C. Mid-Year Review of 2009 Budget and Economic Forecast
CITY OF
CHANHASSEN
7700 Market Boulevard
PO Box 147
Chanhassen, MN 55317
Administration
Phone: 952.227.1100
Fax: 952.227.1110
Building Inspections
Phone: 952.227.1180
Fax: 952.227.1190
Engineering
Phone: 952.227.1160
Fax: 952.227.1170
Finance
Phone: 952.227.1140
Fax: 952.227.1110
Park & Recreation
Phone: 952.227.1120
Fax: 952.227.1110
Recreation Center
2310 Coulter Boulevard
Phone: 952.227.1400
Fax: 952.227.1404
Planning &
Natural Resources
Phone: 952.227.1130
Fax: 952.227.1110
Public Works
1591 Park Road
Phone: 952.227.1300
Fax: 952.227.1310
Senior Center
Phone: 952.227.1125
Fax: 952.227.1110
Web Site
www.ci.chanhassen.mn.us
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MEMORANDUM
TO:
Mayor and City Council
FROM:
~.'"
Greg Sticha, Finance Director
DA TE:
July 13,2009
SUBJ:
Mid-Year Review of 2009 Budget and Economic Forecast
BACKGROUND
As you are well aware, the economic downturn that began in 2008 has carried
forward into 2009. To no surprise, development and new construction starts have
been directly impacted by the downturn in the economy. This has resulted in a
significant reduction in development/permit fees and charges.
Attached you will find a graph that shows the results of building permit revenues
each of the last four years, broken down by first and second halves of the year.
We finished the first half of 2009 with approximately $385,000 in building permit
revenue. Our estimate for the remainder of 2009 is for an additional $300,000,
which would leave us around $650,000 short in building permit revenues. Also
attached is staff's list of proposed budget cuts, new revenues, and the use of one-
time cash to gap this shortfall. This list totals approximately $750,000 in various
resources. With this information, staff believes we should be prepared to
implement the majority, if not all, of the ideas listed on the spreadsheet.
FUTURE
Due to the direct impact that development has on our budget through
permit/development fees, it is staff's intention to become much less reliant upon
those revenues in the general fund. In order to do this, it will require some tough
decisions be made for the 2010 budget. We will have to be very careful to
allocate our resources and priorities to areas that are essential to maintaining a
more viable and stable budget going into the future. In addition, City Council and
staff will need to establish clear goals and prioritize the programs and services we
provide for future budget years.
RECOMMENDA TION
At the work session, staff will review the attached shortfall spreadsheet and
request feedback from the City Council.
ATTACHMENTS
1. Building permit revenue projection graph
2. Revenue shortfall spreadsheet
Chanhassen is a Community for Life. Providing for Today and Planning for Tomorrow
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Chanhassen
2009 Potential Revenue Shortfall Ideas
Description Priority Amount 1 2 3 4 5 6
GENERAL FUND COST SAVINGS
Fuel costs under anticipated 2009 budget High $ 50,000 ~
No Out State Travel Med 5,000 ~
Stop Billing General Fund for Water Med 17,000 ~ ~
Renegotiated Garbage Contract High 5,000 ~ ~
RFP for long Term Disability Insurance Rates High 4,400 ? ~
RFP for life Insurance Rates High 3,200 ? ~
Reduced CSO Hours due to employee on leave High 3,000 ~ 7
Park Maint Department eliminated Items low 7,500 ~
Recreation Center eliminated items low 8,500 ~
Recreation Program - Eliminated items & increased revenues low 21,000 ~
Reduce temporary Salaries in Building Dept High 20,000 ~ ~ ?
Eliminate Scanning Service for Building Drawings High 10,000 ~
Engineering Administrative Charge for Utility Projects Med 84,500 ~ ~ ?
Employee's going to 32 hour week this summer High 6,900 ~ ~
Total General Fund Savings $ 246,000
CAPITAL REPLACEMENT FUND SAVINGS (could be transferred to Gen Fund)
Underspent 2008 CIP items High $ 90,000 7' -/
Total Capital Replacement Fund Savings $ 90,000
OTHER FUND SAVINGS (could be transferred to Gen Fund)/USE OF CASH
Excess levy dollars from 2009 Budget Discussion set aside in Street Recon fund High $ 42,000 ~ -/
Reduce sealcoating projects to highly needed areas only Med 100,000 -/ -/
Excess TIF from closing Gateway West TIF district Med 97,000 7' 7
Close 1999A Bond Fund Med 161,944 ~ ~
Close 2001B Bond Fund Med 16,009 ~ ~
Use Cash Reserves in Capital Replacement Fund low ? -/ ~
Use of Catastrophic Reserve Fund low ? ? -/
Total Other Fund Savings/Use of Cash $ 416,953
Net savings to General Fund $ 752,953
DELAYED PURCHASES
Capital Replacement Fund Purchases delayed one year
(Staff recommends moving ahead with the equipment replacement
listed below)
EQ-015 Comm Devlopment Truck low 30,000
EQ-029 PW light Duty Truck low 33,000
EQ-052 Parks light Duty Truck low 33,000
MIS Purchases (permit software, phone system upgrade, Eng printer) low 76,000
EQ-083 CSO Truck low 30,000
Delay Purchase of Version 7 Springbrook low 27,000
Delay siding and window replacement at satelitte fire station low 42,000
Total Delayed Purchases One Year $ 271,000
1- Sustainable or ongoing cost savings into future years budgets
2 - Already implemented for 2009
3 - New Revenue generation
4 - Resulting cut reduces service level to some extent
5 - Use of funding source that was originaly targeted for another project, purpose or enterprise fund.
6 - One time use of Cash Reserve
1 - Sustainable or ongoing cost savings into future years budgets
Stop Billing General Fund for Water Med $ 17,000
Renegotiated Garbage Contract High 5,000
Employee's going to 32 hour week this summer High 6,900
Reduce temporary Salaries in Building Dept High 20,000
Engineering Administrative Charge for Utility Projects Med 84,500
Total $ 133,400
2 - Already implemented for 2009
Fuel costs under anticipated 2009 budget High $ 50,000
No Out State Travel Med 5,000
Renegotiated Garbage Contract High 5,000
RFP for Long Term Disability Insurance Rates High 4,400
RFP for Life Insurance Rates High 3,200
Reduced CSO Hours due to employee on leave High 3,000
Reduce temporary Salaries in Building Dept High 20,000
Eliminate Scanning Service for Building Drawings High 10,000
Excess levy dollars from 2009 Budget Discussion set aside in Street Recon fund High 42,000
Employee's going to 32 hour week this summer High 6,900
Total $ 149,500
3 ~ New Revenue generation
Engineering Administrative Charge for Utility Projects Med 84,500
Total $ 84,500
4 - Resulting cut reduces service level to some extent
Reduced CSO Hours due to employee on leave High 3,000
Park Maint Department eliminated Items Low 7,500
Recreation Center eliminated items Low 8,500
Recreation Program - Eliminated items & increased revenues Low 21,000
Reduce seal coating projects to highly needed areas only Med 100,000
Total $ 140,000
5 - Use of funding source that was originaly targeted for another project, purpose or enterprise fund,
Stop Billing General Fund for Water Med $ 17,000
Underspent 2008 C1P items High 90,000
Reduce seal coating projects to highly needed areas only Med 100,000
Excess TIF from closing Gateway West TIF district Med 97,000
Close 1999A Bond Fund Med 161,944
Close 2001B Bond Fund Med 16,009
Use Cash Reserves in Capital Replacement Fund low ?
Total $ 481,953
6 - One time use of Cash Reserve
Underspent 2008 CIP items High $ 90,000
Excess levy dollars from 2009 Budget Discussion set aside in Street Recon fund High 42,000
Excess TIF from closing Gateway West TIF district Med 97,000
Close 1999A Bond Fund Med 161,944
Close 2001B Bond Fund Med 16,009
Use Cash Reserves in Capital Replacement Fund Low ?
Use of Catastrophic Reserve Fund Low ?
Total $ 406,953