Recommendation
Staff recommends that the Mayor and Council adopt the attached ordinance to appropriate funds and levy taxes for Fiscal Year 2010. If the Mayor and Council find the changes to the ordinance acceptable a motion to amend the ordinance as modified should be made, seconded and passed and then the ordinance as so amended may proceed to adoption.

Discussion
In accordance with the City Charter, the Mayor and Council adopt the budget at the fund level. The attached ordinance sets the 1) FY 2010 Property Tax Rates, 2) FY 2010 Operating Budget, and 3) FY 2010 Capital Improvements Program (CIP) Budget for each fund.

FY 2010 Property Tax Rates
The City of Rockville has five separate property tax rates as shown below. These tax rates are levied against different groups, and in some cases different areas, throughout the City. Real property taxes are levied against all properties, both residential and commercial, in the City of Rockville. Personal property taxes are levied against all commercial properties in the City of Rockville. The Parking District and Town Square Commercial property taxes are levied against all commercial properties located within the Town Square boundaries. The Town Square Street and Area Lighting District tax is levied against all properties, both residential and commercial, within the Town Square boundaries.

The chart below shows the property tax rates by category for the City of Rockville for FY 2009 and FY 2010.

Tax Category	FY 2009 Rate	FY 2010 Rate	Change
Real Property	$0.292 per $100	$0.292 per $100	No Change
Personal Property	$0.805 per $100	$0.805 per $100	No Change
Parking District	$0.300 per $100	$0.300 per $100	No Change
TS Commercial District	$1.200 per $100	$1.200 per $100	No Change
TS Street/Area District	$0.105 per $100	$0.105 per $100	No Change

FY 2010 Property Tax Credits
The FY 2010 budget includes a one-time tax credit of $100 for every owner-occupied household through the State’s Income Tax Offset Program. This is the third consecutive year that the Mayor and Council have provided this credit that targets residential properties. Under Maryland law, the City of Rockville may grant a real property tax credit that offsets increased income tax revenue. For the past two years, Rockville used this program to target tax relief for owner-occupied residential properties (approximately 15,400 in the City). This type of relief is prudent given current economic conditions because it does not impact future revenue growth and the future provision of current service levels.

In addition to the $100 credit, the FY 2010 budget includes an expanded Homeowners' Tax Credit Program. The Homeowners' Tax Credit Program is a State administered program that provides real property tax credits to residents for property taxes due on their principal residence. Under the FY 2010 Homeowners' Tax Credit Program, households with gross incomes up to $85,000 per year and a household net worth of less than $200,000 (not including the value of the home or qualified retirement savings) could qualify for tax relief on the first $400,000 of their home's assessed value. For low-income households, the credit could be several hundred dollars with the maximum credit totaling the City tax due on the first $400,000 of assessed value. The FY 2010 budget also includes an additional 25 percent credit for seniors 70 years or older who are primary homeowners. The Mayor and Council first approved the senior credit in FY 2009.

The City will receive approximately $2.04 million less in property tax revenues in FY 2010 due to the Income Tax Offset Program ($1.54 million) and the Homeowners’ Tax Credit Program ($500,000) with senior credit.

FY 2010 Operating Budget
The total FY 2010 all funds operating budget decreased by ($893,705) or (0.9%) from the FY 2009 adopted budget. The General Fund budget increased by $246,214 or 0.4% from the FY 2009 adopted General Fund budget. The General Fund has not experienced an increase this low since FY 1999; the average annual increase in the General Fund for the last ten years has been approximately 6 percent. The chart below shows the total operating budget appropriations by fund for FY 2009 and FY 2010.

Fund	FY 2009 Budget	FY 2010 Budget	Change
General Fund	$61,836,373	$62,082,587	$246,214
Water Fund	7,041,715	7,667,800	626,085
Sewer Fund	6,943,150	6,747,000	(196,150)
Refuse Fund	5,757,000	5,493,300	(263,700)
Parking Fund	4,062,400	3,669,540	(392,860)
Stormwater Mgmt Fund	2,259,382	2,569,680	310,298
RedGate Golf Fund	1,587,918	1,617,340	29,422
Special Activities	1,781,612	1,431,080	(350,532)
CDBG	608,000	608,000	-
Town Center Fund	820,090	719,600	(100,490)
Speed Camera Fund	4,800,000	4,130,000	(670,000)
Debt Service	5,230,000	5,098,008	(131,992)
TOTAL	$102,727,640	$101,833,935	($893,705)

FY 2010 CIP Budget
The total FY 2010 CIP budget decreased by ($5,448,442) or (7.4%) from the adopted FY 2009 budget. The CIP budget generally fluctuates from year-to-year depending on the number and type of projects that are funded. The FY 2010 budget includes funding for 69 projects, a $4.1 million transfer from the General Fund, and approximately $12.0 million in new debt. Three major projects funded in FY 2010 include Senior Center Improvements, Police Station, and Gude Drive Maintenance Facility Improvements. The chart below shows the total CIP appropriations by fund for FY 2009 and FY 2010.

Fund	FY 2009 Budget	FY 2010 Budget	Change
Capital Projects Fund	$44,346,714	$37,167,426	($7,179,288)
Water Fund	8,952,499	15,758,907	6,806,408
Sewer Fund	8,154,515	5,622,760	(2,531,755)
Refuse Fund	3,780,770	2,126,075	(1,654,695)
Parking Fund	3,558,316	1,527,038	(2,031,278)
Stormwater Mgmt Fund	3,015,087	1,975,314	(1,039,773)
RedGate Golf Fund	361,979	327,818	(34,161)
Speed Camera Fund	1,452,440	3,668,540	2,216,100
TOTAL	$73,622,320	$68,173,878	($5,448,442)

Mayor and Council History
October 27, 2008: FY 2010 Budget Preview / Worksession - Part I
November 3, 2008: FY 2010 Budget Preview / Worksession - Part II
February 23, 2009: Final FY 2010 Budget Preview
March 23, 2009: Fiscal Year 2010 Proposed Operating Budget and Capital Improvements Program
Introduction of Ordinance to Appropriate Funds and Levy Taxes for Fiscal Year 2010
Introduction of a Resolution to Establish the Service Charge Rate for Municipal Refuse Collection
Introduction of Ordinance to establish a $42 Tax Credit through the Income Tax Offset Program
Introduction of Resolution to establish the Equivalent Residential Unit Rate for the Stormwater Utility Fee
March 30, 2009: Public Hearing on the Fiscal Year 2010 Constant Yield Tax Rate
First General Budget Public Hearing on the Fiscal Year 2010 Proposed Operating Budget and Capital Improvements Program
April 13, 2009: Second General Public Hearing on the Fiscal Year 2010 Proposed Operating Budget and Capital Improvements Program
April 20, 2009: First Mayor and Council Budget Worksession - Operating Budget
April 27, 2009: Second Mayor and Council Budget Worksession - CIP Budget, Other
May 4, 2009: Final FY 2010 General Budget Public Hearing on the Fiscal Year 2010 Proposed Operating Budget and Capital Improvements Program

Public Notification and Engagement
The FY 2010 Proposed Operating and Capital Improvements Program budgets are available on the City's Web site, and hard copies are available at City Hall and the Twinbrook and Rockville libraries. Public hearings were held on March 30, April 13, and May 4, 2009. FY 2010 Adopted Operating and Capital Improvements budgets will be available to the public in July 2009.

Fiscal Impact
The attached ordinance sets the 1) FY 2010 Property Tax Rates, 2) FY 2010 Operating Budget, and 3) FY 2010 Capital Improvements Program (CIP) Budget for each fund.

Attachments
Attachment A - Ordinance

Department Head:



Gavin Cohen, Director of Finance
Approved on: 05/05/2009

City Manager:

Scott Ullery, City Manager
Approved on: 05/06/2009