2012 Budget Process to Neighborhood Groups_FINAL

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FY 2012 Budget Process

Neighborhood Group

Presentation

May 2011



Trends

� Declining State Aid

� Free Cash Reserve used to keep propertytaxes artificially low is no longer available

� Increase in Fixed Costs i.e. Health Insurance

� Loss of Positions

� Increased Net School Spending

� Increased Reserves



Declining State Aid

Net State Aid (Excluding School Building Assistance)

26,030,842

11,440,903

29,455,054

121,658,718

109,418,078

111,660,607

$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

$140,000,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

S

¡ ¢

c£

: C¤

£ ¢ ¢

y S¤

£ £

ts

N t A Ot C t 70



Property Taxes

Levy Analysis (Base Year 2000)

$0

$20,000,000

$40,000,000

$60,000,000

$80,000,000

$100,000,000

$120,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

(5,000,000)

0

5,000,000

10,000,000

15,000,000

20,000,000

Bas vy Gr Fr as

Tax P licyImpl m n d



Property Taxes

Average SFH Tax 2000-2011 gap n b s nd ca ed)

$1,310$1,167

$841$681

$1 800$2 000

$2 200

$2 400

$2 600

$2 800

$3 000

$3 200

$3 400

$3 600

$3 800

$4 000

$4 200

$4 400

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Lowell Massachusetts



Health Trust Expenditures

T E F T F

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010



Positions Lost

Dec eased Headcoun

820

840

860

880

900

920

940

960

980

1000

1020

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010



Net School Spending

Requi e v. ctual et ch l en ing

100 ,¥ ¥ ¥

,¥ ¥ ¥

110 ,¥ ¥ ¥

,¥ ¥ ¥

120 ,¥ ¥ ¥

,¥ ¥ ¥

130 ,¥ ¥ ¥

,¥ ¥ ¥

140 ,¥ ¥ ¥

,¥ ¥ ¥

150 ,¥ ¥ ¥

,¥ ¥ ¥

160 ,¥ ¥ ¥

,¥ ¥ ¥

2003 2004 2005 2006 2007 2008 2009 2010 2011 (Budget)

¦

§ ¨ © ©

t

equirement



R eserves Balance

Lowell eserves 2001-2011

($5,000,000)

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Free Cash Stabilization Funds Chapter 17 Reserve Excess Levy Capacity



� Voluntary layoff incentive programs resultedin fewer involuntary layoffs

� City staff, both union and non-union, made

significant concessions in 2009 and 2010� Took steps to move employees out of more

expensive healthcare plans

� Secured grants to retain Public Safety staffing� Adopted Chapter 32B, Section 18A

Personnel Decisions



� Elected not to fill most vacancies since 2008 ± Results in decreased benefit costs in addition to salary

savings

� Executed long-term fixed price contracts for both

electricity and gas which have saved the Cityhundreds of thousands of dollars

� Adopted conservative borrowing practices

� Implemented energy conservation measures

� Reorganized departments to increase efficiency withno increase in costs

Management Decisions



� Renegotiated our solid waste program

� Negotiated ambulance cost reimbursement

� Renegotiated both the Lowell Spinners and tow

contracts� Transferred the Tsongas Arena to UMass Lowell

� Purchased our streetlights

� Adopted the local option hotel and meal taxes

� Extended the pension liability deadline to 2034 in

order to smooth out substantial losses

Management Decisions



� Implementation of lien process for better codeenforcement

� Contracting out of Cemetery Maintenance =$800,000 to $1,000,000 over three years

� Overtime cost controls

� Increased trash enforcement without adding topayroll

� Projected sick time usage reduction by anaverage of 1 day per employee

Data-Driven Decision Making



� State Aid ± $7.1 million increase in Chapter 70 Aid, all goes to schools

± $1.5 million loss in Unrestricted Aid, all absorbed by non-school accounts

� Snow & Ice Deficit ± $2.8 million

� Health Insurance ($300,000 net total non-schoolincrease)

± Only 5% rate increase ($1.3 million) ± $1 million in net additional savings from agreement with

unions

2012 Outlook



� Energy Savings ± Minor, eaten up by increase in gasoline/diesel

costs

� Tax Growth ± Appleton Mills/Hamilton Canal progressing

� Cemetery

±E

stimated savings $300,000

2012 Outlook



Budget Process

Januar

Late Jan/Ear lyebruar y

G ubmits bu get

Januar y-Mar h

Dept Heads w rk to develop workload indi ator s and depar tmental budgets

Apr il

Dept Heads Submit Budget

Requests

Apr il

House Budget

May

Senate Budget

June

Conf er en e Committee

May /June

City Manager ReviewsBudget and Works on

Document

June

City Council

Deliber ates and Passes Budget



Budget Document Evolution

� 2007 Budget 63 pages; no overview to educate or providecontext; line items and amounts for each department

� 2008-2010 Budgets 130+ pages; financial overview; revenueand expenditure detail; line items and amounts for each

department; financial policies and forecasts; glossary; capitalplan

� 2011 Budget added departmental descriptions andorganizational charts

� 2012 Budget more detailed information about individualdepartments and how they fit in the larger picture;achievements; output measures; related strategic goalsprogress



From This«



To This



The Challenge

The $1.6 Million Question

Why Cant We Just Cut the Budget?



The Challenge

³No Problem«$282M is a Large

Budget.´



Total Appropriations & Costs

$281,942,707

The Challenge

* Following Pie Charts Based on FY ¶10



$267,423,993

But«

We can¶t cut state assessments or deficits to be raised.



$266,024,467

We have an obligation to giveabatements/exemptions to deservingtaxpayers.

But«



But«

Schools must be a priority.

$134,895,375



$115, 15,0

Debt service is fixed.W

e can¶

t defaulton our bonds.

But«



$70, ,

Health insurance, pensions and other fixed benefits resist cuts.

But«



$64,778,837

GLTHS is a fixed assessment.

But«



$29,296,788

Public safety is a priority and grantsprevent police/fire layoffs.

But«



$21,961,788

Trash, streetlights, snow removal arenecessary services.

But«



$7 139 904

There is a price to layoffs«higher unemployment costs as well as animpact to services.

But«



$6,589,904

Veterans benefits are fixed.

But«



$4, 18, 4

Heat,electricity and gasoline costshave been minimized.

But«



What do we have left?

$4. Million



How Much DidWe Need?

$1.6 Million

1/3 of the remaining $4.8 Million!



Can we do that?

How is this ³discretionary´money spent?

Asphalt supplies, telephone service, mailingtax and utility bills, collection of those bills,

traffic signal maintenance, pavementmarking, street sweeping, softwarelicenses, our web site, and many other³invisible

´services.



To Cut $1.6 Million

No Easy Options

� Personnel decisions

� Essential services

� Employee concessions

� Education



On a Positive Note

Bond Rating±

Long Term A1 Rating, enhancedAa2 and Stable Outlook

³The City ¶ s effective management team

continues to implement cost-saving strategiesand prudent expenditure reductions to

produce balanced operations´

± Moody¶s, Dec. 2010



On a Positive Note

DOR Letter to Remove Audit Requirement

³ Lowell has done a remarkable job during

difficult financial times over the past few years

to improve their situation« various internal controls instituted by your office«have placed

Lowell in a position to weather the difficulties

that you face in this business´

±G. Perry, Dir. of Accts.,Dept. of Revenue, Feb.

2011



Summary

Leaner, Right-Sized and Well-

Positioned Government

Documents

2012 Budget Process to Neighborhood Groups_FINAL