BUDGET MEETING II3/2/2015

2015-2016 Budget Outlook GF Amended Budget GF Revenue Outlook Pensions Issues Union Contract Status Other GF Budget Expenses GF Revenue vs. Expenses Capital Fund Fire Pension Fund Police Pension Fund NWSW Redevelopment Fund

Amended Budget Revenues

$153,982 under projections Sales Tax growth slower

Budgeted for 2.4% growth in 14-15. Actual growth projected at 1.05%

Income Tax receipts down IML projected increase to cities Actually decreased from 13-14 by 1.2% instead of increasing

4.2% ($79,103 under budget or half the shortfall of GF projections)

MFT Reimbursements lower Franchise fees ($38,380 under budget)

Comcast down Telecom fees down

Amended Budget Expenses higher by $72,019

Legal Services $38,088 over due to arbitration and personnel matter, neither of which is resolved

Fire Department overtime more than $141,984 over budget due to more retirements

Fire Department Radio Grant ($20,000) was not budgeted

PW Parks Maintenance overspent $40,000 to replace a number of trees downtown and do additional maintenance at the request of STI, one of our landscape donors

Amended Budget (FY 14-15)

FY 14-15 $-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000 $10,457,305 $10,522,895

RevenueExpense

Amended 14-15 $-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000 $10,303,323 $10,594,914

RevenueExpense

Original Budget Request Projected Amended Budget

-Most department budgets in line otherwise (overspent just 0.7% total)-Draft Amended budget gap is ($291,591) or 2.8% of the budget

General Fund Revenues Assessed Value of City (Property Tax)

We received from the County an estimate of a 1.04% decline for the next EAV

Less property tax to General Fund, Library etc. as rates are at maximum levels

4th consecutive year of EAV decline Sales tax

Budgeted for 2.4% growth in 14-15. Actual growth projected at 1.05% Budgeting for 1.0% growth into FY 15-16

Income Tax revenue IML projected growth. Actual revenues down 5.2% compared to

projections. Down 1.2% from prior year. Projecting 0.5% decrease for FY 15-16 State has discussed cutting this revenue stream to help solve its fiscal

problems (State fiscal begins July 1) Temporary cut or permanent Contingency plan discussion (how much effort?)

General Fund Revenues Video Gaming Tax growing, slowed rate of

growth, 5% Franchise agreements declining

Telecomm Tax dropped $14,992 (-4.05%) Cable Franchise dropped $7,261 (-3.49%)

Without pension fund tax increases, there would be no net growth in general fund revenue from last year to the current year

Without fire and police pension property tax levy increases, we have a general fund revenue decrease of $68,777 from 13-14 to 15-16

General Fund Revenues

Revenue $-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000 $10,457,305 $10,303,323

14-15 BudgetAmended

Revenue $-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000 $10,457,305 $10,478,491

14-1515-16

Amended Revenue (-1.5%) FY 15-16 (+0.2%)

GF 1st Draft FY 15-16

FY 15-16 $-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000 $10,348,027

$10,717,233

RevenueExpense

$369,206 difference

2015-2016 Pension Issues Cities fund pension funds by property tax Contributions to pension funds determined actuarial calculation

Liabilities - Assets = Property tax contribution As investments lose value or grow slower than assumed rate of

return, more taxes are required to increase assets State laws that increase pension benefits increase local liabilities

which requires more property tax Disability benefits PSEBA/PEDA Defining disability

Contributions continue rising faster than revenue growth even as funding ratios decline

Squeezing funding for other items and forcing property taxes upward

Total fire pension costs exceed regular wages to active firefighters

Pension Costs to City (property + replacement tax)

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

2014-15*

$-

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$191,550

$702,700

$97,350

$688,900

PoliceFire

Funding Ratios Two methods for determining funding ratios:

Entry Age Normal (EAN) Preferred by actuaries Tries to provide for a level ratio of annual funding

Projected Unit Credit (PUC) Used by the State Helps kick the can down the road by increasing costs as a percentage over

timeFire

EAN2014 – 62.68%2013 - 65.31%2012 – 68.68% 2011 – 74.70%

PUC2014 - 64.17%2013 – 66.88%2012 – 70.94%2011 – 77.32%

PoliceEAN

2014 – 64.70%2013 – 64.97%2012 – 65.66%2011 – 71.46%

PUC2014 – 68.75%2013 - 69.39%2012 – 70.31%2011 – 76.46%

Levy Distribution

General Fund:37%

Library11%

Band2%

Coliseum2%

IMRF6%

Social Security6%

Civil Defense0%

Police Pension19%

Fire Pension18%

2015-2016 Union Contracts Fire union contract

1.75% increase May 1, 2015 Police union contract

Contract expired April 30, 2013 Awaiting arbitration decision

City Final Union Final

What do we plan for non-union workforce in FY 15-16? Personnel costs make up majority of the General Fund

Wages effect social security contributions Wages effect pension contributions Wages effect Workers’ Compensation Insurance (work comp

insurance is a percentage of salary, ex. 20.03% of firefighter salary is needed for work comp insurance)

GF Issues 15% increase in health insurance

($154,879 increase) 10.2% increase in general insurance

($48,831) SFD OT containment Police equipment requirements (thank

you 21st century) tasers, taser cameras, video recording storage, Mobile computer replacements, etc)

GF Non-Department 15% health insurance increase

Self-funded Bad Claim year

General Insurance 10.2% increase

General Fund Plan Commission

Should finalize Zoning Code in FY 15-16

Annual maintenance to County to maintain our GIS data and give us access to “Beacon”

Fire Police Commission

Mayor & Council Chromebooks in

amended budget City Clerk Administrative

Add half-time secretary back?

Fire Department Admin no significant changes Services

regular salaries down due to younger department

increases for maintenance and equipment up and down

Prevention has no significant changes

Police Department Admin is not changed significantly Services

Down slightly, also thanks to younger department Equipment does increase $18,403

Investigation is up Back to full staff in investigation for full year Increased amount for squad replacement

Support Services up 8.51% MDC units in equipment Part time dispatcher to full time (retention) Part time support to full time for records needs to stay in

compliance with the State Various grant funds

Public Works Admin – no significant changes Street

Increased vehicle maintenance Increased traffic/street lighting

Traffic Increase for requested line striper

Parks Landscaping maintenance increase New watering tank for landscape

GF Code

Enforcement Nothing

significant

City Shop Increase for new

shop lighting Various small

equipment requests

2015-2016 Capital Budget Residential Street Reconstruction (local

option sales tax funded) Dump Truck/Plow -$115,000 Squad Replacement for SFD - $35,000 New plow for endloader - $16,000

Capital Fund

FY 14-15 Amended 14-15

FY 15-16 $-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

$2,000,000

$1,596,467

$1,381,738 $1,423,034

$1,896,376

$1,431,555 $1,422,919

Revenue Expense Amended Revenues: 4.3%▼ Amended Expenses: 24.5%▼ Amended Difference: -49,817

FY 14-15 Revenues: 10.9%▼ FY 14-15 Expenses: 25%▼ FY 14-15 Difference: +$115

Streetscape on hold Replace PW DumpTruck/Plow Replace plow for endloader Replace FD Squad

Non-budgeted Capital Items Stormwater Further Housing Demolitions 13 E. 4th Street Demolitions Lawrence Brothers Property

Maintenance Cleanup

Stanley/National Property Demos Redevelopment Maintenance Cleanup

Former NWSW Property Grandon Improvements

Fire Pension Fund The Fire Pension Fund Board manages

the Fire Pension Fund as prescribed under Chapter 5, Section 4 of the Statutes of the State of Illinois. State law outlines: Benefits Board composition

All sworn firefighters are enrolled

Fire Pension Fund

FY 14-15 Amended 14-15

FY 15-16 $-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$912,904 $961,419

$1,034,036

$1,232,279 $1,321,242

$1,428,683

Revenue Expense Amended Revenues: 5.3%▲ Amended Expenses: 7.2%▲ Amended Difference: -

$359,823

FY 15-16 Revenues: 13.3%▲ FY 15-16 Expenses: 15.9%▲ FY 15-16 Difference: -

$394,647

Added retirements this year

Police Pension Fund The Police Pension Fund Board manages

the Police Pension Fund as prescribed under Chapter 5, Section 3 of the Statutes of the State of Illinois. State law outlines: Benefits Board composition

All sworn officers are enrolled

Police Pension Fund

FY 14-15 Amended 14-15

FY 15-16 $-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,090,997

$1,178,520 $1,228,517

$966,360 $1,097,850

$1,107,700

Revenue Expense Amended Revenues: 8.0% ▲ Amended Expenses: 13.6%▲ Amended Difference:

$80,670

FY 15-16 Revenues: 12.6% ▲ FY 15-16 Expenses: 14.6% ▲ FY 15-16 Difference:

$120,817

Additional retirements in Amended and in 15-16

NWSW Redevelopment Fund

FY 14-15 Amended 14-15

FY 15-16 $-

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000 $146,450

$146,450 $146,450

$24,319

$12,533

$73,438

Revenue Expense Amended Revenues: 0.0% Amended Expenses: 48.5%▼ Amended Difference: +

$133,917

FY 15-16 Revenues: 0.0% FY 15-16 Expenses: 202.0% ▲ FY 15-16 Difference: +$73,012

Revenues from donation and rent for “Best Cob” facility on Wallace Street

RLF Reimbursement in FY 15-16

Prioritizing City Projects & Goals Strategic Planning with new Council

Develop competitive edge, don’t just tread water or shotgun an approach Community Input

Key person interviews Open workshops Surveys

Staff Input Develop Assets Inventory

Natural Community Infrastructure Intangible

Goals (examples) Job-ready Population growth/stabilization Make Sterling a premier choice for downstate, small city living Create a destination environment for the downtown/riverfront Promote preservation and utilization of our parks and natural areas Budget Planning

Prioritizing City Projects & Goals Strategic Planning with Council

Action Items Riverfront Lawrence Park Quiet Zones One-Ways Community Gateways Annexations Grandon Wastewater Plant, Extensions, Inflow & Infiltration Stormwater Management Housing (Rentals, Dilapidated, Demos, new) Historic Preservation Bike Paths/Sidewalks Trees (Ash, Street Trees, etc) Community Events Internal Improvements

Outside requests Main Street – funding, events, Farmer’s Market GSDC - development, ongoing contributions, property development/investment Sterling Today – landscape/downtown maintenance, redevelopment projects Chamber – Parades

Council Comments