Build the Budget 2023

The City’s annual budget outlines how the City will spend public funds. Residents, the South Bend Common Council, and the Mayor set strategic priorities for these funds.

The budget isn’t a mandate to spend, so the City can spend less than the budgeted amount. It establishes the legal highest amount the City can spend on various priorities. In other words, the City cannot exceed its spending budget.

The City organizes the budget into services such as fire response, police patrol, or trash pickup.

The City categorizes spending in the budget into Baseline Spending and Strategic Spending. These categories ensure investments in the budget follow City strategic priorities

Baseline Spending

• Baseline Spending funds essential operations at the City to keep residents safe and healthy. It also includes spending that the City already committed to. Examples are servicing debt or maintaining current capital assets.
• Around 85% of the City’s budget is Baseline Spending. During the budget process, the City doesn’t question if these expenditures are necessary. Instead, the City determines the most efficient funding structure for these expenditures.

Strategic Spending

• Around 15% of the City’s budget is Strategic Spending, which supplements essential operations. Strategic Spending helps our residents not only survive but thrive in the City.
• The City determines Strategic Spending by aligning investments with City priorities. This is in contrast to Baseline Spending, which focuses on essential services.

The City generates revenue to support expenditures through tax revenue and charges for service

Tax Revenue

• Property taxes make up about 25% of all City revenue and primarily fund most core government operations. Core operations include Police, Fire, Parks, and administrative departments.
• Income taxes make up about 11% of City revenues. Income taxes primarily fund other government operations. Other operations include those from Neighborhood Services and Enforcement, Community Investment, and other departments.
• Smaller tax revenues, such as gasoline tax, wheel tax, and liquor excise tax, support road repair and other priorities.

Charges for Services

• Charges for Services make up about 30% of the City’s total budget.
• Services include water and wastewater utilities, solid waste (trash collection), the City’s Century Center convention center, and Morris Performing Arts Center.

The City is committed to the passage of a balanced budget. A balanced budget promotes good fiscal management and ensures adequate cash on hand.

Revenue (amount the City generates) is equal to or greater than estimated expenditures (amount the City spends) in a balanced budget. This definition excludes non-operating revenues and expenditures. For example, these may be large, one-time capital expenditures funded with debt.

Common Council and the Mayor may pass a budget amendment to rebalance the budget after it gets adopted. This happens when estimated revenue decreases (City generates less than expected) or estimated expenditures increase (City spends more than expected).

As of the end of 2019, the City had 1,099 full-time employees. Roughly half of City employees are police officers or firefighters.

The City is committed to maintaining a manageable debt level. Debt financing of large-scale capital projects and ongoing capital maintenance is vital to accomplishing the City’s strategic priorities.

• Large-scale capital project example – Rebuilding Howard Park
• Ongoing capital maintenance example – Replacing City vehicles and equipment

The City uses debt to help accomplish large-scale projects. This is one of the most critical ways that the City reinvests in the community and community priorities.

However, the City recognizes that debt must be managed responsibly. Before issuing new debt, the City analyzes existing reserves and expected future revenue that can cover debt service payments.

These analyses help maintain the City’s AA bond rating, one of the highest in Indiana. The City’s bond rating measure our credit-worthiness, like a person’s credit score. A high bond rating helps the City can get affordable rates to finance large purchases.

As of 12/31/2019, the City had roughly $215 million in outstanding debt. Annual debt service payments in 2020 total about $33 million (about 9.4% of all expenditures in the City’s budget).

As of 12/31/2019, the City had around $290 million in cash on hand. About $45 million was in the City’s General Fund, which accounts for most core governmental operations.

Cash reserves ensure the City can respond when there’s a temporary revenue shortage. An example is during recessions when tax revenue decreases.

Your voice matters! The City’s budget depends on understanding what matters to you as a resident.

Take the budget survey at southbendin.gov/budgetsurvey2023

See and attend upcoming budget meetings during August, September, and October at XX

Read the 2022 City budget report on the City website at https://southbendin.gov/wp-content/uploads/2021/09/Final-2022-Budget-Report-9.27.21.pdf

Thank you to all the residents who participated in Build the Budget last year! 2022 was our largest budget feedback collection effort to date.