plano financial projections

8/9/2019 Plano Financial Projections

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Introduction

iiiCity Council

ivBudget & Research Staff

City Manager's Letter

1City Manager's Letter

Economic Overview

5Economic Overview

Revenue & Budget Assumptions

13Revenue & Budget Assumptions

Three-Year Fund Projects and 2009-10Status

21General Fund

31General Obligation Debt Service

35Water & Sewer

43Sustainability & Environmental Services

51Municipal Drainage

55Convention & Tourism

59Recreation Revolving

Fund Summaries

63Combined Budget Summary

65General Fund

2009-10 Status Report and Three-Year Financial Forecast


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66General Fund Revenue By Source

68General Obligation Debt Service

69Water & Sewer

70Water & Sewer Debt Service

71Sustainability & Environmental Services

72Municipal Drainage Utility

73Convention & Tourism

74Golf Course

75Recreation Revolving

76Property Management

77Community Access TV

78Property and Liability Loss

79Capital Reserve

Appendix

81Budget Calendar

83History of Tax Base

84Ad Valorem Tax Analysis

85Transfers

87Projected CIP Impact


Contents


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City Council

CITY OF PLANO, TEXAS2009-10 STATUS REPORT

AND

THREE-YEAR FINANCIAL FORECASTFiscal Year 2010-11 through 2012-13

Phil Dyer, Mayor

Deputy Mayor Pro TemMayor Pro TemLee DunlapHarry LaRosiliere

Place 8Place 5

Council Members

Ben HarrisPat Miner

Place 2Place 1

Lissa SmithVacant

Place 4Place 3

Jean CallisonPlace 7

Thomas H. Muehlenbeck, City ManagerKaren Rhodes-Whitley, Director of Budget & Research

Casey Srader, Budget Manager



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Budget & Research Staff

Karen Rhodes-WhitleyDirector of Budget & Research

x7472

Casey SraderBudget Manager

x5152

Elizabeth Dorrance

Budget Consultantx7146

Carla Rude

Budget Consultantx7407

Matt YagerBudget Analyst II

x5220

Steve TillmanBudget Analyst IIx5470

Anita BellBudget Analyst I

x7194

This document was prepared by the City of Plano, Budget & Research Department.For additional information, contact:

Budget & Research DepartmentCity of Plano, Texas

P. O. Box 860358

Plano, TX 75086-0358(972) 941-7194

www.plano.gov/departments/budget

2009-10 Status Report and Three-Year Financial Forecastv

Budget&R

esearchStaff


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City Manager's Letter



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the keys to this Financial Forecast is the fact that any fund deficits are assumed to be rectified in the year whenthe deficit is projected to occur.

Based on preliminary discussions with both Collin County and Denton County Central Appraisal Districts, totalassessed property values are projected at $24.4 billion with existing property values projected to decrease by5.13% or $1.3 billion overall. This translates into a loss in revenue totaling $6.4 million. New growth is projectedto increase by $200 million in FY 2010-11. The ad valorem tax rate of 48.86 cents per $100 of assessedproperty valuation is maintained throughout the forecast, and the amount allocated between debt and operationsis adjusted accordingly. Due to the issuance of several large Tax Notes for public safety projects, increasedbond sales over the last four years coupled with the projected loss in property value, an additional 1.66 centswill be required to be transferred to the G.O. Debt Fund during 2010-11 from the General Fund. This translatesto a loss of revenue to fund operations totaling $4.1 million.

Sales Tax, the General Funds second largest revenue source, is projected to decline by 5.3% to $53.5 millionas compared to actual collections for FY 2008-09. Currently, sales tax collections for the first five months ofthe fiscal year are down $1.5 million or 5.8%. Due to the volatility of this revenue source, the slowdown in theeconomy, the decrease in manufacturing and wholesale activity, and the increasing loss of retail market shareto surrounding communities, sales tax collections are projected to remain constant at $53.5 million for the

forecast period.

In addition, due to the significant drop in natural gas prices over the last year, the FY 2009-10 Gas Franchisefee check came in $1.2 million under our original budget. Based on projections from the Department of Energy,natural gas prices are expected to increase 7.6% in FY 2010-11. Building and Development related revenuesare currently running 18% below last years actual. Our original budget projection included a 25% decline thisyear and we have projected a 15% decline for FY 2010-11.

Another source of concern within the forecast is the Convention and Tourism Fund. During FY 2008-09, weexperienced a $1.0 million decline in Hotel/Motel tax collections from $5.0 million to $4.0 million due to theeconomic slowdown and decreased occupancy rates and stays. We are anticipating an additional decreaseto $3.8 million for FY 2009-10 and then returning to $4.0 million for the remainder of the forecast period.

Currently, local hotel occupancies are running 12% lower than normal. The decrease in Hotel/Motel Taxeswill directly affect the amount allocated to the Cultural Arts, Historic Preservation and Special Events grantsfunding for the forecast period and will be discussed in greater detail within the Convention and Tourism Fundfinancial forecast section of this document.

Listed below are additional significant features and issues contained within the forecast.

Significant Features and Issues of the Forecast

Not included in the fund projections are any of the Budget Reduction Committee recommendations to bediscussed at the City Council Core Business Matrix Retreat scheduled for April 10, 2010.

Not included in the fund projections are program enhancements relating to increases for mandates, growth,

increased services, technology requests, and other causes for the three-year period. All discretionaryitems will be examined on their individual merit during the budget development process in each year.

No salary increases have been included for either Civil Service or Non-Civil Service employees in theforecast. In addition, attrition is projected at 2.5% for the General Fund and 0.5% for all other funds.

A 5% health insurance increase, an additional 1% per year for TMRS and an increase in the RSP ratefrom 3.13% to 3.5% are included throughout the forecast.

Assumed to be funded within the forecast are all operating expenditures associated with CIP Projectscoming on-line during the forecast period. For FY 2010-11, the total is $2.1 million and includes equipmentand personnel for the addition of a Fire Ladder Truck and a Pumper, the opening of Fire Station #13, aswell as the completion of several Parks and Recreation improvements.

2009-10 Status Report and Three-Year Financial Forecast2

CityMa

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Funding for the Economic Development Incentive Fund has been included throughout the forecast. Theforecast includes the actual two-cent property tax revenue at $4.8 million for FY 2010-11, $4.9 million forFY 2011-12 and $5.0 million for FY 2012-13. The Economic Development Incentive Fund was implementedin FY 2006-07 in order to remain competitive with surrounding neighboring cities in our effort to attractbusinesses to the area and to provide funding for redevelopment purposes. During FY 2010-11, the Cityof Plano landed over a million square feet in real estate deals in a series of high-profile company relocations

including Pizza Hut, Inc., Tektronix and the Planet.The General Fund includes $1 million for the purchase of library books in each year of the forecast.

Operating expenditures are projected to increase by the rate of inflation of 1.0% for FY 2010-11, 2.0%for FY 2011-12 and FY 2012-13.

The forecast assumes issuing approximately $50.0 million in new debt in 2010-11, $42.0 million in 2011-12and $35.0 million in 2012-13. The projected debt figures include the issuance of new debt for the Arts ofCollin County project. However, no additional operating expenditures have been included at this time.

Based on the preliminary information received from North Texas Municipal Water District, both water andsewer rates will be increased dramatically throughout the forecast period. Water rates are scheduled toincrease approximately 10% to 12% in each year of the forecast, with annual expenditures increasesbased on the current take or pay minimum of 26.7 billion gallons. For 2010-11, the annual water rate isprojected at $1.40 per thousand gallons, for 2011-12 at $1.54, and for 2012-13 at $1.69. Wastewater

costs are projected to decrease 2.7% for 2010-11, then increase 6% for 2011-12, and 8.0% for 2012-13.The forecast proposes passing through all water and sewer rate increases proposed by NTMWD effectiveOctober 1

stin each year. The forecast also assumes a return to FY 2005-06 water usage consumption

of 26.4 billion gallons which is close to our 26.7 billion gallon take or pay contract.

My special thanks are offered to all Department Managers, the Executive Team and the Budget & ResearchDepartment for their cooperation in putting together this Financial Forecast. In addition, I look forward todiscussing this information with you at the March 22

ndCouncil meeting and also at our Core Business Matrix

Retreat scheduled for April 10th

.



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Economic Overview

New Horizons, a City of Plano Economic Overview

The Economic Outlook and Overview is intended toserve as a forecast and budgetary planning tool forthe citizens and leaders of Plano. This publicationattempts to provide the reader with a realistic, yetsensible financial overview of the present and futurefinancial conditions of the City. This document beginsthe 2010-11 budgetary planning process for the citizensand businesses of Plano under a united belief that welive, work, and play in one of the finest communitiesin the nation. Here are a few of the key ingredients thatreally make this community:

All America City! Plano, Texas is home to 264,560(Population est., January 2010) dynamic and diverse

individuals who have chosen to reside in a nationallyrecognized community with a proud heritage, a stablefoundation, strong citizen involvement and the provenability to provide excellent services with quality andvalue to the community. According to the 2008 CitizenSurvey, residents feel "safe" served by World Classand Internationally Accredited Public SafetyDepartments, while they drink from a Superior-ratedwater supplywith an approved Water ConservationPlan, navigate top quality, beautifully landscapedstreets and medians, and participate in environmentallygreen recycling programs supported by a Gold

Award winning Sustainability & EnvironmentalWaste Services Department. During a CitizenService Prioritization Assessment conducted in 2007,citizens ranked municipal services such as Police, Fire,Public Works, Customer & Utility Services,Sustainability & Environmental Services, 911 Service,and Building Inspections as both "Highly Important andHighly Valued" city services. In addition, citizens enrichtheir minds with an award winning public school district,have access to five public libraries, and reside in aplace which is convenient to six colleges and

universities.

The City received the national All-America city awardin 1994 and strides into the future with a history ofexcellence and quality services. Additionally, Planowas ranked as one of the six best places to live in theUnited States (Money Magazine, January 2004) andis under the leadership of the 2007 Texas CityManagement Association's City Council of the

Year. During 2007, the National Academy of PublicAdministration (NAPA) honored long-tenured PlanoCity Manager Thomas Muehlenbeck as one of five

2007 recipients of the prestigious National PublicService Award (NPSA). Over the years, Plano hasreceived numerous awards: several Emmy Awardsfor the Plano Television Network (PTN); a NationalLeague of Cities Award for Municipal Excellencefor Innovative City Programs with the Management

Preparation Program (MP3); and a Top Five rankingfor Best Human Resources in the 2007/2008 NorthAmerican Cities of the Future competition by fDimagazine. The Parks and Recreation, BuildingInspections, Police, Fire and the Purchasingdepartments all hold national accreditations.

Theres always something to do! The populaceenjoys access to over seventy shopping centers, 700restaurants, 3,700 hotel rooms, and a full-serviceconvention center. The community examines historicroots in an 1840s downtown area that includes the

original City park and an Interurban Railway Museum,while a nearby historic farmstead and museumshowcases the area's farming heritage. Residents areable to get out and play with access to National GoldMedal Parks and Recreation facilities including: 81public parks, 68 playgrounds, 2 area lakes, 51 milesof recreational trails, 6 recreation centers, a seniorcenter, 3 Theaters/Amphitheaters, 1 Gazebo/BandShell, 9 reserved pavilions, 42 shade shelters, 2 publicgolf courses, 81 public tennis courts, 8 public swimmingpools, and 178 sports fields.



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Location, location, location! Plano holds a keyingredient in a global economy, the location. As thelargest city in Collin County, located 20 miles north ofthe Dallas Texas Central Business District in theCentral Time Zone, city boundaries include 72.2 squaremiles supported by four major transportation arteries,

with convenient access to four airports. Plano is amember city of the regional public transportationsystem, DART, linking Plano with both Dallas and FortWorth and several other regional cities via a light railand bus system. Businesses and citizens are able tointeract with both coasts during most normal businesshours, and , most major U.S. cities are accessiblewithin a three hour flight time. Located in the Sunbelt,Plano enjoys a temperate climate with mild wintersand warm summers. The average year-roundtemperature is 66 F. January is the coldest month,with an average temperature of 44 F. July is the

hottest month, with an average temperature of 86 F.Annual rainfall averages 29 inches. Four large hospitalsand numerous rehabilitation centers, retirement andassisted living facilities are found within the city limits.

The ACCRA Cost of Living Index (AmericanChamber of Commerce Researchers Association,Annual Average Data, published January 2010) rankedPlano as 94.4% (on a 100% average for allparticipating locations) on the annual composite index.In addition, the state of Texas, and the City of Planodo not impose personal income taxes. The majority

of services and benefits enjoyed by citizens in Planoare funded through the City property (ad valorem) taxesand a 1.0% sales tax.

Low Property Tax rates! Plano has a lower cityproperty tax rate and offers greater homesteadexemptions than neighboring cities, as well as the

distinction of having had no property tax rate increasebetween 1990 and 2006, as shown in the Ad Valoremchart above. The municipal property tax rate increasedtwo cents to 47.35 cents per $100 valuation in 2006,and the revenue generated from that increase hasbeen dedicated solely for economic development

incentives, allowing the City to remain competitive withthe development in neighboring cities by offeringspecial incentives to businesses to relocate or remainin Plano, including redevelopment efforts of existingproperties.

A second rate increase of 1.51 cents became effectivein 2009-10 and raised Plano's tax rate to the currentlevel of 48.86 cents per $100 valuation. 89.4% of thatincrease is devoted to the General Obligation DebtFund to pay for principal and interest on bond debtrequired to finance projects in the Community

Investment Plan, with the remaining 10.6% of theproperty tax increase dedicated to the operatingbudgets for services and departments in the GeneralFund. Total property values for 2010 decreased bymore than 1% from 2009, or by $278 Million. The totaltaxable value of all new property constructed andcoming on-line in Plano in 2010 was $380 million, andthe average value of a home in Plano is currentlyestimated at $249,679. The following chart illustrateshow Planos property tax rate compares to thesurrounding cities.

Some of the columns on the chart indicate twonumbers; with the smaller number representing theeffective tax rate, which includes the homesteadexemption. The cities with an asterisk do not offer ahomestead exemption, and display only one rate.

Sound financial planning, credit-worthy! Plano haslong been been nationally recognized for record growthrates, innovations, and managers/employees, as well


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as the continued ability to provide the quality servicesand levels of amenities expected by the citizenry.Holding a AAA Bond rating since 2000 from threeof the nations major bond rating companies reflectsPlanos strong financial operations. Plano is one of thefew cities in Texas to consistently receive the highest

possible bond ratings from Moodys, Standard andPoors, and Fitchs IBCA Inc. In the ratings, the threecompanies lauded everything from the quality of citymanagement, to population growth, to the ability toattract corporate headquarters. In addition, the CitysMunicipal Drainage Bonds again received a AAArating from Standard and Poors. Plano is one of thevery few cities in the entire country to receive this highrating on Municipal Drainage Bonds.

Diversified Population and Culture! Plano ranks70

thin the United States (U. S. Census Bureau, cities

over 100,000, July 2008) and 9th

in the State of Texasin terms of total population. In fifty years, thepopulation has amplified more than 71 times from3,695 to the estimated January 1, 2010 population of264,560. According to the 2008 American CommunitySurvey provided by the U.S. Census Bureau, Planoresidents are well- educated with more than 54.2% ofadults over age 25 holding a Bachelors degree orhigher as compared to the U.S. average of 27.7%.

Residents enjoy a median household income of$84,319 as compared to the national average of$52,029 and of the estimated 264,560 citizens in Plano,66.2% are age 25 years and over with a median ageof 35.6 years. Recent years have shown significantgrowth in Planos minority population, with Asian andHispanic sector growth out-pacing all others. Nearly34% of Plano citizens speak a language other thanEnglish at home. The city grew by 72.5% between the1990 and 2000 Census. The most interesting changeis that the percentage of people moving to Plano fromanother country more than doubled in that decade.

Most of the foreign-born citizens who move to this areaare able to go anywhere in the world. The fact thatthey come here is a testimony to the good jobsavailable, the high quality of life, relatively low costsand the ease of doing business in this state.

Planos population growth continue to level off whileCity leaders pro-actively take measures with thepreparation of financial plans, forecasts and economicguidelines geared to the service standards preferredby the community. As the City reaches maturity, thebudget process involves vigilant monitoring, bothlong-range and short-term planning, combined withbalancing the impacts of decreasing revenues andincreasing maintenance costs. For purposes of theForecast, 0.3% annual population growth is projectedfor 2010-11, 0.1% for 2011-12, and 0.2% for 2012-13.

Construction, renovations and build out! TheConstruction sector continues to experience a shift inthe residential real estate market, with new housingconstruction at historically low levels nationwide. Newsingle family residential permits issued in Plano in 2009compared to 2008 reflect a decrease of nearly 39%,with a commercial decrease of 12%. Decreases canbe attributed not only to the nations current housingand mortgage crisis, ensuing banking crisis and theconsequent recession, and the impending residentialproperty build out within city limits. The numbers ofSingle Family Building Permits and Commercial

Permits reflect this downward trend and are expectedto continue for three more years, as reflected on theBuilding permits chart. Building permits as indicatorsof development are important because they reflectactual new construction, in-fill, remodeling, andre-development, and in turn, serve to indicate changesand additions to the appraisal values for the propertytax base.



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Future revenues related to the number of newconstruction permits issued are predicted to decrease15% for 2010-11, followed by a 10% decrease in2011-12 and a 5% decrease in 2012-13. The totalvaluation of new residential construction permits issuedin 2009 was $48.2 million, while new commercial

construction permits totaled $161.8 million. The CitysDevelopment Review Division continues to see anincrease in alternative housing concepts and requests,including requests for higher density and other zoningchanges.

The popularity of Legacy Town Center and East SideVillage depict future residential building trends continuetowards more compacted living spaces such as foundin patio and town homes, duplexes andpedestrian-friendly multi-purpose developments. Planofaces the challenge of maintaining a balance between

residential and commercial properties. This balanceis an integral part of the very foundation of valueswhich continue to make this community an attractivechoice to new residential and commercial investors,by aiding in retention and promoting positive growthof all property values.

The Texas Job Market! While the Texas economy

remains among the most favorable in United States,Texas employers have eliminated 287,800 jobs overthe past 12 months, for an annual decline of 2.7percent. Professional and Business Services lost atotal of 74,100 jobs since January 2009 and a 5.7percent annual decline. Education and Health Servicesrecorded a total increase of 50,500 jobs added overthe last 12 months. Financial activities posted losesof 13,900 positions over the year. Construction lost95,600 positions over the year for a 14.7 percentannual decline. Despite these figures, the employmentsituation in Plano remains relatively stable, with only

104 estimated positions lost, or 0.1 percent annualdecline, over the same 12 months according to theTexas Workforce Commission. Plano, Collin Countyand area cities continue to enjoy a low cost of livingas evidenced by the ACCRA at 94.4%. Businessescontinue to relocate to the area bringing new jobs,

growth and an overall stimulation to the local economy,while and other business decide to stay within thiscommunity. Today it is not unusual for people to liveand work entirely north of Interstate 635, a highwaywhich once marked an imaginary line betweensuburban residential areas and the residents placesof employment in the DFW Metroplex.

Positive economic outlooks are dependent onconsumer and business attitudes regardingemployment, markets, global economics, energyavailability and prices, and a general perception of

continued economic growth. However, the recentrecession and slow recovery coupled with high levelsof unemployment, as well as a volatile global marketall provide a significant damper to the economicoutlook. As the federal government's economicstimulus package winds down and the Federal Reserveconsiders raising record low interest rates, the currentrecovery is almost universally described as fragiledespite positive trends in a number of leadingeconomic indicators.

Planos employment strength continues to reflect the

diversity of its employment base, including a highlyeducated, talented and motivated workforce. Even intimes of national recession, companies continue torelocate to the community, and businesses alreadylocated here make plans to stay. City leaders workwith the Plano Economic Development Board toidentify, recruit, and retain businesses, contributing tothe communitys economic well-being. An impressiveand diverse list of corporate citizens mitigates theseverity of the economic downturn in Plano whencompared to other metropolitan areas in the nation.

Plano is a major employment center with over 6,000businesses in the city limits. Two major employmentdistricts, Legacy Business Park and the Research andTechnology District, and three large retail shoppingmalls, Collin Creek Mall, the Shops at Willow Bend,and the Shops of Legacy, conjoin with numerousneighborhood retail shops, eateries, and other businessto provide opportunities for employment in retail,wholesale,manufacturing,medical,finance,services and


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high tech fields within city limits. Diversity among thebusiness sectors has eased the effects of the nationalrecession in Plano.

Whats happening here and now? The year 2010is expected to bring only slight economic expansionto the area. Although the economic climate of the cityand region has been stifled by the national economicsituation and low consumer confidence levels, theregion shows small signs of positive and upwardmomentum and is expected to outperform the nationaleconomy again this year. The City previouslyexperienced significant decreases in several keyrevenues such as sales tax receipts, hotel/motel taxesand investment earnings during the recessionary periodof 2001-2003 and is currently experiencing a significantdecrease in the same sources of revenue.

Significant increases in expenditures for oil, fuels,utilities, insurance and medical costs have furtherimpacted the Citys General Fund resources. Twoyears of decreasing revenues and increasingexpenditures has resulted in smaller fund balances(working capital), decreasing the funding available foroperations and programs each year. Difficultprogramming decisions are now part of the budgetcycle each year due to the reductions in resources. Inaddition, the Citys water and sewer revenues continueto remain an area of concern as they are volatile dueto their relation to unusual weather conditions in the

past few years, coupled with increasing regulatorymandates from the EPA and the TCEQ (TexasCommission on Environmental Quality). Also a majorfactor in recent years, the energy market has beenextremely vulnerable and oil prices can fluctuate daily.High global demand, low inventories and politicaltensions around the world all play a role in these prices.Petroleum products,electricity and natural gas pricesare projected to slightly increase in each of the threeyears of this forecast as listed on the AssumptionsMatrix found in this forecast.

Following the exceptional sales tax revenue increasesduring the years between 2005-06 through through2007-08, recent significant decreases in sales taxrevenues are indicative of weak consumer confidenceand slowed business spending throughout the nation.Recent receipts suggest that the sharp decline in salestax revenue may now be leveling out. The decline alsoreflects decreases in disposable personal incomerelated to the recession and unemployment, both aremajor drivers of consumer spending, plus retailbusiness lost to neighboring cities. Collecting $56.5

million in sales tax during 2008-09, sales tax revenuesare currently projected to decrease to $53.5 million in2009-10. The slowdown of the national economy,coupled with high unemployment, rising prices andgrowth in retail options in from surrounding cities hasled to a forecast of sales tax receipts to remain

constant for the all three years of this forecast. "ShopPlano First! is once again the City mantra. A 2003sales tax study indicated that Planos share of theregional market should level out or increase slightly,related directly to the growth of retail infrastructure incompetitor communities, Internet shopping, andgeneral economic recovery. However, the 2003 Reportalso indicated that consumers were spending more onservices and less on clothing and home furnishings.This is significant because those services are taxedmuch less broadly than goods. Also noted in thatreport was the fact that the newer shopping malls

usually include an element of entertainment and areoften the preferred weekend destinations forconsumers.

Texas economic growth is expected to continue to ata lower rate over the three-year period from 2010-2013than was seen in the last decade as the U.S. economyrecovers and the states high-rolling energy andconstruction sectors settle into a more modest andsustainable growth rate. The convergence of aneconomic downturn, the bust in housing andconstruction, and the quirkiness of energy prices havestifled the historically strong performance of the region,and this trend is expected to continue for the next threeyears.

Even in these trying times, Plano continues to be aleader in economic development and business growthin the southwest, reflecting a strong history of attractingnew construction and business expansions. Numerous



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nationally recognized companies and their employeesrealize the benefits of living and working in the samecommunity.

Business and leisure travel reflect the current economicconditions as well when reviewing the hotel-motel taxrevenue collections and the Plano Civic Centrerevenues. These examples evidence the currentbusiness practice of doing more with less. It hasbeen estimated that nearly 70% of firms are takingadvantage of video and web-conferencing technologiesto cut costs. Growth and expansions of hotel and motelfacilities in the city has seen significant decrease overthe prior decade.

National Economic Trends are focusing on thelikelihood of a continued economic recovery withsluggish growth in the short term. As a country, we

have faced numerous challenges over the past fewyears, and in spite of these difficulties, Plano remainsstrong. The lowering of short-term interest rates bythe Federal Reserve has loosened credit and heldinflationary pressures at bay. The current monetarypolicy should stem any dangerous inflationary threatsas well as help shorten the time of recession.

Innovation, including sound technological advances,remains an important key to the expansion of theeconomy. Meeting this challenge is critical to economicgrowth and development. For a positive outlook, this

state continues to have one of the best business taxclimates in the United States. Texas was selectedamong the best for business relocation and expansionand has been named a leader in foreign trade zones.According to a March 2010 presentation by the SMUCox School of Business, over 50% of all nationalbusinesses who plan to relocate withing the next 20years, plan to move their operations to Texas.

A measure of the national economy is the real GrossDomestic Product (GDP), which measures the outputof goods and services produced by labor and property

located in the United States. The following graphshows this measure over the past seven years.Preliminary economic projections for the next threeyears indicate small but positive national growth asbusinesses continue to review and realign their goalswith strategies and plans that are more adaptive tocurrent economic conditions while evolving to a more

global economy. The City Council and managerspractice the same sort of forward planning with an eyetowards the horizon!

The Gross Domestic Product experienced rapid growthfrom 2001 through 2004, but trended downward sincea peak in 2004. Economic expansion currently appearsto be returning, although a "double-dip" is possible.Consumer confidence levels have not yet recoveredwith national unemployment rate remains at or nearthe 10% mark. Both Texas and Plano have historicallybeen below the national unemployment rate averages.U.S. productivity is enhanced by the rapid assimilationof innovative technologies into the workplace, a highproportion of working age people who are employed

and the number of hours they spend on their jobs.However, concerns have been raised over a declinein labor force participation or the share of the adultpopulation that is working or looking for work. Adecline in the share of the population that iseconomically active translates in to a lower rate ofeconomic growth. This has resulted in the relativelylow unemployment rate, a delay in retirements andcontinued growth and strong participation of women.Historically, labor force participation tends to increasefollowing increases in economic activity.

An additional measure of the overall economy is theConsumer Price Index (CPI), a direct indicator of whatinflation will be for the economy. Inflation, as measuredby the annual percentage change in the CPI, isexpected to remain low as historical data shows thatperiods immediately following a recession/depressionremain fairly level for the next several years accordingto several different nationally recognized economists.CPI is also influenced by direct relationship to energyprices. As shown in the following chart, inflation hasremained remarkably stable for the last several years.The CPI is an important factor, contributing to the


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reasonable costs of living for Plano indicated in theaforementioned ACCRA composite index rating of 94.4on a 100 point scale. This forecast includes an inflationrate of 1.0% in 2010-11 and 2.0% in both 2011-12and 2012-13. Low positive inflation helps to enhanceeconomic and market prosperity in the long run.

How does this affect Plano? Although economicforecasts for Plano and the region remain somewhatfavorable, residential build-out and the controlledeconomic recovery continue to influence the City.Sustainability and build-out require a shift in focus fromgrowth to maintenance activities. The City of Plano isstarting to feel the effects of the economic slowdownin areas such as sales tax dollars, new construction

permits issued and a higher unemployment rate thanlast year. These economic indicators will require thatPlano continue to diligently monitor financial guidelines,budgeting and expenditures. Meticulous attention isgiven to the reserve funds, such as the Capital ReserveFund, Community Investment Projects and other CityFunds. During the budget process each year capitalprojects are re-examined and ranked, using financialoversight and planning to ensure that the funds areavailable for these projects as needed. During 2009,the City Council participated in two Core BusinessMatrix Retreats, providing the City Council anopportunity to prioritize and review the City of Planoscore businesses and giving directions to managementregarding reductions in service delivery, if necessary.Also, during 2009, the City Council agreed upon Goalsfor 2009-2014. Five Strategic Plan Goals ensure acontinued focus on providing quality of life, essentialservices for the citizens and identify short-term actions.

The City previously established a Plano at Maturityprogram with nine priorities to address the challengesand opportunities that Plano will face as it transitions

from a growing to a maturing community. All of thepriorities noted are highly impacted by resourceavailability and influence Planos ability to addresschanging financial conditions that will impact servicedelivery and quality of life. In the Financial ResourcesAvailability section of the report, three categories were

identified:Revenue Enhancing: Strategies that will improvethe revenue stream for the City.

Reallocation of Resources: Strategies that seekways to be more efficient with existing resources.

Retail and Economic Development: Strategiesthat create an environment that is positive for thelong-term economic viability of the community.

The City continues to review requests for services thatare likely to increase and/or shift as the city matures,

and continue to explore and promote inter-localcooperation with Collin County and other Metroplexmunicipalities. Such planning is the purpose of thisStatus Report and Three-Year Financial Summary.

Forecast Notes Our regional and state economy hasexperienced this economic downturn at a degree muchlower than the nation as a whole. Limited economicexpansion, as well as limited economic retraction inseveral sectors, continues to generate employmentand other opportunities for Plano, making the effectsof national recession less severe in this area.

However, economists continue to warn that the nationaleconomy is expected to recover slowly over the nextseveral years with Texas expected to follow suit.

As is the case with all projections, external issues canheavily influence economic activity. Significant outsidefactors impacting the City and the nation include:unpredictable acts of nature, terrorism or war;uncertainty about future increases in interest rates bythe Federal Reserve; performance and creditability inglobal financial markets; and uncontrolled inflation.Barring any major developments in these areas, Plano

is poised to see slowing but some growth over the nextthree years.



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Revenue & Budget Assumptions

Budget Assumption MatrixRevenues and Expenditures

2010-11 thru 2012-13

Projected

2012-132011-122010-11ASSUMPTION

Population:

Current Population: 264,560 (Planning Dept.)January 1, 2009

0.30%Increase 0.3% to 265,347 (Planning Dept.)2010-11



Property Values:

Existing Property Value:

-5.00%Decrease 5.0% to $24,398,264,127 (C.A.D.)2010-11

0.00%Flat $24,798,264,127 (C.A.D.)2011-12

1.00%Increase 1.0% to $25,480,216,390 (C.A.D.)2012-13

New Property Value:Increase $200,000,000 (Based on historical)2010-11

Increase $400,000,000 (Based on historical)2011-12

Increase $400,000,000 (Based on historical)2012-13

Revenues:

Taxes

Ad Valorem Taxes:

0.00%0.00%0.00%Assume 99.0% collection rateCurrent

Assume 1.0% delinquent rateDelinquent

Based on historical trends in delinquent accts.Penalty & Interest

New Debt$50,000,000 (Bond Authority)2010-11

$42,000,000 (Bond Authority)2011-12

$35,000,000 (Bond Authority)2012-13

Interest Earnings

3.0% of Working Capital balance2010-11



Building Related Revenues

-15.00%Decrease 15.0% (Bldg. Inspect. Dept. & historical)2010-11

-10.00%Decrease 10.0% (Bldg. Inspect. Dept. & historical)2011-12 -5.00%Decrease 5.0% (Bldg. Inspect. Dept. & historical)2012-13

Direct Population-Based (DP)

0.30%Increase 0.3% (Planning Dept.)2010-11



Indirect Population-Based (IP)






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Direct Economy-Based (DE)

1.00%Increase 1.00% (Projected inflation rate)2010-11



Indirect Economy-Based (IE)

0.50%Increase 0.50% (Projected inflation rate)2010-111.00%Increase 1.00% (Projected inflation rate)2011-12

1.00%Increase 1.00% (Projected inflation rate)201213

GENERAL FUND

0.00%0.00%0.00%Based on historical actualsSales Tax

0.10%0.05%0.15%Indirect Population based increase (IP)Mixed Drink Tax

0.10%0.05%0.15%Indirect Population based increase (IP)Bingo Gross Receipts Tax

Franchise Fees

1.00%1.00%0.50%Indirect Economy based increase (IE)Electrical Franchise

ConstantTelephone Franchise

ConstantFiber Optics Franchise

1.00%1.00%0.50%Indirect Economy based increase (IE)Gas FranchiseConstantCable TV Franchise

Fines & Forfeits

0.10%0.05%0.15%Indirect Population based increase (IP)Municipal Court

0.10%0.05%0.15%Indirect Population based increase (IP)Library Fines

Miscellaneous Revenue

Based on historical actuals & ending working bal.Interest Earnings

Based on rental lease agreementsSale/Rental of Property

4.00%4.00%4.00%4.0% per year increaseInsurance Collections

ConstantSundry

Licenses & Permits

-5.00%-10.00%-15.00%Based on building & development projectionElectricians License

0.10%0.05%0.15%Indirect Population based increase (IP)Food Handlers Permits 0.10%0.05%0.15%Indirect Population based increase (IP)Land/Burning/Liquid Waste

0.10%0.05%0.15%Indirect Population based increase (IP)Grease Trap Permits

0.10%0.05%0.15%Indirect Population based increase (IP)Animal Licenses

0.10%0.05%0.15%Indirect Population based increase (IP)Restaurant Plan Review

0.10%0.05%0.15%Indirect Population based increase (IP)Alarm Permits

-5.00%-10.00%-15.00%Based on building & development projectionFiling Fees

-5.00%-10.00%-15.00%Based on building & development projectionFire Protection Plan Review

-5.00%-10.00%-15.00%Based on building & development projectionBuilding Permits

-5.00%-10.00%-15.00%Based on building & development projectionElectrical Permits

-5.00%-10.00%-15.00%Based on building & development projectionPlumbing Permits

-5.00%-10.00%-15.00%Based on building & development projectionHeating & A/C Permits

-5.00%-10.00%-15.00%Based on building & development projectionFence Permits

-5.00%-10.00%-15.00%Based on building & development projectionSwimming Pool Permits

0.10%0.05%0.15%Indirect Population based increase (IP)Pool Inspection

-5.00%-10.00%-15.00%Based on building & development projectionIrrigation Permits

ConstantDay Laborer Fees

-5.00%-10.00%-15.00%Based on building & development projectionSign Permits

-5.00%-10.00%-15.00%Based on building & development projectionReoccupancy Permits

ConstantMisc. Licenses & Permits

Fees & Charges for Services

0.10%0.05%0.15%Indirect Population based increase (IP)Animal Pound & Adopt. Fee

0.10%0.05%0.15%Indirect Population based increase (IP)Ambulance Service

0.10%0.05%0.15%Indirect Population based increase (IP)False Alarm Response


Revenue&BudgetAssumptions


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0.10%0.05%0.15%Indirect Population based increase (IP)Emergency 911

0.10%0.05%0.15%Indirect Population based increase (IP)Interlocal Plan Review

-5.00%-10.00%-15.00%Based on building & development projectionContractor Registration Fee

-5.00%-10.00%-15.00%Based on building & development projectionEngineering Inspection Fee

-5.00%-10.00%-15.00%Based on building & development projectionResidential Building Plan Review

-5.00%-10.00%-15.00%Based on building & development projectionReinspection Fee

0.10%0.05%0.15%Indirect Population based increase (IP)File Searches

-5.00%-10.00%-15.00%Based on building & development projectionSame Day Inspection Fee0.10%0.05%0.15%Indirect Population based increase (IP)Convenience Copiers

0.10%0.05%0.15%Indirect Population based increase (IP)Recreation User Fee

0.10%0.05%0.15%Indirect Population based increase (IP)Recreation Rental Fee

0.10%0.05%0.15%Indirect Population based increase (IP)Swimming Fee

0.10%0.05%0.15%Indirect Population based increase (IP)Recreation Membership Card Fee

0.10%0.05%0.15%Indirect Population based increase (IP)Tennis Center Fee

0.10%0.05%0.15%Indirect Population based increase (IP)Food Manager/Handler Training

0.10%0.05%0.15%Indirect Population based increase (IP)Tree Trimming Assessments

0.10%0.05%0.15%Indirect Population based increase (IP)Child Safety Fee

4.00%4.00%4.00%4.0% per year increaseSundry

Intergovernmental Revenue

Payments from FISD:Based upon schedule of costs reimbursedSchool Crossing Guards

Payments from PISD:

Based upon schedule of costs reimbursedSchool Liaisons

ConstantCollin County Library Grant

ConstantDenton County Library Grant

ConstantTri-City Academy/Miscellaneous

ConstantInterlocal Radio System Access

Intragovernmental Transfers

Intra-Fund Transfers From:

5.0% of selected Water & Sewer revenues; indirectWater & Sewer Fund

costs; and allocations for additional costs

7.0% of Residential Collection, Special RefuseSustainability & Env. Svcs. Fund Collection, and Landscape Bag revenues

5.0% of Recreation Fund revenuesRecreation Revolving Fund

5.0% of Municipal Golf Course Fund revenuesMunicipal Golf Course Fund

5.0% of Convention & Tourism Fund revenuesConvention & Tourism Fund

7.0% of Municipal Drainage Fund revenuesMunicipal Drainage Fund

WATER & SEWER FUND

9.70%10.00%12.00%Direct Population based increase (DP), and NTMWDWater Income

1.00%1.00%0.50%Indirect Economy based increase (IE)Water Taps

8.00%5.70%-2.70%Direct Population based increase (DP), and NTMWDSewer Income

0.20%0.10%0.30%Direct Population based increase (DP)Water & Sewer Penalties

1.00%1.00%0.50%Indirect Economy based increase (IE)Water Meters

1.00%1.00%0.50%Indirect Economy based increase (IE)Construction Water

1.00%1.00%0.50%Indirect Economy based increase (IE)Service Connect Fee

1.00%1.00%0.50%Indirect Economy based increase (IE)Backflow Testing

1.00%1.00%0.50%Indirect Economy based increase (IE)Sewer Tie-On

1.00%1.00%0.50%Indirect Economy based increase (IE)Pre-Treatment Permits


1.00%1.00%0.50%Indirect Economy based increase (IE)Misc. Income



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CONVENTION & TOURISM FUND

2.00%2.00%1.00%Direct Economy based increase (DE)Hotel/Motel Receipts

2.00%2.00%1.00%Direct Economy based increase (DE)Civic Center Fees

ConstantMiscellaneous


SUSTAINABILITY & ENVIRONMENTAL SERVICES FUND

2.00%2.00%1.00%Direct Economy based increase (DE)Commercial Franchise0.10%0.05%0.15%Indirect Population based increase (IP)Special Refuse Collection

0.20%0.10%0.30%Direct Population based increase (DP)Residential Collection

2.00%2.00%1.00%Direct Economy based increase (DE)BFI, Inc.

0.10%0.05%0.15%Indirect Population based increase (IP)Recycling

0.10%0.05%0.15%Indirect Population based increase (IP)Sale of Landscape Bags

0.10%0.05%0.15%Indirect Population based increase (IP)Tipping Fee

0.10%0.05%0.15%Indirect Population based increase (IP)Contributions via Utility Billing

0.10%0.05%0.15%Indirect Population based increase (IP)Sale of Compost

1.00%1.00%0.50%Indirect Economy based increase (IE)Miscellaneous

2.00%2.00%1.00%Direct Economy based increase (DE)Disposal Reimbursements

MUNICIPAL DRAINAGE FUND0.10%0.05%0.15%Indirect Population based increase (IP)Residential Class Fees

0.10%0.05%0.15%Indirect Population based increase (IP)Commercial Class Fees


MUNICIPAL GOLF COURSE FUND

0.10%0.05%0.15%Indirect Population based increase (IP)Golf Fees

0.10%0.05%0.15%Indirect Population based increase (IP)Concessions

0.10%0.05%0.15%Indirect Population based increase (IP)Room Rental

ConstantMiscellaneous


RECREATION REVOLVING FUND 0.10%0.05%0.15%Indirect Population based increase (IP)Recreation Fees

0.10%0.05%0.15%Indirect Population based increase (IP)Contributions

0.10%0.05%0.15%Indirect Population based increase (IP)Sundry

Based on historical actuals & ending working bal.Interest

Expenses:

Inflation

1.00%Increase 1.0% (CPI, OMB, CBO, Blue Chip Consensus)2010-11



Salaries, Wages & Benefits

Salaries (Civil & Non-Civil Service)

0.00%Increase 0.0% (Management projections)2010-11



RSP

Remain constant at 3.5% of salary (RSP Board)2010-11






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Life Insurance

Remain constant at 1.00% of salary (Calculation)2010-11



Disability


Remain constant at 0.08% of salary (Calculation)2011-12Remain constant at 0.08% of salary (Calculation)2012-13

Medicare




TMRS

1.00%Remain constant at 16.66% of salary (TMRS in Austin)2010-11

+ 1.0% increase each year. (GASB 45)

1.00%Remain constant at 15.29% of salary (TMRS in Austin)2011-12

+ 1.0% increase each year. (GASB 45)1.00%Remain constant at 15.29% of salary (TMRS in Austin)2012-13

+ 1.0% increase each year. (GASB 45)

Health Insurance

5.00%Increase 5.0% (Calculation)2010-11



Attrition

2.5% for General Fund and 0.5% for other Funds2010-11



Depreciation

Method remains constant each year (Historical & ERF)2010-11



Municipal Garage Charges

2.00%Increase 2.0% (Equip. Svcs., gas and oil price inc.)2010-11



Electricity

2.00%Increase 2.0% (Department of Energy)2010-11



Natural Gas






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Capital Outlay

$1,000,000 per year for library books (Historical)2010-11



Existing Expenditures

1.00%Increase 1.0% (Projected inflation increase)2010-112.00%Increase 2.0% (Projected inflation increase)2011-12

2.00%Increase 2.0% (Projected inflation increase)2012-13

NTMWD

Water

12.00%Increase $0.15 per 1,000 gal. to $1.402010-11



Wastewater

-2.70%Decrease $0.04 per 1,000 gal. to $1.412010-11

5.70%Increase $0.08 per 1,000 gal. to $1.492011-128.00%Increase $0.12 per 1,000 gal. to $1.612012-13

Upper East Fork Interceptor System

-15.40%Decrease $0.14 per 1,000 gal. to $0.772010-11

7.70%Increase $0.06 per 1,000 gal. To $0.832011-12


EWS - Regional Landfill

5.60%Price per ton to increase to $39.662010-11



GENERAL FUND TRANSFERS

Capital Reserve

Transfer $10,500,000 (Calculation)2010-11



Economic Development

Constant at $895,770 (Calculation)2010-11

Increase 1.0% to $904,728 (Calculation)2011-12

Increase 1.0% to $913,775 (Calculation)2012-13

Economic Dev. Incentive Fund

Transfer $4,830,856 (2 cents on tax rate)2010-11



Technology Fund

Remain constant @ $1.4 million a yr.,2010-11

General Fund = $1,000,0002011-12

Water & Sewer Fund = $300,0002012-13

Sustainablility & Env. Svcs. Fund = $60,000

Municipal Drainage Fund = $20,000

Convention & Tourism Fund = $20,000




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CATV Fund

Transfer 0.0% of Cable TV Franchise revenue2010-11



Property & Liability LossTransfer $3,200,000 (Calculation)2010-11





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General Fund

Recurring Revenue Vs. Recurring Expenditures

2012-132011-122010-112009-102009-102008-09

ProjectedProjectedProjectedRe-Est.BudgetActual

Recurring Revenue

$74,306,342$73,591,696$74,724,582$82,436,251$82,436,251$82,515,968Ad Valorem Taxes53,501,46853,501,46853,501,46853,501,46857,821,89056,487,233Sales Tax21,990,14521,843,02121,697,35221,375,08322,197,74323,586,444Franchise Fees

8,472,8968,464,4318,460,2018,447,5308,297,3858,317,559Fines & Forfeits1,591,6711,674,6261,858,9712,163,0692,014,1842,567,230Building & Development2,664,0302,668,9472,684,0822,697,6982,580,8742,673,986Licenses & Permits

11,065,21611,014,20710,969,77410,788,55910,744,40910,512,735Fees & Charges for Services727,255727,255727,255727,255716,7472,915,578Intergovernmental

1,616,0401,608,0001,600,0001,400,0001,300,0001,270,999Interest Income21,113,67320,185,02019,300,26318,727,42519,486,53018,513,599Transfers In

30,00030,0000000CIP Coming On-Line2,045,3102,030,1382,016,0722,001,3972,146,2901,884,148Other

$199,124,045$197,338,810$197,540,021$204,265,735$209,742,303$211,245,479Total Recurring Revenue

Recurring Expenditures$157,328,717$155,649,968$153,408,457$149,962,669$150,829,615$146,725,442Salaries & Wages

50,255,38749,353,92648,470,73949,467,13549,254,95845,920,966Supplies & Services-2,420,751-2,420,751-2,420,751-2,420,751-2,420,751-1,617,865Reimbursements1,146,9653,564,1082,130,808000CIP Coming On-Line1,000,0001,000,0001,000,0002,602,8131,010,0001,636,365Capital Outlay

$207,310,318$207,147,251$202,589,253$199,611,866$198,673,822$192,664,908Total Recurring Expenditures

19,958,85819,814,78420,426,62620,648,53120,344,97320,577,987Transfers Out

$17,025,801$16,651,172$26,749,468$42,744,130$25,874,676$44,741,546Fund Balance - Beginning



$19,958,858$19,814,784$20,426,626$20,648,531$20,344,973$20,577,987Less: Transfers Out

($11,119,330)($12,972,053)$1,273,610$26,749,468$16,598,184$42,744,130Fund Balance - Ending

$17,039,204$17,025,801$16,651,172Required 30 Day Balance

$28,158,534$29,997,855$15,377,562Add'l Revenues or ProgramReductions to Meet 30 Days

30303049Days of Operation

0.530.951.66Operating Tax Rate to beTransferred to Debt

$1,350,452$2,355,835$4,050,112Equivalent Amount



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General Fund Forecast

The General Fund is the Citys largest single fund, and serves as the primary operating fund. All general tax

revenues and other receipts that are not allocated by law or contractual agreement to other funds are accounted

for in the General Fund. The sources of revenue that comprise the General Fund are described below:

Operating Revenue Sources:

Ad Valorem TaxAd valorem taxes are levied against the tangibleassessed valuation of real and personal property withinthe city. The property is assessed by the CentralAppraisal District of Collin County at 100% of estimatedmarket value and certified by the Appraisal ReviewBoard.

Sales Tax

The City authorizes a 1% local sales and use tax onthe receipts from the retail sale of all taxable itemswithin the city. Local sales and use tax revenue iscollected by the Comptroller of the State of Texas.

Mixed Drink TaxThe City receives a portion of the State of Texas taxon mixed beverages sold by private clubs within thecity limits.

Bingo Gross Receipts TaxThe City authorizes a 2% collection of gross receipts

resulting from conduct of bingo games by an authorizedorganization in any calendar month. The first $2,500of gross receipts each month are exempted.

Franchise FeesFranchise fees are assessments, based upon grossreceipts, for electric, telephone, fiber optics, gas, andcable television.

Fines & ForfeitsThis category of revenue includes court fines andforfeitures, traffic fines, and library fines.

Licenses & PermitsLicenses and permits include revenue for building &development related, food handlers, restaurant planreview, animal, alarm, fire protection plan review,grease trap, and pool inspections.

Fees & Charges for ServicesFees and charges for services include revenue foranimal adoption, ambulance service, 911, false alarmresponse, charges for parks and recreation programs,contractor registration, engineering inspection,re-inspection, tree trimming, food handler training, andchild safety.

Intergovernmental ResourcesThese resources are comprised of revenues receivedfrom other governmental entities.

OtherMiscellaneous receipts include revenues such asinterest income, rents, and insurance collections.

Other Financing Sources:

Operating Transfers InTransfers from other City funds.


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GENERAL FUND

Operating Revenues

The General Fund accounts for most financialresources except those required for debt or specificallyattributable to the enterprise funds. Resources are

generated by property (ad valorem) and other taxes,franchise fees, fines & forfeits, licenses & permits, andfee & charges for services.

The graph above shows the historical trends andprojections for all General Fund revenues. Asillustrated, 2005-06 revenues in the General Fund werestill highly affected by the national and local economy,

the loss of jobs, and the impact of war. From 2006through 2008 we witnessed a rebound in revenuesources, specifically sales tax and building anddevelopment related revenues. However, the sluggisheconomy, a projected decline in existing propertyvalues, and stagnant sales tax receipts will most likelylead to revenue shortfalls during the three-year forecastperiod. By 2012-13, total General Fund revenues areestimated to be $199.1 million, a 5.7% decrease over2008-09 revenues.

The major sources that make up the General Fundrevenues for 2009-10 include: Ad Valorem Tax(40.4%), Sales Tax (26.2%), Franchise Fees (10.5%),Fines & Forfeits (4.1%), Licenses & Permits (2.2%),Fees & Charges for Services (5.5%), Interest Income

(0.7%), Transfers (9.2%), and Other (1.3%). Adescription of each source as well as a discussion ofthe outlook over the next three years follows.

Ad Valorem Taxes

Ad valorem (property) taxes are the Citys largestrevenue source. Ad valorem tax revenue is determinedby two major factors: the total assessed valueestablished by both the Central Appraisal Districts ofCollin County and Denton County plus the tax rateestablished by the City Council. In 2009-10, the CityCouncil approved a 1.51 cent tax rate increase for atotal tax rate of 48.86 cents per $100 of assessedvaluation. This 1.51 cent tax rate increase wasnecessary due to the loss of property value from theCity's tax base as well as increased debt costs.

Ad valorem tax revenue is based on maintaining thecurrent tax rate of 48.86 cents per $100 valuation forthe next 3 years and assumes a 99.0% collection rate.At no time during the forecast period does the changein distribution between operation and debt exceed the8.0% rollback operating limit. However, due toincreasing bond sales sold over the last three years,a total of 1.66 cents will be required to be transferredback to the GO Debt Fund during 2010-11 fromOperations.



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Based on projections attained by both CentralAppraisal Districts, existing property values are

projected to decrease by 5.13% in 2010-11, remainconstant during 2011-12, and then increase by 1.0%in 2012-13. New growth is projected at $200.0 millionin 2010-11 and then at $400.0 million for both 2011-12and 2012-13.

Sales Tax

Sales tax receipts, the General Funds second largestsource of revenue, are expected to decrease 5.3% in2009-10 from the 2008-09 actual collection of $56.5million to $53.5 million. Based on actual collections

through March, this revenue source is projected todecline due to the continued sluggish economy and adecrease in manufacturing and wholesale activity.Overall, sales tax receipts represent 26.2% of the totalGeneral Fund revenue in 2009-10.

Sales tax receipts will continue to be directly impactedby the national and local economy, the potential lossof market share to surrounding communities, the TexasLegislative-initiated Back-To-School Sales TaxHoliday occurring each August, and the developingstreamlined sales tax issues of origin-based versus

destination-based collections. We are projecting salestax collections to remain constant at $53.5 millionduring the forecast period in anticipation that thesetrends will continue.

The graph above shows the historical trends andprojections for sales tax receipts.

Franchise Fees

Franchise fees for 2009-10 are expected to total $21.4million, or 10.5% of the total General Fund revenue.Franchise fees are collected from assessments, basedupon gross receipts, for electric, telephone, fiber optics,gas, and cable television.

Telephone, Fiber Optics,and Cable Television franchisefees are all projected to remain relatively constant forthe forecast period. Telephone franchise fees arere-estimated for 2009-10 at $4.4 million; Fiber Optics

franchise fees are re-estimated for 2009-10 at $18,021;and Cable Television franchise fees are re-estimatedfor 2009-10 at $2.7 million.

Electrical franchise fees are re-estimated for 2009-10at $11.6 million and are projected to increase at theindirect economy-based rate for each of the threeforecast years. Gas franchise fees are re-estimateddown for 2009-10 to $2.7 million, down significantlydue to lower than anticipated natural gas rates. Gasfranchise fees are projected to increase at the indirecteconomy-based rate for each of the three forecastyears. It is important to note that while franchise feerevenues from all sources are either remaining stableor increasing slightly, the expenditures charged citiesfor these services continue to increase. Most notably,electricity is projected to increase 2.0% in each of thethree forecast years and natural gas is projected to


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increase 7.6% in 2010-11 and 2.0% in both 2011-12and 2012-13 as projected by the Department ofEnergy.

The graph above shows the historical trends andprojections for franchise fee revenue. By 2012-13, thisrevenue source is estimated to reach $22.0 million, a6.8% decrease over 2008-09 revenues.

Fines & Forfeits

Fines and forfeits for 2009-10 are expected to increaseto $8.4 million, up $129,971 from 2008-09 actuals dueprimarily to an increase in municipal court fines thisyear. This category of revenue includes court finesand forfeitures, traffic fines, and library fines.

Fines and forfeits are projected to increase at theindirect population-based rate of 0.15% in 2010-11,0.05% in 2011-12, and 0.10% in 2012-13.

The graph above shows the historical trends andprojections for fines and forfeits revenue. By 2012-13,this revenue source is estimated to reach $8.5 million,a 1.9% increase over 2008-09 revenues.

Licenses & Permits

Licenses and permits for 2009-10 are expected to total$4.9 million, or 2.2% of the total General Fundrevenue. Included within the licenses and permitscategory are food handlers permits, grease trappermits, animal licenses, alarm permits, most building& development related revenues, and various otherpermits.

Due to the continued building slowdown as a result ofthe national and local economy, all building &development related revenues are projected todecrease 15.0% in 2010-11, 10.0% in 2011-12, and5.0% in 2012-13.

Most other licenses and permits revenues are projectedto increase at the indirect population-based rate of0.15% in 2010-11, 0.05% in 2011-12, and 0.10% in2012-13.

The graph above shows the historical trends and

projections for licenses and permits revenue. By2012-13, this revenue source is estimated to be $4.3million, an 18.8% decrease over 2008-09 revenues.

Fees & Charges for Services

Fees and charges for services for 2009-10 areexpected to total $10.8 million, or 5.5% of the totalGeneral Fund revenue. Included within the fees andcharges for services category are ambulance service



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fees, emergency 911 fees, false alarm fees, recreationuser fees, tennis center fees, engineering inspectionfees, re-inspection fees, and various other fees.

Overall, most fees and charges for services areprojected to increase at the indirect population-basedrate of 0.15% in 2010-11, 0.05% in 2011-12, and0.10% in 2012-13. Any building & development relatedrevenues within this category are projected to decrease15.0% in 2010-11, 10.0% in 2011-12, and 5.0% in2012-13.

The graph above shows the historical trends andprojections for fees and charges for services revenue.By 2012-13, this revenue source is estimated to reach$11.1 million, a 5.3% increase over 2008-09 revenues.

Intergovernmental Resources

Intergovernmental resources for 2009-10 are expectedto total $727,255. These resources are comprised ofrevenues received from other governmental entitiessuch as payments from Frisco I.S.D. and Plano I.S.D.for school liaison officers. Also included are a CollinCounty library grant, a Denton County library grant,Plano-Richardson Police training facility receipts, andInterlocal Radio System Access revenue.

Intergovernmental resources are projected to remainconstant throughout the forecast period at $727,255.

The graph above shows the historical trends andprojections for intergovernmental revenue.

Other

Miscellaneous revenues for 2009-10 are expected tototal $3.4 million. Miscellaneous receipts includerevenues such as interest income, rents, and insurancecollections.

Interest income dropped dramatically in 2008-09 dueto the current economic crisis. Interest income isprojected to be $1.4 million in 2009-10 and thenincrease to $1.6 million in 2010-11 and then remainfairly stable throughout the remaining forecast period

assuming sustained favorable interest rates.

The graph above shows the historical trends andprojections for interest income. By 2012-13, thisrevenue source is estimated to be at $1.6 million.


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Operating Transfers In

Transfers in for 2009-10 are expected to total $18.7million, or 9.2% of the total General Fund revenue.Transfers in include intra-fund transfers from the Water

& Sewer Fund, the Sustainability & EnvironmentalServices Fund, the Recreation Revolving Fund, theMunicipal Golf Course Fund, the Convention & TourismFund, and the Municipal Drainage Fund. All transfersare based on a percentage allocation of revenuesreceived in each of these funds. Therefore, therevenues received in future years depend on revenuesgenerated in each of these funds over the next threeyears.

The graph above shows the historical trends andprojections for transfers in. By 2012-13, this revenuesource is estimated to reach $21.1 million, a 14.0%increase over 2008-09 revenues.

CIP Coming On-Line

Additional revenues anticipated in the future as a resultof new facilities coming on-line include the CarpenterRecreation/Senior Center expansion. In both 2011-12and 2012-13, $30,000 in additional revenues is

anticipated for a full year operation at the expandedfacility.

Operating Expenditures

Four decades of rapid growth stimulated local businessand development activity and created generousmunicipal revenues and opportunities. The community,in turn, placed demands on the City to maintain and/orenhance the services provided for citizens. Carefulfinancial planning and budgeting are integral to thebudget process as it is known today.

The following graph shows the historical trends andprojections for all General Fund expenditures. Overthe past decade, there has been steady growth in allmajor expenditure categories, resulting from the stronggrowth in the Citys population and the need forincreased services. However, as the graph below

indicates, 2008-09 shows a dramatic decrease inoverall expenditures. This decrease in spending wasnecessitated by the very sluggish economy andincluded elimination of both full-time and part-timevacant positions as well as an overall decrease indepartmental spending.

The major expenditures that make up the General

Fund by category for 2009-10 include: Salaries &Wages (67.0%), Supplies & Services (22.5%), CapitalOutlay (1.2%), and Transfers (9.4%). A description ofeach expenditure category as well as a discussion ofthe outlook over the next three years follows.



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Salaries, Wages and Employee Benefits

Total Salary & Wage growth for the forecast period isprojected at $10.6 million or an 7.2% increase over2008-09 costs. No salary increases have beenincluded for either Civil Service or Non-Civil Serviceemployees in the forecast. In addition, attrition isprojected at 2.5% for the General Fund. No newpositions or program enhancements are included inthe projections with the exception of retirement payoutswhich are included at $3.0 million for each year of theforecast period. This is necessary to help offset theanticipated large number of retirements in the nearfuture.

Benefits expenditure projections include a 5.0% healthinsurance increase for all periods of the forecast anda 1.0% TMRS rate increase. Other benefit rate

calculations remain constant. Slight increases tobenefits costs such as Medicare, retirement, disabilityand life insurance costs are driven by annual salaryincrease rates.

Supplies & Services

Supplies & services include materials, supplies,contracts, and sundry. During the period of 2008-09to 2012-13, supplies & services expenditures areprojected to increase by $4.3 million or a 9.4% increaseover 2008-09 expenditures.

Supplies & services costs are projected to increasebased on the projected inflation rate of 1.0% in2010-11, 2.0% in 2011-12 and 2.0% in 2012-13.Municipal garage charges are projected to increase2.0% in each of the three forecast periods due toanticipated rising fuel costs. Electricity charges areprojected to also increase 2.0% in each of the threeforecast periods. Finally, natural gas charges areprojected to increase 7.6% in 2010-11 and thenincrease 2.0% in each of the remaining two forecastperiods.

Capital Outlay

Capital outlay is projected at $1,000,000 per year forlibrary books. No other new capital is provided for inthe General Fund with the exception of capital outlayrelated to CIP projects coming on-line.

Transfers

The Capital Reserve Fund policy aims to allocate75.0% of the annual depreciation to be transferredfrom the General Fund. The transfer to the CapitalReserve Fund is projected to remain constant at $10.5million for each forecast period.

The Property & Liability Loss Fund transfer is projectedbased on a three-year average of General Fundlosses. The transfer is projected at approximately $3.1million in 2009-10 and is projected to increase slightlyto $3.2 million in 2010-11, and then decrease to $2.5million for the remainder of the forecast period. Thistransfer is necessary to pay Workers Compensationand Judgments & Damages claims.

A transfer to the Technology Fund in the amount of$1.0 million in all forecast periods is representative ofthe General Funds proportionate share for technologyrelated expenses.

The transfer to the CATV Fund is based on apercentage of the cable television franchise received.Beginning in 2010-11, this transfer will cease in orderto ease the burden on the General Fund and to alsomake the CATV Fund more self-sustaining.

The Economic Development transfer is projected tobe $895,770 in 2010-11. This amount will increase

1.0% in both 2011-12 and 2012-13. This annualtransfer amount is for personnel and operating andmaintenance costs for the Economic DevelopmentDepartment. In 2006-07, the City Council approved a2.00 cent tax rate increase to be dedicated solely foreconomic development incentives and redevelopmentpurposes. In that initial year, $6.0 million, whichincluded the two-cent amount plus supplementalfunding from the General Fund, was transferred intothe Economic Development Incentive Fund for thestart-up of this Fund. An additional $6.0 million wastransferred in 2007-08. The forecast includes the

transfer to include $4.8 million in 2010-11; $4.9 millionin 2011-12; and $5.0 million in 2012-13. Theseforecasted amounts represent only the actual two-centproperty tax revenue and does not includesupplemental funding from the General Fund.

Detailed information regarding specific transfers isprovided in the Appendix section: Three-Year FinancialForecast Transfers.


GeneralFund


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Community Investment Program Impacts

Included in this forecast are new project costsassociated with Community Investment Projectscoming on-line during the forecast period totaling over$6.8 million. These projects include Fire Stations andequipment, an expansion of the Carpenter RecreationCenter, and additional Park Improvements. Pleaserefer to Projected General Fund O&M Expenses Community Investment Program in the AppendixSection of this document for a detailed list.

Outlook & Analysis

Financial policies adopted by City Council stipulatethat the General Fund must maintain a working balanceof 30 days. Beginning in 2010-11, based on thiscurrent forecast, the General Fund will fall short of thisCouncil goal. Specifically, the General Fund will needan additional $15.4 million in additional revenues,reduced expenditures, or a combination of both toreach the 30 day working balance requirement. Thus,the projections indicate that there may not be sufficientresources in the General Fund to maintain currentoperations or increase staffing to meet growing thedemand for services, even if revenues meetexpectations.

In an effort to help soften the anticipated 2010-11budget shortfall, the City Manager has appointed a

committee of department directors to work together toidentify additional cuts. During this process, thecommittee was also tasked with identifying any impactsor outcomes that would result from these additionalcuts and what direct impacts it would have on servicelevel delivery. Departments will meet with City Councilto go over these potential cuts on April 10, 2010.

Not included in the fund projections in this forecastare any of the potential budget reductions identifiedfrom the committee's work. All potential reductionswill be reviewed for inclusion into the 2010-11 Budget

during the upcoming budget process this summer.



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General Obligation Debt Service


2012-132011-122010-112009-102009-102008-09

ProjectedProjectedProjectedRe-Est.BudgetActualRecurring Revenue

$47,878,958$45,283,426$42,242,310$39,959,648$39,959,648$37,052,595Ad Valorem Taxes450,000450,000500,000400,000550,000368,791Interest Income

00000834,120Transfers In150,442150,597142,527246,554246,554238,425Police Academy Reimbursement


Recurring Expenditures

$25,242,074$23,708,930$22,640,000$22,645,000$22,645,000$21,615,000Principal15,268,73714,050,86912,507,54013,508,72013,302,65113,909,338Interest

283,000284,376280,325281,064281,064281,588Trans to Tech Infra & Pub Art2,085,2002,092,6002,097,2002,099,0002,099,0002,103,200Transfer to Tax Notes Moto Mesh

2,733,4692,717,8692,694,4942,678,4192,678,4192,659,794Transfer to Tx Nt MotoMesh& RadioSys

990,619980,644969,994963,725963,72596,019Transfer to Tax Notes Radio System903,776905,476906,976208,40700Transfer to Tax Notes Radio System

20,00020,00020,00020,84010,00070,839Exchange Fees875,0001,050,0001,162,5000578,6610New Debt


$1,130,219$1,056,960$1,451,153$3,250,126$3,084,063$5,491,973Fund Balance - Beginning



$1,207,744$1,130,219$1,056,960$1,451,153$1,281,744$3,250,126Fund Balance - Ending

$25,480,216,390$24,798,264,127$24,398,264,127$25,507,218,156Total Assessed Property Value

Tax Split: 0.19160.18630.17680.16020.16020.1467Debt

0.29700.30230.31180.32840.32840.3268Operations

0.48860.48860.48860.48860.48860.4735



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General Obligation Debt Service Fund Forecast

The General Obligation Debt Service Fund accounts for the accumulation of monies set aside to pay principal

and interest on debt incurred through sale of bonds and other debt instruments. These tax bonds finance

long-term community investment projects such as streets, parks, buildings, and technology infrastructure

projects.

Operating Revenue Sources:

Ad Valorem TaxAd valorem taxes are levied against the tangibleassessed valuation of real and personal property withinthe city. The property is assessed by the CentralAppraisal Districts of Collin County and Denton Countyat 100% of estimated market value and certified by theAppraisal Review Board.

OtherMiscellaneous receipts include revenues such asinterest income.


Operating Transfers InTransfers from other City funds for existing debt aswell as reimbursements.

Operating Revenues

Ad valorem taxes necessary to be collected in theGeneral Obligation Debt Service Fund are determined

by using the projected assessed value for each year,and appropriating the funds required for principal andinterest payments on existing and new debt. Alladditional revenue that is collected in the GeneralObligation Debt Service Fund, such as interestearnings and reimbursements for the Convention &Tourism debt and Police Academy debt, helps offsetthe amount of ad valorem tax revenue required to keepthe ending fund balance at 2.5% of current taxes.

The graph above shows the historical trends andprojections for all General Obligation Debt ServiceFund revenues.

By 2012-13, total General Obligation Debt ServiceFund revenues are estimated to reach $48.5 million.

Ad Valorem Taxes

The existing tax rate is used for projections throughoutthe three-year period. After the debt portion of the taxrate is determined, the remaining amount is availablefor operations. Due to economic conditions, theissuance of several large Tax Notes and with overallproperty values in 2010-11 projected to decrease by4.35%, the projected debt portion of the tax rate willneed to increase from .1602 to .1768. According topreliminary estimates provided by the Central Appraisal

Districts of Collin County and Denton County, the totalassessed property value projected for 2010-11 is $24.4billion which includes a projected decrease of 5.13%to existing property values. Adjustments are made forboth TIF Districts and the 380 Agreements.

Ad valorem tax revenue is based on the current2009-10 tax rate of 48.86 cents per $100 valuation forthe next 3 years and assumes a 99.0% collection rate.At no time during the forecast period does the changein distribution between operation and debt exceed the


GeneralObligation

DebtService


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8.0% rollback operating limit. However, due toincreasing bond sales sold over the last four years, atotal of 1.66 cents will be required to be transferredback to the G.O. Debt Fund during 2010-11 fromOperations.

Other

The 2009-10 budget for interest earnings has beenre-estimated down to $400,000; this is a reduction of$150,000 from the budget due to low interest ratesgenerating less interest earnings. Interest income isprojected to generate $500,000 in 2010-11. Theinterest rates are projected to remain at $450,000 peryear for fiscal years 2011-12 and 2012-13. The graphbelow shows the historical trends and projections forinterest income.


Operating Transfers In

The Police Academy reimbursement totals $142,527from the other member city and is scheduled to bereceived through 2025 when the Police Academy debt

is paid off.

Operating Expenditures

Expenses in this fund are exclusively for support ofprincipal and interest payments on long-term generalobligation debt. The following graph shows thehistorical trends and projections for all G.O. DebtService Fund expenditures.

Existing bond authority should provide funding forcommunity investment projects into 2012-13 from the$144.8 million in bond authority approved by voters onMay 7, 2005 and the $128.6 million in authorityprovided by the voters on May 9, 2009. $18.9 million

of the 2005 authority remains. On January 25, 2010,$28.5 in Refunding and Improvement Bonds were soldas well as $9.7 million in Certificates of Obligation. InJanuary 2011, $50.0 million is projected to be soldwhich includes $9 million for the Arts of Collin Countyproject. For the purpose of this forecast, a $42.0million bond sale is scheduled for 2011-12 and $35.0million for 2012-13. The new G.O Debt uses anaverage interest rate of 4.65% for 2010-11 and 5.0%for 2011-12 and 2012-13. The issuance is projectedon mid-year sales with only one interest payment

included in the first year.Primary factors affecting the projections includechanges in economic conditions, interest rates,structuring of debt payments and actual amounts ofthe annual bond sale.



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Water & Sewer


2012-132011-122010-112009-102009-102008-09

ProjectedProjectedProjectedRe-Est.BudgetActual

Recurring Revenue

$68,732,722$65,459,722$62,071,268$56,856,852$61,035,890$54,845,746Water Income55,377,02454,747,20053,760,00053,233,89653,280,00049,793,133Sewer Income

8,599,0218,513,88284,29682,64392,59683,432Water Taps1,402,2351,399,4371,398,0391,386,9431,339,2571,416,547Water & Sewer Penalties

110,726109,629108,544107,736138,222166,751Water Meters204,621202,595200,589199,096284,372237,597Construction Water149,767148,284146,816145,723156,586148,253Service Connect Fee338,644335,291331,971329,500288,425292,425Backflow Testing

16,31116,15015,99015,87115,87115,825Sewer Tie-On49,92349,42948,93948,57528,20329,325Pre-Treatment Permits20,00020,00020,000035,0000Interest Earnings

00148,928148,928148,928148,928Educational Building

473,151468,467463,828463,843463,828560,843Misc. Income$135,474,145$131,470,085$118,799,208$113,019,605$117,307,176$107,738,805Total Recurring Revenue

Recurring Expenditures

$9,925,417$9,773,070$9,570,170$9,386,644$9,404,695$9,067,288Salaries & Wages12,294,01112,044,98711,192,77312,438,39711,188,39812,663,875Supplies & Services65,548,09162,015,63158,712,36956,345,52556,345,52551,199,906NTMWD

869,898869,233837,635829,670837,195822,480Retirement of NTMWD Debt233,362228,786224,300224,300224,300315,193Reimbursements

---1,117,510-163,149Capital Outlay

$88,870,778$84,931,707$80,537,248$80,342,046$78,000,113$74,231,891Total RecurringExpenditures

39,322,99438,190,19634,778,78035,756,68338,482,63035,381,788Transfers Out

$19,307,411$10,959,230$7,476,049$10,555,173$8,224,030$12,430,047Fund Balance - Beg

plano financial projections

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