Title
FY 2018 Operating Budget and FY 2018 - 2022 Community Investment Plan
Action
Action:
Adopt the FY 2018 Appropriations and Tax Levy Ordinance, the Capital Investment Plan Resolution for FY 2018 - 2022, the FY 2018 Pay and Benefits Resolution and associated Human Resources contracts, and other items related to the Annual Ordinance adoption:
A. The FY 2018 Operating Appropriations and Tax Levy Ordinance,
B. The FY 2018 - 2022 Community Investment Plan Resolution,
C. The FY 2018 General Solid Waste Fee for Single-Family and Multi-Family Residential Units,
D. The FY 2018 Storm Water Interlocal Agreement,
E. The FY 2018 Transit Operating Budget and Debt Service Budget, which was approved by the Metropolitan Transit Commission on April 26, 2017,
F. The FY 2018 Charlotte Water Rates,
G. The FY 2018 Pay and Benefits Plan Resolution and associated Human Resources contracts,
H. Outside Agencies and Municipal Service Districts Contracts, and
I. Other Budget Items
Body
Committee Chair:
Greg Phipps, Budget Committee
Staff Resource(s):
Marcus Jones, City Manager’s Office
Kim Eagle, City Manager’s Office
Policy
§ As required by state law, the City of Charlotte adopts annual appropriations and a tax levy ordinance and considers related actions by July 1 of each fiscal year.
Background
§ Since January 2017, the Mayor and City Council held five Budget Workshops and the required Public Hearing to shape development of the budget.
§ The City Manager’s Recommended Budget was presented on May 1, 2017.
§ The FY 2018 total budget is structurally balanced, enhances services and investments based on the Mayor and City Council’s priorities, including the 10 Traits of Winning Cities, the five Focus Areas, and the Community Letter, maintains current services and commitments, and fulfills the compensation philosophy for employees.
§ General Fund highlights include:
- No increase in the property tax rate
- Increases to public safety personnel:
§ 91 police full-time equivalents (62 sworn, 25 civilian, and four Aviation officers)
§ 18 firefighters for a new engine company at Station 42 in the Eastland area
§ Two Fire Code Inspector and One Administrative Officer positions
§ 61 new General Fund positions outside of public safety - most have external funding sources, many of which are funded fully or in part with fees to meet demand for development, by enterprise funds, or the Community Investment Plan.
§ The FY 2018 - 2022 Community Investment Plan matches the City’s highest priority needs with a financing schedule. The General Community Investment Plan is focused on investing in projects that generate the most community benefit, improve the overall quality of life in Charlotte, and support the strategic foundation elements of the Letter to the Community. The Enterprise capital investments respond to aging infrastructure and increasing service demands associated with the provision of water and sewer, storm water, transit, and aviation services.
Approved Changes to the City Manager’s FY 2018 Proposed Budget from May 24 City Council Straw Votes
§ During the May 24 Straw Votes meeting, City Council approved the following budget amendments to the City Manager’s FY 2018 Proposed Budget:
- Amendment 1: Add $250,000 for one additional Code Enforcement crew to support safe, healthy, inclusive, and prosperous neighborhoods
- Amendment 2: Add $250,000 to the Arts & Science Council to expand the community/neighborhood-based Cultural Vision Grants that align with the recommendations of the Opportunity Task Force
- Amendment 3: Implement Paid Parental Leave for City Employees
- Amendment 4: Add $38,000 to Crisis Assistance Ministries to fully fund their FY 2018 Financial Partner request supporting the City Energy Assistance Program and Emergency Rental Assistance Program
- Amendment 5: Add $50,000 to help fund the relocation of the Siloam School to the Charlotte Museum of History
- Amendment 6: Add $25,000 to support the Centralina Economic Development Commission’s Career Headlight initiative
- Amendment 7: Add $25,000 to the City’s Tree Canopy Program to provide targeted neighborhood funding for tree care
- Amendment 8: Add $50,000 to the YMCA to support the “Summer of Opportunity Partnership” providing summer programming for teens
A. Adopt the FY 2018 Operating Appropriations and Tax Levy Ordinance
Budget Overview
§ The budget ensures accountability to the public by maintaining a well-managed government while supporting safe, healthy, and inclusive neighborhoods, promoting economic opportunity and development, and advancing efforts to become an employer of choice.
§ The total FY 2018 budget is $2.39 billion, with $1.37 billion for operating expenditures and $1.02 billion for capital expenditures (all funds). The General Fund operating budget totals $668.8 million.
§ The total budget includes the following key revenues:
- Property tax rate of 47.87¢ per $100 of assessed valuation, which remains unchanged from the prior year. The FY 2018 assessed value is estimated at $96.62 billion, with an estimated collection rate of 98.75 percent
- Water and Sewer rate increase of $1.73 per month for Availability and Fixed Billing Fees, which are not dependent on how much water customers use. There are no changes to existing water and sewer usage rates.
- The average General Fund subsidy of regulatory user fees increased from 5.2 percent in FY 2017 to 6.2 percent in FY 2018
- The four tier Storm Water rate methodology that was adopted in FY 2016 remains unchanged in FY 2018. This methodology charges a flat rate for each tier based on the same per square foot rate ($0.0033) applied to the median impervious area of each tier
- Charlotte Area Transit System (CATS) modified its transit pass structure so that there would not be a base transit fare increase in FY 2018
B. Adopt the FY 2018 - 2022 Community Investment Plan Resolution
§ The resolution approves the five-year Community Investment Plan expenditure and financing plan totaling $4.1 billion (all funds).
General Fund Community Investment Plan
§ The capital program is based on property tax rates as follows:
- 9.26¢ for the Municipal Debt Service Fund, unchanged from the prior year
- 1.20¢ for the Pay-As-You-Go Fund, unchanged from the prior year
§ The FY 2018 - 2022 five-year General Community Investment Plan totals $751.8 million, comprised of the following categories:
- Housing and Neighborhood Development: $208.6 million
- Transportation: $300.0 million
- Economic Development: $45.3 million
- Environmental Services: $24.0 million
- Facility Investments: $173.9 million
§ The General Community Investment Plan is supported by two of four proposed bond referenda in November 2018 and 2020.
Enterprise-Funded Community Investment Plans
§ Enterprise programs are financially self-sustaining and do not rely on property tax or general government revenues.
§ Charlotte Area Transit System totals $464.4 million and is funded by federal and state grants and the one half-cent sales tax for transit.
§ Aviation totals $1.5 billion and is funded by $369.3 million in revenue bonds, $841.3 million in Federal Aviation Administration and Transportation Security Administration funding, and $324.0 million in cash.
§ Storm Water totals $350.5 million and is funded by $185.5 million in cash and $165.0 million in revenue bonds.
§ Charlotte Water (Water and Sewer) totals $944.0 million, funded by $408.5 million in cash and $535.5 million in revenue bonds.
C. Amend the General Solid Waste Fee for Single-Family and Multi-Family Residential Units
§ As a part of the City Manager’s Proposed Budget, the annual Solid Waste Fee for single-family and multi-family customers changes from $33 to $39.
§ These changes become effective on July 1, 2017.
- The revised fee will be included in the tax bills that will be mailed to property owners by September of 2017 and are due by December 31, 2017
D. Approve the FY 2018 Storm Water Interlocal Agreement
§ The fees for FY 2018 remain unchanged from FY 2016 when the City revised the tier structure methodology to four tiers and began to charge a flat rate for each tier based on the same per square foot rate ($0.0033).
E. Adopt the FY 2018 Transit Operating Budget and Debt Service Budget which was approved by the Metropolitan Transit Commission on April 26, 2017
Policy
The Transit Governance Interlocal Agreement calls for the Metropolitan Transit Commission (MTC) to annually approve a Transit Operating Program and a Transit Capital Program by April 30. Following the MTC’s approval, the Transit Operating and Capital Programs are forwarded to the Charlotte City Council for approval. Upon approval, the Charlotte City Council shall fund the programs through its budget process and/or project ordinances.
Budget Overview
§ The proposed FY 2018 Transit Operating and Debt Service Budgets and the proposed FY 2018 - 2022 Transit Community Investment Plan have been developed in compliance with CATS Financial Policies including annual contribution to the Transit Revenue Reserve Fund, year-end fund balance, debt service coverage ratios, and the transfer of balances to the Capital program.
§ The FY 2018 Transit Operating Budget:
- Reflects a 18.2 percent growth in annual operating and maintenance costs in FY 2018 for start-up and testing of new rail services for the LYNX Blue Line Extension (BLE) project (these costs are fully covered as a part of the BLE Project)
F. Adopt the FY 2018 Charlotte Water Rates
§ Water and sewer fees are necessary to maintain current infrastructure, accommodate growth, and respond to changing regulatory requirements.
§ Charlotte Water will maintain the rate methodology that was adopted in FY 2016.
§ FY 2018 rate changes include:
- Increase the water and sewer availability fees from $9.84 to $10.67 per month
- Increase the water and sewer fixed fees from $7.14 to $8.04 per month
- No changes to the existing water and sewer usage rates
- The proposed typical monthly total water and sewer bill for residential customers is estimated to be $62.72 in FY 2018, an increase of $1.73 per month
- The typical bill assumes 5,236 gallons or 7 ccf used each month. Based on the current rate structure, users consuming more than the typical level of consumption are charged a higher rate to encourage conservation and responsible use of this resource
G. Adopt the FY 2018 Employee Pay and Benefits Plan Resolution and associated Human Resources contracts
§ The recommendations included in the FY 2018 Pay and Benefits Report include the following:
Pay Plans
§ In the Public Safety Pay Plan, the budget includes the following:
- 2.5 percent or 5.0 percent step adjustments, and
- 2.0 percent market adjustment
§ In the Broadbanding Pay Plan (exempt/salaried employees), the recommended budget includes a 3.0 percent merit pool.
§ 1.5 percent non-exempt/hourly pay plan merit budget and 1.5 percent market adjustment.
§ Increase minimum pay to $31,200 (equivalent to $15.00 per hour)
- The proposed adjustment to minimum starting pay is consistent with the Mayor and City Council’s established practice of hiring employees at or above 60 percent of Area Median Income
- With this adjustment, Council will have met the goal of bringing the minimum starting pay for City of Charlotte employees to $15 per hour, a goal which was originally set to be met in FY 2020.
Benefits
§ The City contribution to group insurance coverage increase is three percent. This is aligned with the Council adopted philosophy of: aggressive cost management for benefits, employees expected to fairly share in the cost of benefits, moderate level of benefits and pay, and proactive support of wellness programs to reduce future costs.
§ Medical Premiums
- Effective January 1, 2018, implement a multi-plan medical plan option which will include Preferred Provider Organization (PPO) and Account Based (ABHP) health plans. The Account Based Health Plans will include Health Savings Account (HSA) and Health Reimbursement Account (HRA) options.
- Implement an employee benefits decision support platform to simplify, personalize and optimize how employees elect and enroll in benefits.
- Effective January 1, 2018, the annual wellness incentive will be redesigned to align with the new medical plan options. The wellness incentive will be provided to employees and Non-Medicare Eligible Retirees.
- Effective January 1, 2018 separate employee and retiree claims experience and create premium equivalents based on the actual experience of each group.
- Effective January 1, 2018, adjust the employee cost sharing in the tiers of each medical plan based on separated plan experience of the retiree group and the actuarial value and the cost of the new multi-plan medical plan option.
- The prescription drug plan design will be modified in order to align with the new multi-option medical plan, to contain costs, promote generic utilization and remain competitive with market practices. Changes include increases in copays and coinsurance.
§ Dental Plan/Premiums
- Effective, January 1, 2018 set the City’s dental contribution at $28 for the Basic and Plus dental plans.
§ Other Benefits
- Continue to monitor industry trends to ensure competitive benefits
- Modify the benefits waiting period for new employees to align with Employer of Choice goals.
§ Community Support Leave
- Replace School Support Leave with Community Support Leave. The current School Support Leave provides for a four-hour match of paid leave per year to support schools, whereas Community Support Leave will provide eight hours of employer paid leave per year to encourage our employees to support recognized 501(c)(3) community service organizations, as well as school support activities.
H. Approve Outside Agencies and Municipal Service Districts Contracts
§ The Outside Agency and Municipal Service District contracts are outlined below.
§ A “Scope of Services” for these agencies is provided as an attachment.
FY 2018 Annual Outside Agency Contracts
§ General Fund Financial Partners
- Arts & Science Council: $3,190,823
(includes annual General Fund allocation of $2,940,823 and a one-time allocation of $250,000 from the Pay-As-You-Go Fund)
- Community Building Initiative: $50,000
- Safe Alliance: $333,977
§ Dedicated Revenue Sources Financial Partners
- Charlotte Regional Visitors Authority (CRVA): $15,896,727
Charlotte Regional Visitors Authority: $3,000,000 in one-time funding to assist with expanded visitor promotion and marketing. The $3.0 million will be disbursed following review by City Council of a spending plan to be presented by CRVA.
- CRVA Regional Film Commission: $150,000
§ 100 Percent Federal Grant Funded Financial Partners
- Carolinas Care Partnership: Up to $4,187,079 Includes FY 2018 projected federal grant of $2,165,860 plus a grant carryforward of $2,021,219
- Charlotte Family Housing: $330,000
§ 100 Percent PAYGO Funded Financial Partners
- Community Link: $450,000
- Crisis Assistance Ministry: $418,000
§ PAYGO/Federal Share Funded Financial Partners
- Charlotte-Mecklenburg Housing Partnership - Affordable Housing: $1,860,000
- Charlotte-Mecklenburg Housing Partnership - House Charlotte $231,000
§ Out of School Time Financial Partners
- Greater Enrichment Program: $200,000
- Police Activities League: $156,000
- YWCA: $200,000
- Arts & Science Council Studio 345: $200,000
- Behailu Academy: $66,000
- Above and Beyond Students: $157,934
Municipal Service District Contracts
§ The FY 2018 tax rates for the five Municipal Service Districts remain unchanged from the FY 2017 rates.
Municipal Service District Contracts with Charlotte Center City Partners*
§ District 1 -Center City
- Tax Rate: 1.68¢
- FY 2018 Contract: $1,308,261
§ District 2 -Center City
- Tax Rate: 2.33¢
- FY 2018 Contract: $755,782
§ District 3 -Center City
- Tax Rate: 3.58¢
- FY 2018 Contract: $1,187,241
§ District 4 -South End
- Tax Rate: 6.68¢
- FY 2018 Contract: $913,212
*Actual contract amounts are determined by property tax revenue projections
Municipal Service District Contract with Charlotte University City Partners*
§ District 5 -University City
- Tax Rate: 2.79¢
- FY 2018 Contract: $743,095
*Actual contract amount is determined by property tax revenue projections
City Memberships and Subscriptions
§ The following four General Fund membership and subscriptions contracts are above $100,000 and require Council approval:
- Centralina Council of Governments: $198,503
- Charlotte Regional Partnership: $155,111
- North Carolina League of Municipalities: $111,084
- University of North Carolina School of Government: $100,246
Other Outside Agency Funding
§ $250,000 in Pay-As-You-Go capital funding to contribute to the TreesCharlotte Endowment. The endowment will be administered by Foundation for the Carolinas, where principal contributions would be preserved and only proceeds from interest and dividends would be used to buy trees and fund operations. The current goal for the endowment is $15 million. The City has a goal of providing $250,000 in annual payments for four fiscal years (FY 2017 - FY 2020). Payment of the City’s four annual contributions will be contingent upon TreesCharlotte successfully raising additional private contributions to support the endowment.
§ $300,000 in Pay-As-You-Go capital funding to support the National League of Cities (NLC) 2017 Annual Conference. The NLC convenes its Congress of Cities and Exposition in various cities around the country. Charlotte has been selected to host this annual four-day conference in 2017. Funding is recommended to support the City’s role as host of the conference, including designating a Host City Coordinator to work with NLC staff, conducting mobile workshops to highlight successful City programs, and sponsoring the NLC Board of Directors/VIP welcoming dinner and Host City closing event.
FY 2018 Public Art Work Plan
§ The Arts & Science Council administers the Public Art Program, receiving 15 percent of the one percent allocated to Public Art as specified in Section 15-233 of the Charlotte City Code.
§ The FY 2018 Public Art Work Plan was presented to the City Council during the May 22, 2017, Council Dinner Briefing meeting.
§ The FY 2018 Public Art Allocations include:
- General Community Investment Fund: $235,733
- Aviation Community Investment Fund: $438,982
Charlotte-Mecklenburg Workforce Development Board
§ Job Training Contract for implementing federally funded Workforce Investment Act in an amount up to $6,200,000.
- Funding source is federal Workforce Investment Act Grant
School Resource Officer Program for Charlotte-Mecklenburg Schools
§ The Charlotte-Mecklenburg Police Department (CMPD), through the School Resource Officer (SRO) program, has a security presence at almost all Charlotte-Mecklenburg Schools (CMS) middle and high schools in their jurisdiction.
§ The SROs provide police services to their respective school communities as their primary assignment.
§ CMPD will provide approximately 51 Police Officers and one Sergeant to CMS for the 2017-2018 school year.
§ Based on the previously agreed upon funding formula, CMS will pay the City up to $5,025,661 for the SRO program.
Support to the District Attorney’s Office - Property Crime Unit
§ Since 2008, the City has provided annual funding (via the Charlotte-Mecklenburg Police Department operating budget) to the District Attorney to support two Assistant District Attorneys and three Victim/Witness Legal Assistants from the North Carolina Administrative Office of the Courts to address the backlog of cases in Mecklenburg County and support Police Department crime fighting initiatives.
§ This action authorizes the City Manager to negotiate and execute the FY 2018 contract with the District Attorney and NC Administrative Office of the Courts for continued funding of these five positions.
I. Approve Other Budget Items
§ The budget ordinance included is the City’s annual budgetary operating ordinance. Sections 1 through 13 of this Ordinance reflect the items included in the Manager’s Recommended Budget and all Council amendments.
§ The remainder of the Annual Ordinance (Sections 14 through 119) serves to make budgetary corrections to the current fiscal year for technical, accounting and other “wind-up” tasks necessary prior to the fiscal year’s end.
Sections 14 through 37 General Capital Project Funds
§ Sections 14 through 37 appropriate and consolidate funding to prepare existing accounts for transactions presented in the FY 2017-2021 Community Investment Plan and make other capital project technical adjustments.
Sections 38 through 41 CATS Operating and Capital Projects Funds
§ Sections 38 through 41 adjust appropriations and expenditures for CATS.
Sections 42 through 46 Charlotte Water Operating and Capital Projects Funds
§ Sections 42 through 43 appropriate various capital expenditures.
§ Sections 44 through 46 transfer capital expenditures to appropriate accounts.
Sections 47 through 63 Aviation Operating and Capital Projects Funds
§ Sections 47 through 49 appropriate various capital expenditures.
§ Sections 50 through 63 transfer capital expenditures to appropriate accounts.
Sections 64 through 65 Storm Water Operating and Capital Projects Funds
§ Section 64 appropriates various capital expenditures.
§ Section 65 appropriates fund balance in the Storm Water Operating fund.
Sections 66 through 89 Other Funds
§ Sections 66 through 90 appropriate and transfer funds from various sources for projects throughout the City budget.
Sections 90 through 119
§ Section 90 includes technical accounting changes necessary to clarify or correct FY 2017 and other prior-year budgetary ordinances.
§ Sections 91 through 119 give the Chief Financial Officer authority to make specific routine appropriations and transfers within the adopted budget.
Attachments
Attachment(s)
Annual Budget Ordinance
CIP Resolution
Resolution by MTC
Pay and Benefits Resolution
Description of Services
Storm Water Interlocal Agreement