June 3, 2002
The Honorable Mayor and City Council
Citizens of Gaithersburg
I am pleased to submit the City Budget for Fiscal Year 2003. This budget allocates the resources necessary to implement the majority of our Strategic Direction initiatives as refined annually by the Mayor and City Council. Considerable effort has once again been made to prioritize our expenditures in line with the Strategic Plan, in order to deliver the highest possible value from our revenues. Those elements of the current adopted plan not funded in this budget are being studied for implementation in the coming years.
For the 38th consecutive year, the City's budget can be funded without a tax rate increase. Once again we propose to adopt a real property tax rate of $.212 per $100 of assessed value. Additionally, the ad valorem tax on tangible personal property would remain at the rate of $.53 per $100 of assessed value. This budget continues our policy of maintaining a constant tax rate and our "pay as you go" philosophy relative to our City's finances.
The Operating Budget grew at a slower pace than in recent years and the Capital Budget experienced a second consecutive decrease in anticipation of major expenditures planned for the Fiscal Years 2004 through 2006. The budget also reflects an overall reduction in state and county funding of capital projects.
In brief, the City Operating Budget has grown by $960,162 and is $26,406,806, a 3.8 percent increase over the previous year. This increase reflects the normal growth of expenses associated with City personnel and the provision of City services, as well as a number of new, priority initiatives.
The City's Capital Budget decreased by $3,584,239 and is now $4,444,911, a 44.6 percent reduction.
Reappropriation of excess revenue and unexpended operating funds is $3,574,172, which assists in the funding of the FY 2003 Budget. This is $156,442 less in reappropriation compared to the FY 2002 Budget. These additional funds are (as they were in FY 2002) substantially attributed to a specific Capital Improvement Project - Lakelands Park. Approximately $836,550 of escrowed monies from developers is being used to fund various Capital Improvement Projects, as compared to $309,000 in FY 2002.
Staff continuously strives to obtain the best available economic data relating to our revenues and expenditures. It has been clear for some time that, at current levels, the spending plans anticipated as recently as two to three years ago would have to be re-examined. We feel that this budget allows us to keep an acceptable level of reserves, maintain a consistent tax rate, and avoid debt, while still providing a high level of core services and adding major Capital Improvement Projects.
Funding of the construction and subsequent staffing and operations of new facilities, including Lakelands Park, Lakelands Recreation Center and the Gaithersburg Youth Center, is the single greatest fiscal challenge facing the City in the coming years. Careful evaluation of all current and potential revenue sources must take place prior to the FY 2004 Budget process.REVENUES
A combination of economic forces, an expected reduction in building and development fees, and historically low interest rates have resulted in an actual reduction in forecasted revenues for FY 2003. Staff had already begun to identify these trends and implemented cost-saving measures during FY 2002. Gaithersburg's real property and income tax bases remain strong and are expected to grow in the coming year. Other revenues received, including shared taxes, licenses and permits, and charges for services, are growing at a lesser rate than in previous years. Development-related fees and revenues from interest on the investment of City funds will be substantially less than the previous year. We continue to balance realistic revenue goals in our decision-making processes. For FY 2003, we project an 8.3 percent decrease in overall revenues, as compared to a 5.8 percent increase for FY 2002. Some of this decrease is attributable to the reduction in state funding for capital projects.
We were pleased in FY 2001 to receive grant funds from federal, state and county sources for the proposed Judy Center, Olde Towne initiatives, public safety, recreation, education and the arts. We will continue to pursue additional grant fundings for as many City programs as possible, and have proposed that additional staffing (described below) be utilized to further develop this increasingly-important source of funds.OPERATING BUDGET
The City's Operating Budget increased 3.8 percent over last year's budget. This increase funds new initiatives (outlined below), provides adequate funds to compensate employees fairly, and provides for contingencies for unexpected expenditures. Although many departments requested additional personnel, no new full-time positions are included in this budget. It should be noted that a number of positions were added mid-year in FY 2002 to provide necessary services. These included a Facilities Operations Specialist (supporting both the Kentlands Mansion and the Arts Barn), an Accounting Technician (upgraded from employment agreement), a Recreation Technician, and a Planner (upgraded from part-time to full-time).
In support of our role as a service-oriented local government, we have appropriated approximately 67.1 percent of the FY 2003 Operating Budget to personnel services. Two additional employment agreement positions, a Grants Writer and a Non-Profit Fundraising Advocate are included in this Budget. The Grants Writer position is expected to result in additional grant revenue well in excess of the position's cost, and the Non-Profit Fundraising Advocate's role will be to assist community groups in decreasing their dependence on City funding.
With the expected opening of the Arts Barn in the spring of 2002, support staff included in the FY 2002 budget, but who were not hired, will be brought on soon. These part-time positions include an Arts Program Coordinator and three part-time Receptionists.
Several positions were downgraded or eliminated from the budget for the coming year. These include the Business Systems Analyst (from full-time to employment agreement), a Permit Analyst (eliminated), and Recreation Staff Assistant (from full-time to part-time).
The Gaithersburg Arts Barn opened in the spring of 2002. A full complement of staff is currently being hired. FY 2003 will be the first year the Barn will have a full operating budget. The operation of the Barn will be monitored closely to identify programs that provide revenue offsets while maintaining the facility's programmatic goals.
Enhancements to the Parks, Recreation and Culture budget include transfers of positions in Administrations, Recreation Programs, Youth Services, and Special Events. These changes will result in cost savings and in better allocation of staff resources. Activities undergoing major revisions include Recreation Programs due to the elimination of the Basketball Exchange Program, National Junior Tennis League, and Baseball Clinic. Additionally, several adult sports programs have been restructured.
A number of significant changes appear within the Public Works, Parks Maintenance and Engineering Department budget. Utility costs continue to rise dramatically and alternative purchase options are being explored and conservation measures taken. Costs relating to privatization of the yard waste program, as well as an increase in the recycling contract exceeded $80,000. Additional City facilities have been added to the security contract, which will result in increased costs.
The Planning & Code Administration will conclude the Master Plan process in FY 2003. Printing and binding of the plan are budgeted at $15,650. Staffing change includes the upgrade of a part-time Planner position to full-time.
In FY 2003, the Police Department will commence implementation of the Mobile Data Terminal (MDT) program. The MDT's will allow City officers upgraded access to records and state-of-the-art call dispatching capabilities. Replacement funds for MDT's, police radios and vehicles have necessarily increased ($137,000) in order to keep pace with the higher cost of replacing the more advanced equipment.
The Information Technology Department, in addition to assisting the police in the implementation of the MDT's, will begin a pilot document management program. Document management will allow for easier storage and retrieval of appropriate documents.
In Olde Towne, staff has been working with the Olde Towne Advisory Committee to explore the feasibility of a clock tower and plaza at Olde Towne Park. A preliminary design for the tower, as well as restoration of the historic clock purchased by the City in 1998, are scheduled to occur in FY 2003. A sidewalk project along West Diamond Avenue, funded through a Smart Growth Transit Grant, will also be completed.
CAPITAL IMPROVEMENT PROJECTS
This year's budget includes continued funding for a number of important Capital Improvement Projects. Extension of the capital plan through FY 2007 is presented for each activity in the budget. Because of the scale of upcoming capital projects scheduled for FY 2004 through FY 2006, as well as the completion of the state and county funded projects in Olde Towne, the FY 2003 capital plan is substantially less than in any of the last three years.
Lakelands Recreation Center is by far the largest capital project facing the City in the coming years. The estimated cost of the project now approaches $10 million. As indicated previously, numerous other CIP initiatives were rescheduled or eliminated in order to provide funding for this project. Additionally, the FY 1999 to FY 2002 budgets were artificially high due to extraordinary contributions from the county and state.
- Lakelands Park - Site work and construction of the lighted ball fields, irrigation system, outbuildings, and playgrounds are scheduled for FY 2003 at a cost of $3 million. The park is located on Main Street in Lakelands.
- Lakelands Recreation Center - The FY 2003 Capital Improvement Projects Budget allocates approximately $2,000,000 for this project, to be located at Route 28 and Edison Park Drive. In FY 2004 and FY 2005, $2,400,000 is allocated each year. In FY 2006, an additional $3 million will be needed to complete the project. To supplement City funds, the next four years' expected Maryland Program Open Space contributions will be used for the project. An architectural and engineering contract for design of the facility will be awarded in FY 2003 at an expect cost of $560,000.
- Gaithersburg Youth Center - The State of Maryland provided $250,000 in funding in FY 2002 and an additional $350,000 was requested for FY 2003. The total estimated cost of the facility has risen to $1, 600,000. State funding was not received, and an alternative plan was developed to attempt to keep the project on schedule. In FY 2004, completion of the design of the facility is scheduled to occur, with construction to commence in FY 2005. This plan also assumes a contribution from the State, which will be requested during the next legislative session.
- Technology Projects - As described previously, the Police MDT Program is a major investment of City funds. More than $900,000 is budgeted in this CIP over the next two years for MDT's, 800MHz police radio's, software upgrades and several, smaller projects intended to improve City operations.
- Landscape Improvement - In FY 2003, $150,000 is budgeted in this CIP. Funding supports continuation of the Muddy Branch Road project as well other City landscape projects.
- Stormwater Management - Construction of the Brighton Weir is anticipated in FY 2003. This project represents $350,000 of the $650,000 budgeted in this CIP
- Traffic Calming and Signalization - The major expenditure for FY 2003 is a traffic roundabout at Victory Farm Drive. Funding for this $200,000 project is scheduled to be provided through escrowed funds.
- Other Projects of Interest - Some other projects of interest in the FY 2003 Capital Improvement Budget include $106,000 for Historic District improvements, $161,500 for improvements to Malcolm King Park, $150,000 for Art in Public Places, $207,150 for Community Development Block Grant Projects, $182,400 for improvements to Bohrer Park at Summit Hall Farm, $500,000 for Street Resurfacing, and $337,400 for Olde Towne revitalization.
This budget supports the City's Strategic Directions and presents a balance between the provision of programs and services and available resources. We are preparing for an exciting future while addressing current needs. A number of long-planned capital projects are nearing construction and will be a challenge to future operating budgets. We must carefully manage the creation of new programs not associated with these initiatives and actively seek new revenue sources. City staff, the Mayor and City Council, and involved citizens and businesses will all contribute to meeting this challenge.
Finally, I would like to express my appreciation to those citizens who participated in the Budget Forum, all the staff who assisted in the preparation of this budget, and to the Mayor and City Council and the community as we continue to make Gaithersburg a great place to live, work, learn, and play while maintaining the City's strong financial position.
David B. Humpton