5-YR Forecast City Council Workshop - OKC

1

CITY COUNCIL WORKSHOP

1

FIVE-YEAR FORECAST

FEBRUARY 5, 2019

2


AGENDAFIVE‐YEAR FORECASTFEBRUARY 5, 2019

The full text of the Five‐Year Forecast is available online at:http://www.okc.gov/finance_tab

Economic Outlook

Dr. Russell Evans Executive Director

of the Steven C. Agee Research and Policy Institute

at Oklahoma City University

Financial Trends and Issues

Kenton TsoodleInterim Finance Director

Fiscal Year 2020Budget Outlook

Doug Dowler Budget Director

2

ECONOMIC OUTLOOK

3

FIVE-YEAR FORECAST

Russell R. Evans, Ph.D.Executive Director, Steven C. Agee Economic Research and Policy InstituteMeinders School of Business

3

Economic Outlook (2018)

• U.S. returns to normal growth• 2.5% to 3% real GDP growth

• Economy adds 175,000 – 200,000 jobs per month

• Inflation trends towards 2%

• Modest increases in both short and long-term interest rates

• Oklahoma returns to solid growth• Economic outcomes carried by metro outcomes

• OKC favored with geography and Tulsa has a strong year

• Oil prices stay above critical levels needed to support industry activity

• Employment gains spread across industries

Conclusion (2018)

• Lots of interesting things going on in the economy right now. With any luck, nothing interesting happens in Oklahoma in 2018

• Expect a long, slow transition away from energy as the state’s defining sector with industry activity becoming less prone to boom and bust cycles over time (but not yet!)

• Expect urbanization trends to continue with population, production, and income concentrated in the Oklahoma City and Tulsa

• Moving away from the baseline expectation of a strong year of economic and fiscal activity in 2018 will require on outside shock to the system – so keep your eyes open

• We are on the upside of the current cycle with the downside almost certain to follow

4

Both oil and gas employment and rig activity are settling below previous cycle peaks even as Oklahoma oil production sets new records.

220

480

563

212 214

139

0

100

200

300

400

500

600

0

100

200

300

400

500

600

AV

ER

AG

E W

EE

KL

Y R

IG A

CT

IVIT

Y

OIL

PR

OD

UC

TIO

N (

BA

RR

EL

LS

PE

R D

AY

, TH

OU

SAN

DS)

Oklahoma Oil Production

Oil Production Rig Count

0

50

100

150

200

250

300

En

erg

y In

dex

, Bas

e =

100

in Y

ear

2000

OKOGA-OIPA Oklahoma Energy Index

OK Energy Index 6 per. Mov. Avg. (OK Energy Index)

5

0.7%

1.6%2.2%

1.5%0.8%

$193,389

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

$170,000

$175,000

$180,000

$185,000

$190,000

$195,000

$200,000

Rea

l GD

P ($

Mill

ions

)

OK RGDP

Y/Y Growth RGDP

Two years of recovery (2017 and 2018) follow two years of recession (2015 and 2016). Recent drop in crude oil prices appears to coincide with other indicators of weakening economic conditions.

-11.0%

-1.5%

0.7%

1.2%

7.4%

5.4%

0.3%

0.8%

6.7%

4.1%

0.8%

1.3%

-12.0% -8.0% -4.0% 0.0% 4.0% 8.0% 12.0%

TULSA PCPI GROWTH

OKC PCPI GROWTH

TULSA POP GROWTH

OKC POP GROWTH

MSA Population and Per Capita Income

2018 2017 2016

2018 PCPI

OKC: $49,015

TULSA: $55,331

Solid population growth expected in both OKC and Tulsa in 2018. Since 2010, OKC population growing at CAGR of 1.2% compared to 0.7% in Tulsa. Tulsa MSA continues as the higher wage/higher income MSA. The MSA share of state population has increased from 57% in 2001 to 61% in 2018.

2018 POP

OKC: 1,401,726

TULSA: 998,632

6

Payroll employment recovery dominated by OKC and Tulsa, with Tulsa outperforming its long run average as expected. Recovery slower to materialize in Lawton and Enid.

-1.0%

-1.0%

-0.1%

0.4%

2.6%

2.6%

2.8%

2.5%

2.2%

1.9%

-1.5% -0.5% 0.5% 1.5% 2.5% 3.5%

ENID PRIVATE

ENID NONFARM

LAWTON PRIVATE

LAWTON NONFARM

TULSA PRIVATE

TULSA NONFARM

OKC PRIVATE

OKC NONFARM

OK PRIVATE

OK NONFARM

Employment Summary: 2018 Y/Y Growth

OKC leads the oil and gas recovery, but also posts strong job gains in construction, professional services, leisure, and manufacturing. Only modest gains in trade and utilities and flat employment in financial services. OKC continues to shed jobs in the information sector (not pictured).

14.2%

4.6%

3.1%

0.3%

0.1%

4.2%

1.8%

4.8%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0%

OKC MINING

OKC CONSTRUCTION

OKC MANUFACTURING

OKC TRADE, TRANSPORT, UTILITIES

OKC FINANCIAL ACTIVITIES

OKC PROFESSIONAL BUSINESS SVCS.

OKC ED HEALTH

OKC LEISURE & HOSPITALITY

OKC Employment Summary: Y/Y Growth

7

Urbanization and economic growth are driving housing demand and price appreciation in urban markets. Home price appreciation in both OKC and Tulsa outpacing 10-year CAGR.

1.3%

1.7%

2.2%

1.8%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5%

NONMETRO

TULSA

OKC

STATEWIDE

2008-2018 HPI CAGR

0.9%

4.3%

4.6%

3.3%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0%

NONMETRO

TULSA

OKC

STATEWIDE

2017 Q2 - 2018 Q2 HPI Growth

Oklahoma City housing market is attracting investment capital, with a recent Lendingtree study concluding that OKC leads the nation with 15.4% of mortgages non-owner occupied.

Non-Owner Occupied Mortgages by Major City

Rank City ShareAverage Loan

Amount City ShareAverage Loan

Amount

1 Oklahoma City 15.4% $193,000 41 Salt Lake City 6.8% $239,000

2 Philadelphia 14.6% $245,000 42 Louisville 6.5% $230,000

3 Memphis 14.6% $126,000 43 Columbus 6.4% $230,000

4 Miami 14.5% $382,000 44 Buffalo 6.4% $294,000

5 San Francisco 13.9% $695,000 45 Pittsburgh 6.4% $161,000

6 New Orleans 13.4% $217,000 46 Cincinnati 6.3% $161,000

7 Las Vegas 12.9% $205,000 47 Indianapolis 6.2% $169,000

8 New York 12.5% $533,000 48 Hartford 5.9% $237,000

9 Los Angeles 12.5% $565,000 49 Cleveland 5.7% $124,000

10 Riverside 12.2% $280,000 50 Detroit 5.2% $115,000

Source: Lendingtree

8

Data on headquarter location and attributes from the Business Dynamics Research Consortium (BDRC) suggest increasing activity in HQ relocations, with the BEA’s Mideast, Southeast, and Southwest regions accounting for almost 60% of HQ destinations. Within the Southwest regions, MSA’s that account for a greater share of HQ destinations generally account for a greater share of regional GDP growth.

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0%

% S

har

e of

Eco

nom

ic G

row

th

% Share of HQ Growth

MSA Headquarter Change and Contribution to Regional Growth

2000 - 2007

2007 - 2014

Linear (2000 - 2007)

Linear (2007 - 2014)

OKC is replacing Tulsa as the state’s headquarter city with OKC now accounting for almost 53% of all HQ employment and wages in the state. Tulsa’s HQ sector generally has fewer employees but with significantly higher wages than OKC.

Share of State Total

Headquarter Employees Headquarter Wages

Year Oklahoma City Tulsa Rest of State Year Oklahoma City Tulsa Rest of State

2006 39.5% 50.1% 10.4% 2006 48.3% 46.1% 5.6%

2007 43.1% 45.2% 11.7% 2007 44.4% 49.1% 6.5%

2008 43.3% 45.7% 11.0% 2008 44.2% 49.2% 6.6%

2009 42.3% 43.7% 14.0% 2009 41.1% 51.0% 7.8%

2010 39.5% 41.3% 19.2% 2010 39.5% 44.8% 15.7%

2011 37.5% 44.3% 18.2% 2011 33.9% 52.2% 13.8%

2012 40.9% 41.6% 17.5% 2012 41.1% 45.0% 13.9%

2013 43.8% 39.5% 16.7% 2013 48.1% 38.6% 13.3%

2014 51.9% 32.6% 15.5% 2014 49.0% 36.8% 14.2%

2015 52.5% 31.5% 16.0% 2015 48.6% 36.8% 14.5%

2016 52.7% 29.1% 18.2% 2016 52.8% 29.4% 17.8%

9

Preliminary Economic Outlook: 2019• Strong economic growth in 2018 appears to be diminishing, but inertia should

carry the first half of 2019; the balanced strength – both across industries and metro areas, should help extend the run of this recovery

• Oklahoma economy is vulnerable to both U.S. economic weakness and energy market weakness; expect economic performance to cool in the second half of 2019 to early 2020

• Oklahoma City is less cyclical than Tulsa, but Tulsa seems positioned for growth if U.S. conditions cooperate

U.S. economic activity is cooling. Economic growth is still generally expected to be positive in 2019, but significantly weaker than the 2018 experience.

-0.2

2.7

1.7

1.3

2.7 2.7

2.01.8

2.6

3.1

2.4

1.8

-0.2

3.1

1.51.3

2.0

3.6

3.02.8 2.8 2.7

2.52.3

-1.0

0.0

1.0

2.0

3.0

4.0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Ann

ual G

row

th (

%)

U.S. Real GDP and Personal Consumption Expenditures

Real gross domestic product, annual growth Personal consumption expenditures, growth

10

The pace of job growth will slow in 2019. Monthly payroll gains averaged 219,000 new jobs per month in 2018 but will struggle to average 190,000 new jobs per month in 2019.

3.9 3.84.2

149.0

151.3153.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020115.0

120.0

125.0

130.0

135.0

140.0

145.0

150.0

155.0

NF

Em

ploy

men

t (m

illio

ns, m

onth

ly

Civ

ilian

Une

mpl

oym

ent

Rat

e (a

nnua

l ave

rage

)

U.S. Nonfarm Employment

Unemployment rate Nonfarm employment (monthly average, millions)

The monetary policy assumptions in the model (3 to 4 interest rate increases) already seems dated! As the economy cools, expectations are for fewer rate increases and a slowing of the budget sheet normalization process.

2.0

2.32.2

1.8

2.8

3.4

2.9

3.43.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

%, A

nnua

l Ave

rage

U.S. Inflation and Interest Rates

Core PCE price index, growth Federal funds rate 10-year Treasury note yield

11

Urbanization trends coupled with economic strength will continue to support population growth in Oklahoma City. Oklahoma City population growth is nearly double that of Tulsa while much of the rest of the state is working to hold current population levels.

1.7%

1.3%

1.4%1.5%

1,401,386

1,421,337

1,443,114

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

1,200,000

1,250,000

1,300,000

1,350,000

1,400,000

1,450,000

1,500,000

2012 2013 2014 2015 2016 2017 2018 2019 2020

Ann

ual G

row

th

OK

C M

SA P

opul

atio

n

Oklahoma City Population

Pop Growth Population

After dipping in 2016, both per capita income and average earnings per job in Oklahoma City posted gains in 2017 and 2018. If gains are to be realized in 2019 and 2020, they will be modest.

$42,413 $42,910

$44,911 $45,369 $44,699

$47,097

$49,080$50,759

$51,544

$49,719$51,083

$53,041 $53,420$52,013

$55,347$56,577

$57,956$58,696

$30,000

$35,000

$40,000

$45,000

$50,000

$55,000

$60,000

$65,000

2012 2013 2014 2015 2016 2017 2018 2019 2020

Nom

inal

Inc

ome

and

Ear

ning

s

Per Capita Income and Earnings per Job

Per Capita Income Avg. Earnings per Job

12

The pace of job growth is expected to slow considerably in the second half of 2019 with much softer economic conditions coming by 2020.

-0.1%

0.8%

2.5%

2.1%

1.4%

-0.5%

1.0%

2.9%

2.4%

1.5%

650.5 664.1 673.4

520.5 533.1 541.3

-1.5%

-0.5%

0.5%

1.5%

2.5%

3.5%

4.5%

5.5%

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

2012 2013 2014 2015 2016 2017 2018 2019 2020

Ann

ual G

row

th

Em

ploy

men

t, T

hous

ands

Oklahoma City Employment

NF Growth Pri. Growth Nonfarm Private

Fiscal Outlook• This feels like the February 2017 budget workshop – but the reverse, and less

obvious!• Confident slower economic conditions are coming, just not confident on how

much slower conditions will be

• The slowdown will coincide with the turn of the fiscal year

• Tremendous uncertainty in the outlook – fat tails in the probability distribution of possible outcomes

• Uncertainty with respect to both U.S. conditions and the energy industry; both are important toggles to forecasting local economic and fiscal conditions

• Consider four possible states of the economy and their likelihood of occurrence: Great (.05), Baseline (0.4), Bad (0.3), Worse (0.25)

• What is the single most likely state? Baseline• What is the most likely outcome? A state other than the Baseline!

13

Note that this year is like 2017 in that we anticipate economic conditions to change with the fiscal calendar. It is different from 2017 in the confidence of the timing and magnitude of the change.

Budget Forecast, Performance, and Uncertainty

Budget Workshop FY 2018 Forecast FY 2018 Actual

Feb-17 3.8% to 4.2% 6.00%


Feb-18 3.0% to 3.3.% 4.1% to 4.5%


Feb-19 -1.3% to 3.1% ?

The fiscal outlook is tied explicitly to the economic outlook. If we use the baseline economic forecast (slowing but still positive growth, slowing energy industry conditions but no collapse), baseline fiscal expectations would be 4.5% growth in 2019 and 3.1% in 2020. Alternative baselines are developed and reported given the tremendous uncertainty and vulnerability in the system.

Monthly Detail Growth Rates

Month Baseline: Slow U.S.

Growth/Modest Oil PriceBaseline: Slow U.S.

Growth / Low Oil Price Baseline: Mild RecessionJul-18 8.0% 8.0% 8.0%

Aug-18 4.5% 4.5% 4.5%Sep-18 5.2% 5.2% 5.2%Oct-18 3.0% 3.0% 3.0%Nov-18 1.1% 1.1% 1.1%Dec-18 4.6% 4.6% 4.6%Jan-19 4.7% 4.7% 4.7%Feb-19 6.1% 6.0% 5.9%Mar-19 3.7% 3.5% 3.7%Apr-19 8.4% 7.9% 8.1%May-19 1.7% 1.0% -0.2%Jun-19 3.1% 2.2% 0.5%

Fiscal Year 2019 4.5% 4.3% 4.1%Fiscal Year 2020 3.1% 1.8% -1.3%

14

FIVE-YEAR FORECAST

FINANCIAL TRENDS

27

Financial Trend Monitoring System (FTMS)Adapted from ICMA handbook Evaluating Financial Condition

28

Provides an overall picture of Oklahoma City’s financial condition

15

29

FINANCIAL TRENDS

61%Positive22%

Neutra l

17%

Negative

FY19 INDICATOR RATINGS

23FINANCIALINDICATORS

23 Financial Trend Indicators

30

41%59%

FINANCIAL TRENDS

16

External Indicators track

conditions and demographics in

Oklahoma City that tell us what is happening

in the environment that we live and operate in.

FINANCIAL TRENDS Population

Labor Force

Earnings

EXTERNAL INDICATOR

Property Value

Office Vacancy Rate

Airport Activity

Active Drilling Rigs

31

Crime Rate

Private Development

Hotel Room Nights

Population

32

FINANCIAL TRENDS EXTERNAL INDICATOR

582,352632,204

670,028

0

200,000

400,000

600,000

800,000

1,000,000

FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

POSITIVE

17

Labor ForceAnd Percentage of Labor Force Employed in theOklahoma City Metropolitan Statistical Area (OKC-MSA)

569,552 649,179 Labor Force

679,294

95.20% 95.60% Percentage Employed

96.35%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

0

200,000

400,000

600,000

800,000

1,000,000

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18% EmployedLabor Force

POSITIVE


33

COUNCIL PRIORITY


34

(700)

(700)

5,200

2,000

600

(3,100)

8,000

5,400

4,000

2,600

4,800

‐ 20,000 40,000 60,000 80,000 100,000 120,000 140,000

Information

Natural Resources & Mining

Other Services

Construction

Financial Activities

Manufacturing

Leisure & Hospitality

Professional & Business Services

Education & Health Services

Trade, Transportation & Utilities

Government

5‐Year Comparison/Growth of Non‐Farm Employees in OKC‐MSA by Sector

FY18 FY14

28,100employees

added over the last five years

4.6%growth

18

Average Weekly EarningsOKC-MSA, Private Sector

35

$767 $822

$633$692

$712

$0

$200

$400

$600

$800

$1,000


Average Weekly Earnings

Average Weekly Earnings (Inflation Adjusted)

POSITIVE


COUNCIL PRIORITY

Crime Rate*Crimes Per 1,000 persons

Property Crimes Per 1,000 households

9.06 Crimes Against Persons 7.71

8.67

148.55

111.36Property Crimes 103.10

0.00

50.00

100.00

150.00

200.00

250.00

0.00

5.00

10.00

15.00

20.00

25.00

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Property Crimes*Crimes Against

Persons*

NEUTRAL


36

*Data for 2018 is estimated using actual Uniform Crime Report data from January – September. October – December were an average of the first nine months of 2018.

19

Property CrimesPer 1,000 households / 10 Year History by Category

37

46.17

26.68

Burglary

22.80

85.18

70.00

Theft

65.76

16.6714.36

Auto Theft14.27

0.53 0.32Arson 0.260.00

20.00

40.00

60.00

80.00

100.00

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018



Person CrimesPer 1,000 residents / 10 year history by category

38

0.11 Murder0.07 0.08

0.51 Rape 0.70 0.82

2.18 Robbery 1.82 1.57

6.25

Assault5.12

6.19

0.00

2.00

4.00

6.00

8.00

10.00

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018



20

Property ValueAssessed Property Value in Millions of Dollars

39

FINANCIAL TRENDSFINANCIAL TRENDS EXTERNAL INDICATOR

$5,135

$6,119

$4,407 $4,632

$5,304

$‐

$2,000

$4,000

$6,000

$8,000

$10,000


Property Value

Property Value (Inflation Adjusted)

POSITIVE

Office Vacancy Rate

40


23.5% 24.4%22.9%

15.9%16.9%

19.3%

0%

5%

10%

15%

20%

25%

30%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

CBDOklahoma City

First National Center removed from inventory

Sandridge Center, Parkside and BOK

added

NEGATIVE

21

41

Airport ActivityWill Rogers World Airport Number of Boarding Passengers

1,730,874 1,847,283

2,071,866

0

750,000

1,500,000

2,250,000

3,000,000


POSITIVE


FY18 had growth of 10.2% with airport activity at a record high

COUNCIL PRIORITY

42

Airport ActivityWill Rogers World Airport Number of Boarding Passengers


28Cities served non‐stop

22

43

Hotel Room Nights Sold


3.8 Million

4.1 Million

5.8 Mi l lion

6.5 Mi l lion

‐

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

2014 2015 2016 2017 2018

Room Nights Sold

Room Nights Available

POSITIVE

Private Development Plans

44

155

399

237

0

100

200

300

400

500


NEGATIVE


23

Active Drilling ActivityOklahoma Active Drilling Rig CountOklahoma Field Production of Crude Oil

45


94

199

134179

384

543

‐

100

200

300

400

500

600

700

0

100

200

300

400

500

600

700

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Thousa

n Barrels Per Day

Active Rotary Rigs in OK

OK Field Production of Crude Oil

POSITIVE

*OK Field Production of Crude Oil for 2018 is average from January – October

Active Drilling Rigs% Change in Active Drilling Rigs vs. % change in City Sales Tax

46

Sep 09

‐64.9%

Oct 10

89.8%

Jun 17

128.1%

Nov 15

‐60.7%

‐100.0%

‐50.0%

0.0%

50.0%

100.0%

150.0%

Jan 09

Jul 0

9

Jan 10

Jul 1

0

Jan 11

Jul 1

1

Jan 12

Jul 1

2

Jan 13

Jul 1

3

Jan 14

Jul 1

4

Jan 15

Jul 1

5

Jan 16

Jul 1

6

Jan 17

Jul 1

7

Jan 18

Jul 1

8

% Change in Active Drilling Rigs vs. % change in City Sales TaxJanuary 2009 through December 2018

% Change in Rigs % Sales Tax Change


24

OPERATIONS

Internal Indicators track the

City’s budgetary and financial condition and

present a straightforward picture of financial

strengths and weaknesses.

FINANCIAL TRENDS INTERNAL INDICATOR

Enterprise Working Capital

Liquidity

Fund Balance

Employees per 1,000 Citizens

Fringe BenefitsPension Funding

Long Term Debt

Revenue Per CapitaRevenue Accuracy

Sales Tax Revenues% of General Fund from Sales Tax

EXPENSES

REVENUES

Hotel TaxGrant Revenues

47

Revenue Per Capita

$2,067

$1,809$1,986

$0

$500

$1,000

$1,500

$2,000

$2,500

FY14 FY15 FY16 FY17 FY18

Revenue per Capita

Revenue per Capita (Inflation Adjusted Dollars)

POSITIVE


48

25

Revenue AccuracyGeneral Fund Collections Compared to Budget

49

0.13%

0.78%

3.65%

$0

$100

$200

$300

$400

$500


Budget

Actual

NEUTRAL


Sales Tax Revenue

50

$214 Million

$234 Million

$178 Million$193 Million

$203 Million

$195 Million

$125,000

$150,000

$175,000

$200,000

$225,000

$250,000


Sales Tax Revenues

Sales Tax Revenues (Inflation Adjusted)

Sales Tax Revenues (less Tax Inc)

POSITIVE


26

Sales Tax As a Percentage of General Fund

51

52.3% 52.7% 53.8%

0%

20%

40%

60%

80%

100%


NEUTRAL


COUNCIL PRIORITY

Hotel Tax RevenueIn Millions

52

$14.1 Million$15.4 Million

$10.7 Million$12.7 Million $13.3 Million

$‐

$5.0

$10.0

$15.0

$20.0

$25.0


Hotel/Motel Tax Revenue

Hotel/Motel Tax Revenue (Inflation Adjusted)

POSITIVE


27

Grant RevenueAs a percentage of Total Operating Revenue

53


4.57%

2.97%

2.88%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%


NEGATIVE

Grant RevenueBy Granting Agency

54


$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000


HUD DOT Homeland Security All Other Federal Grants State Grants

28

Employees Per 1,000 Citizens


55

7.60 7.397.17

71%

66% 62%

45%48%

45%

0%

20%

40%

60%

80%

100%

0.0

2.0

4.0

6.0

8.0

10.0

FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19Citizen SatisfactionEmployeees

Employees Per 1,000 CitizensCitizen Satisfaction with City ServicesNational Average for Large Cities

NEUTRAL

Fringe BenefitsAs a Percentage of Total Compensation

56

36.3% 37.8% 38.1%

0%

10%

20%

30%

40%

50%


NEGATIVE


29

Fringe BenefitsOklahoma City Compared to Other State and Local Governments and Private Industry

57


18.2%

6.3% 7.6%5.1%

0.9%

38.1%

11.9% 11.5%

7.5%5.5%

1.0%

37.4%

7.9%

3.9%

7.0% 7.7%

3.8%

30.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

Insurance Retirement Leave FICA, Unemp, WC Other Total

OKC State & Local Govt Private Industry

OKC

S&L

Private

58


80%85% 87%

79%

OKC GrpIndmnty

OKCHMO

S&L Private

Emp Only CoverageEmployer Contributions

80%85%

71% 68%

OKC GrpIndmnty

OKCHMO

S&L Private

Family CoverageEmployer Contributions

92%

79%72%

OKC S&L Private

Take‐up Rate

Fringe BenefitsOklahoma City Compared to Other State and Local Governments and Private Industry

30

Fringe BenefitsAs a Percentage of Total Compensation

59


15.7% 16.0% 16.8% 16.9% 16.9% 16.9% 16.7% 17.2% 17.9% 18.2%

6.6% 6.5% 6.8% 7.1% 7.3% 6.8% 6.6% 6.5% 6.3% 6.3%

7.6% 8.0%8.0% 8.0% 7.3% 7.4% 8.1% 7.5% 7.8% 7.6%

5.5% 5.6%5.5% 5.1% 5.5% 5.7% 5.6% 5.5% 5.2% 5.1%

0.9%1.0% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%


Fringe Benefit by Type

Other

FICA, Wrkrs Comp, UE

Leave

Retirement

Insurance

Pension FundingOklahoma City Employee Retirement System (OCERS)

60

95%

104%104%

50%

60%

70%

80%

90%

100%

110%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

POSITIVE


31

Pension Funding Accrued Liability Funding Ratio

61

54%

62%Fire 68%

76%

95% Police

103%

61%

77% COTPA84%

50%

60%

70%

80%

90%

100%

110%



Long Term DebtRatio of General Obligation Bonded Debt to Net Taxable Assessed Value

62

12.2%13.5% 14.2%

1.47% 1.66% 1.65%

0%

5%

10%

15%

20%

25%


Ratio of GO Bond Debt to Net Assessed Valuation

Ratio of GO Bond Debt to Estimated Fair Market Value

NEUTRAL


COUNCIL PRIORITY

32

Fund BalanceAs a percentage of General Fund Budget

63

11.2%

16.5%

18.2%

0%

5%

10%

15%

20%

25%


Gray shading reflects recommended unbudgeted fund balance ranges per Financial Policies. FY10‐FY11: 6‐10% / FY12‐FY18: 8‐15% / FY19 forward: 14‐20%

POSITIVE


LiquidityRatio of Cash, Cash Equivalents, and Current Investments to Current Liabilities

64

3.86 3.99

2.37

2.69

0.0

1.0

2.0

3.0

4.0

5.0


Government‐wideGovernment‐wide (excluding GO Bonds, MAPS3 and OCMAPS)

A ratio greater than 1.0 indicates a current account surplus

POSITIVE


33

Enterprise Working CapitalIn Millions

65

$356,014$286,611

$370,521

$0

$100,000

$200,000

$300,000

$400,000

$500,000


Total Enterprise Funds (Inflation Adjusted)

Total Enterprise Funds

POSITIVE

Mill ions


Indicators We Need to Continue Monitoring

• Private Development Plans

• Office Vacancy Rates

66

• Grant Revenues

• Fringe Benefits

FINANCIAL TRENDS

INTERNAL INDICATOREXTERNAL INDICATOR

34

FIVE-YEAR FORECAST

SUCCESSFUL OUTCOMES

67

68

SUCCESSFUL OUTCOMES

COURT SERVICE LEVELS AICCM CONSTRUCTION DEVELOPMENT CENTER

Two Community Relations Coordinators help Court customers overcome barriers such as fear, uncertainty and language to resolve municipal court cases

More than 100 cases a month are disposed

The American Indian Cultural Center and Museum resumed construction with the needed $65 million to complete the project including $9 million committed by the City that was funded by growth in the General Fund in FY18

Museum projected to open in 2021

Five positions were added to the Development Center in FY19 to provide quick turnaround for services provided to the development community.

A new Development Center Liaison will help developers navigate the City’s process for codes, permits, and zoning

35

69

SUCCESSFUL OUTCOMES

MAPS 3 OPERATING COST LIVE RELEASE RATE SUNDAY BUS SERVICE

Operating costs have been identified and funded for all eight of the MAPS 3 projects through user fees, sponsorships, and the General Fund

Operating costs for the Oklahoma City Streetcar and Scissortail Park were included in the FY19 General Fund Budget

The live release rate was improved by increased adoptions, transfers out and the community spay and neuter program

Live release rate was 79% in FY18

Bus services is now provided 7‐days a week. Sunday service is available on 16 routes with one‐hour frequency from 6:00 a.m. to 6:30 p.m.

Sunday bus service began January 27th

70

SUCCESSFUL OUTCOMES

RECYCLING PROGRAM

All urban trash customers received new green recycling carts for service and two self‐service pilot rural recycling depots were established

New Recycling Program began July 1, 2018

36

71

SUCCESSFUL OUTCOMES

BODY WORN CAMERAS

GO BOND PACKAGE

IMPACT FEES

ONE CENT TEMPORARY TAX

NEW MUNICIPAL COURT

¼ CENT SALES TAX INCREASE

WATER CONSERVATION WATER RIGHTS SETTLEMENT RADIO SYSTEM

FIVE-YEAR FORECAST

FORECAST ISSUES

72

37

Forecast issues are financial issues facing departments in the coming years

73

Provides early warning for emerging issues departments will face in coming years

All 47 department issues are included in the forecast document beginning on page 92

General overview of the issue Not a detailed cost estimate

74

Highlighted Issues

• 8 Issues HighlightedKey Financial Issues Facing Departments

• Possible Direction and Next Steps IdentifiedRaising Awareness to Stimulate Conversation and Action

38

• Construction set to resume this spring; Expected to open in Spring 2021

• Assume responsibility for future operations and maintenance

• Partner with the Chickasaw Nation through the AICCM Land Development, LLC to develop the commercial property around the facility

POSSIBLE DIRECTION AND NEXT STEPS• Funding and Agreement for Operations and Maintenance• Potential Impact on Operating Funds

75

AMERICAN INDIAN CULTURAL CENTER AND MUSEUM

WATER UTILITY – Water Supply

• $700 million for construction of the 2nd Atoka Pipeline

• Construction to be completed by FY25

WASTEWATER UTILITY – Regulatory Compliance

• $82 million for upgrades and increased capacity from 6 MGD to 9 MGD to meet growth demands

SOLID WASTE UTILITY – Recycling Program

• $4.1 million per year to provide new and replacement carts to customers and purchase replacement collection equipment.

POSSIBLE DIRECTION AND NEXT STEPS• Rate Adjustments

76

LONG TERM WATER CAPITAL

39

PUBLIC INPUT

• Seeking Public’s thoughts for transformational ideas that will propel the City forward

LENGTH OF TAX

• Anywhere from two to seven years

PRESENTED TO VOTERS

• Fall/Winter of 2019

POSSIBLE DIRECTION AND NEXT STEPS• Set aside interest for contingency and/or capital maintenance• Companion Use Tax• User Fees, Sponsorships, Private Partnerships

77

MAPS 4

• Public Safety Capital Funded through FY21

using Better Streets, Safer City Use Tax

• A new funding source needs to be identified for needs beyond

FY21

POSSIBLE DIRECTION AND NEXT STEPS• MAPS 4 Use Tax• General Obligation Bonds• Support State Efforts to Expand Sales Tax Base• Support Efforts to Allow Property Tax for Operations• General Fund Support

78

PUBLIC SAFETY CAPITAL FUNDING

40

DEVELOP A TRANSPORTATION SYSTEM THAT WORKS FOR ALL RESIDENTS

• Maintain transit facilities and equipment in good condition

• Enhance existing servicesmicro transit / traffic signal priority / automated safety systems

• Further implementation of existing transit planshigh frequency corridors / service to the airport / new routes / expanded night service

• Regional Transit Model and Long‐Range PlanBus Rapid Transit starting at end of FY23 Expand street‐car to additional neighborhoods and business districts

POSSIBLE DIRECTION AND NEXT STEPS• Dedicated Funding for Public Transportation• New Motor Fuel Tax

79

PUBLIC TRANSPORTATION SYSTEM IMPROVEMENTS

• Original MAPS projects have been in public use for 10 to 20 years

• MAPS Use Tax was used for capital maintenance but is almost depleted

• MAPS/MAPS 3 projects, GO Bond Projects, and CIP Projects will need a capital maintenance funding source

POSSIBLE DIRECTION AND NEXT STEPS• General Fund – Target is 1‐3% of General Fund for Capital Maintenance• MAPS 3 Surplus Funding• General Obligation Bonds• Facility Charges

80

FACILITY CAPITAL MAINTENANCE COSTS

41

• Difficult time filling and retaining employees in skilled trades, some professional services, part‐time positions, and those requiring a Commercial Drivers License

• Approximately 16% of employees participating in the Oklahoma City Employee Retirement System are eligible to retire

POSSIBLE DIRECTION AND NEXT STEPS• Conduct a New Classification and Compensation Study• On‐the‐Job Training• Partner with Local Educational Institutions.• Contract for Specialized Skill Sets

81

EMPLOYEE RECRUITMENT, CLASSIFICATION AND COMPENSATION

• Progress made in 2017 by increasing eligibility requirements for early

retirees and ending subsidized retiree health insurance for new

employees hired after January 1, 2017.

• Changes are expected to reduce liability by $90 million over 10 years

• Plan still has an unfunded liability in excess of $521 million

POSSIBLE DIRECTION AND NEXT STEPS• Explore cost reduction changes that lessen the impact to plan participants while reducing

costs for the city

82

OTHER POST‐EMPLOYMENT BENEFITS (OPEB) LIABILITY

42

FIVE-YEAR FORECAST

GENERAL FUND REVENUES

83

TRENDS AND FORECAST

FY19 General Fund RevenueWhere the money comes from

84

Sales Tax $255.4M(55%)

Other Taxes$63.7M (14%)

Other Revenue$100.6M (22%)

Franchise Fees$42.0M(9%)

FY19 General Fund Revenue Budget

$461.7 M

43

General Fund Revenue BudgetTop 10 Budgeted Revenue Sources in FY19

85

Revenue Source FY19 Budget % of GF Category

Sales Tax $255,388,510 55% Sales Tax

Use Tax $50,650,630 11% Other Taxes

OG&E Franchise Fee $20,978,938 5% Franchise Fees

Fire Wage Adjustment $12,092,575 3% Other Revenue

Court Cost Fees $9,942,696 2% Other Revenue

Police Wage Adjustment $9,307,367 2% Other Revenue

Traffic Fines $6,875,466 2% Other Revenue

Cox Cable Franchise Fee $6,034,537 1% Franchise Fees

ONG Franchise Fee $5,574,023 1% Franchise Fees

Building Permits $5,493,088 1% Other Revenue

TOTAL $382,337,830 83%

Top 10 Revenue

Sources

83%

All Other Revenues

17%

General Fund FY19 Revenue Budget

86

General Fund Revenue Trends

$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

$300,000,000

$350,000,000

$400,000,000

$450,000,000

$500,000,000

FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19

General Fund Revenue Trends

Sales Tax Other Taxes Franchise Fees Other Revenue

44

87

General Fund RevenuesHistory and Projected Expenditure Growth

3.3% ‐3.1% ‐2.1%8.7%

9.8% 2.6% 2.7% 2.9%3.0% 3.0%

$0

$100

$200

$300

$400

$500

$600


Millions

General Fund Revenue GrowthSales Tax Other Taxes Franchise Fees Other Revenue

Projected Growth

Projected Average Annual Growth of 2.9%

FIVE-YEAR FORECAST

GENERAL FUND EXPENSES

88

TRENDS AND FORECAST

45

FY19 General Fund Expense BudgetWhere the money is spent

89

Personal Services

$331.5M (72%)

Services$93.4M (20%)

Supplies$11.6M (2%)

Transfers

$25.2M (5%)

FY19 General Fund Expense Budget

$461.7M

General Fund Expense BudgetTop 10 Budgeted Expenses in FY19

90

Top 10 Expenses

82%

Al l Other

Expenses

18%

General Fund FY19 Expense BudgetExpense FY19 Budget % of GF Category

Salaries and Wages $216,702,370 47% Personal Services

Heal th and Welfare Insurance $45,284,789 10% Personal Services

Reti rement/Pens ion Contributions $24,355,759 5% Personal Services

Payments to COTPA $21,069,018 4% Other Services

Chargeback ‐ IT $18,326,632 4% Other Services

Reti ree Heal th Insurance $14,562,836 3% Personal Services

Overtime $13,242,486 3% Personal Services

Arena/Convention Center $8,428,168 2% Transfers

Transfer to CIP $8,153,568 2% Transfers

Workers Comp/Insurance $7,879,334 2% Other Services

TOTAL $378,004,960 82%

46

General Fund Expense Trends

91

$0

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

$300,000,000

$350,000,000

$400,000,000

$450,000,000

$500,000,000

FY 00 FY 01 FY 02 FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18 FY 19

General Fund Expense Trends

Personal Services Other Services & Charges Supplies Transfers

Expenses included in the forecast

92

Budgeted Cost Per Year

New or Enhanced Service FY20 FY21 FY22 FY23 FY24

Animal Control Services $295,262 $306,650 $318,533 $328,599 $339,081

American Indian Cultural Center $2,000,000 $2,000,000

Softball Complex $728,862 $751,457 $774,977 $799,467 $824,970

Scissortail Park ‐ Lower Park $761,500 $2,882,400 $3,024,100 $3,172,800

OKC Boulevard Landscape Maint. $300,644 $309,964 $319,666 $329,767 $340,287

Other Enhancements $141,055 $145,428 $149,980 $154,719 $159,654

Fire Dispatch $139,281 $143,599 $148,093 $152,773 $157,647

Police Investigations Civilian Positions $233,835 $241,084 $248,630 $256,487 $264,668

Convention Center Operations $875,707 $3,186,829 $2,261,286 $1,351,522 $1,351,522

Bus Rapid Transit $3,500,000 $3,500,000

Bus Replacement $4,150,000 $5,250,000 $0 $600,000

Total $2,714,646 $9,996,510 $12,353,565 $11,897,433 $12,710,629

47

General Fund ExpendituresHistory and Projected Expenditure Growth

93

2.3% 0.3%‐4.5%%

2.9%

14.1%4.1%

4.3%4.1%

3.1%3.8%

$0

$100

$200

$300

$400

$500

$600


Budget


Millions

General Fund Expenditure Growth

Projected Growth

Personal Services Other Services Supplies TransfersProjected Average Annual Growth of 3.9%

FIVE-YEAR FORECAST

GENERAL FUND GAP

94

48

Projected Gap

95

$250

$300

$350

$400

$450

$500

$550

$600

FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24

Millions

General Fund Revenues and Expenditures

Revenues Expenditures

Projected gap in FY24 $17.0 million

Closing the GapFY19 projection from 5 years ago

96

$475M

$503M

$250

$300

$350

$400

$450

$500

$550

2006 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Milli

ons

General Fund Revenues and Expenditures

Revenues Expenditures

Projected gap in FY19 is

$28.9 million

$461MFY19 Budget

49

Closing the Gap

97

FIVE-YEAR FORECASTFY20 BUDGET OUTLOOK

98

50

FY19 General Fund Revenue Status

99

5 of 10 revenue categories were above budget

Revenue Category

$

Above/(Below)

YTD Budget

Sales Tax $1,830,514

Use Tax $8,090,246

Franchise Fees ($1,158,312)

Service Charges ($1,734,107)

Administrative Charges ($573,846)

Fines & Forfeiture ($528,700)

Licenses & Permits $189,235

Other Taxes ($209,665)

Other Revenue $48,573

Operating Transfers In $568,210

GENERAL FUND TOTAL $6,522,148

Projected Revenue Growth in FY20

100

Sales Tax 2.4%

Use Tax 3.0%

Other Taxes 0.7%

Franchise Fees 1.4%

Licenses and Fees 0.2%

Fines ‐2.8%

Other Revenue 12.5%

Service Charges 3.0%

Administrative Charges 6.4%

Transfers 85.1%

Overall Growth 2.6%

51

Risks to the General Fund

• National Recession or Oil and Gas DownturnRevenues Don’t Meet Projection

• DisastersUnanticipated Events Could Put Additional Pressure on Operationsand Finances

• Human ResourcesEmployee Cost and Benefits / Vacancy Length

101

FY20 Expense Assumptions

• Growth in a number of areas

Personal Services growing $14.6 million or 4.4%

Services growing $3.8 million or 4.0%

Supplies and Capital declining $0.5 million or 5.0%

Transfers growing $1.2 million or 5.2%

• New or Enhanced Services Added

25 Positions added to the General Fund to provide new or enhanced services

102

52

FY20 Budget Calendar

103

JULY 1FY20 Budget takes effect

MAY 283rd Finance Committee Meeting

(Public Hearing)

JUNE 4Adoption of FY20 Budget

MAY 142nd Finance Committee Meeting

(Public Hearing)

APRIL 30Proposed Budget

submitted to Mayor and Council and

1st Finance Committee Meeting (Public Hearing)

FIVE-YEAR FORECAST


104

Documents

5-YR Forecast City Council Workshop - OKC