City of Meridian – Revenue Manual
City of Meridian
FY2013 Budget
Revenue Manual
IDAHO ECONOMIC FORECAST - DIV of FINANICAL MANAGEMENT
On a quarterly basis the State of Idaho Division of Financial Management releases an economic
forecast. The State of Idaho uses data and analysis from a company called Global Insight Inc.
The Idaho economic forecast is of particular interest to the City in forecasting our revenue.
Idaho economic indicators such as employment, population growth, job sector growth, and new
construction are particularly relevant to the Treasure Valley.
The Idaho Economic Forecast released in April 2012 for the period 2012-2015 (Volume XXXIV,
No. 2) indicates slight improvements on the horizon in comparison to last year’s forecast. This is
the result of some improvement in the national economy and because job growth in 2011 was
stronger by a small percentage, than previously predicted.
Idaho employment grew by .05% in 2011. Most of the improvement was in the nongoods
producing sector which accounts for two thirds of Idaho’s nonfarm payroll. The nongoods
producing sector consists of two categories: services and trade. The major service categories
include information services, financial services, transportation, warehousing, and utilities,
professional and business services, education and health services, and leisure and hospitality
services. The trade category is split between retail and wholesale with retail being 75%.
Service employment is expected to grow slightly faster than trade employment, 2.8% to 3%
through 2015. Professional and business services are expected to pick up and be an important
sector of the state’s employment as will be health and private education. The trade sector,
namely retail also is expected to grow.
This April unemployment marked the seventh straight month of decline falling to 7.7%. This
percentage while an improvement is note worthy considering Idaho’s unemployment percentage
before the recession was 3%! Mike Ferguson, Idaho’s former chief economist said “Idaho is
characterized by having turned down earlier and deeper, and it’s turning around more slowly
than other states.”
In the period around 2010 to 2011 Idaho housing starts had fallen to 4,600, the lowest level since
1989. Construction jobs were at 30,000, the lowest level since 1995. The Gobal Insight forecast
calls for construction growing 2.3% in 2013, 4.2% in 2014, and 3.6% in 2015.
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City of Meridian – Revenue Manual
The graph below illustrates that through the years the forecasts have been optimistic to say the
least. However the
Idaho Economic Forecast Housing Start Predictions
line for the 2012
Housing Starts Forecast 2008
forecast and the
Housing Starts Forecast 2009
FY2013 forecast
25,000
Housing Starts Forecast 2010
are identical and
Housing Starts Forecast 2011
the FY2012
Housing Starts Forecast 2012
20,000
forecast hit the
Housing Starts Forecast 2013
actual. This may
15,000
indicate that the
industry has leveled
10,000
off instead of being
in free fall.
5,000
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
CITY of MERIDIAN ECONOMIC & POPULATION FORECAST
In FY2010 Meridian sold 562 residential building permits, exactly the same number sold in
FY2009 and the smallest number since FY1991 until FY2011. In FY2011 Meridian issued 483
building permits. In FY2008 commercial building permit sales were at an all time high of
$1,316,153, the culmination of a five year over year increase in commercial building activity. In
FY2010 commercial building permit sales dropped to $372,654 but did climb to $816,820 in
FY2011.
At the end of April 2012, halfway through FY2012, residential building permits are up 54% over
the same period last year. Commercial building permits are also significantly exceeding FY2011
with the month of April being a single month sales record breaker. In April permits were issued
for the Center Cal power shopping center at the corner of Fairview and Eagle Rd as well as for a
168,000 square foot office tower on the Scentsy campus.
Building permit sales of course influence the Building Department revenue but also impact the
amount of property tax the City will collect due to new construction. New construction for the
tax year starting 1/1/2011 (FY2012) was valued at $96,073,750 with new construction for the tax
year ending 1/1/2012 valued at approximately $128,659,413. The uptick in building permits
sales occurring in the spring of 2012 indicate that new construction will increase over FY2013
when it is calculated for collection during the City’s 2014 fiscal year.
The City of Meridian is located in Ada County, by far the state’s largest county. One quarter of
the state population is in the metropolitan area of Ada County. The population of Meridian is
one quarter of the entire population of Ada County. Unemployment in the City of Meridian as of
April 2012 was 6.4% compared to 7.8% at the same time last year. The county unemployment
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City of Meridian – Revenue Manual
rate in April 2012 was 6.9% compared to the prior year rate of 8.2% with the State of Idaho at
7.7% compared to 8.7%.
Per trulia.com the median sales price for homes in Meridian during the three months ending
April 12, 2012 was $199,080. This is an increase of 17.1% compared to the last year. At the end
of the week ending May 9th, 2012 Meridian had 604 homes listed for sale and 355 homes in
foreclosure.
So, the economic outlook is improving for the State of Idaho although the factors that marked the
recession still exist; high unemployment, large inventory of housing, and lack of consumer
spending. The City of Meridian’s economic improvement is ahead of the State as a whole, with
lower unemployment rates and a larger percent of new construction. Meridian has the advantage
of availability of assessable undeveloped land and also enjoys a higher per capita and median
household income than both the State of Idaho and the national average.
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When we use population forecasts in the report we are using the COMPASS (Community
Planning Association of Southwest Idaho) demographic reports. COMPASS prepares both
predictive demographic reports and estimates of annual actual populations (based on building
data). The chart below illustrates the estimated historical population estimates compared to the
census compared to the current COMPASS population estimates through 2030. COMPASS last
updated their forecast in March of 2010 so it does not reflect the 2010 census. The COMPASS
forecast for 2010 population was 81,950 whereas the census came back at 75,092. Since 2007
Meridian’s
City of Meridian Actual Population Estimates and
annual growth
COMPASS Predictions
rate has been
between 2% and
160,000
3% and we
140,000
expect it to stay
120,000
100,000
in that
80,000
neighborhood
60,000
40,000
through 2015.
20,000
This rate is also
0
consistent with
the population
increase expected
by the State of
Idaho.
The complete COMPASS Trend Forecast can be found on their website www.compassidaho.org
REVENUE SOURCES
City revenue comes from two principal sources; first, tax revenue that is used to finance services
that cannot be provided on a fee per user basis such as public safety, parks, and city
administration and two, fee revenue that results from charging a fee for the measurable use of a
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City of Meridian – Revenue Manual
service such as consumption fees for water and sewer or connection fees to connect buildings to
utility lines in order to pay to increase capacity for drinking water and sewer service. The former
are tracked in the General Fund and the later in the Enterprise Fund.
Community Development is part of the general fund but also tracked separately because any
excess of revenue over expense is directed to the Capital Improvement Fund. The Community
Development Department has three division; Planning, Building, and Economic Development.
Analysis and projection of revenue is essential to the City’s budget development process.
Starting in budget year 2002 the City adopted a budget process that identified the cost necessary
to maintain the current service and activity levels, referred to as the “base budget”. Estimated
revenue minus base equals discretionary revenue, the revenue that is available to the City to use
for program “enhancements”.
Budget enhancements are additions to the budget for new programs or services to allow the City
to provide that same service level in spite of population growth.
The following graphs illustrate changes in the base budget and available discretionary revenue
over time in the City’s two major funds.
General Fund FY2013 Budget Discretionary Revenue
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
Base Budget
Discretionary Revenue
Impact Fees
Grant Revenue
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City of Meridian – Revenue Manual
Community Development Services Discretionary Revenue
$6,000,000
$5,000,000
$4,000,000
$3,000,000
$2,000,000
$1,000,000
$0
-$1,000,000
-$2,000,000
Base Budget
Discretionary Revenue
Enterprise Fund Discretionary Revenue
(Cash Basis - excludes depreciation expense)
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
Budget
FY2006
Budget
FY2007
Budget
FY2008
Base Budget
Budget
FY2009
Budget
FY2010
Budget
FY2011
Budget
FY2012
Budget
FY2013
Discretionary Revenue
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City of Meridian – Revenue Manual
GENERAL FUND REVENUE
The majority of
general fund revenue
comes from property
tax. Other sources of
revenue include state
revenue sharing and
other
intergovernmental
agreements, cable,
electrical, gas
franchise agreements,
park impact fees and
investment interest.
These revenues fund
the fire, police, parks,
and city
administration. The
percent of contribution
of each type of
revenue to the general
fund revenue “pie” changes little from year to year.
Revenue is classified in the audit report
illustrated in the sidebar to the right.
TAXES
FRANCHISE FEES
Propertay tax revenue
Gas Franchise Revenue
Penalties & Interest
Cable TV Franchise Revenue
LICENSES & PERMITS
Power Franchise Revenue
Alcohol permits
FINES & FORFEITURES
Dog Licenses
Parking Fines
Building Permits
Court Revenues
INTERGOVERNMENTAL
False Alarms
State Liquor Apportionment
Restitution
State Sales Tax Sharing
CHARGES For SERVICES
State Revenue Sharing
Park & Recreation Fees
Rural Fire
School Resource Revenue
Grants
Impact Fee Revenue
INTEREST
Planning Filing Fees
as
The only “service” that has been fully supported by user fee charges is the Building Department.
The Building Department issues permits and conducts building inspections for both residential and
commercial developments. The Planning Department also charges fees for services. The Building
Department, the Planning Department, and Economic Development are divisions of the department
Community Development. From FY2003 through FY2007 building permit fees generated revenue
above and beyond expenses for both the Planning Department and the Building Department. The
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City of Meridian – Revenue Manual
City has an ordinance that
this excess revenue be
transferred to the Capital
Improvement Fund to be
used for general fund
capital projects.
Total actual audited
general fund revenue for
fiscal year FY2011 on a
fund accounting basis was
$32 million compared to
an original budget of
$30.7 million and a final
amended budget of $31.5
million. FY2012 revenue
is budgeted at $30.5
million and the actual is
projected to be consistent
with that amount. This total revenue number includes revenues and interest income that are
available only for specific uses, such as the interest from the Public Safety fund, impact fees and
interest, and Capital Improvement Fund interest.
PROPERTY TAX
Property tax is the City of Meridian’s largest source of general fund revenue. Property tax is
calculated by Ada County based on State of Idaho code. The following is a brief summary of very
complicated tax code that has changed many times since its inception. Idaho code limits the amount
of property tax that cities can collect. Starting in the late seventies and continuing through the
nineties, the Idaho Legislature passed numerous laws in response to taxpayers concern with
increases in property tax. Finally in 1995, the Idaho legislature enacted code that limited property
tax increases to 3% over the prior year. The first cap became effective in fiscal year 1997. Later
code revisions allowed cities to apply the prior years levy rate to new construction and annexation.
A quasi tax revolt started in 2005 with citizens protesting rapid increases in property tax bills. The
building bubble resulted in the market prices of homes increasing by double digit percentages. The
grumbling started in resort type areas where property values had increased substantially. The Idaho
legislature convened an interim tax committee who conducted large public hearings all over the
state. State law now requires the homeowner’s exemption to change each year as home values
change. For tax year 2008 the maximum exemption was $100,938, for tax year 2009 the value was
$104,471, for tax year 2010 the value was $101,153, tax year 2011 the value fell to $92,040, and for
tax year 2012 it is $83,974.
Meridian has traditionally had a low levy rate. During the eighties cities had various opportunities to
increase the levy rate. Meridian, as a small town with few services, did not take advantage of them.
The only way to increase the levy artificially is with a 60% vote. As will be discussed below the
rapid decline in market values has resulted in a steep increase in Meridian’s levy rate compared to
historical rates.
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City of Meridian – Revenue Manual
The levy rate is the percentage of each dollar of market value of a property that will be paid in
property tax. Each year the rate “levied” against the taxable value of all properties is recalculated.
The ability to include the value of new construction and annexation to arrive at the maximum
property tax that can be levied has helped the City collect enough property tax revenue to keep pace
during periods of rapid growth. Calculating the levy “rate” involves creating a fraction with the
property tax dollar amount as the numerator and the total taxable value of the City as the
denominator. An important item to note is that the City receives tax revenue a year in arrears from
the date of the property valuation.
At the writing of this report in May 2012 we used the preliminary Ada County Assessor number for
new construction and taxable value. The total taxable value is not the final number. The Idaho
Legislature passed legislation during the 2012 session that will allow developers to exempt certain
site improvements such as roads and utilities from property tax. The legislation was made effective
immediately in spite of opposition by the counties and cities. The counties did not have any
mechanism in place to capture this information so it will be the last hour before we know what the
dollar impact of this might be. We also still lose some new construction value due to previously
passed legislation that allowed developers to change tax status from new commercial back to
agricultural if their project is stalled. Cities will likely continue to face threats from state legislative
changes made to property tax
After several years of decline the City’s total taxable value has started to increase. For the tax year
ending 1/1/2012 the value
increased just over 8%.
This is a marked change
from last year’s decrease
of 10.8% and the year
before decrease of 9.21%.
Construction values used
to calculate the allowable
property tax levy increased
dramatically in fiscal years
2005 through 2008 and
started to descend in
FY09. The taxable value
of new construction
peaked in FY07 (tax year
2006) at $695,193,626. In
contrast the new
construction used to
calculate last’s year’s property tax revenue was $96 million with the low being the year before at
$93 million. This year new construction is up slightly at $128 million.
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City of Meridian – Revenue Manual
The following graph illustrates the components that make up the total dollar amount of tax the City
receives each year. The
base is the dollar amount
of property tax levied the
prior year increased by
3%. The new construction
portion of the tax received
is the value of new
construction multiplied by
the prior year’s levy rate.
The annexation portion is
recently annexed property
value multiplied by the
prior year levy rates.
The City elected to not
take the allowable 3%
increase to base in FY2011
or FY2012. The FY2013
estimate does include the
3% allowable tax base
increase. The last two
years the City has not
taken the base levy tax
increase in consideration
of the need to keep taxes
low for property owners during the recession. The decrease in the taxable value of property meant
that to sustain the same amount of property tax revenue the levy rate increased even without the City
taking the allowable 3% to base increase.
Although the levy rate
changes look dramatic on the
graph in actuality the increase
in the levy rate was offset by
the change in property value.
Almost all residential
property owners experienced
significant declines in the
value of their individual
properties.
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City of Meridian – Revenue Manual
The graph below is a sampling of taxes paid by property owners in different parts of Meridian.
STATE REVENUE SHARING
State revenue sharing is the City’s second largest general fund revenue source. The State of Idaho
collects a 6% sales tax however 1% is exempt from city and county revenue sharing. 13.75% of the
collected sales tax is distributed to cities and counties. 7.75% is distributed into a program called
Revenue Sharing – State Distribution, and 6% is distributed into a program called Revenue Sharing –
County Distribution.
The City portion is divided and distributed based on market value and population. The base is
distributed based on the fourth quarter 1999 distribution plus 5%. The excess portion is then divided
by population.
House Bill 468 passed in the 2000 legislature created a new distribution formula for that portion of
the state sales tax that had been known as the “Business Inventory Replacement”. The new revenue
sharing combined the old Business Inventory Tax replacement portion with the sales tax distribution
known as City-County Revenue Sharing. The state revenue sharing distribution remained the same
but the amount is distributed like the state revenue, each city, county, and special district will be
provided a new base. The base is the amount received for the fourth quarter of 1999. Additional
growth in sales tax will be distributed to cities and counties according to population growth.
Sales tax revenue sharing is often on the table each the State of Idaho legislative session. The State
passed a temporary sales tax hike a few years ago to help get through a budget shortfall. This increase
became permanent but was not shared with municipalities. There were a couple of bills on the table
during the 2012 legislative session generally dealing with exemptions. One of the bills to decrease
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City of Meridian – Revenue Manual
exemptions, tax services, and lower the percentage did not make it out of committee. A second bill to
collect sales tax from internet sales through the Streamlined Sales and Use Tax Agreement also did not
make it out of committee. A third bill with an industry specific exemption did pass.
Idaho sales tax steadily increased during the first part of decade. Revenue peaked in 2008 and then
declined as the recession took hold in Idaho. By 2011 consumer spending started to creep upward and
sales tax revenue reversed its downward course. The State is predicting sales tax revenue will continue
to climb at a bit faster rate, in 2013.
In 2008 Meridian’s share of
state sales tax peaked at $3.5
million, falling to about $3
million from FY2009
through FY2011. When
preparing for the FY2012
budget the City took a very
conservative approach and
budgeted $2.75 million. It
looks like the actual revenue
for FY2012 will be right
around the $3 million mark
and that is what has been
budgeted for FY2013.
LIQUOR TAX
The City receives a portion of the State’s liquor sales surcharge. The State charges a 15% surcharge
on liquor sold through the State Liquor Dispensary. The surcharge is distributed to cities, counties
and specific programs. After distributions to alcoholism treatment, public schools, community
colleges, the cooperative welfare account and the state general fund, the remainder was distributed
between the counties and cities, 49% to counties and 60% to cities. For incorporated cities with
liquor stores the distribution is based on the city’s proportion of total sales. Some portion of the
overall city share is distributed to cities that do not have a liquor store based on their population.
Meridian has three liquor stores.
Unfortunately the State is in the process of reducing the 60% distribution to cities and counties to
50% by 2014. This means each year the distribution has decreased by 2%. Additionally the state
has finished a repayment to cities and counties that resulted from a use of liquor funds to purchase
water rights. The decease in the sharing percentage has been offset by the increase in the volume of
sales and the revenue has remained between $450,000 and $500,000. For FY2013 it is budgeted at
$490,000.
RURAL FIRE
The final piece of intergovernmental income the City receives is from the Meridian Rural Fire
District. The City has an agreement with the District to provide service within the fire district
boundaries. As the City’s boundaries grow, the Rural Fire District service area becomes smaller.
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City of Meridian – Revenue Manual
The Rural Fire District normally pays 20% of the City Fire Department operating expenses. By
special agreement they have built fire stations and made other major capital improvements as well as
picking up an additional operating expense reimbursement for specific periods of time. The City
will be repaying the Rural District for some capital projects, such as Fire Station #5, with public
safety impact fees as the City collects them.
At the writing of this report it appears that the reimbursement for FY2013 is expected to remain at
20%. The actual reimbursement cannot be calculated until the Fire Department budget has been set
however for the last five years it has been right around $1.5 million so we will use that number for
the FY2013 budget.
FRANCHISE FEES
The state of Idaho allows cities to enter into franchise agreements with water, gas, electric, cable and
solid waste collection providers. The percentage collected varies from 1% to 5% of the provider’s
gross sales.
Natural Gas – The franchise fee is 3% of gross (net of uncollected accounts) annual sales. The City
currently has a 30-year franchise agreement with Intermountain Gas Company which expires
January 7, 2017. Intermountain Gas lowered rates in 2010 resulting in revenue decreasing the next
two years, additionally revenue will go up or down depending on the winter weather. It is
anticipated that revenue will continue to stay around $650,000 for the foreseeable future.
Cable – The franchise fee is 5% of gross sales. Cable franchise revenue is paid twice a year based
on a calendar year. The existing agreement is for a term of 15 years and was renewed July of 2011.
Over the past few years the revenue has gradually increased to slightly over $300,000 however
decreased to under $300,000 in FY2011. We expect our revenue from the agreement to remain
under $300,000 in FY2013.
Electricity – Franchise fee is 1% of Idaho Power gross sales in Meridian. The City currently has a
25-year franchise agreement with Idaho Power, which expires November 1, 2023. As with gas,
uncertainty over rate changes and weather makes predictions difficult.
GENERAL FUND FRANCHISE FEES
Actual
FY2008
Description
Natural Gas
Actual
FY2010
Actual
FY2011
Budget
FY2012
Budget
FY2013
781,353 $
804,270 $
658,508 $
673,082 $
650,000 $
650,000
Cable
331,190
334,158
324,010
295,742
285,000
280,000
Electricity
314,684
372,247
391,353
383,044
383,000
383,000
TOTAL
$
Actual
FY2009
$
1,427,227
$
1,510,674
$
1,373,871
$
1,351,868
$
1,318,000
$
1,313,000
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City of Meridian – Revenue Manual
PUBLIC SAFETY
Court Revenue: The City receives ninety percent (90%) of all fines and forfeitures collected under
Idaho Code. The number of infractions and the pay schedule of each is the basis for the City’s fine
revenue. The penalty for an infraction is set in the payment schedule adopted by the Supreme Court
order.
The City contracts with the City of Boise to handle prosecution services, currently neither Meridian
nor the City of Boise have been able to get access to the data controlled by Ada County needed to
determine if 100% of total fine revenue is collected or if some of it is lost to delinquency. The
amount of revenue collected is inconsistent varying in recent years from over $500,000 to $400,000.
The relationship between the City and the Ada County court system is currently in contention as the
County has alleged that the City should pay Ada County for use of the court for Meridian related
cases. This dispute is not anywhere near resolution but at some point may eliminate any revenue
Meridian receives and additionally require the City spend additional money to house a courthouse or
pay for court costs. Due to the uncertainty over the timing and end result of this legal dispute court
revenue is included in the FY2013 revenue budget.
Animal Control and Adoption Fees: City code authorizes animal fees and fines to be charged for
licensing and impounding domestic animals and for animal adoptions. Annual fee collections vary
from $65,000 to $70,000.
School Resource Officers: Meridian School District #2 has had an agreement with the Meridian
Police Department to provide School Resource Officers at designated campuses and special events.
The school district has paid approximately 47% of the officer’s wages (the cost of benefits is not
shared). The agreement is for the school period; which starts in August and ends in June.
PUBLIC SAFETY REVENUE
Description
Court Revenue
School Resource Officers
Actual F2008 Actual FY2009 Actual FY2010 Actual FY2011 Budget FY2012 Budget FY2013
$
457,477 $
401,432 $
485,572 $
424,426 $
400,000 $
400,000
.
167,167
223,548
224,629
224,608
200,000
200,000
Animal Control
TOTAL
70,937
$
695,581
63,122
$
688,102
66,382
$
776,583
69,045
$
718,079
65,000
$
665,000
65,000
$
665,000
PARKS AND RECREATION
Parks and Recreation Fees: Specific programs are charged fees, such as the summer recreation
programs. The City Council is authorized by Idaho State Code to establish fees for certain services
provided. Rates are separately set for each fee. Fee schedules are periodically reviewed and
adjusted as necessary to cover related costs.
There are two types of recreation programs. Adult sports revenue are fees collected for teams
playing in leagues such as the softball league. Recreation program revenue is the revenue collected
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City of Meridian – Revenue Manual
from a wide variety of classes and activities organized through the City Parks Department. It
includes revenue from the summer camp program and special events such as fun runs.
The City sports and recreation programs continue to increase in popularity and participation.
Park Reservations: Fees are charged for the reserved use of the City’s park shelters, baseball fields
and special events held on City property. Revenue projections are based on the population growth,
availability of park shelters, ball fields and weather. As the number of available shelters increases
reservation revenue also increases.
Facilities Lease: In October 1978, a 25-year lease agreement was signed between the City of
Meridian and Cherry Lane Recreation, Inc. A 25-year time extension was put in place in 2001.
During the years of this lease the City received $6,000 per year.
During FY05 the leaseholder was changed to Lake View Meridian Investors and Boise Ranch Golf
Course and the name of the course changed to Lake View. The golf course management contract
was somewhat modified in FY2010. Since the management change in 2005 the City has not
collected a lease fee and has actually provided some financial assistance for golf course
improvement projects.
Donations for Parks: The City has received small cash donations as well as larger donations of
land, equipment or in-kind services. We do not budget for donations; they are only recorded when
actually received.
PARKS AND RECREATION REVENUE
Recreation Programs
Sports Programs
Community Events
Park Reserv
Donations
Actual
FY2008
$109,602
$115,344
$17,437
$36,238
$95,665
$374,286
Actual
FY2009
$125,648
$131,712
$13,565
$51,531
$36,570
$359,026
Actual
FY2010
$106,920
$154,254
$16,250
$50,085
$327,509
Actual
FY2011
$116,159
$173,791
$20,132
$56,401
$8,000
$374,483
Budgeted
FY2012
$130,000
$156,000
$24,100
$50,000
Budgeted
FY2013
$120,000
$175,000
$16,000
$56,000
$360,100
$367,000
IMPACT FEES
The City has had park impact fees for several years. At the issuance of a residential building
permit the City collects $1,384 (fee effective Jan. 1, 2008) per single family residence to use for
new park development. The money is tracked in a separate account and is used only to develop
new parks which maintain the current level of service.
In December of 2006 the City instituted fire and police impact fees to help pay for the capital cost
of constructing fire stations and paying for major equipment necessary due to growth. The Fire
impact fee is $377 per residential building permit and .25 per square foot per commercial building
permit. The Police impact fee is $85 per residential building permit and .06 per square for
commercial building permits.
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City of Meridian – Revenue Manual
The impact fees can only be spent for the portion of capital construction that can be attributed to
growth. The City has a capital outlay plan that defines what percentage of a planned project is due
to growth and maintenance of the current level of service. Impact fees cannot be used to increase
the level of service so
their use is restricted. In
addition, since the Rural
Fire Department has paid
for several capital
construction projects for
the City Fire Department
(fire stations, training
tower, etc.); impact fees
collected for Fire will
need to be returned to the
Rural District.
Impact fee revenue
peaked for Parks in
FY2005 at $2 million
dollars compared to
$733,220 in FY2011.
Park impact fee collections for FY2012 are trending higher than the $600,000 budget however the
amount budgeted in FY2013 for Parks, Fire, and Police remains conservative at $700,000,
$280,000, and $60,000 respectively.
LICENSES AND FEES
The City collects fees for various licenses and permits. These fees are a minor percentage of general
fund revenue and do not change significantly from around $45,000 year to year. The City Clerk’s
Office plans to start selling passports and has determined that this will bring in $56,000. However,
the revenue is offset by the need to hire additional staff.
BUILDING AND DEVELOPMENT REVENUE
Fees collected for building permits, inspections and planning and development services are General
Fund revenue. These revenue sources are generated in the Community Development Services
Department which includes the Planning Division, the Building Division, and Economic
Development. Any excess of revenue over expenditures for this department are transferred to a fund
set aside for general fund capital projects.
Over 90% of the revenues collected in the Community Development Department are from the
Building Division. The Building Division issues and collects money for building permits and
performs building inspections. The Department contracts with inspectors who conduct building,
electrical, plumbing, fire and gas inspections for residential and commercial building projects.
These private inspectors are paid a percentage of the permit fees. Permit fees are based on the size
and dollar value of the project.
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City of Meridian – Revenue Manual
Fees for the Planning Department cover the cost of development applications; site inspections, site
and landscape plan reviews, certificates of zoning compliance etc. Effective January 2, 2002, the
City Council approved
new fees and increased
fees to cover the costs
that were not being
recouped through the old
fee structure. The fees
were increased again in
September of 2005. The
new fees substantially
increased fee revenue.
Another new fee
schedule became
effective April 1, 2008.
As with building permit
sales, Planning
Department revenue has
dramatically decreased
during this construction
slow down.
Both Building Department and Planning Department revenues are obviously tied to construction
activity. When building growth drops, the revenue will drop correspondingly.
The following graph provides a history of Community Development revenue. The first decade of
the new century was boom and bust as far as the building industry. Residential building permits
peaked in FY2005 with commercial building permits peaking in FY2008. Residential building
permit sales started to slow in FY2006 and continued to drop until FY2008 remaining fairly flat
from that point on.
Defying the normal scenario that a
spurt of commercial growth
follows residential growth
commercial growth shot upward in
FY2012 and continues in that vein
in FY2012. However many of the
larger projects were planned a few
years ago and put on hold during
the worst of the recession.
Although residential growth is
picking up in FY2012 we are
taking a cautious approach with
revenue for our FY2013 budget.
Commercial building is very hard
to project and revenue varies
drastically with the size of project. There are still several uncertainties on the horizon such as
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City of Meridian – Revenue Manual
economic uncertainties in Europe and the economic slowdown in China. Some economists feel the
sudden burst of residential building in Idaho may not be sustainable.
ENTERPRISE FUND
The City provides water
and sewer services on a
fee basis. There are two
separate fee structures.
Water and sewer usage
fees are charged for the
day to day operation and
maintenance of the
existing utility
infrastructure.
Assessment (connection)
fees are charged when a
new property connects to
the utility system and are
to expand or extend the
system to accommodate
additional service
demands.
Connection Fees
Connection fees peaked
in FY2005 at $10.5
million. Since FY2009
they have been
approximately $3 million
dollars but a spark in
building activity in
FY2012 is resulting in
pushing revenue over the
$3 million dollar mark.
In the FY2013 budget we
increased our revenue to
$3.4 million dollars.
The assessment (or
connection fee) is
collected at the time the building permit is issued. For commercial assessments, Public Works
makes a determination of the amount the business will use, referred to as “ERU” or “equivalent
residential unit”. For example, a business might be assessed 10 ERU’s, which means that they will
use an amount of water equivalent to the amount 10 homes would use.
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City of Meridian – Revenue Manual
When a new residential property connects to the City Sewer and Water systems, the homeowner is
assessed $2,749 for a sewer connection and $1,794 for a water connection.
Utility Fees
The City of Meridian started the decade with 12,000 individual utility accounts and by mid-year
FY2012 there are just over 27,000 accounts. The City has two sets of fees: a fee for water usage and
a fee for sewer usage.
Water and sewer usage revenues have grown steadily with the growth in customer accounts and
various small rate increases. However the costs to operate the utility systems, particularly the sewer
system, outpaced revenue growth. The sewer system is more costly to operate than the water
system. To address this problem the City approved a fixed cost rate increase for water and sewer
usage effective in three installments over three years. Rates were increased in FY2009 and FY2010
but the FY2011 rate increase was cancelled. The City was hesitant to impose another rate increase
during a sluggish economy and opted to postpone projects until growth picks up again. On an
annual basis the City forecasts operating and capital costs for a five year period to determine if fees
are sufficient to operate the system, keep up with growth, and meet regulatory requirements.
WATER
The rate consists of two components:

Base (minimum charge) – Administrative costs that stay fixed regardless of the level of
operation. For example, billing and accounting services. Even if the account has zero usage this
rate will be charged.

Volume Charge – Covers the direct costs of providing the service, costs tend to fluctuate
with the quantity of output. Such costs include maintenance and repairs, depreciation of assets and
plant labor.
The fee structure is as follows:


The base fee is $5.38
The volume charge (cost per 1000 gallons) is $1.86
Projecting water sales is not clear cut. Factors like weather, length of the irrigation season and water
conservation are impossible to predict. Water revenue changes from year to year are somewhat
erratic. Most new subdivisions in Meridian have pressurized irrigation and do not need to use City
water to water their landscaping. The number of water accounts has increased steadily during the
mid-decade building spurt but has now slowed to less then 2% per fiscal year.
FY2011 water sales were just under $6.8 million dollars with the budget for FY2012 at $6.7 million
dollars and the FY2013 budget at $6.9 million dollars.
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City of Meridian – Revenue Manual
SEWER
The fee structure is as
follows:

The base fee is $8.48

The volume charge
(cost per 1000 gallons) is $5.43
The philosophy and
methodology for the monthly
user sewer charge is the same
as the water charge with one
change. The system cannot
separate water used outside the
house from water used inside
the house. Water used inside the house goes into the sewer system. So, to calculate the sewer rate
for each user the City averages the gallons used by the homeowner during the four winter months
December, January, February and March. This is based on the assumption that no water is used
outside the house during those months. This averaged rate is recalculated on an annual basis.
FY2012 revenue was budgeted at $11.8 million dollars with FY2013 revenue budgeted at $ 12.2
million dollars. Actual FY2011 revenue was $11.9 million dollars.
PUBLIC WORKS REVIEW FEES
The Public Works Department charges fees for providing certain services such as review of
development applications, inspections, site plans, and water, sewer and drainage system inspections.
During the building boom these fees have generated up to $500,000 per year. However the last few
years’ fees have been between $35,000 and $40,000. For FY2013 budget we are budgeting $40,000.
Sanitary Service Administration Fee
The City has contracted with a private company, Sanitary Services Co to provide garbage pick-up
service since April 1, 1997. During FY2012 SSC was purchased by another trash hauler, Republic
Services, however the contract remains the same. The City receives 6% of gross sales for an
administration fee because the City does all of the billing and collection. The City includes the
garbage collection charge on its utility bills and remits it to the contracted trash hauler.
SSC administrative fee revenue increased annually until FY2008. About that time residential
growth rates started to slow and construction dumpster accounts decreased significantly.
In the spring of 2010 the City switched from unlimited pick-up to an automated can collection
system with free recycling. Revenues for FY2011 at $511,760, under the new rate structure were
6% over FY2010. From FY2011 to FY2012 revenues are up about 3%. We set the FY2013
budget at $500,000.
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City of Meridian – Revenue Manual
Other Income
Various other departments within the utility charge small fees for other services such as making
arrangements for property managers to direct the services bill to the tenant, rental of hydrant
meters for construction, and certain inspections and reviews.
INTEREST INCOME
All of the City of Meridian’s funds have cash and investment balances that generate interest. The
City’s investment vehicles are in accordance with the Idaho code. The City retains an investment
advisor who, for an annual fee of a quarter of a percent of the dollar amount invested, maintains a
portfolio of certificates of deposit, and government bonds of varying maturities. The City’s
checking account balances, held at Bank of The Cascades are currently 100% insured under the
NOW FDIC insurance program. NOW insurance is temporary unlimited insurance for government
accounts earning no interest.
The City also invests in the State of Idaho investment pool. The pool behaves somewhat like a
money market account; it is highly liquid with no restrictions on deposits or withdrawals. Due to
the lack of restrictions on allowable withdrawals the interest rate is generally low.
The State of Idaho allows local governments to invest in its diversified bond fund. Fees for
participating in the bond fund are minimal. This fund is considered to be a longer term investment
and withdrawals and deposits are limited.
The graphs below show the City’s investment portfolio and interest rates as of May 31st, 2012.
At the writing of this report in May of 2012 the City was earning an average of less than 1% on our
total investment portfolio. For the fiscal year ended 2007 the City earned almost $3.5 million
dollars on a portfolio of $45.8 million dollars. In stark contrast for the fiscal year ended 2012 the
City will likely only earn $400,000 on a portfolio of about $68 million dollars. On a hopeful note
we are budgeting FY2013 interest revenue at $428,000, for FY2013.
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City of Meridian – Revenue Manual
ACTUAL YEAR-END CASH AND INVESTMENT BALANCES
General Fund
Impact Fee Fund
Public Safety Fund
Develop Serv/CIP Fund
Enterprise Fund
Total City
YE FY07
$22,395,898
$2,356,215
YE FY08
$15,778,460
$2,192,009
YE FY09
$17,762,377
$1,982,180
YE FY2010
$21,716,017
$1,964,241
$4,895,585
$38,916,598
$5,434,155
$26,926,585
$2,204,535
$28,834,247
$2,519,705
$31,002,315
YE FY2011
$18,626,778
$2,980,470
$2,089,202
$4,732,850
$32,667,245
$68,564,296
$50,331,208
$50,783,338
$57,202,278
$61,096,545
ACTUAL FISCAL YEAR INTEREST INCOME BY FUND
General Fund
Impact Fee Fund
Capital Imprv
Public Safety
Enterprise Fund
Develp Services
Total City
Actual FY07
Actual FY08
Actual FY09 Actual FY2010 Actual FY2011
$918,038
$845,980
$511,534
$432,118
$248,059
$124,803
$63,759
$55,804
$16,228
$21,967
$261,244
$66,521
$14,954
$2,981
$4,159
$29,348
$2,228,460
$1,141,833
$907,521
$489,414
$386,311
$102,659
$31,010
$22,361
$9,478
$13,000
$3,635,204
$2,149,103
$1,512,175
$950,220
$702,844
Estimated
FY2012
Budget FY2013
$170,000
$170,000
$16,000
$16,000
$2,000
$2,000
$240,000
$240,000
$428,000
$428,000
The General Fund is the fund for the general activities of the City. Revenues and expenses for
public safety, parks and recreation, and general administration go through the General Fund. The
largest source of revenue flowing into the General Fund is property tax. The City always
maintains a four month operating reserve in the General Fund, the rest of the balance is referred to
as unrestricted. Unrestricted funds are available to use for capital projects and/or to provide an
additional safety margin.
CIP stands for Capital Improvement Fund. The Development Services Fund was used to account
for the Building Department and the Planning Department. Any excess in the Development
Services Fund over operating reserves was transferred to the Capital Improvement Fund. This
model worked well when the City’s building permit revenue was rapidly growing. Once the
building boom stopped Building Department revenues were not sufficient to support the Building
and Planning Department. Technically these functions are general fund functions and reported that
way in the audited year-end financial statements.
Starting in FY2012 the Development Services Fund was merged into the General Fund. We do
continue to isolate Planning and Building revenue and expenses and should there be an excess of
revenue over expense again those funds will be transferred to the Capital Improvement Fund.
Impact Fund is used to segregate impact fees for Fire, Police and Parks that are collected when
building permits are sold. This fund is restricted and may only be used for designated capital
projects.
The Enterprise Fund balance is the fund used for the water and sewer utility operations. The fund
balance is used to provide operating and other reserves and as a source of funding for large
infrastructure projects.
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City of Meridian – Revenue Manual
FY2013 REVENUE BY FUND
Attached are the budgeted FY2013 schedules of revenue by fund. For questions or additional
information concerning the material in this report please contact the City of Meridian Finance
Department by phone at 489-0419 or by email at skilchenmann@meridiancity.org.
CAPITAL IMPROVEMENT FUND
Revenues
Interest
Actual
Actual
Actual
Actual
Actual
Budget
Budget
FY2007
$214,390
FY2008
$63,056
FY2009
$14,523
FY2010
$1,657
FY2011
$4,159
FY2012
$1,000
FY2013
$2,000
COMMUNITY DEVELOPMENT
Actual
Actual
Actual
Actual
Actual
Budget
Budget
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
$3,752,683
$330,165
$4,082,847
$3,450,564
$230,636
$3,681,200
$2,212,842
$127,410
$2,340,252
$1,938,875
$125,963
$2,064,838
$2,371,844
$134,293
$2,506,137
$1,808,000
$135,000
$1,943,000
$2,135,000
$135,000
$2,270,000
Interest
$98,933
$36,365
$20,671
$8,552
$13,000
$10,000
$0
Miscellaneous
$65,291
$16,858
$29,581
$19,240
$660
$0
$0
$4,247,071
$3,734,423
$2,390,505
$2,092,630
$2,519,797
$1,953,000
$2,270,000
Revenues
Building Perm its & Fees
Planning Fees
Total charges for services
TOTAL REVENUE
ENTERPRISE FUND
Revenues
Actual
Actual
Actual
Actual
Actual
Budget
Budget
FY2007
FY 2008
FY2009
FY2010
FY2011
FY2012
FY2013
Charges for services:
Water revenues
4,324,846
5,271,449
5,830,195
6,390,976
6,756,589
6,700,000
6,920,000
Sew er revenues
6,052,325
6,411,722
7,862,962
10,436,067
11,912,510
11,800,000
12,248,000
Sale of m eters
325,007
201,737
153,663
141,479
125,448
150,000
150,000
Engineering Fees
339,487
170,066
51,331
63,505
62,418
45,000
55,000
Trash Billing Service
475,587
483,148
511,761
500,000
500,000
331,874
367,676
432,428
362,019
488,669
325,000
325,000
Interest Incom e
1,904,725
1,282,178
672,301
430,820
386,311
425,000
240,000
Water connections
2,256,295
1,855,581
1,270,867
1,188,783
1,080,403
1,150,000
1,300,000
Sew er connections
3,063,556
2,709,045
2,017,216
1,834,076
1,807,672
1,900,000
2,150,000
18,598,116
18,269,453
18,766,549
21,330,873
23,131,781
22,995,000
23,888,000
Miscellaneous
TOTAL REVENUE:
Operating Revenue
Capital Projects Revenue
-
-
11,373,540
12,422,650
14,806,166
17,877,194
19,857,395
19,520,000
20,198,000
7,224,576
5,846,804
3,960,383
3,453,679
3,274,386
3,475,000
3,690,000
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City of Meridian – Revenue Manual
GENERAL FUND
Revenues
Actual
Actual
Actual
Actual
Actual
Budget
Budget
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
Property Tax
Base + New Construction
$13,434,463
$15,679,063
$17,060,769
$18,784,574
$19,416,599
$19,335,124
$19,915,560
$13,434,463
$15,679,063
$17,060,769
$18,784,574
$19,416,599
$19,335,124
$20,491,577
24%
17%
9%
10%
3%
0%
3%
Alcohol licenses
$53,196
$42,385
$50,312
$53,725
$53,675
$50,000
$52,000
Dog License/Adoption
$69,650
$70,937
$63,122
$66,382
$69,045
$65,000
$65,000
Miscellaneous
$11,462
$5,073
$10,949
$16,717
$16,645
$5,000
$60,925
$134,308
$118,395
$124,383
$136,823
$139,365
$120,000
$177,925
Allow able Increase
$576,017
Licenses and Perm its
Total licenses-perm its
Intergovernm ental
State liquor apport.
$418,775
$458,546
$496,850
$474,307
$489,949
$450,000
$490,000
State revenue sharing
$3,388,596
$3,568,686
$3,126,994
$3,012,053
$3,087,105
$2,750,000
$3,000,000
Rural Fire
$1,012,107
$1,504,890
$1,488,522
$1,407,660
$1,598,137
$1,569,061
$1,500,000
$46,621
$101,425
$288,824
$603,269
$719,885
$709,074
$645,000
$4,866,099
$5,633,548
$5,401,189
$5,497,288
$5,895,076
$5,478,135
$5,635,000
$1,307,324
$1,427,227
$1,510,674
$1,373,872
$1,351,868
$1,320,000
$1,313,000
$523,639
$457,477
$401,432
$485,572
$424,426
$400,000
$400,000
$19,469
$28,483
$35,222
$25,987
$9,670
$5,000
$543,107
$485,960
$436,654
$511,560
$434,096
$405,000
$400,000
School Resource Officer
$159,876
$167,167
$223,548
$224,629
$224,608
$200,000
$200,000
Sanitary Service Adm in
$399,427
$488,609
$0
$0
$0
$0
$0
$24,310
$19,300
$25,850
$107,971
$85,994
$20,000
$20,000
$171,211
$242,384
$270,925
$277,424
$310,082
$301,000
$311,000
$35,389
$36,238
$51,531
$50,085
$56,401
$50,000
$56,000
$7,632
$6,730
$32,609
$54,946
$41,095
$4,000
$4,000
$797,845
$960,428
$604,462
$715,056
$718,180
$575,000
$591,000
$810,877
$777,328
$381,766
$383,100
$277,407
$300,000
$170,000
Grants
Total intergovernm ental
Franchise Fees
Fines and forfeitures
Court Revenue
Other
Total Fines and Forfeitures
Charges for Service
Special Events
Recreation program s
Park Reservations
Rental Incom e
Total charges for services
Interest Unrestricted
Miscellaneous
Rent
$0
$0
$0
$0
$0
$0
$0
Donations
$335,183
$61,047
$245,961
$90,485
$54,634
$14,000
$4,000
Miscellaneous
$135,936
$282,400
$64,321
$11,804
$92,942
$100,000
$35,000
$471,120
$343,447
$310,283
$102,288
$147,575
$114,000
$39,000
Park Im pact Fees
$891,706
$1,039,104
$757,938
$753,830
$711,299
$600,000
$700,000
Fire Im pact Fees
$445,555
$523,836
$241,814
$266,060
$335,697
$275,000
$280,000
Police Im pact Fees
$103,116
$126,770
$54,824
$64,732
$77,720
$65,000
$60,000
$1,440,377
$1,689,710
$1,054,575
$1,084,622
$1,124,716
$940,000
$1,040,000
$114,947
$76,603
$44,180
$25,803
$21,967
$20,000
$16,000
$23,920,467
$27,191,708
$26,928,937
$28,614,986
$29,526,850
$28,607,259
$29,873,502
Total Miscellaneous
RESTRICTED Im pact
Total Im pact Revenues
Interest Restricted
TOTAL REVENUE
Incom e Restricted
Incom e Unrestricted
$1,555,324
$1,766,313
$1,098,755
$1,110,424
$1,146,683
$960,000
$1,056,000
$22,365,143
$25,425,396
$25,830,182
$27,504,561
$28,380,167
$27,647,259
$28,817,502
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