To: Honorable Mayor and Members of Town Council
From: David L. Corliss, Town Manager
Trish Muller, CPA, Finance Director
Title
Resolution Approving the 2021-2025 Balanced Financial Plan
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 Town 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 2021 with the development of the 2021-2025 Balanced Financial Plan.
The 2021-2025 Balanced Financial Plan demonstrates that the Town is in good financial condition, and although not all departmental budget requests were able to be accommodated, numerous 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 $12.5 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. The Town’s sales tax rate remains consistent at four percent. The 2021 property tax mill levy is projected to remain the same at 1.196 mills based on preliminary property valuation for the Town that reflects a 4.4 percent increase over the prior year. The actual mill levy will be determined in December after final valuation is provided from the County. No change in water, water resources, stormwater, or wastewater rates is planned in 2021 for existing users. An increase in water system development fees is planned along with inflationary increases for all other impact fees as previously approved by Town Council.
The Balanced Financial Plan includes 10 additional FTEs in 2021 including:
• Three Castle Rock Water positions
• Three Public Works positions
• One in the Finance Department
• One in the Town Attorney’s Office
• One new position will be in Development Services and will report to the Fire Department
• Two Part Time positions, one in Parks and one in the Town Attorney’s Office, are being converted to Full Time. Combined, these two position conversions add up to approximately 1 FTE
Personnel projections also include a 6 percent increase in healthcare cost for Town employees and 8 percent for the Town.
Overarching goals of the 2021-2025 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
2021 Budget Priorities
The 2021 Budget priorities used as the basis for development of the 2021-2025 Balanced Financial Plan can be summarized as follows:
• Ensure outstanding public safety
• Enhance our transportation
• Secure our water future
• Maintain strong Parks and Recreation
• Support economic development
• Manage Town finances conservatively
Council has affirmed the above priorities and approach throughout the 2021 Budget process. These priorities are also supported in the 2019 community survey results as previously presented to Town Council.
Financial Overview
The 2021-2025 Balanced Financial Plan was developed using conservative and informed financial modeling and forecasting. Annual growth in sales tax revenue is included at 3 percent for 2021-2025. Residential growth is expected to continue to be strong over the five-year planning period and is budgeted at 700 single-family units and 118 multi-family units in each year.
Based on these revenue assumptions, the General Fund operating budget is balanced in each year from 2021-2025. 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 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 2021-2025 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 10 additional FTEs for 2021 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 2021, by fund and by department.
GENERAL FUND
Police Department:
• Offer the option for sworn Police to transition to the Fire and Police Pension Association defined benefit retirement plan for a cost of $176,778. Costs will increase in out-years as state-mandated funding requirements increase
Fire Department:
• Transfer $687,144 to the General Long-Term Planning Fund for future equipment replacement needs
Parks and Recreation Department:
• Annual trail improvements planned for $638,150
Finance Department:
• Add a Sales Tax Auditor position for $108,152, including salary and benefits with anticipated revenue collections equal or greater than this amount
• Purchase a new software system to increase payroll efficiency for a one-time cost of $115,000
Town Attorney’s Office:
• Add a Senior/Assistant Town Attorney position for a cost of $133,864, including salary and benefits
TRANSPORTATION AND TRANSPORTATION CAPITAL FUND
• Continue the annual Pavement Maintenance Program, focused on northern Castle Rock, at an estimated 2021 cost of $11.5 million
• Set aside $2.6 million toward the future Crystal Valley Parkway interchange with I-25
• Design the future widening of Fifth Street for a one-time cost of $1.5 million
• Finalize design and acquire any additional needed right of way for final Plum Creek Parkway widening for a one-time cost of $500,000
• Complete traffic signal and traffic safety improvements for one-time costs of $452,000 and $300,000, respectively
• Improve certain Downtown alleys for an estimated one-time cost of $330,000
• Add two new positions: a construction manager at an ongoing annual cost of $174,118, and a traffic review engineer at an ongoing annual cost of $110,678 (The construction manager will not likely start until the second half of 2021, given current project schedules)
CASTLE ROCK WATER FUNDS (Combined)
• Continue improvements on the Castle Rock Reservoir system at an estimated cost of $7.5 million
• Continue stream stabilization projects for an estimated cost of $7.1 million
• Complete water storage tank projects at an estimated cost of $4.5 million
• Construct the long-planned Administration and Customer Service building for an estimated one-time cost of $4.4 million
• Continue the imported renewable water WISE project for an estimated cost of $3.2 million
• Continue sewer line rehabilitation projects at an estimated cost of $3 million
• Add new water supply wells and improve existing wells at an estimated cost of $2.7 million
• Continue projects with the Plum Creek Water Reclamation Authority at an estimated cost of $2.4 million
• Continue the Prairie Hawk wastewater interceptor project at an estimated cost of $2 million
• Complete security and SCADA system improvements at an estimated cost of $1.5 million
• Continue the imported renewable water Alternative Source of Supply (Box Elder) project for an estimated cost of $1 million
• Add a network and systems engineer for an ongoing annual cost of $138,370, a water distribution supervisor for an ongoing annual cost of $108,256, and a plant maintenance electrician for an ongoing annual cost of $106,082; all three positions will require vehicles totaling a one-time cost of $129,202
CONSERVATION TRUST FUND
• Improvements at select Town parks for $3,800,000
GENERAL LONG-TERM PLANNING FUND (TECHNOLOGY AND CAPITAL REPLACEMENT)
• Synthetic turf replacement at Butterfield Park for $216,000
• Replace networking devices/hardware for $158,600
• Complete critical maintenance at the Fire Training Center for a one-time 2021 cost of $150,000
• Replace Town servers for $100,000
DEVELOPMENT SERVICES FUND
• Add a fire plans examiner for an ongoing annual cost of $128,263; an additional vehicle is included to support the position, which will cost $45,000. This position will report to the Fire Department
COMMUNITY CENTER FUND
• Parking lot improvements for $225,000
• Replace fitness equipment for a one-time cost of $175,000
FLEET FUND
• Purchase of 39 vehicles and other equipment for $3,023,807
• Add a Fleet Technician for a total cost of $91,746
Conclusion
The overarching goals of the 2021-2025 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 2021-2025 Balanced Financial Plan demonstrates that the ongoing initiatives set forth within the 2021 Budget are sustainable and the one-time requests are able to be accommodated.
Staff Recommendation
Staff recommends that Council approve the 2021-2025 Balanced Financial Plan as presented.
Proposed Motion
I move to approve a Resolution Approving the 2021-2025 Balanced Financial Plan.
Attachments
Attachment A: Resolution
Exhibit 1: 2021-2025 Balanced Financial Plan