To: Honorable Mayor and Members of Town Council
From: David L. Corliss, Town Manager
Trish Muller, CPA, Finance Director
Title
Resolution Approving the 2022-2026 Balanced Financial Plan for the Town of Castle Rock
Body
________________________________________________________________________________
Executive Summary
Long-term planning is an essential part of the annual budget development process. In the past, a three-year balanced financial plan has been prepared along with the annual budget. Beginning in 2020, with the 2020-2024 Balanced Financial Plan, planning increased to five years to provide a longer term perspective that demonstrates the sustainability of Town funds. The framework for this initiative ties back to the Town’s numerous Council-adopted long-range plans, which define levels of service and provide clear direction on priorities and projects while maintaining conservative financial management. This effort continues in 2022 with the development of the 2022-2026 Balanced Financial Plan.
The 2022-2026 Balanced Financial Plan demonstrates that the Town is in good financial condition and, although not all departmental budget requests were able to be accommodated, several requests to support Town priorities and level of service needs are included. All funds are balanced in each of the five years of the plan, meaning that funds available plus annual revenues exceed the total planned expenditures in all funds. This does include the planned use of $44.6 million of capital reserves for one-time capital projects, which is a common and sound financial practice.
The Balanced Financial Plan does not include any tax rate increases, although a new lodging tax was approved for 2022 and forward. The Town’s sales tax rate remains consistent at four percent. The 2021 property tax mill levy decreased to 1.139 mills based on the final property valuation for the Town that reflects a 10.8 percent increase over the prior year. A slight decrease to water rates and fees for existing customers is proposed in 2022, along with an increase to the maximum allowed amount for growth-related water system development fees. Inflationary increases are proposed for all other development impact fees, as previously approved by Council.
The Balanced Financial Plan includes 16.25 additional FTEs in 2022 including:
• Three Castle Rock Water positions
• Two Public Works positions
• One Development Services position
• Eight Public Safety positions in Police and Fire
• One new position in Parks, and one position reclassified to full time
• One position in Finance reclassified to full time
Personnel projections also include an 8 percent increase in healthcare cost for Town employees and 6 percent for the Town.
Overarching goals of the 2022-2026 Balanced Financial Plan include 1) providing healthy operating resources and capital projects in Town priority areas of transportation, water, parks, and public safety and 2) maintaining current levels of service in a responsible and conservative manner.
Discussion
2022 Budget Priorities
The 2022 Budget priorities used as the basis for development of the 2022-2026 Balanced Financial Plan can be summarized as follows:
• Ensure outstanding public safety
• Enhance our roads
• Secure our water future
• Maintain strong parks and recreation
• Support economic development
• Manage Town finances conservatively
• Preserve our community character
Council has affirmed the above priorities and approach throughout the 2022 Budget process. These priorities are also supported in the 2021 community survey results as previously presented to Town Council.
Financial Overview
The 2022-2026 Balanced Financial Plan was developed using conservative and informed financial modeling and forecasting. Annual growth in sales tax revenue is included at four and a half percent for 2022. Residential growth is expected to continue to be strong over the five-year planning period and is budgeted at 800 single-family units and 220 multifamily units in 2022.
Based on these revenue assumptions, the General Fund operating budget is balanced in each year from 2022-2026. This includes the Town and employee medical and dental insurance premium increases, along with some departmental budget requests related to level of service needs. Several department requests were unable to be included in financial planning based on fiscal constraints in the projections. This includes numerous public safety personnel requests that are unable to be funded.
Financial Details
The 2022-2026 Balanced Financial Plan (Exhibit 1) shows the estimated costs of addressing high-priority area level-of-service needs and of implementing additional major priorities and projects in all operating funds using projected resources. Included within the plan are 16.25 additional FTEs for 2022, needed to address top-priority level-of-service needs, along with needed increases in expenditures for equipment, technology, services, and capital projects. The following is a summary of the most significant items (generally, totaling $100,000 or more) in the plan for 2022, by fund and by department.
GENERAL FUND
Public Safety:
• Implementation of the Public Safety Pay System for both the Fire Department and Police Department for $819,750
Police Department:
• Adding four Patrol Officers for $517,275, including salary and benefits
Fire Department:
• Adding four Firefighter/Paramedics, one with emphasis in training, for $547,540, including salary and benefits
Parks & Recreation Department:
• Annual trail improvements planned for $4.8 million
• Implementation of a Lodging Tax, which is projected to generate $650,000; with these funds, a parks maintenance position is included, as well as multiple park-improvement projects
Finance Department:
• Purchase a new software system to increase payroll efficiency for $196,740
Transportation & Transportation Capital Fund:
• Continue the annual Pavement Maintenance Program at an estimated 2022 cost of $18.5 million
• Set aside $13.6 million toward the future Crystal Valley Parkway interchange with I-25
• Widen Ridge Road for $5.2 million
• Construct Plum Creek and Crystal Valley roundabout for $2.5 million
• Widen Plum Creek Parkway and roundabout for $7.8 million
• Construct Highway 86 and 5th Street improvements for $7.0 million
• Add two new positions: a lead operator for $91,215, and an operator for $85,440, including salary and benefits
Castle Rock Water Funds (Combined):
• Continue the imported renewable water WISE project for an estimated cost of $14.2 million
• Newlin Gulch pipeline and pump station for $10.0 million
• Continue Cherry Creek Basin infrastructure $9.6 million
• Complete security and SCADA system improvements at an estimated cost of $4.5 million
• Continue water wells replacement for $4.3 million
• Continue Waterline Rehab Replacement for $3.9 million
• Continue stream stabilization projects for an estimated cost of $1.5 million
• Continue projects with the Plum Creek Water Reclamation Authority at an estimated cost of $670,015
• Continue Watershed Master Plan updates for $507,310
• Continue lift station upgrades for $410,000
• Add a wheeled excavator to maintain levels of service for infrastructure for $350,000
• Add a meter service technician for an ongoing annual cost of $74,030, a stormwater conveyance operator for an ongoing annual cost of $71,250, and a water plant operator for an ongoing annual cost of $88,350
Conservation Trust Fund
• Improve select Town parks for $1.0 million
General Long-Term Planning Fund (Technology and Capital Replacement):
• Replace emergency medical services equipment for $684,130
• Replace synthetic turf at Gemstone Park for $309,000
• Replace networking devices/hardware for $292,600
• Replace Town servers for $152,000
• Install new security cameras at Town parks for $110,000
Community Center Fund:
• Replace fitness equipment for a one-time cost of $350,000
Development Services
• Add a combination building inspector for $105,960, including salary and benefits
Fleet Fund
• Purchase 38 vehicles and other equipment for $3.5 million
Conclusion
The overarching goals of the 2022-2026 Balanced Financial Plan are providing healthy operating resources and capital projects in Town priority areas of roads, water, parks, and public safety and maintaining current levels of service in a responsible and conservative manner. Based on projected revenues, not all departmental requests were able to be accommodated; however, the included items align with Council priorities and endeavor to maintain levels of service in the community. The 2022-2026 Balanced Financial Plan demonstrates that the ongoing initiatives set forth within the 2022 Budget are sustainable, and the one-time requests are able to be accommodated.
Staff Recommendation
Staff recommends that Council approve the 2022-2026 Balanced Financial Plan as presented.
Proposed Motion
“I move to approve the Resolution as introduced by title.”
Alternative Motions
I move to approve the ordinance as introduced by title, with the following conditions: (list conditions).
I move to continue this item to the Town Council meeting on _____ date to allow additional time to (list information needed).
Attachments
Attachment A: Resolution
Exhibit 1: 2022-2026 Balanced Financial Plan