Federal Impact Aid (Public Law 87~), and, the second, the unforeseen ramifications of the Gramm- Rudman-Hollings Amendment. The effects of negative Congressicnal action could be disastrous to State and Local governmem~finances and could completely eliminate our ennire reserve. Also, in an effort ~o continue to keep our strong bond rating, we are attempting to limit our issuance of General Obilgation Bonds to $8 million a year. Therefore, the $1.5 million transferred to the C~al Improvement Program will allow us to attempt to keep General Obligation Bonds to that limit. APPROPRIATIONS OF MAJOR NOTE Fair Labor Standards Act As required by the recent Supreme Court decision and Congressional actions, we are in complicance with the requirements of the Fair Labor Standards Act. Originally, the cost associated with the implementation of nhis Federal mandate could have exceeded Si,000,000. I have attempted to maximize the provisions of the subsequent Congressional amendment allowing compensatory time in lieu of overtime payments. While instructions to all department heads are explicit with respect to the use of compensanory time, ~wo public safety areas have require