Eating breakfast- we're about 15 minutes from the start.  Budget review this morning.

Here we go:  General Fund Sales Tax down 2.9%  Projected down by 700,000. for the year.  City had budgeted for about 18.2M. Other changes:  Atmos fees down 223K, Ambulance fees up 105K, Court fines down 112K.  This puts us with a current hole of 1.4M with about 1/2 the fiscal year to go.  Not pleasant.

Stephen Southwell, local blogger with www.whosplayin.com is here filming and will be placing the raw files online at some point.

City has put the breaks on the following expenditures:  400K in frozen staffing, 53K in computer and radio upgrades, Arts Center operations 83K (but this is because construction has taken longer).  Library books and av expenditures frozen, 43K.  Alley improvements $170K (doesn't hurt now but adds up over a few years), neighborhood improvement 400K, asphalt improvements 335K, traffic improvements 330K, Mowing 70K.  Total of 1.88M reduced.  We saw some of this at the state level on I-35 since they've reduced their mowing expenditures.  The state has cut their mowing contracts in half this past year.  These were frozen but still have to be done at some point, so it's essentially kicking the can down the road to make this year's budget work.

Reviewing income and where we will be in 2010-11 budget.  Sales tax will be at roughly 17M, salaries will be kept flat (this is over 70% of our expenditures from the general fund).  Property tax looks to be down by 4.14% (over $200,000 reduction). 

For those of you glazing over with all these numbers, let me summarize:  We have a large budget shortfall in all of our income streams-  Large by Lewisville standards, the budget is run very tightly.  (good thing this stuff interests me I guess).

To make our tax revenue break  even the city would have to raise the tax rate by 3.69% or 1.185 cents per $100 of property value.  If the council does not raise taxes and keeps our rate at the existing number we would have a $718,000 deficit on property tax receipts.  Assuming we raise the taxes to match the 09-10 revenues and the projections play out the city would need to come up with 2.3M to meet their budgetary expenses, no new programs, no new employees.  In other words- raise revenues or start cutting staff and services.

If the council doesn't raise the taxes, that hole goes from 2.3M to 3M dollars.

Mr. King is now reviewing some programs and budgetary ideas to erase a deficit without changing the income (raising taxes and fees).  Employee education program for employees (tuition reimbursement).  Mr. King gave out a supplemental document which I don't have a copy of at the moment.  Equipment warranty budgets would be eliminated (33-48K).  Gorena wants to know about extended warranties vs failure costs.  The city has reduced this on many classes of items (like printers).  Cities typically pay for extended warranties and services so they can manage cash outflows better.  Capital improvement dollars could be slowed or stopped (alley improvements continued).  6K for aerial flyover photographs of the city.  We do this one every 2 years.  12K for grafitti abatement.  If you cut this you can't tell private property owners to clean it up per state law.  Cable TV programming (photography, av programs etc) 82K, Library books and AV (continue freezing) 42K, Parks and Leisure Services Maintenance Crew continued freeze 118K, Interior plant care 7k, Social services (CDBG funds) 175K, neighborhood street rehab continued freeze 400K, transportation consultation (this one brought in over half a million in streets monies from the state) 90K, street maintenance continued freeze 111K, arts center custodian continued freeze 37K, PD vehicle porter program (this would tie up police to move equipment around like the radar boxes) 83K, newsletter public info 54,000, animal control 12K, school resource officers (another 172K is paid by LISD) 172K, window cleaning 10K, floor maintenance 5.6K, right of way mowing continued freeze 73K, internal auditing 86K, PD clerical continued freeze 38K, code enforcement continued freeze 83K, daytime janitorial 98K, library adult services 90K, project management 79K, FD public education 126K, PD call taking 46K, asphalt rehab 332K, right of way mowing additional reductions 75K, arts center programming continued freeze 60K, planning/economic development continued freeze 80K, animal adoption incentive 1K, library hours reduction 14-62K, rec center hours 17K, concrete rehab 940K, holiday lighting 43K, public construction inspection continued freeze 53K, sidewalk maintenance 380K, CM clerical 48K, employee awards events 51K, vet care 5K, traffic improvements continued freeze 330K, arts center performances 50K, special events 45K, 1 day employee furlough 59K, defer equipment replacement payments (our budget item planning for replacement of things like fire trucks and computers) up to 792K, defer risk fund payments up to 964K, CS clerical 47-70K.

That's a fairly comprehensive list of line items identified by staff of cuts that could be made.  Many are 'penny wise pound foolish' but if cuts have to be made this is how it would happen. 

Revenue options:  Increase residential garbage by $1 a month 219K, residential stormwater fee $1 a month 219K, commercial stormwater fee 370K  (we pay 589K a year on stormwater already and are allowed to charge a fee which we don't currently), 1/8 cent crime control district (saw this one coming) 2.1M, 1/8 cent fire protection district 2.1M, 1/4 cent crime control district 4.2M.  Crime control and fire protection districts do lock this money into specific uses.  Ask LISD to pay for the full student resource officer amount 172K, Payment in Lieu of Taxes (PILOT) to 3% 243K, PILOT to 4% 486K (this shifts money from the utility fund to the general fund, more a rejiggering and would mean increased utility fees at some point I'd assume), 1/8 cent streets increase 2.1M, 1/4 cent streets 4.2M.  Budgetary changes would include decreasing debt service (amount we pay down our bonds or reduce capital improvements), increase the operations and management.  These have TBD line items on them since there's a lot of variability. 

I'll be putting these docs up on Sunday for public review.  They're on the city website under the council meetings.  The list in the preceeding paragraphs I'll be adding to my site this weekend.

Police pay 200K per year for crossing guards, there's a request to review this with LISD and see if the ISD pays for crossing guards in other cities.

King is mentioning that by continuing to keep the tax rate flate we will continue to get further and further behind as we grow and add services.

We're now reviewing sales tax options:  State law limits local sales tax to 2%.  Currently Lewisville has 1% for the General Fund, .5% for Denton County Transportation Authority, .25% for 4B Parks and Library.  We could expand 4B but run the risk of it being overturned and then we'd have no way to fund the debt on RR Park, the Library, etc.  This gives us a quarter cent of sales tax available to raise.

Crime control districts are good for 5 years with a continuation of 5, 10, 15, or 20 years.  Monies gathered by this tax can be used for lots of crime prevention programs.  You'd need a board to manage these funds.  This does sunset so you wouldn't want to pay salaries out of it.

Street maintenance tax.  Money can only be used on existing roads, can't be used for new roads.  Gets renewed every 4 years.

Fire control are the same as crime control.  Covers fire and EMS.

Municipal development district:  "super 4B".  sports, convention centers, libraries, water parks, affordable housing (buying up run down apartments!), water conservation and utilities, programs that create or retain jobs.  All of these can be funded with a MDD.  It's extremely broad- for example if you're going to build an office park you could use this tax to pay for facilities to support that type of development project. 

Baytown Tx. is the largest city using this tool.  Their plan for the tax has money for economic development, construction etc.  I'd be good with this one, most flexible for revitalizing the city.  No sunset.  Could include Castle Hills.

Venue project tax- economic development, tourism, complexes like a ballpark.  This is very specific to a project but also allows you to add more to hotel motel taxes.  This might be useful specifically for redevelopment of the lakefront.

Ueckert mentions that he's asked others if having a restrictive tax is better than the broad tax in the long term.  King also mentions that since this is sales tax it is the most volatile source of funding you can have.  Gorena states that if we do a crime prevention then it would be easier to pass.  He'd rather increase the sales tax than to raise property tax and fees (although the council raised fees this past year already).  King states Gorena is looking at the political side vs the economics and flexibility.

We're done with that section and now we're reviewing General Obligation Debt (woo hoo).

The city owes about 63M that finances capital improvements over the last several years.  Controlling the debt helps to control the tax rate.  Higher debt = higher taxes.  Lower tax revenues = less debt service.  Based on our current  tax rate we would reduce our debt service by 309K next year.  To keep the debt rate the same we'd also need to not issue 4M in bonds which were scheduled to be sold this year.  If we did sell debt this year and kept the tax rate the same we would have to defer principal payments and put pressure on future years- or dip into our reserves  to pay those principal payments.  An argument for releasing debt is that interest is cheaper than ever, as are construction costs so we'd be getting a great deal.

Projecting ahead and assuming continued taxable assessed value decline; in the 1980's it took 7 years to get back to 1988 levels, Mr. King thinks it might take longer, our debt service account would be in the hole by almost 1M by fiscal year 2013-14.  This of course assumes a flat property tax rate and no construction bonds for 2010 and 2012.  These funds are for roads, sewers, water, firehouses and other municipal construction projects, not just new but repair and maintenance.

Mr. King is now reviewing our bond programs and what they're currently paying for.  Slides available from the city website.

Our original property tax plan had a projected growth of 0-2% and we've had a reduction of 2.4%.  If we keep the taxes flat we will not be doing any capital improvement programs and will be looking at having to find additional funds to pay off the debts we currently have since property tax collection is declining.

We have 22.8M in reserves that could be used to fund projects instead of using bonds.  Council reduced this by 8M for projects like the animal shelter.  Mr. King is now reviewing current projects that are coming up or that we've planned for but are delayed (I-35).  You could reimburse yourself with bond funds as long as you do it within 3 years. 

Reviewing projects that are coming up (the new plaza, Mill Street redesign, Valley Ridge, and others).  Options are pretty straightforward; advance yourself the money from the general fund and reimburse yourself with a bond sale within 3 years, draw ddown reserves, wait and not release binds, increase taxes.

We're taking a lunch break-  be back at 1:30pm.