Council’s first look at 2016 budget
- Published: October 29, 2015
Budget season is in full swing. At its last two meetings, Oct. 5 and Oct. 20, Village Council reviewed the proposed 2016 Village budget, which, according to Assistant Village Manager/Finance Director Melissa Vanzant, is “in better shape than in the past,” thanks in part to “more conservative” spending and proposed utility rate increases that, if passed, will bring new revenue to the Village’s enterprise funds.
According to the latest budget projections, the 2016 general fund budget is in the black — provided the five-year property tax levy, up for renewal in 2016, passes this spring. The general fund pays for almost all Village services outside of the enterprise funds for electric, water, sewer and solid waste.
Among the enterprise fund budgets, only the electric fund is expected to run a significant deficit, due to anticipated increases in power costs. While the Village’s new water treatment plant is expected to cost $5.3 million, only a small portion of that expenditure will hit the 2016 water fund budget. Three of the enterprise fund budgets reflect consumer rate increases in 2016, with more increases in 2017 and beyond.
Budget discussions will continue on Nov. 2. A first reading for the 2016 budget is scheduled for Nov. 16, and a second reading for Dec. 7. The budget could be passed as “emergency legislation” before the end of the year.
Vanzant anticipated a smooth process. “I don’t expect that there will be a whole lot of changes,” she said.
General fund in the black
The latest figures for the 2016 general fund budget project $3,388,807 in revenues and $3,142,291 in expenditures (which includes transfers out to other funds), putting the general fund solidly in the black.
Income and property taxes make up the lion’s share of revenues to the general fund. Local tax revenue is projected to be $2,666,000 in 2016, nearly $300,000 more than was budgeted in 2015. (Actual local tax revenue for 2015 is on track to come in roughly $160,000 over budget.) Revenue from state taxes shared with the Village make up the next largest chunk, at $246,562, down from $550,245 in 2013.
But this positive picture hinges on the passage of the five-year property tax levy, which is up for renewal next year. (The levy has two chances for passage, first in May 2016, and then in November, said Vanzant.) Five-year projections for the general fund with and without the levy show a stark difference: without the levy, the 2016 budget would run a nearly $750,000 deficit. Losses would hover between three-quarters and half-a-million dollars each year over the next five years without the levy, and fund balances would be eroded to negative territory by 2018.
By contrast, the budget with renewed levy funds projects the general fund to be in the black for all five of the next five years.
“We have essentially two major sources of revenue: property taxes and income taxes,” said Vanzant this week. Income taxes make up the bulk of revenue; property taxes contribute around $900,000. Of that amount, $700,000 derives from the levy.
Eleven departments are included in the general fund. Six are budgeted lower in 2016 than 2015, while three departments, including public safety (up from $1,333,623 to $1,397,413), are budgeted higher. Two remain flat.
In addition, the budget contains a raft of so-called special revenue funds — key among these street maintenance/repair and parks and recreation — that receive monies from the general fund, as well as other sources. Street expenditures in 2016 are projected at $595,330, down by more than $100,000 from 2015. Parks expenditures are up slightly in 2016, from $354,107 to $379,390. Both funds are projected to be in the red.
Small but of note is the green space fund, which was not funded at all in 2015, but will receive a transfer of $25,000 from the general fund in 2016.
Shoring up enterprise funds
The Village’s four enterprise funds — electric, water, sewer and solid waste — stand outside of the general fund, though some monies from the general fund are typically transferred in to cover certain costs. The proposed enterprise fund budgets for 2016 are in “pretty good shape,” said Vanzant. Only the electric fund is expected to run a significant deficit, which is due to steep increases in power costs, she said.
The water and sewer funds are expected to post a small profit and loss, respectively, next year, but are on track to build up significant balances in the coming years. Included in both budgets are proposed rate increases previously reported by the News: 30 percent each year over three years for water, and 15 percent each year over four years for sewer. These increases serve to “stabilize” the water and sewer funds, according to Vanzant. The funds have historically run low balances.
The impact of the new water treatment plant project, estimated to cost $5.3 million, will be minimal in 2016, said Vanzant. Water rate increases, phased in over time, will help pay for the new plant. Vanzant anticipates that the Village will pay only $104,000 toward the plant in 2016. In subsequent years, the Village expects to make around $250,000 in annual payments toward loans and debt service, she said.
Vanzant informed Council that AMP, the Village’s municipal power cooperative, is expecting dramatic increases in electricity costs in the coming year. The proposed 2016 budget projects $1.2 million more in expenditures over 2015, most of which is due to power costs. Vanzant noted that the Village’s investments in hydropower may moderate these expenditures over time — but involve more outlays in the short term.
Included in the electric fund budget is a proposed 18 percent hike in consumer electric rates in 2016, followed by annual increases of 12, 9, 8 and 3 percent, respectively, from 2017 through 2020. These increases follow (though slightly modify) the recommendations of electric consultant John Courtney, who recently presented to the Village Energy Board. According to Village Manager Patti Bates, Courtney recommended that the Village replace its current tiered electric rate structure with a “more equitable” flat-rate structure, which would include a moderate increase in the customer charge for residential and existing commercial users. (New commercial users would incur a demand charge offset by a lower energy charge. Existing businesses could opt for this approach if doing so saved them money.)
The solid waste fund is roughly on par with the 2015 budget. Over the next couple of years, small losses are projected to become small profits as a recommended annual rate increase of 3 percent, starting in 2017, takes effect.
New capital needs
Not yet included in the 2016 budget are proposed capital projects totaling $202,100. Among these projects is downtown Streetscape phase 3, budgeted for $125,000 (including electric work), which would upgrade sidewalks on the west side of Xenia Avenue from Corry Street to Short Street. Council urged Bates to consider “finishing the project,” instead of limiting 2016 work to the next phase. The total project, to come in at a higher (not yet specified) cost, would include the remaining sidewalk improvements from Short Street to Limestone Street on the west side, as well as upgrades to the sidewalk in front of Speedway.
A new police cruiser, budgeted at $40,000, is also being requested for 2016.
Budget materials can be accessed online at yso.org by downloading the Oct. 5 and Oct. 21 Council packets.
In other Council business:
• Council reviewed the revised ordinances for proposed water and sewer rate increases. The redrafted ordinances reflect a five-year schedule of annual increases, through 2020, rather than a single-year increase. While rates are slated to increase, Council members recommitted to a previously stated preference for maintaining current “readiness for service” fees. A second reading of the ordinance is scheduled for Council’s Nov. 2 regular meeting.
• Council member Marianne MacQueen provided an overview of the “priority easements” identified by Tecumseh Land Trust in collaboration with the Village Environmental Commission. In line with the goal of protecting village drinking water, the top priorities are those properties within the one- and five-year “time of travel” to village wells from the Yellow Springs wellhead. Other priority properties are in the Jacoby Greenbelt (especially those that front on Dayton Street) and the properties in the “Country Commons” area east of Yellow Springs and Glen Helen. A majority of Council signaled its informal support for the easements; a formal motion will be made in the future.
• Council briefly discussed the format for the upcoming ACE Task Force meeting, scheduled for Oct. 29 at 7 p.m. in rooms A & B. The discussion will feature “pro” presentations by Yellow Springs Police Chief David Hale and Greene County ACE Task Force Director Bruce May, as well as two “con” perspectives by individuals still to be identified. Discussion among Council and the attending public will follow.
Council’s next regular meeting is Nov. 2 at 6:30 p.m.