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HomeMy WebLinkAbout0 - TRANSMITTAL LETTER Peter B. lewis, Mayor 25 West Main Street * Auburn WA 98001-4998 * www.ci.auburn.wa.us * 253-931-3000 February 11, 2004 Citizens of Auburn c/o City of Auburn 25 West Main Auburn, Washington 98001 Re: Transmittal of the 2004 Final Budget Dear Citizens of Auburn: It is a pleasure to present the City of Auburn's Final Budget for 2004. The budget is a financial plan that allocates available City resources to a variety of community services and programs. It anticipates the basic needs of the City and enhances our citizens' overall quality of life. Information included herein presents a course of action that facilitates the City's continuing development as a responsible, efficient and effective government. The City continues to experience both opportunity and challenge. The ongoing economic slowdown has required us to take a closer look at our business. Legislative enactments have resulted in limitations in revenue growth over the past several years. One of the more significant issues the City needs to address in the future is how to deal with the effects of voter-approved initiatives that limit future growth in revenues. The City has endeavored to maintain a positive development climate by living within its present revenue and by avoiding such additional taxes and fees as an employee head tax, local B&O taxes, and elevated property tax assessments. Still the basic economic formula remains the same. City income is divided into thirds with property tax providing one third, sales tax a third, and fines and fees some percentage just under one third. Economists' state that because of voter approved measures by state law property tax revenues will grow at some figure less than one percent. Sales tax revenues are forecasted to remain flat or go up only a small amount through next year, and fines and fees are at the maximum allowed by our Council and citizens. If income will go up less than one percent and cost of living expenses will go up more than two percent, then the City must watch all revenues and expenditures closely while we go through this downturn in our economy. The continued success of our many automobile dealerships, including a significant number of recent expansions, together with a variety of new businesses, should continue to provide support for City services and public facilities in the coming years. Further reduction in revenues from other sources and the impact of a voter approved initiative places a priority on preserving as many programs and services as possible. Local efforts, therefore, will be directed toward exploring ways to maintain quality services. A major focus will be towards developing long-range forecasts of costs associated with City services that are presently supported by general tax revenues to project the long-term impacts of decreases in revenue. In addition, the City will continue supporting those economic development efforts that will show an economic benefit to the City in the form of new jobs and sales tax. AUBURN * MORE THAN YOU IMAGINED 2004 Final Budaet Transmittal Letter The City's General Fund has been budgeted conservatively over the past six years. Static revenue in 2002 was less than the cost of services and for the first time in 10 years the City suffered a decline in general government revenue. This prompted careful fiscal management and attention for the 2003 and 2004 budget years to preserve financial stability. Expenditure budgets were thoroughly reviewed and a portion of the carry over from prior years was used to sustain service levels in those budgets. At this time, revenue is projected to exceed collections in 2002, and 2004 revenues will have modest increases over 2003. The City will still need to utilize reserves to balance the budget. Every effort has been made to maintain an adequate ending fund balance in anticipation of continuing adverse impacts of economic trends and possible regulatory change. The final budget includes only one program improvement due to limited revenue growth and to preserve the current programs that have been adopted in previous years. THE BUDGET PROCESS The 2004 budget is the culmination of a detailed process involving both City staff and the City Council. Goals and vision were established early on by Council through workshops in late 2002 and again in 2003. The departments, in developing the capital and program areas of the 2004 budget, used the vision Council established during the workshops when preparing the 2004 work plan and goals. Budget requests were developed jointly by Department Directors and the Mayor and presented to Council committees for review. The desire is to maintain essential programs at present levels of service, develop a workable strategy to achieve Council goals, recommend modifications to meet changes in the City's circumstances, and continue the responsible financial management of the City's resources. THE BUDGET DOCUMENT Each year Auburn's Vision and Mission Statements are highlighted in the budget document. These statements, developed jointly by the Council and City staff, describe the City's direction and priorities as the City moves into the 2151 century. The statements provide a framework for action and direct future activities and development within the city. The 2004 budget format presents the budget as a policy and fiscal planning tool as well as a plan for the wise commitment of available resources. As in the past, departmental qualitative performance objectives are highlighted throughout the document. These objectives can be found in the Budget Summary and Budget Policies Sections (Sections I and III) of this document. Organization of the budget is intended to focus on the key policy issues involved in its development and present financial data in meaningful detail while portraying the full scope of the budget and City operations. The budget is organized around one type of budgetary measure-the "baseline budget," which allocates available resources to existing programs and services to preserve current levels of service. This Letter of Transmittal presents an overview, serves as an introduction, and sets forth the policy and strategic considerations involved in the budget's preparation. Section I summarizes the 2004 fiscal plan, presenting budget amounts as well as the issues and programs involved. Section II describes the budget process and the various documents produced in support, as well as the parts of the budget and their interrelationships. Section III presents a summary of the policies implemented by the budget. This section identifies City issues, goals and planned initiatives. It includes policies and priorities that were employed in budget development along with funding requirements. Page 2 2004 Final Budaet Transmittal Letter Section IV outlines the budget as a financial plan, focusing on and analyzing the budget's financial data to describe how City operations will be financed and how fiscal resources will be allocated to different functions and services. This section presents an overall summary of both revenues and expenditures, including a discussion of General Fund revenue estimates and the basis of these estimates. Also included is a five-year financial forecast of the General Fund based on the actions and policies of the budget. Section V contains an overview of the City's operations, summarizing the budget as an operations guide. The organization of the City is presented from different perspectives along with administrative costs that are allocated between funds. Section VI presents the baseline budget which details City operations on a department-by-department, fund-by-fund basis. Descriptions of the services supported by each department and a brief summary of departmental work programs, which implement citywide goals, are presented along with line item financial data. Section VII discusses the 2004 program improvements that are included the budget. Section VIII summarizes the City's Capital Facilities Plan. 2004 BUDGET CONSIDERATIONS The 2004 budget builds upon past experience and past budgets to protect the sound financial condition of the City. It continues the initiatives of prior years with an effective array of programs responding to community needs and instituting modest baseline adjustments that form the basis for maintaining current levels of service as the community grows through natural expansion and annexation. Our Fiscal Condition The budget has been prepared with the objective of maintaining the City's financial condition and facilitating achievement of Council objectives. The General and Cumulative Reserve Funds include essential balances; other fund balances continue to be adequate. The Utility Funds have had decreasing working capital balances due to the need to perform extensive upgrades to the systems. The 2004 budget does not include any rate increases for the Water, Sewer and Storm Water utilities. The Solid Waste fund is reviewed annually to determine if a rate increase is required. There is no rate increase anticipated in 2004. Auburn's growing tax base has offset significant revenue losses that have occurred in the past due to legislated reductions in industrial sales taxes. A number of commercial and service industry additions currently in progress or in the planning stages contribute to an economic picture of ongoing development. Addition of the Lakeland Town Centre; Zones, Inc.; the remaining Auburn Market development; the Fisher Services complex; transit-oriented development; and the Safeway packaging and distribution center, as well as other additions, are anticipated to have a positive impact on available revenue. Several large residential developments and two or three large commercial developments are in the permitting and construction process either within Auburn's city limits or adjacent areas that are within our Urban Growth Boundary and thus in areas of potential annexation. Future large residential developments include approximately 3,500 units in one site and perhaps up to 2,100 in another. While there has been no new bonded debt issued in 2003, substantial amounts have been issued in recent years. During 1997, the City issued $5.0 million in revenue bonds for utility infrastructure. During 1998, $4.0 million limited tax general obligation bonds were issued for constructing a new library. The utility system issued $8,350,000 in 1999. These bonds enabled the continued development of infrastructure necessary for the City to provide utilities for growth and wholesale water to other communities in need of service, as well as to meet domestic water treatment standards and storm water treatment system requirements. Revenues from utility sales will be used to repay related bond debt. A $1,655,000 limited tax general obligation bond was issued for the construction of enclosed hangars and other improvements at the airport. All of the rental hangars were pre-leased prior to breaking ground. The City also participated Page 3 2004 Final Budaet Transmittal Letter jointly with four other cities in the construction of the new Valley Communications Center and is responsible for $2,193,500 of the remaining general obligation debt associated with the facility. The City enjoys an outstanding bond rating and a solid reputation within the financial community. Again, a fiscally responsible budget is approved for 2004 to anticipate substantial unknowns in revenue stability. Thirteen million, three hundred thousand dollars in sales tax revenue has been projected as the City's portion of retail sales in 2004. Budgeted sales tax revenue is equal to the 2003-estimated revenue. A one percent decline in 2002 sales tax revenue has lead to cautiousness in forecasting this revenue. 2003 turned out better that anticipated and had a modest three percent growth. The 2004 estimate will be adjusted upward if the trend proves to be stable. Longer-term economic growth projections for the City continue to be positive, although reason for caution remains. The regional economy began to show signs of modest recovery in 2003, with an acceleration of income and spending growth during the second half of 2003 anticipated. To ensure stability and continuing economic security, the City has maintained adequate reserves. In accordance with this strategy, the Cumulative Reserve Fund is budgeted at $4,4 million, and the General Fund undesignated 2004 reserve balance is budgeted at $2,4 million. Additionally, an insurance reserve of just over $2.6 million is maintained to meet litigation claims and $3.3 million for the City's obligations for health care costs of LEOFF 1 retirees. Significant Budget Measures and Initiatives Careful financial planning and management allows the City to continue meeting its goals through implementation of a coordinated strategy. 1. Limiting any new staff and reviewing replacement staff for essential need, and limiting staff and new programs unless staff or program fully support such growth. 2. Applying the fiscal capacity of the City to meet potential future needs. 3. Using reserve funds to finance capital equipment that maintains or enhances productivity. 4. Controlling optional, discretionary expenses. 5. Providing adequate training, technology and tools to enhance productivity. 6. Maintaining a baseline of funding which continues to deliver high quality municipal services with special attention to: a) Continuing support of growth management. b) Supporting effective law, safety and justice services. c) Delivering a diversity of recreational and cultural programs. 7. Providing staff support and funding for street maintenance, repair and improvements to meet planning requirements and benefit from available funding opportunities. 8. Enhancing the capacity of the infrastructure where funding opportunities exist by assigning priority to providing necessary matching funds. 9. Continuing operation of the City's enterprise functions on a business basis. 10. Exploring all opportunities for economic development that will provide a return to the City of Auburn. 11. Exploring all opportunities for additional services that can be supplied by the City for a fee that will result in a net positive revenue to the City, including any required personnel to deliver the service. Budget Accomplishments Since effective fiscal planning is carried out on a multi-year basis, this budget should be viewed in the context of past budgets. Responsible fiscal management and the City's current revenue levels have enabled the City to support a baseline General Fund budget that responds to the City's need to provide Page 4 2004 Final Budaet Transmittal Letter quality community services at reasonable levels. The 2004 budget allocates $99 million among all budget functions and funds. The total tax supported General Fund is projected to decrease by 4.98%, from $43,534,380, as adopted, to $41,366,600 and anticipates that reserves will be reduced from previous high levels as revenues level off. A strong financial position is not the only objective of responsible city government. The Council has developed vision and mission statements and goals to guide the development, direction and management of the City. Highlighted below, in the form of Citywide Goals, are some of the City of Auburn's recent accomplishments. BUDGET GOALS - 2004 The goals set the overall direction for the City and priorities for program support and development. The 2004 budget allocates the City's resources to achieve its stated goals through the Citywide work program. This program is facilitated by the budget and administered by the Mayor. As such, the goals set the direction of activity for the various departments throughout the year. Objectives that enable realization of the City's goals were then developed for departments to use to finalize work program goals. Overall goals to guide development and implementation of the 2004 work plan are presented as follows: Retain and Preserve Community Identity Many things can foster a community identity. A strong core downtown area, good schools with neighborhood involvement, and a developed park system help to create a "sense of place" for residents and visitors. Yet we live in an area where one city often blends into the next and where many people experience Auburn primarily as a place they drive through on State Routes 167, 18 or 164. To further foster community identity, the City has embarked upon a program for creating significant community gateways. Located at strategic major entrances into the city, these landmarks will provide visual identifiers that the traveler is now in Auburn and that this is a community that has a strong belief in itself and its future. The program we are embarking upon is a multi-year effort to locate and design these gateway features and couple them with a coordinated effort to promote the city. The features will be comprised of specially designed landscaping, signage and possibly artwork. Strong and vibrant neighborhoods result in a strong and vibrant community. Most of Auburn's neighborhoods fit this description. However, several have experienced decline caused by a variety of factors. It is important that these areas be identified and their issues addressed to allow them to flourish with the rest of the community. For several years the City has coordinated the efforts of volunteers in the areas of crime reduction, safety improvements, parenting classes, reduction of teen pregnancy and related programs aimed at helping people to help themselves. The City devotes significant local and federal resources to support agencies and programs that offer services to our most needy citizens. In the future these ongoing efforts will be coupled with an active neighborhood rehabilitation program. The goal of this program will be to work with residents to remove blighting influences, promote resident involvement and make strategic investments, all of which are designed to help a neighborhood return to health. The City continues to improve the Les Gove Community Complex and research potential sites for a community center. During 2002 the City successfully negotiated a contract with the area YMCA to purchase their current building and have the property it sits on returned to the City. This site would be ideal for a community center as it is adjacent to the Les Gove Community Complex. Downtown Vision The City Council continues to include city sidewalks and street lighting as a major priority in downtown as well as other areas of the city. Staff is working to identify the key research and policy related considerations that Council should consider in evaluation of current policy and practice. When needs are identified and policies issued, resource allocation will be required to implement the policy. Page 5 2004 Final Budaet Transmittal Letter Auburn's downtown is the historic heart of our community. When the City of Auburn was younger, it was the primary source of goods and services. The rail station was a primary link to the outside world. While the addition of highways and malls has brought tremendous changes, downtown remains at the heart of our community. As such, the City continues to undertake major efforts to promote revitalization. After years of planning, the Sounder commuter rail station and bus transit hub are now open. With completion of the Lake Tapps Parkway, the 3rd Street overpass, the "A" Street Transit Center access and the 277th corridor, there has been a public investment of well over $60 million in downtown Auburn, as well as another $40 million at the north and south ends of the city. These efforts will improve access and parking and help set the stage for additional private sector investment. Already we have seen the opening of two new restaurants while other properties are being assembled and cleared for new development. The City has completed its Downtown Revitalization Plan, which seeks to work with existing and potential new businesses to expand services in the area. At the same time, Auburn Regional Medical Center completed construction on a major expansion of over 350,000 square feet in early 2003. These efforts will continue over the coming years and downtown can again resume its position of importance to the community. Economic Development During the 1990s Auburn experienced tremendous growth in population and employment. As of the April 2003 population count, there are over 45,000 people who call Auburn home. There remains a need to bring family-wage and high tech jobs to the community if our residents and their children are to continue to prosper. A viable community needs a strong private sector to provide a stable tax base. Today, attracting such businesses is highly competitive. With improvements in communications and transportation these businesses have great flexibility as to where they locate. The City's Economic Development program seeks to highlight and reinforce Auburn's advantages, work to improve infrastructure and job readiness skills of our residents, and work with businesses to facilitate relocation and expansion thoughout the city. Invest in Trails, Parks and Park Programs, Open Space and Trees The City added a summer teen camp to expose teens to new, challenging outdoor experiences. Theater, arts and drama classes were also added to the teen summer program. Additional adult support has been added at the Late Night program to give adults and youth more opportunities for interaction. The summer youth sports camp and programs for popular sports such as roller hockey, basketball and soccer were expanded. The City continues to plan and research open space development. Planning is ongoing to connect existing parks to the trail system, including completing the White and Green River loops and connecting them into the interurban trail. Continued development of existing park property is ongoing with improvements planned to several neighborhood parks as well as the larger properties. Resolve Transportation Issues SR 164 Safety: Secured an agreement with WSDOT and the Muckleshoot Indian Tribe seeking and planning SR 164 safety and capacity improvements. SR 167 Expansion: Participated in the SR 167 alternative study to pursue regional transportation improvements that relieve congestion and benefit the City's growth potential. 277th Project: The City of Kent helped manage the construction of this project with grant construction funds. Closure of South 277th was on June 19,2001, and it was opened again in early November 2002. 3rd Street Project: This project was completed in August 2002. Page 6 2004 Final Budaet Transmittal Letter "M" Street Grade Separation: This project has been included in the City's Transportation Improvement Plan as a future roadway improvement that should qualify for funding as a Phase II Fast Corridor project. The City will also pursue grant funding. Technology The City will continue to facilitate the use of the technology infrastructure to implement efficiencies in the work place and upgrade our computer technologies to support more efficient business processes. The City's home page was enhanced to provide answers to frequently asked questions and in 2003 our IS Division researched, recommended, and implemented Government Access Cable Television. Other technology enhancements include the implementation of wireless laptop reporting in Police patrol vehicles, eliminating the need for officers to hand write reports to be later entered into the computer system. The officer, while in the field, now enters reports directly into the system. Other technology enhancements for field staff allow building inspectors to document inspections on-site and later download the data into the computer system at the end of the day, once again reducing the need for duplication. In 2004, major technology projects will again focus on more efficient communications with our citizens and internally. Enhancements to the City website will allow citizens direct access to meeting agendas and minutes. Enhancement to communications systems will provide video conferencing and cable broadcast capabilities. Enhancements to internal systems will allow more efficient communications between City sites and contracted agencies such as the Yakima Corrections facility. Finally, web-based systems will be upgraded to allow citizens to begin accessing the permitting database to check on the status of permits. Miscellaneous Endangered Species Act: The City is represented on various WRIA (Watershed Resources Inventory Area) 9 (Green River) committees, and staff is also working with the WRIA 10 (White River) work group. The City continues to review development applications, policies and projects to ensure that damage to fish habitat is minimized and opportunities for enhancement are undertaken. An ESA/Sensitive Areas Coordinator was hired to be responsible for coordinating and implementing efforts to respond to ESA issues and concerns. Crosswalk and Lighting Needs: Council has asked staff to evaluate crosswalk and lighting needs specifically in the Central Business District and then to expand the program to include not just the downtown area, but other areas throughout the city. Revenues and Potential Annexation Costs: The City will continue to evaluate the impact on total resources as a result of annexations. Water Supply: The City has completed its years-long, intensive effort to characterize and model the hydrogeology underlying the city. This work has been at the center of the process necessary to pursue additional water rights for the City's Water utility. Court Alternatives: Due to increasing costs and time associated with traffic infractions, staff will be investigating potential options for other ways to handle the volume of these cases. Partnering Opportunities: The City will continue to pursue opportunities to partner with the Muckleshoot Tribe, school districts, railroads, service organizations, private enterprise and the religious community to plan, develop and improve the Auburn area for the benefit of all concerned. CLOSING COMMENTS As Mayor, and as a citizen of Auburn, I am proud of the City's accomplishments. The City Council has established a vision for Auburn's future. Building a bridge to that vision is our challenge as we move into Page 7 2004 Final Budaet Transmittal Letter the 2151 Century-and continuing dialogue with Auburn's citizens and businesses is a firm foundation for that bridge. The 2004 budget for the City of Auburn represents a balanced approach to planning for Auburn's future. It continues a reasonable level of service while maintaining the financial integrity of the City. The increase in residential development and an increasing population are placing greater demands upon City services. Increases in programs must be managed carefully and brought on only as revenues become available. Every opportunity to increase revenue from sales tax must be explored and careful consideration given to each possibility. City, business and individual citizens must work hand-in-hand for all of us to succeed. The City is presenting a conservative, balanced budget that meets the basic service requirements for Auburn's citizens and businesses during a difficult economic period for the State and for the citizens of Auburn. The objective, as always, is to provide a reasonable level of service to the Auburn community within the framework of fiscal integrity and sound financial management. Auburn is a special place to live, a home of over 45,000 people who still believe it is a small town. This is a difficult period for all of us, but we will find solutions that make sense for Auburn by working together as we have always done. Sincerely, \J 3?r;:/ ~- ....~~ Peter B. Lewis Mayor Page 8