2008/10/15 Council Agenda Packet

CITY OF EVERETT FISCAL ANNEXATION ANALYSIS • While the analysis does make estimates of FTE needs at annexation and through the buildout period, actual decisions regarding hiring and staffing will be made by the Council during each budget cycle, based on City priorities and actual demand. • By assuming the full cost of providing services from the date of annexation, the analysis does not infer any short-term cost savings associated with gradually ramping up levels-of-service.To actually deliver services from the date of annexation would likely require some level of pre-hiring (costs which are not estimated in this analysis) or, more likely, some level of contracting with existing service providers to augment the City's ability to meet the needs of the annexation areas immediately. • The only capital costs that are estimated as part of this analysis indude the one-time and ongoing equipment costs associated with new staff. These costs include expenses related to information technology for all employees, and specialized equipment and vehicles for Police department staff. Facilities and equipment for the Fire Department are assumed to be acquired from Fire District 1 as part of the asset transfer to the City required by state law. • The future changes in service demands and City revenues are a function of explicit assumptions regarding growth and development, inflation factors and the assumption of maintaining current levels of service and continuation of current tax and fee policies. • The voter-approved EMS levy is assumed to be renewed every six years at the full $0.50 rate. 2.2 Process for Scenario Screening and Evaluation Criteria The analysis of annexation scenarios was conducted in a two step process: (1) an initial screening of all seven annexation scenarios to assess the relative fiscal impacts of each; and (2) a more detailed feasibility assessment of the most promising options, which included additional work with several departments to determine the most cost-effective service delivery approaches. Initial Scenario Screening Upon identifying the seven annexation scenarios, we met with the City staff to document existing service levels, department positions, and their demand drivers. This piece of analysis provided baseline information to determine how City staffing might be expected to change in response to new demand associated with annexation. At the same time, operating revenue estimates were generated, including all sources of the City's general government funding. Based on this initial operating expense and revenue estimates for all scenarios, an initial screening of the scenarios was conducted and reviewed with City staff to determine which scenarios might deserve further detailed analysis. Scenario feasibility was determined based on several evaluation criteria: • Percentage of City-wide surplus or deficit that would occur upon annexation, in 2015, 2020, and 2025. A potentially acceptable deficit threshold was three percent of City-wide expenditures after the State sales tax credit. • Areas that had high revenues per capita could also have high costs per capita — therefore, it was also important to look at operating costs and revenues in terms of total and per capita amounts. IL Final Report:October 2008 Page 8