Professional Documents
Culture Documents
Goal 8: Sound Governance
Presented by Bret Starr, Assistant CFO
May 12, 2010
1
Overview
• Economic Conditions
• General Fund
• Water & Sewer System Fund
• HOT Funds
2
Economic Conditions
3
Economic Outlook
• Irving is affected by the national recession
• Recovery of city revenues is 18‐24 months away
• Unemployment of 8.1% is lower than national
average but higher than normal
• All city revenues affected by the recession
• Each fund must stand on its own revenues
4
Economic Impact
• Revenues have declined by $18 million since the
beginning of the recession
– Property Tax ‐$8.9 million or ‐12%
– Sales Tax ‐$6.3 million or ‐12.5%
– Hotel Tax ‐ $2.5 million or ‐13.6%
• Improved service levels and new programs
– Police and Fire staffing
– Animal Shelter
– West Aquatic Center
• Budgets have been balanced without a tax increase
5
General Fund
6
General Fund Revenue Projection
• Property Tax ($5.5 million)
(‐5% reduction in Commercial values)
• Sales Tax ($3 million)
• Electric Franchise ($2.4 million)
• Total revenue reduction ($10 million)
• The effective tax rate is needed to offset
further declines in values and provide the
same amount of tax revenue as this year. 7
Property Tax Value
In Billions
$20
18.45
17.83
$18 17.55 17.41
$16 15.42
14.62
14.29
13.91 14.03
$14 13.79
13.37
12.44
$12
$10
$8
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 8
Sales Tax
In Millions
$55.00
$50.00
$50.00
$46.85
$46.74
$45.86
$45.10
$45.00 $44.31
$43.74 $43.74
$41.77
$40.00
$38.04 $37.94
$35.00 $36.29
$30.00
1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10
9
2010-11
Personnel Related Savings
• 87 vacant positions eliminated since 2006
– $5.7 million in annual savings
– Reduced general government / executive positions
– Added positions directed to Council priorities
• Staffing aligned with strategic plan key focus areas
• Police, Fire, Code Enforcement, Animal Services
• Additional 40 positions held vacant
– $3 million in annual savings
– 28 employees have agreements to take on additional
duties in return for temporary salary adjustments at
an annual cost of $106,450 10
Cost Savings and Efficiencies
Cost savings and efficiencies: $11.3 million
– Cost savings, cost avoidance, staff hours reduced
volunteer hours, reduction in paperwork
– Combined like functions, eliminated redundancies
– City‐wide use of Lean, Six Sigma, and other tools
– Electric contract savings $2 million per year
– 2007‐2009 other savings $7.1 million
– 2009‐10 savings to date $1.4 million
– An additional 7 projects are currently underway
11
Increased Customer Satisfaction
• Cost reduction achieved without decreasing service
levels or quality of service
• Customer satisfaction is up
– 2009 Resident Survey: double digit increases
• Appearance of the city +12%
• Code enforcement +21%
• Neighborhood safety +13%
• Employee knowledge +10%
– 2009 Internal Services Survey:
• Print Services 99.5% overall customer satisfaction
• Information Technology +19%
• Fleet Services +7% 12
General Fund Expenditures
• Structural Increases +$5.5 million
– Step plan +$2.8 million
– Health Insurance +$1.5 million
– Retiree health insurance +$700,000
– Non‐personnel expenditures +$500,000
• Cost Savings ‐$3.5 million
– Market adjustments ‐$750,000
– Staffing reductions ‐$720,000
– Dependant claim audit ‐$400,000
– Capital spending reductions ‐$400,000
13
– Reduce replacement funding ‐$970,000
2010‐11 General Fund Balance
• Revenue losses $10 million
• Net Expenditure increases 2 million
• Funding Gap: $12 million
• Proposed strategies to balance budget
– Hold positions vacant $3.0 million
– Effective tax rate 5.5 million
– Reduce expenditures 3.5 million
$12 million
14
Water & Sewer
System Fund
15
Water and Sewer System Update
• Water demand at lowest level in 10 years
• Revenues insufficient to meet bond covenants
– Legal requirement is 1.1, we are currently at 1.6
– Default will impact our ability to sell any type of debt
until resolved
• Cash reserves $3.5 million below policy minimum
• TCEQ fees and treatment costs are rising
• Many operating costs are fixed
16
Water Sales by Month
Y-T-D 5 Yr Avg
17
Water and Sewer System Update
• Capital Projects have been reduced to only the
highest priority
• Major capital investments will be required in the
next few years
• $18‐20 million needed to fund Irving’s share of
North Texas MWD booster pump station 2011‐12
• Over $9 million in required major infrastructure
replacement projects
18
Key Projects Must Continue ‐ $9M+
• $1M ‐ 54” Customer Way Sewer
– High risk of failure, sinkhole, overflow, regulatory
• $6.5M ‐ Delaware Creek Sewer
– High risk of major sewage overflow, regulatory
• $1M Facility Security
– Homeland Security issue, unfunded mandate
• $0.5M Hackberry Pump Station Improvement
• Required TXDOT utility relocations
• Residential water/sewer pipe replacements on hold
19
Hotel Occupancy Tax
Funds
20
Hotel Occupancy Tax
• Primarily generated by business travel
• FY 09‐10 Budget $17.2 million
• FY 09‐10 Projected $16.3 million
• FY 10‐11 Projected $15.8 million Historic
Preservation
0.6%
• Contingency plans Entertainment
Museum
1.4%
Center
in place to reduce 22.2%
Convention Center
IAC and ICVB 22.2% ICVB
31.7%
operating budgets IAC
18.0%
Debt Service
4.0% 21
HOT Taxable Receipts
In Millions
$240
$230 $229
$220
$203
$199
$200 $189
$187
$182
$180 $172
$164 $182 $182
$176
$160
$155 $153
$140
$120
$100
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
22
Summary
• Impact of the recession will continue over the
next 24‐36 months
• All major revenue streams are reduced
• Each fund must stand on its own resources
• Continued reductions in expenditures and
additional revenues will be necessary to
maintain a balanced budget for FY 2010‐11
23