Proposed FY2022-2023 Operating & Capital Budget (Presentation)

PROPOSED FY 2022-2023 OPERATING & CAPITAL BUDGET Suffolk City Council Work Session April 6, 2022

CITY MANAGER’S MESSAGE Budget Priorities: •

Maintain Service Levels While Providing Tax Relief to Citizens

• Protection of Human Health and Safety •

Employee Compensation and Critical Personnel Resources

• Investment in Public Education •

Quality of Life Enhancements

• Compliance with Financial Policies

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BUDGET OVERVIEW Budget Document Structure: • • • • •

Covers 17 Operating & Capital Funds of the City Total of all funds - $767,571,838 Executive Summary with highlights of each funds Line Item detail for all Funds and Departments Appendix with Supplemental Information:  Personnel Summary by department  Statistical information, graphs, and trends  Summary of Reserve Balances  Financial Policy Compliance Summary  Proposed Budget Related Ordinances

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FY 23 PROPOSED BUDGET General Fund Capital Projects Fund Debt Service Fund Downtown Business Overlay Taxing District Route 17 Special Taxing District Grants Fund Transit System Fund Aviation Facilities Fund Law Library Fund Road Maintenance Fund Fleet Management Fund Information Technology Fund Risk Management Fund Utility Fund Stormwater Fund Refuse Services Fund Schools Fund

$263,051,194 62,142,627 30,973,668 190,421 4,526,712 660,129 1,682,962 1,082,899 50,460 32,307,128 15,154,998 14,233,559 21,931,001 67,106,896 8,331,177 11,168,391 232,977,616 $767,571,838

BUDGET PRIORITIES Maintain Service Levels While Providing Tax Relief to Citizens • Proposed Real Estate Tax Rate: 

$1.09 Citywide - 2 cents reduction



$.105 Downtown Business Overlay Taxing District



$.24 RT. 17 Taxing District

• 3rd lowest in region • 75% Personal Property assessment ratio for cars and trucks less than 2 tons

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BUDGET PRIORITIES Protection of Human Health and Safety • College Drive Fire Station – Phase II Hiring  12 Firefighters  3 Lieutenants  3 Captains

• Also added full-time Fire Inspector – converted from two part-time positions • Additional funding for Health Department and WTCSB  Suffolk Health Department $93,996  Western Tidewater Community Services Board $75,596

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BUDGET PRIORITIES Employee Compensation and Critical Personnel Resources • $8.4M for full year of Compensation Study/Step Plans

• 52 new full-time positions to address new facilities, growth, and service demand General Fund  Fire & Rescue  Planning & Community Development  Parks & Recreation  Police  Human Resources  Social Services  City Attorney  Clerk of the Circuit Court  Sheriff  Capital Programs  Animal Shelter  Registrar

Other Funds  Road Maintenance/Traffic Engineering  Stormwater

19 5 5 Converts 8 part-time Park Attendants to 4 full-time 4 3 2 1 1 1 Converted from part-time 1 Converted from part-time 1 1 44 6 2 8

BUDGET PRIORITIES Employee Compensation and Critical Personnel Resources • $1.8M additional overtime funding for Fire & Rescue Department

• $281K additional part-time funding for Police Department  Security Officers  Traffic Officers • $193K additional part-time funding for Bennett’s Creek Recreation Center and cemetery staffing needs

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BUDGET PRIORITIES Investment in Public Education • $2M increase for School Operations - $67.3M total • $7.5M capital funding for JFK Middle School Replacement

• $3.575M capital funding for major systems repairs/replacements • $11.2M budgeted for schools debt service Local Funding Support for Schools Operations $80.0 $70.0 $60.0 $50.0

$49.7M $49.7M

$53.6M $53.8M $55.8M

$59.8M $60.8M $62.3M

$65.3M $67.3M

$40.0 $30.0 $20.0 $10.0 $0.0

FY 14

FY 15

FY 16

FY 17

FY 18

FY 19

FY 20

FY 21

FY 22

FY 23 Proposed

BUDGET PRIORITIES Quality of Life Enhancements • FY 23 Capital Budget includes all projects in first year of CIP • $29.9M bonds for General Government capital projects • $4.8M bonds for Stormwater capital projects

• $6.2M General Fund cash allocated for compliance with Capital “Pay-Go” Policy • Additional $2.5M General Fund cash provided for capital contingency due to rising construction costs

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Compliance with Financial Policies

Policy Requirement

FY 22 Budget

FY 23 Projected

Capital Pay-Go

3.0%

3.1%

4.5%

Debt as Percentage of Assessed Value

4.0%

1.9%

1.7%

Debt as Percentage of General Gov't Exp.

10.0%

7.3%

6.4%

Unassigned Fund Balance

20.0%

22.5%

20.0%

2.5% Max

N/A

1.0%

No Min/Max

N/A

$10.7M

Budget Stabilization Fund

Capital Reserve Fund

General Fund

General Fund Revenue FY 22 Budget General Property Taxes Other Local Taxes Fees, Charges, Misc.

State/Federal

Fund Balance/Fund Transfers

FY 23 Recommended

Incr./ Decr.

Percent Change

$ 149,969,846

$ 169,667,755

$19,697,909

13%

47,706,203

53,981,203

6,275,000

13%

8,299,003

8,278,493

(20,510)

0%

27,910,832

28,208,668

297,837

1%

3,930,647

2,915,074

(1,015,573)

(26%)

$ 237,816,531

$ 263,051,194

$ 25,234,663

10.6%

GENERAL FUND REVENUE General Property Taxes – 13% increase - $19.7M • Real Estate – 14% increase - $16.4M  Reassessment value increase – 10.81%  New Construction increase – 2.79%  Public Hearing required for “Effective Rate Increase” due to reassessment growth of 1% per Section 58.1-3321 of State Code

• Personal Property - 12% increase - $3.0M

• Penalties and Interest – 23% increase - $300K

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GENERAL FUND REVENUE Other Local Taxes – 13% increase - $6.3M • Meals – 23% increase - $2.5M • Sales and Use – 15% increase - $2.0M • Business License – 24% increase - $1.8M • Lodging – 14% increase - $200K • Admissions – 100% increase - $75K

• Tobacco – 16% decrease - $300K

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GENERAL FUND REVENUE Other Revenue Sources • Charges for Services – 10% increase – $353K

• State & Federal – 1% increase - $297K • Permits, Privilege Fees – 13% increase - $195K • Miscellaneous/Recovered Costs – 9% decrease – ($120K) • Fines & Forfeitures – 15% decrease – ($125K) • Use of Money & Property – 28% decrease – ($324K)

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General Government Expenditures FY 22 Budget General Government

$

Judicial

12,599,163

FY 23 Recommended $

14,382,359 $

Increase/ Decrease

Percent Change

1,783,196

14%

9,941,365

10,663,646

661,746

7%

Public Safety

70,500,924

81,385,772

10,945,382

16%

Public Works

5,585,287

6,306,040

720,753

13%

Health & Welfare

16,140,696

17,253,451

1,112,755

7%

Education

65,775,180

67,775,180

2,000,000

3%

Parks, Recreation, and Cultural

12,786,651

14,759,370

1,972,719

15%

Community Development

7,659,796

8,179,268

519,472

7%

Other Public Services

1,231,512

2,299,544

1,068,032

87%

35,595,957

40,046,564

4,450,607

13%

Non-Departmental $

237,816,531

$

263,051,194 $

25,234,663

10.6%

Tax Dollar for City Services

Public Safety Education and Related Debt Debt Service Health & Welfare Parks, Recreation, & Cultural General Government Judicial Community Development Capital Pay-Go Public Works Non-Departmental Local & Regional Organizations

31¢ 30¢ 7¢ 7¢ 6¢ 5¢ 4¢ 3¢ 3¢ 2¢ 1¢ 1¢ $1.00

Primary Drivers: Personnel and Benefits      

$12.9M

Full Year Cost of Compensation Study/Step Plans 19 FTEs - Fire & Rescue (College Drive Fire Station/Fire Inspector) 25 FTEs - Support positions to address growth and service demand Fire & Rescue overtime funding Police Department part-time Traffic and Security Officers Parks and Recreation part-time - Bennett’s Creek Recreation Center and cemetery staffing

Transfer to Capital Projects Fund

$2.5M

 Capital Contingency to address escalation of construction costs

Risk Management

$2.3M

 Increasing health insurance costs

Support for Suffolk Public Schools

$2.0M

Debt Service

$1.4M

Primary Drivers: Other Operating Expenses

$ 2.9M

 Department equipment needs  Maintenance Contracts and Repairs  Telecommunications, Fleet, Information Technology

Local and Regional Organizations  Suffolk Center for Cultural Arts

$1.1M

•

Refuse Fund    

•

No increase to the monthly Refuse fee - $25.25 Current service level maintained for trash pickup and recycling Addresses increasing disposal costs at SPSA $457K budgeted from Refuse Fund Balance

Stormwater Management Fund 

No increase to the $7.50 monthly Stormwater fee per ERU



Includes debt service and $500,000 for stormwater capital projects

• Public Utilities Fund  $9.3M in cash funding for water and sewer capital projects --- prevents borrowing which helps mitigate impact on future water/sewer rates  Addresses increases in bulk water contracts with cities of Norfolk and Portsmouth  Modest increase in water rate ($.12) and meter service charge ($.50)  Average customer will see increase of $1.10 per month or 1.1% in combined water and sewer bill not including HRSD charges

Water Rate per 100 cubic feet Average Water Bill (5 ccf)

FY 22 $10.31 $51.55

FY 23 $10.43 $52.15

Change $.12 $.60

Sewer Collection per 100 cubic feet Average Sewer Bill (5 ccf)

$7.27 $36.35

$7.27 $36.35

$.00 $.00

Meter Service Charge

$12.75

$13.25

$.50

Avg. Combined Bill (Water/Sewer)

$100.65

$101.75

$1.10

• State Grocery Tax Legislation is still unsettled and could have an impact on City and Schools funding • Senate Bill maintains local portion of Grocery Tax with no impact to City revenue

• House Bill exempts state and local portion of the Grocery Tax - Provides supplemental funding for School Divisions but does not replace City revenue loss

- $3M impact to General Fund in FY 23 • $3M reduction in local funding support for Suffolk Public Schools

will be recommended to City Council if the General Assembly moves forward with the proposed House Bill Grocery Tax legislation

FY 23 BUDGET SUMMARY •

Tax Relief for Citizens - $.02 reduction in Real Estate Rate

- 75% Personal Property assessment ratio for cars and trucks less than 2 tons

• Employee Compensation and Critical Personnel Resources - $8.4M for full year cost of Compensation Study/Step Plans

- 52 new positions to address staffing of new facilities and workload demand - Additional Fire & Rescue overtime and Police and Parks and Rec. part-time funding

• Support for Public Education - Additional $2M for Schools operations

- $11M for Schools capital projects including JFK Middle School Replacement

- Schools Budget adds 28 new positions

•Quality of Life enhancements through investments in capital projects • No changes to Refuse and Stormwater fees • Modest increase to water rate and meter service charge

NEXT STEPS • April 6 - Proposed FY 23 Budget Presented to City Council Motion to Schedule Budget Public Hearing on April 20th

• April 20 - Public Hearing - Proposed FY 23 Budget and Ordinances • May 4 - Public Hearing – Effective Rate Increase Due to Reassessment Recommended adoption of FY 23 Budget

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BUDGET INFORMATION • Proposed Budget and Presentation posted to City’s website • Full Budget Document Available for Review:    

City Website Municipal Building - City Clerk’s Office City Libraries East Suffolk Recreation Center and Curtis R. Milteer, Sr. Recreation Center

• Citizens can contact Budget Division with questions at (757) 514-4016 or at BudgetOfficer@suffolkva.us

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QUESTIONS?

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