dear mayor whipple and members of the city council - policy message.pdf · this spirit of...

2021-2022 Proposed Budget Wichita, Kansas

Honorable Mayor Brandon Whipple, Members of the Wichita City Council July 21, 2020 Dear Mayor Whipple and Members of the City Council: Pursuant to state statutory requirements, the 2021-2022 Proposed Budget is presented to the Wichita City Council. This Proposed Budget has been developed in midst of a very uncertain times, due to the Covid-19 pandemic. What initially seemed a distant threat now has a considerable impact on our community. In mid-March, the City of Wichita closed courts, libraries, recreation centers, and cultural facilities. That was followed by the announcement on March 17 that school was cancelled through the end of the school year. A state-wide stay-at-home order was issued on March 30, which expired on May 3. Since then, the Governor has ordered a statewide mask order, and on July 8, the Sedgwick County Health Officer issued a mandatory order requiring that masks be worn in public. The Covid-19 pandemic has changed many aspects of our society. Our paradigm on social interaction has been altered, our way of providing services up-ended, and the City has experienced significant reductions in key revenues. During this period, the 2021-2022 Proposed Budget has been developed. In shaping this Proposed Budget, the City has relied on a solid foundation that the Covid-19 pandemic can not impact: The City Council approved mission and goals, City organizational values, the importance of engaging stakeholders and residents, and the innovation and resiliency of the City organization and staff.

ALIGNMENT WITH THE CITY’S VISION, MISSION AND VALUES

The City of Wichita is a large organization that provides a variety of services to residents and visitors. Each activity, strategy, and outcome in the 2021-2022 Proposed Budget is guided by a clear vision, a simple mission, and values. In addition, the mission and goals provide guidance in prioritization of services and strategies. Those strategies that provide outcomes most directly related to achieving City goals can be priorities, while any necessary reductions in spending can be targeted towards those strategies that, while important, are not as directly or critically related to achieving City goals. The City’s vision is to be a leading–edge organization serving a dynamic and inclusive community. Based on this vision, the City Council adopted a clear and simple mission statement: As an exceptionally well-run city, we will:

Keep Wichita safe,

Grow our economy,

Build dependable infrastructure and

Provide conditions for living well.

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The Budget funds strategies that align to the City’s mission. In 2018, all activities were categorized as either “untouchable” or “touchable.” “Untouchable” activities are those activities that are legally required, intrinsic to what residents expect from the department, or are things peer departments in other cities typically provide. In June 2020, residents had the ability to prioritize budget spending by balancing the budget using an online Budget Simulator, which provided additional feedback to validate resident priorities. These most important areas are where the City is striving for excellence, and the 2021 Proposed Budget, as well as the Capital Improvement Program (CIP), preserves funding for core services, such as Fire response, Police beat patrol, and street maintenance. Due to economic conditions, services that are important for residents, but are more discretionary, are identified for funding reductions. Examples include right-of-way mowing, tree planting, and funding for arts and cultural programs and grants. Finally, it is important to recognize the influence that the City’s values have, not only on operating strategies, but also on how budget recommendations are developed and presented. To accomplish its mission, the City anchors its work in its core values of trust and service. Trust means: Respect, Empowerment, Ethics, Stewardship, Integrity, Engagement, and Family. Service means: Professionalism, Innovation, Excellence and Equity. To summarize, everything the City does, including developing and proposing annual budget recommendations, is based on the City’s mission, which is guided by its values.

ENGAGEMENT DURING THE BUDGET PROCESS

Although engagement strategies were different this year, those continued to be very important in the development of the Proposed Budget. This engagement initially began with a series of three retreats held with the City Council in April and May 2020 that were broadcast on City7. These retreats provided initial estimates of the financial impact of the Covid-19 pandemic, and then focused on a variety of potential options to strategically align expenditures with anticipated revenues. A list of 90 options to balance the budget was presented to the City Council for review on May 26, 2020. This retreat process allows the governing body to provide informal guidance on key budget policies during a period of reduced revenue and economic uncertainty. The key recommendations in the 2021 Proposed Budget are based largely on the discussion of the 90 concepts presented. Resident engagement is a key element of the budget process. An online Budget Simulator provided residents the opportunity to balance the budget. The simulator was available from June 12 to June 30, and 3,678 simulated budgets were completed. Residents prioritized core services, such as fire and medical emergency response, persons crimes investigation, street maintenance, and municipal court. In addition to the Budget Simulator, a Social Media Town Hall was hosted for the ninth consecutive year in order for residents to vote on some of the concepts included in the list of 90 items presented to the City Council in May. These Social Media Town Hall events continue to be a very effective means of reaching residents and collecting feedback. Due to social distancing considerations, staff presented the budget virtually at City Council District Advisory Board (DAB) meetings in June. Finally, a variety of other channels were used by the Communications Team staff to enhance resident engagement. These efforts included posting videos of budget workshops and other budget

Engagement is Important

The City has consistently developed ways to enhance resident engagement. In 2020, this included the 9th annual Social Media Town Hall, the second year of the Budget Simulator, remote participation in neighborhood meet-ings, and the posting of material on www.wichita.gov and City7.

Residents have consistently indicated public safety and street maintenance are high priori-ties.

City Mission & Goals Guide Budget

Development

The Proposed Budget is developed to align funding recommendations with the City Council approved mission and goals.

City values, including innovation, excellence, engagement and stewardship, also guide recommendations.

Social Media Town Hall Participation

RESPONSES

NEXTDOOR 4,869

FACEBOOK 4,317

TWITTER 582

TOTAL 9,768

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presentations online (in addition to broadcasting them on City Channel 7), utilizing social media platforms to announce key dates and presentations and providing a variety of budget-related documents on the City’s website at www.wichita.gov.

RESILIENCE AND INNOVATION

Wichita has a history of innovation. Wichita State University’s developing Innovation Campus is a recent example of the university’s long-standing influence on innovation in the community. This spirit of innovation is also long-standing in the culture of the City of Wichita organization. From becoming one of the first mechanized fire departments in the early twentieth century, to embracing community policing strategies in the early 1990’s, there are examples of innovation throughout the organization. During the previous economic downturn, resilience was paired with innovation. Results from the semi-annual National Resident Survey for Wichita have demonstrated improvements in resident ratings for many service areas since 2006. In fact, the City of Wichita was awarded the Voice of the People Award for Transformation in Community Engagement from ICMA and the National Research Center in 2019. A decision-making framework has guided the budget process since 2009. Examples of initiatives from the last economic downturn include the outsourcing of turf mowing, the reorganization of Recreation Services, and decision support tools for major asset types. The street maintenance decision tool has guided more effective investment in the Wichita’s road network, which is a top priority for residents. Smaller-scale initiatives, such as the centralization of building maintenance, realignment of nuisance abatement and tall grass and weeds mowing with code enforcement, and ongoing technology implementations have allowed the City of Wichita to continue to provide important services to residents in an environment of constrained resources. While the Covid-19 pandemic presents many challenges, it also presents opportunities to provide excellent service to residents, but in remote or electronic ways that minimize contact. To better serve vendors and employees, staff have emphasized electronic payment options—to eliminate paper checks that require handling and interaction. In addition, staff no longer hold paychecks for pickup (which was a laborious process), but rather those are mailed to employees. To facilitate engagement and interaction, the City has pivoted quickly to using remote access for both employees and residents. District Advisory Board meetings, Pension board meetings, and even City Council meetings have been held with residents provided the opportunity to participant remotely. In cases where remote service delivery is impossible, such as Fire, Police, Transit, Park Maintenance, and Public Works & Utilities, departments quickly moved to make employees and residents as safe as possible. The Century II Convention Center was turned into a decontamination zone for Fire apparatus and EMS vehicles. A new remote training process is being implemented by the Fire Department so that staff will complete some of their required medical training and remain in their station, significantly reducing the need for crews to travel out of their Primary Response Areas. Transit maintenance staff discovered a quick and inexpensive way to make masks during a shortage. The Police Department distributes masks to residents in its effort to educate residents about the mask ordinance. Park & Recreation offered recreation programming online, focused on park maintenance due to increased usage, and prioritized day camps when facilities opened on June 29 so that parents could return to work. Public Works & Utilities Facilities Services staff have been the first line of defense against the virus in City buildings by increasing cleaning frequencies, sanitizing work spaces, distributing hand sanitizer, and installing plexiglass shields to prevent the spread of the virus. The reconfiguration of the flow of traffic inside City Hall allowed the facility to open safely in late May. These actions ensured that public safety, transportation, and water were provided without any lapses. A sampling of the employees and their actions to ensure the continuity of operations are highlighted on the budget cover this year. The 2021-2022 Proposed Budget reflects the focus on organizational resilience in the face of challenging economic and public health conditions. Due to public health considerations, no swimming pools or splash pads will open in 2020. While facilities are closed in 2020, construction of renovated pools will accelerate so those will open in 2021, rather than in 2021 and 2022 as originally planned. The temporary closure of Century II to the public has presented the opportunity to privatize operations in 2021. Public Works & Utilities have been driving toward improved energy efficiency, and this budget reflects an innovative partnership with Evergy to offset energy use through renewable energy from the Ponderosa Wind Farm. Two refurbished Fire engines are

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expected to be delivered by 2020 year-end. Refurbishing two units saved the City $500,000 when compared to the cost of new apparatus, and the Fire Department will evaluate the effectiveness of the program in 2021. Decision support tools developed by Public Works & Utilities have been key to prioritization of maintenance and capital projects, guiding difficult decision-making during the CIP process. Lessons learned from the code enforcement pilot project will result in an expanded code enforcement liaison effort in order to respond to cases more effectively and the transition of the warrant function to a contract managed by Municipal Court. After years of discussion about providing a full-service library in southeast Wichita, a lease agreement on the high-visibility East Harry corridor, rather than the construction of a new facility, will make that vision a reality in early 2021. These innovative initiatives are examples of the vision and mission of the City of Wichita serving as a framework for decision-making that is focused on outcomes.

OPERATING ENVIRONMENT

In developing the annual City Budget, it is important to identify potential external threats that could impact financial resources available for the City. This is even more critical given the Covid-19 pandemic. The City of Wichita serves as a regional economic hub for more than one million people. In addition, Wichita businesses operate in a global economy, providing products and services to customers throughout the world. At the beginning of 2020, the Wichita economy was performing well, with several positive factors that were suggesting continued economic growth. The Wichita State University (WSU) Center for Economic Development and Business Research (CEDBR) Current Conditions Index (designed to give an indication of the present condition of the Wichita metropolitan area economy) was at 98.3 in February 2020, reaching its highest level since 2008. In addition, the WSU Leading Indicators Index (designed to give an indication of where the Wichita economy is headed over the next six months) was 99.1 in February 2020, the highest level since 2008. Assessed valuation has continued to rebound, with growth in 2020 estimated at a healthy 5.2% based on 2019 sales. Through the first half of 2020, there has been strong demand in the residential real estate market, fueled in part by low interest rates. Before the pandemic, the WSU Center for Real Estate projected an increase in home prices of 4.3% in 2020. This budget is based on assessed valuation growth of 1.5% for the 2022 Projected Budget, which is based on sales in 2020. This is due to weakening local economic conditions, largely a result of the expected impact of the Covid-19 crisis. Retail sales also demonstrated strong growth of 3.5% in 2019. The response to the pandemic has halted that growth. CEDBR projects a 10.6% decline in retail sales, which is included in sales tax revenue projections for 2020. Income and unemployment both impact retail sales. Though nominal personal income increased by 6.2% in 2018 and was expected to grow by 5.7% in 2019, it is projected to be followed by a 15.8% decline in 2020. Total employment in the Wichita Metropolitan Statistical Area (MSA), as reported by the Bureau of Labor Statistics, continued to improve through March 2020, with employment reported at 308,273, which was 6,213 higher than March 2019. The pandemic had an immediate impact on employment levels in the Wichita area in April. The Bureau of Labor Statistics preliminarily reported employment at 274,062 in April 2020, a decrease of 34,211 as compared to the prior month and 30,396 lower than April 2019. In 2019, the Wichita area unemployment rate declined for the ninth consecutive year to 3.4%, but the preliminary calculation for April 2020 is 17.8%. When Boeing froze production on the 737 Max airliner in December 2019, the impact was felt throughout the supply chain. The impact on Sprit Aerosystems’ Wichita operations, which supply fuselages for the 737 Max, had already impacted employment in the aviation sector before the impact of the Covid-19 pandemic. Other aerospace companies and suppliers have announced furloughs in response to the pandemic. Wichita’s concentration in aerospace manufacturing will result in a potentially slow recovery if air travel remains at low levels.

City Operating Environment

The Wichita economy was fundamentally strong and performing well...until the Covid-19 pandemic.

Assessed valuation is performing well in 2021, but is expected to lag the economic downturn; sales tax is expected to drop im-mediately, with a slow recovery projected.

Any prolonged weakness in the aviation in-dustry could impact economic conditions in Wichita.

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Although the local economy grew at a moderate pace in 2019, the national economy officially entered into a recession in February 2020. The impact of a recession impacts City of Wichita revenue in a lagging manner. This budget has been developed with an immediate downward projection for many City revenue sources, including sales tax and motor vehicle tax collections. After a lag period, a recession would likely diminish growth in the assessed valuation base. While the City is aggressively pursuing a number of policies and strategies to facilitate local economic expansion, the projections included in the Proposed 2021 Budget are adjusted with a conservative view, based on the events of the past four months.

FINANCIAL PLAN

Perhaps two of the most important City values are stewardship and professionalism. Both values guide the financial planning process that is integral to the 2021 Proposed Budget. Each year, a Financial Plan is developed, including a longer term view with five-year projections. Although projecting for that length of time is challenging at best, and is compounded with the current Covid-19 crisis, the Financial Plan attempts to identify potential issues and trends, quantify the impact of those issues and trends, and provide thoughtful and strategic responses for potential policy direction. TOTAL CITY REVENUES AND EXPENDITURES - The 2021 Proposed Budget includes $629,661,161 in expenditure authority among all of the City’s funds (net of interfund transactions and not including Trust funds and grants). For the 2020 Revised Budget, total expenditure authority of $575,084,850 is included; an increase of $35.6 million over 2019 actual expenditures. The 2021 Proposed Budget of $629,661,161 represents an increase of $54.6 million over the 2020 Revised Budget. However, a significant portion of the increased expenditures budgeted in 2021 ($51.1 million) are related to the appropriation of reserves, consistent with State statute. These reserves will most likely not be spent, but State law requires that any amount of fund balance in excess of 5% of expenditures be appropriated. After adjusting for appropriated reserves, the budget growth is $3.6 million in 2021; an increase of 0.6%. GENERAL FUND - The General Fund is used to finance City services cited by residents as the most important, including police operations, fire protection, parks, transit, and infrastructure maintenance. General Fund expenditures account for nearly half of the entire City budget. Expenditures in the General Fund are aligned with revenues, resulting in a balanced budget in 2021. However, consistent with financial forecasts from previous years, maintaining a balanced General Fund budget in the future will require continued diligence and foresight. Slow growth is projected for property tax and sales tax, and interest earnings are expected to decline. Additionally, many revenues are significantly impacted by environmental and technology changes as pointed out in the past. Despite these challenges, the City has a long history of balancing the budget annually. RESERVE LEVELS - The City maintains reserves in a variety of funds. Reserves provide liquidity for the City, which is particularly important in the event of emergencies, unforeseen circumstances, or downturns in revenues. Reserves also ensure adequate cash flow to fund City operations. However, perhaps one of the most important reasons to maintain (and increase) reserve levels is the impact of reserves on the City’s bond ratings. Maintaining consistent bond ratings is very important to mitigate borrowing costs. The ratings are based on multiple factors, including existing reserve balances. The City has consistently maintained favorable bond ratings, and has enjoyed competitive access to capital markets. The balance in the General Fund will be $35.4 million, which is an estimated 14.3% of expenditures in 2021, exceeding the 10% policy minimum. The General Fund reserve balance has increased annually for the past ten years, from $22.5 in 2009 to $36.4 in 2019. The Proposed Budget does project a one-time draw on General Fund balance in 2020 of $1 million due to the rapid change in economic conditions and the costs associated with responding to Covid-19 challenges. However, due to an increase in reserves of $1.5 million in 2019, the reserve level after the 2020 drawdown will still be higher than the projection in the 2020 Adopted Budget. In addition, staff will seek to eliminate any draw on 2020 reserves, including aggressive efforts to receive pass-through CARES grant funding from Sedgwick County to mitigate any unexpected Covid-19 expenses.

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MILL LEVY RATE - The General Fund budget is based on a mill levy rate of 25.720 mills, which is 0.51 mills higher than the 2020 Adopted Budget due to the shift of 0.51 mills from the Debt Service Fund to the General Fund. The total mill levy rate for the City is estimated at 32.720 mills in 2021, the same as the rate levied in 2020. GENERAL FUND EXPENDITURE GROWTH - General Fund expenditures in 2020 are projected to decrease by $0.9 million, or 0.4%, over 2019 expenditures, with 2021 growth of $5.3 million, or 2.2%. Reductions in 2020 are attributable to lower costs for fuel, a hiring freeze, service level adjustments outside of public safety, and rate holidays for information technology and fleet charges. Some of the factors contributing to lower than average growth for 2021 are a health insurance holiday for one pay period, continuation of the hiring freeze, and privatization of performing arts and convention center operations. Expenditures are dominated by salaries and benefits. Base wages are a function of employee demographics, union wage agreements and the number of positions filled. Benefit costs are more challenging. Although the City has aggressively pursued strategies to moderate growth rates, health insurance costs (which total 12% of General Fund expenditures) are budgeted to grow 8% annually. The City Council has traditionally and prudently fully funded the actuarial recommendations for pension contribution rates, which is reflected in the funded ratios of the City’s pension plans. However, adverse market conditions, or changes in actuarial assumptions, can potentially impact pension contribution growth rates in the future. To preserve the financial health of the General Fund, it is important to consider strategies to limit expenditure growth and enhance revenue growth. Staff continually examine best practices and cost structures, with the objective of minimizing the costs of providing City services. Concurrently, staff will continue efforts to enhance user fee revenue by developing appropriate cost recovery rates for services. OTHER FUNDS - The City budget is comprised of 28 additional funds. These funds are reviewed in greater detail in the Financial Plan section. Generally, most of the City’s other funds are stable, with adequate reserves and favorable forecasts. However, two funds merit further discussion.

Golf Fund. The golf system continues to face a very challenging future. Nationwide, the golf industry continues to have challenges. Several Wichita area courses have been closed in the past decade, but there is still more supply than there is demand for golfing. A General Fund subsidy of the Golf Fund occurred in 2019, but there is no available capacity in the planning period for additional support. Staff will be responsible for developing fiscal sustainability options to ensure

continuity in golfing facilities, while avoiding subsidization.

Transit Fund. The long-term outlook after 2021 is stable, but challenged. The Transportation Department has lowered operating costs and increased revenue and ridership through innovative partnerships and reduced operating costs due to

MILL LEVY RATE 2020

ADOPTED 2021

PROPOSED

General Fund 25.214 25.720

Debt Service Fund 7.506 7.000

TOTAL 32.720 32.720

Low and Stable Mill Levy Rate

For the 27th consecutive budget, the mill levy rate will be equal to the prior year. Wichita’s mill levy rate is also expected to remain one of the lowest in the area.

Long-Term General Fund Financial Plan (Dollars in Millions)

2020

REVISED 2021

PROPOSED 2022

PROJECTED 2023

PROJECTED 2024

PROJECTED 2025

PROJECTED

Revenues $241.5 $247.8 $252.5 $255.3 $259.4 $263.8

Expenditures $242.5 $247.8 $255.3 $259.2 $263.3 $267.5

Margin ($1.0) $0.0 ($2.8) ($3.9) ($3.9) ($3.7)

EXPENDITURE GROWTH (0.4%) 2.2% 3.0% 1.5% 1.6% 1.6%

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electric buses. The discontinuation of in-person school in March 2020 impacted ridership and revenue. Structural deficits remain due to expenditure growth that outpaces revenue growth in the five-year forecast. However, additional funding from

the Federal Transit Administration should provide sustainability during the planning period.

KEY RECOMMENDATIONS

The 2021 Proposed Budget is a plan that adapts to the challenges posed by the operating environment and allocates resources to produce outcomes consistent with the City’s mission. In addition, the recommendations are designed to enhance performance and strive for excellence in “untouchable” activities. To determine the outcomes produced by the City, an extensive performance management system is utilized. Staff report on performance through over 400 measures, many of which are included in this Proposed Budget document. When developing the budget, targets are established for each performance measure. These targets represent the level of performance expected based on the amount budgeted and anticipated operations due to social distancing and the stay-at-home order from March to May 2020. Not only is transparency enhanced by reporting exactly how well the City performed in certain areas, these targets are an important tool to help determine whether the appropriate amount of resources are provided, and whether new operating strategies should be considered.

Keeping Wichita Safe - The 2021-2022 Proposed Budget includes funding for the implementation of Phase Two of the Police Staffing Study. In 2016, the City utilized a consultant to develop a staffing plan to further improve policing outcomes. This plan was developed based on an examination of current staffing levels and best practices in policing. The plan is divided into three phases and is scalable. Phase I civilianized several positions, allowing commissioned officers to return to patrol duty. Patrol officers have been added, with the goal of increasing the amount of proactive police patrols. Initial funding for Phase II of the Police Staffing Study was included in the 2019 Revised Budget. Staffing is itemized in the 2020 Revised Budget in order to create a fifth beat patrol bureau for the central area of the city and add capacity for investigations. Funding for six positions is provided by a three-year COPS Grant.

A grant had been used to fund six Police Officers for the Broadway Corridor project in order to provide foot and bicycle patrols. Due to this program’s success in reducing crime rates and improving resident and business safety, the positions are funded by the General Fund in the 2021-2022 Proposed Budget. The Fire Department has collaborated with Sedgwick County Emergency Communications and EMS since 2017 to coordinate responses to medical calls. By reducing the number of non-emergency medical responses serviced by the Fire Department, overall call volume has been reduced by 18 percent, allowing the Department to focus on critical incidents. The Fire Department also partnered with other City and County agencies on ICT-1, which uses a combination of medical, mental health, and law enforcement resources to assist residents who have issues beyond or in addition to traditional medical needs. The Fire Department is in the process of implementing a software analysis tool to improve deployment, which is anticipated to be completed and in use in 2021. Dependable Infrastructure - Street Maintenance, an “untouchable” activity, continues to be prioritized. In the CIP a total of $11 million is allocated for the Outsourced Pavement Prevention Program (OP3) in 2021, an increase from the $10 million budgeted in 2020. Longer term, street maintenance funding is scheduled to continue increasing to a level of $20 million in 2030.

The 2021-2022 Proposed Budget allocates $3.6 million from the General Fund to support Transit operations for a three-year period. This temporary decrease of 5% from the 2020 Adopted Budget will be offset by additional CARES Funding. The General Fund contribution is supplemented with an additional $1 million annually through 2020. This was approved by the City Council in

Police Staffing Study

The 2020 Revised Budget adds 26 commis-sioned positions in the Police Department, six of which are funded by a COPS Grant.

Pavement Maintenance

Contracted street maintenance funding is scheduled to continue increasing in the CIP to a level of $20 million in 2030.

Fire Department Collaboration

A partnership with Sedgwick County Emer-gency Communications and EMS has al-lowed the Fire Department to focus more on critical incidents.

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December 2016 from the proceeds of the Hyatt sale in an effort to develop sustainability strategies for Transit. With this funding, the Transit Fund has updated its service delivery model while improving operating efficiency. The transition of 20% of the bus fleet to electric buses by the end of 2020 will further reduce operating costs.

In 2019, a Facilities Condition Assessment was completed. Facility maintenance projects are prioritized in the CIP, which has a favorable impact on ongoing maintenance costs. A wind energy contract with Evergy will result in electricity savings estimated at $325,000 across all funds starting in 2021.

Living Well - Due to social distancing considerations, pools and splash pads will not open in 2020. This will allow for acceleration of Aquatics Master Plan construction so that five renovated pools and four new splash pads will debut in May 2021. Funding is programmed in the 2021 Proposed Budget to operate these facilities. In order to have a balanced budget, some changes to Park and Recreation operations are proposed. These changes are expected to be temporary. Planting of new trees will be suspended during the economic downturn in order to prioritize dead tree removal and pruning. Upon delivery of a remote-control grapple truck in 2020, five positions will be frozen.

After the Advanced Learning Library opened in June 2018, efforts to discern the role of branch libraries resulted in the Branch Library Study. During the Social Media Town Hall, residents were asked whether hours of operation or materials purchases should be prioritized. The feedback was that hours should be prioritized. Library hours and locations are unchanged in 2021, and funding is included in the Proposed Capital Improvement Program for improvements at each branch location. A reduction in the budget for library materials is included in the 2020 Proposed Budget. Funding allocated to cultural institutions in the 2021 Proposed Budget is 5% less than the prior year. Efforts to improve cost recovery at Old Cowtown and CityArts have been challenged by closures from March to May 2020 and social distancing considerations, but efforts to improve efficiency are ongoing. In order to leverage industry best practices, Century II operations will be privatized starting in January 2021.This change is expected to eliminate the need for an annual subsidy from the Transient Guest Tax Fund, which is approximately $2.7 million per year. That funding can be directed to other eligible activities. Growing our Economy - The City of Wichita continues to partner with the Wichita Downtown Development Corporation, which is funded in part by the Self-Supporting Municipal Improvement District (SSMID), to revitalize and energize downtown. The assessed valuation in the SSMID increased by 6.27%, which is evidence of private sector investment in downtown. The Douglas Market Development, which is part of the Center City South TIF, will include the Kansas Health Science Center, a culinary arts school, student housing, and a hotel. Improvements to the Chester I. Lewis Park, which was named after a prominent civil rights leader, will serve as the entry plaza for the development. Well-Run City - Ongoing process improvement efforts have resulted in significant savings and efficiencies. Examples include implementation of a Finance/HR Payroll ERP. Savings from process improvements and increased cost recovery are estimated at $250,000 per year in 2021 and 2022. The Information Technology Department swiftly moved the organization to remote working and meetings. Participation in the Bloomberg What Works Cities initiative has prompted the creation of the Wichita Innovation Lab in order to retain the focus on technology and innovation. The 2021 Proposed Budget is funded with an estimated mill levy of 32.720 mills, equal to the 2020 rate. This taxing rate continues to be of one the lowest in the Metropolitan Statistical Area. The 2021 Proposed Budget is balanced and retains General Fund reserves estimated at $35.4 million.

Aquatics Master Plan

Aley, Harvest, McAfee, Minisa, and Orchard pools will open in 2021 at the same time as four new splash pads at Boston, Edgemoor, Evergreen, and Linwood parks.

Promoting Economic Development

Additional redevelopment in the Center City South TIF will result in the Kansas Health Science Center and a culinary arts school.

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CONCLUSION

The City of Wichita is not alone in being significantly challenged by the Covid-19 pandemic. However, due to the leadership of the City Council, and reliance on the City’s mission, goals and values, a fiscally sustainable budget has been prepared. Coupled with the often-demonstrated resiliency and the history of innovation in the City of Wichita, I am confident the City of Wichita will emerge from this latest test as a stronger, more focused and more efficient organization. The Proposed 2021-2022 Budget as recommended is expected to be a step in this direction. Sincerely,

Robert Layton City Manager

Acknowledgements

The City’s 2021 Proposed Budget is based on the input and contributions of many individuals. City staff, including Department Directors and Assistant City Managers Donte Martin and Scot Rigby, played key roles in the budget process. Staff in the Finance Department spent a great deal of time assessing revenue and expenditure trends, refining the performance measurement model, researching policy alternatives, and producing this document. This staff is led by Finance Director Shawn Henning. Budget and Research Office staff includes Budget Officer Elizabeth Goltry Wadle, and analysts Trinh Bui, Lindsey Vogt, Sean Sandefur and Michelline Stokes. Jordan Torres provided assistance with documentation review and publication, and IT staff were critical in maintaining the capacity for staff to work remotely.

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The City used an online Budget Simulator and a Social Media Town Hall in June to engage residents and gather their feedback on budget priorities. There were 3,665 completed budgets from the online simulator and 9,768 votes during the Social Media Town Hall.

The online Budget Simulator focused on General Fund services, which were grouped by service area: 1) Parks, Libraries, Arts & Culture; 2) Police; 3) Public Safety; and 4) Streets. As each participant progressed through the screens to make budget choices, the impact of each de-crease was displayed. Participants could decrease support for a service (in red), or keep the level of support the same. Each time a slider bar was moved, the estimated total expenses (upper right) and the target to reach a balanced budget (upper left) were updated. Before submitting results, participants could enter demographic information and provide comments. The simulator was live from June 12 to June 30, 2020 at wichita.budgetsimulator.com. The service areas that were decreased the least were Fire and Medical Response, Persons Crime Investigations, and Pavement Maintenance. While the Budget Simulator was online, a Social Media Town Hall event was held on June 23. The six topics included in the Social Media Town Hall were presented at the City Council retreat on May 26. Those topics were about animal control, mowing, code enforcement, librar-ies, streets, and trees. Participants could vote for their preferred options on Facebook, Twitter, and Nextdoor. In total there were 9,768 votes. Feedback on a number of topics, such as the trees topic (at right) and the code enforcement topic, was relatively evenly split. On other topics, feedback was more decisive. For example, when asked whether street maintenance or street expansion should be prioritized, 93% selected street maintenance. This prioritization is reflected in the development of the 2021-2030 Capital Improvement Program.

Issue - The online Budget Simulator and Social Media Town Hall were leveraged in 2020 to increase resident

participation in the budget process during a period when social distancing requirements discouraged traditional public

meetings.

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The Covid-19 pandemic has had a severe and sustained negative impact to the tourism, convention, and theatre production industry. Century Il experienced a significant increase in 2020-2021 event cancellations, as well as a decrease in 2021 event bookings. Due to the downturn in bookings, the Division of Arts and Cultural Services and Visit Wichita reduced their workforces and have discussed opportunities to collaborate on sales activities, as well as implement processes that are more efficient and reduce costs. In addition to these efforts, the City Manager’s Office will release a Request for Proposals to privatize Century II operations. Privatizing Century II would reduce the subsidy from the Tourism and Convention Fund, help ensure a full range of comprehensive services, as well as increase branding, marketing and activity at the facility.

Issue - Historically, the Century II Convention and Performing Arts Center has been operated in-house by the City of Wichita. Shifting to a privatized model in 2021 will allow the facility to leverage industry best practices and limit the ongoing subsidy required from the Tourism & Convention Fund.

When Covid-19 cases were first diagnosed in Sedgwick County, the City of Wichita moved quickly to temporarily close facilities. The organization used available data and recommendations to provide essential field services as quickly as possible. The organization prioritized public health with operational continuity. In mid-March, facilities such as Century II, Cowtown, Recreation Centers, the Wichita Public Library, and Municipal Court were closed. City Hall was also closed to the public in late March. Reo-pening of facilities began in late May, with a phased approach that balances safety and the need for in-person services. The Park and Recreation Department has prioritized day camp programming during the reopening phase. Limited recreation clas-ses have been offered that require social distancing. The Wichita Public Library began offering curbside service on May 11. On May 26, limited access to locations began so that residents can access computers. Patrons can check out books, but shelves are only available to staff. Based on available best practices, a wait period for shelving books was implemented. Golf courses were closed initially. Two courses reopened in April and the remaining two courses reopened in May. Social distancing restrictions are in place, such as fewer tee times and a limitation on group sizes. Contactless play includes using an app for scorekeep-ing, modified holes, online reservations, and cashless payments.

At City Hall, Municipal Court reopened in late May. All pending cas-es were assigned new court dates. Public meetings are being con-ducted using a hybrid remote/on-site approach. The City Council has met on a regular schedule, but uses online comments and sim-ulcasting to include other participants. The Planning Commission has used the same approach - commissioners, staff, and residents attend the meeting from different rooms. Public Works & Utilities Facilities staff have been the first line of defense against the virus in City buildings by increasing cleaning frequencies, sanitizing work spaces, distributing hand sanitizer, and installing plexiglass shields to prevent the spread of the virus. The reconfiguration of the flow of traffic inside City Hall allowed the facili-ty to open safely in late May. Technology has been instrumental in operational continuity when facilities have been closed or to facilitate collaboration when staff must remain apart from each other. Though the Fire Department and Police Department have been providing field operations without interruption, technology has allowed for collaboration since bringing employees together is potentially dangerous. This flexibility has allowed the organization to continue to provide services and to re-spond as circumstances surrounding the pandemic shift.

Issue - The City of Wichita moved swiftly to safely provide services to residents. A new framework for operations that ensures social distancing and remote work and meeting options prioritizes public health.

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The financial condition of Wichita’s golf system has been in a slow but continual decline for over a decade. The number of rounds played has steadily fallen, leading to a decrease in course utiliza-tion, which is consistent with national trends. Many strategies have been used during this time in an attempt to maintain financial sustainability. These strategies included increas-ing rates, enhancing customer service, expanding marketing, offer-ing alternative services, purchasing modern carts, and promoting youth golfing. Despite these efforts, the Golf Fund’s condition has continued to deteriorate, jeopardizing the system’s ability to contin-ue to provide public golf. The fundamental problem is that many Golf Fund expenditures are fixed, while the utilization of the golf system has continued to decline. To consider options to reduce capacity, a staff committee was formed to take a data-driven view of options. Both quantitative and qualitative criteria were established, through which the existing golf courses were analyzed. An empirical model was developed that

evaluated the courses in terms of financial health, demand, the level of required capital investment, land restrictions, and redevelopment opportunities. A decision support tool was created by the Finance Department to help predict financial outcomes based on different scenarios. As a result of this staff analysis, the committee report recommended the closure of L.W. Clapp Golf Course, a strategy that was approved by City Council on June 18, 2019. To reduce operating costs and increase revenue, Park and Recrea-tion staff developed a variety of recommendations that are incorpo-rated in the 2020 Adopted Budget, such as rolling winter closures and furloughs and a pass plan. A positive impact was expected, but 2020 financial performance was less sustainable than in 2019. Fur-ther operating adjustments have been made to the Golf Fund in the 2021 Proposed Budget with regard to reduced capacity due to so-cial distancing and course closures in March and April. However, the Golf Fund remains unsustainable.

Issue - For over 100 years, the City of Wichita has provided public golf for local residents. Golf operations are meant to be self-supporting, but continued declines in rounds have led to overcapacity. As a result, the position of the Golf Fund is perilous, requiring continued adjustment of fees. Even with the closure of one course and winter rolling closures and furloughs, the Golf Fund remains unsustainable.

Resident concerns about local police policies and protocols resulted in reforms being submitted to the Mayor, City Council, and Police Department by community organizations. The City of Wichita has published a Response to the Community, which is available online, as an analysis of the Wichita Police Department’s policies, proce-dures, and operations. One reform recommended by community members was to “immediately defund the police department.” For some, that term means to cease all funding and disband a police department or create a new service model. For others, it means a reduction in funding and reallocation of those dollars to other departments and services. A new public safety model will be considered that empha-sizes police response to emergency situations and the improvement of community policing. Staffing to embed police officers in the com-munity to develop trusted relationships and to proactively address the issues that lead to crime is reflected in the 2021-2022 Proposed

Budget, with the addition of 26 commissioned staff. The funding for these positions was included in the 2020-2021 Adopted Budget as a non-departmental item. The funding is budgeted by line item in the 2021 Proposed Budget and the new positions will be authorized. Many of the reforms recommended by community organizations are related to training. The City of Wichita operating budget focused on enhanced training since 2019. Since then, the staffing for the Train-ing Bureau has increased from 14 to 21 in order to further improve recruitment, recruit training, and in-service training for the Wichita Police Department. This training occurs at the Law Enforcement Training Center on the WSU Innovation Campus, which is a joint effort with Sedgwick County and the WSU School of Criminal Jus-tice.

Issue - Recent events across the country have brought to the forefront the need to rigorously review local police

policies and protocols to ensure that the City of Wichita is providing equitable community public safety services. The

2021-2022 Proposed Budget funds enhanced community policing and training efforts.

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The CIP and operating budget are linked in three ways: the com-bined mill levy, the impact of infrastructure capital projects on maintenance costs, and the impact of expanded infrastructure on operating costs.

The City of Wichita continues to fund capital improvements through a wide array of funding sources in order to maintain and enhance public assets. A scoring matrix is used to prioritize projects. The financial and operating impact of potential projects is a key element considered when developing the CIP.

The City of Wichita responded swiftly to the Covid-19 pandemic during the operating budget and CIP process. Both the General Fund and Debt Service Fund levy property taxes. Though the com-bined rate is unchanged from year to year, shifts between funds allow for flexibility. In the past, the Local Sales Tax Fund was principally used for free-way projects. However, capacity is now available for the funding of street projects, such as bridges, arterial improvements, and street maintenance. In the 2019 Adopted Budget, one mill was shifted from the Debt Service Fund to the General Fund in order to imple-ment the Police Staffing Study. For the 2021 Proposed Budget, an additional shift of 0.5 mills from the Debt Service Fund to the General Fund is budgeted for two years. This shift is possible due to the delay of 18 projects valued at $28.2 million. Examples of projects that are delayed include branch library improvements, bikeways, and street expansion projects.

CIP capacity is leveraged to improve infrastructure condition and reduce maintenance costs in the operating budget that stem from system failures and result in downtime. The Facilities Decision Sup-

port Tool, was used for the first time during the CIP process to in-form the programming of facilities maintenance projects. Contract street maintenance is included in the CIP. The overall value of the street network has increased from $444 million in 2014 to $570 million in 2019. Well-maintained streets reduce operating costs for spot fixes. Water line replacements ($61.5 million) and Sewer line replace-ments ($61.5 million) are funded in the CIP. Renewal and replace-ment of the distribution network reduces operating costs related to emergency repairs.

On June 4, 2019, the Wichita City Council approved an update to the Aquatics Master Plan, which includes CIP funding for the reno-vation of six neighborhood pools and the construction of six new splash pads. The renovated pools will use utilities and chemicals more efficiently—thus saving operating funds—and will enhance the overall experience for residents. Funding is included in the 2021-2022 Proposed Budget for operations and maintenance of the new facilities. In addition to these large capital assets, the 2021-2030 Capital Im-provement Program includes funding to help support operating budget initiatives. This includes dollars for street maintenance, park facility improvements, athletic courts, Old Town parking improve-ments, cultural facilities, replacement of heavy equipment and the replacement of all Police stations and three Fire stations.

Issue - The Operating Budget and the Capital Improvement Program (CIP) for the City of Wichita are linked in order to provide services that residents value.

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The Wichita Police Department Animal Control Division is the only agency in Wichita tasked with enforcing animal control ordinances. They respond to a variety of calls for service related to animals that are lost or abandoned, strays, confiscations, evictions, dog bites, dangerous dogs, exotic animals, and rabies quarantines. Ordinance changes similar to other communities, such as Overland Park, would limit the scope of responsibilities so that Wichita Animal Con-trol would not address lost, abandoned or stray cats. Currently, the Wichita Animal Shelter takes in animals from resi-dents, as well as Animal Control Officers. Resident surrenders com-prise 50% of the volume at the Wichita Animal Shelter. This reduces the capacity of Wichita Animal Control Division to enforce ordinanc-es in order to ensure public safety. In order to sharpen the focus on animal control ordinance enforce-ment, intakes at the Wichita Animal Shelter will be limited to animals

brought in by Animal Control Officers in the course of enforcing animal control ordinances. Peer cities such as Topeka do not oper-ate animal shelters. The City of Wichita would have a modified ap-proach where Wichita Animal Control intakes would be held at the current Wichita Animal Shelter. But similar to peer communities, residents would be directed to other shelters for animal intake. This transition could require changes in ordinances in order to focus the efforts of Wichita Animal Control on improving public safety. It is anticipated that outcomes related to Animal Control Field Services would be improved following this transition. As a part of the Zero-Based Budgeting Process, Animal Control Field Services was iden-tified as a untouchable activity in the Police Department. However, Shelter Services was not, since it is not intrinsic to the core function of the City of Wichita and is provided by other organizations.

Issue - In order to focus the Police Department Animal Control Division on field operations, the transition of the shelter

by limiting the intake of animals brought in during the normal course of business by Animal Control Officers is included

in the 2021 Proposed Budget.

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Operations in 16 departments plus the City Council are funded by the 2021 Proposed Budget. Brief reviews of each department are provided in this section. AIRPORT—The 2021 Proposed Budget includes $31,641,222 in expenditures for the Airport Fund. Airport seeks to provide a safe, efficient, customer friendly, and fiscally responsible airport system that serves the airport tenants, airport users, and the public. The new Dwight D. Eisenhower National Airport terminal opened in June 2015. In 2019, there were 876,640 enplaned passengers that utilized the services of Airport, which was a 5.3% increase over 2018. Passenger levels at Eisenhower National have been significantly impacted by the Covid in 2020. Projections of passenger traffic for 2020 show it to be 50% of 2019. In reaction to the pandemic, federal grant money of $11.5 million was awarded to the Airport which will be used to pay operating and debt service expenses. CITY MANAGER’S OFFICE—The 2021 Proposed Budget includes a total of $12,482,196, including $9,282,228 from the General Fund with $7,656,532 to finance operations in the City Manager’s Office; and $4,825,665 to support Arts and Cultural Services. The City Manager’s Office seeks to provide professional leadership and management for the City of Wichita. Through this leadership and management, City Council and community priorities are promoted, community engagement remains at the center of the decision-making and resource allocation process, and cultural amenities are made available to the residents. In July 2019, the Customer Care Center launched AccessWichita which provides residents access to City services and information. FINANCE—The 2021 Proposed Budget for Finance includes a total of $178,828,803, with $6,256,949 from the General Fund. The Finance Department seeks to maintain a sound framework for managing financial resources for the provision of City services. Throughout 2019, Finance staff in multiple divisions were involved with implementation of the new Finance/Payroll/HR ERP. The Finance ERP project went live in January, 2020 and the HR/Payroll ERP project will be completed in 2020. FIRE—The 2021 Proposed Budget for the Fire Department is $52,719,673, with $854,972 from grants and the balance from the General Fund, $51,864,701. The Fire Department seeks to provide Wichita with excellent and proactive fire and life safety services through prevention, education, and protection services. A quick response to fire and medical emergencies minimizes the risk of loss of life and property damage. The City has collaborated with Sedg-wick County to create the Integrated Care Team (ICT) community para-medicine program that will provide an alternative approach to community needs that cannot be met by first responders.

HOUSING AND COMMUNITY SERVICES—The 2021 Proposed Budget for Housing and Community Services is $29,333,778, of which $29,716,514 comes from grants and $382,736 from the Homelessness Fund. The Housing and Community Services Department seeks to impartially stabilize neighborhoods by administering various affordable housing programs and providing well-being services to help residents break cycles of poverty. Housing and Community Services is primarily supported by federal grants, which can fluctuate and increase the difficulty of long-term planning. High priority activities through 2024 will consist of infrastructure, infill housing development and homeownership, home repair, and public services including youth programming, domestic violence shelter services, and neighborhood assistance. HUMAN RESOURCES—The 2021 Proposed Budget for Human Resources is $1,827,366, which is completely from the General Fund. The Human Resources Department supports City departments by ensuring a diverse, inclusive, and well-trained workforce. Human Resources will continue to monitor industry trends to support hiring and training strategies. HR is partnering with Finance to implement the new Finance/Payroll/HR ERP system. INFORMATION TECHNOLOGY—The Information Technology Fund budget will be $14,264,414 in 2021. The Information Technology Department seeks to provide cost-effective and competitive solutions, achieve operational excellence, and deliver strategically aligned technology and innovative solutions. Technology management and improvements support the efforts of every City service. Information Technology staff provide support to operating departments when technology systems are replaced and updated. Current projects in 2020 and 2021 focus on large system upgrade projects: Finance, and Human Resources/Payroll (ERP) and Records Management systems for both Police Department and Municipal Court. LAW—The 2021 Proposed Budget for Law is $3,194,539 with $3,032,440 from the General Fund and $162,009 from grants. The Law Department seeks to represent the City in legal actions, provide legal advice, and manage the City’s diversion and deferred judgment programs. Law Department staff will be evaluating the optimal levels of in-house and third-party counsel to represent the City. Since 2016, there has been an increase in Kansas Open Records Act requests and staff is working to implement an online records management system to streamline the fulfillment process.

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LIBRARY—The 2021 Proposed Budget for Library services totals $9,500,608, of which $9,239,033 comes from the General Fund and $261,575 from the Grant Funds. Precautions related to public health during the COVID-19 pandemic led to branch closures and limited services for several months. During this time, curbside pickup was offered and Library staff focused on serving citizens through digital content. Library staff continues to focus on a variety of new programming initiatives including: 1000 Books Before Kindergarten, an early literacy/school readiness initiative; Candid Conversations: a Discussion of Race in Wichita; and Learning Circles, lightly facilitated online courses offered in a collaborative setting. METROPOLITAN AREA BUILDING & CONSTRUCTION (MABCD)—The 2021 Proposed Budget for MABCD totals $6,197,394, with $1,143,681 from the City’s General Fund, $4,953,713 from the MABCD Fund, and $100,000 from a Community Development Block Grant. MABCD seeks to ensure that all residential and commercial structures and properties are properly and safely planned, built, and maintained within Wichita and Sedgwick County using national best practices, while providing fair and equitable rules for the local building industry. METROPOLITAN AREA PLANNING (MAPD)—The 2021 Proposed Budget for MAPD totals $2,090,715 with $1,613,487 for Planning Services and $477,229 for the Zoning Enforcement Program. MAPD seeks to provide professional planning services to the community regarding land use, community facilities, and infrastructure needs so that the Wichita/Sedgwick County metropolitan area continues to be a quality place to live, work, and play. MUNICIPAL COURT—The 2021 Proposed Budget for Municipal Court is $14,427,045, with $7,733,431 from the General Fund and $3,028,614 from the Special Alcohol and Drug Programs Fund, and $3,665,000 from the Municipal Court Restricted Fund. Municipal Court seeks to impartially uphold the City of Wichita Municipal Code and facilitate the interests of justice in a thorough and fair manner. Municipal Court will implement paperless workflow in 2019 and 2020. This department will take advantage of workflow software available within the organization. Responsibility for the Special Alcohol and Drug Abuse Programs Fund was transferred from the City Manager’s Office to Municipal Court in 2018. Special courts and alternative sentencing options will continue to be evaluated in the context of a holistic systems approach that is managed by Municipal Court.

PARK AND RECREATION—The 2021 Proposed Budget for Park and Recreation totals $21,171,875, with $17,032,567 from the General Fund, $4023,789 from the Golf Fund, and $115,519 from the Cemetery Fund. Park and Recreation seeks to provide high-quality life experiences to the Wichita community through the enhancement of world-class amenities and activities. POLICE—The 2021 Proposed Budget for Police services includes $99,224,175, of which $98,088,648 is funded through the General Fund and $1,224,264 is funded through Grant Funds. The Police Department provides professional and ethical public safety services in partnership with citizens, and identifies, prevents, and solves the problems of crime, social disorder, and neighborhood decay, thereby improving the quality of life in Wichita. Police services help ensure physical safety and protect both public and private property. PUBLIC WORKS & UTILITIES—The 2021 Proposed Budget for Public Works & Utilities includes $270,850,781, with $34,429,145 from the General Fund, $152,777,427 from the Sewer and Water Funds, and $83,644,209 from a combination of grants and other funds. The Public Works & Utilities Department seeks to plan, design, construct, and maintain Wichita’s transportation, drainage, water, and wastewater infrastructure, as well as its public buildings and vehicles, and to protect and preserve the environment. Protecting public infrastructure can help lower long-term maintenance costs and protect the environment. Public Works & Utilities will continue to allocate resources to priority areas in the community, such as street maintenance. TRANSPORTATION—The 2021 Proposed Budget for Transportation includes $5,861,978 in the Transit Fund, $2,739,891 in the Downtown Parking Fund, and $10,593,706 from grants for a total of $19,195,576. Transit is overcoming structural deficits through a variety of operational efficiencies, the procurement of several electric buses that will replace older models in the fleet, and through strategic local partnerships with USD 259 and WSU, netting approximately $400,000 in revenue. Transit ridership has declined during the COVID crisis and the entity has received $14 million in federal CARES funding.

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