City Council Agenda and Packet 2012 10 09 SP

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LLoCityof uisville COT ORADC) - SINCE 1878 September 28, 2012 Mayor and City Council City of Louisville 749 Main Street Louisville, CO 80027 Dear Mayor Muckle and City Council: Office qf the City Manager As required by Section 11 -2 (b) of the City Charter, I am pleased to offer for your consideration the proposed 2013 Annual Operating Budget and the 2013 -2017 Five -Year Capital Improvements Plan. The City is in good fiscal health. This is the result of several things including (1) the voters approving the Use Tax in November 2010, (2) the current level of building activity generating an increase in building permit and building use tax revenue that is likely to continue for several more years, (3) Louisville being recognized as a great destination for food and fun and the resulting sales tax revenue generated by those activities, and (4) the actions that you approved in late 2009 and early 2010 to bring the City's expenditures and revenues back into balance even though we had lost two of the City's largest retail businesses (Sam's Club and Safeway). The City's fiscal health makes it possible to propose a 2013 Budget and Five -Year Capital Improvements Plan that would fund several large capital projects including the City Services Facility reconstruction ($6.5 million), the Diverging Diamond Interchange at McCaslin Blvd and U.S. 36 ($3.5 million to be combined with $9.0 million from other entities), and the South Street Gateway Underpass ($2.9 million), while still increasing funding for the City's street resurfacing program from the current level of $1.25 million, to $1.5 million in 2015 and then $1.75 million in 2016 and 2017. This will optimize the level of resurfacing we can do and minimize the life -cycle costs of maintaining the City's streets. Financial Overview The 2013 budget includes a total revenue projection (excluding interfund transfers) of $35.9 million for all funds, a decline of 6.1% over the estimated revenue for 2012. This decline is mainly attributable to a reduction in projected building - related revenue (construction permits, impact fees, tap fees, etc.) and a reduction in anticipated utility user fee revenue. Staff expects utility user fee revenue to decline because of a decline in consumption, not rates. Staff proposes to increase water rates by 6% and wastewater rates by 4 %. Staff also recommends completing a rate study to confirm that the proposed rates are adequate to provide the resources needed to fund the City's water and wastewater systems. Based on information from Boulder County, staff projects that net property tax revenue will increase by 1.3% to reflect increases in the City's assessed valuation. Staff projects sales tax revenue will increase by 5% in 2012, 3.5% in 2013, and average a 3% annual increase for 2014 through 2017. The 2013 budget includes total expenditures (excluding interfund transfers) of $49.2 million, an increase of 39% over 2012 expenditure estimates reflecting increases in capital spending for which we have been building up reserves for several years. Total expenditures include $23.5 million for operations, $2.5 million for debt service, and $23.0 million for capital outlay. Total appropriations for all funds, including interfund transfers, are $50.6 million. 7