Despite ongoing issues surrounding pensions, insurance-related expenses, and other personnel costs, Owensboro city officials on Thursday presented a balanced budget largely focused on public safety for the upcoming year. No tax increases were proposed.
According to City Manager Nate Pagan, this year’s budget also reflected the effects of the COVID-19 pandemic, as unemployment rates increased over the last year. Still, he said, the City of Owensboro was doing better than both the state and federal governments.
“We’re actually performing much better than the rest of the state, so that’s something to be proud of,” Pagan said.
COVID-19-related expenses totaled $1.9 million for the 2020-21 fiscal year, though the majority of those were reimbursed through CARES Act funding, barely making a dent in the upcoming year’s budget.
The 2021-22 budget proposes no tax increases, though pension-related expenses made up a “considerable cost,” Pagan said.
For the foreseeable future, pension costs are expected to increase by 12% per year for local governments. An actuarial study is currently underway to determine how long those costs will plague local, state and federal governments.
“We could have a 12% increase until the end of the decade,” Pagan said.
This year marked the first time the city had to pull funds from the pension reserve fund to cover the pension costs — $974,000 will be taken from that fund, leaving $2.28 million.
With a $3.3 million surplus in the city’s general fund for the 2021-22 fiscal year, city officials said things were still looking up.
“There are other cities that aren’t as fortunate as we are, and they’re looking at tax increases [to cover pension-related expenses],” said Angela Waninger, director of finance and support services.
Here’s a breakdown of each department’s budget presentation:
Public Events — Tim Ross, Director
The Public Events department proposed a budget increase of 7% for the 2021-22 fiscal year, increasing its total budget by $53,497.
“Between increases in doing a larger July 4 celebration and the HydroFair Event we’re holding this year, as well as increases in goods and services … that’s why that’s gone up,” Ross said.
After receiving positive responses from last year’s Fourth of July event across the city, Ross said his team would likely hold a similar July 4 event this year, holding multiple fireworks displays across different areas of the city, including downtown Owensboro’s riverfront.
Community Development — Abby Shelton, Director
The Community Development Department’s budget will increase by $423 this fiscal year. The budget for the year totals $278,876.
“The increase in personnel costs is for the full-time salary addition of housing and grants coordinator,” Shelton said. “Supplies will increase due to in-house marketing costs and materials for the northwest NRSA.”
Shelton said eight applications were received for that position, and that she hoped to hire someone by May 18.
The City will receive an additional $237,732 in Community Development Block Grant funds this year to go toward various projects across the northwest part of the city.
“The majority of funding and staff time this upcoming year will be spent administering these programs within the northwest NRSA,” she said. “In addition to these programs, the community continues to enjoy strong partnerships with Habitat for Humanity, as well as the Owensboro Area Affording Housing Solutions Community Housing Development Organization. We will be completing six more homes this year for low-income families between these organizations and city staff.”
Owensboro Fire Department — James Howard, Chief
OFD’s budget for 2021-22 will see a 4% ($447,634) increase, with a total budget of $12,673,873.
Howard called it a “modest increase” that would largely fund the department’s personnel and pension costs.
“Our organization is lean, efficient and focused; 102 positions make up the Owensboro Fire Department when fully staffed,” he said. “That 102 breaks down to 99 uniformed personnel, an administrative aid and two part-time inspectors.”
Howard said OFD responded to over 8,600 calls for service in 2020.
“Supply costs go up by 12% next year,” Howard said. “It’s primarily due to a replacement plan for our radio equipment. There’s money being set aside every year for that radio equipment for a projected replacement.”
Howard said EMS-related supplies for basic life support services and the efforts in becoming an advanced life support organization contributed to increased supply costs. The first class of OFD firefighters will graduate from ALS training this summer.
Human Resources — Josh Bachmeier, Director
The HR department budget for 2021-22 will increase by 5% this year for a total budget of $900,926.
Personnel costs will increase by 4% while technical supplies will decrease by 21%.
Four departments were identified as needing some attention due to turnover percentages. The street department has experienced the highest turnover rate for two years straight, Bachmeier said.
“Those employees become an important aspect of the city,” he said, adding that the City had a hard time retaining and attracting qualified candidates due to low pay.
“These are laborious jobs, and they’re also hazardous,” he said. “Therefore we’re proposing to increase the pay by half a grade for road workers [a 5% increase], at an average of $2,500 annually.”
The grounds department has also been seeing “double-digit turnover rates” year after year, Bachmeier said. He said maintaining city property was laborious, and proposed increasing pay by over $1 an hour, or $2,300 annually.
The HR department also proposed increasing pay for crew leaders in both departments. Including COLA, that equates to a $4,000 increase annually.
The Owensboro Police Department was another area seeing high turnover rates. Bachmeier attributed this to low pay, job-related stress, societal changes and technical and psychological complexities that made training for the job more difficult.
“We propose to increase rates to remain competitive with our peers,” he said, adding that OPD had already begun including a variety of bonuses to attract new recruits.
Bachmeier proposed increasing the entry-level pay rate by 5% for police officers. That equates to roughly $2,000 additional pay per year, he said.
The Parks & Recreation department was also having trouble recruiting seasonal employees for the summer months, Bachmeier said. He proposed increasing the pay rate by $0.50 an hour in an effort to attract high-quality candidates. That equates to $200-$250 more per summer, he said.
Bachmeier said the dispatch and transit departments were also experiencing high turnover rates.
Information Technology — Angela Bruner, Director
The IT department proposed a 15% decrease to $2,204,177 for the 2021-22 fiscal year.
Geographical Information Systems — Angela Waninger, Director of Finance and Support Services
The GIS budget will decrease by $2,000 for the 2021-22 fiscal year. The total budget will cost $502,556.
“Major projects for the upcoming year include the deployment of aerial photography covering all of Daviess County, providing monthly GIS update and support for 911 dispatching, supporting central dispatch moving to an updated CAD system,” Waninger said. “In the new CAD system, GIS data is integrated into the CAD system locating the emergency and providing appropriate response.”
Finance and Support Services — Dane Galloway, Deputy Director
This department’s budget will increase by 6% for the fiscal year, totaling $1,898,060.
“We take care of major projects for the city. We collect taxes and revenues,” Galloway said. “We do all city finance. We do all budgeting and audit, and we also do the day-to-day data collection for both of our TIF projects.”
The $102,000 increase will primarily go toward personnel costs.
Owensboro Police Department — Art Ealum, Chief
OPD proposed a budget increase of 5% for the fiscal year, totaling $15,575,946.
Most of that increase will go toward personnel costs, including COLA and pension costs. Software and maintenance costs will also increase 12%.
“Unfortunately, criminals out there have learned to circumvent the system and are oftentimes more advanced than the police department,” Ealum said.
Adding body cameras will increase the supplies budget by 26%, at an additional cost of $140,085.
“Basically, we are renting cameras, and every three years we’ll be refreshed with new hardware,” Ealum said. “In that is included redaction software, because with body-worn cameras, we can expect an increase in open records requests, because people know that you have them, and people want to get the footage. In most cases, we’re obligated to submit that to them.”
Ealum said OPD responded to 38,500 calls for service in 2020. Additionally, OPD conducted 7,500 traffic stops. In total, the department received only 33 complaints, a number Ealum commended.
Central Dispatch — Paul Nave, Director
The budget for central dispatch will decrease by 14% in 2021-22, totaling $3,072,073 for the year.
The majority of that decrease stems from projects that had been budgeted in previous years, including an updated Computer-Aided Dispatch (CAD) system and an upgraded P-25 radio system for both the city and county.
Nave said the new CAD system, which is slated to roll out this year, should be a “win-win” for both first responders and the community they serve.
“If there’s a suspect arrested today, the city and county can see it,” Nave said. “They can gain evidentiary information by working together.”
The P-25 radio system will also provide a seamless communications system between city and county entities during disasters, Nave said.
Parks & Recreation — Amanda Rogers, Director
Consisting of 16 full-time staff and 178 seasonal employees, the Parks & Rec department proposed a 5% increase for their 2021-22 budget. The total budget will increase by $198,830, totaling $4,077,437 for the year.
The most significant increase will go toward personnel costs, including retirement and health costs.
“We are seeing a significant amount of turnover, and training is very significant in what we do,” Roger said. “We have so many customer interactions. We touch more than 300,000 people a year in the operations of all of our facilities, locations and events.”
Replacement costs for certain items, such as surfacing replacement at Smothers Park, will increase supply costs.
The recreation fund encompasses seven different enterprise divisions, including the Edge Ice Center, both public pools, two golf courses, Centre Court Tennis Complex Facility and Kentucky Legend Fields. That budget will decrease by 6%, totaling $3,189,481.
“At $7.47 an hour, my own kids didn’t even want to work for me,” she said. “So I’m very thankful that the city manager allowed me to put [a pay increase] in the budget to propose to you all. We did lose several employees last year because they didn’t stay with us … so we have an increased number this year. To ensure that we can continue all those operations, we need to make sure we can staff those.”
The significant decrease in the budget comes from the City having funded the Ben Hawes Maintenance building last fiscal year.
Public Works — Steve Franklin, Director
The Public Works department is divided into two categories: engineering and operations.
The engineering budget will decrease by 3% this year, totaling $3.4 million. Personnel costs will increase by 6% due to insurance and COLA costs, while capital will decrease by 91%.
“That’s down almost $300,000, because last year we plugged in $300,000 in capital land improvement to boost our sidewalk maintenance program,” he said.
The paving budget will total $2,150,000, with the goal of paving eight miles of city streets.
The operations budget will decrease by 11% this year, totaling $2.48 million.
Personnel costs are up, while maintenance funds are down 7% due to rollover funds. Supplies are up 73% for the year while capital expenditures are down 72% for the year.
Last year, Public Works replaced 1,723 signs and filled 2,143 potholes, Franklin said.
The stormwater budget, which is part of Your Community Vision fund, will increase by 1%. The total budget is $517,000, up by $3,600. Supplies are up $1,500 as the department budgets for handheld, portable radios.
The ditch crew maintained 59 miles of ditches and 191 acres of land that were cut, mowed and bush hogged last year.
The property maintenance department will increase its budget by 11% this year, totaling $418,825. Personnel costs, new equipment and increased demolition funds primarily make up the bulk of that budget increase.
The facilities maintenance budget is down 6% this year, totaling $1.6 million.
The garage budget increased 0% for the 2021-22 fiscal year.
The sanitation budget will decrease its budget by 15% this year, bringing the total budget down by $1.3 million.
Franklin said the biggest reduction comes from decreased capital costs due to “timing of purchases of capital equipment,” which he said would fluctuate from year to year.
The transit department’s budget will decrease 67% for the upcoming fiscal year, totaling $2.8 million.
“Personnel is actually up … however, maintenance is down 64%, supplies is down 54% and capital is down 98%,” Franklin said. “That is primarily due to the CARES Act funding we received this year.”
That, coupled with some grants, contributed to the budget reduction, Franklin added.
“A lot of people don’t understand how big the Public Works department is,” Pagan said.
Non-Departmental Items — Lelan Hancock, Assistant City Manager
New wayfinding signs will make up a large portion of non-departmental city projects, Hancock said.
“We’ve got $100,000 going toward that this year, with $240,000 of carryover,” he said. “Those, basically, will be the entry signs from the bypass to downtown, leading all the way up to pedestrian signs to give you guidance throughout our downtown major venues. I hope to have those going up later this fall.”
The wayfinding signs project has been a five-year effort, Hancock added.
A downtown entry sign will total $250,000 for the fiscal year, while a transient boating dock design project will total $443,650.
“There’s a tremendous permitting process you have to go through,” Hancock said. “All of the river design studies that go on, including the environmental river impact as well. It’s not a dock that would be on a pond or a lake. It’s in the river, so it’s much more substantial. It has to sustain the river traffic — the highs and lows. This one will have boats come up for multiple days at a time.”
Hancock said there will be various grants available for the design process, which could offset some of those funds.
TIFs — Angela Waninger, Director of Finance and Support Services
The city received its second TIF reimbursement from the state in October 2020, Waninger said. The Gateway Commons TIF reimbursement totaled $723,000 — up from $291,000 for the 2019 year.
The downtown TIF received $440,000 in 2020 reimbursements, which was down from the $498,000 reimbursement in 2019.
Waninger and Galloway will submit the city’s TIF reimbursement application to the state for 2020 activity by April 30.
“We look to be reimbursed by the state for 2020 by October,” Waninger said. “At which point, we will disperse those funds per the Master Development Agreement at that point.”
Your Community Vision — Lelan Hancock, Assistant City Manager
These funds are derived from the net profits taxes, Hancock said. As city-wide projects, these funds go toward stormwater, parks, public safety and public works projects.
Stormwater projects total $1.5 million, while an OPD/Firearm simulator project will total $210,000.
The city’s fire training center will receive $1.5 million and an additional $250,000 set aside for the burn room.
“This is one of our most well-needed projects this year,” Hancock said.
Arts Agencies Funding Allocation — Nate Pagan, City Manager
Pagan explained that the city typically proposes a 2% increase to the various arts agencies across the city, unless a specific agency requests a lesser amount.
This will be the first year that the city doesn’t allocate any funds toward the Bluegrass Music Hall of Fame and Museum as part of a three-year contract that ends this year. Friday After 5 will also receive no funding due to last year’s season being cancelled.
In total, the city is budgeting $782,000 toward various arts agencies.
Social Services — Nate Pagan, City Manager
Social services agencies will receive a 2% increase in funding this year, Pagan said. United Way will allocate the funding for the rest of the social service agencies across the city.
Government Services — Nate Pagan, City Manager
The Human Relations Commission requested a 2% increase, while the rest “largely didn’t request an increase,” Pagan said.
General Fund — Nate Pagan, City Manager
“Far and away, the biggest priority is public safety, as it probably should be,” Pagan said.
Pagan said personnel costs were the biggest driver in each department’s budget. Personnel costs totaled $1.5 million, while other expenses totaled $1.08 million.
“You could attribute all the increase to pension and those personnel-related costs,” Pagan said. “I think all those departments have been prudent and professional in their requests. We did have to make various cuts throughout the process, but they understood that. They were very reasonable and were able to prioritize what they wanted and what they could do without for another year.”
Mayor Tom Watson said one of the biggest challenges facing government was the ability to compete with the private sector.
“I said then, ‘At some point we have to start competing with the private sector, because things change,’” he said. “Now, we’re right there. If we don’t get the ability to compete — especially with these public works and police and fire — 2023 is going to look awful if we’re not careful. We are discussing that, anyway.”
Five-Year Forecast — Angela Waninger, Director of Finance and Support Services
“Our long-range plan takes into consideration several factors,” Waninger said. “Things to consider are the economy, the effects of our two TIFs, impending changes in legislation, the cost of health insurance, state pension costs, and the increasing costs in supplies, such as asphalt and building materials.”
Waninger said the finance department had forecast a surplus for the 2021-22 year, and a deficit for the 2022-23 fiscal year.
“You see operating deficits starting in the 2023-24 fiscal year,” she said. “Fortunately, we have a fund balance that absorbs the forecasted deficits. Tax rates and fees are designed to bring in a surplus for two to four years, then it levels out for one to three years. Then you start to see a decline, which can then require use of the fund balance until further action is taken.”
Thanks to the general fund balance, Waninger said the city’s budget appeared healthy and that “the future looks good.”
