CITY OF OREM ADOPTED BUDGET 2013-2014 56 NORTH STATE STREET OREM, UTAH 84057 WWW.OREM.ORG CITY OF OREM ADOPTED BUDGET FISCAL YEAR 2013-2014 TABLE OF CONTENTS EXHIBIT "A" Budget Mes s age …………………………………………………………………………………… 1 Overview …………………………………………………………………………………………… 7 General Fund ………………………………………………………………………………………… 23 Road Fund …………………………………………………………………………………………… 67 CARE Tax Fund …………………………………………………………………………………… 71 Debt Service Fund ………………………………………………………………………………… 75 Capital Improvement Projects Fund ……………………………………………………………… 79 W ater Fund ………………………………………………………………………………………… 87 W ater Reclamation Fund …………………………………………………………………………… 93 Storm Sewer Fund ………………………………………………………………………………… 99 Recreation Fund …………………………………………………………………………………… 105 Solid W as te Fund …………………………………………………………………………………… 111 Fleet Maintenance Fund …………………………………………………………………………… 115 Purchas ing & W arehous ing Fund ………………………………………………………………… 119 Self-Ins urance Fund ………………………………………………………………………………… 123 Friends of the Library Fund ……………………………………………………………………… 127 Orem Foundation Trus t Fund ……………………………………………………………………… 131 Community & Neighborhood Services Fund …………………………………………………… 135 Senior Citizens Fund ……………………………………………………………………………… 141 Telecommunications Billing Fund ………………………………………………………………… 145 Capital Improvements Summary …………………………………………………………………… 149 EXHIBIT "B" Fees and Charges ……………………………………………………………………………………B-1 to B-26 EXHIBIT "C" Compens ation Programs ……………………………………………………………………………C-1 to C-21 EXHIBIT "D" Budget Amendments for Fis cal Year 2012-2013 ………………………………………………… D-1 to D-8 CITY OF OREM ADOPTED BUDGET FISCAL YEAR 2013-2014 EXHIBIT “A” (Budget) CITY OF OREM ADOPTED BUDGET FISCAL YEAR 2013-2014 BUDGET MESSAGE 1 CITY OF OREM ADOPTED BUDGET FISCAL YEAR 2013-2014 This page has been intentionally left blank. 2 CITY OF OREM ADOPTED BUDGET FISCAL YEAR 2013-2014 June 4, 2013 To the City of Orem Mayor, City Council, and Citizens: I appreciate the opportunity of presenting this Fiscal Year 2013-2014 budget to you. This document is prepared for your review in anticipation of a public hearing scheduled for the purpose of adopting this budget on June 11, 2013 at 6:00 p.m. in the City of Orem Council Chambers at 56 North State Street, Orem, Utah. The following Budget Message is a brief overview of the highlights in the budget. Additional information is available from Richard Manning, Administrative Services Director, who has overseen the preparation of this document. BUDGET MESSAGE The good news with this budget is the economy is coming back. The unemployment rate in Utah is 5.2% compared to 7.6% nationally. Nationally the housing industry is beginning to improve. The City's sales tax growth confirms that the economy is improving. The City's sales tax receipts have shown an increase for the third consecutive year. Presently sales tax receipts for the City are up between 5% and 6% over the same period of 2012. When the FY 2012-2013 budget was adopted, it contained a property tax increase of $1,700,000.00 with an average impact on an Orem home of $4.00 per month. The reason for the proposed property tax increase was to pay for ongoing increased expenses the City is obligated to pay, primarily related to UTOPIA. A citizens group collected a sufficient number of signatures from registered voters calling for a referendum election on the Council's action in the next general election. This is scheduled to be voted upon in the November 2013 election. Regardless of the outcome of this election, this year's budget will not reflect an increase in the property tax rate. This budget from ongoing revenue streams covers the $2,858,983 UTOPIA pledge obligation and the unexpected $575,000 in UIA operational support. The City cancelled its agreement with the University Mall to pay $975,000 per year to support the mall when Nordstrom's left. The City has cut 18 full-time positions from the budget. This is in addition to the 19 positions cut in the FY 2008-2009 budget. The combination of additional revenue with operating and personnel cuts has made it possible to create this balanced budget. That being said, this budget contains no wiggle room and lacks the ability to fund any pay increases for employees or a properly funded capital improvement and maintenance program. A fully sustainable budget provides for operations, personnel, capital investment and replacement sufficient to provide the services desired by the residents of Orem on an ongoing basis. This requires a revenue stream that can weather the inevitable ups and downs of the economy without causing dramatic swings in service levels. 3 CITY OF OREM ADOPTED BUDGET FISCAL YEAR 2013-2014 With the sales tax growth and personnel and operational cuts, the budget is balanced and is not drawing upon reserves as it has in the past two years. This budget is not considered sustainable for a variety of reasons including: no provision in the budget for salary increases, replacement of public safety equipment, proper levels of care for parks and other infrastructure, etc. For example, this is the sixth consecutive budget without an increase for employee cost of living or merit increases. Also, this budget contains virtually no funding for capital projects. BUDGET POLICIES The City is required by State law to enact a balanced budget and this budget is presented with revenue and expenditure levels that are believed to be achievable. City staff is to be commended for working together to provide the core services of the City with the resources currently available. In doing so, some services that have traditionally been provided by the City will no longer be provided. In preparing this budget, the City Council and staff have worked together in developing a set of budget principles to guide the decision making in crafting this and future budgets. BUDGET GUIDING PRINCIPLES The City Council has directed staff to prepare this and future budgets with the following guiding principles: • City Council--Incorporate policies and vision of the City Council. • Self-Sustaining-- Enterprise funds should be self-sustaining. • One-Time Money--One-time revenues used for one-time expenses. • Ongoing Money--Use sustainable, ongoing revenue sources to pay for ongoing expenses. • Asset Management-- Develop capital facility master plans for buildings, utilities, and other significant City infrastructure. The master plans should include strategic operations, maintenance, and replacement guidelines with a supporting financial plan. The financial plan should justify a rate structure that supports the implementation of the master plan. Adopt a rate structure that supports the implementation of the master plan for a five-year period and redevelop the plan every five years. • Compensation--Develop and follow a market driven compensation plan that will entice and retain good, quality employees. • Vehicle replacement--Fund an annual vehicle replacement plan that prioritizes the replacement of qualified vehicles. • Revenue Sources--Evaluate the health of revenue sources on a regular basis. The General Fund should be supported by diverse, stable revenue sources that do not collectively cause dramatic fluctuations over time. • Reserves--Develop and maintain healthy enterprise fund reserves to sustain impacts of emergencies. Manage the General Fund reserves according to the State code. • Planning--Plan ahead with the big picture in mind. Provide a means for employees across department lines to consult with each other during the budget planning process. Seek community input through a variety of means (for example, Citizen Survey). • Debt-- Debt will only be issued for projects that cannot be reasonably afforded through a pay-as-you-go savings plan. For example, a pay-as-you-go scenario may be rejected if to do so would require cutting services or increasing service fees higher than would be necessary to pay debt service. In as much as possible, debt will be planned as part of the financial component of the Capital Master Plan. 4 CITY OF OREM ADOPTED BUDGET FISCAL YEAR 2013-2014 The budget is a financial plan for the fiscal year. It is, in essence, a plan of operation based upon an expected economy. At times, the best that can be said about expectations is to expect the unexpected. As a safeguard, all revenue collections and expenditures are monitored throughout the year by management and sophisticated software programs have been developed that assist in controlling and analyzing expenditures. This allows staff to reduce budgets quickly to minimize the impact of a faltering economy on the City's ability to deliver key services. EXPENDITURE HIGHLIGHTS Personnel This budget includes no requests for new personnel and no provision for the equivalent of cost of living adjustments or merit increases. Entering the fiscal year, the City has 23 fewer employees than it had in July 2012. Five of these positions will be filled bringing the net reduction in employees to 18. Residents will notice the impact of fewer employees as some services will no longer be offered and many remaining services will be slower. The City, by law, belongs to the Utah State Retirement System (URS). The URS was hard hit by the great recession. They, like the stock market, lost a considerable amount of equity. To make up for these losses, the URS has increased contribution rates of its members. These increased rates are reflected in the budget. Additionally, with the Patient Protection Affordable Care Act (PPACA) or ObamaCare more fully taking effect on January 1, 2014, the City has added to the budget about