Fort Walton Beach — Fiscal Year 2020-21 Adopted_Budget — reading text

Accountability We will take full responsibility for our actions, resources, and attitudes. Teamwork We will work together to provide quality services. Customer Service We will be professional, use all available resources, and strive to meet the needs of our customers. Continual Improvement We will promote a culture that seeks to better our organization. Adopted by City Council in September 2011, after a collaborative effort by Department Directors and the City Manager, the updated Vision and Mission for the City are as follows: Vision The City of Fort Walton Beach: a recognized leader in the provision of Community Services. Mission To enhance and protect the Community by providing quality services. 2  Strategic Plan Adopted in July 2019 City Council’s primary responsibility is to shape public policy to achieve the citizens’ desires for the future. As time passes, the complexion of a community, its residents and leaders change, as do the priorities of the community. There is probably no more daunting a task that any community faces than planning for its future and identifying future priorities. The Strategic Plan is a multiyear plan and the budget process determines which parts of the Plan receive resources each year. Each Objective is in line with the City’s Vision, Mission Statement and Core Values. Throughout this document, Strategic Plan Objectives have been tied to expenses, capital improvement projects, and performance measures – look for the icons below Objective #1 – Safe and Livable Community for Citizens Quality of Life Survey Data, Crime Stats, Traffic Injury Stats, Pedestrian and Bike Safety, and Reducing Congestion Objective #2 – A Government that Maximizes the City Budget, Tax Revenue, and Population Stats Objective #3 – Support Intelligent Growth City Population Data, Percentage of People Under 25, Building Permits and Parks and Recreation Data Objective #4 – Maintain a Well-Trained, Talented and Engaged Municipal Workforce Employee Engagement and Turnover 3 4 City Manager’s Budget Message October 1, 2020 Honorable Mayor, City Council Members, and Citizens: It is my pleasure to submit the FY 2020-21 municipal budget. The City of Fort Walton Beach budget is designed to meet the highest standards of municipal budgeting. This budget continues the City’s commitment of providing high quality services in a cost-controlled manner, developing an assortment of revenues to fund programs and maintaining prudent cash reserves. This year’s budget process emphasizes sound fiscal management and sustainability to achieve the goals established by citizens, City Council, and staff. The FY 2020-21 budget of $49,575,666 is $2.3M, or 4.96%, more than the adopted FY 2019-20 budget; it is primarily due to the sale of surplus properties and other operational increases within the CRA fund (Landing improvements), Florida Building Code fund and Enterprise funds (adoption of five-year utility rate study). The budget is predicated using the rolled-back millage rate of 5.3293 mills; as a result Ad Valorem revenues will remain relatively flat with a slight 0.19% increase year over year. ECONOMIC ENVIRONMENT FY 2019-20 brought about numerous challenges, including the COVID-19 Pandemic, which required the employees of the City of Fort Walton Beach to rise to the challenge and adapt on-the- fly to continue conducting the business of the City in a professional and safe manner. COVID-19 resulted in a shutdown of the local economy from late March to the end of May, which negatively affected many of our revenue sources. As a result, all non-essential projects and hiring of employees have been frozen for the remainder of FY 2019-20. City employees have adapted quickly, because of COVID-19, to remain available to our customers and have explored opportunities of alternative service delivery methods, including electronic/virtual interaction. As a result, the City is now providing services more efficiently through the adoption of new procedures on how to conduct business while maintaining the highest level of customer service that our constituents have grown accustomed to. The City continues to explore new revenue sources and have been successful in obtaining two Federal Grants that assist with personnel costs within our public safety departments. The City is also taking advantage of any State funding opportunities available to help cover revenue shortfalls due to COVID-19. Unemployment in Okaloosa County is 6.9% as compared to 2.8% a year ago. Unemployment in the State of Florida is 11.5% with the National average at 10.5%. The State of Florida projects a decrease in local option fuel tax and communication services tax revenues, two of four of the City’s revenue sharing funds (local option fuel taxes, municipal revenue sharing, local option sales tax and half-cent sales tax). The decrease in local option fuel tax reflects slightly lower fuel demand. The communication services tax revenues have declined in projections over the last few years due to the bundling of taxable wireless services. On a brighter note, the Okaloosa County Property Appraiser anticipates a 5.8%, or $84M, increase in taxable assessed property values for the City, as the real estate market continues its recent boom. City of Fort Walton Beach, FL 5 City Manager’s Budget Message TOP BUDGET ISSUES Current Year – FY 2020-21 Prior Year – FY 2019-20 Fire Assessment Fee $1,152,767 ▼ Fire Assessment Fee $2,500,000 ▲ Fee was implemented on 1/1/2020 and is designed to Fee is designed to cover the costs of Fire Protective cover the costs of Fire Protection Services. Services. Fees revised after start of FY 2019-20. Insurance Benefits $400,000 ▲ Pension Benefits $431,893 ▼ Increase of 10.5% in overall rates for health Decrease in Pension Contributions for DB Plans due to insurance. employee turnover and higher investment earnings. Insurance Benefits $545,261 ▲ State-Shared Revenues $620,721 ▼ Increase of 4.70% in overall rates for health, dental, A decrease of 39.23% year over year as a result of life, and vision insurance; change to employer premium COVID-19. contributions. Property Taxes The City’s 2020 gross taxable property value for operating purposes is $1.533 billion, an increase of $84 million, or 5.80%, from the 2019 final gross taxable property value of $1.449 billion. Property taxes primarily fund General Fund operations. However, property taxes paid by certain residents and businesses located in areas targeted for specific improvements to eliminate blight and improve infrastructure are allocated to the Community Redevelopment Agency (CRA) Fund. 1,800 9 1,600 8 Ad Valorem Taxes (millions) 1,400 7 Taxable Value (millions) 1,200 6 1,000 5 800 4 600 3 400 2 200 1 - - 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 General Fund CRA Fund Tax Revenue Millage Staffing and operational cuts were made in FY 2011-12 and FY 2012-13. In FY 2013-14, the City simply did not have room to “do more with less” and raised the millage rate to 5.7697 mills. As property values continue to rise, the City lowered the millage rate to the rolled-back rate of 5.6395 mills in FY 2019-20. The FY 2020-21 proposed budget is predicated on the millage rate of 5.3293 mills. This rate, known as the rolled-back rate, generates the same amount of property tax revenue as the prior year, even with the increases in property values. One mill equals $1 per $1,000 of taxable property value. City of Fort Walton Beach, FL 6 City Manager’s Budget Message Wage Adjustments The Pay & Classification Study was completed and implemented in FY 2019-20. Human Resources and Finance implemented the recommendations of the study for each position minimun and adjusted the compressed salaries for the affected employees. Furthermore, the position reclassifications were adopted within our current position management structure. Additionally, a 2.0% (effective on the employee’s anniversary date) Length of Service adjustment for all employees, excluding Fire Bargaining Union Members (which have been allocated to each member in accordance with the current Collective Bargaining Agreements) and sworn Police Department employees (adjustments will be made based on the pay grade and step plan adopted with the Pay & Classification Study), has been allocated in the budget. The Length of Service adjustments will equate to an increase of $209.7K in the budget. Pension Defined Benefit Changes The City is required to maintain its three defined benefit pension plans in a fiscally sound manner. Investment earnings and employee/employer contributions comprise the plans’ income. General employees and police officers currently contribute 5% of wages while firefighters contribute 8% of wages into their respective plans. The City’s annual contribution, as a percent of payroll, is based on