2021 Proposed Budget

AUGUSTA, GEORGIA PROPOSED BUDGET FISCAL YEAR 2021 WWW.AUGUSTAGA.GOV Photo Courtesy of the Augusta Convention & Visitors Bureau Office of the Administrator -h Jarvis R. Sims, Iutcrinr Administrator Ste. 910 - Municipal Buildirg Maurice Mcl)orvell, Interim DcpuS Administrator 535'fellhir Street - Augr.rsta, GA.30901 Tony McDonald, Deputy Administrator (706) 821-2400 - Fax (706) 821-2819 October 20,2020 The Honorable Hardie Davis, Jr., Mayor Members of the Augusta, Georgia Commission 535 Telfair Street Augusta, Georgia 30901 RE: FY 2021 Budget Dear Mayor Davis and Members of the Augusta, Georgia Commission: Thank you for the opportunity to present, for your consideration, the Administrator's recommended budget for fiscal year 2021. Without question, 2020 has been the most challenging and unpredictable year that many of us, perhaps most of us have ever experienced. The onslaught of the Coronavirus early in the year dramatically changed the way we live, work and play, and its lingering impacts continue to shape our daily lives. Given this environment, managing the City's operations has required new and experimental approaches to accomplish our mission of providing essential services to our community. With revenues sharply declining due to business and industry closures, and with the City's operations having to adjust to stay-at- home orders and other emergency management edicts, service delivery for the past several months has had an unusual, and sometimes unrecognizable,look and feel. Needless to say, these factors have created a tremendous amount of uncertainty for 2021. Despite the challenges, however, I am proud to say that Augusta, Georgia has maintained its commitment to providing a safe and healthy community, with a high quality of life for our citizens. The City has proven itself to be very resilient throughout the pandemic and will continue to do so as we enter a new year. Within this framework, I have outlined below the Administrator's recommendations for the FY 2021 budget. To begin, revenues have been significantly reduced, due in large part to the downturn in sales taxes resulting from temporary, and in some cases peflnanent, business closures, and from the cancelling, postponing or reconfiguring of major tourist driven events like the Masters Golf Tournament, the Iron Man Competition and Arts in the Heart. It is hoped that 2027 revenue will have a full recovery, but the uncertainty that exists requires caution when making revenue projections for next year. With the data currently available to us, what we predict is this: General Fund revenues in 2021 are expected to be approximately $164 million, compared to budgeted revenue for 2020 in the amount of nearly $169 million. If this holds true, we can expect to see a $5 million reduction in budgeted revenue next year. Of course, there are many contributing factors to this equation, such as the uncertainty of the impacts that COVID-I9 will continue to have on the revenue stream. Honorable Hardie Davis, Jr., Mayor Members of the Augusta, Georgia Commission FY 2021 Budget Page 2 During the next thirty days prior to budget adoption, trends may move our projections upward or downward. Also, there are other, more tangible - impacts, such as the $1.3 milli"on reduction in revenue to the General Fund resulting from the Storm Water Subcommittee's proposed elimination of the Storm Water Payments-in-Lieu-of-Taxes and Payments-in-Lieu-of-Fran"t i." Fees. Despite the current bleak revenue picture, the recommended budget relies on whatever natural revenue growth there may b", if ury at all, and does not require the imposition of an increased tax burden on our "iltir"r.. The Budget Team's approach to the 2021b'rdget, given the parameters outlined above, was very straight forward' i.e., start with the base level of the 2020 budget. Adjustments were made only to reflect ;;G obligations, thereby minimizing, if not entirely eliminating, iequests for new personnel and for new and expanded programs. The intent is to maintain current levels ofiervice without intemrption. In spite of this guidance, the initial budget requests from General Fund departments combined had a total of $1.4 million in new personnel requests and $3.4 million in new program requests. These increases,- coupled with inflationary increases and with increases that *" r"quir.d to annualize partial-year funjing of certain items approved in 2020 (such as the cost of living and longevity increases t, or..-pbG.l; created a total initial out-of-balance amount of $16 million. rhe $tO mitlion represents the amount that the requests ($180 million) exceed projected revenue ($164 million). The mosinotable of the increases outside of our control include approximately $2.5 million in additional pension costs and nearly $OOO,OOO in added healthcare costs. The Budget Team's challenge, therefore, was to craft a budget that can be supported by existing revenue sources. The resulting amount, after much deliberation between the Adminisirator,s Office andiinance Department, is $172.2 million, or approximately $8 million over projected revenue. The Administrator,s recommended budget reconciles this difference through a combination of several items. First, there are various items funde d in 2020 that will no longer be required n 2021, such as the outsourcing of probation Services ($240,000), debt service for the Depot Project (5350,000) and election expenses {$5Zt,OOO;. These 2020 expenses have been removed from the 202l budget with a corresponding reduction to the revenue burden. Secondly, General Fund transfers to Transit operations ($3.2 million) and to Transit grants ($600,000) have been eliminated inFY 2021since these amounts will be covered by Coronavinis ana, Relieianj Economic Security (C4RES) Act funding next year. As a cautionary note, the GARES Act funding is likely to end in 2021; therefore, the elimination of the $3.8 million transfer from the General Fund for 2021witlhave to be replaced forFY 2022. Third, the Administrator's recommended budget calls for the use of Fund Balance in the amount of approximately million. $a.3 It is seldom considered a good strategy to appropriate Fund Balance for recurring operations, so I do not make this recommendation lightly. on ihe other hand, by definition, the Fund Balance is intended for use in emergency and/or extraordinary circumstances. Without a doubt, 2020 has included its share of both emergencies and extraordinary circumstances. I would contend, therefore, that Fund Balance use in this case is both appropriate and necessary to sustain the existing level of services provided to our citizens. I would further recommend, and strongly so, that beginning in iy 2022, we implement plan a to begin the replenishment of the amount taken from the Fund Balance in 2021. Honorable Hardie Davis, Jr., Mayor Members of the Augusta, Georgia Commission FY 2021 Budget Page 3 The Administrator's recommended budget also restores the Contingency Fund to the amount of $600,000 for emergent items that may develop during the fiscal year but that were not anticipated at the time the budget was adopted. The intent of the contingency Fund appropriation is to ad.d another Iayer of security to Augusta's fiscal plan for 2021. To conclude, the summary above illustrates the many challenges that have plagued the city of Augusta during 2020 and that will continue to have an impact rr-202L Th"." challenge"s have created a lot of uncertainty for the near future, especially during the upcoming fiscal year. As we know, however, with challenges come opportunities. I have also attempted to highlight in this ."r"*;t;;; we have been able to capitalize on such programs as the CARES Act in order to maintain service deilvery in a very unpredictable environment. while effectively managing through the short term, we must not forget that long term issues remain to be addressed for the future, such as revisiting the fee structure for the street light p;t"; in order to render the program more sustainable, and retooling the Transit system to make it more aJcommodating to our community and, at the same time, making it more feasible to operate. As you will note, this budget proposal addresses many of the short term.issues facing Augusta, Georgia, and recognizes that other longer term issues that reach far beyond any single frscA yZar await further discussion and debate by the Commission. I am pleased to present this proposaf whiJ provides a foundation for FY 2021 operations and lays groundwort the for future operations i;r"ur. to come. My staff and I look forward to working with you over the next several weeki to adopt a dudget for 2021 that is fiscally responsible, provides for a high level of service to our citizens, ano nefps to promote a higher quality of life in Augusta, Georgia. Sincerely, lnterim Administrator Budget Summary By Fund Recommended Adjustments Revenues By Department Expenditures By Department Program Enhancements - New Personnel & Upgrades Program Enhancements - New Projects/Additional Funding Program Enhancements - New Capital Requests Work Session - Presentations Budget Summary By Fund AUGUSTA, GEORGIA ADMINISTRATOR RECOMMENDATION ALL FUNDS OCTOBER 20, 2020 Fund Rev/Exp Revenues Expenditures Rev/Exp 2021 Number Fund Name FY2020 FY 2021 FY 2021 Difference GENERAL FUNDS 101 General Fund 103,883,750 101,038,620 107,452,380 -6,413,760 273 Law Enforcement 64,936,430 62,970,860 67,645,120 -4,674,260 Total General Fund/Law Enforcement 168,820,180 164,009,480 175,097,500 -11,088,020 Included in General Fund for reporting

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