2018 Proposed Budget Presented 9/25/17

For 2017’s budget the focus was cutting wasteful spending and separating the financials for the City and Utilities. The result has already demonstrated a path for a more financially responsible government.  We exceeded revenue goals and were under budget on expenses which not only saved millions of dollars over previous years, but greatly reduced the city’s reliance on our utility profits.

 

 

 

 

The Utility subsidy came in the form of transfers into the City’s operating account and also by directly paying City operating expenses as you can see in the graph above.  After separating out City & Utility financials, Utilities no longer pay for City expenses such as phone, computer, community development among may other expenses. Utilities will continue to make up the shortfall for the City but only in a transparent transfer and only for the amount needed until infrastructure is updated.In 2017, the Utility transfer exceeded the City’s need showing a surplus.  The actual subsidy should have been $1,787,671, which is substantially lower than previous years.Here is the net City deficit and when compare to the last two years, the City’s reliance on Utility assistance has greatly reduced and well on its way to being self-reliant.  In 2017 the City did not use any cash reserves as in years past either. While we transferred more than what was needed from Utilities, this is the first surplus in many years. Now that expenses are properly appropriated, we can manage utility subsidy and even plan for the correct amount the city should be getting to better serve its citizensBecause less is being transferred out, Utilities’ profits have increased.  With 2018 projected profits, we can start immediately on upgrading the urgent needs in the sewer department.Since 2010 the City of Fairhope has grown in population almost 27% while the total number of Full-time City employees has decreased almost 4%.  The shortage has been a long-term problem but has been particularly exasperating now due to rapid growth.  We must fill in the holes to bring better services, become more efficient, capitalize on revenue opportunities and greatly reduce overtime.

The budget also includes 2% fund for merit increases based on performance.  By eliminating the standard cost-of-living raise, we can afford to raise employees for exceptional performance. The increase will happen on the anniversary date rather than all at once after the budget passes.Total debt with 2020 projection.  The City debt will be paid down to just under $2MM, but Utility and Airport debt are long term.  Utilities have also held debt which should have been under the City such as the settlement/purchase of the “Triangle” property. We can no longer co-mingle expenses and revenue or we cannot properly manage the areas that need attention.One of the big reductions in 2017 was excessive engineering expenses.  We saved $341K+ by hiring the Operation Director who is a civil engineer.  The 2018 budget includes a new engineering dept which will be a shared expense in all departments which will include SCADA, mapping and GIS services.  This department is a critical need to solve sewer leaks and quality water concerns.

Fiscal 2017 began with 234 passenger vehicles.  We were paying more in mechanical expenses than the vehicles were worth and also paying unnecessary liability insurance. We are beginning 2018 with ~142 passenger vehicles.

When new vehicles were purchased, the old ones were handed down.  New purchases must replace old equipment unless we are adding a person.

2018 budget includes leasing larger equipment so we are not having to pay the whole purchase up front.  There will be no surprises on capital outlay each year, full warranty and maintenance included with lease and turned in for new equipment. This process will save money (mechanical, overtime, efficiency).

Top line budget numbers for City and Utilities.  Here is the link for full budget.  Proposed Revenue & Expenses are both conservative. Below is the video presentation.

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