FY 2019 2020 BUDGET PRESENTATION May 21 2019

FY 2019 -2020 BUDGET PRESENTATION May 21, 2019

FRAMEWORK PURPOSE 2 The City of Lancaster will serve the need of our citizens for a safe & healthy environment to live, work and play by VISION N O providing high. I S S I M quality, cost effective fy and y i t n e d ll i nit services in areas We wi to commu the of public safety; n nd respo and focus oer public water, needs zen/custom sewer and solid citi h: The City will strive for a throug balance between small ing waste utilities; n n a l p tegic and public g n i * Stra ainta ipsadministration. town charm and large city m / g n h ti benefits. We will partner * Crea ve partners i with citizens and effect aining t e r / g businesses to make this ctin and * Attra motivated s a community of choice , e skilled g employe for living, working and carin leisure.

FOUNDATION Despite the continual challenges the City faces, there a number of positive projects and initiatives underway which strengthen the City’s infrastructure and overall quality of life for citizens. 3

FOCUS Budget Development Grant/Capital Projects Statistics Fee Changes Budget Summary Employees § § § § 4 Council Goals Impact Budget – All Funds Highlights General Fund Hospitality Tax Fund Gross Revenue Fund Solid Waste Fund Budget Re-cap Future

BUDGET DEVELOPMENT February March - Budget Calendar recommended presented to Council for adoption - Departments receive budget packets - Council holds annual Goals Session - Departments finalize and submit budget requests - Finance Director prepares a comprehensive working budget document - City Administrator reviews and finalizes the working budget document for distribution to the Finance Committee May - City Administrator & Finance Director finalize recommended budget - Recommended Balanced Budget document is distributed to Council - Finance Committee reviews recommended budget - Council Budget Workshop for Budget Presentation June - Finance Committee review for first reading - First Reading of Recommended Budget - Public hearing - Second reading and adoption of budget 5 April - Finance committee reviews department requests and initial revenue projections and makes requests for other funding - Staff researches alternative funding sources & identifies inefficiencies - Department budget reviews with City Administrator and Finance Director

BUDGET DEVELOPMENT EXPENDITURES …and keep expenditures down until we do. aw to operate ed by l We are requir REVENUES We need to find ways to increase revenue… 6 udget ordinan u al balanced b nder an annu ce. CCC

STATISTICS OVERLAPPING MILLAGE RATES City of Lancaster Direct and Overlapping Governments Last Ten Fiscal Years Fiscal Year 2010 City of Lancaster 143. 50 Lancaster County School District 172. 00 Lancaster County 80. 90 University of South Carolina - Lancaster 3. 30 Total 399. 70 2011 143. 50 175. 25 83. 60 3. 40 405. 75 2012 143. 50 183. 50 83. 00 3. 60 413. 60 2013 149. 70 187. 00 85. 10 3. 80 425. 60 2014 154. 70 188. 00 90. 41 3. 95 437. 06 2015 156. 90 192. 50 92. 80 4. 10 446. 30 2016 164. 40 202. 50 94. 30 465. 5 2017 176. 4 217. 5 91. 20 4. 30 489. 40 2018 178. 5 217. 5 95. 60 4. 50 496. 10 2019 172. 9 219. 5 97. 5 4. 7 494. 60 CCC 7

STATISTICS ORIGINAL BUDGET – 5 YEARHISTORY City Financial Profile 2014/2015/2016/2017/2018/2019 Recommended 2019/2020 $22, 483, 095 $24, 883, 922 $33, 560, 355 $23, 393, 520 $22, 483, 095 $25, 121, 000 General Fund $12, 291, 748 $11, 737, 917 $11, 290, 804 $12, 324, 940 $12, 291, 748 $11, 749, 900 All Funds FTE Employees 182 160 162 177 182 Millage Rate 156. 9 164. 4 176. 4 178. 5 172. 9 CCC 8

BUDGET SUMMARY FY 20 Council Goals - Impact Must Do #1 Explore Public/Private Partnership Opportunities with the Chesterfield Could Do#2 a Appropriate $150, 000 for Hospitality Tax Grants Could Do#2 b Provide Assistance to the Cultural Arts Center Expansion Project Budget Impact: $300, 000 Note: This is included as HTAX grants in the recommended budget. 9

BUDGET SUMMARY q FY 20 Council Goals - Impact q Should Do#3 Phase In Implementation of the Evergreen Comp & Pay Study Budget Impact: Phase 1 - $278, 705 q Must Do #3 a Develop a 2020 Census Outreach Program Budget Impact: $2, 000 q Should Do #2 Implement and Enforce Truck Restriction Routes & Deploy Effective Signage Budget Impact: $2, 000 10

BUDGET SUMMARY 2019 -2020 Recommended Budget CCC 11

BUDGET SUMMARY FY 20 - Highlights q All Funds • Implement Phase 1 of the Compensation Restructure q General Fund • No Millage increase • Decrease in the local option sales tax credit factor to 0. 003723 • Building & Zoning Fees updated throughout q Hospitality Tax Fund • Includes 300, 000 for grants q Gross Revenue Fund • No Rate Increase • New Fee for Meter Checks - $25. 00 • New Fee for dewatering and solid waste removal q Solid Waste Fund • No Rate Increase 12

BUDGET SUMMARY FY 20 - Highlights Salaries & Benefits q Compensation • Recommending Phase 1 of the Compensation Restructure per the Evergreen Compensation & Pay Study • Recommending cost of living increase for employees not affected by Phase 1 of the Compensation Restructure q 1% Increase Employer Retirement Contribution q No increase in Health Insurance Premiums q Employee benefits eliminated • Education Reimbursements • Wellness • YMCA Memberships q Staffing Levels 13 • • • New Position - Public Safety IT Technician New Position - Part-time Associate Judge Reclassify – Performing Arts Manager as Part-time Eliminate Field/Recycling Coordinator Create Transfer Station Superintendent

GENERAL FUND Budget Trend 13, 000 12, 500, 000 11, 797, 598 12, 000 15. 0% 11, 441, 820 12, 471, 155 11, 749, 900 11, 290, 804 11, 500, 000 5. 0% 10, 951, 894 11, 000 4. 5% 10, 500, 000 10, 000 10. 0% -0. 2% -5. 4% 0. 0% -4. 3% -5. 0% -3. 0% 9, 500, 000 9, 000 -10. 0% 8, 500, 000 8, 000 -15. 0% 2015 2016 2017 2018 GF Original Budgeted Expenditures 14 2019 % change 2020 Rec

GENERAL FUND The City continues to endure lingering constraints and the loss of tax revenue, which lessens the elasticity and flexibility normally associated with good budgeting. FY 2018 -19 Current Budget* $11, 844, 000 FY 2019 -20 Recommended Budget $11, 749, 900 Difference (94, 100) Decrease (. 79%) *Current Budget includes amendments approved by City Council since the budget was adopted. 15

GF - REVENUE CHANGE FY 20 Recommended FY 19 Budget GF Operating Budget (w/o capital projects Capital Purchases Total GF Budget Current Revenue Sources Other Financing Sources Change % Change 10, 912, 420 10, 253, 900 (658, 520) (6%) 931, 000 1, 496, 000 565, 000 60% 11, 843, 420 11, 749, 900 $ 10, 622, 420 (93, 520) (. 80%) $ 9, 877, 000 $ (995, 420) (6. 5%) -0 - 50, 000 Downtown Reserves 120, 000 85, 000 (35, 000) (29%) Use of Fund Balance CIP 894, 000 1, 496, 000 602, 000 67% Use of Fund Balance Other 207, 000 241, 900 34, 900 17% $11, 843, 420 $11, 749, 900 Total GF Revenue 16 (. 80%)

GF - REVENUE BY TYPE Charges for services Intergovernmental 2% 4% Interest 1% Other 1% [CATEGORY NAME] [PERCENTAGE] Taxes Fines, fees, licenses & permits Intergovernmental Charges for services Interest Other Fund Balance 17

GF - MILLAGE IMPACT Millage FY 18 FY 19 FY 20 Operating 166. 5 172. 9 - Special Reserves 12. 0 - - Total Millage 176. 4 172. 9 - 172. 9 No tax millage increase The use of unassigned fund balance: change § to offset the loss of tax revenue; § to bring the unassigned fund balance in compliance with the City’s policy of between 40% - 60% of budgeted expenditures. Reduces the Property Tax Credit factor from. 003900 to. 003723 due to less than expected revenue from the State Property Tax Credit Fund Increases net taxes $22. 74 on $100 k home/$30 k vehicle § Example in subsequent slide. 18

GF - *TAX EXAMPLE – 4% CITY OF LANCASTER PROPERTY TAX EXAMPLES Data An Owner Occupied Home with a market value of: Vehicle Value Item Current Projected Taxing Data Assessment Ratio - Home Assessment Ratio - Vehicles Assessed Value - Home Assessed Value - Vehicles Tax Rate in Mils Sales Tax Credit Factor 4. 00% 6. 00% $4, 000. 00 $1, 800. 00 172. 9. 003900 4. 00% 6. 00% $4, 000. 00 $1, 800. 00 172. 9. 003723 Tax on Home Gross Tax Minus Credit Amount = Net Tax (+) (-) (=) $17. 70 $691. 60 $390. 00 $301. 60 $691. 60 $372. 30 $319. 30 Tax on Vehicles Gross Tax Minus Credit Amount = Net Tax (+) (-) (=) $5. 04 $311. 22 $117. 00 $194. 22 $311. 22 $111. 96 $199. 26 Tax Gross Tax Minus Credit Amount = Net Tax (+) (-) (=) $22. 74 $1, 002. 82 $507. 00 $495. 82 $1, 002. 82 $484. 26 $518. 56 Profile $100, 000 19 $30, 000

GF - *TAX EXAMPLE – 6% CITY OF LANCASTER PROPERTY TAX EXAMPLES Profile Data 6% Rental Property $100, 000 Item Current Projected Taxing Data Assessment Ratio - Home Assessed Value - Home Tax Rate in Mils Sales Tax Credit Factor 6. 00% $6, 000. 00 172. 9. 003900 Tax on Home Gross Tax (+) $1, 037. 40 Minus Credit Amount = (-) $390. 00 $372. 30 Net Tax (=) $647. 40 $665. 10 $17. 70 20

GF - EXPENSE BY TYPE Recreation Code Enforcement 1. 4% 2. 4% Public Works 7. 3% [CATEGORY NAME] [PERCENTAGE] Judicial /Court 3. 3% General Government 29. 5% Public Safety 41. 7% General Government Judicial /Court Recreation Capital Outlay 21 Debt Service 1. 6% Public Safety Code Enforcement Public Works Debt Service

GF - EXPENSE BY CLASSIFICATION [CATEGORY NAME] [PERCENTAGE] Personnel 22 Operating Debt CIP

GF - BALANCE UNDESIGNATED FUND BALANCE as a % OF EXPENDITURES Fiscal Year End Unassigned Fund Balance is compared to the subsequent fiscal year budgeted expenditures City Policy Minimum 40% City Policy Maximum 60% Fiscal year End 2018 72% Projected Fiscal Year End 2019 65% Projected Fiscal Year End 2020 55% FY 2019 – 2020 Recommendation: • Appropriate fund balance for CIP and Phase 1 of Compensation Restructure • Future fund balance trend will depend on recouping tax revenue with anticipated new development 23

GF - CAPITAL OUTLAY Department Item Cost Police Vehicles – four (4) @ 30, 500 122, 000 Police Vehicle Equipment – four(4) @ 28, 000 112, 000 Fire Truck to replace 2012 Tahoe Fire Engine to replace 1997 KME Pumper 50, 000 950, 000 Buildings & Grounds Attachment for Vehicle #362 – Internments Streets Leaf Truck to replace Vehicle #295 Streets Truck to replace Vehicle #435 – Chevy 205, 000 Total 24 17, 000 40, 000 1, 496, 000

GF - DEBT SERVICE TYPE Fire Truck BALANCE FINAL PAYMENT 122, 960 4/15/20 Motorola Dispatch Console 96, 881 3/01/21 Johnson Controls Lease 42, 467 7/11/21 TOTAL Rounded to the nearest dollar 25 $262, 308

HOSPITALITY TAX FUND All dollars in the Hospitality Fund are restricted, as required, and can only be used to fund tourism related expenditures that comply with Section 6 -1730 of the South Carolina Code of Laws, 1976, as amended. Primary revenues § Two percent (2%) local hospitality fee tax upon the gross proceeds derived from the sale of all prepared foods and beverages served within the City of Lancaster § Ticket sales from the City’s Performing Arts Series. Primary expenditures § Grants § Event promotion and execution § Performing Arts program. 26 Recreation 47% [CATEGORY NAME] [PERCENTAGE ]

HOSPITALITY TAX FUND RECOMMENDED BUDGET FY 2018 -19 Current Budget* $1, 095, 845 FY 2019 -20 Recommended Budget $1, 012, 025 Difference (83, 820) Decrease (8%) *Current Budget includes amendments approved by City Council since the budget was adopted. 27

HOSPITALITY TAX FUND ASSUMPTIONS o Hospitality Tax budget is 8% less than FY 19. o Projected Revenues: Hospitality Tax Revenue - 7% increase Performing Arts - 7% decrease o Estimated Fund Balance $800, 000 o Use of fund balance -0 - o Includes funding for Phase 1 of the Compensation Restructure o Includes 300, 000 for grants; § 150 K for Projects & Events § 150 K for Capital Projects and Infrastructure o Limited performing arts programs 28

E 911 FUND FY 2018 -19 Current Budget* - 0 - FY 2019 -20 Recommended Budget $60, 000 Difference 60, 000 Highlights o Nothing was budgeted in the E 911 Fund for FY 2019 in anticipation of migrating to the Lancaster County 911 system o The City continued to receive E 911 Funds throughout 2018 -2019 o The projected fund year-end fund balance is 68, 000. Recommendation o Use fund balance to purchase CAD software 29

GROSS REVENUE FUND RECOMMENDED BUDGET FY 2018 -19 Current Budget (less EPA Projects) * $8, 709, 382 FY 2019 -20 Recommended Budget $8, 903, 059 Difference 193, 677 Increase** 2% *Current Budget includes amendments approved by City Council since the budget was adopted. **The increase is due primarily due to: § Matching fund for the Water Line Replacement Project § Phase 1 of the compensation restructure § re-allocating salaries and operating functions 30

GROSS REVENUE FUND - SUMMARY FY 20 Recommended FY 19 Budget Change % Change GR Operating Budget (w/o Capital projects) $ 7, 920, 382 $ 8, 282, 759 $ 1, 153, 877 Capital purchases 789, 000 620, 300 (168, 700) Total GR Budget (less EPA projects) 8, 709, 382 8, 903, 059 985, 177 GR Revenue Other Financing Sources - Grant Use of Capital Replacement Reserves Total Gross Revenue 7, 265, 600 7, 990, 350 724, 750 654, 782 481, 000 789, 000 431, 709 $ 8, 709, 382 $ 8, 903, 059 $ 193, 677 - 31 - 5% (21%) 2% 10% (27%) (45%) 2%

GROSS REVENUE FUND EXPENSE BY CLASSIFICATION [CATEGORY NAME] [PERCENTAGE] Recommended Budget: $8, 903, 059 32

GROSS REVENUE FUND CAPITAL OUTLAY Department Item Cost WW Treatment Mower – Ferris 61” Stander 8, 000 17, 000 WW Treatment Repave WWTP entrance 35, 000 WW Treatment Replace Truck 427 4 x 4 quad cab 70, 000 WW Treatment Major Blower overhaul and service WW Treatment 16” Crown Influent Pump 400, 000 WW Collection Combination Sewer Jet / Vac Truck 53, 100 WW Collection Case Sr 240 Skid Steer WW Collection TR 300 Hudson HTMBG 7 Ton Deckover Trailer TOTAL 33 30, 000 7, 200 $620, 300

GROSS REVENUE FUND DEBT SERVICE TYPE BALANCE FINAL PAYMENT Johnson Controls/AAIG 684, 378 7/11/21 SRF #3 - WWTP & Line Upgrade 206, 829 10/1/21 SRF #4 - Sewer Line Upgrade 265, 907 10/1/23 SRF #5 - WWTP Expansion 2, 890, 316 3/1/28 SRF #6 – Sewer Basin 18 Rehab 3, 457, 836 11/1/47 SRF #7 – Sewer Basin 17& 23 Rehab 2, 489, 903 12/1/48 TOTAL Rounded to the nearest dollar 34 $9, 995, 169

GROSS REVENUE FUND ASSUMPTIONS o o No rate increase Updates Fee Schedule Section 2. 08 – Water Connection Fees Establish a fee for meter tests; City Code, Sec 28 -94 (d) Establish fee for drying and disposal of discharge drop off at the Wastewater Treatment Facility Provides for o o 35 The distribution of water Collection & treatment of wastewater 5, 900 customers Maintenance and Repair of the City’s water distribution and wastewater collection systems and wastewater treatment plant

SOLID WASTE FUND FY 2018 -19 Current Budget* $3, 052, 408 FY 2019 -20 Recommended Budget $3, 396, 295 Difference 353, 887 Increase ** 11% *Current Budget includes amendments approved by City Council since the budget was adopted. **The increase is due primarily due to: § Capital Outlay § Phase 1 of the compensation restructure § re-allocating salaries and operating functions 36

SOLID WASTE FUND - SUMMARY FY 20 Recommended FY 19 Budget SW Operating Budget (w/o Capital projects) $ 2, 534, 408 $ 2, 558, 295 Capital purchases 838, 000 518, 000 Total SW Budget 3, 052, 408 GR Revenue 3, 396, 295 Other Financing Sources 2, 427, 000 2, 558, 125 335, 000 Use of Capital Replacement Reserves 290, 408 838, 170 Total Gross Revenue $ 3, 052, 408 $ 3, 396, 295 - 37 Change % Change 320, 000 61% 343, 887 11% 131, 125 5% (335, 000) 547, 762 $ 343, 887 11%

SOLID WASTE FUND ASSUMPTIONS o No rate increase o Establish late payment penalties – Fee Schedule Section 3. 07 Provides for o The residential & commercial trash pick-up o Transfer Station operations 38

SOLID WASTE FUND EXPENSE BY CLASSIFICATION [CATEGORY NAME] [PERCENTAGE] Recommended Budget: $3, 396, 295 39

SOLID WASTE FUND CAPITAL OUTLAY Department Solid Waste Admin Transfer Station Item Mack - Semi Truck 3 @ 130 K Ford F-350 Satellite Garbage Dumper Transfer Station Building to Cover C & D Chute Case Backhoe to Replace Vehicle #564 Cost 390, 000 35, 000 70, 000 265, 000 78, 000 TOTAL $838, 000 40

SOLID WASTE FUND DEBT SERVICE TYPE BALANC E FINAL PAYMENT $62, 211 10/15/20 2017 Lease – Walking Floor, Tractor & Truck $349, 255 6/30/23 TOTAL $411, 466 2015 Lease -2 Mac Truck Tractors Rounded to the nearest dollar 41

GRANT PROJECTS o CDBG DEMOLITION – Carry over from 2019 o CDBG Waterline Replacement 42

FEE SCHEDULE CHANGES Section Description Change Fee Amount 1. 02 Local Option Credit Decrease . 003723 2. 08 Water Connection Fees Increases Various 2. 09 Meter Test New $25. 00 2. 13 Discharge Drop off Drying & New Disposal 100 plus disposal costs 3. 07 Sanitation Late Payments New 10% UB Bill 1. 5% Transfer Station 4. 01 - 4. 06 Building & Zoning Fees Increases Various 43

EMPLOYEES The single most important asset that the City has is its workforce. The recommended budget acknowledges the value of skilled , motivated and caring employees and the need to address critical workforce related issues including competitive pay, cost of living adjustments and retention of qualified employees. 2018 -2019 Classification and Pay Study o Determined the City’s workforce was paid about 30% less than market which included peer municipalities and the private sector 44

BUDGET RE-CAP o All Funds - $25, 121, 000 § Implement Phase 1 of the Compensation Restructure o General Fund - $11, 750, 000 § No Property Tax Increase § Reduce Local Option Credit -. 003723 § Use of Reserves incompliance with City Fund Balance Policy o Hospitality Tax Fund - $1, 012, 000 § 300, 000 Budgeted for Grants 45

BUDGET RE-CAP o E 911 Fund - $60, 000 § Appropriates Carry-over funds o Gross Revenue Fund - $8, 903, 000 § No Rate Increase § Fee Schedule Updated o Solid Waste Fund - $3, 396, 000 § No Rate Increase § Fee Schedule Updated 46

FUTURE o Capital Utility Projects - supporting growth, attracting industries and bringing about annexation o Downtown Development Plan - involvement and leadership are essential o Housing Stock – Anticipating 2 Housing Developments o Compensation Restructure - Phase 2 & 3 essential to retaining qualified employees as well attracting the best and brightest future workforce 47

REMAINING BUDGET CALENDAR • June 6 Finance Committee – to discuss prior to 1 st reading Thursday – 4: 15 PM • June 7 Lancaster News Public Hearing Notice • June 11 First Reading – FY 2019 -2020 Annual Budget Ordinance Tuesday – 7: 00 PM • June 18 Tuesday – 7: 00 PM Public Hearing - FY 2019 -2020 Annual Budget Tuesday – 7: 00 PM Second & Final Reading – FY 2019 -2020 Annual Budget Ordinance • July 1 Start of New Fiscal Year • June 25 48

QUESTIONS? COMMENTS? CONCERNS?