Fiscal Year 2020 2021 Managers Recommended Budget FY

Fiscal Year 2020 -2021 Manager’s Recommended Budget FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 1

Agenda • Budget Development Strategy • Revenue Projections • Operating Budget • Capital Improvement Plan • Next Steps FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 2

Budget Development Strategy The priorities identified with this new budget are to: • Provide the resources and appropriate response to the COVID-19 pandemic • Maintain the services provided to the community • Expand investments in critical infrastructure • Overarching strategy is to be flexible and responsive to changing economic conditions and revenue impacts FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 3

Budget Development Strategy • Budget built around closing a $540, 000 gap caused by: • Impacts of the pandemic • Decreases in grant funding for fire staffing • Funding current year staff additions for full fiscal year • Recommendation includes: • Reductions based upon pandemic impacts such as large events • A series of line item reductions based upon current year actuals • Cuts in the operating budget that would be restored if possible mid-year • A group of budgeted items that are on hold for potential reductions based upon actual revenues • Identification of high priority needs-list items that could potentially be added mid-year FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 4

Budget Development Strategy • The items cut for pandemic impacts include: • Concerts on the Green/Taste of Davidson • Christmas in Davidson (Partial) • Public Art and Arts & Science Council Contribution • Line item reductions based upon current year actuals include motor fuels, monies for HVAC maintenance, and street light utility costs • Operating cuts identified for potential mid-year restoration include staff travel, board retreat facilitation, street resurfacing, monies for outside legal counsel and IT equipment FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 5

Budget Development Strategy Balancing Summary Travel and Tourism and Events Cuts Line Item Reductions 153, 200 Items for Potential Restoration 218, 576 Total 539, 276 167, 500 FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 6

Budget Development Strategy • The recommended budget also includes $214, 500 of items on hold for further evaluation as the fiscal year progresses • This represents an additional 10 percent reduction in sales tax revenue. These items include: • Police vehicle • Main Street Grants • Sidewalk maintenance • If there were further revenue challenges, then unassigned fund balance could be deployed to maintain core operations FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 7

Budget Development Strategy • Mid-Year Review and Potential Restoration and Additions • Items from list of cuts for restoration • High priority needs-list items: • Three percent merit pool • Police Lieutenant (Full Time Equivalent) – convert Patrol Officer position • Affordable Housing / Equity and Inclusion Position (Full Time Equivalent) FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 8

Draft Strategic Plan Goals • A Well-Planned and Livable Community - Preserve our rural area and create well-planned, dynamic community places with connected progressions between them. • Historic Preservation - Preserve our historic properties that contribute to our vibrant and unique community and honor the history of the lived experiences of our residents. • Connecting People and Places - Expand the town’s transportation network to provide residents and visitors with safe, convenient and efficient travel choices to connect people across the community. • Operational Excellence - Provide superior services in an efficient and fiscally responsible manner to our entire community through a professional and committed workforce. • Equity and Inclusion - Work together to create a culture of belonging, address our past inequities, provide opportunities for all, treat everyone with respect and dignity and recognize every voice. • Sustainability and Natural Assets - Implement and encourage innovative solutions to environmental, energy, and climate- based challenges. FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 9

Draft Strategic Plan Strategies • Develop a historic preservation master plan – pursuing grants • Establish an affordable housing manager/equity position – on hold for mid-year review • Use 2017 General Obligation bonds to fund infrastructure improvements – in Manager’s Recommendation • Develop land preservation tools and objectives that include: - staff time • Explore a “purchase of development rights program” • In partnership, create a voluntary agriculture district program in Mecklenburg County FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 10

Draft Strategic Plan Strategies • Formalize the growth management tiers map and annexation criteria from the Comprehensive Plan into Davidson’s Planning Ordinance – staff time • Implement targeted conditional zoning and use the fiscal impact study • Revisit the water/sewer policy • Develop an affordable housing plan – in Manager’s Recommendation • Develop a small area plan for downtown – on hold FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 11

General Fund Projected Revenues $12, 361, 832 FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 12

Revenue Projection Assumptions • Overall Decrease of 2. 4% (304 K) • Ad Valorem revenue increase of $365 K, which is 3. 5% over FY 2020 • 5. 4% increase in Ad Valorem Base • Tax rate unchanged at $. 29 per $100 of valuation • Reduction of projected collection rate to 98% Real Property and 99% Motor Vehicles • 15% Projected Reduction Due to COVID-19 • Sales ($305 K) • Prepared Foods and Occupancy ($70, 500) • No Fee Increases FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 13

Revenue Projection Assumptions (cont. ) • Allocates $71, 000 of Fund Balance for School Resource Officer at Davidson K-8 Vehicle and Equipment. • The final year of the Fire Department SAFER grant reduces the FEMA contribution from 75% to 35% of expenditures and the grant ends in December 2020, resulting in a $71 K reduction. • Interest earnings have reduced significantly. Projected interest earnings reduced from $200 K to $100 K. FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 14

Operating Budget - $12, 361, 832 FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 15

Operating Budget • Addition of School Resource Officer for Davidson K 8. Salary and benefits funded from CMS contract. • Personnel Cost Changes: • Health Insurance 9% increase • LGERS 1. 2% increase on total payroll for eligible employees • Workers Compensation reduction ($57 K under FY 2020 metric) due to improved experience modification • Fire Department Shift Commander and Arborist funded 50% in FY 20 Budget FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 16

Operating Budget • Continuum $1 million has been allocated: • $150 K to keep Solid Waste fee unchanged • $850 K to invest in infrastructure projects on voter approved debt • As reviewed earlier, cuts to budget were primarily operating FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 17

Capital Improvement Plan • Proactive approach to create a Community Investment Fund to fund capital projects on a go-forward basis • Fund revenues: • Nonrecurring - target of 50 percent of unassigned fund balance as of March 1 of current budget year • Original plan to fund a portion from recurring budget on hold • Policy Change for the board to allocate a portion of unassigned fund balance with the budget each year • Still leaves money for pop-ups FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 18

Capital Improvement Plan 19

Capital Improvement Plan FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 20

Capital Equipment Schedule FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 21

Budget Process Next Steps • Review all funds, CIP, fee schedule • Budget and Economic Development expenditures virtual public hearing at May 26, 2020 board meeting • Review budget at May 26, 2020 board meeting • Consider approval of Budget Ordinance at June 9, 2020 board meeting • Community member feedback opportunities: • Virtual Public hearing May 26 th • Phone, email, social media, Speak Up • Email: budget@townofdavidson. org FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 22

Discussion Questions? Any items for staff to research for the next budget discussion? Board discussion FY 2020 -21 Proposed Budget Jamie Justice, Town Manager & Piet Swart, Finance Director May 12, 2020 23