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Ordinance 67-22 To: Members of Dublin City Council From: Megan O’Callaghan, City Manager Date: November 29, 2022 Initiated By: Matthew L. Stiffler, Director of Finance Jaime Hoffman, Deputy Director of Finance Melody Kennedy, Budget Manager Meghan Murray, Financial Analyst Re: Ordinance 67-22 – Amending the Annual Appropriations for Fiscal Year Ending December 31, 2022 (Q4) - AMENDED Summary Ordinance 67-22 amends the annual appropriations for the fiscal year ending December 31, 2022 to provide supplemental funding for the fourth quarter of 2022. The following sections were amended subsequent to the first reading of the Ordinance by City Council on November 14, 2022. Details of the amended requests are as follows: Section 1 requests funding authorization in the General Fund: Income Tax Refunds City Council originally heard a request on November 14th for $600,000 in additional funding authorization needed for income tax refunds. Subsequent to the writing of the Q4 Ordinance, the Division of Taxation received a net profit refund request in the amount of $813,409. After review, it was determined to be a valid refund request. The Division of Taxation is anticipating more net profit refund requests will be received before year-end. An additional $1,000,000 is being requested in funding appropriations to cover those requests. Additionally, on December 2, 2022 the Division of Taxation received the municipal net profit distribution report from the State of Ohio, also known as the State Opt-In Report. The State Opt-In is a way for businesses to file local tax returns with multiple jurisdiction on the State’s website. The State becomes solely responsible for the administration and collection of the local tax. The distribution report is always on a two (2) month delay. The report for December is a result of the October filings (extension deadline date) and unfortunately with those filings from October the State has determined that the City of Dublin owes the State $613,508.57. This refund payment is due back to the State before the next month’s distribution report, or the next distribution will be reduced. The Division of Taxation is requesting a supplemental budget increase in 2022 in the amount of $614,000 so that the State of Ohio can be refunded in a timely manner without any additional financial consequences for the City. The total budget authorization request for tax refunds has now been increased to $2,214,000 to cover refunds payable. Any un-used budget for tax refunds will lapse at year-end. During the November 14th City Council meeting, a question was raised by City Council with regard to the net impact of refunds on income tax collections. As City Council is aware, 75% of income tax collections are allocated to General Fund for operations, and 25% are allocated to the Capital Improvements Tax Fund for capital maintenance and projects. Income tax refunds only impact the General Fund. Office of the City Manager 5555 Perimeter Drive • Dublin, OH 43017-1090 Phone: 614.410.4400 • Fax: 614.410.4490 Memo Memo re. Ord 67-22 – Amending the Annual Appropriations for Fiscal Year Ending December 31, 2022 (Q4) November 29, 20222 Page 2 of 5 The year-to-date actual collections (as of November 15th) information is as follows, with the last three years presented for reference: For reference, language from the November 8th memo is below: Budget authorization in the amount of $600,000 is requested for income tax refunds. As the extension deadline for annual returns has passed, the Division of Taxation is now seeing an increased amount of individual refunds, both from non-residents working from home or days spent working out of Dublin. Additionally, there has been an increase in resident refunds resulting from over-estimates. The tax refund original budget amount for 2022 was $5,210,000, but due to the large amount of work- from-home refunds processed during the year, another $400,000 supplemental appropriation was authorized in Q3 for a total revised budget of $5,610,000. As of October 19, 2022, the Division of Taxation has processed $5,433,292 in refund returns; leaving roughly $176,700 in the budget to process refunds through the remainder of 2022. As of October 20, 2022 there are approximately $340,700 pending tax refunds of which $226,300 are allocated for individual returns, and $114,400 for net profit refunds. Sufficient budget authorization does not exist to process those refunds currently due, let alone the anticipated $175,000 refunds due in November and December. There is also the possibility of additional net profit refunds once the State of Ohio processes the October State Opt-in fillings, which are not reported to Dublin until early December. Based on these facts, the Division of Taxation is requesting a supplemental appropriation budget increase in the amount of $600,000. Any un-used budget for tax refunds will lapse at year-end. Transportation & Mobility City Council originally heard a request for a transfer of funds between transportation accounts in the total amount of $95,000 for professional services related to the SR 161 East Corridor Visioning Study. The movement of funding has a net neutral budgetary impact. Subsequent to the hearing on November 14th, it has become necessary to adjust the transfer of funds to the professional services account in the additional amount of $41,000, or $136,000 total. This funding is being requested for the purpose of contracting for services to provide for the Western Dublin Rail Visioning Study. For reference, language from the November 8th memo is below: The Division of Transportation & Mobility is requesting a transfer in the amount of $95,000. City Council authorization is necessary due to the movement of funds crossing between two different work areas in Transportation & Mobility. The budget is being transferred from available funds in the general maintenance (sirens and street lighting) accounts to a professional services line item account. There is no budgetary impact with regard to this transfer as the increase in appropriations in the professional services account will be fully off-set by a reduction to the general maintenance account. The funds will be utilized to encumber a contract for the SR 161 East Corridor Visioning Study. Memo re. Ord 67-22 – Amending the Annual Appropriations for Fiscal Year Ending December 31, 2022 (Q4) November 29, 20222 Page 3 of 5 Section 5 requests funding authorization in the Sanitary Sewer Construction Fund: Department of Finance Bank Fees Funding authorization in the amount of $7,500 was included in the ordinance to cover bank fees for sanitary sewer debt payments. The amount of the request has not changed, however to offset that request, we are proposing to un-appropriate $10,000 of un-needed funding allocated for debt issuance fees included in a separate line item account. For reference, language from the November 8th memo is below: The Department of Finance requests funding appropriation in the Sewer Construction Fund in the amount of $7,500 to cover bank fees to US Bank for debt payments. The City budgeted an estimate for these fees in the 2022 Operating Budget, however the bank fees are more than anticipated due to the new-money sewer debt issued in 2022. Advance Repayment Ordinance No. 03-22 authorized an advance in the amount of $1,000,000 from the Sanitary Sewer Construction Fund to the Sewer Fund in repayment for funds used in the Deer Run Force Main and Lift Station Project. The full repayment of that advance will not occur in 2022 due to the increase in costs discussed below. Subsequently, the Department of Finance is requesting to un-appropriate $200,000. (Note: The un-appropriation of the advance was increased to $300,000 based on the additional need for the Deer Run Sanitary Sewer Improvement Project as reflected below.) Division of Engineering Sanitary Sewer Extension 1B (ES203) Authorized funding in the total amount of $200,000 is being requested for the Sanitary Sewer Extension 1B project. The design contract totaling $140,000 for the sanitary sewer extension in the Trails End area was executed in late 2021, but not encumbered until early 2022. Of the remaining request of $60,000, it will be will used to cover increased construction costs and any easement acquisition necessary (across two parcels). For reference, the construction contract was approved by City Council in Resolution No. 48-22 on October 10, 2022. Deer Run Sanitary Sewer Improvement (ES179) Authorization in funding in the total amount of $100,000 is being requested for the Deer Run Sanitary Sewer Improvement Project. Additional funding is needed to complete the roadway trench repairs on Dublin Road, and compensate the contractor for additional materials needed. This is a result of a quantity modification due to adjusted calculations of the overall length of the roadway, pavement thickness and trench width. Section 7 requests funding authorization in the Accrued Leave Fund: Accrued Leave Fund Recent announcement of the departure of several employees, through both resignation and retirement, will have a potential impact on the Accrued Leave Fund. Per guidelines set forth in the City’s Compensation Plan, departing employees may cash-out a portion of their leave balances. In light of this, section 7 of this Ordinance has been amended to include additional spending authority to cover the projected pay-out of Memo re. Ord 67-22 – Amending the Annual Appropriations for Fiscal Year Ending December 31, 2022 (Q4) November 29, 20222 Page 4 of 5 leave time and associated benefits (OPERS and Medicare) for these employees. The spending authorization requested also provides a small buffer for any additional resignations occurring prior to the payroll cut-off date in mid-December. Appropriations unused at year-end in the Accrued Leave Fund will be returned to the fund balance. Recommendation Staff recommends City Council approval of Ordinance 67-22, amending the Annual Appropriations for the Fiscal Year Ending December 31, 2022, at the second reading and public hearing of the Ordinance on December 5, 2022. To: Members of Dublin City Council From: Megan O’Callaghan, City Manager Date: November 8, 2022 Initiated By: Matthew L. Stiffler, Director of Finance Jaime Hoffman, Deputy Director of Finance Melody Kennedy, Budget Manager Meghan Murray, Financial Analyst Re: Ordinance 67-22 – Amending the Annual Appropriations for Fiscal Year Ending December 31, 2022 (Q4) Summary Ordinance 67-22 amends the annual appropriations for the fiscal year ending December 31, 2022 to provide supplemental funding for the fourth quarter of 2022. The following sections provide descriptions of the appropriations contained within the Ordinance and the reason for the request. Details of the budget requests are as follows: Section 1 requests funding authorization in the General Fund: Income Tax Refunds Budget authorization in the amount of $600,000 is requested for income tax refunds. As the extension deadline for annual returns has passed, the Division of Taxation is now seeing an increased amount of individual refunds, both from non-residents working from home or days spent working out of Dublin. Additionally, there has been an increase in resident refunds resulting from over-estimates. The tax refund original budget amount for 2022 was $5,210,000, but due to the large amount of work- from-home refunds processed during the year, another $400,000 supplemental appropriation was authorized in Q3 for a total revised budget of $5,610,000. As of October 19, 2022, the Division of Taxation has processed $5,433,292 in refund returns; leaving roughly $176,700 in the budget to process refunds through the remainder of 2022. As of October 20, 2022 there are approximately $340,700 pending tax refunds of which $226,300 are allocated for individual returns, and $114,400 for net profit refunds. Sufficient budget authorization does not exist to process those refunds currently due, let alone the anticipated $175,000 refunds due in November and December. There is also the possibility of additional net profit refunds once the State of Ohio processes the October State Opt-in fillings, which are not reported to Dublin until early December. Based on these facts, the Division of Taxation is requesting a supplemental appropriation budget increase in the amount of $600,000. Any un-used budget for tax refunds will lapse at year-end. Fuel Budget authorization in the amount of $150,000 is being requested in Fleet Maintenance to cover the cost of fuel through year-end. The City purchases gasoline and diesel through the Central Ohio Farmers Co-Op Inc. As of November 2, 2022 the City has spent roughly $1.57 million in fuel (gasoline, diesel and Compressed Natural Gas (CNG)), and received reimbursements of approximately $740,000 from fuel sales (fuel reimbursement plus surcharge) to Washington Township, IGS and the Dublin City School District. Office of the City Manager 5555 Perimeter Drive • Dublin, OH 43017-1090 Phone: 614.410.4400 • Fax: 614.410.4490 Memo First Reading Documents Memo re. Ord 67-22 – Amending the Annual Appropriations for Fiscal Year Ending December 31, 2022 (Q4) November 8, 20222 Page 2 of 5 The cost of diesel has significantly increased during the past few months. This time last year, diesel was roughly $3.25/gallon (including applicable taxes). As of October 2022, the price of diesel was $5.35/gallon (including applicable taxes). Last year in November and December, the City expended over $233,000 to purchase fuel. As of November 2, 2022, there is $116,430 in encumbrances in the fuel account and roughly $12,500 un-encumbered and available for use. Fuel Expenditures – Fiscal Year 2020 through November 2, 2022 Due to the increasing price of fuel, which is projected to stay high during Q4 (2022) by the US Energy Information Administration, the Division of Facilities and Fleet Maintenance is requesting a $150,000 supplemental appropriation to cover costs through December 31, 2022. Any un-used budget for fuel will lapse at year-end. Transportation & Mobility The Division of Transportation & Mobility is requesting a transfer in the amount of $95,000. City Council authorization is necessary due to the movement of funds crossing between two different work areas in Transportation & Mobility. The budget is being transferred from available funds in the general maintenance (sirens and street lighting) accounts to a professional services line item account. There is no budgetary impact with regard to this transfer as the increase in appropriations in the professional services account will be fully off-set by a reduction to the general maintenance account. The funds will be utilized to encumber a contract for the SR 161 East Corridor Visioning Study. Utilities – Facilities and Parks Operations The City’s utilities include water, sewer, gas and electric for the City’s buildings, parks, traffic and street lights, warning sirens, and outdoor swimming pools. As of November 2, 2022, the City has expended $1.978 million in total utility costs. That amount exceeds the total 2021 calendar year spending which was $1.764 million. The rising utility bills are being driven by the surge in the price of natural gas, which generates about 40% of the United States’ electricity. Due to the rising costs, American Electric Power (AEP) increased its rates in June 2022 by roughly 2 cents per kilowatt hour, with another increase expected in May 2023. Rate increases along with additional park amenities have resulted in the need for increased funding for the City’s utilities. Funding authorization in the total amount of $150,000 is requested to cover utility costs for the City’s buildings and parks through the end of the year. Any un-used budget for utilities will lapse at year-end. First Reading Documents Memo re. Ord 67-22 – Amending the Annual Appropriations for Fiscal Year Ending December 31, 2022 (Q4) November 8, 20222 Page 3 of 5 Utility Expenditures – Fiscal Year 2020 through November 2, 2022 Section 2 requests funding appropriation authority for Franklin County Auditor’s Deductions (fees) for Funds as listed in section 2 of the Ordinance. This request will cover the fees collected by the County Auditor to pay their administrative costs in distributing the City’s real estate tax appropriation sheet. In several cases, the increase in County Auditor deductions was related to the property owner remitting their real estate tax payments past the Auditor’s due date. In the remaining Funds, the service payments were higher than anticipated causing the related Auditor deductions to exceed the budgeted amounts. Initiating Department: Finance (Section 2) Section 3 requests funding authorization in the amount of $78,000 in the Rings/Frantz TIF Fund for costs related to the Avery Road and Rings Road – Cara Road Interim Intersection Improvements Project. This covers a professional services contract addendum to provide engineering services. Additional work includes the extension and connection of proposed pedestrian facilities to existing facilities or logical termini; revision of plan to full depth replacement of Cara Court and Cara Road; Rings Road utility revisions; additional field surveys; preparation of structural hydraulic report; structural design and plan preparation, and preparation and update of detailed plans. Initiating Department: Public Works (Section 3) Section 4 requests funding appropriation authority in the Bridge Park Block Z TIF Fund in the amount of $110,173, and in the Bridge Park Incentive District Fund in the amount of $2,965,912 for contractual obligations as specified in the Bridge Park Development Agreement. The service payment revenue is distributed according to the development agreement. These service payments will be used to pay-off the debt service associated with public roadway improvements, parking garages and community facilities. There is off-setting revenue for all disbursements requested in this section. Section 5 requests funding appropriation in the Sewer Construction Fund in the amount of $7,500 to cover bank fees to US Bank for debt payments. The City budgeted an estimate for these fees in the 2022 Operating Budget, however the bank fees are more than anticipated due to the new-money sewer debt issued in 2022. First Reading Documents Memo re. Ord 67-22 – Amending the Annual Appropriations for Fiscal Year Ending December 31, 2022 (Q4) November 8, 20222 Page 4 of 5 Section 6 requests funding authorization in the Fiduciary Funds. As City Council is aware, these are funds held for distribution by the City as an agent for another entity for which the City has custodial responsibility. For this reason, these Funds are considered clearing accounts and do not provide measurement of operations and are not required to be budgeted. However, the City prefers to monitor the accounts, and to the extent possible, eliminate deficit balances. All payments made from these accounts within the Fiduciary Funds have revenue to offset the expenses with no net impact to the City’s financial balance. The Central Ohio Interoperable Radio System (COIRS) approved two resolutions that need inclusion in the 807 Fund: • An authorization of $15,000 for the completion of all legal work related to the Huntley Tower site land utilization agreement. • An authorization of $5,000 for unexpected repairs on generators, and to cover maintenance expenses through year-end 2022. Initiating Department: Finance (Sections 4, 5 and 6) Recommendation Staff recommends City Council approval of Ordinance 67-22, amending the Annual Appropriations for the Fiscal Year Ending December 31, 2022, at the second reading and public hearing of the Ordinance on December 5, 2022. First Reading Documents First Reading Documents First Reading Documents First Reading Documents