INTRODUCTION AND WELCOME
CITY OF FAIRVIEW FINANCIAL FUND TYPES
Unrestricted Funds: These funds can be used for any purpose or need to operate the city. The general fund is the main unrestricted fund and is used to pay for salaries, operating expenses, capital and equipment purchases, community services, etc. The city council may designate unrestricted funds for specific programs or uses. However, since the city council can also alter the use of those designated funds the funds are considered to be unrestricted.
Restricted Use Funds: These funds are restricted by rule or legislation imposed on the city by an outside regulatory agency or government, or by the city itself by ordinance, and are to be expended only for their designated purpose. Restricted use funds should not be comingled with unrestricted funds.
THE GENERAL FUND
The general fund is an unrestricted fund and is the main operating budget fund for the city. It is made up of revenues such as sales taxes, property taxes, business licenses, building permits, and other miscellaneous revenues. The general fund may be made up of combined sub-funds that, in total, comprise the whole general fund.
The city of Fairview “general fund” is comprised of the operating fund, the capital fund, the reserve fund, the facilities fund, the Bowie Park fund, and the tree bank fund. Broken down, these funds work as follows:
Operating Account: Salaries, operating expenses, public utilities, professional services (city attorney and city engineer), etc.
Facilities Account (designated from the general fund): 60% of the city’s total building permit revenue is allocated to this fund to pay for capital related to growth and to pay for the maintenance of that capital.
Capital Account (designated from the general fund): Vehicles, equipment, buildings, long term capital planning.
BCBS Adjusting Account: This account is funded by the employee’s payroll deduction share of employee health insurance costs and the city’s contributing share of the employee health insurance costs. This account is new for the FY 2020 budget and will result in a better management of our health insurance costs. We should also see a reduction in these costs.
Bowie Park Account (designated from the general fund): Originally funded by the sale of property for the Publix shopping center, this fund is set aside for improvements to the parks in the Bowie Park system.
Tree Bank Account (designated from the general fund): This fund is used to install trees and landscaping on public properties and rights of way. The program is funded by the deposit of moneys collected from developers for the clearing of trees on commercial development sites.
RESTRICTED USE FUNDS
Grants and Other Programs: This fund is made up of money from outside sources, usually the state or federal government, for specific projects or purchases. Generally, these are pass through funds. The money is distributed to the city as a reimbursement or a payment advance for an approved project expenditure.
Reserve Account (designated from the general fund): An amount to be held in reserve to cover significant unbudgeted emergency circumstances. The reserve account is not be included in the city’s operating budget, which much operate exclusively apart from the reserve account. By ordinance passed in 2019, the city’s recurring reserve amount is set at 10% of the city’s general fund operating budget, effective July 1, 2020. The 10% reserve is already fully funded.
State Street Aid Fund: This fund is money provided to the city by the state for the purposes of road resurfacing, repair, construction, maintenance, safety improvements and related expenses.
Drug Enforcement Fund: This fund is comprised of moneys awarded to the police department by the court system as result of cash and asset seizures resulting from drug enforcement activities. The awards may be seized cash and assets (such as vehicles) which may be sold. The cash and any moneys received from the sale of awarded assets may only be used by the police department for the general purpose of further drug enforcement activities.
RECURRING REVENUE
Recurring revenue is revenue that recurs on a cycle. Sales tax revenue recurs monthly. Property tax revenue recurs annually. Recurring revenue can generally be depended on for annual budget purposes.
NON-RECURRING REVENUE
Non-recurring revenue does not recur on a cycle and cannot be depended upon for budgeting purposes. The Bowie Park Fund is a non-recurring revenue.
BUDGET (FISCAL) YEAR
The city’s fiscal year, established by the state, is July 1st through June 30th. As a standard practice and whenever possible we delay approving capital purchases until the third quarter of the fiscal year to ensure that cash flows are met and that the operating cycle is not adversely affected by cash distributions for capital.
CITY OF FAIRVIEW CASH FLOW CYCLE
The city’s cash flow cycle is one of a surplus period and a deficit period. The city’s single largest source of revenue is property taxes. That revenue occurs primarily in October, November and December, and must be spread across the budget year. Therefore, these months are usually “surplus” months because we take in more than we spend.
The city’s property tax revenue for the budget year beginning July 1, 2019, is projected to be $1,800,000. The remaining sources of revenue are projected to be $3,800,000, and are fairly evenly spread across the year. Because of the cash flow cycle the city has approximately 3 “surplus” months, 3 balanced months, and 6 “deficit” spending months where the property tax surplus is spent as a result of balancing normal operations when operating expenses are greater than revenues.
CITY OF FAIRVIEW CURRENT ADJUSTED ACCOUNT BALANCES ON MAY 23, 2019
Operating Account $ 1,100,500
Facilities Account $ 161,100
Capital Account $ 250,750
BCBS Adjusting Account $ 500
Bowie Park Account $ 106,200
Tree Bank Account $ 101,200
Grants/Programs $ –
Reserve Account $ 578,700
State Street Aid Fund $ 153,500
Drug Enforcement Fund $ 82,600
CITY OF FAIRVIEW OUSTANDING DEBT
The city’s only outstanding debt is the 2014 $2,900,000 bond issue. The debt is financed through fiscal year 2030 and the current balance is $2,400,000. The annual debt service on the city’s bonded debt is $257,000, which is 4.6% of the city’s annual operating budget.
LEASE/PURCHASE AGREEMENTS
The city is in year one of a ten (10) year lease-purchase agreement for a new fire truck. These annual lease/purchase payments are $45,000. The city is also in year one of a four (4) year lease purchase on new public safety radio equipment. These annual lease/purchase payments are $145,000. The current total lease/purchase payments are $190,000, which is 3.3% of the city’s annual operating budget.
FAIRVIEW CITY SALES TAXES
From November, 2001, until April, 2018, the City of Fairview had its own .5 cent sales tax which, in calendar year 2017, generated approximately $660,000 in direct sales tax revenue to the city. That changed with the 2018 county wide .5 cent sales tax increase. With the passage of the county wide .5 cent the city’s direct sales tax revenue immediately decreased to approximately $330,000. Why? The Tennessee state code, in part, reads and is applied as follows:
If the county has levied the tax at the maximum rate, no city in the county may levy an additional local sales tax. If a county has a sales tax of less than the maximum, a city may levy an additional tax up to the difference between the county rate and the maximum. If a city passes an ordinance to increase its sales tax rate above the county rate, the city ordinance is suspended for 40 days during which time the county legislative body may pass a resolution to increase the county tax. If such a resolution is passed, the ordinance remains suspended until a countywide referendum is held. If the referendum is successful, the city ordinance is dead. However, if the referendum is not successful, the city may proceed with a city referendum on the matter. T.C.A. § 67-6-703. If the city referendum passes, the city receives all revenues generated by the increase above the county level; the first half is not earmarked for education. However, if the county, at a later date, raises its sales tax rate up to the level of the city rate, then the distribution formula outlined below would apply to the entire local option portion of the sales tax.
Distribution. Revenue from local option sales tax levied by counties is distributed as follows:
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50 percent specifically for education, to be distributed in the same manner as the county property tax for school purposes.
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50 percent distributed on the basis of where the sale occurred. Taxes collected inside a municipality are distributed to that municipality, and taxes collected in unincorporated areas are distributed to the county. Counties and cities may contract with each other for distribution of the half not allocated to school purposes.
When the county wide sales tax rate increased from 2.25% to 2.75%, the city’s .5% became void and the 50/50 distribution of those revenues was applied by the State.
Approximately $125,000,000 in retail sales take place in the city of Fairview each year.
It is estimated that 75% of the retail sales which take place in the city of Fairview are made by non-city residents. Approximately 60% of the city’s retail sales are made by out-of-county residents. We don’t enjoy the increasing traffic on Hwy 100 but it is vital to our retail success.
DECISION MAKING IS A GROUP EFFORT – ATTENDEE DISCUSSION
BUDGETARY CONSIDERATIONS AND AWARENESS
Residential Development Effect: For fiscal year 2017 (July 1, 2016, – June 30, 2017) the total building permit revenue (general fund and facilities account) was approximately $366,000. For fiscal year 2020, beginning July 1, 2019, we are projecting a total of $150,000 in comparative total revenue. (The budget includes a building permit rate increase of 25%).
Residential Development / Sales Tax Combined Effect: The combined building permit and sales tax decrease represents a $546,000 comparative revenue decrease in 2020 from 2017 *.
Roadway Maintenance: We have contracted with our engineering partner, Civil and Environmental Consultants, to develop an existing-conditions report for our primary thoroughfares (Chester Road, Old Franklin Road, Crow Cut Road, Cox Pike, Northwest Highway, Horn Tavern Road, Old Nashville Road). We have to develop a plan to remediate our primary roads. This will likely require a bond issue *.
2040 Comprehensive Plan Implementation: The 2040 Comprehensive Plan, “Fairview Forward”, has been accepted by the planning commission and the board of commissioners. A comprehensive revision of our zoning ordinance, subdivision regulations and design review is underway. This work is scheduled to be completed by March 31, 2020, and is a very aggressive and complex project for city staff, planning commission members and elected officials.
Personnel Retention and Development: The city adopted a new pay plan in 2017. The market for qualified staff, in all positions, is very tight. We will have to maintain staffing through salaries, employment benefits, etc. Due to the market, geographical location, training costs, political climate, etc., employee retention is less expensive than employee reinvestment.
CITY OF FAIRVIEW OPERATIONAL ACTIVITY SINCE AUGUST 1, 2018
Administration: The position of I.T. director has been defunded and will not be filled.
Finance: The position of finance clerk remains vacant and will not be filled.
Planning Department: The position of city planner has been defunded and will not be refilled. The position of codes director has been defunded and will not be refilled. We have contracted for new management software and the department is “managed by committee”. We have also transitioned one position out of public works and into the planning department to manage city projects. That position will not be re-filled in the public works department.
Public Works: We have reassigned duties and tasks within the department. The department staffing has been reduced by three (Vacancies for maintenance superintendent, laborer and naturalist will not be refilled).
GOVERNANCE
2018 Municipal Election: Four (4) city commission seats will be up for election in November, 2020. There will two races. One race will be for one seat with a two (2) year term, with the highest vote winner being elected. Another race will be for three (3) seats with the two highest vote winners filling two (2) four year terms and the third highest vote winner filling a two (2) year term.
ADMINISTRATION
Budgeting and Financial Reporting: For the 2017 – 2018 budget year the city installed a new general ledger system and new budgeting system. The audit for the year included no findings, ongoing concerns or matters for review. The same budget process was employed for the current fiscal and the year beginning July 1, 2020.
ADA Transition Plan: The development and implementation of the city’s ADA Transition Plan, required to have been completed by December, 2013, is currently underway. This plan should be employed by January, 2020.
MUNICIPAL OPERATIONS
Park safety: Every patrol officer on duty every shift is required to make at least one patrol through Bowie Park. Our fire department also makes frequent drives through the park when returning from service calls.
LESO Program (Law Enforcement Support Office): The police department has begun actively securing equipment through the LESO program. This program requires little or marginal investment from the city and returns valuable surplus military equipment to the city. Generally, and within certain guidelines, this equipment can then be sold by the city and the funds used for capital equipment for the police department. This is a great way to transition former federal dollars into local dollars for reinvestment in our community. It also relieves pressure on the city’s budget for competing capital dollars. Most of the initial revenue realized from this program will go toward replacement vehicles for the police department.
CAPITAL INVESTMENT NEEDS
Police Firing Range: This has to be a priority going forward. We have training agreements in place for the fiscal year but a long term solution is desperately need. The most likely location is the 25 acre outparcel on Dice Lampley Road. Initial costs estimated at $50,000.
Holding Facility for Court: Municipal court days at city hall are becoming unmanageable. We will have to invest in a secure out building at city hall. Estimated cost is $100,000.
Building Replacement at Hwy 96 Fire Station: The metal building is in disrepair and not suitable for repair to the necessary degree. Estimated cost is $100,000.
Training Facility for the Fire Department: Intended to replace the wooden structure behind the fire station. This could be installed at the out parcel in conjunction with the firing range. Estimated cost is $50,000 +.
Equipment for Public Works: Truck for use with the chipper/leaf service; mini excavator for routine projects and right-of-way maintenance; loader for public works compound and service work. Estimated total is $200,000 ($60,000 budgeted in FY 2020)
OTHER FISCAL YEAR 2019 – 2020 GOALS AND OBJECTIVES
Purchasing System: We look to install a new purchasing process that will include purchase order requisitions, purchase order approval, receipting guidelines, and approved vendors.
Fully Revised Personnel Policy and Employee Handbook: This focus will be on the revision of work rules, personnel policy, an employee handbook, drug free work place, wage & hour management, and workplace harassment.
Accident Review Board: The accident review board will be made up of department heads and senior staff. The purpose of the board will be to review on the job injuries, accidents and near misses, and to develop guidelines for discipline or training related to workplace accidents.
Water and Sewer Advisory Panel: The 2006 agreement between the City and the Water Authority of Dickson County includes a provision for the creation of City of Fairview Water and Sewer Advisory Panel. This three person panel (mayor, city manager, Fairview citizen) has been empaneled and is to report back to the B.O.C., in January of 2020, with suggestions for how the city can invest in or otherwise improve the sewer access in Fairview and the relationship between the city and the W.A.D.C. board and administration.
CITY DEPARTMENT UPDATES
Police Department: Staffed by 21 Sworn officers including the chief, assistant chief, training lieutenant, administrative sergeant, two investigators, and fifteen officers assigned to patrol. The department performs the full range of police services.
Fire Department: Staffed by 18 full-time certified fire fighters including the chief, one training officer and 16 shift personnel. The fire department primarily performs fire suppression and BLS (basic life support) services. The department operates three fire pumper units, one heavy rescue truck, one medium duty service truck and one ladder truck. In addition to providing exceptional service they also provide the community with a return on investment. Fire department I.S.O. (Insurance Services Offices) ratings are graded on a scale of 10 to 1 (1 being best). Our current I.S.O. rating is a 3. This rating affords reduced insurance rates for Fairview businesses and residents.
Public Works: Staffed by 7 full-time personnel including 3 superintendents, 2 equipment operators, 1 crew members and 1 park programmer. Additionally, we have 2 part-time park rangers. The department provides all public works and park services. These services include facilities maintenance, infrastructure maintenance and repair, equipment maintenance and repair, parks maintenance, nature center programs, rights of way maintenance, and special events services. The public works staff is the crew that keeps city clean, our roadways serviced, our infrastructure in good order, and our parks enjoyable. The public works crew also provides the chipper and leaf pick-up services which, although not without some initial hiccups, is working effectively and as originally intended.
CONCLUSION AND QUESTIONS
