2 Table of Contents Message from the City Manager Iam pleased to present Chesapeake’s Popular Annual Financial Report (PAFR) for the fiscal year which ended June 30, 2023. We produce this report to enhance transparency and accessibility by presenting budgetary and financial information in ways that are user- friendly to the community. The City recently received the Government Finance Officers Association’s (GFOA) Award for Outstanding Achievement in Popular Annual Financial Reporting for last year’s PAFR. This achievement puts the City in a select group of local governments that have received awards in all three categories from the GFOA and is a testament to the strong team of professionals serving the City in the Finance and Budget Departments. More information on these recognitions is on page 15. This year, we have chosen to highlight the importance of water in Chesapeake. Water is one of the city’s most unique defining features, covering nearly 4% of its area. The City owns 135 bridges and culverts and additional bridges are owned by private, state, and federal partners. Six of the bridges are moveable, allowing taller boat traffic to pass through. Our water resources, infrastructure, and services keep our City beautiful, create recreational opportunities, and provide nationally-recognized drinking water to our citizens and visitors. This report contains a variety of financial information, as well as other details about the City and its government. The City ended FY 2023 with an overall net position of $2.4 billion, an increase of $160.0 million or 7.2% from the prior year. The increase in net position is attributable to the excess of revenues over expenses in governmental and business type activities. On June 30, 2023, the City’s unassigned fund balance in the General Fund was $91.8 million or 12.4% of FY 2023 general fund revenue, and our credit rating was reaffirmed at the highest levels from the three top rating agencies. As we move through fiscal year 2024, the City will continue to operate in a fiscally responsible and sustainable manner. Our top priority is working to implement the City Council’s priorities in support of making Chesapeake an exceptional place to live, learn, work, farm, and play. Chris Price, City Manager Chesapeake will be economically strong, culturally diverse, and environmentally responsible, with a quality of life that defines our city as an exceptional place to live, learn, work, farm, and play. As the city continues to grow, it will be a progressive and well-connected community of treasured rural areas, vibrant neighborhoods, and thriving commercial and industrial centers. Moving forward, we will build on our strengths to create an unparalleled city that meets our full potential. City Council’s Vision for Chesapeake 3 PAFR FY 2023 Chesapeake operates under the Council-Manager form of government, with a City Council composed of eight Council Members and a Mayor, all of whom are elected at-large. The Council selects a Vice Mayor from among the Council Members and appoints a City Manager to serve as the City’s Chief Executive Officer. The City Manager is responsible for the day-to-day administration of the City, overseeing twenty departments. Council also appoints the City Attorney, City Clerk, Real Estate Assessor, Internal Auditor, and members of various boards and commissions. The Sheriff, Treasurer, Clerk of the Circuit Court, Commonwealth’s Attorney, Commissioner of Revenue, and School Board are elected by the citizens. Chesapeake City Government Vice Mayor Dr. John de Triquet Mayor Rick W. West C. Jeff Bunn Don J. Carey, III Robert C. Ike, Jr. Amanda L. Newins S.Z. “Debbie” Ritter Dr. Ella Ward Daniel W. Whitaker City Council 2023 Notes on the PAFR • Chesapeake’s fiscal year runs from July 1 through June 30. The financial information in this document covers the period from July 1, 2022 through June 30, 2023. • The Popular Annual Financial Report (PAFR) is a summary document. As such, not all the financial information complies with the requirements of Generally Accepted Accounting Principles (GAAP). The data in the PAFR includes both short-term financial information such as revenues and expenditures for the reporting period, as well as longer-term financial measures such as net position. To view the GAAP-compliant Annual Comprehensive Financial Report (ACFR), please visit the City’s website • receive substantial funding from the City of Chesapeake. In FY 2023, the contribution totaled $287.8 million. The Schools are a separate legal entity whose operations are under the oversight of the elected School Board, which appoints the Superintendent of Schools. The financial reports of the Schools are included in the City’s annual financial audit but are not included in this PAFR. 4 Citywide Organizational Chart 5 PAFR FY 2023 Chesapeake Water By The Numbers Did You Know? In 2017, the American Water Works Association (AWWA) declared the City of Chesapeake “The Peoples’ Choice” in its Tap Water Taste Test. Beneath your neighborhood there is a maze of pipes weaving to and from your property, all for different purposes. Stormwater Pipe System: Some areas of the City have piped stormwater systems (as opposed to stormwater ditches). These pipes take rainwater from the street to a nearby pond, river, or canal, which all eventually lead to the ocean. A water treatment plant is not involved in this process. The Public Works Department is in charge of maintaining stormwater systems. Sanitary Sewer System: Completely separate from the stormwater system, the sewer system moves wastewater from your house to a pump station and finally to a sewage treatment plant. The Public Utilities Department manages the sewer system from your property to the pump station and the Hampton Roads Sanitation District manages the system from the pump station to the treatment plant. Drinking Water System: For those who have City water, the water that comes out of your faucet has been cleaned at a water treatment plant and pumped to your home. Separate Systems of Separate Systems of Equal ImportanceEqual Importance 6 General Fund Revenues Fiscal Year Ended June 30, 2023 $738.5 Million Other Local Taxes $165.8 Million Sales and use taxes, business license taxes, restaurant food tax, tobacco tax, and lodging tax, among others. Charges for Services $12.3 Million Recreation fees, emergency medical service fees, and plan review fees, among others. Miscellaneous $19.1 Million Fines & forfeitures, investment income, revenues from the use of property, recovered costs, and other miscellaneous local revenue. Licenses, Permits, Fees $11.7 Million Motor vehicle licenses, animal licenses, permit fees, and inspection fees, among others. Property Taxes $426.8 Million Taxes on real property, public service corporations, and personal property. Intergovernmental Revenues $102.7 Million Funds received from the Commonwealth of Virginia, federal government, and transfers from Chesapeake Public Schools. The General Fund includes the majority of City services and includes those services funded from tax revenues. Totals and percentages on pages 6 and 7 are rounded to allow for clear, simple reading. More specific figures can be Trend Analysis Fiscal Years 2017 to 2023 2% 2% 2% 22% 14% 58% 7 PAFR FY 2023 General Fund Expenditures Fiscal Year Ended June 30, 2023 General Government $135.8 Million City Council, Council appointees & their departments, financial departments, libraries development & permits, among others. , Public Safety $122.5 Million Police Department, Fire Department, and Emergency Management. Parks and Recreation $13.5 Million Community Centers, maintenance, parks, and recreation & arts programs. Capital Outlay $5.5 Million Funds used to purchase long-term assets that are not accounted for in the capital budget. 17% $638.8 Million The decrease in expenditures in FY 2021 was caused by the receipt of federal stimulus funds (Coronavirus Aid, Relief, and Economic Security Act) which were used to reimburse personnel costs related to qualifying services. There were also increases in FY 2022 and FY 2023 attributable to adoption of the pay plan and inflationary impacts. Trend Analysis Fiscal Years 2017 to 2023 Education $287.8 Million Funds transferred from the City to Chesapeake Public Schools. Excludes $11.3 million of debt issued. Public Works $73.7 Million Engineering, traffic, streets & bridges maintenance, drainage, waste collection, and funding for Hampton Roads Transit. 45% 12% 2% 1% 19% 21% 8 Chesapeake’s F unding Cycle City Council has designated three Strategic Anc hors and five Desired Outcomes as part of their Strategic Planning Process (shown at left). Alignment to these anchors and outcomes is c onsidered when making decisions, evaluating projects, and shaping the City’s future. The Anchors and Outcomes form the underpinnin g for development of the Budget and the determination for how resources will be allocated in both the short and long t erm. These tenets also form the basis for the ongoing evaluation of programs and initiatives. For more information, ple ase see the City’s Strategic Plan Summary Report at CityOfChesapeake.net/StrategicPlan. SSttrraatteegicgic PP lanning Forms the Foundationlanning Forms the Foundation FFinancial Rinancial Reporeporttining Tg Trracackks ts the Prhe Prooggrreessss The City’s Annual Comprehensive Financial Report (ACFR), which is published and presented to City Council each December, reports on the organization’s financial performance for the fiscal year ended the previous June. This report, which includes independently-audited financial statements, provides information on how the City performed relative to its annual budget. The Popular Annual Financial Report (PAFR) provides a snapshot of select financial and other information of interest to the public in a clear, easy-to-follow format. Drawing from the ACFR, the PAFR presents City financial highlights in more easily-understood terms. 9 PAFR FY 2023 Chesapeake’s Funding Cycle City Council has designated three Strategic Anchors and five Desired Outcomes as part of their Strategic Planning Process (shown at left). Alignment to these anchors and outcomes is considered when making decisions, evaluating projects, and shaping the City’s future. The Anchors and Outcomes form the underpinning for development of the Budget and the determination for how resources will be allocated in both the short and long term. These tenets also form the basis for the ongoing evaluation of programs and initiatives. For more information, please see the City’s Strategic Plan Summary Report at Strategic Pgic Planninlanning Fg Fororms tms the Fhe Foundaoundattionion Strate Budget Development Sets the Plan The City’s spending plan, or Budget, is proposed by the City Manager and approved by City Council. The Operating Budget covers day-to-day expenditures, while the Capital Budget contains assets exceeding $100,000, with a life span of more than 1 year (ex: roads, bridges, technology). Citizen input into the Budget development process is welcome, as seen in the calendar below. Fiscal Year 2025 Budget Calendar March 26, 2024 Operating Budget Presented & Posted Online for Review April 23, 2024 Public Hearing on Operating & Capital Budgets - Opportunity for Citizen Comment May 14, 2024 Council Considers Approval of Operating & Capital Budgets Next >