The second reading of the 2009 Capital Facilities Plan (CFP) update takes place at tonight’s City Council meeting. This is the first opportunity for the public to offer formal comment to the full council on the draft CFP, and the first opportunity for the council to discuss the plan. Some background is in order.

The Growth Management Act requires the city to adopt and update a CFP to provide long-range (six years) policy guidance for the development of capital improvements. The purpose of the CFP is to identify and coordinate capital improvements needed to accommodate the city’s population, set policy and ensure that necessary capital facilities are provided in a timely manner.

Realistic capital planning offers several practical advantages to the community, including: it facilitates the repair or replacement of existing facilities before they fail; forces the community and city to set priorities among competing needs, projects and interests; promotes government efficiency by having related projects such as sidewalks, drainage and roads to be planned and built simultaneously; enhances opportunities for outside financial assistance; and serves as the primary tool that turns much of the Comprehensive Plan into reality.

The Financial Capacity Analysis (FCA) is an essential element of the CFP, as well as the annual budget. It demonstrates the city’s ability to pay for capital projects in the CFP and identifies specific revenue sources and amounts to be used to pay for the proposed projects. It rests on assumptions of future revenue and expenditure that are based on data and analyses supplied by the state, actual year-to-date revenue collections and careful analysis of key economy trend indicators. The expenditure forecasts are based on implementing the Benchmarking Study recommendations for achieving efficiencies, which will lead to a leaner operating budget requiring fewer employees.

Since February, the council’s Finance Committee has met almost weekly to revise and adapt the FCA to take into account any changes in city revenue that have accompanied the general downturn in the economy. According to the latest available data, actual city revenues remain consistent with the forecast used in the FCA

The plan’s purpose is to use sound fiscal policies to provide adequate public facilities consistent with the city’s Comprehensive Plan. The level of capital expenditures is determined by what the city can safely afford over the next several years while maintaining a minimal impact of the property tax rate and other municipal revenues. Presently, the council has implemented or is looking to implement the following CFP financial policies:

• A minimum of 5 percent of unrestricted, projected operating revenues are designated as an emergency reserve within tax supported funds;

• The equivalent of 5 percent of estimated ongoing annual revenue sources shall be held in reserves;

• Debt service shall not exceed 25 percent of operating revenues within each function, i.e., tax supported, utility by policy, etc.

• Grant funding included in the plan has either been approved by the grantor or has successfully been obtained by the city for similar projects in the past.

Meanwhile, the Public Works and Transportation Committee has developed a prioritized list of projects, which are achievable within the financial and staff constraints we face over the next six years.

This year, our administrative staff has developed new tools that provide better data on project costs and their short- and long-term implications for city finances. The Public Works Committee has developed a prioritized project list that can be accomplished within the city’s financial and staff constraints. The projects include those that are: legally required; needed to preserve existing infrastructure; needed to address the level of service deficiencies spelled out in the Comprehensive Plan; responsive to the survey on community spending priorities. We have also received valuable advice and comment from members of the public, which we have considered carefully in developing the draft CFP.

Council now needs to begin making decisions on the CFP so the administration can develop the preliminary 2009 budget for council’s consideration in October. We are already a month behind schedule, extending the process to provide additional opportunities for public comment and council discussion. We need to focus on the task before us, build on the work already done to meet our legal obligations and reach agreement on the CFP and FCA so the administration can develop a strong preliminary 2009 budget.

Chris Snow is the chairman of the Finance and Personnel Committee.