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6B - Recommendation to City Council regarding 2004-2005 Parks and Recreation Operating BudgetDO NOT REMOVE - PRAB File Material CITY OF BOULDER y,.., PARKS AND RECREATION ADVISORY BOARD AGENDA ITEM MEETING DATE: APRIL 28, 2003 (Agenda Item Prepazation Date April 18, 2003) AGENDA TITLE: Pubhc Hearmg and Recommendat~on to Crty Council regardmg 2004 - 2005 Pazks and Recreahon Operatmg Budget REQUESTING DEPARTMENT: Jan Geden, CPRP, Duector of Pazks and Recreation Julya Bndgewater, Admuustratrve Services Divis~on D~rector Chuck McElwaui, Admmistratrve Analyst FISCAL IMPACT: $20,206,500 PURPOSE: The purpose of this item is to mform the Parks and Recrearion Advisory Board of ~ Parks and Recreation Department's Operating Budget that will be submrtted as part of the Crty Manager's 2004 - 2005 City Operatmg Budget. A formal vote ~s requ~red for PRAB to make its recommendations to City Council BACKGROUND: The department's operatmg budget is accounted for m six funds General Fund, 25 Sales Taac Fund, Recreation Ac[rvrty Fund, Pern~anent Parks and Recreation Fund, Lottery Fund, and the 15 Sales Tax Fund The depaztment is designated as fund manager for the 25 Sales Tax Fund, Recreation Activity Fund, Permanent Parks and Recreation Fund and Lottery Fund The operatmg budget pays for the day-to-day activities of the department The $20 milhon budget is allocated m four divisions: Admuustration, Plannuig and Development, City Parks, and Recreation The operatmg budget consists of personnel, non-personnel, renovation and refurbishment, debt serv~ce, and cost allocation/transfer expenditures The operatmg budget mcludes funduig for general admuustratrve and busmess serv~ces, parks and forestry operations and mamtenance, and recreational services and programs totaluig $15.8 milhon Renovauon and refurbishment expendrtures totaluig $1 4 million are funded m the Plannutg and Development Drvision Debt service expendrtures totahng $2.75 million is funded m two divisions: $2 4 milhon is ~.., budgeted m the Admuustration Drvision m the 25 Sales Tax Fund. $304,000 is budgeted m the Plancung and Development Drvision, of wluch $304,000 is m Lottery Fund and $50,000 is m Permanent Parks and Recreation Fund AGENDA ITEM # VI-B ; PAGE 1 ~ Cost allocation expenditures of $132,000 are budgeted in the Administration Division in the .25 Sales Tax Fund, while cost allocation expenditures of $52,000 is budgeted in the Planning and Development Division, $43,000 in Permanent Parks and Recreation Fund and $9,000 in Lottery Fund. Renovation and refurbishment, debt service and cost allocation are also discussed with the PRAB during the annual CIP budget discussions. Parks and Recreation 2004 Operating Budget s,ooo,ooo . , ,..... .,,... . ,. .. . .: _ _ ~,ooo,ooo . . . ` 'I 6,000,000 _._ . ---- - - , ,. , , , .T ~~_ 5,000,000 _ __ _ _ - - _ -- - - --- 4,000,000 - - 3,000,000 - - - - - - --- - - - 2,000,000 - - 1,000,000 -- --- ` '~"T:' - .~~ 3.:: Administration P~anning & City Parks ~ Recreation Development ^ Permanent Parks & 754,300 Recreation Fund ~ Recreation Activity Fund _ 2,094,047 5,300,584 O.25 Sales Tax Fund 2,791,489 1,574,563 747,615 78,110 ^.15 Sales Tax Fund 52,677 93,323 _ _ ~' ^ Lottery Fund _ 581,576 _ ^ General Fund 1,512,264 28,079 3,012,363 1,585,482 Table and graph 1 The above table and bar graph detail the funding of Parks and Recreation 2004 Operating Budget by division and the sources of funds that make up the budget. ~ AGENDA ITEM # VI-B ; PAGE 2 0 Graph 2 The above pie chart, graph 2, details the 2004 target operating budget by major category of expenditure. It shows that personnel costs comprise 55% of the operating budget, non-personnel, 23%; debt service on capital acquisitions, 14%; renovation and refurbishment, 7%; and cost allocation, 1%. The department has 159.25 full time equivalent (FTE) standard staff. There are about 80 FTE of seasonal staff. ANALYSIS: Sales and use tax revenue has declined in the City of Boulder by about 1 S% since the year 2000. Please refer to Attachment A: The Ciry of Boulder Geraeral Fund Budget Shortfall, which gives more detail on the city-wide budget situation. Since then, a four year, $5 million reduction plan was developed to address possible declines in the economy, or the expiring 0.15°Io public safety tax not being extended, or major store closures. This document has been provided as Attachment B to this memo. The Parks and Recreation General Fund portion of that reduction was $488,000. Unfortunately, more than one of those scenarios has come to pass and all the cuts proposed in that plan will be implemented, although some not until 2004 or 2005. Further, the combination of all these factors are contributing to the city-wide revenue gap, now resulting in the need for significant budget reductions. The 2004 - 2005 General Fund Budget is being prepared to address a$9.1 million budget gap between expenditures and revenues. Council will consider a ballot measure in November to extend some type of general fund tax. If the tax is approved in 2004, the General Fund cuts will be reduced by $6.2 million. In order to prepare for the possibility of either situation, budget cuts are being planned for the worst case scenario. In addition to the customary budget submission for the 2004 - 2005 budget, the department is required to turn in budget reductions and revenue enhancements that represent a 25% net AGENDA ITEM # VI-B ; PAGE 3 ~ decrease in General Fund budgets. This allows the City Manager to pick from the budget reductions and revenue enhancements to present two alternative budgets for Council. Whether the entire 25°Io reductions will be taken is still to be determined and may not be decided until November 2003. The department is charged with looking for efficiencies, opportunities for revenue increases and then as a last resort, making service level cuts. With the department experiencing multiple years of budget cuts tied to the four year, $5 million reduction plan, most efficiencies have been already taken. Reductions of this magnitude will result in service cuts, and consequently, personnel reductions. General Fund Budget Reductions $3,500.000 . . , .;.:? : . . . .. . . ~ '~a~. $3~OOO~D00 - - - _ _--- ----- x ~' ~~ .~x a . - ,;:, $2,5fl0.000 _. _ _ - - ---- ------ - -_ _ $2.000.000 _ --- -- - - $1,500.000 -- - $t ,000,000 $500.000 - $0 Administration P~anning & ~ City Parks and Recreation Development j Forestry i Subsidy 2004 Budget Target $1,512,264 $28,079 $3,012,363 $1,585,482 2004 w/ 4 year, $5 million $1,467,264 $28,079 $2,942,363 f $1,573,822 100,448 I $21,059 ~ $2,206,772 I $1 Table and Graph 3 The above table and graph details the 2003 Budget, the 2004 budget target, the effects of the 2004 budget target with the four year, $5 million reduction plan, and then the 2004 budget targets with the additiona125°Io reductions. The pie chart that follows, graph 4, details the percent and dollar amount of the Recreation Activity Fund that is from the General Fund and from user fees. (Non-residents pay a 25% higher fee than residents.) User fees make up 82% of the Recreation Activity Fund at $7.4 million and the subsidy from the General Fund provides $1.585 million or 18%. AGENDA ITEM # Vl-S ; PAGE 4 ~ Recreation Activity Fund ~eneral F~ Subsid~ Sources of Funds - in millions $1.585 18% UserFees $7.4 82% Graph 4 The 25% reduction in the General Fund subsidy is $396,000. Fortunately, with the renovations of our facilities, we are well positioned to increase facility attendance and program usage to offset the decrease of subsidy from the General Fund. Efficiencies and increases in user fees can also assist in offsetting the decrease in subsidy. However, there is also a rise in the cost of providing services. Some program and service cuts will need to be made to achieve the net $396,000 general fund loss of subsidy. The 2004 - 2005 Budget Submission: Staff is in the beginning stages of developing this budget and will be able to give more specitics about what reductions in services will be recommended to the City Manager in the department's budget submission during the presentation at the Apri128, 2003 PRAB meeting. Staff will provide information regarding the 2004 - 2005 budget submission, examples and rationale for types of reductions and the challenges staff faced with developing the budget, as well as detailing next steps and the timelines regarding the process. PUBLIC COMMENT AND PROCESS: This item is advertised in the Daily Camera. STAFF RECOMMENDATION: Staff will submit the department budget to the Budget Office per City Manager budget guidelines related to the development of the operating budget. Although according to the Charter, Prab's function regarding the operating budget is only to review, City Council does seek overall comments from the board regarding the budget. Staff recommends that the Board approve a motion containing general comments regarding the Parks and Recreation Department 2004 - 2005 Operating Budget. ATTACHMENTS: A. The City of Boulder General Fund Budget Shortfall B. Potential Reductions to General Fund; Strategic Financial Plan; Addressing Either an Expiration of the .15 Public Safety Sales Tax or a Reduction in Sales Tax Collections. AGENDA ITEM # VI-B ; PAGE 5 Attachment A 1 THE CITY OF BOULDER GENERAL FUND BUDGET SHORTFALL The problem - Just like many other governments and private businesses, the Ciry of Boulder is exPeriencing a significant gap between revenue collections and the expense of providing current services. Just like any other business, the city government has to live within fiscal constraints and must balance its budget through some combination of red~icing costs and inereasing revenuc. HOW MUCH IS THE GENERAL FUND BUDGET GAP? In 2003, the city of Boulder will spend about $RS million to operate general city services such as police, fire, parks, recreation, libraries, and environmental and human services. Sales and use tax revenue has declined by about 18% since the year 2000. This has resulted from a combination of the poor economy and retail sales "leakage" to places like Costco and Flatiron Crossing Mall. Further, a 0.15% sales tax for public safety purposes will expire at thc cnd of 2004 eliminating another $3.7 million in revenue. Therefore, sales tax revenue available to support probrams and services will be down significantiy resulting in a total budget gap about $14.1 I1ll~~IpR. ln anticipation of revenue declines, all sales tax supported funds have already implemented major expenditure reductions, first looking for efficiencies and, only as a last resort, eliminating programs and services. Although a smaller portion of the budget gap, certain costs have increased by much more than inflation. An example is the cost of property and casualty insurance which has increased significantly since 9/1 l. General Fund 8 Public Safety Sources 8 Uses ol Funds ~~~~.am rea~oro~s ~~~i~aee~ 11 D.000 ,oo.ooo 9D.000 -•- o3c~.:rc~s 80,000 a ~ses 'ro.ooo 60,00~ so,ooc LuoS _~,, x~ce~ .-.-, ~,or zaoe WHAT COULD IMPROVE THE SITUATION? Sales Tax by Function En~n enta~ DOen Spar,e ~ Puolic Safe[y ~_„ za~ T,a~sP~rtabor, a~MS a Hrrsea~~on 1B% ~y~ Human Samces Library 8 M6 7% gq In 2002, the city began implementation of a four-year $5 million budget reduction plan which was developed as a contingency to address one of the following three possibilities: X significant declines in the economy; X the expiring 0. l5% sales tax not bein~ extended; or X major store closures at Crossroads Mall. Unfortunately, more than one of these possibilities has come to pass, resulting in the need for significant additional program and service reductions. The city is now at a place where there are very limited alternatives to absorb revenue reductions and we need community input on what programs or services should be eliminated to balance the budget. General Fund Expenditure Reductions 2002 & 2003 $2.2 million 2004 & 2005 $2.8 mil]ion Further budget cuts required $9.1 million Total $14.1 million WHAT CAUSED THIS SITUATION? The City relies heavily on sales and use tax revenue to support many programs and services. The current statc of thc economy has negatively impacted sales and use tax revenue. ~ Consumers have reduced purchasing activity due to declines in disposable income and general uncertainty about jobs and the economy. ^ Many businesses have downsized, closed, or relocated out of Boulder. Others have reduced or eliminated purchases of computers and equipment. In addition to consumer purchases, business-ro-business capital purchases also generate sales and use tax revenue. X A combination of competing retail alternatives in surrounding communities and reduced retail opportunities in the Ciry of Boulder has resulted in "leakage" of purchases and associated sales tax revenue. Several economic vitality initiatives are in progress: ^ The City Manaber has convened a group of business leaders (Economic Vitality Action Group) to recommend tools that can be used to improve the vitality of both the business and retail economy in the city. ^ Council has appropriated monetary resources to support economic vitality initiates. ^ The Boulder Convention and Visitors Bureau is developing a master plan to increase visitors and tourism and associated sales tax revenue. ^ The Central Area General improvement District is in the process of issuing bonds to build & operate a parking garage under the new hote] being built at 9'h & Canyon. This hotel will bring additiona] visitors (and retail aales) to the downtown. ^ The City is awaiting a proposal from Westcor regarding redevelopment of the Crossroads Mall Also, City Council is considering placing an election question on the November 2003 ballot again requesting extension of the expiring 0.15% sales tax. Therefore, citizens may have the oppominity to diminish the extent of service reductions necessary by approving extension of the 0.15% sales tax. But, even if voters approve ext ension of this revenue source, expenditures must still be reduced by $6.2 million. WHAT SHOULD WE EXPECT IN THE FUTURE? Some ]eve] of slow increase in capital purchases by businesses located in the City as the economy improves. But, because there is so much available commercial office space in the area (30% vacancy rate in Interlockenj, we continue to experience an outflow of businesses seeking lower lease rates and we may never get back to the magnitude of business generated taxes that we enjoyed during the 199os. ^ Some level of slow increase in consumer rctail purchases as the economy improves and Crossroads Mall is redeveloped. But, we will never again be the regional retail shopping center for thc Qouldcr Vallcy, so wc cannot count on retuming to the level of taxes previously generated through consumer retail purchases. NEXT STEPS? City departments are preparing lists of altematives to balance the b~dget. After these alternatives are identified, the city will be requesting citizen input. To make the best possible choices during this difficult time, input will be requested regarding what services should be eliminated under the foltowing two scenarios: ^ S9. l million reductions if the 0.1 ~~'o sales tax is not extended. ^ 56.2 million reductions if extension of the 0.15% sales tax is approved at the November election. AGENDA ITEM # , PAGE Potential Reductions to Genera{ Fund - - _ -- -- - - -- . . _------ --------- ---- - -- - --- ---- - - -- . -- - - --- _ _ _ _ ___ Strategic Financial Pian _ _ _ - -- -- _ Addressing Either an Expiration of the .15 Public Safety Sales Tax or a Reduction in Sales Tax Collections DEPARTMENT ITEM S 20Q2 2002 5 Amts FTEs 2003 2003 $ Amts FTEs 2004 2004 $ Amts FTEs 2005 2005 $ Amts FTEs Total °/a0f Total Im act of 5ervice Reduction Parks & Recreatian - Volunteer Coord --- -- ~~ a-~:~ 27,250 0.56 Volunteers wili be managed by divisions. Divisions wiL' need to aliocate resources to accommodate volunteers_ __ - Printing lCommunications 24,ODQ ~ --_ _-- . 4 20,000 -- - - ---- - ----- _----- --------- -- --- Catalo~ will be produced 3 times a year instead of 4 times a~ear. Parks Positions Fund Transfer J` " 52,291~ ;,'-1 ~ Athietic Maintenance 5ervice i~J,300 ~ ~ I 11.660 Lower maintenance standard-over seedinglfertilizer applied 2 timeslseason instead o timeslseason. _ Front Desk Temps 5,17{~ ~`~ _~ _, _ _ leet I Uniform Services , ~ ~ 1.OQQ <' !~ I ~ '`:''I 25.000 2,000 _ _ _ Some effciencies will be fou~d in extending the life of some fleet and non-flee', equipment. Some additionai efficiencies wili be found by purchasmg smalier vehides purchasing more iuel efficient cars vs. purchase of trucks whenever possible. These savin s will not occur rf iabor rates gasoline costs increase significantl~r ` Registration Clerk I ~I 20,006 0.5D _ Reduction in service for citizens registering for classes-possibfe longer {ines or wait time. Seasonal 5alaries _ 9Z,0~0 r j 7,500 7,500 Reduction in maintenance standards for parks- less mowing and weeding. Reduc6on repair and maintenance of irrisation s steY ms. _ FiowerPlantin Reduction ~ S,tC~p ~ ~ _ _ Parks Supplles_ 27,G0~ Uniform Services I 13,ODQ Reduction in the empioyee clothin~ allowance pr~ram __ Parks Const Super - Tma to PPF -- Bfl,DOD 0.90'~ _ _ - - Parks Secretary - i-- I 37.500 : ~ - 1.D0 --- --- Reduction in service levels for stzff and citizens calling Park Operations Center for i~formation - - Media Specialisf _ _ _ i - _ ~,.- -- 25.000 _ __ 0.50 -- - -- __ _ - Reduction in tne DepartmenYs promotion_marketin~ and public informaiion products Cit Parks NPE 65,GOG - - _ Major reduction in department GIS services and reducetl resource mana =ment --- - -- Sub-total - - - - - - 57,461 159,404 193.910 77.5~0 - . Alloc to Recreation Aci~vitv ~und _ --- --- --- - ~-- -- Total G~ aarks 8 Re~reatia $ 57;461 ~J;~O ~ $ 159,400 ~ 0.9n' S 19~ 910 1 5~i 5 77 5D0 1 001 5 488.273 5 6?0le Rec Fee Study - re~~ ennance 20,OOG ------- -----_ __ _ Attachment B Agenda Item • VI • B, Page 7 ~ 0 0 ~