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2008-09 Budget Strategy

2008-09 Budget Strategy. Presented by Mayor Don Ness To the Duluth City Council June 9, 2008. Today’s Presentation. Introduction – Mayor Ness Sample list of proposed budget strategies – Mayor Ness Budget principles – Lisa Potswald Operational restructuring – Lisa Potswald

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2008-09 Budget Strategy

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  1. 2008-09 Budget Strategy Presented by Mayor Don Ness To the Duluth City Council June 9, 2008

  2. Today’s Presentation • Introduction – Mayor Ness • Sample list of proposed budget strategies – Mayor Ness • Budget principles – Lisa Potswald • Operational restructuring – Lisa Potswald • Income statements – Mayor Ness • What are our next steps – Mayor Ness

  3. Proposed Budget Strategies • Eliminate or hold open 33 positions • Close Human Rights Office • Eliminate DEDA general fund subsidy • Eliminate Office of Sustainability • Turn over Zoo operations to Zoological Society • Close Fire hall • Eliminate Engine 3 Fire Rig • Combine Parks & Library Departments • Reduce Aquarium Subsidy by $100k

  4. Proposed Budget Strategies -Continued • Close Washington Pool • Eliminate City Run Adult Leagues • Reduce fuel consumption by 15% • Reduce size of rolling stock fleet • CD, WD, PACT all pay rent & expenses • Eliminate Fun Wagon service – sell asset • Close 1/3 of Community / Recreation Buildings • HIF funds used to support SSO Issue

  5. Proposed Budget Strategies -Continued • Eliminate support for Sister Cities, Grandmas Marathon, Beargrease and Inline Marathon • Transition to pay as you go for capital equipment • Transfer responsibility for Senior Nutrition Program • Implement Administrative Fine System • Eliminate Staff support for many City Boards and Commissions • Reform Civil Service Process • Retiree Health Care / Medicare

  6. Budget Principles

  7. Principle #1: Fiscal Discipline

  8. Principle #2: Effective Resource Allocation

  9. Principle #3: Efficiency

  10. Operational Restructuring

  11. Restructuring and Reform • City government can no longer afford to provide services that could effectively be accomplished by other organizations/individuals. • The goal today is to present a plan for restructuring and controlling costs, not just listing cuts • The next step will be to develop comprehensive plans for implementing change.

  12. Prerequisites for Restructuring

  13. Prerequisites continued

  14. Prerequisites continued

  15. Income Statements

  16. Income Statement - Reserve • 2008 Beginning Fund Balance $1,086,000 • Current Year Changes • Sale of Steam District II $2,500,000 • Other one time revenues 500,000 • 2008 Estimated Ending Balance $4,086,000 * * Meets 5% minimum fund balance target; long term goal is to have 7% to 10% in the General Fund undesignated, unreserved fund balance.

  17. Income Statement – Operational Deficit • 2008 General Fund Operational Deficit $4,420,000* • Recommended Budget Strategies • Positions held Vacant $1,403,000 • Impact Neutral Revenue $363,000 • Revenue Increases $330,000 • Eliminated Subsidies $100,000 • Eliminated Outside Agency Support $680,000 • Efficiencies/Managerial Changes $187,000 • Eliminated Services/Activities $435,000 Total of Strategies $3,498,000 • Current 2008 Operational Deficit $(922,000) *Includes Fund Balance Restoration of $1 Million

  18. 2008 Total General Fund Impact • Restore Reserve $3,000,000 • Operational Strategies $3,498,000 • Remaining Deficit $ 922,000 • Total Recovery by Year’s End $7,420,000

  19. Income Statement – 2009 Initial • 2009 General Fund Operational Deficit $8,360,000 2008 Permanent Fixes $3,379,000 Current 2009 Operating Deficit $4,981,000 • Recommended Budget Strategies • Neutral Revenue Efficiencies $750,000 • Revenue Increases $750,000 • Recovery of Cost for Services $200,000 • Eliminated Outside Agency Support $300,000 • Efficiencies/Managerial Changes $2,000,000 • Eliminated Services/Activities $1,000,000 Total of Strategies $5,000,000

  20. Additional Strategies Lists developed from ideas provided by the administration, staff, union representatives and the public • Expense reduction/revenue enhancement list • Eliminated services/task list • Operational efficiencies/managerial improvements list

  21. Next Steps

  22. Next Steps • Budget resolution will be presented on June 19 • Develop and implement plans regarding each of the recommendations • Work with community groups to clarify implications for 2008 and beyond • Educate the public regarding service reductions and process changes

  23. Questions?

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