City of Zachary Budget Message for the Fiscal Year 2011-2012 May 10, 2011 Consolidated Budget Message One goal the new Administration wanted to ensure in the budgeting process was the involvement of Department Heads and the City Council from beginning to end, and in all decisions regarding the budget. There have been meetings with individual Department Heads, collective meetings with the departments, as well as workshops for the City Council and Department Heads. It has truly been a cooperative endeavor between all in the preparation of the budget. Operating under a budget for the current year that was already in place, the Administration has taken a very conservative approach toward budgeting for fiscal year 2011-2012. Concerns across the State and the Nation as to declining revenues appears to have missed the City of Zachary. Until the Administration can obtain a clearer picture of where we feel revenues will be heading, we have projected a virtual static budget for the new year. With the opening of new businesses and the Audubon Bridge north of Zachary becoming operational, we fully expect sales tax revenues to increase in Zachary. Even with this projected growth, there has only been a modest 1% increase in sales tax projections. The Administration is looking forward to the Americana Project beginning during this fiscal year. This should provide the City with a very good boost in permits of all types during the year. As the businesses and residential properties begin to open next year, we expect a surge in sales and property taxes. The Administration continues to work with the new software program that it inherited, and continues to make every effort to ensure that the dollars already spent will have been justified. The ability to pay bills and acquire and pay permits and licenses on line should be available by the beginning of 2012. The Administration, with recommendations from Department Heads, has proposed a very aggressive capital program for the City for the fiscal year. The City currently has a very aged utility fleet including both vehicles and equipment. With the City’s healthy fund balance and cash reserves, the Administration feels it is both necessary and wise to replace aging equipment that is costing more in repair than anticipated. There are existing project needs in both the Police and Fire Departments required to bring buildings and equipment up to today’s standards. The City has begun the process to borrow $ 9.3 million dollars at a percentage rate of 0.95 from DEQ. This will give the City the ability to completely upgrade, repair and replace virtually the entire City’s sewer system that is beyond ten years old. It is the intent of the City to be “proactive” in this matter, rather than be “reactive” to daily repairs. The Administration will be proposing to the Council a rate increase that will fund the proposed bond issue, while at the same time, not overly taxing our consumers. There has been only one rate increase in the City’s utilities in over thirty (30) years. General Fund The Administration is projecting a static budget for the year 2011-2012. Sales tax is projected to increase by 1% and many revenues are projected to hold steady as with past year trends. Expenditures are increasing in areas beyond the City’s control such as health insurance and retirement contributions. Even with static growth in revenues, the Administration is projecting recurring revenues to exceed recurring expenditures for the year. The City will continue to maintain a healthy fund balance and cash reserve. In all departments fuel costs continue to rise. Efforts will be made in the coming year to control fuel expense for all departments. Likewise, Utility costs are projected to rise as well. The Administration is proposing an overall 3% increase in salaries, with individual increases based on performance reviews. Capital expenditures are numerous and reported on the five year Capital Outlay plan. The fund balance should remain over $ 5,000,000. Utility Fund As mentioned in the consolidated message, the City is pursuing a bond issue from DEQ for $ 9.3 million to completely upgrade its’ sewer system. Old decayed lines will be replaced with modern technology which will greatly improve infiltration and infusion into our system which in turn will greatly improve our flow toward City Parish Sewer operations. This available money can be borrowed at a 0.95% rate allowing for a modest increase in rates to service the debt. The Administration has proposed an aggressive capital plan for replacing old and dilapidated equipment and vehicles. There are also projects associated with the widening of Highway 64, and the construction of a turning lane on West Mount Pleasant that are included in the budget. Generally revenues and expenditures are in line with past years and recurring revenues exceed recurring expenditures for the year. Street Improvement Fund There are two main projects in this fund for the year, Pope and Hickman Roads and McHost Road. Revenues are projected to continue in this fund as with previous years. The City continues to maintain a healthy fund balance in this fund.