VILLAGE OF BEVERLY HILLS BUDGET PROJECTIONS PRESENT AND FUTURE by mrbelding

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									 VILLAGE OF
BEVERLY HILLS
   BUDGET
PROJECTIONS
PRESENT AND FUTURE

   FEBRUARY 17, 2009



                       1
   WHY IS THE BUDGET
 DIFFICULT TO BALANCE?
UNEMPLOYMENT IN MICHIGAN IS 10.6%
FORECLOSURES AND THE REDUCTION OF
REAL ESTATE VALUES
NATIONWIDE ECONOMY, 44 STATES HAVE
DEFICITS
SOUTHEAST MICHIGAN’S DEPENDENCE ON
AUTOMOTIVE INDUSTRY




                                     2
    2009-2010 REVENUE
        ESTIMATES
Three primary revenue sources
A) Property Taxes
B) State Revenue Sharing
C) Charges for Services

Other revenue source
A) Contribution from fund balance

                                    3
      PROPERTY TAXES
Proposal A (Property Tax Act of 1994).
 A) Increased State Sales Tax from
$.04 to $.06.
 B) Limited property tax growth to lesser of
inflation or 5%.

Headlee (Headlee Amendment of 1978).


                                               4
                        PROPERTY TAX
                      OVERVIEW – INTENT
    Residents property taxes would increase
    by lesser of inflation or 5%
AVERAGE $300,000 HOME                 TAXABLE VALUE - $150,000

THE INTENT OF PROPOSAL A (CHARTER OPERATING MILLAGE)
YEAR     CPI       TAXABLE VALUE MILLAGE RATE    TAX
2008                 $150,000        9.3801   $1,407
2009    4.40%        $156,600        9.3801   $1,468
Taxes increase by $61 annually
VILLAGE OF BEVERLY HILLS

YEAR      CPI        TAXABLE VALUE      MILLAGE RATE      TAX
2008                 $596,058,110             9.3801   $5,591,084
2009     4.40%       $622,284,666*            9.3801   $5,837,092
Tax collection increases by $246,008 annually
                                                                    5
*Estimated
                           PROPERTY TAX
                          OVERVIEW – 2009
   Taxable Values Drop by estimated 4.5%
AVERAGE $300,000 HOME                 TAXABLE VALUE - $150,000

THE INTENT OF PROPOSAL A (CHARTER OPERATING MILLAGE)
YEAR     CPI      TAXABLE VALUE MILLAGE RATE    TAX
2008                $150,000        9.3801   $1,407
2009    -4.50%      $143,250        9.3801   $1,343
Taxes decrease by $64 annually
VILLAGE OF BEVERLY HILLS

YEAR      CPI       TAXABLE VALUE       MILLAGE RATE      TAX
2008                $596,058,110             9.3801    $5,591,084
2009     -4.50%     $571,565,390*            9.3801    $5,361,340
Tax collection decrease by $229,744 annually
*Estimated
                                                                    6
STATE REVENUE SHARING
     YEAR                AMOUNT
     2000               $1,088,436
     2001               $1,060,864
     2002               $1,010,598
     2003               $ 965,970
     2004               $ 868,168
     2005               $ 818,365
     2006               $ 837,723
     2007               $ 829,059
     2008   BUDGET      $ 828,747
     2009   STATE IS SHORT $1.6 BILLION


                                      7
      2009-2010 EXPENSE
          ESTIMATES
UPDATED 5 YEAR REVENUE & EXPENSE
PROJECTIONS
ASSUMED 5% TV REDUCTION IN 2010-2011 AND AN
ADDITIONAL 3% TV REDUCTION IN 2011-2012
ASSUMED WAGE FREEZE FOR ALL EMPLOYEES
(UNION & NON-UNION)
INCREASE PS PENSION CONTRIBUTION
MAINTAIN CURRENT STAFFING LEVELS AND
CURRENT SERVICES
NO ADDITIONAL OPEB CONTRIBUTION

                                              8
   GENERAL FUND SUMMARY
                 CURRENT     2009-2010   2010-2011

Property Taxes   $5,512,883 $5,361,342 $5,093,274
State Revenue    $ 828,747 $ 828,747 $ 828,747
Other Revenue    $ 821,791 $ 806,561 $ 797,310
Fund Balance           $ 78,203 $         0 $
  0
Total Revenues   $7,241,624 $6,996,650 $6,719,331

Total Expenses   $7,241,624 $7,369,105 $7,539,021

Difference       $       0   ($ 372,455) ($819,690)

                                                      9
   FUND BALANCE SUMMARY
               CURRENT 2009-2010 2010-2011
FUND BALANCE   $1,428,820 $1,350,607 $ 978,152

CONTRIBUTION   $   78,203   $        0   $       0

BUDGET DEFICIT $        0   ($ 372,455) ($819,690)

ENDING FUND
BALANCE        $1,350,607 $ 978,152      $ 158,462

PERCENTAGE     18.65%       13.98%       2.35%

                                                     10
     WHAT THIS MEANS?
The Fund Balance of the General Fund
will fall to 2.35% by June 30, 2011.
If there is any delay in tax collection after
July 1, 2011, the Village will not be able to
pay its bills or payroll on time.
By June 30, 2012, the projected deficit will
be $1,077,468.


                                            11
THE FUTURE AND OPTIONS
The Village is a service oriented organization. Unlike the
private sector that can reduce staff and capacity due to
economic downturns, the Village still has (2000 census)
10,437 people that expect services. The Village is 4.2
square miles with 10.99 miles of Major Roads and 44.30
miles of Local Streets. We have 4,210 dwellings. The
Council and most residents are aware of this problem. The
Village Council and administration have discussed many
different options. These include service and staff
reductions, or service sharing. The discussions in the next
three months will determine next year’s budget and set
policy for future budgets.



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