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Home My WebLink About4. Street Funding Plan- Finance Commission Recommendation 08/13/2013Village of Mount Prospect Mount Prospect, Illinois INTEROFFICE MEMORANDUM TO: MICHAEL E. JANONIS, VILLAGE MANAGER FROM: FINANCE DIRECTOR DATE: AUGUST 7, 2013 SUBJECT: REVISED STREET FUNDING PLAN At a joint meeting of the Village Board and Finance Commission held on July 9, 2Q13, the Finance Commission presented a recommended funding plan for the street resurfacing program. The funding plan called for a reallocation of a portion of the property tax and other tax and fee increases to be implemented over a two -year period. Below was the proposed implementation schedule for the original plan. Year One (2014) Reallocation of existing vehicle sticker revenue from General Fund to Streets ($1,385,000). • Reallocation and lowering of the 2013 property tax levy for refuse collection to General Fund (backfill lost vehicle sticker revenue). Reduction in property tax levy of $471,000. • Increase in the direct charge for refuse collection of $143 (backfill lost property tax revenue). Proposed annual fee increases from $100 to $243. Year Two (2015) • Increase local motor fuel tax $0.03 from $0.02 to $0.05. Additional revenue of $510,000 is generated. • Increase vehicle sticker $9.00 from $36.00 to $45.00. Additional revenue of $346,900 is generated. This funding plan met several goals set by the Finance Commission including the alignment of revenue sources with like expenditure items, and creating a pay -as- you -go scenario for the street program using existing and new revenues. Total new revenue generated under this proposed funding plan was $2.2 million. While the funding plan was sufficient to support the ongoing street program, it did not address the backlog of street resurfacing (now estimated at 11 miles). After considerable discussion the Village Board asked the Finance Commission to look into alternatives for revising the funding plan. Items to be considered included the use of available fund balance and step increases to the planned changes in user fees and taxes. The Finance Commission met again on July 25, 2013 where a revised funding plan was developed. Suggestions from the joint meeting were incorporated into the revised plan. The plan still calls for a reallocation of a portion of the property tax levy from the Refuse to the General Fund. Increases to taxes and user fees will be implemented over a five -year period under the revised plan and reserves from the Refuse and Street Construction Funds will be used. Revised Street Funding Plan August 7, 2013 Page 2 Below is the proposed implementation schedule for the revised funding plan. Year One (2014) • Reallocation of one -half of existing vehicle sticker revenue from General Fund to Streets ($692,500). • Reallocation of a portion of the 2013 property tax levy ($692,500) for refuse collection to General Fund (backfill lost vehicle sticker revenue). • Increase in the direct charge for refuse collection of $50 (backfill lost property tax revenue). Proposed annual fee increases from $100 to $150. • Utilize reserves in Street Construction Fund totaling $600,000 to supplement resurfacing program. Year Two (2015) • Reallocate balance of vehicle sticker revenue from General Fund to Streets ($692,500) • Reallocation of a portion of the 2013 property tax levy ($692,500) for refuse collection to General Fund (backfill lost vehicle sticker revenue). • Increase local motor fuel tax $0.02 from $0.02 to $0.04. Additional revenue of $340,000 is generated. • Increase vehicle sticker fee across all license types ($9.00 increase for passenger vehicles, from $36.00 to $45.00). Additional revenue of $350,000 is generated. • Utilize reserves in the Refuse Fund totaling $692,500 (backfill lost property tax revenue). Year Three (2016) o Increase in the direct charge for refuse collection of $50. Proposed annual fee increases from $150 to $200. Year Four (2017) o Eliminate balance of refuse collection tax levy ($471,000). Utilize reserves in the Refuse Fund (backfill reduction in tax levy). Year Five (2018) o Increase direct charge for refuse collection by $36. Proposed annual fee increases from $200 to $236. Attached is a table illustrating how the revised funding plan is to be rolled out. Available fund balances from the Street and Refuse Funds were used along with gradual increases to the various taxes and fees over a five -year period. Again, these revisions accomplish the goal of funding the ongoing street program into the future, but do not address the backlog of street resurfacing. Finance Commission Chair, Vince Grochocinski, and Village staff will be on hand to make a more detailed presentation on the materials and to answer questions and facilitate discussion. David O. Erb Finance Director H:\ACCT\BUDGET\Budget 2013 \Q1 and Mid -Year Review \Mid - Year \VB Revised Street Funding Plan.docx Village of Mount Prospect Finance Commission Street Fund Funding Recommendation - July 2013 General Refuse Street Const. Fund Fund Fund Total 2013 2014 2015 Current Funding - Vehicle Stickers 1,385,000 - - 1,385,000 Property Tax - 1,856,000 - 1,856,000 Refuse Direct Charge - 1,275,000 - 1,275,000 1,385,000 3,131,000 - 4,516,000 Year One - Vehicle Stickers Property Tax Refuse Direct Charge Fund Balance (Streets) Refuse Direct Charge Increase -yr. 1 (A) 692,500 (B) 692,500 1,163,500 - 1,275,000 (C) _ (D) - 650,000 1,385,000 3,088,500 692,500 600,000 1,292,500 1,385,000 1,856,000 1,275,000 600,000 650,000 NO . L" (A & B) Reallocate one -half of vehicle sticker revenue from General Fund to Street Improvement Construction Fund. Reallocate portion of refuse collection tax levy to General Fund. (C) Utilize fund balance in the Street Improvement Construction Fund. (D) Increase direct charge for refuse by $50.00 from $100.00 to $150.00, Year Two - Vehicle Stickers Property Tax Refuse Direct Charge Refuse Direct Charge Increase -yr. 1 Fund Balance (Refuse) Local MFT Increase Vehicle Sticker Increase (E) (F) 1,385,000 471,000 - 1,275,000 650,000 (G) _ 692,500 (H) ` 1,385,000 3,088,500 1,385,000 340,000 5,000 1,385,000 1,856,000 1,275,000 650,000 692,500 340,000 350,000 6,548,500 (E & F) Reallocate balance of vehicle sticker revenue from General Fund to Street Improvement Construction Fund. Reallocate portion of refuse collection tax levy to General Fund. (G) Utilize fund balance in the Refuse Fund. (H & 1) Increase local MFT $0.02 from $0.02 to $0.04. Increase in vehicle sticker across all license types to generate $350,000. Senior discount remains in place. Village of Mount Prospect Finance Commission Street Fund Funding Recommendation - July 2013 General Refuse Street Const. Fund Fund Fund Total 2016 2017 2018 Year Three Vehicle Stickers - - 1,385,000 1,385,000 Property Tax 1,385,000 471,000 - 1,856,000 Refuse Direct Charge - 1,275,000 - 1,275,000 Refuse Direct Charge Increase -yr. 1 - 650,000 - 650,000 Refuse Direct Charge Increase -yr. 3 (J) - 650,000 - 650,000 Local MFT Increase - - 340,000 340,000 Vehicle Sticker Increase - - 350,000 350,000 1,385,000 3,046,000 2,075,000 6,5016,000 (J) Increase direct charge for refuse by $50.00 from $150.00 to $200.00. Year Four Vehicle Stickers - - 1,385,000 1,385,000 Property Tax (K) 1,385,000 - - 1,385,000 Refuse Direct Charge - 1,275,000 - 1,275,000 Refuse Direct Charge Increase -yr. 1 - 650,000 - 650,000 Refuse Direct Charge Increase -yr. 3 - 650,000 - 650,000 Fund Balance (Refuse) (L) _ 471,000 _ 471,000 Local MFT Increase - - 340,000 340,000 Vehicle Sticker Increase - - 350,000 350,000 1,385,000 3,046,000 2,075,000 6,506,000 (K & L) Eliminate balance of refuse collection tax levy. Utilize fund balance in the refuse fund. Year Five Vehicle Stickers - - 1,385,000 1,385,000 Property Tax 1,385,000 - - 1,385,000 Refuse Direct Charge 1,275,000 - 1,275,000 Refuse Direct Charge Increase -yr. 1 - 650,000 - 650,000 Refuse Direct Charge Increase -yr. 3 - 650,000 - 650,000 Refuse Direct Charge Increase -yr. 5 (M) - 471,000 _ 471,000 Local MFT Increase - - 340,000 340,000 Vehicle Sticker Increase - 350,000 350 1,385,000 3,046,000 2,075,000 6,506,000 (M) Increase direct charge for refuse by $36.00 from $200.00 to $236.00.