Chapel Hill Town Manager Roger Stancil's Presentation on the Budget

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Town of Chapel HillFiscal Conditions Report

Roger Stancil, Town ManagerFebruary 2, 2012


Organization of Town Finances (Fund Accounting)

• Town funds are categorized as follows:– Governmental – Generally tax supported activities– Enterprise – Business-like activities, generally self-supporting – Special Revenue – Restricted to certain uses such as grants– Capital – Fixed Asset related activities usually project based

• The General Fund is the primary operating fund of the Town and it includes the operations of Police, Fire, Public Works, Library, Parks & Recreation, Planning and General Government

• Fund Balance is the Town’s “Savings Account”


General Fund($50.5M)

Transit($18.0m)

Stormwater($1.9m)

Parking($2.1m)

Debt Service & Capital($7.2m) Housing

($1.7m)

Internal Service($3.8m)

Relative Size of Funds FY2011-12 Budget

Relative Size of Funds FY2011-12 Budget

Other Funds($1.0m)


Where Town Funds Come FromFY2011-12 Budget: $86.4m


How the Town Spends its RevenuesFY2011-12 Budget: $86.4m


Impact of Financial CrisisGF Revenues Less Expenditures* 2006-07 thru 2010-11

$(1,500,000)

$(1,000,000)

$(500,000)

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

2006-07 2007-08 2008-09 2009-10 2010-11

$365,912

$1,397,401

($1,124,342)

$258,775

1) Overall General Fund Spending Exceeded Revenues

$1,813,223

* Net of transfers to other funds


Reaction to Financial Crisis

Initially thought to be a “near-term” issue•Cut back spending:

– $2.1 million reduction in General Fund Spending for current FY

– $0.7 million reduction in pay-go Capital

– Maintain higher level of vacancies: 56 fewer Full-time employees in 2011 vs 2010*

* As of October

710654

200174


Reaction to Financial Crisis (cont.) • Short-term Strategies:

– Suspension of supplemental funding of OPEB liability*

– Using Bond funds for operating expenses: Annual Road Repaving

– Reduction in funding for capital improvements

– Shifting tax revenue from Debt Service Fund to General Fund

Debt Service Fund Tax Rate Shift

$1,297,800

Bond Funds for Paving Operations$661,000

Reduce Capital Pay-go$721,269

OPEB Funding$400,000

* Retiree Healthcare


Property Taxes• The Town’s property

tax rate is divided into three parts: General Fund, Transit Fund and Debt Service Fund.

• For FY2011-12, part of the Debt Fund tax rate was shifted to the General Fund to help balance the budget.

FY09-10 FY10-11 FY11-12

General Fund 36.0 36.0 37.8

Debt Fund 9.3 9.3 7.5

Transit Fund 4.1 4.1 4.1

Total 49.4 49.4 49.4

Property Tax Rate (cents per $100)

$27,264,000

$5,380,000

$2,940,000


Property Taxes• Property taxes are 48% of General Fund Revenues and 19% of

Transit Fund Revenues• Town property tax rates have stayed the same for the last

three years• The Town portion of a Chapel Hill resident’s tax bill is 32%

56%32%

12%County

Town

School District


Chapel Hill Property Tax Rates(Last 10 Years) Hill

and Overlapping Districts (Orange County)

Does not include Downtown District

.553.575

.522 .522 .522

.581

.494

.029


(.008)

.494 .494


Comparative Tax Rates(Municipality Only)


Capital Improvements

• Small capital improvements are funded through annual pay-as-you-go appropriations

• These annual appropriations fluctuate with the amount of available “one-time” money

Budgeted Capital Improvements (Pay-Go)

$1.12M$1.03M

$0.30M

$1.17M


Debt Management• Major projects (TOC, Library, Southern Community Park and

Aquatics Center) have significantly increased outstanding Debt • In FY09 The Town initiated a Debt Management Plan to

address the budgetary pressure of increasing debt service

Total Outstanding Debt (Last 10 Fiscal Years)

$625 $608

$1,125 $1,062$1,146

$1,041 $930

$1,140

$847


Reaction to Financial Crisis • Maintaining our Commitments:

– Avoided layoffs, furloughs and major benefits changes – Not raising property tax rates for three years– Investing in our future:

• Fully funding the Comprehensive Planning Initiative• UNC Healthcare Partnership for employee health• Ombuds program

– Maintain fund balance levels to address future revenue shortfalls

– Maintain Funding level for Performance Agreements with Other Agencies


What we have Learned• Economic crisis is not a short-term

event• Stop-gap measures will not work• We need to think differently about

how we budget– Budget priorities should be aligned

with our community priorities– Spend within our means– Stop assuming same scope of services– Concentrate on services that are of

the highest value to the people we serve

Define Budget Programs

Identify Priority Themes

Priority Budgeting 2020 Visioning

Identify Available Resources

Evaluate Programs Based

on Priority Results

Establish Priority Results


Where we are now• We completed FY 2010-11 with mixed results:

– GF spending exceeded revenues– Total GF fund balance decreased but unassigned

fund balance increased• The 2011-12 Budget is smaller than the prior

year and uses less Fund Balance, but it is built on unsustainable strategies – We have run out of “easy” strategies to balance

the budget and we now need to address service levels


Total GF Fund BalanceFY2005-6 thru FY2010-11

19.6%23.5%

14.9%

21.4%

12.4%

26.2%

$20.4

$17.6 $17.9

$19.9$21.5$21.3

* Prior to FY11 fund balance designations and reserves were was categorized differently

3) Unassigned (available) fund balance increased


Budget Revenue Comparison FY2011 and FY2012

$5.1m

$1.1m

$47.5m

$49.4m

• GF Budget decreased $2.1 million (3.9%)

• Use of fund balance declined by $4 million

• Current revenues increased due to property tax shift ($1.3m) and minor growth in other sources

$50.5 million

$52.6 million


Budget Expenditure Comparison FY2011 and FY2012

$8.6m$8.2m

$19.4m $19.4m

$9.9m

$13.0m$13.2m

$11.3m

• Decrease in Gen. Gov. is due to reduction in CIP and OPEB funding

• Decrease in Leisure is due to changes in Parks & Rec. & Library

• Decrease in Gen. Gov. is due to reduction in CIP and OPEB funding

• Decrease in Leisure is due to changes in Parks & Rec. & Library


Where we are now (Summary)• We have been successful in balancing our

budget while maintaining our commitments• We have used several strategies to balance

the budget and some are unsustainable• Strategies that have gotten us this far are

beginning to erode the quality of our services• We are now at the crossroads of financial

sustainability


Next Steps: Expenditures• Prioritize services based on 2020 Vision (Priority

Budgeting)• Address Town-wide non-personnel costs: utilities,

fleet, copiers & printers• Identify assets for possible sale (Asset

Management)• Grow Healthcare Partnership• Manage personnel costs by vacancy management

and attrition (Workforce Planning)


Next Steps: Revenues• Current Focus of economic development efforts

– Better use of existing resources:• Increase absorption of Office Space• Capture our entrepreneurs

– Improve Business Climate: Sales taxes will be our best hope for tax growth in the near-term as property taxes decline


Next Steps (cont.)• Future Focus: Increase non-residential share of

property tax base– Challenge: One new University Mall plus one new Blue

Cross Blue Shield Home Office would only add one percent (1%) to the non-residential tax base.

– Opportunities for new retail development• 15-501 South opportunity may be lost to Wal-Mart in Chatham

County• The Edge at Eubanks and I40• Redevelopment of Ephesus Church Road area


Next Steps (cont.)

• Requirements:– Clear, streamlined planning and development

review process aligned with 2020 Vision– Resource allocation aligned with 2020 Vision


Additional Resources• The following Budget and Financial Documents and

Presentations are available on the Town’s Website:– The Town’s Comprehensive Annual Financial Report for the Fiscal Year

ended June 30, 2011 and 8 prior years• http://www.townofchapelhill.org/index.aspx?page=163

– The Town’s Annual Budget Document for the current Fiscal Year (FY2011-12) and 7 prior years

• http://www.townofchapelhill.org/index.aspx?page=1728– Reports to Council during the preparation of the FY2011-12 budget

• http://www.townofchapelhill.org/index.aspx?page=1315

– 2020 Project Resource Library• http://www.townofchapelhill.org/index.aspx?page=1824

Chapel Hill Town Manager Roger Stancil's Presentation on the Budget

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Transcript of Chapel Hill Town Manager Roger Stancil's Presentation on the Budget