Printer Friendly Version (PDF)
TO: Mayor and City Council
DATE:
March 18, 2005
SUBJECT: City Manager's Budget Message - Fiscal Year 2006
INTRODUCTION
As the Fiscal 2006 budget for the City of Williamsburg is presented to City Council, both public policy and private initiatives are rapidly changing the town.
Public policy comes in the form of an impending updated Comprehensive Plan and a new set of City Council’s Biennial Goals and Initiatives. Both being put into action through this Budget and Capital Improvement Program.
Private initiatives come in the form of the prospective 359 acre Quarterpath at Williamsburg development, the 55 acre High Street development, reconstruction of the Williamsburg Lodge as the next step in Colonial Williamsburg’s massive reinvestment program, the start of William and Mary’s aggressive building program with its Adair Parking Garage and Barksdale dorm, and continued redevelopment downtown and elsewhere around the city.
It is our duty as stewards of this special place to do all in our power to see that these changes protect and enhance the character of Williamsburg , honoring its heritage while building its future.
This is also a time of change in how we present Williamsburg as a destination. Regional collaboration on the Jamestown 2007 Commemoration, the Williamsburg Area Destination Marketing Committee, and the Tourism Industry Strategic Vision reinforce each other as Virginia ’s Historic Triangle learns how to better cooperate internally and compete externally.
For FY 2006, the Proposed General Fund Operating Budget can be summarized by:
- Projected Revenues of $29,055,046 , up by 4.83% .
- Planned Spending of $ $29,206,780 , up by 5.38 %.
- Use of Reserves to Balance of $151,734.
- Calendar Year 2004 CPI up by 3.3 % .
- No Change in Tax Rates.
- Revenue Recovery for Emergency Medical Service Transport.
- Personnel increase from 185.5 to 191.0, led by 3 new firefighter/EMTs.
- Allowance for merit pay increases of 4.0%.
In the Utility Budget, recommended is a 3.85 % Water and Sewer rate increase, from $2.60 to $2.70 per one thousand gallons, beginning July 2005, per the Five Year Water and Sewer Rate Analysis.
In the General Fund Capital Improvement Program, a total of $12,599,550 is projected in new capital spending, excluding debt service. Several important capital projects are now under construction and continuing into the coming year, including VDOT’s Richmond Road reconstruction, Treyburn Drive construction, Braxton Court rehab, and the third high school.
With the above as an overview, here are a number of issues that are particularly relevant in understanding and reviewing the proposed budget, beginning with General Fund revenue projections.
REVENUE PROJECTIONS
Next year (FY 2006) we forecast General Fund revenues of $29,055,046, a 4.83% increase over the current year (FY 2005) budget amount. Behind the Budget Guide tab is a detailed explanation of revenues, revealing the legal basis and ten year trends of all revenue sources. The following is a summary of significant revenue changes in next year’s budget:
- 1. Property Taxes. Property tax projections are based on a total anticipated value of real estate of $1,265,000,000. Assuming no change in the tax rate of $.54 per hundred dollars of assessed value, we estimate real property tax collections of $6,830,000 next year, a 7.9% increase from current year budget estimates. Property taxes continue to be among the faster growing revenues due to reassessment and new construction.
Other property taxes include personal property and business property. These categories are showing growth, but not as much as real estate taxes. All property taxes (real and tangible) taken together are expected to generate $9,471,800, a 6.9% increase. Property taxes only account for 33% of general fund revenue compared to an average of about twice that in most jurisdictions in Virginia.
- 2. Other Local Taxes . Other local sources of taxation include various consumer utility taxes and franchise fees, business licenses and prepared food and lodging or "room and meal" taxes. The estimate for room and meal tax collections is projected to total $3,900,000 for room tax, a 3.5% decrease; and $5,500,000 for meal tax, a 1.3% increase, over last year’s estimates. These estimates assume no growth in the tourism economy, adjusting the estimate to reflect actual performance this past year. Further, the room tax estimate does not include the new $2.00 destination marketing surcharge for additional tourism promotion which is a separate line item in the budget of $1.8 million. These are good reasons to hope we will turn the corner this year and see a return to growing profits, but it would not be wise to budget on that basis yet.
Two years ago City Council adopted a 25¢ per pack tax on cigarettes. We expect this tax to generate $250,000 next year. Taken together, all local sources of taxation are expected to generate $23,893,800, a 3.1% increase over the current year budget.
- 3. User Fees. User fees include various license and permit fees, and various charges for service. Licenses and Permits are conservatively projected to decrease by 3.5%, including commercial and residential building permits. I am planning a review of building permit fees in late spring, especially plan review fees, to ensure our fees are adequate as major new construction activity continues in the coming years. Charges for service and miscellaneous (which includes Park and Recreation fees, cemetery fees, and royalties) are projected to increase by 51.9% due to the inclusion of $250,000 in revenue recovery for Emergency Medical Service transport. Council will receive more information on this proposal under separate cover.
- 4. Fines and Forfeitures. This category covers court fines – mostly for traffic violations, parking fines, and code violation fines. It is expected to decrease by 5.7% to $241,300.
- 5. Revenue From Use of Money and Property . The interest earnings estimate, in the General Fund of $570,000, and in the Utility Fund of $100,000, based on assumed earnings of 2.5% on daily accounts, and 3.5% on longer-term accounts. Additionally, the property rental estimate is $360,700, a 5.6% increase, covering the Community Building , Transportation Center , City Square , and the Prince George Parking Garage.
- 6. Revenue From the Commonwealth. Revenue from the state government in the amount of $2,483,905, which includes support for constitutional officers and both categorical and non-categorical aid, are estimated to increase by 9.2% based on the improving state financial picture. The estimate of Sales Tax for Education of $706,881 shows a 24.9% increase over the estimate last year when we were in the midst of the 2004 General Assembly budget battle.
EXPENDITURE ISSUES
Next year we have proposed General Fund operating expenditures of $ 29,206,780, an increase of 5.38% over the current year adopted budget. Broken down in four large categories:
|
FY 2005 Adopted Budget |
FY 2006 Proposed Budget |
Percent Increase/ (Decrease) |
City Departments |
$14,353,187 |
$15,129,533 |
5.4% |
Constitutional Officers and Judicial |
$ 1,479,356 |
$ 1,712,563 |
15.8% |
Education and Library |
$6,958,799 |
$7,390,779 |
6.21% |
Outside Agencies and Health |
$4,923,844 |
$4,973,905 |
1.02% |
The Proposed Budget recommends a net increase of 3.5 personnel positions in the General Fund, and 2 positions in the Utility Fund. Total full time equivalent city positions in both funds will stand at 191.0. Changes in expenditures worthy of note are:
1. Salary Ranges and Pay. The city’s Merit Pay Plan gives management the flexibility to target increases where most needed. Our goal should be to remain reasonably competitive on compensation within the limits of revenue growth. Therefore, I am recommending the following:
- Increase in Pay Ranges of 3.0%, in order to account for the rise in wages and the rise in the Consumer Price Index in calendar year 2004 of 3.3%. (The range increase does not in itself change anyone’s salary and therefore has no direct impact on the budget.)
- Average Merit Increase allowance of 4.0%, costing $268,891 in salary increases, to be applied per the city’s Merit Pay Plan as detailed in the Personnel Manual.
- The merit increase will hold our employees on average to 96.1% of the middle of their salary ranges.
- An increase in the supplement for firefighters who are qualified paramedics from $3500 to $4500 annually.
2. Personnel Positions . The chart below summarizes the net change in positions recommended. The total number of positions in the city increases from 185.5 to 191 in the proposed budget.
POSITION |
GRADE |
ADD/DELETE |
|
|
|
General Fund |
|
|
Economic Development Manager |
10 |
+1 |
Information Systems Technician |
6 |
+1 |
Information Resources Manager |
10 |
-1 |
Firefighter/EMS |
6 |
+3 |
Recreation Maintenance Supervisor |
6 |
-1 |
Park Superintendent |
5 |
-1 |
Recreation Facilities Manager |
7 |
+1 |
Recreation Maintenance Worker |
3 |
+.5 |
General Fund Net Change |
|
3.5 |
|
|
|
Utility Fund |
|
|
Water Plant Operator II |
4 |
+1 |
Municipal Service Worker |
3 |
+1 |
Utility Fund Net Change |
|
2.0 |
3. Health Insurance . The city's health plan is largely self-insured. Anthem is paid a set amount to administer the plan, but the city keeps savings when actual costs fall below the "premium,” and pays more when costs exceed the premium. That liability, however, is capped at 125% of premiums through excess insurance. Savings to date have created a reserve, $450,686 as of the end of FY 2004, to fund losses should losses exceed the amount budgeted in any given year. Therefore, we budget for the expected loss only. Based on experience so far this year, we have included a 8.5% increase in funds budgeted for health insurance over the current year budget in the total amount of $931,361.
4. Virginia Retirement System . VRS sets the contribution rate for the city based on annual actuarial studies. Our rate beginning July 1, 2005 will hold constant at 14.25%. Based on our projected payroll next year we expect to pay $1,078,398 to VRS to fund employee retirements.
5. General Administration. The City Council, Clerk of Council and City Attorney’s budgets for next year reflect little change from the prior year. The City Manager’s budget reflects an increase of 31.4%, mostly to fund the proposed new Economic Development Manager position. The Operating Contingency is recommended at $100,000. Personnel restructuring in the Finance Department will result in near level funding by deleting the Information Resources position and adding a new Information System Technician position.
6. Constitutional Officers. The Commissioner of Revenue, Treasurer and Registrar budgets show little net change from the prior year. The Electoral Board, however, shows an increase of 43.0% needed to cover the number of elections scheduled in next fiscal year.
7. Joint Courthouse and Judicial Functions. The Joint Courthouse Agreement, dated December 1996, between the city and James City County, governs cost sharing not only for taking care of the new courthouse, but for judicial functions related to the Courthouse, including: Circuit Court, General District Court, Juvenile and Domestic Relations Court, Clerk of the Circuit Court, Commonwealth Attorney, and City/County Sheriff. The Courthouse Agreement provides that the city and county will determine population based on the annually updated Hampton Roads Data Book published by the Hampton Roads Planning District Commission. The estimate of city cost is $320,000, up 3.2% from the prior year.
8. Public Safety. Police and Fire Department budgets are up from the current year with a 5.6% increase in the Police budget (including emergency communication/dispatch) totaling $3,502,653; and an 6.8% increase in the Fire budget totaling $2,765,375. These increases are due primarily to the payroll increases and three new firefighter/EMT positions, and increased budgets for telecommunication and radios.
9. Parking Garage. Based on experience in the first year of operation, we are able to reduce the garage operating budget by 19.5% to $104,072. This is offset by $150,000 in projected revenues. If use of the garage continues to grow as it did over the initial months of operation, the revenues will be higher. Revenues in excess of operating costs will help pay debt service on the structure.
10. Regional Jail. Funding for the city’s share of the regional jail is expected to be $875,000, an increase of 32.9% from the current budget. The city share of jail costs is based on an average usage rate of 17.9% over the past five years. Each member jurisdiction ( Williamsburg , James City , York and Poquoson) pays for their share of the inmate population based on the location where the offense occurred and the arresting authority. Local costs have climbed as State contributions have been stagnant, and the number of city inmates has climbed to about 75. Other detention related expenditures are the Middle Peninsula Juvenile Detention Commission, which is projected to decrease by 8.9%; and Colonial Group Home Commission which should increase by 4.7%.
11. Building Inspection . The Building Inspection budget of $433,796 is up 8.6%, continuing to be driven by a high level of building activity and increased costs for the property maintenance and rental inspection programs. Fees to offset these program costs are compared to market and increases recommended when appropriate. A review will take place later this spring.
12. Information Systems . The budget covers the contracts for hardware and software maintenance for the city’s information systems, copiers, and video system (including Channel 48). The budget includes funding for an annual PC replacement program, and development of our GIS system, for a total of $275,000, a 4.6% decrease from the prior year.
13. Public Works. Public Works divisional budgets (Engineering, Streets, Landscape, Cemetery, Mosquito Control, Facilities Maintenance) average close to the current year amounts. They reflect the 4.0% average merit increase, but no increases in staffing. The street resurfacing annual commitment is proposed to increase from $430,000 to $460,000. The cost of refuse collection is estimated at $788,800, up 7.1% from the prior year’s amended budget.
14. Planning Department. Planning Department next year is proposed at $454,195, an increase of 5.0%. Professional services funding is included to assist with reevaluation of the city’s Architectural Review Guidelines, updating the list of architecturally significant structures, and evaluate the market for more student oriented business opportunities.
15. Human Services. Salaries in the Human Services Department are funded in part by the Commonwealth, but the department is a city operation. Local funding supplements State funding to allow the department to provide a full array of human services. The local budget for next year is estimated at $558,186, level with the prior year.
16. Parks and Recreation. A total budget of $1,260,733 represents a 1.6% increase. Level funding reflects the consolidation of two supervisor positions into one, and the addition of one half time maintenance worker position. Next year a new service – the Waller Mill Dog Park – will open with no increase in operating cost demonstrating increasing productivity by the Parks and Recreation Department.
OUTSIDE AGENCY ISSUES
Nearly one-half of the city's General Fund budget goes to agencies and activities not under City Council's direct operational control. Funding relationships are often complex, and vary in degrees of funding discretion possible from year to year. The "Notes on Funding Relationship," contained under the Budget Guide tab, help explain the city's role in providing financial support to these agencies and activities.
Background documentation from outside agencies is contained in the Appendix, or provided under separate cover, as in the case of the School and the Library budgets.
A number of issues concerning outside agency funding requests for the coming year need to be highlighted:
1. Health Services . The four agencies named below provide health services to city residents, workers and visitors. The total recommended funding for FY 06 is $433,807, an increase of 6.4% over the current year.
The Peninsula Health District budget request to the city is $123,263, a 4.8% increase over the current year
Olde Towne Medical Center (Williamsburg Area Medical Assistance Corporation or WAMAC) has requested funding of $84,000, a 2.4% increase over the current year.
The Comprehensive Health Investment Program (CHIP) has requested $15,937. The Human Services Advisory Board has recommended funding Olde Towne at $84,000, and CHIP at $15,937, which is reflected in the proposed budget.
Finally, the Colonial Services Board, the agency through which the city provides mental health and retardation services to its residents, requests a 8.0% increase in city contribution to $210,607, based on an equitable multi-jurisdictional funding formula.
2. Schools. Based on the School Board's budget at this point in time, and State funding based on General Assembly action, we can expect a city contribution to the operational budget in the amount of $6,580,503, a 6.8% increase from the current year. The final amount will be determined by formula as set forth in the current five-year city/county Joint School Agreement effective July 1, 2002 , and the final amount of State support. As a result of current and past school agreements, the city's proportional share of funding for the schools over the past decade has declined, and that trend will continue next year. City children numbering 732 now account for 7.83% of the children enrolled in the system. Under the Joint School Agreement, in FY 06 the city will pay a share equal to its enrollment times a factor of 1.23. So, the city still pays a premium to participate in the joint system. Based on the current enrollment split, the city’s contribution will be 9.63% and the county’s 90.37%, of local funding for the schools.
3. Library. The Williamsburg Regional Library is funded under the revised library agreement with James City County , effective July 1, 1999 . That agreement calls for funding of operational costs based on the proportion of circulation by residency. Based on the library’s figures, the city/county circulation ratio for fiscal year 2004 was 16.73% city, and 83.27% county. At this time the Library has not completed their proposed budget while they wait to see what James City County proposes to do with personnel costs. So, the city’s proposed budget is based on estimated city contribution of $793,826, a 1.6% increase over the current year.
4. Human Service Agencies. The city's Human Services Advisory Board, as requested by City Council, has evaluated Human Services Agency requests for funding, and made its recommendations to City Council. Their analysis and recommendations are in the Appendix to this document. The proposed budget is a 7.5% increase from the current year in the total amount of $84,311. The proposed budget follows the Human Services Board’s recommendations in all respects.
5. Community and Economic Development Agencies. The city has aggressively supported tourism advertising and promotion through Colonial Williamsburg and the Williamsburg Area Convention and Visitors Bureau.
This year Colonial Williamsburg Foundation has requested near level funding of $1,300,000, and I have recommended that amount. The Williamsburg Area Chamber of Commerce together with the Williamsburg Area Convention and Visitors Bureau have requested level funding of $863,000 (which includes $100,000 for Chamber operations), plus an additional $97,000 for supplemental marketing. I am recommending that the city fund the base request, but not the supplemental $97,000. The proposed budget also includes an estimated $1,800,000 of pass through funding from the $2.00 room surcharge to the Williamsburg Area Destination Marketing Committee’s “GoWilliamsburg” campaign. This brings the total city tax dollars for tourism promotion to $3,863,000.
In addition to tourism promotion, the city support is recommended for a number of other agencies that make important economic development and community development contributions to Williamsburg:
Hampton Roads Planning District Commission - $10,332
Peninsula Council for Workforce Development - $ 5,919
Hampton Roads Economic Development Alliance - $11,605
Thomas Nelson Community College
--Hampton Campus - $14,237
--Williamsburg Campus rental - $20,000
--Hampton Workforce Development Center - $10,500
--Technology grant - $ 5,504
Jamestown/Yorktown Foundation - $10,000
Colonial Soil and Water District - $ 2,415
Hampton Roads Partnership - $ 5,325
Williamsburg Land Conservancy - $ 5,000
Heritage Humane Society - $16,000
Williamsburg Farmers’ Market - $ 5,000
Crossroads Coordinating Committee - $10,000
Jamestown 2007 Host Committee - $ 8,000
Community Services Coalition - $ 2,500
Total including CWF and CVB - $4,105,337
This year two new community/economic development agencies have been added. The Hampton Roads Economic Development Alliance is the result of the recently approved Southside/Peninsula merger, leaving the Peninsula Council for Workforce Development in place of the old Peninsula Alliance for Economic Development. The Community Services Coalition, which operates the Historic Triangle Community Services Center , is also new. This one time request is to match a $25,000 grant from the Williamsburg Health Foundation for debt reduction and maintenance of their building which has been in service now for ten years. Another new request for funding comes from Historic Jamestowne. I have not recommended adding Historic Jamestowne to the city’s list of agencies receiving annual funding.
All of these recommendations are for the requested amounts except for Williamsburg Land Conservancy which requested $10,000, and the Heritage Humane Society, which requested $23,000.
In the case of the Heritage Humane Society my recommendation for a reduction in annual operating to $16,000, and a total city capital contribution for the new shelter of $175,000, relates to achieving a fairer contribution share with James City and York Counties . James City contracts with HHS for shelter services in the amount of $27,000 annually (and the city pays JCC $24,000 annually to handle animal control in the city). York County pays HHS $7,700 annually for shelter service. The city owns the shelter itself and provides it rent free to HHS. With only 8% of shelter use, the city is carrying much more than its share. This is also true with regard to contributions for the new facility; all as summarized here:
| City | JCC | York | |
| Current annual operating contribution | $ 23,000 | $ 27,000 | $ 7,700 |
| Percent of operating contribution | 40% | 47% | 13% |
| Anticipated capital contribution for new shelter | $175,000* | 482,000* | $100,000 |
| Percent of capital contribution | 23% | 64% | 13% |
| Percent of shelter use | 8% | 79.5% | 12.5% |
| Percent of population (2004) | 17% | 68% | 15% (Bruton) |
* City contribution at $75,000 in land, $75,000 in drainage work, $25,000 cash. JCC Contribution includes underwriting a $500,000 loan for HHS with county holding new building as collateral.
6. Cultural. The Williamsburg Arts Commission has again performed the task of receiving, evaluating, and recommending funding for the arts. Their report is copied in the Appendix. They recommend local arts funding of $ 136,750, up 0.3% from the current year. Of this amount, the city contribution would be $ 63,375. This assumes a state arts commission challenge grant of $10,000, and county funding of $63,375. The State grant last year was $10,000.
City sponsorship for the third annual “Festival Williamsburg” is provided in the amount of $50,000. In partnership with the Virginia Arts Festival, “Festival Williamsburg” is a major addition to the Arts Calendar and to tourism.
7. Transportation. James City County has requested $154,200 to support our new, unified transit system, Williamsburg Area Transport. The unified system, as envisioned in the Long Range Public Transportation Plan, combines JCC Transit, Relax and Ride, and the William and Mary systems. Work on governance with the goal of creating a regional authority to own and operate the system is ready for governing board action. I recommend the city fund the requested amount of $154,200, contingent on moving ahead with the new governing structure and a fair formula for allocating costs between localities.
Under Transportation are two additional regional partnerships to promote alternatives to highway travel. These are continuing support for Virginia ’s High Speed Rail Coalition in the amount of $3,500; and second year support for the Newport News/Williamsburg Airport Task Force in the amount of $6,000 to support efforts to expand air service for the Peninsula .
CAPITAL IMPROVEMENT PROGRAM
Revenue to fund the CIP comes from 1% Sales Tax Receipts and funds reserved for capital improvements.
Here are some of the highlights from this year's update of the Five Year Capital Improvement Program:
- Richmond Road Reconstruction from Brooks Street to New Hope has been in progress for three years, mainly underground wiring and right-of-way acquisition. Street reconstruction itself, delayed again last year, is now scheduled to be re-bid in May 2005, and begin in summer 2005. VDOT’s current schedule calls for project completion in late 2006. Almost all of the remaining money needed for this project will come from our VDOT Urban Allocation.
- Stage One of Treyburn Drive (design and engineering) and Stage Two (right-of-way acquisition and permitting) has been substantially completed. Treyburn Drive is scheduled to begin construction concurrent with High Street, now anticipated in late 2006. Substantial city funds will be used for this project with future reimbursement from VDOT.
- Several projects deal with enhancement to city highways and byways. These include underground wiring on Braxton Court , guardrail replacement on Jamestown Road , new sidewalks, and participation in a regional “Wayfinding” project designed to help visitors navigate the Historic Triangle area.
- The beginning of a multi year upgrade to Kiwanis Park , resurfacing tennis courts and install wall protection at Quarterpath Recreation Center , developing Strawberry Plains neighborhood park and replacing the bridge/fishing pier at Waller Mill Park .
- Re-roofing the Fire Station and Police Station, and portions of the Library will proceed.
- Continued planning for a new City Hall in City Square
- Public Safety communications upgrades to ensure reliable, effective, interoperable communications.
- The Braxton Court Community Development Block Grant Project is now beginning and will extend into next year. Another CDBG grant has been submitted for the Quarterpath area – Roses Trailer Court .
- Funding of the School’s CIP request – subject to action by James City County Board of Supervisors per the Joint School Agreement – includes the third high school and the next elementary school
- City participation in the construction of a new animal shelter in partnership with the adjoining counties and the Heritage Humane Society.
The Planning Commission’s review of the draft CIP, used in developing the final recommendation, is provided under the Capital Improvements tab.
UTILITY FUND OVERVIEW
The Utility Fund projects $4,423,230 in operating revenues and a 2.9% increase in operating expenditures. A 3.85% water rate increase, $2.60 to $2.70 per 1000 gallons, is recommended.
A Rate Analysis for the Utility Fund is provided under the Appendix tab. The analysis shows a future with modest rate increases, and a future with no rate increases. The Rate Analysis is updated annually as part of the budget process. Expensive ”new water” from King William Reservoir or some alternate source, purchases of more watershed land, and renewal/replacement of infrastructure, are all in our future. Unlike nearly all other area jurisdictions, the city still does not charge separately for sewage collection and pumping, but rather bears this cost using water revenue. City rates for water and sewer combined continue to be exceptionally low in the region, as shown in Exhibit 3 of the Rate Analysis.
NEXT STEPS
The budget process now moves from the staff level "formation" phase, to the Council and public level "adoption" phase.
The Budget Work Sessions, principally to look at outside agencies, are scheduled for Monday, March 21 and Tuesday, March 22. The school budget will be reviewed at the Monday, April 11, City Council work session. The formal budget hearing will be advertised for the April 14 City Council meeting. Adoption is scheduled for the May 12 Council meeting.
Jackson C. Tuttle
City Manager