Letter from City Mgr
June 18, 2009
The Honorable Mayor and City Council Members
Mayor Rosenthal and Council Members:
It is my privilege and responsibility to present the Fiscal Year 2009-2010 (FYE 2010) Annual Budget, adopted on June 9, 2009. The adoption of an annual budget is required by the Norman City Charter, Article III, Section 4 (i) and by Title 11, Oklahoma Statutes, Section 17-205 (Oklahoma Municipal Budget Act). An annual budget must be approved by the City Council at least seven days prior to the beginning of the new fiscal year, certified by the Cleveland County Excise Board before July 1, and transmitted to the State Auditor and Inspector within 30 days of the start of the fiscal year.
We encourage our citizens to explore their City’s budget document, which contains interesting and vital information on all aspects of the City’s operation, as well as information of general interest on Norman.
REVIEW OF FISCAL YEAR 2008-2009 ACTIVITY
The City of Norman’s economy continued to grow during the fiscal year ending June 30, 2009 (FYE 09), though at a much slower rate than in recent years. The national economic recession and collapse of the national financial services sector during the fall of 2008 has continued into 2009 and has had direct and indirect impacts on the Norman economy. This much slower growth rate is reflected in the chart below, which shows sales tax growth percentages over the last ten years. Long-term trends indicate that the City’s sales tax, the major source of General Fund revenue, will continue to grow, though at a slower rate than the growth in expenditures.
The Norman and central Oklahoma economy has continued to outperform the economy of the United States as a whole. Overall, however, volatile trends have negatively impacted the financial performance of the City. Because of this volatility, the City of Norman has fairly aggressive reserve policies. By policy, the City seeks to hold eight percent (8%) of its budgeted expenditures in each operating fund in reserve fund balance for unanticipated operational demands or below-target revenues. When fund balances exceed these targets, the City Council can appropriate fund balances to address immediate, non-recurring needs. In the General Fund, the City reserves six percent (6%) of fund balance for operations and budgets for an additional two percent (2%) emergency reserve account.
As measured by per capita employment, the City of Norman workforce is the smallest of any of the 17 regional cities that Norman is commonly compared to (see page 7) and serves a much larger geographic area than almost all of our “benchmark” cities (see page 6). The ability of the City to continue to provide a high level of public service is a testament to the dedication of our workforce.
Exploration of Future Initiatives
A major City of Norman activity during fiscal year 2008-2009 was the exploration of strategic initiatives to be undertaken. The City Council directed processes of public participation and input into future improvements to the City’s stormwater management programs, a long-range plan for the Porter Avenue Corridor and for addressing the long-term water supply needs of the City.
The stormwater management exploration resulted in a recommendation for a two-pronged approach to addressing the drainage and flood control needs of the City. The City will improve its floodplain and floodways to more efficiently convey Stormwater, while at the same time developing greenbelts and trails along floodways throughout the City. The City will refer financing proposals to the voters of Norman during fiscal year 2009-2010 to pay for needed capital improvements, acquire floodplain easements and rights-of-way, and to enhance the maintenance capabilities of City-owned storm drainage facilities.
The City Council directed the preparation of a long-range plan for the Porter Avenue Corridor in central Norman, which endeavors to coordinate the development of the area in a more orderly fashion, and to manage the relationship between commercial businesses along Porter and residences which abut the Corridor. The draft Plan seeks to celebrate the history of Porter Avenue as the former north-south entrance into Norman, and to celebrate the Corridor being the predecessor to Norman’s “Magnificent Mile of Cars” along interstate 35. The draft Plan recommends that the current four-lane configuration of Porter will be reduced to three lanes (one traffic lane in each direction with a dedicated left turn lane and medians), along with the installation of modern traffic roundabouts at Alameda and Acres Streets.
The Norman Water Utility is a part of a multi-jurisdictional study on the strategic water supply needs for central Oklahoma. The study is examining the importation of water from southeastern Oklahoma along a large water distribution pipeline owned by the Oklahoma City Water Utilities Trust (OCWUT). During fiscal year 2008-2009, the City participated in the preparation of a study which listed several recommendations. The most economical solution is for water to be imported from an extraction point at the Moyer’s Crossing (State Highway 3) of the Kiamichi River near Rattan, Oklahoma and importing it to a treatment plant at Lake Stanley Draper in Oklahoma City. Strategic decisions will need to be made by the Norman Utilities Authority about the best ways to participate in this long-term water supply: through the purchase of untreated water extracted from the pipeline near Lake Thunderbird in Norman; through the purchase of treated water from the OCWUT and transmitted directly to the Norman water distribution system; or through other means. Any of these directions will require an increase to the Norman water rate structure over several future periods.
Public Safety Initiative
In response to voter approval of a temporary (7-year), dedicated public safety sales tax, the City initiated several actions during fiscal year 2008-2009. Land was purchased for a new fire station and negotiations are underway for purchase of land for a second fire station approved within the public safety sales tax. Architectural design was begun for the first of these fire stations, to be constructed in northwest Norman. The first 12 of the approved 41 police officer positions were hired, and related vehicles and support equipment for the positions was added. A Citizen’s Public Safety Oversight Committee was appointed, and a Community Oriented Policing (COP) Program was adopted by the City Council. The COP Program will expand the crime prevention community partnerships and problem solving activities of the Norman Police Department and will seek to change the law enforcement culture of the City over time.
Conference Center Opens
In October, 2008, the John Q. Hammons Conference Center opened at the 280-suite Embassy Suites Norman within the University North Park development in north Norman. The conference center is the first of its kind in Norman and will enable the convention and tourism functions of the City and the Norman Convention and Visitors Bureau to be significantly expanded. Many state, regional and national conferences and meetings which could not have been hosted in Norman previously, can be accommodated at the new conference center. Overall, the number of hotel rooms in Norman expanded tremendously in FYE 2009, with the opening of the Best Western Norman, Courtyard by Marriott, Comfort Inn and Suites and the Hilton Garden Suites.
Interstate 35 Widening and Rock Creek Overpass
A major widening of Interstate 35 through Norman is underway. This project will ultimately widen the interstate, which is the major north-south road for the central United States, from four to six lanes and construct or re-construct six bridges and interchanges. The widening project is a federal transportation project coordinated by the Oklahoma Department of Transportation, but the City of Norman is participating in the project in many ways. The City has coordinated a study of the economic impacts of whether the frontage roads along I-35 through Norman should be one-way or two-way.
The City’s University North Park Tax Increment Finance District is providing major portions of the financing of the construction of a new overpass of I-35 at Rock Creek Road. This overpass will significantly improve east-west access for traffic throughout west Norman and will relieve traffic congestion at the Robinson, Main and Tecumseh Street interchanges. Finally, the City and the UNP TIF will finance improvements to the I-35 interchanges at Robinson Street and Tecumseh Road (Tecumseh Road and 24th Avenue NW intersection). The design of these interchanges will be structured to further ease traffic congestion throughout the area and to improve access to University North Park and to the newly-constructed Norman Regional Hospital Healthplex and U.S. Army Reserve Regional Headquarters.
Utility Enterprise Systems
The City’s utility enterprises continued progress on major capital projects during FYE 09. The Norman Sanitation Utility completed a new and expanded compost facility which will enable vegetative wastes (leaves, yard clippings, etc.) to be processed more efficiently. The Sanitation Utility is also in the process of expanding its transfer station facility. Significant progress was made on major new facilities for the Water and Wastewater Utilities as well. As envisioned in the City’s Strategic Water Supply Plan, the Water Utility is nearing completion of an additional 10 ground water wells, which will add approximately 4 million gallons per day of water to the City’s supply, and final engineering designs were completed for the expansion and improvement of the Vernon Campbell Water Treatment Plant.
The Norman Wastewater Utility continued its aggressive sewer maintenance plan, replacing neighborhood - sewer lines throughout the City on a “worst things first” basis. The maintenance plan is now in its seventh year, and major progress has been made to improve the condition of the City’s sewers. The Wastewater Utility also continued progress on the construction of new sewer mains (interceptors) and conveyance facilities in north Norman, as directed by the City’s adopted Wastewater Master Plan. Since the adoption of the Wastewater Master Plan, tens of millions of dollars of sewer interceptors have been constructed to serve current and future customers of the Norman Wastewater Utility. The next major phase of construction will be the rehabilitation and expansion of the north side Lift Station D, at an estimated cost of $8.6 million.
Budget Presentation Award
For the seventeenth consecutive year, the City of Norman earned the Government Finance Officers Association's (GFOA) Award for Distinguished Budget Presentation for our FYE 2008-2009 Budget documents. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document; as an operations guide; as a financial plan; and as a communication device. We believe this document continues to conform to program requirements, and we will submit it to GFOA for another award.
BUDGET PROCESS AND OVERVIEW - FISCAL YEAR 2009-2010
Fiscal Year 2009-2010 Operating Budget Highlights
In preparing this document, citizen and Council input has been solicited, obtained and included. Three Council budget retreats were held in preparation for this document, along with numerous other televised, open study sessions and Council Finance Committee meetings. Council’s direction was obtained at each of these meetings and was included in the budget prior to the completion of the executive budget proposal. A public budget hearing was also conducted during the May 26th Council meeting, at which further citizen input was obtained.
Due to the slowing of the growth rate in the local economy and the national recession, no major new initiatives are being undertaken in the FYE 2010 budget. The addition of additional personnel funded by the temporary Public Safety sales tax highlights the personnel changes in this budget. The budget adds 15 firefighter and supervisory personnel to the Fire Department, and 9 police officers and supervisory personnel to the Police Department. Within the General Fund-supported functions of the City, personnel is being added to support the expanded public safety functions, including an additional Employment Specialist (primarily a recruiter for the public safety personnel); a Warrant/Security Officer for the Municipal Court, and a Communication Officer (Dispatcher).
Budgeting of the Westwood Park golf course and swimming pool operations was changed from an enterprise fund to a special revenue fund in the FYE 2010 budget. In response to the direction of the City Council, the General Fund will provide operating subsidies to the golf course, and the Westwood operations will seek to reduce the level of General Fund subsidy through business practice changes in future years.
Highlights of FYE 2010 Capital Budget and Five-Year CIP Plan
Detailed information on individual capital improvement projects is given in the FYE 2010 Capital Improvements Project (CIP) Budget document. This information is summarized in the Capital Projects Funds Section of the Budget document. Pursuant to voter-approved Ordinances, seven-tenths of one percent (0.7%) of sales tax revenue is dedicated for capital improvements (including payment of debt service on capital projects) and this is the primary source of revenue for the Capital Fund. Of these funds, twenty-seven percent (27%) is set aside for “capital outlay” items to be used by the City’s operating departments; five percent (5%) for maintenance of existing facilities; twenty-five percent (25%) for street maintenance; and thirty-eight percent (38%) for pay-as-you-go CIP projects.
A major initiative within the fiscal year 2010 capital budget and five-year capital plan was the City’s response to federal “stimulus” grants and programs funded by the American Recovery and Reinvestment Act (ARRA) of 2008. The City succeeded in obtaining federal grants, matching funds and low interest loans to expand its Community Development Block Grant programs, to fund the “shovel ready” Water Treatment Plant and Lift Station D expansion projects, to purchase of compressed natural gas vehicles, and for road improvement projects. Council directed staff to aggressively pursue ARRA funds, and at this writing further federal grants have been applied for.
The City’s FYE 2010 Capital Budget and five-year capital plan also reflects a Council initiative to expand the City’s commitment to the maintenance of its existing buildings and support facilities. The allocation formula for the dedicated capital sales tax was changed in FYE 2010 to increase the allocation for Maintenance of Existing Facilities projects from 3% to 5% of the capital sales tax proceeds. Over time, this will enable the City to repair and improve its facilities in parks, fire stations and other facilities.
Replacement of the City’s fleet of rolling stock and automated computer systems continues to be a high priority for capital outlay expenditures. The FYE 2010 budget allocates funds for the replacement of high-dollar firefighting equipment that the Fleet Management Division deemed to be more cost-effectively replaced than maintained. Further, the capital outlay portion of the Capital budget will finance the purchase of data storage facilities which will improve the performance for all users of the City’s local area computer network. The continued ability of the City to address these capital needs from within available revenues speaks well of the wisdom of the voters and policy makers in setting aside resources to address them on an ongoing basis.
The FYE 2010 Budget is basically a status-quo budget, with the implementation of the public safety sales tax being the major area of growth. The impact of the national recession on the Norman economy will continue to be monitored, and we will suggest budget adjustments during the year as necessary.
It is my privilege to present this budget document to you, our decision-makers, and to the citizens of Norman. On behalf of the staff and citizens, I want to first thank you, our policy-makers, for your effectiveness as leaders and for your commitment, despite the many demands on your time and interests. It is truly a pleasure to work with such a caring and committed group of City Council Members. Your leadership in bringing forward the strategic stormwater, water and facility maintenance programs will have far-reaching and long-lived benefits for the citizens of Norman.
I want to express my appreciation to the many people who contribute to the City's efforts in carrying out its mission. The citizens, who become involved and are willing to give their time and interest in addressing issues facing the City, are a tremendous asset. I am very grateful for the willingness of our citizens and public interest groups to participate and influence their community.
Finally, I want to express my gratitude to the Finance and Planning Department employees who continue to operate our budget process in a highly professional manner. The expertise and skill of the City staff as a whole is greatly appreciated, not only for their work in preparing this document, but also for their dedication to their duties throughout the year. I have relied greatly on the expertise, experience and professionalism of Council and senior staff in the preparation of this budget. Our success is based on your dedication and hard work.