Fort Walton Beach Council agenda — 08-02-2007 Special agenda --tentative millage — reading text

Budqet Challenqes Fort Walton Beach is navigating a dynamic environment and activities and finances are being adjusted and refined to continue the course of progress steered in recent years. rate of 4. 1986 results in Compared to maintaining the current millage rate of 4. 6458, the tentative millage 631, 254 less revenue for FY 2007- 08. However, in comparison to FY 2006- 07 budgeted ad valorem is $ 92, 565 1. 5%. This overall percentage decrease is less than the revenues, the overall decrease or reduction ( which is exclusive of new construction) due to continuous redevelopment legislative 5% is to eliminate downtown in the Community Redevelopment Area. The purpose of designating a CRA for growth in the slum and blight and the property tax reform legislation does not penalize jurisdictions than simple majority of CRA. In order to comply with property tax reform without requiring a vote greater rate of 4. 1986, a decrease of 9. 7% the governing body, staff has prepared a budget based on a millage from 4. 6458. Communication Services Tax that the In April 2007 the City received a letter from the Department of Revenue ( DOR) advising of the CST vendors had improperly filed the vendor' s CST third- party preparer for one City' s returns. An audit by DOR revealed that the returns for the period June 2004 through September other jurisdictions, 2006 incorrectly attributed amounts to the City of Fort Walton Beach from distributions to the When staff City. first noticed the increase in thereby resulting in higher monthly 2 of 4 monthly payments and contacted DOR in 2004, City staff was told the increase was attributable to increased use of cellular phones after Hurricane Ivan. Communication services tax ( along with half-cent sales tax, local option fuel tax, and municipal revenue sharing) revenues are budgeted based on estimates provided by the Legislative Committee on Intergovernmental Relations ( LCIR) and actual revenues have traditionally come in at or above LCIR estimates. The notice from DOR in April indicated an overpayment of $ 1, 666, 858 over a twenty-eight month period, which the City will be permitted to repay over a similar period of time. Additionally, the City' s monthly disbursement has decreased approximately $ 50, 000 as a result of the correction. In May the FY 2006- 07 budget was amended to account for the $ 825, 000 current year revenue decrease. Lower monthly distributions will result in $ 881, 645 less revenue from CST in 2007- 08. Additionally, twelve months of overpayment reimbursement is budgeted from fund balance in the amount of $714, 368. Public Service ( Utilitv) Tax Utility taxes are contractually levied against electric, gas, and water revenues at the rate of 10%. The City adopted a $ 20/ month cap for residential consumers and a $ 50/ month cap for non- residential consumers for the utility tax. In addition, the electric utility tax is not levied on the first 50 kilowatt hours per month for residential use. The Attorney General has issued several opinions stating that caps and limitations on the dollar amount taxed under Florida Statute 166. 231 are improper and the City was advised by its attorney in 1997 that state statute does not authorize limitations or caps. It is estimated additional $ 279, 160 in revenue would be received if the an public service ( utility) tax cap and exemption were removed. This fee schedule change has been identified as an alternative to reducing the amount appropriated from fund balance in the General Fund. Declininq Revenues Estimates for the following state- shared revenues are calculated by the Legislative Committee on Intergovernmental Relations ( LCIR). Due to a slowing economy these revenue sources are anticipated to decrease. Half- Cent Sales Tax - down $ 185, 940 or 9. 8% Municipal Revenue Sharing - down $ 55, 095 or 6. 5% Local Option Fuel Tax - down $ 35, 285 or 4. 9% Fire Union Neqotiations The current three- year contract expires September 30, 2007 and union members are budgeted to receive the same 1.4% cost-of- living adjustment as general employees and police officers. Any benefits negotiated with the Fire Union will most likely be handled through a budget amendment. Due to the uncertaintywith homestead property tax reform on the January 2008 primary election ballot, it is unlikely that the City will obtain more than a one- year agreement at this time. Alternative Service Deliverv of evaluating Management Advisory Group is currently studying City operations with the objective and analyzing services for the feasibility of privatization, public- private partnerships, and/ or consolidation with other local governments to improve the efficiency and effectiveness of City to study and government. All areas of City operation, exclusive of fire services, are subject recommendation with the overall goal of reducing the cost of government services to citizens. The General Fund budget as prepared includes a $ 692, 780 appropriation from undesignated fund balance to bridge the gap between revenues and expenditures. Although it is not prudent to use reserves to fund ongoing operational expenses, in light of the pending alternative service delivery so as not to take study results staff did not reduce service levels ( other than capital improvements) actions that may possibly run counter to the study findings. Staff anticipates implementing the 1, 2008 and amending the FY 2007- 08 budget accordingly study' s recommendations by January to eliminate the use of reserves for operations. However, staff has prepared a list of possible reductions ( Comprehensive Budget page 19) should City Council desire a lower budget from General Fund reserves prior to the results of the alternative service delivery appropriation study. 30f4 Conclusion Home Rule authority is the power of local governments to conduct government, perform functions, and render services, except when expressly prohibited by law. In an effort to preserve Home Rule authority, the property tax reform legislation allows local governments to override the statutory current year property tax reduction and future years' cap as follows: 2007- 08 Variance from Variance from 2007- 08 Ad Valorem Maintaining Current 2006- 07 Method of Adoption Millaqe Description Millaqe Rate Revenue Millaqe of 4. 6458 Revenues Majority vote of Roll- back rate at 4. 1986 $ 5, 926, 619 <$ 631, 254> <$ 92, 565> governing body percentage cap Two- thirds vote of Roll- back rate 4.4196 $ 6, 238, 576 <$ 319, 297> $ 219, 392 governing body Unanimous vote of 538, 689 Prior year millage rate 4. 6458 $ 6, 557, 873 $ 0$ governing body Rate higher than prior ~ Voter referendum 4. 6459 year Public HearinQs Per state statute, the City must hold public hearings on the budget and the City' s meetings may not be on the same date as that of Okaloosa County or the School Board. The City is required to notify the Property Appraiser of the date and time of the City' s first public hearing for the budget and this date is printed on the TRIM Notice. Any change in the meeting time for the first public hearing on the budget will require re- notification to each City property taxpayer. Accordingly, City Council established its public hearings for the budget at its April 24, 2007 meeting for the following dates and times: Special Council Meeting - Wednesday, September 5, 2007, 5: 30 pm Special Council Meeting - Wednesday, September 19, 2007, 5: 30 pm According to information currently available to the City, these budget hearing dates do not conflict with the public hearing dates of Okaloosa County or the School Board. Recommended Motion Staff respectfully requests that City Council: Motion 1 Set the FY 2007- 08 tentative millage rate for ad valorem taxes at 4. 1986 mills. Motion 2 Confirm the dates and times of the public hearings for the budget: Special Council Meeting - Wednesday, September 5, 2007, 5: 30 pm Special Council Meeting - Wednesday, September 19, 2007, 5: 30 pm Attachments: 2007 Certificate of Taxable Value ( DR- 420) 2007 Tax Increment Adjustment Worksheet - Original CRA ( DR- 420TIF) 2007 Tax Increment Adjustment Worksheet - Expanded CRA ( DR- 420TIF) Concur L Concur Do Not Concur Do Not Concur Hold for Discussion Hold for Discussion t,- citY Manager u: lbudgetlbudget 07-081milage - triml8- 2 tentative millage memo. doc 40f4  Certification of Taxable Value FOR DOR USE ONLY DR-420