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Unformatted text preview: ADOPTED FISCAL YEAR 2019 BUDGET City of Norfolk, Virginia Funding Solutions to Norfolk’s Challenges Operating Ord #: 47,229 Capital Ord #: 47,231 This page intentionally left blank July 1, 2018 Honorable Mayor and City Council City of Norfolk, Virginia I respectfully submit to you the Adopted Fiscal Year (FY) 2019 Financial Plan for the City of Norfolk, which is comprised of the General Fund, enterprise funds, special revenue funds, internal service funds, Capital Improvement Plan (CIP), and the Annual Plan for Housing and Urban Development (HUD) Block Grant programs. The discussion during our budget work sessions resulted in amendments to the Proposed FY 2019 General Fund and Parking Fund budgets. These amendments to the Proposed FY 2019 Budget were adopted at the May 22, 2018 City Council meeting. The table below illustrates the final Adopted FY 2019 Financial Plan: Fiscal Year 2019 Financial Plan Operating Fund Adopted Budget General Fund $880,788,426 Enterprise Funds $145,660,878 Special Revenue Funds $60,312,685 Internal Service Funds $103,941,204 $1,190,703,193 Total Operating Funds $112,039,271 Capital Improvement Plan $1,302,742,464 Total Operating and Capital Funds Annual Plan for HUD Block Grants $5,841,730 Total Financial Plan $1,308,584,194 The FY 2019 Financial Plan builds on the work we have accomplished together and funds City Council’s and the community’s priorities of investing in neighborhoods, housing, public safety, education, and resilience. This adopted budget is bold. The Adopted FY 2019 Budget is based on our economic reality. It reflects cuts that were participatory and thoughtful, while continuing to fund Council’s priorities. We are taking on big, bold challenges that include making investments in education, inclusive economic growth, infrastructure, and catching up on deferred maintenance of our buildings, vehicles, equipment and in technology. The city manages resources for the community in a thoughtful and effective way. However, our responsibility is about more than sound financial management of public resources. Ultimately, the budget—how we spend the people’s money—is about helping people thrive in Norfolk, helping them have the best quality of life possible. Norfolk has an outstanding quality of life thanks to long-standing partnerships among the community, our elected leaders, and city staff. Sustaining and even elevating that quality of life requires innovative ways to approach 1 challenges. The Adopted FY 2019 Budget embodies new approaches to allocating our constrained resources to evergrowing needs. General Fund Operating Budget Amendments Prior to the third budget work session we identified an additional $50,000 in interest income and $113,000 in audit contract savings. During the third work session, City Council chose to increase the bed tax by $1 and increase the cigarette tax by 10 cents. These resources support the City Council directives outlined below. Council Directives Outside Agencies: The restoration of the five percent funding decrease proposed for outside agencies including Festevents. A total of $916,646 is restored, which maintains a cut of $25,000 to citywide marketing initiatives. Fire-Rescue: The restoration of the proposed reductions to firefighter stipends and the restoration of two specialized firefighter positions that were eliminated in the proposed budget. Norfolk Emerging Leaders (NEL) program: Restores $154,365 to the Recreation, Parks, and Open Space (RPOS) budget for the Norfolk Emerging Leaders (NEL) program. These funds will restore funding to 80 NEL positions for a total of 272 NEL positions in FY 2019. Arts Manager position: Restores $72,397 to the Cultural Facilities, Arts and Entertainment budget to continue support for the Arts Manager position. Campostella and Merrimack Station Recreation Centers: Restores $65,000 to the RPOS budget to continue yearround programming at Campostella and Merrimack Recreation Centers. Grandy Village Recreation Center: Restores $40,000 to the RPOS budget to continue current operations and programming at the Grandy Village Recreation Center. Officer of Election pay: An ongoing increase to the Office of Elections budget of $38,640 to support a pay increase for Officers of Election who volunteer to serve at the polls on Election Day. These funds will increase the pay for over 400 Officers of Election. Residential Driveway right-of-way fee: The reduction of the proposed increase to the residential driveway permit. The fee will increase by only $15 instead of the proposed $85. The $15 increase reflects the administrative processing fee that will be added to all right of way permit fees. Computer Resource Centers: The restoration of $30,000 to prevent the closing of Diggs Town and Oak Leaf Computer Resource Centers. Also, $15,000 to expand programming provided at the computer resource centers, which may include the support of SOL students that are not receiving after-school assistance. Festevents Ocean View programming: Provides $25,000 to Norfolk Festevents for programming in Ocean View. Planning Fees: A reduction in proposed planning fees for Zoning/Conditional Rezoning and Text Amendment fees to better align with the region. This will affect an average of 47 permits annually, for a total reduction in proposed revenues of $11,000. Legal Aid Society of Virginia: An ongoing increase to the Legal Aid Society of Southeast Virginia of $1,600 for general operation support. These funds will support additional low-income families seeking legal aid. 2 General Fund Operating Technical Adjustments We also have a number of General Fund operating technical adjustments to the Proposed FY 2019 Budget that are required. These technical adjustments are outlined below. Tax Increment Financing Fund - The Proposed FY 2019 Budget reflected dissolving the Tax Increment Financing (TIF) Fund on June 30, 2018. The debt service on the Housing and Urban Development (HUD) refunding bonds and real estate tax revenue were included in the Proposed FY 2019 General Fund Budget. However, the city’s bond counsel ruled that since TIF revenues are pledged to pay the debt service, the TIF Fund cannot be dissolved until the debt has been paid off in FY 2024. The Adopted FY 2019 Budget restores the TIF Fund budget which includes the debt service expense and transfer of excess revenues to the General Fund. On the General Fund side, this will result in a removing the real estate tax revenue of approximately $5.9 million and restoring the transfer to the General Fund from the TIF Fund of approximately $4.3 million, for a net decrease of approximately $1.6 million to General Fund revenues. There is a corresponding $1.6 million transfer back of the debt service expenditures to the TIF Fund. Norfolk Public Schools (NPS) Other Revenue – While the Education section of the Budget (pages 327 – 345) accurately depicts the Proposed Norfolk Public Schools Operating Budget, the number that was used in the Proposed General Fund Expenditure Summary for Public School Education (page 88) did not reflect NPS’ proposed reduction of $602,951 in Other Revenue. This revenue category is for miscellaneous local funds received from sources other than the city’s General Fund such as tuition, fees, surplus sales, building rentals, and other small revenue items. This technical adjustment will not impact local or state revenue to NPS but will reduce the total General Fund Budget by $602,951. Ocean View Senior Center Funds – The Proposed FY 2019 Budget transferred $75,000 from RPOS to Prime Plus in the Outside Agency section of the budget. The funds for Prime Plus were to be used to relocate and provide programming for the Ocean View Seniors that will be displaced when the Senior Center is closed. Subsequent to the budget proposal it was decided that the Ocean View Seniors would move into the East Ocean View Recreation Center and RPOS would continue to provide programming. As a result, this transfer is no longer necessary. Norfolk Public Schools (NPS) Revenue Sharing Formula – Based on the Proposed FY 2019 Budget, the revenue sharing formula calculation resulted in a constant 29.2 percent share of non-dedicated local tax revenues. As a result of the amendments to the proposed budget, the revenue sharing formula calculation would result in a constant 29.55 percent share of non-dedicated local tax revenues. The amendments include the $1.00 increase to the bed tax and removing the real estate tax revenue associated with the Tax Increment Financing Fund. This adjustment will not result in additional funding for NPS, rather it accurately sets the constant share percentage to match the FY 2019 Budget. Table 1 below outlines the impact of the City Council budget amendments and the technical changes to the General Fund Budget: 3 Table 1: General Fund Revenue Amendments Adjustments Raise Bed Tax $1.00 Raise Cigarette Tax 10 cents Reforecast Interest Income Type Council Directive Council Directive Council Directive Decrease Zoning/Conditional Rezoning and Text Amendment fee Council Directive increase Council Directive Eliminate residential driveway right-of-way fee increase Technical Adjustment Reduce NPS Other Revenue Technical Adjustment Reduce Revenue (no TIF dissolution) Amended General Fund Revenues Amount $1,000,000 $520,000 $50,000 ($11,000) ($32,550) ($602,951) ($1,601,535) ($678,036) General Fund Expense Amendments Adjustments Restore funding to outside agency partners Restore Fire-Rescue stipends Restore reduction to NEL program Restore Fire-Rescue specialty positions Restore Arts Manager position Type Council Directive Council Directive Council Directive Council Directive Council Directive Restore year-round hours at Campostella and Merrimack Council Directive recreation centers Council Directive Restore Funding for Grandy Village recreation center Council Directive Increase Officer of Election pay Council Directive Restore Funding for computer resource centers Council Directive Fund Festevents Ocean View programming Council Directive Increase programming at computer resource centers Council Directive Increase funding for Legal Aid Society of Virginia Council Directive Refine Compensation increase costs Council Directive Contract Savings - Outside Audit Technical Adjustment RPOS Funding - senior programming at EOV Recreation Center Technical Adjustment Outside Agency Funding - PrimePlus Technical Adjustment Reduce NPS Expenditures Technical Adjustment Reduce Debt Services expenses (no TIF dissolution) Amended General Fund Expenditures Amount $916,646 $200,500 $154,365 $82,208 $72,397 $65,131 $40,000 $38,640 $30,000 $25,000 $15,000 $1,600 ($2,037) ($113,000) $75,000 ($75,000) ($602,951) ($1,601,535) ($678,036) At the third work session City Council also decided to place all proposed Parking Fund rate increases on hold pending the recommendations of a third-party consultant’s report. This amendment prompted changes to the Parking Fund’s operating budget and to the Parking Capital Improvement Plan (CIP). These amendments are outlined below in the Parking Fund Budget Amendments section. 4 Parking Fund Budget Amendments Parking Revenues: Total Parking Fund revenue will be reduced by $1,415,017 from the Proposed FY 2019 Budget. Revenue from Operating Transfers In, (use of cash savings to fund operations) will increase while operating revenue will decrease. Parking Expenditures: Total Parking Fund expenses will also be reduced by $1,415,017 from the Proposed FY 2019 Budget. Table 2 below details the Parking Fund operation amendments described above. Table 2 Parking Fund Operating Amendments Revenue Description Decals – Residential Parking Fines and parking violations Short term parking Long term parking On Street parking Cruise Ship Revenue Recreational Parking Parking discount stamps City short term parking Rollover from previous year Total Revenue Amendments Expenditure Description Transfer to CIP Reserve for abatement funds Total Expenditure Amendments Amount ($80,000) ($507,300) ($927,000) ($948,000) ($220,000) ($50,000) ($620,000) ($60,000) ($33,000) $2,030,283 ($1,415,017) Amount $1,000,000 ($2,415,017) ($1,415,017) Parking CIP: The Proposed FY 2019 – FY 2023 Parking Fund CIP included projects that would have been supported by the proposed increase in parking rates. As a result of placing the rate increases on hold pending the recommendations of a third-party consultant’s report, the Parking Fund CIP will be amended. The amendments to the Parking Fund CIP are outlined in Table 3 below: Table 3 Proposed FY 2019 – FY 2023 Parking CIP Project Improve Parking Customer Experience Improve Parking Technology Infrastructure Maintain Parking Facilities Rehabilitate Parking Garages Totals FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 $9,000,000 $0 $0 $0 $0 $2,000,000 $2,000,000 $1,000,000 $0 $0 $1,900,000 $1,900,000 $2,900,000 $2,900,000 $2,900,000 $0 $0 $3,000,000 $0 $0 $12,900,000 $3,900,000 $6,900,000 $2,900,000 $2,900,000 5 Amended FY 2019 – FY 2023 Parking CIP Project Improve Parking Customer Experience Improve Parking Technology Infrastructure Maintain Parking Facilities Rehabilitate Parking Garages Totals FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 $7,000,000 $0 $0 $0 $0 $0 $0 $0 $0 $0 $2,900,000 $2,900,000 $2,900,000 $2,900,000 $2,900,000 $0 $0 $0 $0 $0 $9,900,000 $2,900,000 $2,900,000 $2,900,000 $2,900,000 There are two Capital Improvement Plan technical adjustments to the Proposed FY 2019 Budget that are required. These technical adjustments are outlined below in the Capital Technical Adjustments section. Capital Technical Adjustments Fund Chrysler Hall Major Upgrades – The project was funded in the Proposed FY 2019 CIP at a total of $40 million over five years; $13.5 million in FY 2020 and FY 2021 and $13 million in FY 2022. This project will be financed with a combination of bonds, historic tax credits, and philanthropic donations. Subsequent to the budget proposal, it was determined that in order to quickly apply for tax credits the city would need to complete 35 percent construction drawings. As a result, this technical adjustment shifts $6 million of funding forward into FY 2019 to immediately begin the architectural and engineering work. The total funding for the project will not change, just the timing. Table 4 below outlines the adjustment. Table 4 Chrysler Hall Major Upgrades – Change in Five-Year Plan Description FY 2019 Proposed $0 Amended $6,000,000 Change $6,000,000 FY 2020 $13,500,000 $11,500,000 $ (2,000,000) FY 2021 $13,500,000 $11,500,000 $ (2,000,000) FY 2022 $13,000,000 $11,000,000 $ (2,000,000) FY 2023 $0 $0 $0 Five-Year Total $40,000,000 $40,000,000 $0 Change to Reappropriation of Previous Authorizations - Reappropriation of previously authorized and unspent CIP funds (top right of page 442 in the Proposed FY 2019 Budget) allows new capital projects to be funded with bond authorization from previously approved projects that: • • are completed and have unspent funding, or have never begun because priorities have changed or the project could not be completed as funded. The Proposed FY 2019 CIP included a total reappropriation of $3,192,409. This amount included $1,500,000 from the project “Support Career and Technical Education.” Subsequent to the budget proposal it was determined that this project should not be closed and the funding reappropriated. As a result, the reappropriation of previous authorizations will decrease by $1,500,000 million to $1,692,409. In order to offset this reduction, bond authorization will increase by a corresponding amount. 6 Next Steps As we move forward, the Administration will continue to partner with resident and businesses to revitalize neighborhoods in a collaborative, connected, competitive, and creative way. This bold budget represents a significant step in our journey toward building a great city of the 21st Century. We look forward to working with you and the residents to implement the many initiatives supported by the Adopted FY 2019 Budget. It is my pleasure to present to you the City of Norfolk’s Adopted FY 2019 Budget. Douglas L. Smith City Manager 7 This page intentionally left blank April 3, 2018 Honorable Mayor and City Council, I respectfully submit to you the Proposed Fiscal Year (FY) 2019 Financial Plan for the City of Norfolk, which comprises the General Fund, enterprise funds, special revenue funds, internal service funds, Capital Improvement Plan (CIP), and the Annual Plan for Housing and Urban Development (HUD) Block Grant programs. A summary of the Proposed Financial Plan is shown in the table below: Proposed FY 2019 Financial Plan Fund Proposed Budget General Fund $881,466,462 Enterprise Funds $147,075,895 Special Revenue Funds $54,457,685 Internal Service Funds $103,941,204 $1,186,941,246 Total Operating Funds $109,039,271 Capital Improvement Plan $1,295,980,517 Total Operating and Capital Funds Annual Plan for HUD Block Grants $5,841,730 Total Financial Plan $1,301,822,247 Last year, the theme of my proposed budget was building on the city’s momentum. We listened and heard what you have told us these past 16 months since I joined Team Norfolk. Your priorities are embedded and reflected in this budget proposal. The FY 2019 Financial Plan builds on the work we have accomplished together and funds the Council’s and community’s priorities of investing in neighborhoods, housing, public safety, education, and resilience. The budget before you funds solutions to Norfolk’s challenges. The City of Norfolk is not the city it was 30, 20, or even 10 years ago. During his State of the City address, the Mayor challenged everyone to re-imagine Norfolk. He said, “New opportunities will reshape and define us for years to come. But our progress as a city will ultimately be determined by our ability to think anew, to dare to dream, and to re-imagine this old seaport city as the coastal community of the future, the hub of economic development, and the connector and strength of the region. Leaders before us made bold decisions that gave us security and momentum that transformed our city. Now it is our time to be bold and courageous, and re-imagine Norfolk.” This proposed budget is bold. The city manages resources for the community in a thoughtful and effective way. However, our responsibility is about more than sound financial management of public resources. Ultimately, the budget—how we spend the people’s money—is about helping people thrive in Norfolk, helping them have the best quality of life possible. Norfolk has an outstanding quality of life thanks to long-standing partnerships among the community, our elected 1 leaders, and city staff. Sustaining and even elevating that quality of life requires innovative ways to approach challenges. My Proposed FY 2019 Budget embodies new approaches to allocating our constrained resources to ever-growing needs. The Proposed FY 2019 Budget is based on our economic reality. It reflects cuts that were participatory and thoughtful, while continuing to fund the Council’s priorities. Economic challenges require new, community-supported solutions if we are to continue improving our quality of life. We are taking on big, bold challenges that include making investments in inclusive economic growth, infrastructure, and catching up on deferred maintenance of our buildings, vehicles, equipment and in technology. Investment in maintenance and technology was deferred during the recession and funding has never returned to an adequate level. The Proposed Financial Plan invests more than half-a-billion dollars over the next five years on capital projects that support your priorities: education, neighborhoods, infrastructure, and resilience. The Proposed FY 2019 General Fund Budget is $881.5 million. It is 2.8 percent, or $24.2 million, more than last fiscal year. The overall 2019 spending plan is $1.3 billion. The budget proposal I recommend to you changes our approach to debt, investment and maintenance; enabling ...
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