Last week I shared a bit about the process we use to create the City’s annual budget.  This week I will provide an overview of what is included in the Recommended Budget for Fiscal Year 2020 (FY20).  As I mentioned last week, under our form of government, I propose the annual budget to the City Council, based upon a community vision and strategic priorities established by the Council.  The Council reviews this recommendation, conducts a public hearing, and identifies any revisions they feel necessary prior to their adoption of the budget.

What Have We Been Provided and Where Did It Come From?

Essentially all of the money we have available to deliver services comes from tax revenue or fees paid for specific services such as solid waste, parking, or securing a permit.  The most significant source of revenue comes from taxes paid on real estate, accounting for nearly $88 million for the upcoming year.  This is followed by revenues from taxes on personal property ($23 million) and sales ($21 million).  In total, local tax revenues equate to $204 million or about 68% of all the revenue used for the annual budget.  The remaining revenues come from a variety of sources, with the two most significant being intergovernmental transfers ($75 million), predominantly from the Commonwealth, and charges for services ($16 million).  Once totaled from all sources, the revenue we anticipate having in FY20 to deliver our services is just shy of $300 million, nearly $8 million more than we budgeted for in FY19.

What Do We Propose Spending It On?

As in every preceding year, we propose that the vast majority of the funds available be spent in essentially the same manner.  This “base budget” equates to about $291 million and is what pays for such things as policing, fire protection, teachers, libraries, and parks.  Spending on education ($85.1 million) continues to be the highest priority, followed by community safety ($69 million).  In addition to funding the base budget, it is necessary to increase expenditures in a number of areas just to meet inflationary increases and contractual obligations.  These increases account for just over $3 million in new expenditures.  It is also desirable, when possible, to enhance or expand services in key areas.  The Recommended Budget includes additional funding for such purposes.  Likewise, it is necessary to increase employee compensation to remain competitive in attracting and retaining the workforce necessary to deliver City services.  The Recommended Budget includes around $2.5 million for this purpose, a 2.75% increase over the current year.  Finally, the budget includes a series of “one-time” expenditures for items such as equipment, grant matches, costs to conduct elections, etc. These expenditures total $2.6 million.

In addition to spending on the base budget, inflationary and contractual increases, service expansion, employee compensation, reserves, and one-time expenditures, funding is necessary to continue meeting our capital needs—that is our need to maintain, enhance, and build new bridges, streets, buildings, etc.  The City creates a five-year plan for capital needs to guide these expenditures. Over the next five years, it is anticipated we will need to spend $108 million on these items.  Most of these expenditures will be in the form of borrowed money or debt.  We will need to spend nearly $15 million in FY20 to “service” that year’s share of debt.

So there you have it, a balanced Recommended Budget: $300 million in revenues and $300 million in expenditures.  This is what it takes to educate our children, provide law enforcement, fire protection, safe and clean streets, parks, libraries, social services, arts, and so much more.  You can view the Recommended Budget online at the City’s website and City Council will offer citizens an opportunity to comment on the budget at the public hearing scheduled for April 25, at 7 p.m., in Council Chambers.

We are truly a fortunate community to be able to provide the resources necessary to deliver on many of the identified priorities.  We may not be able to deliver everything in exactly the way all would prefer, but we can and do deliver a myriad of high-quality services that our health, safety, welfare, and quality of life depends upon.

-- Bob Cowell

It is a fact of life that taxes must be paid, and just as true that our ability to provide the services we all depend upon is based upon revenue from those same taxes.  This post and the next one will focus on the City’s budget.  This week I will zero in on the process we use to develop the budget, and next week I will address what the FY20 budget proposal includes.

Start with What is Important

Several months before we begin talking about numbers, we start by talking about priorities.  In the early fall of each year, City Council members gather to discuss the priorities for the upcoming year.  This discussion is guided by the existing Strategic Plan which highlights the agreed upon goals, strategies, and performance measures for the City.  The staff will also often present relevant financial and policy considerations – for example, information about the local and state economy, and trends that may affect revenues or expenditures.  This meeting also represents the best time the Council has to review the progress made in delivering the outcomes we indicated we would achieve.  This is where we look at how graduation rates, crime data, job growth, street paving, etc. are doing, and where adjustments in expectations or approaches may be warranted.  The conclusion of these discussions should be affirmation of the Strategic Plan, any necessary adjustments in expected outcomes or performance measures, and a renewed set of “marching orders” for City staff as we begin the development of the next budget.

Provide Instructions and Prepare Proposals

In a Council-Manager form of government such as we have here in Roanoke, it is the City Manager who prepares and presents to Council the proposed budget based upon their priorities and guidance.  I initiate this process by relaying to the various department directors the results of the annual meeting with Council, and providing instructions for preparing proposals for revised or new expenditures.  This is where I indicate if I am seeking proposals for spending reductions or new programs, the areas we will focus on addressing, and other items they need to consider.  This is also when the Office of Management and Budget provides technical guidance regarding deadlines, forms to be used, etc.  Once instructions are provided, the directors begin preparing proposals for service reductions or additions, proposed purchases, etc.  Throughout this process, the directors serve as cross-functional teams, work closely with the Office of Management and Budget personnel and, from time to time, come together for further clarification from the City Manager.  This work will go on for the several months, culminating in submission of proposals in the late part of the winter.

Review and Refine

Once proposals have been received, they are reviewed and refined by the staff of the Office of Management and Budget for presentation to the City Manager.  I, along with the two Assistant City Managers, review the proposals, facilitate presentations by staff of the proposals, ask questions, request additional information or clarification, etc., all in an effort to develop a draft document that begins to move us toward a balance between revenues and expenditures.  While this work is going on, projections of anticipated revenues are being developed.  There will be projections of real estate taxes, personal property taxes, sales taxes, fees, support from the State, grants, etc., which are used to create the total revenue projections used to clarify what we will have available to meet our expenditure needs. 

Sharing with Council

In the early part of the spring we begin briefing Council of the progress—first how revenue projections are looking, then how expenditures are shaping up and, finally, how close we are to presenting a balanced budget.  Late in this process, as we begin to be very close to a balanced budget proposal, we begin briefing the Council members in detail, individually, affording them more time to ask specific questions of what is being considered. This all culminates in a proposed budget presented by the City Manager at a meeting in April, followed by a public hearing and a final Council work session.

Action and Reporting

In May of each year, after months of work, debate, briefings, and discussions, City Council will approve a final budget that will be used to enable delivery of the services we all are dependent upon to conduct our daily lives and business activities.  As we implement the budget, we have staff tracking revenues coming in and expenditures being made to ensure consistency with the budget, and to identify any deviations that need attention.  Additionally, outside accountants and auditors evaluate what we have collected and expended, and verify compliance with regulations, standards, policies and practices, and noting any areas needing correction.

It's a long and sometimes confusing process, but it is the process that we use to determine how to spend nearly $300 million annually needed to provide schools, streets, libraries, parks, law enforcement, fire protection, emergency medical services, stormwater management, solid waste collection and disposal, and dozens upon dozens of other vital services. 

For the next post – what is proposed for FY20?

--Bob Cowell

Every few years the City contracts with someone to conduct a statistically valid survey of residents to determine how we are doing in the delivery of our services.  This week, the results of the most recent survey were presented to the Mayor and City Council.  This week’s post provides a glimpse at what we learned.

Everything is Important 

Not all that surprisingly, nearly every service provided by the City was evaluated as important by respondents.  The most important?  Public Safety - Police, Fire, and EMS services ranked the highest.  Slightly less important?  Parks and trails, along with animal control, were identified as facilities slightly less important.  It is, in part, for this reason – the indication that “everything is important,” that we ask the Council each year to prioritize our focus.  With regard to the City’s seven areas of strategic importance, currently the Council ranks funding for Education as the most important, followed by Public Safety, Human Services, Infrastructure and so on, which is pretty consistent with how things settled out in the survey results.

Where We are Doing Well and Where There Could Be Improvement

As with any inquiry that asks how one is doing, there are bound to be areas where things are going well and areas where there could be improvement.  Our work is no different.  Areas where survey respondents indicated we are doing well include public safety, libraries, pick up of trash, parks and trails, and animal control.  Areas where respondents said we could improve include sidewalks, street paving, stormwater management, and events offered at the Berglund Center.  Most important are those areas where respondents indicated the service was very important and where either we are doing well or where there could be improvement.  Again, public safety, libraries, and trash collection stand atop the rankings for importance and satisfaction.  Sidewalks and street paving are two areas ranked very important and where improvement is warranted. 

Where Have We Been Improving

There are a couple of areas we have been focusing on over the past several years to improve our performance and thereby your satisfaction.  Notable areas include youth and social services, which have seen double-digit increases in satisfaction over previous surveys.  Another area where improvement has been seen is removal of snow and ice from City streets.  Perhaps the most rewarding responses were those indicating how safe folks felt in their neighborhoods and downtown.  Most respondents stated they felt very or somewhat safe in their neighborhoods (African Americans 98% and Caucasians 87%).  Likewise, most stated they felt very or somewhat safe in downtown (African Americans 96% and Caucasians 84%).

There is a great deal more information contained in the presentation made to the Council and in the Executive Summary, which are posted on the City’s website.  These results, combined with the Council’s Strategic Plan and the annual Performance Indicators and Measures report shape the annual budget proposal presented to Council for public hearing and adoption.  The budget development process and the proposed budget will be the subject of my next two posts.

-- Bob Cowell