HomeMy WebLinkAboutCOW 2010-09-27 Item 3A - Budget - Proposed 2011-2012 Program and Service Reductions CO UNCIL AGENDA SYNOPSIS
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ITEM INFORMATION
1 CAS NUMBER: 10-105 I ORIGINAL AGENDA DATE: 9/27/10
At; IND,\ ITEM TITLE Proposed Program and Service Reductions for 2011 -2012
C\'II?GORY Discussion Motion n Resolution Ordinance n BzdAward Public Hearing Other
Mtg Date 9/27/10 Mtg Date Mtg Date Mtg Date Mtg Date Mtg Date Mtg Date
SP( )NSOR Council Mayor Adm Svcs DCD Finance Fire Legal P&R Police PW
SP( )NSOR'S Staff will present the City Administration's proposed program and service reductions for
SU1IMARY 2011 -2012.
RIwIEWED BY COW Mtg. CA &P Cmte F &S Cmte 1 1 Transportation Cmte
Utilities Cmte Arts Comm. Parks Comm. Planning Comm.
DATE:
RECOMMENDATIONS:
SPONSOR /ADMIN. Information only
COMMITTEE
COST IMPACT FUND SOURCE
EXPI?NDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED
Fund Source:
Comments:
MTG. DATE I RECORD OF COUNCIL ACTION
9/27/10
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MTG. DATE I ATTACHMENTS
9/27/10 I Informational memorandum dated 9/24/2010, with attachments
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4 City of Tukwila
Ia
J a Jim Haggerton, Mayor
90: INFORMATIONAL MEMORANDUM
TO: Mayor Haggerton
FROM Steve Lancaster, City Administrator
Shawn Hunstock, Finance Director
DATE: September 24, 2010
SUBJECT Proposed Program and Service Reductions for 2011 -2012
ISSUE
Staff will summarize program and service reductions being proposed by the City administration
in order to address current and projected revenue shortfalls for the 2011 -2012 biennium These
program and service reductions will be reflected in the Preliminary Budget for 2011 -2012, which
will be distributed to the City Council and made available to the public in early October.
BACKGROUND
In early 2010 the City Council reviewed the City's current and forecast financial situation and
determined that significant action is required in order to bring revenues and expenditures into
balance. An estimated $9 million per year gap between anticipated revenues and forecast
expenditures was identified. In response to this situation, the City undertook a balanced
strategy that included the following targets: reducing programs and services by $2.2 million per
year; reducing the total cost of compensating City employees by $3.4 million per year; and
increasing revenue by $3.4 million per year. This balanced strategy has been described as the
"three legged stool."
On July 19, 2010 the City Council adopted measures to increase annual revenue by $3 million
On July 26 staff reported that it had been unable to reach agreement with any of the city's
represented employees regarding a reduction in the city's cost of employee compensation.
Staff indicated it had delayed some important work on the 2011 -2012 budget in hopes of making
progress on this matter, but must now move forward based on the assumption that no employee
cost reductions will be agreed to. On a positive note, staff indicated it had identified an
opportunity to reduce annual contributions to our self insured health care fund by $1 million, and
suggested this saving be applied to the $3.4 million target for reducing employee compensation
(thus, the remaining "employee compensation" target would be $2 4 million) By consensus, the
Committee of the Whole requested that staff identify $2.4 million in additional program and
service reductions to compensate for the lack of agreement with employees. Combined with the
original $2 2 million goal for program and service reductions, a "new" goal for program and
service reductions of $4.6 million resulted
DISCUSSION
Six -Year Revenue and Expenditure Forecast
Before presenting the administration's proposals for program and service reductions, it will be
helpful to review the most current version of the City's six -year revenue and expenditure
forecast "Attachment A" The administration and council have used this tool for several years 3
INFORMATIONAL MEMO
Page 2
and throughout the 2010 budget planning process to help gauge the long -term implications of
changes to revenues and expenditures. This is the tool that helped us earlier this year to
identify the estimated $9 million annual gap between forecast revenues and expenditures.
Attachment A has been updated to reflect the most current information available on likely
revenues and expenditures. Notable changes from the last version formally presented to the
City Council are as follows:
Operations Maintenance costs (General Fund departmental expenditures) decreased
by $1 25 million for 2011, with similar decreases in out years. The change is due to
quantifying actual expenditure requests for 2011 -2012 versus previous projections
based on previous year actual plus an arbitrary percentage. Departments have gone
beyond the program and service reductions in lowering their 2011 -2012 budget
requests. These additional reductions will be quantified and presented to Council as
part of the draft budget document on October 4th
Another component of the decreases O &M costs is the expected enactment of lower
PERS contribution rates by the State. Previous projections included PERS contribution
rates of 9.65% for 7/1/2011 6/30/2012 and 12.49% for 7/1/2012 6/30/2013. The
Pension Funding Council recently recommended lesser contribution rates (8.61% and
9.30 respectively), which is considerably lower than the recommendations by the
Office of the State Actuary Due to the funding difference, there is a growing gap
between current year contributions and the contributions needed to actually fully fund
future retirement benefits. Because of this gap, we have included in the Attachment A a
rough estimate of what that funding gap might be. The line "Estimated Unfunded PERS"
is based on an estimated unfunded liability of 3% of current salaries For 2011 this
amount is $772,000. This represents an estimate of the difference between actual
retirement fund contributions by the City, and those contributions needed to fully fund
retirement benefits. An option for Council might be to set aside this amount in a reserve
fund for when the legislature decides to not only fully fund current year contributions, but
also makes up for prior unfunded liabilities. If the decision to do so is made by the
legislature, the effect will be to dramatically increase the cost of retirement contributions
for the City. Setting aside the estimate on Attachment A would provide funding for this
increased cost which will almost certainly occur at some point.
Projections for certain revenue items (Real Estate Excise Taxes, Investment Interest and
Interfund Utility Taxes) were decreased. Additional analysis of prior actual cash
receipts, as well as the effect of utility rate changes on the interfund utility tax, resulted in
decreased projections of $801,000 for 2011, which is also carried forward throughout the
six -year financial plan.
In an effort to address the underfunding of critical capital infrastructure projects,
including residential streets, arterial street annual overlays, and other miscellaneous
projects, just over $6 million was added back into the capital program throughout the six
year financial plan. It should be noted that the revisions still do not provide funding for
many of the City's critical infrastructure needs such as facility improvements and
replacement and fire apparatus replacement
The result of this newer and more reliable information is a decrease in projected revenue of $4.4
million in total for all six years The decreased O &M expenses, due to declines in budget
requests by departments as well as lower than expected retirement fund contribution rates,
4 resulted in a total of $16.4 million less in expenditures throughout all six years. The estimated
W\ Steve\ BUDGET\ ProgServiceReductionsMemoSeptember 27.doc
INFORMATIONAL MEMO
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unfunded retirement fund contributions total $5.1 million for all six years, and an additional $6 1
million of expenses was added to the capital investment plan. These changes are summarized
in the table below, shown in total for the entire six -year financial plan (in 000's).
Ending fund balance (from 9/14 Council briefings) 3,270
Decreased revenue projections (4,405)
Decreased O &M expenses 16,445
Increase in projected retirement funding (5,121)
Increase in capital investments (6,085)
Other miscellaneous changes 18
Revised ending fund balance 4.122
Proposed 2011 2012 Program and Service Reductions
Attachment 2 is a matrix summarizing the proposed program and service reductions for 2011-
2012. As has been recognized throughout this challenging budget planning process, the
reductions necessary to meet city goals for financial sustainability will be very difficult.
Many of the proposed program and service reductions were presented to the City Council in
May and June of this year and are referenced as "Phase 1 Proposals" in Attachment 2 These
proposals were intended to meet the original $2.2 million program reduction target. These
reductions, together with the previously mentioned revenue increases, were the subject of a
Public Meeting held by the City Council on July 11, 2010 Additional measures necessary to
achieve the revised program and service reduction target are referenced as "Phase 2
Proposals."
The following is intended to assist in understanding the information presented by Attachment 2
The far -left column of Attachment 2 "Program identifies the specific program or City
Department for which reductions are proposed.
The next column "Proposal') briefly describes the specific proposed reduction.
The third column "Annual Budget Savings provides an estimate of the annual cost
savings for the individual proposals and a total savings figure (in bold type) for that
program or department. It is important to note that savings associated with specific
staffing reductions include both salary and benefit cost savings.
The column headed of Budget' indicates the percentage that the budget for the
referenced program or department will be reduced under the proposed program
reductions (in bold type).
The column headed "FTEs Reduced" provides the number of city staff positions (in "full
time- equivalents that are intended to be eliminated as part of each program reduction
proposal, and a total staff reduction (in bold type) for that program or department.
The final column "Percent Staff Reduction indicates the expected percentage reduction
in the referenced program or department staffing levels, compared to authorized 2010
staff levels.
The program and service reductions proposals summarized by Attachment 2 will be more fully
described at the September 27 Committee of the Whole meeting Department Directors will be
available to answer Council questions regarding the anticipated effect these actions will have on
the types and levels of service provided by their departments. In total, the proposed reductions
will result in a substantial change in the level of municipal services provided to our community
Wl SteveIBUDGETI ProgServiceReductionsMemoSeptember 27.doc 5
INFORMATIONAL MEMO
Page 4
Implementing these program and service reductions will result in annual budget savings
estimated at $4.16 million. While this is Tower than the $4.6 million revised goal, it will be
sufficient to maintain a positive fund balance at the end of the six -year financial planning period,
based on the updated and more accurate planning model (see Attachment 1).
The proposed program and service reductions summarized by Attachment 2 will result in a
reduction in City staff by an estimated 27 "full time equivalent" positions It is important to know
that due to a "hiring freeze" implemented earlier this year, a number of the positions that would
be eliminated under this proposal are already vacant. There are also vacancies in some
positions that are not proposed for elimination, and some employees may choose to apply for
the "Voluntary Separation Program" recently approved by the City Council. Thus, the number of
"layoffs" that will be needed to achieve the reduced staffing levels will be substantially lower
than 27 FTEs.
It should also be noted that the elimination of a specific position may not necessarily mean the
individual currently holding that position will be subject to layoff. The City's various contracts
with labor groups have provisions addressing how layoffs are to be accomplished. City
administration will seek to work closely with labor group representatives to ensure the provisions
of these contracts are followed
RECOMMENDATION
Information only.
ATTACHMENTS
1 Attachment 1: "Attachment A" (updated 09/22/2010 version)
2. Attachment 2. General Fund Program and Service Reductions (dated September 27,
2010)
6 W\ SteveI BUDGETIProgServiceReductionsMemoSeptember27 .doc
ATTACHMENT A
CITY OF TUKWILA 09/22/2010
TOTAL REVENUES EXPENDITURES
2011 2016 Analysis in 000's
REVENUES (see A -10 2011 2012 2013 2014 2015 2016 Totals Original Assumptions
General Revenues 3 00% Sales Tax
Sales Tax 15,400 15,631 15,865 16,103 16,587 17,084 96,671
Property Taxes 12,800 13,120 13,448 13,784 14,129 14,482 81,763 2.50% Property Taxes
Utility Taxes 4,500 4,635 4,774 4,917 5,065 5,217 29,108 3.00% Gambling Taxes
New Revenues 3,000 3,075 3,152 3,231 3,311 3,394 19,163 4 00% Other Revenue
Decr. Health lnsur. Prem. 1,000 1,030 1,061 1,093 1,126 1,159 6,468
Program Reductions 2,200 2,255 2,311 2,369 2,428 2,489 14,053 Revised Assumptions
Other Revenue Incr /E.xp Red 1,800 1,845 1,891 1,938 1,987 2,037 11,498
One -time sale of properly 2000 0 0 0 0 0 2,000 2011
Interfund Utility Taxes 1,349 1,431 1,559 1,651 1,770 1,862 9,622 0.00% Sales Tax (equal to 2008 actuals)
Gambling Taxes 1,977 2,036 2,097 2,160 2,225 2,292 12,788
ContractAgreement SCL 1,976 2,035 2,096 2,159 2,224 2,291 12,782 2.50% Property Taxes
Charges/Fees for Services 5,431 5,594 5,762 5,935 6,113 6,296 35,130 0 00% Gambling Taxes
Transfers In Other Funds 1,875 1,931 1,989 2,049 2,110 2,174 12,128 2.00% Other Revenue
Intergovernmental Revenue 922 950 978 1,007 1,038 1,069 5,964
Other Taxes/Miscellaneous 1,640 1,689 1,740 1,782 1,846 1,901 10,608
Subtotal 57,870 57,257 58,725 60,189 61,958 63,747 359,746 2012 2014
Dedicated Revenues (Capital) 1.50% Sales Tax
Real Estate Taxes 250 258 265 273 281 290 1,617 2.50% Property Taxes
tvtotor Vehicle Taxes 455 469 483 497 512 527 2,943 3.00% Gambling Taxes
Investment Interest/Misc. 100 103 106 109 113 116 647 3.00% Other Revenue
Property Taxes 130 130 130 130 130 130 780
Parking Taxes 140 140 140 140 140 140 840 2015 2016
Transfers from Golf Course 0 0 150 150 175 175 650
Subtotal 1,075 1,099 1,274 1,300 1,351 1,378 7,477 3.00% Sales Tax
TOTAL- REVENUE AVAILABLE 58,945 58,357 59,999 61,489 63,309 65,125 367,223 l
1 EXPENDITURES 1
Operations& Maintenance: 48,401 49,109 51,319 53.628 56,042 58,563 317,062
(See Attachment B)
Howard Hanson Dam Response 1,700 300 0 0 0 0 2,000
Debt Service 3455 3,447 3,532 3,593 3,104 2,874 20,005
Transfer to Reserve Fund 1,256 2,573 3,958 5,408 0 0 12193
Estimated Unfunded PERS 772 803 835 868 903 939 5,121
Admin/Engineering Overhead 300 309 318 328 338 348 1,941
Subtotal Available 3,061 1,816 36 (2,334) 2,923 2,401 7,902
Capital Attachment C
Residential Streets 150 300 0 200 300 3,000 3,950
Bridges 145 205 205 270 1,470 270 2,565
Arterial Streets 2,036 2,632 2,317 2,100 1,795 1,675 12,555
Parks Trails 521 409 163 237 257 286 1,873
General Government
Facilities 101 0 0 0 0 0 101
General Improvements 500 500 500 500 500 500 3,000
Fire Improvements (50) (50) 0 0 0 X55) 55)
Subtotal Capital 3,403 3,996 3,185 3,307 4,322 5,676 23,889
Balance by Year (342) (2,180) (3,149) (5,641) (1,399) (3,275) (15,987)
Carryover from 2010 20,109 0 0 0 0 0 20,109
Accumulated Totals 19,767 17,587 14,438 8,797 7,397 4,122
Notes
Carryover Estimates at 09/8/10 Reserve Percentage
General Fund 6,089 4% 2011
Street Fund 320 8% 2012
Arterial Street Fund 6,500 12% 2013
Land Acq Parks Devel. 4,800 16% 2014 -2015
Facility Replacement 2,000
Gen. Gov't. Improvements 400
Total 20.109
Decreased sales tax projection for 2011 to be $14 1M (2.1 decrease from 2009),
plus $1 3M mitigation.
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(Attachment 2: September 27. 2010 (p. 1)
GENERAL FUND PROGRAM AND SERVICE REDUCTIONS
ANNUAL PERCENT
BUDGET FTEs STAFF
PROGRAM PROPOSAL SAVINGS OF BUDGET REDUCED REDUCTION
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Boards and
Commissions
Phase 1 Proposal
Reduce Arts Commission Budget 21,500 1
Reduce Equity Diversity Budget 3,100
Reduce Sister City Committee Budget 2,850
27,450 50% I 1
'City Council Phase 1 Proposal
Reduce "Other Services /Charges" "Supplies" 5,000
5,000 2%
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Mayor's Office Phase I Proposal 1
I Eliminate "Analyst" position 1 100,0001 1.0
1 Modify contracting for legal services 50,000
1 Phase 2 Proposal
Reduce DC Representative contract 52,0001
Eliminate Olympia Rep contract 48,0001
Reduced Civil Service expenses 1 8,900
(Eliminate 1 FTE City Clerk's Office 80,500 1.01
339,4001 13% 2.0 14%
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Attachment 2: September 27, 2010 (p. 2)
GENERAL FUND PROGRAM AND SERVICE REDUCTIONS
ANNUAL PERCENT
BUDGET FTEs STAFF
PROGRAM PROPOSAL SAVINGS OF BUDGET REDUCED REDUCTION
DCD Phase I Proposal
I Reduce 1 FTE electrical inspector 94,500 1.0
Reduce level of graphics and mapping 45,800 0.5
Cross -train permit technicians 46,500 0.5
Transition to lower -cost GIS 17,080
Fund staff through housing program rev. 80,000
Reduce capacity for unanticipated needs 16,120
Phase 2 Proposal
I Eliminate Code Enf adm support 1/2 FTE 30,023 0.5
Reduce Plan Review 1/2 FTE 45,112 0.5
Bring recycling contract in -house 18,000
Reduce capacity for unanticipated needs 82.675
I 475,810 15% 3.0 12%
'Municipal Crt. Phase I Proposal
I Reduce Court, Probation Parole expend. 6,000
I Phase 2 Proposal
Reduce Administrative Support 60.631 1.0
66,631 6% 1.0 10%
Attachment 2: September 27. 2010 (D. 3)
GENERAL FUND PROGRAM AND SERVICE REDUCTIONS
ANNUAL PERCENT
BUDGET FTEs STAFF
PROGRAM PROPOSAL SAVINGS OF BUDGET REDUCED REDUCTION
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Human Srvc. (Phase I Proposal
1 Maintain current level of support for CSC 0 I
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Phase 2 Proposal
Reduce CSC contract 30,000
Eliminate contingency fund 15,800
I 45,800 8% I 0 0%
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I IT Dept. Phase I Proposal I I
I Reduce cell phone expenses I 10,000 I
Misc. budget reductions I 14,500
Reduce MS Office licensing costs I 27,000
Reduce PC specs /extend rotation period 63,000
Phase 2 Proposal
Eliminate Hazelnut; Rec program to P &R 72.000 I 0.5
I 186,500 17% I 0.5 6%
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Attachment 2: September 27. 2010 (p. 4)
GENERAL FUND PROGRAM AND SERVICE REDUCTIONS
ANNUAL PERCENT
BUDGET FTEs STAFF
PROGRAM PROPOSAL SAVINGS OF BUDGET REDUCED REDUCTION
Public Works Phase I Proposal
Eliminate Development Engineer position 101,050 1.0
Reduce CERTTraining Program 44,500 0.5
Reduce Street Maintenance level of service 71,500 1.0
Reduced bridge overlay programs 137,500 1.0
Eliminate Dump Pass /Neighborhood Cleanup 32,500
Phase 2 Proposal
Elim. 6300 mgmt /custodial service 50,000
Elim. City Hall landscape service 10,500
Modify 800 MHz radio replacement 25,000
Streetlight power savings 32,500
Reduce exp. video /fiber upgrades 50,000
Reduce annual signal upgrades 50,000
605,050 9% 3.5 5%
!Parks Rec. Phase 2 Proposal
Eliminate Assistant Director position 139,800 1.0
Reduce 1.0 FTE Rec Specialist 73,400 1.0
Reduce 2.0 FTE Admin Supt Assist 123,400 2.0
Reduce 1.5 FTE Maintenance Specialist 112,400 1.5
Reduce maintenance supplies /water /misc 30,500
Reduce recreation program offerings* 120,000
Net new revenue 145,000
744,500 18% 5.5 20%
(Attachment 2: September 27, 2010 (p.5)
GENERAL FUND PROGRAM AND SERVICE REDUCTIONS
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ANNUAL PERCENT
BUDGET FTEs STAFF
PROGRAM PROPOSAL SAVINGS OF BUDGET REDUCED REDUCTION
1 1
Foster Golf Reduce General Fund Subsidy 62,0001 1
62,0001 1
1 1
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Police Phase I Proposal
Reduce 1.0 FTE Crime Prevention 102,000 1.0
1 Phase 2 Proposal I
Reduce 1 FTE Traffic Division 102,000 1.0
Reduce 1 TAC Team position 102,000 1.0
1 Convert 3 Positions to "Pipeline" 26,000
Reduce OT, misc. expenses 170,6001
502,6001 4% 3.0 4%
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!Fire Dept. Phase I Proposal I
1 Reduce Admin Support Tech to 3/4 time 21,3001 0.25
1 Reduce Fire Prev. by one Captain position 104,4471 1.0
Reduce min staffing to 13 to reduce OT costs 100,0001
Phase 2 Proposal 1 1 I
Reduce min staffing to 12 (replace FS #52 Engine
w /Aid Car) 309,162 3.0
1 534,9091 5% I 4.251 6%
1 1 1 1
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(Attachment 2: September 27, 2010 (p.6)
GENERAL FUND PROGRAM AND SERVICE REDUCTIONS
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ANNUAL PERCENT
BUDGET FTEs STAFF
PROGRAM PROPOSAL SAVINGS OF BUDGET REDUCED REDUCTION
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Investigate forming a MPD or partner to fund
continuing operations; or alternatively close the
Tukwila Pool pool by September 2011. 450,000 3.75
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IHR Dept. Phase 2 Proposal
Eliminate Extra Labor budget 3,500
Reduce supplies 2,500
Reduce Professional Services 6,000
Reduce Com, Travel, Advertising 16.000
28,000 2% 0 0%
Finance Dept. Phase 2 Proposal
Eliminate 1 Fiscal Specialist 86.201 1.0
86,201 5% 1.0 8%
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TOTAL PROGRAM
SERVICE
REDUCTIONS 4,159,851 27.50
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