Transcript CITY OF GARY, INDIANA presentation for Relief to the DISTRESS UNIT APPEAL BOARD December 2010 Honorable Rudolph Clay, Mayor.

CITY OF GARY, INDIANA
presentation for Relief
to the
DISTRESS UNIT APPEAL
BOARD
December 2010
Honorable Rudolph Clay, Mayor
CITY OF GARY
AGENDA

INTRODUCTION

RECENT FINANCIAL SITUATIONS

PROPOSED BUDGETS REDUCTIONS
 2010
 2011-2012

PROPOSED 16-LINE STATEMENTS

SUMMARY

CONCLUSION
INTRODUCTION


The City of Gary, Indiana is seeking assistance from the
Distressed Unit Appeal Board pursuant to I.C. 6-1.1-20.3-6
et. seq. Relief from the application of the credit against tax
liability established under I.C. 6-1.1-20.6 and as also set
forth in H.B. 1001(2008) is sought in order to ensure the
continuation of, as far as possible, basic services to the
citizens of Gary.
Under the provisions of I.C. 6-1.1-20.6, the City of Gary
would be required to reduce its tax levy in the amount of
$30 million in 2009 and $36 million in 2010. Using these
figures, the City would have to reduce its budget by nearly
57% from its 2008 level.
INTRODUCTION, cont’d

Although the City has reduced its levy for 2010 to $48.5M from
the $63M 2008 levy, without additional relief for 2010, the city
would have to shut down the majority of City operations and
would be unable to provide services other than public safety
protection.

In order to comply with the requirements of this law as they are
currently promulgated, the City hereby provides the Distressed
Unit Appeal Board with the financial plan covering a 3 year
period as a phase-in of the tax caps established by the law.

This plan is submitted with the understanding that as long as the
entirety of these cuts is required, whether in 2010 or 2012, the
City of Gary faces fiscal devastation that will affect not only its
residents, but the surrounding communities and the state as well.
IC 6-1.1-20.6– STATE MANDATED
BUDGET
2009 -2010 LEVY REDUCTIONS

Gary Civil City
 2009 Levy Reduction- $30,305,930
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This represents a 48% reduction from the 2008 levy of
$63,684,886
2010 Levy Reduction - $36,337,798

This represents a 57% reduction from the 2008 levy of $63,684,886
These reductions represented a pre-1996 Levy
RECENT FINANCIAL
SITUATIONS
2009 BUDGET REDUCTIONS

Eliminated 365 positions from the 2009 budget between
January 1, 2009 and June 15, 2009. Reduced Civil City
employees from 1,356 to 991.
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General Fund eliminated 117 positions, transferred out 17 to other funds,
and outsourced 47 positions.
Parks Fund eliminated 106 positions (mostly seasonal and part-time)
Genesis Center eliminated 54 positions from its tax-based fund
2009 RECENT FINANCIAL
SITUATION
Reduced General Fund from 29 departments to 22 departments (of
which 1 dept. is unfunded and 1 consists only of commissioners)
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Departmental Changes Included:
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Consolidated Health Dept. and Community Services
Eliminated Status of Women Dept. Staff (except Commissioners)
Outsourced Sanitation Department (moved street employees from General
Fund-General Services Dept. to Motor Vehicle Highway Fund)
Consolidated Mayors’ Dept, City Operations, and Public Information
Transferred Jail Services to County
Consolidated General Services and Demolition
Consolidated Finance and Human Resources
Consolidated Building, Planning, and Public Works
Did not fund Labor Relations Dept. for 2009
YEAR 2009
PROPOSED REDUCTIONS Versus IMPLEMENTED
REDUCTIONS
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PERSONNEL: Reduce workforce by 148 positions through the
following means (Actual reduction is 365)
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Consolidate Health and Community Services Departments (Yes)
Consolidate Public Info and Chief of Staff Departments (Yes)
Outsource Sanitation Services (Yes)
Transfer City Jail Services to the County (Yes)
Transfer employees to Grant, where allowable (Yes)
Transfer majority of street dept. employees from Gen Fund to Motor
Vehicle HWY (Yes)
Down-sized staff in several other departments of tax-based funds (Yes)
Close 6 Park Pavilions (Yes)
YEAR 2009
PROPOSED REDUCTIONS versus IMPLEMENTED
REDUCTIONS
PERSONNEL, continued
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Close 4 of 8 Pools for summer usage, reducing summer Park part-time
staff significantly (Yes)
Complete an analysis of medical insurance coverage and reorganize
insurance plan to increase employees’ contribution accordingly, to more
adequately cover self-insurance medical claims expenses (In final process)
Reduce Clothing Allowance and negotiate with Fire and Police
Department Unions changes in sick leave requirements and holiday
compensation. (In process)
Negotiating with Teamsters union to remove payouts of sick days upon
termination. (In process)
Make changes to Police, Fire, and ASCME unions premiums to pay 100%
of medical insurance employee premiums, instead of 25% discount for
public safety and $30.00 discount for ASCME (In process)
YEAR 2009, Continued
PROPOSED REDUCTIONS versus IMPLEMENTED
REDUCTIONS

OPERATIONS:
 Participation in Fuel Hedging program co-authored by Crowe
Chizek (IACT) and funded through Indiana Bond Bank.
Allows 1st and 2nd class cities to lock in gasoline prices,
which helps to reduce risk from escalating gasoline prices.
(Yes)
 Work with Indiana American Water to identify meters no
longer needed, or meters that can be down-sized to reduce
water bills. (In process)
 Exploring new vendor to lock in natural gas prices at a rate
lower than current provider for NIPSCO (In-process)
YEAR 2009, Continued
PROPOSED REDUCTIONS versus IMPLEMENTED
REDUCTIONS
OPERATIONS, continued
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Work with Crystal Clean to purchase used oil from oil
changes provided by Vehicle Maintenance (In process)
Transfer the payment of $1.1M in Water Hydrant Fees to the
community (Yes)
Negotiated a better Cell Phone and land lines plan resulting
in approx. $30,000 savings per month. (Yes)
Year 2009, Continued
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PROPOSED REDUCTIONS versus IMPLEMENTED
REDUCTIONS
REVENUES:
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Increase fees for City Services in most departments (Yes)
GSD established a Garbage Collection Fee in conjunction with
outsourcing saving approx. $3.3M to the City (Yes)
Selected a new EMS Billing Service (that has currently increased
collections) to assist in financially retaining EMS (Yes)
Working (in 2009) with USX Public Safety Director to engage their grant
writer to write grants effective for 2010 City of Gary Public Safety
overtime and equipment. (Yes, but no results yet)
Advertise new rates for licenses and permits- December 2009; send
follow-up letter to businesses operating without business licenses by
January 31 2010 to increase revenues for licenses and permits. (Yes, in
process)
CITY OF GARY FINANCIAL
LEVY REDUCTION PLAN
2010-2012
OBJECTIVE: To petition DUAB according to IC 6-1.120.6, and reduce Civil City property tax levy by $36M
between years 2010-2012, at a phase-in rate, which
would allow the City to:
 Maintain maximum efficiency allowable in public
service from gradual reduced levels of property tax
revenues.
 Spur economic development to increase tax revenues
from a declining property tax base.
 Obtain additional grant funding for pertinent services.
2010 LEVY REDUCTION
Reduced 2010 levy by $9M
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From Personnel Reductions
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From Operation expenses (such as grants and subsidies, and
professional services)
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Elimination of Excess Levy
ANALYSIS OF MAJOR 2010
BUDGET EXPENSES
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Police and Fire Budgets are 48% of Total 2010
Budget
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Civilian Budget us 30% of Total 2010 Budget
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Medical Insurance, TAW Interest, and Utilities
are 22 % of Total 2010 Budget
CITY OF GARY 2009 AND 2010 LEVY
COMPARISON
2009 DUAB APPROVED
2010 DUAB PROPOSED
GENERAL FUND
$
54,215,164.42
GENERAL FUND
$ 45,951,781.00
PARKS FUND
$
1,360,708.75
PARKS FUND
$
1,166,345.00
GENESIS CTR FUND
$
1,097,450.04
GENESIS CTR FUND
$
388,616.00
CUM CAPITAL DEVELOPMENT
$
114,053.48
CUM CAPITAL DEVELOPMENT
$
90,500.00
DEBT SERVICE FUND
$
876,611.00
DEBT SERVICE FUND
$
875,335.00
FIRE PENSION FUND
$
-
FIRE PENSION FUND
$
85,000.00
POLICE PENSION FUND
$
-
POLICE PENSION FUND
$
10,600.00
TOTAL FUNDS LEVY
$
57,663,987.69
TOTAL FUNDS LEVY
$ 48,568,177.00
TOTAL LEVY REDUCTION
$9,095,810.69
CITY OF GARY
2010-2012 BUDGET PROPOSAL
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BUDGET REDUCTION CONSIDERATIONS:
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High Priority on public safety staffing
Services that other units of government are required by law to offer the
same service
Services the City of Gary is required to offer the community under law
Services that can be consolidated
Services that can be outsourced at cost representing a reduction from
current spending levels
Services that could be offered for a reasonable fee to the public
PFM fiscal monitor recommendations
YEAR 2010
2010 INITIATIVES
IMPLEMENTED
IN 2009
YEAR 2010
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PERSONNEL: Reduce workforce by 62 positions
through the following means (Accelerated reductions in
2009 to include projected 2010 reductions of 222
positions)
 Consolidated the Building and Planning Departments
(Both Depts. consolidated with Public Works in
2009)
 Consolidated General Services and Demolition
Services (Yes, consolidated in 2009)
 Eliminated an additional 6 positions for 2010(Yes)
 Purchase excess insurance for worker’s
compensation (in process)
YEAR 2010
Many of the following 2010 initiatives will
begin implementation in 2010, however,
the full effect of savings will not be
realized until 2011
Year 2010
PERSONNEL
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Eliminate Board Compensation
Implementation of furlough days and salary reductions
Further reductions in overtime
Elimination of additional Civilian positions as Identified by PFM
Reduce Fire Department staffing by 57 employees
Eliminate 3 Special Police positions
Reduce clothing allowances to $500.00 for Police and Fire employees, and
negotiate to eliminate 90-day severance pay outs for retirees, and other costly
incentive compensation.
Implement new rates for employee health insurance to cover rising health insurance
cost to the City
Employ Chief Operating Officer to direct day to day operations
Employ two accountants to assist Director in implementing new processes, and
expanding current processes
Create Economic Development Department
Increased Unemployment and Workman’s Comp’s percentages from 2% to 4%
Year 2010
OPERATIONS:
Additional privatization and departmental consolidation
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Consolidation of Services for the Dept. of General and Demolition
Services with the Department of Public Works
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Transfer Code Enforcement to Building Department
 Cross Train Inspectors in Building Department
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Consolidate the Fire and Police Commission administration
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Transfer Animal Control to the County
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Transfer 911 Dispatch to the County
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Privatize Traffic Control Operations
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Outsource Vehicle Maintenance
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Privatize balance of Trash Collection
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Implement vehicle reduction and take-home vehicle reduction policies
YEAR 2010
OPERATIONS:
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Reduce Fuel sites and fuel pumps in operation
Establish a semi-annual Citizen’s Report to include updates of the City’s
financial position and other areas of interest to the public.
Increase accountability for judgments, claims, and settlements
Additional reductions in travel expenses
Move Health Community Services to City Hall, reducing utilities, and lease
payments. (Moving Maternal Child Care Services from Methodist Hospital
to the Community Health Center to eliminate leasing expenses of $40,000;
will maintain telephone expense)
Eliminate Grants and Subsidies from the tax-based funds, except for Grant
matches.
Close some Fire Stations
Re-establish the modified accural method of accounting
YEAR 2010, CONTINUED
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REVENUES:
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Realize grant revenue for City of Gary Public Safety overtime and
equipment as a collaborative effort between USX and City of Gary. (Not
yet, however, obtained COPS grant for 11 officers for 4 years with no
retention requirement.)
Incorporate more effective procedures for licenses renewal and
inspections, to encourage more business owners to purchase and renew
their licenses and permits
Incorporating other revenue generating mechanisms for EMS, such as
transport services, and accurate and timely filing of reports transport
services, more aggressive collections. (Conversing with Methodist Hosp.
regarding City of Gary EMS transport services becoming a priority over
other private ambulance service companies).
Sale of lots and vacant land (On-going, seeking to accelerate the amount
sold in a given period of time)
Sale of other assets, such as garbage trucks
YEAR 2011-2012
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PERSONNEL:
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OPERATIONS:
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Outsource Golf Course, if not self sufficient
Outsource Genesis Center, if not self sufficient
Outsource Hudson Campbell, if not self sufficient
Continued Implementation of furlough days and reduction in
pay for civilian employees
Reduce interest related to TAW
Reduce outstanding loans
Reduce cost of leasing copiers, printers, etc. as a result of staff
reductions in 2010-2011
REVENUES:
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Shift Sanitary District levy to General Fund in 2011
Increased revenues from additional Grants
YEAR 2013 and 2014
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2013 and 2014 are the final stages for imple-mentation
of initiatives from 2011 and 2012
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2013 and 2014 will address the USS settlement that has
been negotiated for property tax credits in the amount
of $8M to be paid over 4 years
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2013 and 2014 will provide for implementation of the
NSP grant and other economic development programs
that would increase the property tax base
SUMMARY
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How Can DUAB Help?
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Increase Circuit Breaker Caps for City of Gary
at a phase in rate through 2014
Assist in legislation that will mandate compliance to
budget certification and property tax distributions
with already established deadlines. This will
eliminate critical cash flow issues compounded by
the property tax caps, and low percentage of property
tax collection rates.
SUMMARY
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How Can Legislators Help?
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Reconsider the Property Tax Cap percentages for large
industry by increased caps
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Find a common denominator between local and state
assessment of real property for large industry, so that all tax
paying segments pay their fair share. On-site assessments
must be performed, as opposed to predominant software
calculations.
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Allow 2nd class cities to adopt a Local Option City Income
Tax and impose gasoline taxes
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Continue to provide distributions from the Welfare Excess
Fund to assist entities with Public Safety. Funds should be
limited to entities with Police, Fire, and EMS department,
however, for maximum effect.
SUMMARY
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How Can Legislators Help? , continued
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Reduce frequency of “assessment by trending” to every
other year in order to eliminate backup and encourage
timeliness in property tax rates and distribution. It is quite
possible that the enormous additional interest for TAWs,
created by delays, will cost more than the increase revenue
realize from more frequent trending assessment. In the case
of HB1001, the financial harm due to the delays could be
irreconcilable.
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ANY QUESTIONS?