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Home My WebLink AboutCouncil Presentation 05/26/2020-FY2021 Manager Recommended Operating Budget - FinalFiscal Year 2020-2021 Recommended Operating Budget May 26, 2020 OVERVIEWMANAGER’S RECOMMENDED BUDGET Accomplishments Investment Summary FY2021 Revenue Outlook Selected Operating Budget Summaries Next Steps STRATEGIC FOCUS AREASMANAGER’S RECOMMENDED BUDGET Carondelet Micro Hospital Opening Dove Mountain Assisted Living Construction Alicat Scientific Expansion FL Smidth Krebs Expansion PSE Archery –Dove Mountain Bisbee Breakfast Club @ Downtown Marana Airport activity; Grant Projects; Economic Development Prospects MANAGER’S RECOMMENDED BUDGET Ina Interchange Completion Water Quality Campus Construction Public Safety State Accreditation Make Marana 2040 General Plan Adonis Wastewater Project Funding Infrastructure Plans and Studies MANAGER’S RECOMMENDED BUDGET Parks and Rec Digital Engagement Virtual Council Meetings Business Continuity Tools Street Pavement Condition Inventory DSC digital inspections and reviews MANAGER’S RECOMMENDED BUDGET Marana Signature Events Star Spangled Spectacular Fall Festival Holiday Festival Founders’ Day Discover Marana Tours Movie Familiarization (FAM) Tours History & Archeology Tours MANAGER’S RECOMMENDED BUDGET Parks and Recreation Master Plan Honea Heights Park SUP Cal Portland Project Special Needs Recreational Programming El Rio Observation Deck Opening MANAGER’S RECOMMENDED BUDGET RECOGNITIONS Top 10 Best Cities to Live in Arizona (HomeSnacks.com) Top 10 Safest Cities in Arizona (Safewise) PISCES Award for Adonis Sewer Project Marana Cape Chase -Outstanding Adaptive Recreation Program Digital City Survey Award MANAGER’S RECOMMENDED BUDGET FUTURE DEVELOPMENT PVB Fabrications Corp. HQ Luke Automotive Dealership Sol Dog Lodge JD Russell HQ at AVQ PSE Archery Mandarina Development Vanderbilt Farms Development MANAGER’S RECOMMENDED BUDGET PLANNING FOR GROWTH LAND USE PLANNING: 2040 General Plan Land Development Code Parks Open Space Dev Reqs North Marana Drainage Study INFRASTRUCTURE PLANNING: Sewer Conveyance Plan Pavement Preservation Plan Airport Drainage Study North Marana Drainage Study Parks Master Plan MANAGER’S RECOMMENDED BUDGET BUDGET IN THE TIME OF COVID19MANAGER’S RECOMMENDED BUDGET Methodology Request to Departments Prioritization FY2021 ECONOMIC OUTLOOK Yiannis Kalaitzidis MANAGER’S RECOMMENDED BUDGET ECONOMIC OUTLOOKMANAGER’S RECOMMENDED BUDGET COVID-19 pandemic has caused unprecedented social and economic disruption No models exist to quantify the magnitude or duration of financial impact or the eventual recovery Economists agree we are in a recession Rebound expected to commence in the final two quarters of calendar year 2020 Key to recovery will be effectively handling the health emergency and the reopening of our economy DURATION & IMPACTMANAGER’S RECOMMENDED BUDGET Control of Virus Spread vs. Economic Response Source: McKinsey & Company, JLBC presentation, April 2020 Scenarios of impact of COVID-19 spread ECONOMIC OUTLOOKMANAGER’S RECOMMENDED BUDGET -4.8% -40% 24% 11%3% -50% -40% -30% -20% -10% 0% 10% 20% 30% Q1 2020**Q2 2020 Q3 2020 Q4 2020 2021* Real GDP (annualized rate) Source: Congressional Budget Office, as of 5/11/2020. *Average for year. **Actual results. ARIZONA ECONOMYMANAGER’S RECOMMENDED BUDGET State of AZ -April Forecast Versus Enacted Budget FY2021 BUDGET OUTLOOK MANAGER’S RECOMMENDED BUDGET SALES TAXES Change from FY2020 Budget: 9.4% or $2.5M Retail: 10% Restaurants: 10.0% Contracting: Unchanged Hotels: 10.0% MANAGER’S RECOMMENDED BUDGET * FY 2019-2020 Actuals are estimated 25.3 27.2 29.0 26.2 24.2 25.8 26.3 26.9 24.4 $21 $22 $23 $24 $25 $26 $27 $28 $29 $30 2016-17 2017-18 2018-19 2019-20*2020-21 BudgetedMillions Actual Revenue Budgeted Revenue STATE SHARED REVENUES Change from FY2020 Budget: 1.6% or $208K Shared Sales Tax: 10% Urban Revenue: 15% Auto Lieu: 10% Shared Revenue Estimates and Census: HB2483 Allows for an annual update of population by using the U.S. Census Bureau’s estimate. Shared revenues presented here may change once final Census numbers are available. MANAGER’S RECOMMENDED BUDGET * FY 2019-2020 Actuals are estimated 10.7 11.5 12.0 12.3 10.8 11.5 11.7 12.8 13.0 $- $2 $4 $6 $8 $10 $12 $14 2016-17 2017-18 2018-19 2019-20*2020-21 BudgetedMillions Actual Revenue Budgeted Revenue LICENSES, FEES & PERMITS Change from FY2020 Budget: 9.3% or $454K SFR FY2020 Budget: 735 SFR FY2021 Budget: 617 MANAGER’S RECOMMENDED BUDGET 597 668 559 687 794 802 726 -100 100 300 500 700 900 2014 2015 2016 2017 2018 2019 2020 Single Family Residence Building Permits By Fiscal Year FY19 thru May: 705 FY20 thru May: 726* * FY 2019-2020 Actuals are estimated 4.8 5.6 5.9 5.1 4.0 4.5 4.8 4.9 4.4 $- $2 $4 $6 $8 2016-17 2017-18 2018-19 2019-20*2020-21 BudgetedMillions Actual Revenue Budgeted Revenue BUDGETING FOR THE PANDEMICMANAGER’S RECOMMENDED BUDGET Goal: Maintain services & the people that provide those services Maintain Structural Budget –ongoing revenues cover ongoing expenses Limit use of one-time resources and preserve fund balance Allow for flexibility –restrict certain expenses, maintain sufficient contingency COMPENSATION & BENEFITSMANAGER’S RECOMMENDED BUDGET Employee Compensation -$344,628 decrease No merit increases planned for FY2021 General Fund salary savings from hiring freezes and delays New positions in Water for new Water Treatment Campus operations Other pay and benefits: Health insurance & other benefits: $180,367 Employee retirement contributions: ($31,533) Worker’s Compensation costs: (58,818) Tuition Reimbursement program: $25,000 STRATEGIC POSITION INVESTMENTMANAGER’S RECOMMENDED BUDGET Working Position Title FTE Department Funding Source Water Operator II 1.0 Water Water Fund Electrician 1.0 Water Water Fund Total FTE Changes 2.0 Summary: Salary & ERE Investment: $162,732 ($81,366 salary savings) Salary savings in General Fund: $576,271 4 vacant FTEs frozen, others delayed hiring by 6 months RESOURCES & TOOLSMANAGER’S RECOMMENDED BUDGET Vehicles & Equipment: $1,271,817 Technology: Ortho photography for digital mapping: $27,000 Cartegraph database analysis: $25,000 Carry over projects: Permitting, Business license, Utility billing systems Facilities: MMC Campus Waterproofing and Drainage improvements: $126,125 MOC fiber cabling repair: $22,000 Concession stand improvements: $10,000 GENERAL FUND BUDGET SUMMARYMANAGER’S RECOMMENDED BUDGET Category FY2020 Budget FY2021 Recommended $ Change % Change Revenue $ 47,188,667 $ 44,248,402 $ (2,940,265) -6.2% Expenditures 46,786,547 42,678,805 (4,107,742) -8.8% Transfers Out 4,510,542 3,789,685 (720,857) -16.0% Change in fund balance $ (4,108,422)$ (2,220,088)$ 1,888,334 46.0% * Both FY2020 & FY2021 amounts exclude contingency authorization of $5.0M Expenditures: Personnel & Benefits ( 2.2% or $0.7M) Contracted Services ( 25.7% or $2.0M): Completion of large one-time projects and deferment of new projects and other purchases to future periods. Operating Supplies and Equipment ( 21.1% or $0.4M): Includes $654K reimbursement under Marana Jobs Creation Incentive Program. Capital Outlay ( 51.9% or $1.8M):Vehicle replacements, Facilities remodel, deferment of $1.750M of new projects. OPERATING IMPACTS ON RESERVESMANAGER’S RECOMMENDED BUDGET 25.0 29.6 36.6 39.5 37.3 $0 $5 $10 $15 $20 $25 $30 $35 $40 2016-17 2017-18 2018-19 2019-20 Estimated 2020-21 BudgetedMillionsGeneral Fund Reserve Balances Fund Balance 25% Coverage MAJOR IMPACTS ON RESERVESMANAGER’S RECOMMENDED BUDGET Estimated Fund Balance @6/30/20 $ 39,455,856 Project Carry Over 911,425 Transfers to other funds 1,190,122 Restricted for Debt Service 2,599,563 FY2020-2021 Projects 2,637,651 Due from Wastewater 3,111,943 Due from Airport 1,079,926 Pre-paid expenses 330,333 Target Reserve 11,797,167 Estimate Unassigned $ 15,797,726 Project Carry Over, $0.9M Transfers to other funds, $1.2M Restricted for Debt Service, $2.6M New Projects & One-time, $2.6M Due from Wastewater, $3.1M Due from Airport, $1.1M Target Reserve, $11.8M Pre-paid Expenses, $330K Unassigned, $15.8M General Fund Balance BED TAX FUND BUDGET SUMMARYMANAGER’S RECOMMENDED BUDGET Category FY2020 Budget FY2021 Recommended $ Change % Change Revenue $ 1,227,600 $ 1,104,840 $ (122,760) 10.0% Expenditures 1,227,600 1,104,840 (122,760) 10.0% Change in fund balance $ -$ -$ -0.0% Revenue: Sales Tax ( 10.0% or $123K): Based upon decreased occupancy revenues due to the impact of the pandemic. Expenditures: Contracted Services ( 9.4% or $71K): Includes increase to State Land Lease payment Operating Supplies & Equipment ( 59.6% or $203K): Includes reduced expenses due to the impact on revenues. HIGHWAY USER REVENUE FUND BUDGET SUMMARY MANAGER’S RECOMMENDED BUDGET Category FY2020 Budget FY2021 Recommended $ Change % Change Revenue $ 3,655,329 $ 3,281,296 $ (374,033) -10.2% Expenditures 4,906,881 3,868,500 (1,038,381) -21.2% Change in fund balance $ (1,251,552)$ (587,204)$ 664,348 -53.1% Revenue: Intergovernmental Revenues ( 10.0% or $364K): Based on Census and Town preliminary estimate. May change once final Census estimates are released. Expenditures: Contracted Services( 27.0% or $1.1M): Current year included carry forward funding for the Town’s Pavement Preservation Program. Operating Supplies & Equip ( 98.9% or $465K): Includes restricted amount for several vehicles to be replaced if funding is available. WATER OPERATING FUND BUDGET SUMMARY MANAGER’S RECOMMENDED BUDGET Revenue: Charges for Services ( 4.1% or $240K): Rate revenues are solely based on the existing rate structure plus new account growth. Reduction due lower than anticipated account growth and rates revenues in the current fiscal year. Expenditures: Contracted Services ( 13.6% or $248K):Includes restricted amounts for a grant funded conservation program and for emergency operations. Operating Supplies & Equipment( 6.8% or $131K):Includes reduced developer contributions. Category FY2020 Budget FY2021 Recommended $ Change % Change Revenue $ 6,048,969 $ 5,952,873 $ (96,096) -1.6% Expenditures 7,361,638 7,657,018 295,380 4.0% Transfers In 1,072,298 1,112,404 40,106 3.7% Change in fund balance $ (240,371)$ (591,741)$ (351,370) 146.2% WATER RECLAMATION OPERATING FUND BUDGET SUMMARY MANAGER’S RECOMMENDED BUDGET Revenue: Charges for Services( 23.6% or $351K): Rate revenues are solely based on the existing rate structure plus new account growth. The Town raised rates in January 2020 based on a study approved by Council. Expenditures: Contracted Services( 36.0% or $198K): Includes restricted amounts for increased maintenance needs on the sanitary sewer collection system. Operating Supplies & Equip ( 16.1% or $58K): Includes reduced electricity costs. Category FY2020 Budget FY2021 Recommended $ Change % Change Revenue $ 1,521,045 $ 1,872,178 $ 351,233 23.1% Expenditure 2,467,387 2,492,887 25,500 1.0% Transfers In 859,070 809,070 (50,000) -5.8% Change in fund balance $ (87,272) $ 188,361 $ 275,633 315.8% AIRPORT OPERATING FUND BUDGET SUMMARY MANAGER’S RECOMMENDED BUDGET Revenue: Charges for Services ( 6.2% or $21K): Based anticipated revenue growth Expenditures: Contracted Services( 16.5% or $41K): Decrease associated with one-time projects completed in the current fiscal year Capital Outlay ( 30K): One-time purchase completed in current fiscal year Transfers In( 28% or $58K): Represents what may likely be an ongoing, operating subsidy from the General Fund Category FY2020 Budget FY2021 Recommended $ Change % Change Revenue $ 402,200 $ 385,336 $ (16,864) -4.2% Expenditure 644,880 559,978 (84,902)-13.2% Transfers In 242,680 174,642 (57,543)-28.0% Change in fund balance $ -$ -$ -0.0% KEY DATES Dates:Stage in Budget Process Task Description June 16, 2020 Approving Council Adoption of Tentative Budget July 21, 2020 Approving Council Adoption of Final Budget MANAGER’S RECOMMENDED BUDGET DISCUSSION & DIRECTION MANAGER’S RECOMMENDED BUDGET GENERAL FUND EXPENDITURE SUMMARY BY DEPARTMENTS MANAGER’S RECOMMENDED BUDGET Row Labels 2020 Amended Budget 2021 Manager Recommended Budget $VAR from PY %VAR from PY Mayor Council 349,616 350,244 628 0.2% Town Manager 1,870,089 1,412,785 (457,304)-24.5% Town Clerk 566,128 497,112 (69,016)-12.2% Human Resources 1,142,205 866,325 (275,880)-24.2% Finance 1,522,424 1,458,785 (63,639)-4.2% Legal 1,043,625 994,826 (48,799)-4.7% Technology Services 3,006,286 3,040,575 34,289 1.1% Economic & Tourism Development 287,827 238,458 (49,369)-17.2% Development Services Admin 2,254,562 1,945,087 (309,475)-13.7% Engineering 3,066,551 2,330,923 (735,628)-24.0% Police 14,608,029 14,123,519 (484,510)-3.3% Magistrate Court 1,156,666 1,102,740 (53,926)-4.7% Public Works 6,336,950 4,059,896 (2,277,054)-35.9% Parks & Recreation 4,976,605 4,587,494 (389,111)-7.8% Community & Neighborhood Svcs 1,196,652 1,163,998 (32,654)-2.7% Grand Total 43,384,215 38,172,767 (5,211,448)-12.0%