This is our second annual budget process working together with Zionsville Town Council. Thank you for the time many of the Town Council members have made to attend our earlier budget workshops. The feedback we received has been very helpful.
I believe this year we are all more familiar with the differences found between local government budget management and private business. There are similarities and best practices that town officials can draw from, but it’s not an apples-to-apples comparison.
Unlike a business whose goal is to generate profit and create shareholder value, local governments are charged with providing and maintaining public infrastructure, public safety, parks and recreation services and amenities, planning services and community and economic development activities (to name a few).
Corporations and small businesses ONLY succeed when they generate a profit. In local government, a balanced budget is achieved when total expected revenues are equal to total expenditures. However, excess revenue and underspent budgets can accrue over time in different funds. When these fund balances reach a designated threshold, they may be earmarked for specific uses, such as capital expenditures for public safety equipment and vehicles.
Not all of our divisions or departments generate revenue or user fees, but they do have a vital role in supporting the overall operations of our Town (e.g., IT, communications, and human resources). Most of our departments rely to some degree on property tax income to support their efforts. Not even town court operates exclusively on the fees they generate.
When I proposed the 2021 budget, I shared with you that we had healthy fund balances that could be allocated towards future capital projects. These were planned projects and the money was intentionally saved for those specific purposes. Rather than appropriating fund balance through the normal annual budget process, this Council preferred approving an operating budget that could be funded fully through incoming revenue sources. And advised that capital projects would be reviewed through additional appropriations requests in the following year. Therefore, you will find a similar approach presented to you today.
We are proposing a balanced operational budget that invests in our workforce. Our 2022 revenues are projected to increase approximately 2%. This increase is lower than what we have seen in previous years.
Zionsville, like other communities across Indiana, is expected to see reduced local income tax distributions compared to previous years. The Department of Local Government Finance (DLGF) projects this revenue source will be lower than in past years due to the impact of COVID. Local income taxes are our second highest revenue source, therefore, we are proposing a conservative approach to our 2022 budgets.
I am pleased to share with you a balanced budget in that the incoming revenue is slightly higher than the proposed expenditures.
2022 proposed revenue budget: $32,587,219
2022 proposed expenditure budget: $32,570,253
Given the information we have today, this 2022 budget is restrained to 2% growth over the current year’s budget. We propose to invest this growth in our workforce. The budget offers an across the board 4% payroll increase for our employees. The remaining 2022 budget lines will remain at or below the 2021 levels.
This budget proposal will allow residents to continue to enjoy current-day service levels.
Since the start of my administration, we have worked to modernize our processes and tools across all our departments. This includes policy setting and long-term planning initiatives, as well. Three upcoming financial projects include:
- Establish a Finance Committee. The Finance Committee will review, update and create financial policies and will explore opportunities for additional revenue generation. This five-person team will include me, the Deputy Mayor Julie Johns-Cole, Town Councilor Bryan Traylor, CFO Tammy Havard, Zionsville community member and STAR Bank Retail Banking Area Manager Amanda Rubeck and the Town’s financial consultant.
- Update our cash reserve policy. We will set a minimum balance for major funds and review/update the current disbursement threshold.
- Sustainability planning. Create an expense/revenue forecast that anticipates trends beyond 18 months and a 5-year capital improvement plan for each department.