2015BudgetInformation

September2014(revisedOctober4)

TheoriginalbudgetletterwaswrittenpriortheElkhartCountyCouncilvotetoadoptnewLocalOption
IncomeTaxes.Asofnow,theextrapropertytaxesthatwillbereceivedasaresultoflowercircuit
breakersisestimatedbyUmbaughtobeabout$650,000.Thiswillrelievesomedrainonoperating
balancesreferencedneartheendoftheletter.

ThisbudgetdoesnotincludethenewPublicSafetyoptiontax.Itisunknownatthistimehowmuch,if
any,ofthenewrevenueestimate($1.3million)willbereceivedin2015.Whenwehavemore
information,somepublicsafetyexpensescanbemovedtothenewfund.Thiswillalsoreducethedrain
onoperatingbalances.

Originalbudgetletterindicatedthatrevenuebudgetsheetswereincludedwiththeletter,andtheywere
not.Ideletedthatreferenceinthisrevision.Theywilleitherbeemailedpriortocouncilmeeting,or
availableatthemeeting.Therereallyisntmuchthatcouncilcandoaboutrevenue,liketheycanabout
expenses,unlessmemberseelocalfeerevenuestheydliketoseeenhanced.Revenuebudgetsheetsare
mostlyjustinformationalsocouncilmembersunderstandthewholeprocess.

Wherebudgetnumbersarechangedfromthemostrecentversionsent,theyarehighlightedinred.

CityCouncilMembers:

AsIwrite,theElkhartCountyCouncilisconsideringanew0.25%PropertyTaxReliefOptionTaxanda
0.25%PublicSafetyOptionTax.Thesearenotincludedinbudgetinformationbelow.Anewpublicsafety
taxwouldbringaboutthesameamountasthe0.25%EDITtax,$1.5million.AccordingtoUmbaughand
Associations,a0.25%PropertyTaxReliefOptionTaxwouldreducecircuitbreakerlossesbyabout
$650,000.IfCountyadoptsthesebyOctober1,fullyearrevenueofabout$2.1millionwouldcomein
2015.Thiswouldbesignificantrelieftohelpoffsetanticipatedcircuitbreakerreductionsof$4.7million.

Beforedivinginto2015budget,itwillhelptoprojectwherewemaybeattheendofthisyearinourmajor
threeoperatingfunds.GeneralFund,MotorVehicleHighwayandParks/Recreationaffectionately
calledTheBigThree.

Toarriveatprojectedyearendoperatingbalances,mycalculationincludes:

TocashonhandJune30,addpropertytaxestobereceivedsecondhalfof2014(adjusteddownforcircuit
breakersandanticipatinganother3%willbedelinquent)andaddmiscellaneousrevenuetobereceived
secondhalfof2014.Fromthetotal,deduct2014budgetremainingtobespent(adjustedtoanticipate5%
maybeunspent),anddeductanticipatedadditionalappropriationstocomethesecondhalfof2014.

Bythiscalculation,theyearendoperatingbalancesforthethreefundswouldbe$4,480,899.This
comparestoourtotalstartingoperatingbalancesforthisyearof$5,217,008(adjustedforencumbrances
from2013budgettobespentin2014).Areductionofaboutthisamountwasanticipatedinthisyears
budget.Itstillleavesourcombinedoperatingbalancesat20%oftheproposed2015BigThreebudgets.

TheRainyDayFundisinadditiontooperatingbalances.AsofJune30,theRainyDayFundtotaled
$2.154million,approximately$500,000ofwhichremainsavailabletotheGoshenHousingAuthority.
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ExplanationofBudgetWorksheets

Budgetworksheetsforexpenditureprojectionsareenclosedforthe2015budget.Ichoosethisformat
becauseitistheonlyonethatprovidesrecentyearshistorytocomparewithcurrentproposedamounts.
FigureswillcorrespondtothoseonForm1sinthedocumentspreparedforTinabyUmbaughand
Associates.BudgettotalswillcorrespondtothoseintheForm4Bs(proposedtaxlevyestimateandrate).

Councilmembersmayrecallinstructionfromprioryears.

Forexpenditureworksheets,thefirstthreeACTUALcolumns(20112013)areaccurate.TheYTD
(yeartodate)columnrepresentsthefirsthalfof2014.TheCURRENTBUDGETcolumnisntalways
whatwasoriginallyapprovedforthe2014budget.Figuresincludeanyencumbrancesfromthe2013
budget,transfersandadditionalappropriationsduring2014.Handwrittennumbersaregenerallywhat
departmentheadsfeelisneeded.Somewerereducedbyme,whileotherswereadjustedby
ClerkTreasurertoaccommodate27payperiods,duetohowthecalendarfalls.

BudgetGrandTotal

2014=$32,997,564
2015=$33,279,806

StateLegislaturenowrequiresthatCityCouncilapprovebudgetsforRedevelopmentCommission.These
areincludedinthetotalsabove.Budgetsarebrokendownbyfundbelow.

GeneralFundRevenue

GeneralFundrevenueagainincludesa$500,000transferfromtheRainyDayFundtohelpshoreupthe
operatingbalance.ShouldtheCountyCouncilapprovenewLocalOptionIncomeTaxes,thistransfer
wouldnotbeneeded.

CountyAdjustedGrossIncome(CAGIT)andPropertyTaxReplacementCredit(PTRC)willincrease
onlymodestlyin2015.

2014 2015
CAGIT $3,468,421 $3,653,100
PTRC $805,964 $833,238

IhaveleftthePaymentInLieuofTaxes(PILOT)fromUtilitiesat$500,000.Themaximumdrawthat
maybejustifiedaccordingtofinancialconsultantsfromUmbaughissomethingover$1,000,000.Thisisa
potentialsourceofrevenueinthefuturetohelpoffsetreductioninpropertytaxes.IncreasingPILOTadds
toneartermneedforwater/sewerrateincreases.

PersonnelBenefits

Fulltimepersonnellinesgenerallyinclude1.5%increasesexceptforPoliceDepartment,whichis2%.
ThedifferenceisbecausePoliceagreedtonegotiateawayfourhourspermonthofcompensatorytime
earnedasattendancebonus.

Raisesarenotnetincreasesintakehomepay,asemployeespickuppartofthecostincreaseforhealth
insurancepremiums.Healthinsurancepremiumsareincreasing6%.Employeescontribute20%to
premiumcost.

EngineeringbudgetincludesextraincreasethatwillbeinthesalaryordinanceforCivilCityandUtility
Engineerstoremaincompetitiveforthosepositions.

CommentsonIndividualBudgets(wheretherearechangesofsignificance)

Theseareinaccountnumberorder,whichisthesameorderasthebudgetworksheets.GeneralFund
budgetshavenewlinesaddedthisyeartotransferpersonnelbenefitsfromBoardofWorks.Thishad
alreadybeendoneinprioryearsforbudgetsoutsidetheGeneralFund.

CommunityRelationsCommission:$10,000isaddedforaspecialprojecttheyintendto
undertakein2015.YoumaycontactaCRCmemberforinformation.

Council:$65,000isincludedtopaycostofCityElection.ThisfigurewasgivenbytheElkhart
CountyClerk.

BoardofWorks:Significantdecreaseisbecausepersonnelbenefitshavebeentransferredto
otherdepartmentbudgets.ITpositionistransferredtotheEngineeringbudget.Otherinsuranceis
increasedforproperty/casualtyinsurance.OtherServiceChargesisincreased$50,000for
anticipatedincreasefortrashpickup.

EngineeringDepartment:FulltimesalariesincludesincreasetoincludethetransferofIT
positionfromBoardofWorks.

BuildingDepartment:Parttimesalariesisincreasedtoaddaparttimeinspector.

CentralGarage:Includesincreasingparttimepositioninpartsroomtofulltime.

PoliceDepartment:Fourofficerswererequestedinthisyearsbudget.Twoweretorestore
priorreductionsandtwowereinaddition.Councilagreedtoaddtwopositionsandconsiderthe
othertwointhe2015budget.Thesetwoareincludedinthisbudgetrequest.Alsoincludesanew
linetopayforreplacementvests.

FireDepartment:CouncilagreedtoaddonepositionthisyearsotheMedicChiefcouldmove
fromshiftto8hourdays.The2015budgetrequeststwopositionstorestorepriorreductions.

MVHFund:Councilagreedtorestoreavacantpositioninthisyearsbudgetandagreedto
consideranadditionalpositionin2015,recognizinggrowthoftheCity.Thisbudgetincludesan
additionallightequipmentoperator.Alsoincludesnewlinefordisposalofstreetsweepings,
requiredbyIDEM.

ParksandRecreation:Thisbudgetrequestsrestorationofanadministrativepositionthatwas
notfundedinthisyearsbudget.Alargeincreaseisshownforcapitalequipment(mowers,trucks)
asthesepurchaseshavebeenputoffforawhile.Theincreaseispartiallyoffsetbyasignificant
(butlesser)decreaseininfrastructurecapitalcosts.
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EconomicDevelopmentIncomeTax:IncreasesfundingforChamberofCommerceand
DowntownGoshen,Inc.from$35,000to$50,000.Funds$50,000asecondyearforkeepingthe
GoshenTheaterfromgoingdark.Adds$50,000formarketingandpromotion.Thiswould
includethejointcommunitymarketingstartedthisyearwithChamberofCommerce,Goshen
CommunitySchoolsandGoshenCollege.Anewlineisaddedforbuildingdemolitionsand
improvements,$100,000.RevenuetotheEDITfundincreasesfrom$1,420,947in2014to
$1,520,776in2015.

RainyDayFund:Atransferof$500,000toGeneralFundtosupplementitsoperatingbalanceis
anticipated.Thisfundreceivesnopropertytaxes.

CCIStormSewerFund:ServicesContractualisreduced.

RedevelopmentandTaxIncrementFinancing:Thesebudgetsareincludedwithallothers.
TheStateLegislaturenowrequiresthatCityCouncilsapproveRedevelopmentCommission
budgets.Wehavedonesointhepast,withoutithavingbeenamandatefromtheState.
CommentsandquestionsshouldbedirectedtoCommunityDevelopmentDirectorMarkBrinson.

StormWaterManagementFund:CapitalProjectsisreduced.Thisbudgetisfundedcompletely
byacountywidestormwatermanagementfee.Nopropertytaxesareused.

TIFDistrictBudgets:ConsolidatedNorthwestandConsolidatedSoutheastTIFdistrictbudgets
eachinclude$30,000salaryreimbursementtotheGeneralFundforcostofconstructioninspector
intheEngineeringbudget.PlymouthAvenueTIFincludes$5,000forthesamepurpose.

MillraceTrust:Thisfundisproposedtobespentforvariousmillraceprojectsin2015.

BUDGETSBYFUND

Followinginformationshowsindividualbudgettotals,howtheycomparetothisyearsbudgets,effectto
operating(i.e.cash)balancesandreferencetorecent,currentandcomingyearsbalances.Currentyear
budgetfiguresarefortheadoptedbudget,notincludinganyadditionalappropriationsduring2014.Itis
misleadingtosimplycompareindividualGeneralFundbudgets,astheyincludepersonnelbenefittransfers,
significantlyreducingtheBoardofWorksbudget.Foryeartoyearcomparison,theGeneralFundtotals
aremoremeaningful.

GeneralFund 2014Budget 2015Budget

CommunityRelations $24,000 $34,000

Council 64,020 133,167
Mayor 83,090 127,829
ClerkTreasurer 211,000 293,687
Legal 167,600 259,483
Court 204,020 303,825
BoardofWorks 3,395,719 2,545,943
Cemetery 203,650 265,498
Engineer 245,000 425,881
Building 198,590 312,507
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Planning 157,500 246,556

CentralGarage 573,400 767,377
Police 5,971,512 6,276,274
Fire 5,083,969 5,456,262

TotalGeneralFund $16,583,070 $17,448,289

OtherFunds 2014Budget 2015Budget

MVH $2,373,013 $2,670,927

LocalRoadandStreet 350,000 300,000
ParksandRecreation 1,943,250 2,245,288
Aviation 222,473 235,642
Probation 73,561 77,327
EDIT 1,226,500 1,554,327
EID 70,000 45,000
LECE1 3,000 3,000
RainyDay 500,000 500,000
CourtFees 14,100 14,500
BeautificationandRestorationTrust 650 650
ResidentialLeaseFees 103,747 90,403
LECE2 41,000 41,000
DebtService 423,350 425,590
CumulativeCapDevelopment 550,000 550,000
CCIStormSewer 200,000 100,000
CCIFireStation 250,000 250,000
StormwaterManagement 569,963 500,900
FirePension 610,828 592,533
PolicePension 676,064 585,237
MillraceTrust 2,000 59,500

Totalotherthangeneralfund $10,203,499 $10,841,824

RedevelopmentCommission 2014Budget 2015Budget

TIFBondandInterest 1,194,542 1,191,447

RedevelopmentNonRevertingOperating 239,276 259,071
SoutheastConsolidatedTIF 2,110,410 1,595,273
NorthwestConsolidatedTIF 2,576,767 1,843,902
PlymouthAvenueTIF 90,000 100,000

TotalRedevelopment $6,210, 995 $4,989,693

Totalallbudgets $32,997,564 $33,279,806

PROPERTYTAXSUPPORTEDBUDGETSANDLEVYNEEDEDTOFUND

2014Budget 2015Budget

GeneralFund $16,583,070 $17,448,289

MVH 2,373,013 2,670,927
ParksandRecreation 1,943,250 2,245,288
DebtService 423,350 425,590
CumulativeCapDevelopment 550,000 550,000
CCIStormSewer 200,000 100,000
CCIFireStation 250,000 250,000

Totalpropertytaxsupportedbudgets $22,322,683 $23,690,094

Propertytaxrequiredforbudgets

Whenbudgeting,citiesarerequiredtopresumeappropriationswillbespentintheirentirety,though,of
course,theyarent.Thefiguresbelowreflectthisfactbyapproximating5%wouldnotbespent.Without
doingthis,andbecausesomeflexibilityisbuiltintothebudgettoefficientlytransferappropriationsbetween
lineswhennecessary,andsotheClerkTreasurerisnotpayingmoremoneyforlegaladswhenadditional
appropriationsareneeded,thebudgetonpaperdoesnotprojectrealisticoperatingbalances.

BigThree Expenses Misc.Revenue

GeneralFund $17,448,289 $8,011,647

MVH 2,670,927 1,707,294
ParksandRecreation 2,245,288 455,156

TotalBigThree $22,364,504 $10,174,097

GeneralFundmiscellaneousrevenueincludesPTRCand$500,000fromRainyDayFund

PropertytaxneededtofundBigThreebudgets,maintainingestimatedbeginningoperating
balancesof20%:

Ifbudgetsfullyspent $12,190,407

Ifbudgets95%spent $11,072,182

Netpropertytaxescommittedtootherbudgets(estimates)

DebtService $500,000
CumulativeCapDevelopment $550,000
CCIStormSewer $200,000
CCIFireStation $0
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Totalpropertytaxescommittedtootherbudgets $1,250,000

Estimated2015propertytaxlevy

Grossmaximumpropertytaxlevy $15,615,242
Circuitbreakerloss $4,710,382
Collectionshortfall(3%)fromnet $327,146

Netcollectionestimated $10,577,714

Sothismeansonly$9,327,714wouldcometoTheBigThreebudgets,meaningtheiroperatingbalances
willdeclineby$1.7millionin2015(inadditiontousing$500,000fromRainyDayFund).Thereareoptions
tomitigate:

a. TransfermorefromtheRainyDayFund
b. IncreasethePILOTfromUtilities
c. NewCountyOptionIncomeTaxrevenueofapproximately$2.1million

Budgetsforfundswithoutpropertytaxes Expenses Revenue

LocalRoadandStreet $300,000 $275,540

Aviation 235,642 176,082
Probation 77,327 103,630
EDIT 1,554,327 1,520,776
EID 45,000 55,000
LECE1 3,000 500
RainyDay 500,000 0
CourtFees 14,500 9,985
BeautificationandRestorationTrust 650 2
ResidentialLeaseFees 90,403 56,000
LECE2 41,000 23,200
StormwaterManagement 500,900 463,900
FirePension 592,533 608,098
PolicePension 585,237 639,994
MillraceTrust 59,500 50

Totaloffundswithoutpropertytax $4,600,019 $3,932,757

RedevelopmentBudgets Expenses Revenue

TIFBondandInterest $1,191,447 $1,189,890

RedevelopmentNonRevertingOperating 259,071 206,250
SoutheastGoshenConsolidatedTIF 1,595,273 1,667,230
RiverRaceCapitalProjects 0 319,793
PlymouthAvenueTIF 100,000 56,290
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NorthwestConsolidatedTIF 1,843,902 1,948,190

TotalRedevelopment $4,989,693 $5,387,643

ClosingComments(adaptedslightlyfrom2014budgetletter)

ForTheBigThreeoperatingfunds,exceptforahiccupin2011,whenpropertytaxcollectionswere
abnormallylow(93%aftercircuitbreakerdeductions,andcounterbalancedin2012withoperating
balanceincrease),theCityhashadrevenuesaboveexpenseseveryfiscalyearuntil2013,whenwespent
$400,192morethanrevenue.The$500,000transferfromRainyDayFundcoveredthedeficit,modestly
increasingoperatingbalances.

Thisyear,underthefollowingparameters,expenseswillexceedrevenuebyabout$800,000.The$500,000
RainyDaytransferwillpartiallycoverthedeficit.Therestcomesfromoperatingbalances.

expensesat95%oforiginalapprovedbudgets
propertytaxescollectedat97%aftercircuitbreakerreductions
miscellaneousrevenuesasprojected
nosignificantadditionalappropriationstotheendof2014

Underthisscenario,operatingbalancesinthesethreefundsatDecember31,2014willbeabout20%of
their2015budgets.Thesearerespectable,butnotoverlycomforting.ThischangesifElkhartCounty
adoptsnewLocalOptionIncomeTaxes.

Manycitiesandtownshavedrainedtheiroperatingbalancescompletelyandhavetoborrowfromthe
bondbanktogetfromonepropertytaxdrawtothenext.EarlyinmytermasMayor,Goshenwasina
positionwhereourClerkTreasurerwasdoingthesamething.Itwasupsettingtopayintereston
borrowedfundsbecauseoperatingbalancesweretoolowtohandlenormalcashflow.Throughcareful
budgeting,wemanagedourwayoutofthatpredicament.Inrecentyears,dealingwiththeimpactof
propertytaxcontrols,wevebeenconservativewithjobopeningsleftvacant,positionscombinedandother
costsavingmeasures.Butwhencomparingdepartmentsizestowhatweshouldhavetoproperlycarefor
ourgrowingCity,itcouldbearguedwevebeentooconservative.

Sincepropertytaxcapsbegantohaveeffect,from2009through2014,Goshenwillhavelost$14.1million
fromitsmaximumallowablepropertytaxlevy.Itisestimatedanother$4.7millionwillbelostin2015.
Presumingacollectionrateof97%ofnetlevy(maximumlesscircuitbreakers),propertytaxrevenuewill
probablybesimilarin2015tothisyearsprojected$10.5million(atsame97%estimatedcollection).Itwill
beabout$1.2millionlessthanwasreceivedin2005.Withoutotherrevenuesources,wecannotcarefor
ourCity,andofferallthesameservices,aswehaveinthepast.

Evenifthisyear(2014)doesntplayoutexactlyasprojected,withcarefulbudgetplanningtheCitycan
affordtocontinueservicesatpresentlevels,whileatthesametimebeingfairincompensationtoour
employeesresponsiblefordeliveringservices.Fundshavenotyetbeendivertedfromtheirintended
purposestoshoreupdaytodayoperations(i.e.EDITFund).Norshouldtheybe,ifwecareaboutthe
longtermfiscalhealthoftheCity.

Agreatdealofrespectisdueourdepartmentheads,ClerkTreasurerTinaBontragerandallemployees
forgoodfinancialstewardship.

Disclaimer

Ifthereareanydifferencesbetweenbudgetnumbersinthisletterandonesinthebudgetdocumentsat
Councilhearings,thosedocumentstakeprecedence.

AlwaysforaBetterGoshen,

AllanKauffman