City Manager Budget Message
Fiscal Year 2014
To Mayor Barrett and Members of the Peoria City Council,
I am pleased to provide you with a recommended FY 2014 Annual Budget and 10‐Year Capital Improvement Program for the City of Peoria. These spending plans reflect our commitment to provide balanced services and amenities to our residents, while preserving our organization’s long‐term financial viability.
As the city continues to manage through a muted economic recovery, we are beginning to see signs of modest improvement to our five-year revenue picture. However, revenues are just keeping up with known costs, and restrict our ability to support additional commitments in the upcoming year. The recommended budget continues to “hold the line” in department budgets, yet can address core services and maintain levels of service our residents have come to expect. This balanced and strategic approach results in a spending plan that adapts to the changing needs of our community, without compromising our financial future.
Setting long-term priorities for the City is one of the most important responsibilities for Peoria’s elected officials. This past March, the City Council re-affirmed their 24‐month policy goals. These policy statements set the direction for the organization, and act as a touchstone for making financial and operational decisions to achieve community expectations. The following broad policy priorities are reflected throughout the recommended budget:Community Building
- Enhancing Current Services
- Preserving our Natural Environment
- Total Planning
- Economic Development
- Leadership and Image
Over the past few months, staff has provided Council with information briefings regarding significant policy issues. This includes discussions on economic development initiatives, and service discussions in anticipation of planned growth in Peoria. The recommended budget includes appropriate funding to begin addressing these new demands in a thoughtful and strategic manner, without disrupting our traditional existing services.
Each year, as part of the City’s strategic budgeting approach, department directors engage their employees to discuss trends, options, and opportunities for addressing citizen needs. Part of this includes an analysis to deter-mine the true cost of the services they provide. This information is included in the City Council budget workbooks at the beginning of each department section. Using this information, Department directors then align their work plans with council’s policy goals and submit associated budget requests to achieve desired performance outcomes.
The result is that the FY2014 recommended budget does not require notable spending reductions; but rather includes very modest additions to ensure service levels are maintained in our programs and activities. Also, the plan strives to maintain or replace existing assets as needed. Lastly, the city’s energetic economic development efforts continue to be funded in a manner that produces beneficial results. In seeking these pursuits, a special focus was placed to ensure that services and amenities are well balanced and distributed throughout the community.
Peoria's Fiscal Situation
The city’s revenue stream is largely influenced by overall economic conditions. The gradual national recovery that began unevenly in 2010 has continued at a very modest pace, hampered at times by nagging unemployment, federal policy indecision and European currency issues. There are, however, encouraging bright spots at both the national and state level, such as 1) improving home resale values; 2) modest improvements in job growth at the national level and slightly improved growth at the state level; 3) healthy gains in stock market indices, returning some lost wealth during the recession, and 4) improving purchases of big ticket items like automobiles that reflect a willingness on the part of consumers to spend again.
Locally improving consumer confidence has manifested itself in slightly higher-than-anticipated city sales tax collections during FY2013. We expect actual sales tax revenues for this fiscal year to exceed projections by almost 4 percent, with stronger performance in the retail (especially auto sales), restaurants and bars, and construction categories. For FY2014, we are forecasting roughly 2 percent growth in city sales tax revenues.
Property tax collections continue to be impacted by the local housing market. Although we are beginning to see home prices ticking upward, the lag between the time properties are valued and the time they are billed means we will see property tax collections decrease again in FY2014. Recent information from the County Assessor’s Office projects a 7.2 percent decline in the city’s assessed valuation in FY2014. We expect property tax collections to start increasing in FY 2015 and continue to increase in subsequent years.
The FY 2014 budget, therefore, employs modest assumptions of growth that reflect a steady but muted outlook. The budget assumes marginal increases in economic activity during this period. In addition, the budget conforms to national expectations that the economic recovery will continue.
Taxes, Rates and User Fees
Given the current economic climate, the budget as submitted strives to limit the financial burden placed on our residents. The FY 2014 recommended budget assumes no increase to property tax rates for the upcoming year. Likewise, the city sales tax rate remains at 1.8 percent.
In FY 2013, the city was able to reduce the residential solid waste rate by 13 percent. And going forward, no rate adjustments are anticipated in the near future. Water, Wastewater and Commercial solid waste rates are recommended to remain unchanged in the proposed budget. Overall, Peoria residents continue to enjoy comparatively low utility rates among Valley cities.
The city regularly evaluates its user charge system to ensure that we are assessing appropriate fees for the services we provide. For FY 2014, this analysis resulted in adjustments to a small number of recreation fees to help recover the full cost of these services per council policy.
Use of Fund Reserves
The Council‐adopted Principles of Sound Financial Management have established strong policies on reserve levels for our major operating funds. It is important to remember that much of these reserves are established to address immediate and dramatic fiscal difficulties. To address such emergencies, the budget includes contingency appropriation for crisis events, but does not apply any reserves to address recurring expenses. As a result, the budget remains compliant with the City’s stated Principles.
The city’s top priority is to preserve and enhance the high quality of life Peoria residents have come to expect. The FY 2014 budget provides the financial resources necessary to meet these expectations. One of the keys to any community’s quality of life is to develop a vibrant and diversified economic base, with both a qualified workforce and quality jobs. As such, investments have been recognized toward a number of economic development initiatives and projects.
An example of this investment was highlighted this last October, when Trine University announced that it will establish a branch campus in Peoria. The campus will offer undergraduate and graduate degrees in science, technology and engineering, and well as a variety of other programs that are in line with Peoria’s Higher Education Initiative.
The P83 Entertainment District Improvements project represents a first step in a proposed 400,000 square foot mixed-use, redevelopment project to be built on the west parking lot of the sports complex. Planned im-provements are designed to create a unique year-round, outdoor, family-oriented urban destination. The design of the first phase of this unique project is budgeted in FY2014.
Public safety is a critical component to our residents’ quality of life. This budget underscores the city’s ongoing commitment to this important local responsibility. The budget maintains the number of sworn police and firefighter positions. Yet two important positions are recommended to help provide public safety support. With the planned opening of Pioneer Park, a Park Ranger will be added to ensure a public safety presence at the Park. In Fire, a Management Analyst position is recommended to provide needed analytical support to the Fire Chief and fire operations. Additionally, we have supported a number of one-time requests by both the Police and Fire departments. This helps the organization continue its emphasis on a community-based policing approach, which proactively addresses neighborhood concerns while establishing vital relationships with community leaders.
These efforts will be supplemented by several other neighborhood-focused initiatives. Funding is provided to continue the successful Community Works program, which provides for small, targeted capital improvements that make an immediate difference. The neighborhood grant program is a partnership between the city and neighborhood organizations that results in aesthetic improvements to our neighborhoods. And the ever-popular Neighborhood Pride revitalization program is back for its 17th year, offering support to individual property owners.
New this year, a Human Services Coordinator position is recommended to evaluate the human and social service needs in our community and coordinate with service providers. There is a growing need to not only increase our collaboration and partnerships with our social service providers, but also provide a bridge for those in need of these services.
Peoria has long boasted premier youth‐related recreation programs and activities. Various after‐school programs, aquatic center activities, and special interest classes provide useful outlets for youths and teens in our community. While such services have been curtailed in other Valley cities, we have remained committed to providing affordable and enjoyable alternatives for Peoria’s young citizens. The planned opening of the City’s second Community Park, Pioneer Park, will add to the mix of recreation programs and opportunities available to our citizens.
Finally, the recommended budget includes some available funding for modest wage increases for city employees. The city is currently working with our four labor groups to finalize their agreements.
Capital Improvement Program
Each year the Council updates the Capital Improvement Program (CIP). The CIP provides a schedule of planned improvements over the next 10 years and identifies the revenue sources that will pay for those improvements.
The recommended CIP includes major investments in economic development, parks, roadways, public safety facilities, and water and sewer infrastructure. This includes funding for the construction of several major projects already underway, including Pioneer Community Park, renovations to the team clubhouses at the Peoria Sports Complex, and the widening and reconstruction of Lake Pleasant Parkway from Westwing Parkway to the Loop 303. All three of these projects are on track to be completed in FY 2014.
The city continues to improve Peoria’s transportation system. Aside from the Lake Pleasant Parkway, we are set to begin construction this summer of the Agua Fria Truck Road Reliever, a $10.5 million roadway that will reduce truck traffic on Beardsley Road. Maricopa County is moving forward with its extension of Deer Valley Road over the Agua Fria River, and we are already working on a project to mitigate the impacts of increased traffic on our residents in that area. We are putting the finishing touches on the widening of 83rd Avenue on the city’s southern boundary, and we are in the design phase of a similar project one mile to the east on 91st Avenue. Soon we will begin design of the half-street improvements to 103rd Avenue between Olive and Northern and two federally funded intersection widening projects on 75th Avenue—one at Peoria Avenue and the other at Cactus Road.
Perhaps the most exciting development in our capital program is the addition of a project to build the first phase of a community park in northern Peoria. This area is in need of lighted sports fields and other recreational amenities, and this project will address these deficiencies with amenities like the ones we are now building at Pioneer Community Park. Other parks and trails projects planned for the next year or two include the Camino a Lago Neighborhood Park, the 99th and Olive Trailhead, and various New River Trail connections.
Economic development has become a significant category within the capital program. This year we have added to the program the first phase of our P83 Entertainment District Improvements, as well as a project to build a parking structure as part of the redevelopment of the parking lot west of the Peoria Sports Complex. For FY 2014, we have funding to build El Mirage Road from its existing terminus at Vistancia Boulevard to Lone Mountain Parkway as a means to help jump-start development of this key investment zone. The CIP also includes funding required to meet requirements of the city’s agreements with BioAccel, Maxwell Technologies, and Trine University.
While supporting these higher profile new improvements, the program recognizes efforts to maintain existing city assets. The capital plan includes numerous ongoing programs and one-time projects to perform regular maintenance on infrastructure and to replace those assets that have reached the end of their useful lives. Examples include our IT network infrastructure projects, replacement of water slides at our swimming pools, rehabilitation of trunk sewer lines, and maintenance of our roadways.
In summary, the proposed budget totals $468 million, which represents a 1.06 percent decrease over the prior year. The budget for the general fund, the city’s primary operating fund, is $119.5 million—a 6.5 percent increase. The $154 million capital budget for FY 2014 represents a 9.6 percent decrease over the FY 2013 plan, while the 10‐year capital improvement program totals $524.5 million, a 13.2 percent increase over last year’s program.
Overall the outlook is continuing to improve. We’ve managed through the recession and our revenues are now growing, albeit slowly. I believe this budget underscores a commitment by all city departments to maintain service levels in our core services, and to implement cost-saving efficiencies wherever possible, while preserving those things that make Peoria great.
I wish to thank the City Council for their guidance and support throughout the development of this proposed budget. In addition, I wish to thank the Management and Budget Department staff, our deputy city managers, department directors, the Human Resources Department staff, and all of the employees of the city who have contributed by creativity and sacrifice to make the FY 2014 budget a reality.
Carl Swenson, City Manager
Download a PDF copy of the City Manager's Budget Message for 2014