To: Honorable Mayor and Members of Town Council
From: David L. Corliss, Town Manager
Trish Muller, CPA, Finance Director
Title
Resolution Approving the 2024-2028 Balanced Financial Plan for the Town of Castle Rock
Body
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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 2024 with the development of the 2024-2028 Balanced Financial Plan.
The 2024-2028 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 $55 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 2023 property tax mill levy dropped to 0.92 mills based on the preliminary property valuation for the Town that reflects a 5.5 percent increase over the prior year. An increase to water rates and fees for existing customers is proposed in 2024, 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 9 additional FTEs in 2024 including:
• Six Public Safety positions in Police and Fire
• One position in Transportation Fund
• Maintenance Worker II in Lodging Tax Fund
• One position in the Water department
Personnel projections also shows a five percent increase in healthcare cost for Town employees and five percent for the Town.
Overarching goals of the 2024-2028 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
2024 Budget Priorities
The 2024 Budget priorities used as the basis for development of the 2024-2028 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 2024 Budget process. These priorities are also supported in the 2021 community survey results as previously presented to Town Council.
Financial Overview
The 2024-2028 Balanced Financial Plan was developed using conservative and informed financial modeling and forecasting. Annual growth in sales tax revenue is included at three percent for 2024. Residential growth is expected to continue to slow over the five-year planning period and is budgeted at 400 single-family units and 330 multi-family units in 2024.
Based on these revenue assumptions, the General Fund operating budget is balanced in each year from 2024-2028. This includes a zero increase for Town and employees medical and dental insurance premium costs along with some departmental budget requests related to level of service needs. Minimal department requests were unable to be included into 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 2024-2028 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 9 additional FTEs for 2024 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 2024, by fund and by department.
GENERAL FUND
Police Department:
• Add three Police positions - one CRT Office, One Investigation Sargent and One Dispatcher
• Address additional needs of CRPD including $380,007 for Flock subscription, Milestone camera replacements, annual range use, additional uniform costs, as well as other needs
Fire Department:
• Add three Fire and Rescue positions: three firefighter/EMTs -these positions eventually would serve the future Fire Station 156
• Address additional needs of CRFD including $228,055 for retirement payouts and over hires.
Parks & Recreation Department:
• Continue renovations at Mitchell Gulch park; and construct Plum Creek North Park
• Complete the Colorado Front Range Trail within Castle Rock
• Add a bike zone at Ridgeline Open Space with technical features, ramps and jumps
• Updates to the Miller Activity Complex and Recreation Center pools
• Using revenue from the new lodging tax, add a Maintenance Worker position
• Purchase new golf carts at Red Hawk Ridge Golf Course
TABOR FUND:
• The Town exceeded its TABOR revenue cap for 2022 by $10.2 million
o Town Council approved transferring funds from three tax- and impact-fee receiving funds into the TABOR Fund to spend as voters approved:
§ Proposed Crystal Valley Interchange Funding: $5.2 million
§ Funds toward roads/transportation: $2.8 million
§ Funds for public safety: $2.2 million
§ TOTAL: $10.2 million
TRANSPORTATION & TRANSPORTATION CAPITAL FUND:
• Crystal Valley interchange and related road construction
• Complete an aggressive Pavement Maintenance Program, focused in 2024 on western Castle Rock, at an estimated 2024 cost of $15.1 million
• Crowfoot Valley Road improvements northeast of Knobcone Drive
• Ridge Road and Plum Creek Parkway improvements scheduled for completion by the end of 2023
• Right of way acquisition for Fifth Street, continued planning on Wolfensberger widening
• Reduced building permits translates to less impact fee revenue and fewer capital projects
• Add one new position called Traffic Maintenance Superintendent
CASTLE ROCK WATER FUNDS (Combined):
Continue projects, program and policies to advance the goal of securing 75% renewable water by 2050; reducing per-capita consumption to 100 gallons per day; and maintaining affordable rates and fees, including:
• Continue advancing long-term water renewable efforts including the WISE imported
water project
• Continue advancing advanced metering infrastructure
• Continue water and sewer line rehabilitation projects and upgrades to security, controls and network
• Add a position for SCADA Superintendent as well as Landscape Design
CONCLUSION
The overarching goals of the 2024-2028 Balanced Financial Plan are providing healthy operating resources and capital projects in Town priority areas of transportation, 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 2024-2028 Balanced Financial Plan demonstrates that the ongoing initiatives set forth within the 2024 Budget are sustainable and the one-time requests are able to be accommodated.
STAFF RECOMMENDATION
Staff recommends that Council approve the 2024-2028 Balanced Financial Plan as presented.
PROPOSED MOTION
I move to approve a Resolution Approving the 2024-2028 Balanced Financial Plan.
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).
ATTACHMENT
Attachment A: Resolution
Exhibit 1: 2024-2028 Balanced Financial Plan