Last night the Board of Estimates met, items 1 – 29 they passed without any discussion and they moved right on to the Capital Budget. These meetings are designed primarily to hear from department heads about what is in the budget in each of their departments and for the council members to ask questions prior to submitting budget amendments which are due after a Public Hearing at the council 9/17 and the council members will need to get their amendment in by noon the next day. We’ll see the amendments the following Friday (9/20) and Board of Estimates will vote on those amendments the following Monday (9/23). The council then has another public hearing on 10/1 and then they have a month before amendment are due from the full council on 10/3 just prior to the council taking up the budget. (BK interpretations in parenthesis throughout.)
They hand out a whole bunch of items – I wasn’t there so I don’t have them. This is the schedule of who they heard from last night and who they will hear from tonight at 4:30. I should also note that although this is a Board of Estimates meeting, all alders can be there to ask questions. (Looks like only Subeck, Weier, Ellingson and Bidar-Sielaff are there at the beginning of the meeting in addition to the alders on Board of Estimates.) There are not supposed to be any other meetings scheduled at this time. But of course, the Police and Fire Commission is meeting during this time because they just do whatever the hell they want.
Dave Schmeidicke, the Finance Director, explains the summary of the capital budget which is also on-line. The first page is the mayor’s message with numbers at the bottom of the page. The next few pages are a summary of some of the projects they will be hearing about.
Page 8 has graphs that give the history of adopted capital budgets with the general obligation (G.O.) borrowing and other funding, with the actual amount of money they borrow. (They borrow much later in the year and by that time, some projects drop out and they don’t actually have to borrow the funds.) This page also has projections for the Capital Improvement plan. (The budget is actually a one year budget with projections of other projects for an entire 5 years, but those are not necessarily being approved until the year in which they appear.) The general fund and library amounts are also on the page to show the levy supported debt service. (How much of our tax dollars are spent each year paying back all this debt.)
Page 9 compares by agency the amounts in the 2013 budget with the comparison to what the mayor put in his 2014 budget. He says in the fire department the large project is the fire administration building and Station 1 remodel. The other large change is Facilities Management, there is a proposed sustainability fund and the largest project is for the Municipal Building (James Doyle Square). Major Streets is down because they did some cash management that they did in 2013 and won’t have to do in 2014.
Sue Ellingson asks what cash management is?
Schmeidicke says that they reauthorized 2012 borrowing to 2013 and they had enough of a balance that they didn’t need to borrow money at that time, but they borrowed in and 2013 and they won’t have to borrow it in 2014 because most of the projects are on time and they the balance is worked out in the capital projects fund. In Fleet they usually buy $6M in vehicles every year but they hadn’t for a few years and they are returning to that plan. In Planning and Development there a bunch of projects including “developer subsidies” in TID, neighborhood centers, Single Room Occupancy project and Public Market. The table below does library and other sources. In Water Utility they have $5M in authorizations and some new projects, they are replacing their operations building on Patterson which has been in the plan for several years.
Page 10 they have a table of projects that are being funded in a direct appropriations. They are assuming a premium from the 2014 debt issuance which will occur later this month and that has been allocated consistent with the ordinances. The estimates of the debt service as a share of general fund expenditures is shown on the bottom of the page. From 2011 through 2014 you can see that share is 20 – 22% over the next few years. (That means 20% or more of our taxes being spent goes to pay principle and interest on all the projects from the past 10 years – the city borrows for 10 years at a time.)
Page 11 the table compares G.O. Debt by agency. At the bottom the total number of new projects in 2013 was about $68.6M and the number of new projects in 2013 is $92.4M. Also, when you look at the agency request line. They could request within their prior year amount and then they could request supplemental projects. They requested $240M in requests.
Page 12 breaks down the new projects compared to reauthorizations. They are projects that are not started in 2013 so they need to reauthorize the borrowing or other funding sources for 2014. It is broken down by agency.
Page 14 focuses on G.O. debt requirements for the 5 years of the capital improvement plan.
Mike Verveer asks about the new presentation in the budget staring on page 7 that is all the supplemental requests which they never had before.
Schmiedicke says that the agency request process had 2 elements. One was to stay within 2013 projects dollar amounts and then they could ask for additional money in supplemental requests and on page 7 they list those projects requested by agencies. The table on page 9 is the projects that were included in the budget.
Verveer asks if in the Executive Operating budget will have the same thing?
They say they will put those in there too.
Chris Schmidt asks about page 10 in the memo and the estimates of the premium, he asks where the estimates come from.
Schmidicke says those come from working with their financial adviser, they will be issuing the debt Sept. 17th, so based on the amount they are borrowing, $57M of tax exempt G.O. notes and their estimate of the market out there, as well as they are putting a pricing limit on so that we don’t get a premium that won’t be really large. The market is at a point where because of rising interest rates investors are interested in an up front payment with a high coupon per year so there is a possibility that we could get a really large premium plus a coupon rate, so that is the 5% debt service we would pay each year on top of that. Based on the estimates, we would end up around $4M, that may change, if it is different we would have to have an amendment to fund the projects another way . . .
Next they go through department by department and tonight I’ll watch it and get you caught up! Meanwhile, study those budget summary pages. Links all here until when (and if) I get them put in separately, which is my goal, but work usually gets in the way these days!
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