2021-2022 Proposed Revised Biennial Operating and Capital Budget

2021-2022 Proposed Revised Biennial Operating and Capital Budget INTRODUCTION Arvada is continuing to make decisions under the FOCUS performance-management system. This integrated performance-management system is not a project with a defined end date. Rather, this is a process that defines how staff looks at what they do each day and how this supports the City Council Strategic Results. It provides data for decision making and helps drive funding decisions for the many programs Arvada citizens want and need. Citizens will be able to see the value they receive for their investment through the performance measures and strategic results.

All the revenue and expenditure assumptions for the 2021-2022 Proposed Revised Biennial Operating Budget were made in the context of the FOCUS Arvada framework. Each department’s budget was based upon five key elements: a mission statement, a vision statement, department strategic results, lines of business and programs. Using this framework and keeping the customer experience in mind, key results are identified that are to be accomplished during the two-year budget.

In addition, on September 16, 2019, City Council adopted a new six-year City Strategic Plan 2020 to 2025. Their plan outlined five priority areas and 29 strategic goals to be accomplished over the next six years. City staff uses the Council’s identified strategic measures to develop milestones and measures to identify what results are being achieved and what needs refined. With these measures in place, discussions follow pertaining to process and budget, with the resulting goal of a true performance-based system. City Council adopts annual revisions to the strategic plan (the most recent revision on July 19, 2021) to recognize updates to current goals and remove goals that have already been achieved.

National Economy In 2020, the swift and massive shock of the COVID-19 pandemic and shutdown measures to contain it, caused the worst recession since World War II. Although this recession was particularly deep with major indices dropping 20 – 30% and the loss of approximately 22 million jobs, the recession was short lived at only two months. The quick actions of the Federal Government, Congress and the Federal Reserve through the Paycheck Protection Program (PPP), the Coronavirus Aid, Relief and Economic Security (CARES) Act, lowering short term interest rates and initiating two stimulus programs provided much needed relief. Funding through the Paycheck Protection Program (PPP) allowed small businesses to apply for a forgiveness loan that would help offset salary and wages. Funding was also allocated to States, Counties and large Cities to help offset the challenges of the COVID-19 virus. The City received $9.4 million in CARES funding. 78% of the funding was used for business and non-profit assistance while the remaining 22% was used for housing and human service and internal city use. While the stimulus packages helped to reduce the depth of the recession, US Gross Domestic Product (GDP) still declined 3.5% in 2020, the worst in the US since the end of World War II. In March of 2021, the $1.9 trillion American Rescue Plan Act (ARPA) was signed into law. The first tranche of the funds were received in the second quarter. The City received half of its $11 million allotment in May and is working through completing the planning phase with recommendations for funding scheduled to go to City Council this fall. Second quarter GDP grew just above 6%. Total GDP growth is projected at 6% for 2021, falling to 5% by 2022.

Local Economy The City’s general revenue base has several different influences. Two of the major contributors are sales tax and building activity. As illustrated in the discussion below, the City has experienced very positive results in nearly every major revenue category for the past ten years. In 2020, the City started the year in a positive manner, with the first quarter exceeding budget expectations. The second quarter was somewhat of a roller coaster, with April sharply down but May and June showing high levels of growth. The City finished the year with a 9% increase. The City’s retail offerings include many essential businesses 55