December 10 2019 BUDGET PRESENTATION 2019 Budget Timeline

December 10, 2019 BUDGET PRESENTATION

2019 Budget Timeline SPECIAL Council Meeting Fall 2018 Review Period Oct. 27 Nov. 26 1 st Budget Workshop 2 nd Budget Workshop Departments present their proposed 2019 budgets Discussion of current and new Revenue sources Nov. 28 & 29 Three Public Meetings for Residents to Comment on the Budget Targeted for First Reading and Motion to Advertise Nov. 29 SPECIAL Council Meeting Dec. 18 Public Comment Period Proposed Budget Presentation Dec. 10 2019 Budget Adoption Potential Adoption of the Proposed 2019 Budget Next Steps: • TONIGHT – Motion to Advertise Proposed 2019 Budget • DEC 18 - Consider Adopting a Budget for Fiscal Year 2019 2

Budget Trend 2014 -2019 [VALUE] Previous Budgets Proposed 2019 Budget $ 33, 885, 281 Norristown Millage Rate $34, 545, 082. 99 $ 32, 130, 709 $ 30, 476, 843 Which is a $628, 865. 91 (1. 9%) increase over 2018 expenditures. $ 30, 858, 125 14. 7 $ 29, 606, 063 Our initial preliminary budget for 2019 (presented in Oct) was $34, 689, 493. 82. Staff was able to decrease budget by -$203, 448. 31 $ 28, 988, 029 12. 7 Our since Nov. 29 budget presentation, which proposed expenditures of $34, 486, 045. 51, budget increased by $59, 037. 48. 12. 36 2013 2014 Preliminary 2019 Budget 2015 2016 2017 2018 Proposed 2019 3

2019 Budget Breakdown Debt Service 12% Debt Service Police 25% Public Works 15% Overhead Insurance, Pension, & Comp. Fire 15% Finance & Tax 2% Law & IT 2% Insurance & Pension Public Works Administration, HR, & Executive 2% Police Fire 8% Administrative Overhead 12% Recreation 1% Code Enforcement 3% Planning & Dev 3% DEPARTMENT Administration Executive & Contributions Human Resources Finance & Tax Law IT Administrative Overhead Recreation Code Enforcement Planning & Dev Fire Insurance, Pension, & Comp. Police Debt Service Public Works 2019 Total Prelim. Budget 2019 Budget $394, 972. 47 $122, 600. 00 $218, 512. 29 $804, 889. 63 $392, 500. 00 $263, 500. 00 $4, 036, 163. 00 $402, 448. 15 $953, 823. 15 $877, 536. 02 $2, 784, 576. 00 $5, 239, 461. 00 $8, 790, 141. 32 $4, 200, 000. 00 $5, 063, 960. 96 $34, 545, 082. 99 % Total 1. 1% 0. 4% 0. 6% 2. 3% 1. 1% 0. 8% 11. 7% 1. 2% 2. 8% 2. 5% 8. 1% 15. 2% 25. 4% 12. 2% 14. 7% 100%

2018 v. 2019 Expend. DEPARTMENT Administration Executive & Contributions Finance & Tax Human Resources Law Administrative Overhead Recreation IT Code Enforcement Planning & Dev Police Fire Public Works Insurance, Pension, & Comp. Debt Service Budget Totals Adopted 2018 391, 427. 35 124, 700. 00 768, 533. 00 206, 442. 00 392, 500. 00 4, 036, 163. 00 345, 941. 00 263, 500. 00 874, 494. 00 872, 105. 56 8, 639, 976. 00 2, 766, 284. 00 4, 856, 302. 86 5, 139, 461. 00 4, 200, 000. 00 33, 916, 218. 08 Prelim 2019 Variance % Change 394, 972. 47 3, 545. 47 0. 9% 122, 600. 00 - 2, 100. 00 - 1. 7% 804, 889. 63 36, 356. 63 4. 7% 218, 512. 29 12, 070. 29 5. 8% 392, 500. 00 - 0% 4, 036, 162. 00 - 0% 402, 448. 15 56, 507. 15 16. 3% 263, 500. 00 - 0% 953, 823. 15 79, 329. 15 9. 1% 877, 536. 02 5, 430. 02 0. 9% 8, 790, 141. 32 150, 165. 32 1. 7% 2, 784, 576. 00 18, 292. 00 0. 7% 5, 063, 960. 96 169, 269. 88 3. 5% 5, 239, 461. 00 100, 000. 00 1. 9% 4, 200, 000. 00 0 34, 545, 082. 99 628, 865. 91 1. 9% 5

Expenditure Increases Proposed 2019 Budget $ 628, 865. 91 increase CATEGORY Amount Changed % of Total Personnel Cost + $ 329, 070. 31 52. 3% Operational Cost + $ 199, 795. 60 31. 8% Insurance Cost + $ 100, 000. 00 15. 6% Other Dept. Operations 3% Recreation Operations 6% Insurance Cost 16% Personnel Cost 52% Public Works Operations 6% Code Operations 7% Fire Operations 9% 0%

Expenditure Increases Change in Personnel Cost $ 329, 070. 31 Increase Total in 2019 Contractual Personnel $ 11, 133, 622. 90 % of 2019 32. 2% Amount Change % of Personnel Change ($329, 070. 31) % of Total Change ($628, 865. 91) % Change Impact on $34 M 78. 9% 40. 8% 0. 7% 21. 9% 11. 5% 0. 2% + $ 256, 969. 21 *Amount Change includes Police (55%), Laborers (32%), & Clerical (13%) Non. Contractual $ 3, 597, 030. 60 10. 4% + $ 72, 101. 10

Revenue Trend 2016 -2019 Change in Assessment 2018 $ 879, 289, 212. 00 2019 $ 875, 764, 044. 00 Projected 2019 Revenue 33, 877, 831. 00 33, 115, 200. 18 $ 762, 540. 82 (2. 3%) decrease over 2018 Nov. Projected Revenue was 32, 701, 650. 18; increased revenues by $413, 550. 00 based on NRN projections 31, 996, 735. 00 31, 875, 109. 14 Anticipated Deficit $ 1, 429, 882. 81 ($34, 545, 082. 99 – $33, 115, 200. 18) Actual 2016 Actual 2017 Unaudited estimate Budget 2018 Proposed 2019 Budgeted Expenditures – Anticipated Revenues Decreased the deficit by $ 354, 511. 52

2019 Revenue Breakdown DEPARTMENT 2019 Budget % Total Property Taxes 12, 723, 545. 18 38. 4% Fines & Forfeits Local Enabling Taxes 11, 633, 850. 00 35. 1% Debt. Licenses 3%& Permits [CATEGORY 2% NAME] Miscellaneous Licenses & Permits 1, 020, 350. 00 3. 1% <[PERCENTAGE] 2% Intergov. Grants Overhead Service 5% Non Business Permits 110, 000. 00 0. 3% Waste Collection Fines & Forfeits 813, 000. 00 2. 5% 8% Insurance & Interest, Rent, Royalties 149, 000. 00 0. 4% [CATEGORY PILOT 22, 700. 00 0. 1% Pension NAME] Public Safety Local Enabling Taxes <[PERCENTAGE] Highways Intergov. Grants 1, 651, 065. 00 5. 0% 3% & Streets 35% [CATEGORY (Meters) Waste Collection 2, 766, 180. 00 8. 4% NAME] 1% General Government 313, 935. 00 0. 9% <1% Public Works Public Safety 926, 000. 00 2. 8% Police Highways & Streets (Meters) 370, 100. 00 1. 1% Culture & Recreation 74, 475. 00 0. 2% Fire Property Taxes Miscellaneous 541, 000. 00 1. 6% 39% 2019 Total Projected Revenues $ 33, 115, 200. 18

2018 v. 2019 Revenues REVENUE SOURCE Property Taxes Local Enabling Taxes Licenses & Permits Non Business Permits Fines & Forfeits Interest, Rent, Royalties PILOT Intergov. Grants Waste Collection General Government Public Safety Highways & Streets (Meters) Culture & Recreation Miscellaneous Fund Reserves Budget Totals Adopted 2018 12, 751, 229. 00 11, 285, 300. 00 1, 010, 700. 00 165, 360. 00 871, 000. 00 173, 342. 00 22, 700. 00 1, 516, 333. 00 2, 659, 872. 00 315, 786. 00 890, 500. 00 400, 100. 00 82, 500. 00 606, 000. 00 1, 127, 019. 00 33, 877, 741. 00 Prelim 2019 12, 723, 545. 18 11, 633, 850. 00 1, 020, 350. 00 110, 000. 00 813, 000. 00 149, 000. 00 22, 700. 00 1, 651, 065. 00 2, 766, 180. 00 313, 935. 00 926, 000. 00 370, 100. 00 74, 475. 00 541, 000. 00 33, 115, 200. 18 Variance % Change -27, 683. 82 -0. 2% 348, 550. 00 3. 1% 9, 650. 00 1. 0% -55, 360. 00 -33. 5% -58, 000. 00 -6. 7% -24, 342. 00 -14. 0% 0. 00 0. 0% 134, 732. 00 8. 9% 106, 308. 00 4. 0% -1, 851. 00 -0. 6% 35, 500. 00 4. 0% -30, 000. 00 -7. 5% -8, 025. 00 -9. 7% -65, 000. 00 -10. 7% -1, 127, 019. 00 -762, 540. 82 -2. 3%

2019 Revenue Breakdown Options for Revenue Generation: • PILOT for tax-exempt properties (voluntary) • Revised fee structure • • Administration – Charging $50 for Block Party Applications Recreation – New Hourly Park Permits Fee Structure and Facility Rental Fees Public Works – Increase Permit/Application Fees Codes Enforcement – Increase Fees for Rental Licenses and Plan Reviews; NEW Quarterly Pricing for Contractor Licenses and New Calculations for residential and commercial building permits (modifications/repairs only) • 2019 Fee Schedule to be Proposed on Dec. 18 Workshop Meeting

PILOT Analysis Payment in Lieu of Taxes • Voluntary payments made to compensate a government for some or all of the property tax revenue lost due to tax exempt ownership of use of real property 256 non-municipal tax exempt properties Category Non-Taxing Body tax-exempt properties Montgomery County properties Norristown Area School District properties Total Tax-Exempt Properties Total No. 229 20 7 Assessed Value $85, 893, 195. 00 $37, 249, 650. 00 $28, 020, 140. 00 Exempt Taxes $1, 262, 629. 97 $547, 569. 86 $411, 896. 06 $151, 162, 985. 00 $2, 222, 095. 88

Fund Balance Forecast § “The Municipality had a $1. 1 million deficit in 2018 and is leaning on its reserves to fill it. Absent corrective action, the deficit grows to $1. 8 million in 2020 and then $2. 4 million in 2021, before shrinking when debt payments drop in 2022” (Source: National Resource Network, 2018). $10. 0 $7. 8 $8. 0 Surplus/Deficit $6. 5 $4. 7 $6. 0 Millions $4. 0 $2. 0 $0. 0 $2. 3 $1. 7 $0. 9 $0. 0 ($2. 0) ($1. 3) 2018 Budget ($0. 6) ($1. 8) ($4. 0) Debt Service (in $ millions) Ending Fund Balance 2019 Projected ($0. 8) ($2. 4) 2020 Projected 2021 Projected 2022 Projected 2023 Projected 2018 2019 2020 2021 2022 2023 $4. 0 $3. 9 $1. 4 $0. 9 13

2019 Funding Proposal Combination Millage Increase & Fund Reserves Year Option 1: No Millage Increase Option 2: 0. 5 Mill Increase Option 3: 1. 0 Mill Increase Millage Increase Revenue Use from Reserves Fund Balance after Budget 14. 7 N/A $1, 429, 882. 81 $6. 4 M $423, 344. 34 $1, 006, 538. 47 $6. 8 M + $44. 42/year (3. 4% increase) $7. 2 M + $88. 84/year (6. 8% increase) 15. 2 15. 7 $846, 668. 68 $583, 194. 13 Avg. Impact on Prop. Owners No immediate impact Millage calculations are based on the average assessed property value of $88, 837. 90 and only reflect the average impact on property owners. 14

Millage Comparison Municipality Millage Value of 1. 0 Mill East Norriton (2018) 2. 727 $ 946, 644. 66 West Norriton (2018) 4. 475 $ 924, 738. 32 Montgomery County (2018) 3. 459 $ 59, 447, 715. 41 Norristown (2018) 14. 7 $ 879, 289. 21 Norristown (2019) 14. 7 $ 875, 764. 04 Calculations are based on Municipal/County Budget Presentations for 2018 15

2019 Budget Timeline 2019 Budget Adoption Fall 2018 Review Period Oct. 27 Nov. 26 1 st Budget Workshop 2 nd Budget Workshop Departments present their proposed 2019 budgets Discussion of current and new Revenue sources Nov. 28 & 29 Three Public Meetings for Residents to Comment on the Budget Nov. 29 SPECIAL Council Meeting Dec. 10 Public Comment Period Proposed Budget Presentation SPECIAL Council Meeting Potential Adoption of the Proposed 2019 Budget Dec. 18 Targeted for First Reading and Motion to Advertise Next Steps: • DEC 18 - Consider Adopting a Budget for Fiscal Year 2019 16