FY 2022 Budget Development February 3, 2021 FY 2022 BUDGET DEVELOPMENT WORK SESSION 1 FY 2022 Budget Development Agenda 1. FY 2022 Operating Budget 2. FY 2022 – 2026 Capital Improvement Program Office of Budget and Performance Management 2 www.charlottesville.gov/budget FY 2022 Budget Development Budget Process Update Important Dates • Feb 9- Budget is Balanced! – Real Estate Tax Rate (and rollback rate) advertisement will be sent to paper for publication per State requirement that must occur 30 days before the real estate tax rate public hearing (publish on Feb 13) – FY 2022 Proposed Budget must also be completed (ad includes % change to the budget from current year) • February 9 – Planning Commission CIP Public Hearing • March 1 - Proposed City and School Operating and Capital Budget Formally Presented to Council • March 15 - First Budget and Tax Rate Public Hearings • April 5 - Second Budget Public Hearing/Budget Approval First Reading/Tax Levy Approval First Reading • April 13 - Budget and Tax Levy Approval Second Reading Office of Budget and Performance Management 3 www.charlottesville.gov/budget FY 2022 Budget Development Budget Process Update Scheduled Worksessions Mar 4 Budget Worksession #1 (Revenue & Expenditures) Mar 11 Budget Worksession #2 (Outside Agencies) Mar 17 Community Budget Forum Mar 25 Budget Worksession #3 (CIP) Apr 8 Budget Worksession #4 (Wrap-up) Please visit www.Charlottesville.gov/budget for further details. Office of Budget and Performance Management 4 www.charlottesville.gov/budget FY 2022 Budget Development FY 2022 Operating Budget Development Estimates as of January 2021 FY 2022 Initial Revenue Estimates $190,232,749 FY 2022 Initial Expenditure Estimates $194,829,066 Initial FY 2022 Budget GAP ($4,539,317) Office of Budget and Performance Management 5 www.charlottesville.gov/budget FY 2022 Budget Development FY 2022 Operating Revenue Category $ Change Budget Local Taxes (936,446) Development Licenses and Permits (425,500) Intergovernmental Revenue (115,600) Charges for Services 118,380 Misc. Revenue (220,956) Transfers from Other Funds (300,000) City/County Revenue Sharing 822,521 Designated Revenue Changes $94,477 Preliminary Estimate - FY 2022 Revenue Change ($963,124) Office of Budget and Performance Management 6 www.charlottesville.gov/budget FY 2022 Budget Development FY 2022 Operating Budget Development FY22 General Fund Budget Submissions Deparmental 45.23% Contribution to City Schools r 30.13% Outside Agencies 7.93% Transfers to Other Funds Other Non Departmental 14.78% 1.92% Office of Budget and Performance Management 7 www.charlottesville.gov/budget FY 2022 Budget Development FY 2022 Operating Budget Development • Exceeded the 40% formula in 8 of past 10 $5.0 Schools Contribution Increase fiscal years. $4.0 • Schools total budget increase of approx. $3.3M in FY22, which includes 19.5 new $3.4 vi' C: $3.0 FTE’s and a 2% average pay increase.  Requested City contribution for FY22 -2 i $2.0 is level due to the use of one-time .s ~ $1.0 40% funding (CARES) to fund ongoing budget increases. $0.0 -$1 .0 • City Budget projected to decrease in FY22. FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19 FY20 FY 21 • Considering significant future capital investment in City Schools 40% of Change in RE and PPT Revenu e - Change in Actual Contribution Office of Budget and Performance Management 8 www.charlottesville.gov/budget FY 2022 Budget Development FY 2022 Operating Budget Development What is not included at this time: • Tax Rate Increases • Economic Reserve Funding • Increases for Employee Compensation • Change in the contribution to City Schools • Increase in General Fund Contribution to Debt Service • $4.9M in City Departmental New Requests Office of Budget and Performance Management 9 www.charlottesville.gov/budget FY 2022 Budget Development FY 2022-2026 CIP Budget Draft Adopted Budget Proposed Capital Improvements Program FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Totals Sources of Funds: General fund transfer $ 900,000 $ 7,665,841 $ 6,737,940 $ 7,549,378 $ 6,580,400 $ 8,580,400 $ 37,113,959 Year- End Surplus - - - - - $ - Bond issues 23,861,092 26,823,072 12,235,491 12,287,907 59,885,491 9,885,491 $ 121,117,452 Other 1,033,750 908,000 380,500 318,000 318,000 318,000 $ 2,242,500 Total sources $ 25,794,842 $ 35,396,913 $ 19,353,931 $ 20,155,285 $ 66,783,891 $ 18,783,891 $ 160,473,911 Uses of funds: Education $3,400,000 $3,520,000 $4,600,000 $3,400,000 $52,150,000 $2,150,000 $ 65,820,000 Economic development $0 $150,000 $150,000 $150,000 $150,000 $150,000 $ 750,000 Facilities Capital Projects $4,120,491 $1,370,491 $1,370,491 $1,370,492 $1,370,491 $1,370,491 $ 6,852,456 Public safety and justice $1,295,500 $7,079,581 $265,000 $1,417,415 $265,000 $265,000 $ 9,291,996 Transportation and access $14,445,101 $15,652,000 $4,563,440 $4,662,378 $4,443,400 $4,443,400 $ 33,764,618 Parks and recreation $93,750 $865,000 $790,000 $790,000 $790,000 $790,000 $ 4,025,000 Affordable Housing $2,400,000 $6,344,841 $7,200,000 $7,950,000 $7,200,000 $9,200,000 $ 37,894,841 General government $40,000 $415,000 $415,000 $415,000 $415,000 $415,000 $ 2,075,000 Total uses $ 25,794,842 $ 35,396,913 $ 19,353,931 $ 20,155,285 $ 66,783,891 $ 18,783,891 $ 160,473,911 Office of Budget and Performance Management 10 www.charlottesville.gov/budget FY 2022 Budget Development FY 2022 – 2026 Capital Improvement Program 5 Year CIIP Plan Budget History 180,000))00 I 160,000,000 140,000,000 .__ / 7• 5 Year CIP Plan Funding Progression 120,000,000 / -=- FY 2017 -2021 FY 2022 -2026 100,000,000 80,000,000 .... -- - /! Plan Total $ 8,802,455 Education Priority $ 7,976,890 Affordable Housing $ 26,854,528 Transportation and Access Plan Total $ 37,894,841 $ 65,820,000 $ 33,764,618 60,000,000 40,000,000 20,000,000 - ·- I I Additional Funding $ 93,845,586 2010 2012 2014 2016 2018 2020 2022 2024 Office of Budget and Performance Management 11 www.charlottesville.gov/budget FY 2022 Budget Development FY 2022 – 2026 Capital Improvement Program Non Departmental Debt Service Payment Fund 4.27% 4.74% Expenditures Management 3.16% Fund Balance Target Adjustment 0.27% Local Contribution to Schools ~ ~ - - - - - - - - - - - _ E m ployee Compensation and 32.52% Training 1.07% Internal Services 2.53% Financial Services 2.71% Public Safety and Justice Healthy Families and Community 22.70% ~ 16.76% !infrastructure and Transportation 9.29% Office of Budget and Performance Management 12 www.charlottesville.gov/budget FY 2022 Budget Development Debt Projection – The “Planning” Side Ratio of Debt General Fund Service to Total • Variables Subject to Change Fiscal Bond Issue Annual Debt Expenditure General Fund Year Amount (1) Service (2) Budget (3) Expenditures 2016 11,125,466 9,128,798 156,391,435 5.84% • Bond Issue Amount – New Projects and 2017 11,140,000 10,103,067 162,018,737 6.24% Projects Previously Approved • Timing of Bond Issues 2018 4,610,000 10,615,335 171,657,127 6.18% 2019 9,520,000 10,375,167 179,725,535 5.77% 2020 - 10,771,937 188,863,920 5.70% • Interest Rates 2021 13,455,000 10,465,180 191,195,873 5.47% • General Fund Growth • Variable Relationships 2022 25,000,000 10,983,075 190,232,749 5.77% 2023 25,000,000 12,732,218 193,086,240 6.59% 2024 25,000,000 14,128,519 195,982,534 7.21% • More Debt = Higher Annual Debt Service 2025 2026 60,000,000 25,000,000 15,541,933 19,760,790 198,922,272 201,906,106 7.81% 9.79% • Reduced Capacity = shrinking General Fund 2027 25,000,000 21,351,167 204,934,698 10.42% Budget, higher Interest Rates 2028 2029 - - 22,419,071 21,344,164 208,008,718 211,128,849 10.78% 10.11% • Increased Capacity = General Fund Growth, 2030 - 20,107,983 214,295,781 9.38% stable/lower interest rates 2031 15,000,000 19,100,717 217,510,218 8.78% 2032 15,000,000 19,531,680 220,772,871 8.85% **Estimates and subject to change Office of Budget and Performance Management 13 www.charlottesville.gov/budget FY 2022 Budget Development Debt Projection –The “Consequences” Side General Debt Service Annual Debt Fund % Fund General Service (2) Transfer(4) $ Increase Increase Balance (5) Fund 9,128,798 9,279,578 - 0.00% 11,962,480 Transfer 10,103,067 9,817,330 537,752 5.80% 11,880,013 Annual 10,615,335 10,375,167 10,371,750 11,003,348 554,420 631,598 5.65% 6.09% 11,905,368 12,830,074 Debt 10,771,937 11,049,584 46,236 0.42% 13,255,398 + Service Payment 10,465,180 10,983,075 12,732,218 14,128,519 10,251,550 10,285,365 12,019,857 13,755,038 (798,034) 33,815 1,734,492 1,735,181 -7.22% 0.33% 16.86% 14.44% 13,178,415 12,605,932 12,005,848 11,731,734 Debt 15,541,933 15,490,923 1,735,885 12.62% 11,767,101 Service 19,760,790 21,351,167 17,227,526 18,964,861 1,736,603 1,737,335 11.21% 10.08% 9,307,263 6,979,699 Fund 22,419,071 19,102,943 138,082 0.73% 3,685,599 Balance 21,344,164 19,241,786 138,843 0.73% 1,612,592 20,107,983 19,381,406 139,620 0.73% 900,700 19,100,717 19,521,818 140,412 0.72% 1,321,801 19,531,680 19,663,039 141,221 0.72% 1,453,159 Office of Budget and Performance Management 14 www.charlottesville.gov/budget FY 2022 Budget Development Debt Projection – Big Picture "Planning" "Consequences" Ratio of Debt General Fund Service to Total General Debt Service Fiscal Bond Issue Annual Debt Expenditure General Fund Fund Fund Year Amount (1) Service (2) Budget (3) Expenditures Transfer(4) $ Increase Balance (5) 2016 11,125,466 9,128,798 156,391,435 5.84% 9,279,578 - 11,962,480 Existing Capacity $ 185,000,000 2017 11,140,000 10,103,067 162,018,737 6.24% 9,817,330 537,752 11,880,013  Debt Service Doubles 2018 4,610,000 10,615,335 171,657,127 6.18% 10,371,750 554,420 11,905,368 - $10M to $22M Existing Projects (ABNI) $ 74,000,000 2019 9,520,000 10,375,167 179,725,535 5.77% 11,003,348 631,598 12,830,074 FY 22-26 CIP Draft $ 121,117,452 2020 - 10,771,937 188,863,920 5.70% 11,049,584 46,236 13,255,398 Total Projects $ 195,117,452 2021 13,455,000 10,465,180 191,195,873 5.47% 10,251,550 (798,034) 13,178,415  Significant New 2022 25,000,000 10,983,075 190,232,749 5.77% 10,285,365 33,815 12,605,932 Revenue 2023 25,000,000 12,732,218 193,086,240 6.59% 12,019,857 1,734,492 12,005,848 Enhancements 2024 2025 25,000,000 60,000,000 14,128,519 15,541,933 195,982,534 198,922,272 7.21% 7.81% 13,755,038 15,490,923 1,735,181 1,735,885 11,731,734 11,767,101 Required 2026 25,000,000 19,760,790 201,906,106 9.79% 17,227,526 1,736,603 9,307,263 2027 25,000,000 21,351,167 204,934,698 10.42% 18,964,861 1,737,335 6,979,699 2028 - 22,419,071 208,008,718 10.78% 19,102,943 138,082 3,685,599 2029 - 21,344,164 211,128,849 10.11% 19,241,786 138,843 1,612,592 2030 - 20,107,983 214,295,781 9.38% 19,381,406 139,620 900,700 2031 15,000,000 19,100,717 217,510,218 8.78% 19,521,818 140,412 1,321,801 Office of Budget and Performance Management 15 www.charlottesville.gov/budget FY 2022 Budget Development • Strategic Focus – The DRAFT CIP focuses on Council’s key priorities • Affordability - This plan is not affordable without the significant revenue enhancements • Reallocations – Funds already committed but Key not spent in previous plans can still be reallocated • Future Needs - Additional or new CIP funding would likely not be available for quite some time. Messages Cash funding would be the only option and would also be competing with the additional funds needed to cover the debt service. • Limited reserves – Even with additional tax revenues, the reserve funds are depleted Office of Budget and Performance Management 16 www.charlottesville.gov/budget FY 2022 Budget Development To accomplish Council’s goals and priorities, the DRAFT CIP is presented with the following recommendations: • Schools Reconfiguration is included with a $50 Million placeholder. • West Main Streetscape is removed entirely and previously committed funds (about $18 Million) are available to be Responding reallocated to the school project if needed. • Real estate property taxes are proposed to be increased by 2 cents annually beginning in FY23 for a total of 10 cents to the over five years. Council and the School Board will need to build community support for these investments. • The School funding formula should be recalibrated to challenge recognize the new debt service requirements. A once in a generation project to reconfigure the schools will require a new approach to the school transfer calculation starting in FY23. • While the CIP, operational budgets, and tax rates are all reviewed and adjusted annually, once the school project commences, future Councils will be obligated to complete the work. Office of Budget and Performance Management 17 www.charlottesville.gov/budget FY 2022 Budget Development Wrap-Up Questions and Discussion Office of Budget and Performance Management 18 www.charlottesville.gov/budget