FY 2019 Approved Budget
Highlights of 2018-19 Approved Budget
For the full budget, please click: FY 2019 Approved Operating & Capital Budget
Budget is in compliance with the Board of Mayor and Aldermen’s debt and fund reserve policies, significantly exceeding the reserve requirements.
The City property tax remains unchanged at $0.4176 per $100 of assessed valuation.
The Invest Franklin dedicated funding for infrastructure/ transportation investment and support of City operations remains in place. Find out more on Invest Franklin here.
Overall, the approved budget has net increase of 4.5 positions across all funds, 1.5 in in the general fund. This targeted group of new positions are in Engineering, Water Management, and Stormwater, all of which have been impacted by growth.
The approved budget includes a general pay increase of 2.5% plus an additional performance-based pay increase of up to an additional 2.5%.
The City of Franklin continues to maintain one of the lowest municipal property tax rates in the State of Tennessee.
Funding is provided for important investments in equipment replacements of $3.5 million, technology enhancements of $500,000, and facility improvements of $500,000.
A rate increase for residential garbage collection and recycling service is included in the approved budget. The increase from $17.50 per month to $19.00 per month. The FY19 budget does not require a General Fund subsidy to Sanitation and Environmental Services operations.
The approved FY19 budget for all funds is $152,572,551 which represents a decrease of 2.8% compared to FY18. Increased budgeted expenditures across funds include increases in the General, Sanitation and Environmental Services, Transit, Street Aid, and Facilities funds.
FY 2019 All Funds Revenues Distribution by Category
FY 2019 All Funds Expenses Distribution by Fund
Major changes to each fund are described below. The General Fund is provided in greater detail below.
Street Aid and Transportation Fund. The City receives the local share of the state gasoline
tax to fund the maintenance of local streets. The approved FY19 budget for this fund is $4.2
million, an increase of 33.3% or $1 million compared to the current year budget. Included in this
budget is approximately $752,000 from the City’s property tax revenue to fund additional
neighborhood street resurfacing. Approximately $600,000 of additional annual revenue has been
realized in the Street Aid Fund due to additional gasoline tax from the IMPROVE Act (state
transportation funding plan) passed in 2017 and increased population as determined by the City’s
2017 special census. Also included in the budget is approximately $175,000 for sidewalk repair
and construction. Funding of $250,000 per year is provided for “sidewalk gap” construction as a
part of the Invest Franklin program. Sidewalk projects funded through this initiative are
designed to better connect neighborhoods throughout the community. FY19 marks the second
year of the five-year commitment made by the Board in the Invest Franklin program.
Sanitation and Environmental Services Fund. The FY19 budget for the City’s Sanitation and
Environmental Services Fund is $9.2 million, an increase of 7.5% compared to the FY18 budget.
A rate increase from $17.50 per month to $19 per month is included within the budget for
residential services. This increase will generate approximately $495,000 of additional revenue.
Commercial rates were adjusted last year during FY18, moving from $45 per ton to $55 per ton.
Because of these rate adjustments, the FY19 budget does not include a General Fund subsidy for
the Sanitation Fund. A significant focus this year will be placed on developing a long-term,
multiyear rate plan. The goal will be to produce a multiyear plan like what is in place within the
Water/Sewer utilities. In addition, the City will continue to examine the ability of the SES team
to meet service needs driven by growth as well as options related to enhanced efficiency and
sustainability for residential services.
Road Impact Fund. Revenue collections within the Road Impact Fund continue to be solid
thanks to strong development activity. Based on expected development activity, revenue in this
fund is projected at $8 million for FY19. The approved budget anticipates $2.7 million in
expenditures in the form of a transfer to the Debt Service Fund. This transfer pays the principal
and interest on arterial road projects that the City has undertaken to account for trip generation
by new businesses and residential development. The fund also includes direct contributions to
approved projects within the Invest Franklin Capital Investment Program plus payments/offsets
associated with existing agreements with developers who have provided right-of-way and/or
have built elements of the City’s arterial road network. In 2017, the Board of Mayor and
Aldermen expanded the road impact fee to include collector roads. The FY19 budget includes
$5.7 million in expenditures.
City Facilities Tax Fund. The Facilities Tax Fund provides for the collection of privilege tax
for new development to help pay for new public facilities/equipment attributable to growth. The approved FY19 budget includes $8.57 million for new Sanitation and Fire equipment and
Fire facilities expenditures. The largest expenditure in the Facilities Tax Fund will be the
construction of the new fire station in southeast Franklin (Fire Station 7). Fire Station 7
construction was approved as a part of the Invest Franklin Capital Investment Program. The
facilities tax rates have not been updated since 2007.
Stormwater Fund. Residents and businesses pay fees to support the City’s efforts to manage
Stormwater quality and quantity programs and initiatives. The rates for these services remain
unchanged in the approved budget and have not been reassessed in more than ten years. The approved budget is nearly $6.1 million for FY19, a decrease of $131,000 from the FY18 budget.
The budget includes approximately $3.5 million for capital improvement projects and
equipment. The approved budget also includes the addition of one new position, an equipment
operator. Additional staff will enable the City to better respond to increased service demands. In
2017, the City obtained Qualified Local Program status, which allows the City to act on behalf of
the state in making regulatory determinations. This capability has enhanced the City’s
responsiveness and efficiency in working with development.
All Funds Revenues - FY 2014-2019
All Funds Expenses - FY 2014-2019
The approved 2018-2019 (FY 2019) general fund budget is $70,550,059, which represents an increase of 1.7% compared to the current $69.4 million budget for 2017-2018 (FY 2018). This budget increase is primarily due to cost increases in personnel expenses and the funding of expanded services in the areas of public safety, parks, and streets, all of which are significantly impacted by growth.
General Fund Revenue Distribution by Category
General Fund Expenses by Department
General Fund Revenues
In total, general fund revenues for FY19 are projected at $70.55 million, up 1.7% from the FY 18 budget of $69.4 million. The following is a brief summary of revenue by category.
Sales Tax. The City’s largest single revenue source continues to be sales tax. Local sales
tax collections are projected to account for 50.4% of total General Fund revenue. The
FY19 sales tax budget of $35.6 million represents a growth of 4%, or $1.4 million,
compared to the FY18 estimate of $34.2 million. The State of Tennessee Funding Board
identified a range of 2.5% to 3.76% for statewide growth.
Intergovernmental Revenue. The second-largest category of revenue, intergovernmental
revenue (also referred to as state-shared revenue), accounts for 16.7% of total General
Fund revenue and is projected to be $11.8 million, a decrease of 3.2% compared to the
FY18 budget of $12.2 million. The City did not receive as much increased revenue as
expected during FY18 due to modifications in the application of the state-wide sales tax
to certain purchase categories.
Property Tax. The third-largest revenue source for the City’s general fund is property tax,
which accounts for 10.8% of General Fund resources. The amount of property tax
revenue going to General Fund operations for FY19 is $7.7 million, compared to $6.8
million budgeted in FY18. The General Fund portion of property tax revenue is the result
of the total property tax of $20.7 million minus $2.0 million due to the City’s Industrial
Development Board, plus an additional $8.7 million for the Debt Service Fund and fund
reserves for the Street Aid & Transportation Fund and for Invest Franklin. The City’s
property tax rate remains at $0.4176 per $100 of assessed valuation, which is one of the
lowest property tax rates among cities across the State of Tennessee and across the
Alcohol Taxes. Local governments in Tennessee receive wholesale beer/liquor taxes
from distributors and privilege taxes from local businesses that serve liquor by the drink.
For the FY19 budget year, these various alcohol taxes are projected to generate $4.3
million, accounting for 6.1% of General Fund revenue. The projected FY19 revenue is
4.2% above the FY18 budget of $4.15 million.
Building Permits and Licenses. As construction activity continues to grow, the City of
Franklin is budgeting building permit and license fees revenue of $3.5 million in FY19,
an increase of $133,459 compared to the FY18 budget. These fees allow the City to
recover the costs associated with providing construction-related services. Building
permit and license revenue accounts for 5% of the General Fund revenue.
Franchise Fees. The collection of franchise fees from cable and gas utility providers
accounts for 3.4% of General Fund revenue. For FY18, $2.4 million is projected in
Other Revenues. Other revenue categories of note include grants, municipal court
fines/fees, and interest income. Grant funding and court fines/fees are projected down
compared to FY18. Interest income for FY19 is projected to grow by 19.4% compared to
FY18. All other revenues in these categories are projected to be relatively stable
compared to prior years.
Historic collections for FY 2014-2017 and budgeted estimates for FY 2018 & FY 2019 are shown below:
FY 2014-2019 General Fund Revenues by Major Category
General Fund Expenditures
As described above, the total available resources within the General Fund is
$70.55 million for FY19. Through the budget process, the expenditures necessary to maintain
service levels are defined in the base budget.
Employee Earnings and Benefits. The cost of wages and benefits for City team members
(employees) accounts for 72.7% of the City’s general fund budget. Overall, employment-related
costs are projected at $51.3 million, 6.5% higher than the current budget of $48.1
Pension Expense. At the end of December 2016, the City of Franklin closed its City
Employee pension program and entered into an agreement with Tennessee Consolidated
Retirement System (TCRS) for the ongoing administration of the pension system. While
TCRS will administer and manage the “closed” City pension program, the City is still
responsible for its oversight and for determining the appropriate annual contribution
based on the advice of its actuary. City employees hired after December 31, 2016, enter
into the TCRS system upon hire and are full participants in the system. The City
contribution to TCRS for enrollees is 6.2% of salary. Based on the advice of the actuary,
a 7% increase in the City’s pension contribution is included in the FY19 budget. Overall,
pension expenses for FY19 are projected at approximately 10% of total payroll.
Position Vacancies. Again this year, the recommended budget includes a turnover factor
of 3.5% that is applied to budgeted wages and salaries. This method anticipates that there
will be some employee turnover during the year that will result in budgetary savings. By
conservatively estimating this amount, we are able to apply budget dollars to other nonpersonnel
components of the budget. The City’s actual vacancy experience over the past
seven years has been approximately 6%. While conservative compared to recent
experience, the 3.5% turnover factor employed in the budget will continue to be
Salary Adjustment. The approved FY19 budget includes a total $1.3 million for annual
pay adjustments. The annual pay increase for City team members will involve two
components this year: 1) approximately 60% of the pay adjustment will be allocated in
an across-the-board 2.5% general pay increase and 2) an additional pay increase ranging
from 0.5% to 2.5% will be provided to City team members based on their 2017
performance evaluations. As a result, City team members will receive pay increases
ranging between 3% and 5% based on their performance. The pay adjustment will be
effective the first pay period in July 2018. A similar pay adjustment approach was
implemented in FY18.
Compensation Plan review. During FY18, the City completed a comprehensive update
of the City’s compensation plan. The Board of Mayor and Aldermen approved updates
to the plan including an increase of 10% to all pay grades and adjustments for individual
team members where needed to ensure an appropriate level of progress through the pay
range. When initially approved, the plan was to implement these changes over an 18-
month period from January 2018 through July 2019. At that time, Board members asked
that implementation by July 2018 be explored as part of the FY19 budget process. The approved FY19 budget includes the full implementation of the compensation plan update
both in terms of pay grade adjustment and any individual pay adjustments necessary
based on the review of their progression through the pay grade.
Employee Benefits. For the past several years, the City has adopted a specific approach
to sharing health insurance costs with employees. Using this policy, the City pays 85% of
the premium for single coverage and 80% of the premium for employee family coverage
for active employees. Through this approach, we as an organization communicate to our
team the importance of controlling healthcare expenses as we share in managing this cost
together. Overall, the City’s health insurance costs will remain flat for FY19. In FY18,
the City modified the structure of health insurance plan options for City team members.
For many years, the City has offered either single or family coverage options. Starting in
FY18, the City began offering four options to its team members (and qualified retirees):
single coverage, single plus spouse, single plus children, and family coverage. By
expanding options, the City will enable employees to select the coverage option that best
fits their needs. In FY19, the City will begin offering team members the option to use a
true high deductible health insurance plan paired with a health savings account.
FY 2014-2019 General Fund Expenditures by Program Area
Operations. The operations expenditure category is a broadly defined category that
encompasses non-personnel and non-capital activities. It includes utilities, supplies,
contractual services, repairs and maintenance, and vehicle fuel. In total, operational
expenses account for 21.8% of General Fund expenditures. The approved FY19 budget
amount of $15.4 million for operations is a decrease of 10.0% from the FY18 budget,
primarily due to continued cost-containment measures and the elimination of one-time
expenses such as lease payments.
Transfers to Other Funds. There are no operating subsidies to the Street Aid and
Transportation Fund in 2018-19. The transfer to the Transit Fund is $985,171, an increase
from the current funding level of $892,993. There is no budgeted subsidy planned for the
Sanitation and Environmental Services Fund. The subsidy to this fund has moved from a
$4.5 million General Fund subsidy in FY2008 to no budgeted transfer in FY19.
Capital Expenditures. Capital expenditures are defined as the purchase of equipment,
vehicles, machinery, and computer hardware/software that has a multiyear useful life and
a cost more than $25,000. This category does not include the Capital Investment Program
(CIP), which is the plan for implementation of large-scale public infrastructure and
building projects. For the approved FY19 General Fund budget, capital expenditures are
projected at $3.9 million. This expenditure level is a decrease of $250,000 compared to
FY18 budget of $4.1 million. The majority of FY19 expenditures are for replacement
equipment. To assist in funding these capital equipment replacements, the FY19 budget
will utilize the $0.015 of the property tax rate previously identified for capital investment
funding. This funding represents approximately $752,000.
Outside Agency Funding. The City funds various government, human service, nonprofit,
and community service organizations through its budget each year. In total, the FY19
budget funds these organizations at $516,301, an increase of $55,245 compared to the
FY18 budget. While no new agencies were added to City funding, there were increases
requested by several agencies, including a contractual increase for the Williamson
County Animal Control services, increased funding for the 91X regional bus service, and
an additional $10,000 to Williamson Inc. for economic development initiatives.
Cash Reserves and Bond Rating. Two key measures of a city’s financial health are its
reserves and its bond rating. The City has adopted a reserve policy that identifies a 33%
General Fund reserve as an important benchmark. The City of Franklin is projected to
end the current fiscal year (FY18) with a General Fund reserve of $44.7 million. With no
draw from General Fund reserves planned, this same fund balance is projected for FY19.
$44.7 million represents 63.3% of annual revenue and expenditures at the end of FY19.
In 2014, the Board identified a policy to permit the use of reserves above 45% for “pay as-you-go”
funding of capital investment projects. Given this policy and the current
projections for General Fund cash reserves, up to nearly $13 million from reserves could
be available for funding capital projects.
FY 2014-2019 General Fund Expenditures by Major Category
The City of Franklin continues to experience dynamic population and economic growth. Our
reserves are at strong levels, our debt obligations are manageable, and our tax rate is among the
lowest in the state and country. The City leadership team has taken decisive action over the past several years to control costs and live within our means while finding new, innovative ways to
deliver exceptional services to the community. Continued strong financial management,
implementation of technology, adoption of best practices, and strategic investment will position
the City of Franklin to succeed and thrive in the years to come.
Eric S. Stuckey