Ken Moore, Alderman, Franklin, Tn

June 2010-Special Budget Edition and Flood Update

The Budget-After months of preparation by Department Heads and City Staff, we have a balanced budget that will go thru the necessary three readings and BOMA approval prior to it becoming official toward late June. The Budget and Finance Committee has spent numerous hours doing budget interviews and then more time reviewing the final budget document and passing it on to the full board.

There will be three separate ordinances that reflect this budget: (1) an ordinance reflecting the budget, (2) an ordinance establishing the property tax of 43.4 cents per $100 of assessed valuation. (This can be further broken down into its components such as 24.3 cents going to the general fund and 19.3 cents going to the debt service fund), and (3) an ordinance establishing the new solid waste fee($15).

Overall, it is a $50 million dollar general fund budget that is 6.9% less than last year and 15% less than two years ago. The good news is that there will be no service cuts and there will be no layoffs of City employees. There will be a 2% cost of living adjustment for City employees early next year. City employees will not have any change in their health insurance premiums or other benefits. Water is an enterprise fund and will be passed separately.

• Revenue-45% of our revenue comes from sales tax receipts which compared to past years is lower. The remainder comes from property tax, state shared revenues, and other funds. The good news here is that we just saw two months of positive growth in sales tax revenue after 22 negative months. For the twenty-second year in a row, the property tax remains stable at 43.4 cents per $100 assessed value. Other streams of revenue include facility taxes, hotel/motel tax, and impact fees which complete the revenue sources for the City. Revenue projections are based on moderate growth on the sales tax side and the property tax side.
• Expense side-Seventy-two percent of the general fund budget is personnel related. Another way to look at the personnel component is that 52% of the budget pays for the police and fire department. On a dollar per citizen perspective, our costs are similar to other communities across the State. Over one-half of the City vacancies are in the police department and will be filled after the economy improves. Overall there are 43 full time vacancies that are unfunded in this budget.
• Debt Service-Debt service has increased this year because of the issue of the $40 million dollar bond issue to cover the police station project and other projects to which we have committed funds. Last year it was $3 million dollars and will rise to $5 million for this next budget year. This increase represents debt service on some very significant projects for Franklin that can be completed with lower interest loans and with significant cost savings compared to pre-recession prices. This results in significant savings.
• The City has the highest financial credit rating available and the debt and reserve fund policies that are in place will guide the City so it can maintain its financial ratings and its leadership role. Our reserve fund represents 48% of the annual expenditures which is 15% higher than our policy of 33%.
• Street resurfacing- One of our challenges is keeping up with our street paving cycle. We receive a portion of the gas tax from the State but this is not adequate to keep up with the paving needs because of rising costs and the fact that the gas tax is fixed and is not indexed to rising gas prices. In the past, we have supplemented this portion of expense by about a million dollars a year. To balance the budget, we will not do that this year. One highlight is a truck mounted infrared paving system that will be able to heat pavement in the repair process and save on asphalt and oil and do a better job at the same time. The $170 thousand dollar price tag will pay for itself in between one and two years.
• Self insurance- we currently self insure our health plan but are now looking at moving toward self-insurance on our workers compensation coverage. This will produce a significant savings to the City without undue risks. The budget does not reflect this yet, but it will be explored and likely implemented going forward.
• Non-profits-Annually, the City funds certain non-profits that have been traditionally supported by the City and who provide in many cases services that the City would have to pay for if these entities did not do their work. United Way has vetted these agencies again this year and determined their merits and made recommendations as to their funding which will require BOMA action. Budget and Finance reviewed the funding and voted to make it a 6% across the board cut rather than follow the recommendations of the panel.
• Solid waste fee-this fee will be increased again this year by $3 dollars (from $12 to $15) in an effort to meet the cost which drains over a million plus from the revenue stream because we charge less than what it costs to deliver the service. The previous fee of $3 for a second can will be increased to $7.50. The start of the “blue bag” recycling program is not the reason for the increased fees and would have occurred even if the program was not approved. If recycling will be utilized by more of our residents, we hope to be able to come closer to breaking even on solid waste services. The blue bag program is a pilot program and will be monitored for its success. The goal should be to make the solid waste service more like an enterprise fund. Our costs for the service compared to other communities in our area and across the country reveal a lower cost. Many communities lack solid waste service and during the recent disaster and were delayed for over a week with clean up efforts versus Franklin which started immediately.
• This is a bare bones budget with many needed items and capital equipment being pushed out to the future. Some equipment that is being acquired will be on a lease purchase basis such as new police vehicles. A sum of $669 thousand dollar will be used from the general fund to pay for some badly needed capital equipment that can wait no longer.
• Congratulations to City staff that have worked so hard on this budget and daily make sacrifices for our community with their public service. In spite of the tough economic times and the budget cuts there will be no tax increases and the city will maintain well above what the rating agencies consider the right percentage for reserve balances. 

Flood Update-We have now moved to a different phase of the flood recovery. We have moved to a more individual or case by case issue where Citizens have unanswered questions, frustrations, and uncertainties brought on by either partial damage or complete loss of their home.

The City continues to work tirelessly to identify any and all programs that may be available to the victims of the flood. Information about the flood mitigation program is slowing getting here and may take longer to implement than our patience. The bottom line is that we are still bound by the State and Federal Guidelines for the disaster and this does little to solve individual frustrations of those affected.

The costs continue to rise but seem to be leveling out. Overtime costs to the City are now at $101,000 dollars, direct department costs at $63,000 dollars, and damage to City property has jumped to $880,000 dollars. Over 1140 tons of storm debris has been collected since May 3 to May26.

Over 441 structures have been damaged with a loss estimate of $16.5 million dollars and eighty-five percent of this is residential dwellings. At this stage, there may be at least twenty-five (25) homes with over 50% damage. Codes dictate that anything in the floodplain with over 50% damage is a complete loss and may not be rebuilt. There seems to be a lot of flexibility as to how this is determined.

We still have much to learn about the Flood Mitigation Program which could provide up to 75% reimbursement to a homeowner with an associated local match for the balance to buy homes in the floodplain that are a total loss. The State has announced they will cover one-half of the required match which is good news. Hopefully, further information about this program will be available within the week. It is not likely to be a quick fix or a fast track program. This is a voluntary program and not required by law. Nashville has been part of this program for some time which explains their ability to begin purchasing homes in the flood plain.

The City’s role will be to make sure of the safety of the structure, assist in guidance on repair and mitigation, act as a conduit for the programs available, storm water management, and pairing of resources. The City specifically will not act as an insurance company and must follow the State and Federal guidelines.

It is still important that homeowners register with FEMA.

1.      1-800-621-3362

2.      www.disasterassistance.gov

3.      M.fema.gov (e-mail)

4.      Disaster Recovery Center (at old Police Headquarters)

 The City can be reached to discuss individual specific questions by calling 794-7012. Building permits are still free for flood related damage. The City is actively reaching out to homeowners with fifty percent or greater damage and if you do not hear from them, call the number above.