03-04-19 Personnel and Finance (Tax Caps/Impact)

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•CITY OF SOUTH BEND OFFICE OF THE CLERK is operating expenditures. As you probably saw on that graph, operating expenditures continue to go up year after year. Salary and benefit costs continue to rise particularly with respect to health insurance. One(1)of the things you may remember from the Mayor's Address,he focused on was, yes, the rise of health insurance has slowed, but it continues to rise. And as the costs and fees go up,we have more and more pressure in the General Fund to cover the cost of that health insurance. There are also other operating expenditures and routine maintenance. The cost of maintaining streets, sidewalks, curbs, etcetera continues to outpace the revenue that we receive. The demand to continuously repair and replace curbs, sidewalks, and streets is outpacing our revenue in a variety of different funds. The last bucket of financial concerns for 2020 is Capital Expenditures. These are large scale capital projects that are already underway. Particularly My SB Parks&Trails is a large capital investment that the City already has underway and a continuation of large-scale upgrades and infrastructure, particularly sewers. There are several large projects and large capital investments that the City is already a part of, that are putting pressure on both operating expenditures in an era of declining revenue. I want to dive a little deeper into each of these three (3)buckets and I'm happy to answer any questions. He went on, The first (1St) bucket is revenue. So as I said, the revenue end you see in this graph (referencing the presentation), revenue in 2020 is expected to take a slight dip but then increase slightly from 2021 to 2023. This is as I said earlier, the General Fund, we sometimes call it the General Fund Plus,which are the Local Income Tax Funds.Those are generally the core operations of the government. If you expand this to the entire government, and look at the operating revenue for all funds, you'd see a very similar picture. This chart (referring to the presentation) is a projection of all operating revenue. So,when I say operating revenue,this excludes debt proceeds. A lot of times when you see numbers it will include, in revenue, the proceeds that we get from issuing debt.This does not include that. These are charges for service,tax receipts,and the ongoing operating interest revenue and the ongoing operating revenue that the City gets every year. A couple of things to note here are the differences between this chart and the previous chart. The budget for 2019 actually represents a decrease from our actual operating revenue from 2018. That is largely due to one (1) time revenues that we received in 2018. There were several large one (1) time revenues that we received in 2018 that are not expected to continue into 2019. For example, the most significant is a $4.5 million payment by INDOT with respect to SR 933. In taking over . the maintenance of SR 933, INDOT paid us a pretty large pay out for that particular project. While we did see a reduction from actuals in 2018, for our budget for 2019 we're seeing an even future reduction for our projection for 2020. That is the focus of where we are at. There is about a $4 million reduction in the overall projection for 2019 to 2020. He continued, The next logical questions are where that comes from? And, what is driving that revenue reduction? There are a number of different factors. The most significant of those is property taxes. I don't want to get too deep into this because we could have a whole two (2) hour session on the calculation of property taxes. I do want to show a little bit about how property taxes are calculated to show what the actual issue is that we will be facing next year. This top line here shows how each individual tax payers' gross annual taxes are calculated. The net assessed value of their property is just total assessed minus any deductions or exemptions that they may have. The net assessed value of their property times the total tax rate of all the units in their property is their taxing district. That's important that we talk about all units because the City of South Bend is one (1) taxing unit. But if you are paying property taxes you are paying property taxes to the County, the library, and school district. You're paying multiple property tax rates that all go into that total tax rate deduction. If the circuit breaker tax law had not been put into place, that would EXCELLENCE I ACCOUNTABILITY INNOVATION I INCLUSION I EMPOWERMENT 455 County-City Building 227 W.Jefferson Bvld South Bend,Indiana 46601 p 574.235.9221 f 574.235.91731 1 10574.235.55671www.southbendin.gov 3