June 1, 2012 Honorable Mayor and City Council: On behalf of our City Team, I am pleased to present to the City Council and to the Citizens of Sioux City the Approved Fiscal Year 2013 Operating Budget. This Approved Operating Budget seeks to minimize costs to residents while still preserving services and promoting economic development. It includes all operating funds and is in compliance with Iowa State law, as well as City Council adopted fiscal policies. Six public hearings were held to gather input from our residents. The meetings were effectively advertised, reviewed at twice weekly City media conferences, televised, and live streamed at sioux-city.org. The public budget sessions included interactive discussions of the proposals, the budget development process, a review of historical information and current trends, and a preview of upcoming or ongoing budget issues. Input gathered at these public meetings greatly assisted the City Council with their adoption of the Sioux City Operating Budget. The FY 2013 Approved Operating Budget follows the City’s Strategic Plan which provides a guide and vision for the goals and priorities of the City. To ensure the Strategic Plan is successful, the budget must reflect the same values and priorities. Priorities incorporated into the budget document are as follows: • Quality of Life Vision – We will position Sioux City as a preferred community through marketing initiatives and growing local pride in our City. • Health and Safety Vision – We will enhance public health and safety by maximizing the utilization of technology, improve community engagement, and improve communications and facilities. • Infrastructure Vision – We will invest in infrastructure to attract and retain business and increase quality of life. • Progressive Leadership Vision – We will use formal and informal methods to engage the Council, our employees, and our customers to promote enhanced organizational engagement and commitment to our shared vision. 405 6th Street P.O. Box 447 Sioux City, IA 51102 www.sioux-city.org • Economic Opportunity Vision – We will work with current business to create job growth and aggressively seek out opportunities to attract new economic growth. Sioux City continues to confront difficult financial challenges and is recovering from the flood of 2011. State-mandated increases, including a significant increase in pension payments, coupled with increased service delivery costs, loss of grant funds, use of fund balances, continued low interest income and our commitment to limit our property tax burden have combined to create another challenging budget review. However, we are pleased to report that the approved operating budget meets the commitment to maintain or lower the tax levy from the FY 2012 approved level. Holding the line on property taxes for a fourth consecutive year is largely the result of our past and present commitment to aggressive economic development investment. Local option sales tax will provide $11.14 million to the FY 2013 Capital Improvement Program (CIP) and Operating Budget. Sales tax revenue will provide in excess of $6.68 million in property tax relief. In addition, the City’s Tax Increment Financing (TIF) Districts will release a record $430.6 million in property valuation in FY 2013, representing a 3.2% increase from the FY 2012 TIF release. The TIF release results in $15.2 million of available property tax revenue for the City of Sioux City, Woodbury County, and the Sioux City School District. The City’s efforts to improve operations and lower costs did not start, nor do they end, with approval of the annual budget. It is necessary to put into place the means to ensure that taxpayers receive the maximum value from their government for each dollar spent. During the course of each year, City staff continues to focus on ways to reduce costs and improve services. Numerous departments have restructured operations in order to lower costs and release monies for new priorities, while maintaining high service levels. Unfortunately, maintaining and/or reducing tax levels will result in continued cost and staff reductions, potentially impacting the array of current City-provided services. In keeping with our ongoing cost reduction efforts, the FY 2013 Approved Budget includes elements of each of the following ongoing objectives: • Fees for Services – In an effort to reduce general property taxes, considerable efforts have been applied in recent years to ensure that users of services pay appropriately for those services. We strongly recommend continued analysis and implementation of all appropriate fees in order to relieve property tax payers, and ultimately ensure adequate funding of public safety. • Consolidation – The City will continue to review programs and services to determine if redundancies exist or if consolidations can produce cost-savings, first internally within the City organization, and second with other local governments. • Inter-Governmental Collaboration/Privatization/Contracting – Introduction of competition in operation and pricing of governmental services to ascertain those services which are best and most economically provided by City departments and those where inter-governmental or the private sector are best able to provide service. ii Application of Technology – Continued efforts to apply technologies to lower costs and enhance public services. One aspect of this effort is the merger of technology efforts into a single technology services group in an effort to concentrate expertise and achieve an economy of scale. Improved Performance Measurement – Represents a commitment to expanding performance measurements as a critical component in examining the effectiveness and efficiency of service delivery. This is evident in our use of the International City/County Management Association (ICMA) Center for Performance Measurement. Sioux City’s historic commitment to sound financial management practices has helped to establish strong financial ratings which will continue to assist us in the future. Investment in our community and responsible management of our resources, have shown to be beneficial to our community, both in quality of life and financial health. The budget process for the City of Sioux City is not an annual procedure but is a daily, continuous progression that is conducted throughout the year. The City continually monitors its sources of revenues and expenditures so as to enable frequent and thorough analysis. Adjustments up to and including employee reductions occur throughout the year. The focus of the Approved FY 2013 Operating Budget is ultimately our residents and making a positive difference in their lives. The City will make every effort to invest in the economy and responsibly manage our resources to make Sioux City a prominent community in which to live, work, and raise a family. We sincerely thank each of you for your continued support and guidance. I also wish to express my tremendous appreciation to the City Leadership Team, Finance and Administrative Services Department, and our dedicated staff for their tireless work in the development of the approved budget. We look forward to working with you, our residents, business and not for profit leaders, and our dedicated Sioux City staff in carrying out this approved financial plan. Respectfully submitted, Paul Eckert City Manager iii Overview of Approved FY 2013 Operating Budget Fiscal Year 2013 Approved Budget The City of Sioux City FY 2013 Approved Operating Budget is $172,311,114, an increase of 3.84% from the Adopted FY 2012 Operating Budget. The increase is primarily due to increases in employee wages and benefits, debt service costs and increased utility costs. The City-wide budget is made up of various fund groups. Property taxes fund approximately 28% of the total budget, charges for services fund 43%, and a variety of other revenue sources make up the remaining budget. Fees for services are reviewed annually to ensure the amount charged is sufficient to cover the cost of providing these user-fee based types of services. Other revenue sources are also maximized whenever possible before the City levies property taxes. FY 2013 Approved Budget Trust Funds Internal Service 2% Funds 15% General Fund 29% Enterprise Funds 21% Debt Service Special Revenue Funds Funds Capital Funds 17% 15% 1% As illustrated on the following page, 72% of the operating tax funds are devoted to the Police and Fire Departments. The remainder primarily supports our libraries, parks and recreation, art center/museum/symphony, and convention center/auditorium/tourism. The Approved FY 2013 General Fund Budget has increased 5.6% totaling $49,606,392. The development of the FY 2013 Approved Operating Budget addresses many challenges, some of which are listed on the following page. iv FY 2013 Departmental Allocation of Operating Taxes Art Ctr, Museum & Community Symphony 3% Development 3% Transportation 3% Environmental Recreation 9% Services 1% Events Facilities 3% Public Works less than 1% Library 6% Public Safety 72% The following is a partial list of challenges confronted by City staff in developing the FY 2013 Approved Operating Budget: • Increased wage costs. • Increase in general liability insurance. • Increased retirement funding for Municipal Fire & Police Retirement System of Iowa (MFPRSI) and Iowa Public Employees’ Retirement System (IPERS). • Continued low interest rates. • Increased utility costs. • Insufficient Road Use Taxes to cover costs associated with road maintenance. • Inflation pressures on budgets. • Increase in debt costs. v Impact of Taxes on the Residential Property Tax Owner in Sioux City $1,900 $1,800 $1,700 $1,600 $1,500 $1,400 $1,300 $1,200 $1,100 $1,000 $900 $800 $700 $600 $500 FY 96-FY 97-FY 98-FY 99-FY 00-FY 01-FY 02-FY 03-FY 04-FY 05-FY 06-FY 07-FY 08-FY 09-FY 10-FY 11- 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 City Taxes The FY 2013 Approved Operating Budget includes a tax levy amount which will decrease 4%, for a tax levy rate of $15.99 per thousand dollars of valuation.