Fund/Budget Overview

Budget Summary

General Fund

The City maintains many “funds” within the City budget. The General Fund supports the bulk of the City’s operations and the operations most identified with the City, such as Fire, Parks, Library, and Law Enforcement. Funding for the Fire, Parks, Recreation, Library, Planning, and Administrative operations is primarily with General Fund and Special Revenue dollars. Some grants and donations are also included in the General Fund. Donations and revenue from Parks and Recreation programs help fund those operations. General Fund revenues consist of property taxes, licenses, and permits, fines, miscellaneous revenues, and charges for services. The Enterprise Funds Water, Stormwater, Sewer (Wastewater), and the Special Revenue Fund Employee Benefits, are charged an administrative service fee by the General Fund to offset the support provided by administrative staff. Reflecting that in the budget through transfers. Following is a graph showing the breakdown of the General Fund by expenditure category.

The Re-Estimated FY21 Budget

The original General Fund Budget for FY21 had expenditures of $3,985,188. Mid-year reestimates of FY21 yearend expenditures are $4,005,260.00 without considering transfers. Management predicts an increase in projected FY21 year-end expenditures by $20,072. The General Fund had an additional $127,681 in unbudgeted expenditures throughout FY21; $57,255 in plat review fees for Project Omega and $49,868 for vehicles approved for purchase in FY20 but paid for in FY21, $17,000 for an irrigation system to water the soccer fields, $1363 in uniforms, and $1150 in new recreation programing. Those increases were slightly offset by deleting obsolete expenditures from the budget; a decrease in predicted expenditures for the comprehensive plan due to timing and a low bid of $100,000, and approximately $7,672 by removing obsolete expenditures in miscellaneous micro-purchases. There were no transfers to Capital Funds for projects from the General Fund in FY21

The FY22 budget

The General Fund Budget for FY22 proposes expenditures of $3,928,516. This would be a 1.37% decrease from mid-year re-estimates of FY21 year-end expenditures at $4,005,260.00 without considering transfers. When transfers are considered, the total expenditures are $4,228,516, which is a 6.13% increase. The $300,000 increase is to fund the Capital Project called Sankey Summit Trail. The Sankey Summit trail is located on the northern side of the homes that face Aaron Avenue and will be between the back lot lines of the houses that face Aaron. The new houses anticipate construction in the summer of 2021 in the next plat of Sankey Summit. The trail is approximately ½ mile long. It is connecting the Grant Street trail, with one endpoint at the signalized pedestrian crossing on Aaron Avenue and the other endpoint in Eagle Creek, near the fishing ponds. The City anticipates constructing the trail in the summer of 2021 by reimbursement to the developer, as this is the optimum method for both cost efficiency and coordination. Notwithstanding the funding for the trial, management was able to maintain operating costs by a strategic evaluation of the direct and indirect costs of each process and department. Thereby reallocating shared services between the General Fund and the Special Revenue and Enterprise Funds that had previously not balance. The Special Revenue and Enterprise funds were not contributing any funds towards Work’s Compensation for the employees allocated to the operation and administration of those operations, which is a cost of $29,801. Likewise, opportunities existed for both the Road Use Tax Special Revenue Fund and the Sewer Enterprise Fund at a portion of $153,281 for 2011, 2013A, and 2018 bonds and $6,188 for 2013A Paine Heights, respectfully.

Following is a comparison of how cities in Iowa with populations between 3,000 and 9,999 spend general fund dollars. The Iowa League of Cities published this for FY20. This gives an idea of how The City of Bondurant compares.

Special Revenue Funds

Special Revenue Funds contain proceeds from a specific source, required by law to have separate accounting, and restricted for a specific spending purpose.

Road Use Tax Special Revenue Fund

The Road Use Tax (RUT) Fund is dollars for the primary source for Public Works operations for street maintenance and repairs. Any remaining expenditures long of taxes allocated by the Iowa Department of Transportation the City’s General Fund or debt service dollars augment. The FY21 re-estimated yearend funding that the City receives from Road Use Tax is decreasing by 7.84% or $65,519. This is likely due to the COVID-19 pandemic decreasing the demand for gasoline of which is one of the sources for the tax. The City anticipates receiving $801,000 in Road Use Taxes in FY22 and $769,282 for year-end FY21. The increase of 4.12% or $31,718 will fund a portion of the Debt Service Fund. Below is an illustration produced by the Iowa Department of Transport artistically explaining the calculations and cash flows of the Road Use Tax Fund.

Employee Benefits Special Revenue Fund

The Employee Benefits Fund is the primary source of funding for Social Security, Medicare, Health, Dental, Unemployment, and Worker’s Compensation Insurance, and Iowa Public Employees’ Retirement System (IPERS). Any remaining expenditures long of taxes levied to support those accounts, the City’s General Fund dollars augment. The FY21 re-estimated yearend funding that the City receives for Employee Benefits from property tax has remained consistent with previous estimates. The City anticipates receiving $402,923 in Property Taxes in FY22 and $589,233 for year-end FY21. The expenditures for year-end FY21 have been reestimated from $622,385 to $734,480. The growth is in part due to the timing of accounting for the growth of positions being accounted for Worker’s Compensation. It is a retroactive accounting with an audit done annually. The FY21 budget is based on historical data, grew from $84,000 to $180,062 to true up for the previous periods. As the City has grown its staff level 65.22% since 2018, going from 22 to 38 full and part-time positions. In FY22 the budget is $99,821. The Road Use Tax and Enterprise Funds have previously not been allocated their portion of Worker’s Compensation. To fund the growth, $29,801 will flow from those funds to the Employee Benefits Fund. Starting in 2019 The City received an operating grant from the Federal Government to support the growth in the Emergency Services Department. It was a three-year grant that will end in February 2021. The funding of those benefits requires the City to levy taxes for the continued expenditures. As in compliance with the Local Option Sales Tax intent (LOSST), the City will direct cash flows from LOSST in lieu of levying taxes by $453,840 in FY22, to continue funding the Emergency Services expansion along with the other staff growth.

TIF Special Revenue Funds

Tax Increment Financing (TIF) Fund is restricted to certain projects within an urban renewal area or can be used to repay debt for urban renewal projects that bring infrastructure to undeveloped areas. This revenue pays for economic development rebates and expenses, as well as some debt services, such as the bonds that were recently issued for the infrastructure improvements adjacent to Project Bluejay and OMEGA. The City worked with financial advisors to calculate a minimum assessment for those projects. Those projects’ development agreement included a minimum assessment based on those calculations to pay the debt service through the TIF appropriations. The minimum assessment was exceeded for those projects resulting in not only funding the debt service for the bonds issued but also adding to the General Fund Tax pool. TIF is also used to pay for costs that are directly connected with economic development. In 2018, Council approved an update to the Urban Renewal Plan that will enable the City to issue TIF bonds for the 10th Street Extension project, as restoring the farm-to-market connection is critical. Engineering for that project is underway. Construction of which is anticipated in FY23. In FY21, the City is projected to receive a total of $514,762. In FY22 $1,374,946 is predicted. These funds will flow to Capital Projects and administration that will allow the vision of economic development the Council has driven, to continue to mobilize land into productive contributors to the tax base.

Local Option Sale & Service Tax (LOSST) Revenue Funds

Local Option Sales & Service Tax (LOSST) Fund is restricted to the used fund dictated by the voters. Per the Citizen voters of The City of Bondurant, it means 60% of the funds must go towards property tax relief, fund the bond issuance for the Library expansion, and contributing to infrastructure projects. Since LOSST revenues derive from sales tax, in the current unpredictable nature of the economy, it is very difficult to predict how the flow will be. The original FY21 budget had an estimated $895,000. However, the year-end re-estimate is $712,970. City Management has determined that in this current climate trying to calculate an exact number is not feasible and has budgeted for funding to remain constant for FY22 at 53 $712,970. Those funds will flow to “buying down the levy rate” $453,840 to the Employee Benefits Fund and $243,475 to pay the debt service on the Library Expansion.

Debt Services Fund

The Debt Services Fund is dedicated to the payment of the principal and interest on the City’s long-term debt. Revenue for this fund comes from property tax, TIF, and Road Use Tax fund transfers. This fund is used to account for the accumulation of resources for, and the payment of, general obligation bonds. General obligation bonds are the most common type of bonds issued by a city. They are often called “full faith and credit bonds” because the taxable valuation of all real property located in the city is pledged to pay them. The advantage of general obligation bonds over other bonds is that the interest rate is usually lower than other types of bonds. The main disadvantage of general obligation bonds is that they are subject to debt limitation, while other types of bonds are not. There are two types of general obligation bonds: essential corporate purpose and general corporate purpose. Bonds issued for a general corporate purpose require a public election with a 60 percent majority vote. Some examples of general corporate purpose bonds include bonds issued for swimming pools, libraries, city halls, fire stations, and police stations. Bonds issued for an essential corporate purpose need only the approval of a resolution by a majority of the total city council at an official meeting, following a published notice and hearing. Examples of essential corporate purpose bonds include bonds issued for street and bridge construction; refinancing of debt; park improvements; and flood control. The City has one bond that is not subject to the maximum debt levy. It is still a general obligation bond, backed by the “full faith and credit” of the City’s valuations, however, it is subject to annual TIF appropriation. In FY 2020-2021 the Debt Service levy rate was projected to be $.98086 per $1,000 of taxable valuation. This rate was 8.31% of the City’s total property tax rate. This is a lower percentage than FY 2018-2019 when the debt service rate was 23.855% of the total or $3.2873. This lower percentage means the City is able to dedicate more of the property tax levy to general operations. The lower percentage was due to the abating that tax levy with LOSST revenues. In FY 2021-2022 the Debt Service levy rate was adopted at $2.25094 per $1,000 of taxable valuation or 19.36% of the total tax levy. Management found that applying the LOSST abatement to the Employee Benefits Fund rather than the Debt Service fund had a greater impact on property tax relief. The FY22 budget reflects that change in strategy. Below is a graph outlining the Debt Service Payments from 2019 to 2030.

The Enterprise Funds

The funds considered Enterprise Funds have an operation that is similar to a private business. These funds account for operations that function with service charge funding, the City’s utilities. Bondurant’s Enterprise Funds are water, sewer (wastewater), and stormwater. As discussed under Capital Projects, the City is currently investing and facing some major 54 investments in infrastructure, however, no rate adjustments in either water or sewer recommendations are at this time related to capital projects. A rate adjustment for garbage and recycling is likely at some point in the near future. The City was able to avoid in FY21 the need for a rate increase in the garbage by reducing the number of special collections to one per year, enabling the City to absorb the rate increase from the hauler and prevented it from being passed through to the ratepayer. The previous year the City absorbed the rate adjustment and paid it with fund balances, however, that is not a sustainable practice. Staff anticipates receiving notice of increase from the garbage provider and has already received notice from the recycling provider about pending adjustments that will have to be passed through to the end-user. Included in the FY21 year-end budget is funding for stormwater improvements along Grant Street that create additional downstream capacity. Mud Creek and improvements to the 2nd Street NW culvert were accomplished in the current fiscal year. Additionally, the City continues with stormwater planning and project prioritization. The Water Department also funds budgeted for water meter replacement