GENERAL CONSIDERATIONS
Best Small City in the Country;
One of the Best Sport Cities in the Country; One of the Best Small Metro Areas
for Business; Boom Town; 50 Smart Places to Live; One of Best Quality of Life
Cities; Recession-Proof Economy; 25 Best Cities to Find a Job; and Lowest
Unemployment Rate in the Country. These
are recent headlines describing the City of
The most severe downturn in the national economy in recent history has an obvious influence on all of the above. The results are clearly being seen in local businesses dependent upon regional, national, and international markets. Major private sector investments dependent upon national financing have been postponed or terminated altogether. Financing for public sector investments has also been significantly slowed. Private individuals’ retirement programs, personal savings, and other investments have also been greatly reduced. It is clearly a time for prudent considerations in managing all public, private, and personal finances, and it is this influence that guides the proposed budgets that are the body of this document.
With this presented, there are major initiatives continuing to develop that will influence the prosperity of the area. Municipal related projects include:
RIVER FRONT DEVELOPMENT: The current phase of this development
remains on schedule. $28,000,000 in economic development grants; tax increment
financing; and private sector financing is in place. Occupancy of the new
Construction of the road and
utilities could start later this calendar year with construction of the
DOWNTOWN
SUNNYSIDE: This past year, an important tool was put in place to assist in the redevelopment of the Sunnyside area. The Tax Improvement Financing District and Tax Improvement Financing Project established by Council well positions this project for future opportunities. National financing problems currently retard any immediate, substantial development, but as the economy improves, this project is prepared to move forward as well.
SPECIAL NOTES
Every annual City Budget is unique. From year to year, circumstances change, opportunities are realized or lost, and in some years there are telling influences over which the City has limited influence. This year is one of those years that has to contend with the latter point. To highlight the unique features of this year’s proposed budgets, the following considerations are noted:
1. As described earlier, the national economy does influence the local one. Cities all across the Country are enacting harsh financial measures to contend with the situation. Although Morgantown does not have to consider measures as drastic as elsewhere, the national economy still has an important impact. In additional to national considerations though, City of Morgantown budget documents are also being greatly influenced by the growth and development of new businesses just outside of the City. Major shopping centers, residential developments, and strip centers that have been constructed outside of the City all compete with City businesses for limited, discretionary dollars in the local economy. This diffusion of funds erodes the City tax base that supports many of the core, public services that make a market possible in the first place. The point made here is that for the first time in recent history, the growth of the City tax base is projected to be almost non-existent–unlike previous years with growth rates of 7%, major revenue streams for next year are projected at near 0% (although growth of regular revenue is flat, the proposed General Fund is actually is $1,273,000 less than this year principally because of the preceding year cash carry-over and decreased B & O Construction Tax in the new year);
unfortunately, growth rates for expenditures are not standing still at all–for example, just recently the City witnessed a 20% increase it its health insurance costs.
2. To help bridge these divergent, revenue expenditure growth rates, the proposed budget documents include the following measures: A: In the Capital Escrow Account, all current projects have been reviewed and in some instances alternate financing arranged, and in others it is recommended that projects be postponed (additional detail in the budget message): B: The City carefully segregates one time revenues from funding ongoing expenses (the proposed Budget observes this principle), but for the first time, the proposed budget does include ongoing Coal Severance funds and Health Fund surpluses to establish a 2.7% contingency line for the General Fund. Although many Cities routinely employ such funds for operating expenses, previous to this year, Morgantown exclusively has used such funds for one time capital improvements (the City should return to this practice as soon as improved economic conditions allow); and C: Although not reflected in the proposed budget documents, it is recommended that the City employ discretionary attrition in the workforce to mitigate revenue expense growth trends until improved economic circumstances are realized.
With the above points noted, the balance of this document presents the recommended budget documents for fiscal year 2009-2010.
CITY COUNCIL GOALS
AND
OTHER HIGHLIGHTS
What follow is a brief description of the proposed budget as per City Council’s goals and a overview of significant, proposed features:
1. Service Fee Increases and Tax Formulas: There are no recommended increases in service fees or changes in tax formulas for the new, proposed budget. A new Downtown User Fee may be considered to fund new public services in the area, but the issue needs additional research and input from pertinent interests. Similarly, the Rental Housing Advisory Committee will be asked to review Code Enforcement service fees and Building Permit fees to fund enhanced services, but again, they are not included in the proposed budgets. The general principal observed is that given the national economy, businesses and individuals are probably and rightfully more focused on restoring their personal financial positions than paying additional fees and taxes..
2. Continue the Street Paving Program: Included in the Capital Escrow Account Budget is $400,000 for the 2010 Street Paving Program. As in the past several years, other area governments will be invited to participate in a joint paving program and realize an economy scale benefitting all of the participants.
3. Transportation: Collectively $534,500 is budgeted for transportation programs in the new fiscal year–includes unexpended funds from this year (Bus Subsidy $291,500 ; Additional Bus Line $65,000; MPO Contribution $18,000; Traffic Calming $75,000; Bike Lanes $35,000; and Traffic Plan Support for the MPO $50,000).
4. Continue the Sidewalk Program: $23,000 is added to the $37,000 remaining in this line item to finance the City’s sidewalk program this coming construction season. The next section of the Falling Run project will be completed.
5. Grant City Employees a Cost of Living Raise: The proposed budget includes a 2% cost of living raise for City employees (includes the Library and BOPARC). Last year’s consumer price index for the area was .001% (December to December), but given the volatility of the national economic indicators, this is probably not a valid number. If approved, this will the seventeenth year in a row that such a raise has been granted. The cost of this action is $182,000
6. Continue the Capital Improvement Program:
DEPARTMENT ITEMS AMOUNT
Police Cruisers $150,000
Radios, Computers 70,500
Public Works Street Sweeper 150,000
Equipment 5.000
City Hall Repair 25,000
Equipment 4,000
Engineering Equipment 12,000
Planning GIS 16,000
Information Technology Computers, Servers, Phones 40,000
Fire Equipment 10,000
Signs and Signals Equipment 9,500
Equipment Maintenance Equipment 5,000
TOTAL $497,000
Principal Capital Improvements planned for the next 4 years are as
follows:
Department 2010-2011 2011-2012 2012-2013 2013-2014
Municipal Complex $500,000 $500,000 $500,000 $500,000
Street Resurfacing 400,000 400,000 400,000 400,000
Police Cruisers 150,000 150,000 150,000 150,000
Fire Vehicle 450,000
Sidewalks 100,000 100,000 100,000 100,000
Traffic Calming 50,000 50,000 50,000 50,000
Bike Lanes 50,000 50,000 50,000 50,000
BOPARC 350,000 350,000 350,000 350,000
Public Works Vehicles 150,000 150,000 150,000 150,000
7. Support BOPARC: A total of $1,337,313 is recommended to support BOPARC operations and capital improvements in the new fiscal year ($857,313 General Fund; $180,000 Special Hotel Motel Tax contribution; and $300,000 Capital Escrow Account). Recommended capital improvement projects are listed in Section 8
8. Public Works Soil Reclamation Project: Work continues at the Public Works Garage to mitigate a fuel tank leak that likely occurred in the 1980's. $90,000 is budgeted for this State mandated project. Special Note: There is a possibility that the City may be reimbursed these funds by the State Legislature by virtue of a discontinued State insurance program that would have covered this expense.
9. River Front Event Center: As noted earlier, the Event Center currently being constructed will be a major anchor for continuing River Front development. It will be an economic engine attracting thousands of guests and visitors to the City for the next 30 years or more. To assure that it functions in the best fashion possible, $520,000 is proposed to fund public infrastructure upgrades in the area. Special Note: B & O Construction Taxes generated by the project itself are designated to support this project.
10. Metropolitan Theatre: Just as the Event Center will advance the City’s River Front, so will the Met continue to advance the Downtown. In the near future, there may be a significant opportunity to realize an additional revenue for the Theatre that may need to be supported with a local match. To assure that this opportunity is not lost, it is recommended that $342,000 be added to the Met line item in the Capital Escrow Account Budget.
11. Contributions to Other Agencies: Contributions to the United Way,
the MRTC, Celebration of America, MLK Day, the Community Trust, Arts and
Culture, National Youth Sports Program, the Humane Society, Vision 20/20, Main
Street, Special Youth Program, MAEP, Sunnyside Up, the Botanic Gardens, Social
Justice, Mon Health, Boys and Girls Club, Inclusive Community, and the Bartlett
House are all recommended to be funded in the new budget at the same rate as
the current year. Contributions to
agencies in this category total $382,500.
12. Capital Escrow Account Adjustments: As noted in General Considerations, it is recommended that several Capital Escrow Account projects be adjusted. They are: reduce the Energy Audit cost to $10,000 ($70,000 balance will be financed in the Energy Conservation Bond); $54,000 is reallocated from projects that have been closed; $84,000 in Main Street Projects (Signs and Farmers’s Market) are postponed for one year–matches are not in place; $210,000 for the new Fire Station is reprogrammed (Station is totally funded with the Fire Revenue Bond); and a $225,000 Escrow is closed for Housing Authority programs as per new financing arrangements. These adjustments total $643,000.
13. Municipal Workforce: The City is fortunate that it has been able to support a talented, productive set of employees. Equally important is that over the past 13 years the City has been able to add 25 new positions with no increase in service fees or tax formulas–these new positions were exclusively funded though the growth of the City’s economic base. As reported earlier though, there is no projected growth in the general revenues for the new fiscal year. Consequently, there are no recommended new positions. To the contrary, to help narrow revenue expenditure gaps, it is suggested that the City exercise discretionary attrition with vacancies that occur during the year. This practice should continue until general economic conditions improve.
REVENUES
GENERAL CONSIDERATIONS
1. The unencumbered balance to start the new year is projected to be $1.169,119 less than the current year. The principal reason for this is the flat, revenue growth rate reported earlier in this document. Traditionally, the cash carry over is used to fund the contingency account in the succeeding year and, along with B & O Construction taxes, assist with capital improvements.
2. Property tax assumptions for the new year are based on past levels of growth. Revenues for the new year are conservatively estimated to increase by 3 %. The actual expected assessment should be forwarded by the County Assessor’s Office in early March.
3. B & O Construction taxes are forecasted to be $1,725,000 (down $675,000 from this year). Estimates are based upon known contracts. National financing situations are seriously degrading new projects. All of these one time revenues are proposed to be transferred to the Capital Escrow Account.
4. Liquor tax receipts have greatly varied over the past several years (differing as much as $400,000). Part of this can be explained by the timing of payments, but the balance remains unexplained. The projection is based upon historical records rather than recent fluctuations.
5. Fire Service Fees are based upon actual charges with; a 2% delinquency factor.
6. Court Fines reported for the current year are down because of the extraordinary number of retirements in the Police Department this past year–replacements had to attend the Police Academy in Charleston and complete and in service training period. Revenues should rebound in the new fiscal year to $700,000.
7. Interest earned on investments has been significantly reduced this year because of national monetary policies (earnings down from $210,000 last year to $80,000 this year and $80,000 project for next year).
8. Remaining revenues are projected on the basis of recent, historic trends.
EXPENSES
GENERAL CONSIDERATIONS
1. Health Insurance rates are calculated at the current rates (125% of expected claims) and allow for an 8% increase in the second half of the new fiscal year. With this assumption, the City will expend $3,159,318 on this fringe benefit next year.
2. All Liability Insurance costs are increased 3% for a total cost of $252,627.
3 All employee retirement costs are funded at level required by State law. Special Note: The State in the near term may consider consolidating all Police and Fire Pension programs into one program for purposes of investment management (programs would retain their individual identities within the assembly). Accompanying this could be a requirement for larger contributions from employees; additional funds from the State; and a City obligation to fund whatever balance remains to make the funds actuarially sound on a 40 year basis. This could increase the City of Morgantown’s cost by more than $200,000 per year, but reform of some sort is very much needed.
4. Contributions to the Building Commission are the fire service fee revenues put in place to fund the new North Side Fire Station–$328,719.
5. Workers Compensation rates remain unchanged. In recent years, the City has enjoyed low rates because of its attractive claims history and resulting merit rating. The current rate is .88 with 1.0 considered average
6. The General Fund Contingency is proposed to be $596,358 which is 2.62% of the budget. It is suggested that if additional cas carry over funds are realized at the end of this fiscal year, the the first $86,255 be used to increase this contingency to 3% of the budget. Special Note: The second priority for additional revenues should be fund for Public Works vehicles (stake bed truck, dump truck, plows/spreaders ($114,0000).