CITY of DULUTH 2021 Adopted Annual Budget
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CITY OF DULUTH 2021 Adopted Annual Budget MAYOR Emily Larson CITY COUNCILORS Renee Van Nett Arik Forsman Gary Anderson Joel Sipress Roz Randorf Janet Kennedy Zack Filipovich Derek Medved Terese Tomanek CHIEF ADMINISTRATIVE OFFICER Noah Schuchman Table of Contents City of Duluth, Minnesota - 2021 Approved Budget Page Section One - INTRODUCTION 171 Public Works & Utilities This section contains information about the entire city's 188 Transfers and Other Functions approved budget and describes the process. 1 Transmittal Letter Special Revenue Funds 4 Profile of Duluth 189 Statement of Revenues, Expenses, 5 Listing of Duluth Officials and Changes in Fund Balance 6 City Organization Chart and Personnel 190 Lake S uperior Zoological Gardens 11 Strengths, Challenges, and Opportunities 191 Parks 20 Budget Highlights 195 Special Projects 25 Total Approved Budget 196 Police Grant Programs 27 Total Approved Revenue Comparison 197 Capital Equipment 29 Total Approved Expense Comparison 198 Economic Development 30 Major Revenue Source Analysis 199 Community Investment Fund 34 City Fund Structure 200 Energy Management 35 Approved Budget by Fund Detail 201 Tourism Taxes 37 Highlights by Fund 203 Home Investment Partnerships Program 44 Budget Award Announcement 204 Community Development 45 Financial Polices 205 Community Development Administration 54 Priority Based Budgeting 206 Workforce Development 208 Senior Employment Section Two - APPROPRIATIONS 209 Other Postemployment Benefits This section contains summary information of each specific 210 DECC Revenue fund and detail on specific departments and divisions. This 211 Street System Maintenance Utility includes revenue estimates, personnel, capital needs, and approved operating expenses. 212 Street Improvement Sales Tax 213 Street Lighting Fund General Fund 59 General Fund Summary Debt Service Funds 60 General Fund Revenues 215 Statement of Revenues, Expenses, 61 Revenue Estimates by Source and Changes in Fund Balance 66 General Fund Expenditures 216 Debt Service Funds Narrative 68 Expenditures by Division and Category 219 Debt Service Funds Detail by Fund 70 General Fund Personnel Summary Departmental Budgets Capital Projects Funds 73 Legislative & Executive 224 Statement of Revenues, Expenses, 86 Property, Parks, and Libraries Department and Changes in Fund Balance 105 Administrative Services Department 225 Special Assessment 121 Finance Department 226 Permanent Improvement 136 Planning and Economic Development 227 Street Improvement Program 149 Fire Department 228 Capital Improvement 162 Police Department 229 Tourism & Recreational Projects Table of Contents continued City of Duluth, Minnesota - 2021 Approved Budget Enterprise Funds 230 Statement of Revenues and Expenses 231 Golf Fund 237 Parking Fund 248 Priley Drive Parking Facility 252 Public Works & Utilities Summary 258 Water Fund 273 Gas Fund 288 Sewer Fund 304 Clean Water Surcharge Fund 308 Stormwater Fund 321 Steam Utility Fund Internal Service Funds 332 Statement of Revenues, Expenses, and Changes in Fund Balance 333 Self Insurance - Workers' Compensation 334 Self Insurance - Liabilities 335 Medical Health Fund 336 Dental Health Fund 337 Fleet Services Section Three - CAPITAL BUDGET This section contains the city's capital budget. 343 Capital Improvement Plan 401 Capital Equipment Plan Section Four - APPENDIX This section contains supplemental information. 445 Ordinances & Resolutions 446 Demographic & Economic Statistics 447 Principal Employers 448 Total Estimated Market Values 449 Operating Indicators 451 Capital Assets by Function 452 Glossary 458 Common Acronyms January 1, 2021 Members of the Duluth City Council And Other Interested Parties Dear Reader, The City of Duluth budget process is a disciplined practice which uses the strengths of highly skilled leaders to seek strategic financial solutions and opportunities to achieve City priorities. Never was this process more important as the City faced the unprecedented challenges of the pandemic and a nation’s reckoning with racism and civil unrest. The 2021 budget was completed in accordance with the City’s budget policies, city charter and the State of Minnesota’s truth in taxation laws. Given the many challenges of 2020, the optimistic and stable budget presented in this book was not expected. However, with concerted efforts and focused financial prudence exercised using Priority Based Budgeting over the last four years, the City has risen to the challenge of 2020 and emerged stronger. Addressing the financial challenges of 2020 was not an easy process and came with many sacrifices and compromises. As a City, we addressed revenue shortfalls by implementing, hiring, travel and purchasing freezes, staff layoffs, concessions from bargaining units, voluntary pay reductions, halted financial commitments to others, reduced programming and closed facilities. The 2021 budget process began with Mayor Emily Larson presenting the proposed general fund budget and tax levy to the City Council on August 24, 2020. The City Council approved the proposed maximum tax levy on September 28, 2020. Finance committee meetings were held September through December where City departments and authorities presented their budgets as well as strengths, opportunities, and future challenges. On December 14, 2020 a truth in taxation hearing was held virtually at 7:00 pm to allow citizens time for public comment and questions. The final 2021 budgets, budget appropriations, tax levies, capital improvement plan, and bonding intent and plan were approved by Council on December 21, 2020. The 2021 budget continues to be a budget focused on alignment of funding with the values of the City. This budget pairs the strategies and policy recommendations from Imagine Duluth 2035, the City of Duluth’s recently adopted comprehensive plan, with the time intensive, staff-driven and community- influenced budgeting process called Priority Based Budgeting (PBB). 2021 Budget Highlights: Increased property tax levy 2.98% 1 Budget Drivers: State Budget Considerations LGA Levy limits Employee Expenses Collective bargaining agreements with new concessions Health insurance premiums Retiree insurance Economy Global Pandemic influencing revenues and jobs Sales tax decrease Tourism tax decrease Framework Goals and Assumptions: Increased property tax levy of 2.98% which includes an increase of 2.02% for the street light levy. Increased property value growth of 6.64% Used cash reserves in the amount of $3.8M LGA- status quo Dedicated ½% sales tax for streets Health care rates stay flat While there are no major changes in service levels or fees in 2021, we did budget for a 10% decrease in sales tax and a 25% tourism tax decrease based on the unknowns of the pandemic. The expected decrease in Tourism Tax revenue will impact the City’s ability to allocate resources to as many community organizations. This year, despite the relentless power of a pandemic, the City has: • Invested well over two million dollars via the 1200 Fund and Duluth Economic Development Authority into local small businesses and entrepreneurs, • Embraced curbside library delivery, • Supported thousands of residents with Unemployment Insurance assistance and job search support, • Opened ten miles of streets to pedestrians to allow for social distance physical activity during Stay At Home • Made changes to our development code to promote childcare, • Waived fees and streamlined permitting to allow for expanded sidewalk and adjacent occupancy for food and beverage sales, • Adjusted staffing across departments to keep up with demand for services, • Finished the completion of over fourteen miles of road work, • Moved city meetings and services online, • Protected the health of our workers, and • Ran a fair and robust primary election and have ensured that in our vigorous democracy, all first amendment rights are supported, upheld and protected. 2 We’ve gotten an extraordinary amount accomplished under extenuating circumstances. In large part because at our core, Duluthians believe that the City’s hard work makes a difference. For 2021, our values are on full display as a budget built on the strength of community and what was learned during the PBB process. We bring employees back and removed furlough days; we did not increase the property tax levy to meet General Fund operating expenditures; 40% of our residential properties and 68% of commercial property owners will see a decrease in their city property tax. We have spent the last four years steadily addressing fundamental and historical budget challenges with focus, financial prudence and an eye towards our future. In this budget we isolate our financial risks, benefit from our sensible fiscal management of the past four years and recognize the many sacrifices our staff and municipal residents are making. The budget and property tax levy for 2021 meets the City’s needs, protects workers and builds on our ability to continue to be a steady and reliable presence in the face of financial insecurity, pandemic health concerns, social fear, isolation and racial discord. We have built a City of Duluth financial structure strong enough to survive a global pandemic. This is the year, and the work, we never anticipated but are ready for. The City continues to prioritize making debt payments to ensure the City remains in excellent standing with bond rating agencies which allows the City to leverage other investments and benefits. The 2021 budget approvals were endorsed by the City Council, led by Council President Gary Anderson.