Recommendation
Staff recommends this ordinance be introduced at the meeting of October 12, 2009, with adoption scheduled for the meeting of October 26, 2009.

Discussion
In accordance with the City Charter, since the budget ordinance is adopted at the fund level, a change in the appropriated amount of any fund requires action by the Mayor and Council. The vehicle for such action is an amendment to the budget ordinance. The attached budget ordinance, Attachment A, would amend the Fiscal Year 2010 budget.

BACKGROUND
On August 26, 2009, the State of Maryland's Board of Public Works voted to decrease the municipal share of Highway User Revenue (HUR) by 90 percent and State Aid for Police Protection by 35 percent for all municipalities within the State of Maryland. This was the Board of Public Works' second round of reductions aimed at addressing the State's projected budget shortfall of more than $700 million for Fiscal Year 2010. The State made the first round of cuts in July that focused largely on State agencies with little to no impact on municipalities.

The revenue reductions from the State equate to approximately $2.16 million for the City's HUR and $217,000 for the City's Police Protection. In total, based on the current modified budget, the City's FY 2010 General Fund budget is $2.38 million out of balance.

In order to re-balance the budget, staff developed several recommendations that would reduce expenditures while still supporting the Mayor and Council's vision, existing programs and services, and the City's infrastructure. Staff evaluated all regular vacant positions, operating programs and services, as well as Capital Improvement Program (CIP) projects scheduled for FY 2010 and future years. A summary of staff recommendations is below with full descriptions under the "RECOMMENDATIONS" section.

Vacant General Fund Positions	$282,000
General Fund Operating Expenditures	373,000
Capital Projects Fund CIP Projects	1,722,000
TOTAL	$2,377,000

RECOMMENDATIONS
Vacant General Fund Positions - $282,000
Staff recommends freezing 8.3 FTE vacant General Fund positions. These positions would be frozen for the remainder of FY 2010, and will be re-evaluated during the FY 2011 budget development process. In order to maintain current programs and operations, the City will utilize temporary employees, current regular employees, and consultants to perform the responsibilities of the frozen positions. The $282,000 in savings is the total salary and benefit savings from the 8.3 FTEs less the amount that is needed for additional temporary employees and consultants. The frozen positions are listed below by Department:

Community Planning and Development Services – Historic Planner (1.0 FTE)
Human Resources – Human Resources Specialist (1.0 FTE)
Information and Technology – Senior Systems Analyst (1.0 FTE)
Police – Housing Code Inspector (1.0 FTE)
Public Works – Inspection Aide (1.0 FTE)
Recreation and Parks – Childcare Staff (0.8 FTE)
Recreation and Parks – Community Center Clerk (0.5 FTE)
Recreation and Parks – Laborer (1.0 FTE)
Recreation and Parks – Lifeguard (1.0 FTE)

Future vacancies that occur during FY 2010 will be automatically frozen pending discussion of the need for the position with the City Manager.

General Fund Operating Expenditures - $373,000
Staff recommends reducing the overall General Fund operating budget by $373,000. A majority of these reductions are ongoing reductions that will continue through FY 2011. Staff worked diligently to provide recommendations that would enable the City to maintain program and service levels as much as possible. Major reductions that impact City departments are recommended for the following categories:

Employee Travel, Training, Dues/Fees	$79,610
Consultants, Outside Trainers, Artisans	61,840
Program Supplies	51,795
Contract Services for Repair/Maintenance	47,320
Outside Printing	28,800
Furniture and Equipment	24,320
Temporary Employees, Overtime, Allowances	21,815
Facility Rental	14,630
Advertising and Recruitment	14,200
Other	28,670
TOTAL	$373,000

There are some reductions that are included in the above categories that may have a small visible impact to the Rockville community. These reductions include $4,700 for the November through May/June Rockville Reports special inserts, $9,000 for the replacement of the Glenview Mansion kitchen's oven/range, $3,500 for new furniture at the Senior Center, $6,500 for athletic field herbicide applications and sports lighting system repairs, $8,620 for new street trees, $15,000 for grass mowings and general repairs at West parks, and $6,000 for Rockville Day in Annapolis.

In addition to the $373,000 in reductions, since future revenue reductions are likely in FY 2010 and continuing into FY 2011, all departments will hold back on employee travel and training that is not directly related to a professional certification, or essential for a job function.

Capital Projects Fund CIP Projects - $1,722,000
The FY 2010 adopted General Fund budget includes a transfer to the Capital Projects Fund of $4.1 million. Staff recommends reducing this transfer by approximately ($1.7 million) to equal $2.4 million for FY 2010. Staff reviewed all Capital Projects funded CIP projects and selected those projects that would have the least impact for residents or user groups. Staff evaluated factors such as usage, stage of project completion, and other outside funding sources to develop the list of recommended projects. Staff recommends the following CIP projects be reduced or deferred to future years.

Pedestrian Safety, Traffic Controls, Street Lighting Improvement, Sidewalks $500,000
Both the Capital Projects Fund and the Speed Camera Fund support these four projects. When the City added Speed Camera funding to these projects last year, we were required to maintain the Capital Projects funding (paygo) in order to comply with the supplanting language in the State law. This law stated that Speed Camera Funds could not supplant other funds for projects that were already underway or planned in the City’s capital or operating budgets. The new Speed Camera law that takes effect on October 1, 2009 does not contain language about supplanting funds; therefore, we can legally remove the Capital Projects Fund portion of these projects. Removing this funding is possible because project costs have come in under budget, and the City received a federal grant for the Beall Avenue sidewalks project last year. Since these projects are sufficiently funded by Speed Camera revenues and grant funding, removing the Capital Projects funding has no impact on the scope of the current projects and commitments or project schedules.

Horizon Hills SWM Ponds $15,000
This funding is for the design of potential park enhancements, to be constructed in conjunction with the modifications to the three existing stormwater ponds (pond modifications are funded by the Stormwater Management Fund). After initial outreach was conducted with the community, staff does not anticipate having to design or replace any park features. Therefore, removing this funding has no impact on the scope of the current project or project schedule.

Playground Equipment Replacement $232,000
This funding represents Capital Projects Fund savings in this project. A majority of the savings is a result of receiving a $160,000 State of Maryland Department of Natural Resources Community Parks and Playground grant for Woodley Gardens Park playground equipment replacement in FY 2009. In addition, the City has recently received approval for three FY 2010 grants totaling $341,000 for the scheduled FY 2010 playground sites. The FY 2010 scheduled playground replacement sites include Woottons Mill Park, Senior Center Park, and Civic Center Park. Since the City is utilizing grant funding, the Capital Projects Fund portion of this project is no longer needed. Therefore, removing this funding has no impact on the scope of the current project or project schedule.

Athletic Courts, Asphalt/Concrete Improvements, HVAC Replacements $218,000
This funding is for renovations at various athletic courts, parking lots and pathways, along with the replacement of various City HVAC units. Removing this funding will delay some athletic court surface renovations, various parking lot and pathway renovations, and a minimal number of HVAC replacements.

F. Scott Fitzgerald Theatre $232,000
This funding is for renovation of the Social Hall and replacement of the exterior Theatre lobby doors. The Social Hall is used daily and provides ADA access to the theatre from the rear parking lot. The room is used weekly for rehearsals by the Rockville Concert Band, Rockville Regional Youth Orchestra, Potomac Valley Youth Orchestra, as well as for fitness classes. Due to its flexible space and size, the room frequently hosts larger conferences, meetings, classes, receptions and summer camp programs presented both by the City and through private rentals. Regular users include the Rockville Civic Ballet, Musical Theater Center, Dawn Crafton Dance Studio, Indian Dance Educators Association, along with many private groups.

Although the design is nearly complete, staff recommends the construction portion of this project be deferred to future years. The Social Hall can continue to function in its current state; however, problems will arise for this aging facility if these needs are not addressed in the future.

Pumphouse Improvements $427,800
This project funds interior improvements to the Pumphouse. This facility currently serves as the monthly meeting location for the East Rockville Civic Association, and houses weekly meetings of a senior citizen support group, chess club, girl scouts, and music classes. This building has also housed “The Finest” afterschool program over the past several years.

The funds for this project are for the modernization and upgrading of the interior, space reorganization, conversion of the existing kitchen to a kitchenette, new furnishings, and equipment. Early in the design phase it was discovered that the mortar between the bricks on interior walls was deteriorating and in need of “re-pointing” to keep the building structurally sound. Staff recommends funding the “re-pointing” in the near future, which will require the removal of the existing paneling and windows. A cost estimate is being generated for this part of the project, and will be included in the FY 2011 through FY 2015 CIP budget. Staff also recommends that the kitchen appliances be removed because they do not meet code. The building is in need of a facelift, but the bulk of the project can be postponed without significant impact to the current users.

Vehicles for City Use $97,200
The majority of this funding is for equipment that was scheduled to be replaced in FY 2010, but will now be replaced in future years. This equipment includes two trailers, two snowplows units, two saltbox units, a compressor, and a tractor.

Other CIP Projects
Two other major CIP projects that were considered for reductions during this process include Swim Center Improvements and Senior Center Improvements. Funding of approximately $600,000 is budgeted in the Swim Center Improvements project for the complete renovation of the outdoor bathhouse. This project was not recommended due to the age and condition of the building, and the large number of residents served by this facility. Staff estimates that 1,500 visitors per day use the bathhouse during the summer months. The Senior Center Improvements project, which has approximately $2.5 million currently available, was also considered but not recommended because $700,000 of the $2.5 million is funded from a State grant. If the City were to reduce the Capital Projects portion of this project, the City would forfeit this grant.

Mayor and Council History
This is the third budget amendment for FY 2010. The first budget amendment was adopted by the Mayor and Council on August 3, 2009, and the second budget amendment was adopted by the Mayor and Council on September 21, 2009. The FY 2010 budget was adopted by the Mayor and Council on May 18, 2009.

Fiscal Impact
The following operating fund(s) will be adjusted if this budget amendment is adopted.

City Fund	FY 2010 Current Budget	October Amendment	FY 2010 Amended Budget
General	$62,198,763	($2,377,000)	$59,821,763
Water	7,667,800	-	7,667,800
Sewer	6,956,180	-	6,956,180
Refuse	5,493,300	-	5,493,300
Parking	3,669,540	-	3,669,540
SWM	2,569,680	-	2,569,680
RedGate Golf	1,617,340	-	1,617,340
Special Act.	1,431,080	-	1,431,080
CDBG Fund	608,000	-	608,000
Town Center	719,600	-	719,600
Speed Camera	4,130,000	-	4,130,000
Debt Service	5,098,008	-	5,098,008
TOTAL	$102,159,291	($2,377,000)	$99,782,291

The following CIP fund(s) will be adjusted if this budget amendment is adopted.

City Fund	FY 2010 Current Budget	October Amendment	FY 2010 Amended Budget
Capital Projects Fund	$37,111,977	($1,722,000)	$35,389,977
Water Fund	17,068,407	-	17,068,407
Sewer Fund	5,622,760	-	5,622,760
SWM Fund	2,126,075	-	2,126,075
Refuse Fund	1,527,038	-	1,527,038
Parking Fund	3,865,314	-	3,865,314
RedGate Golf Fund	327,818	-	327,818
Speed Camera Fund	3,668,540	-	3,668,540
TOTAL	$71,317,929	($1,722,000)	$69,595,929

Attachments
Attachment A: Amendment to Budget Ordinance

Department Head:



Gavin Cohen, Director of Finance
Approved on: 10/02/2009

City Manager:

Scott Ullery, City Manager
Approved on: 10/02/2009