Fort Walton Beach — Fiscal Year 2023-24 Adopted Budget — reading text

proposed budget. The City Manager reviews major issues and June 2023 City Council Budget Policy Meeting Discussion Budget Issues Department Directors are present for any Set Proposed Millage Rate for TRIM Notice discussion. The meeting is open to the public and the public is encouraged to August 7, 2023 City Council Budget Workshop attend and participate. September 12, 2023 City Council Meeting – Adopt Tentative Millage Rate and Budget by Resolution After the budget policy meeting, a budget September 26, 2023 City Council Meeting – Adopt Final Millage workshop is held with City Council in Rate and Budget by Resolution August to discuss the proposed budget to make any final revisions prior to the two public hearings to formally adopt the budget in September. This meeting is also open to the public. During September, two public hearings on the millage (i.e. property tax) rate and budget are held per State Statute before final budget consideration. These meetings are advertised as part of the agenda and Florida Law requires certain newspaper advertisements prior to the second and final budget hearing. At the public hearings, the public may make formal comment either for or against the proposed budget and ask questions of City Council about the budget. Budget adoption occurs in September after City Council deliberations and two public hearings. City Council may take action to modify the proposed budget at its discretion. Prior to budget adoption, City Council must adopt a millage rate to support budgeted funding levels. An adopted budget is published no later than October 1st. Budget Maintenance Budget maintenance is a year-round activity of the Department Directors, Finance Director, and Budget Analyst. Spending control mechanisms include Finance Department review of purchase requisitions and departmental review of reports presenting budget versus actual revenues and expenditures. These financial reports are prepared and reviewed by staff monthly and provided to City Council quarterly to identify and communicate any spending variances. Performance measures are prepared and reported to Council quarterly to monitor progress against goals and objectives, citizen satisfaction, and benchmarks. City of Fort Walton Beach, FL 18 Annual appropriations lapse at fiscal year-end except for encumbrances and appropriations related to multi-year projects and other items identified by City Council to be carried over to the next fiscal year. These carry-overs are included in the ensuing year’s adopted budget resolution. Budget Transfers Operationally, the City functions at a fund level basis allowing budget transfers within funds for individual line items that exceed the budgeted amount without a formal budget amendment. Budget transfers are used only to transfer appropriations between line items within a fund, not to increase the total budget or to transfer resources between funds. Budget transfers are permitted in accordance with Administrative Policy FIN-13. All budget transfers are performed in the City’s accounting system by the Finance Department. Budget Amendment Per Florida Statute 166.241, the adopted budget may be revised with a budget amendment approved by City Council in the same way the budget was adopted. The resolution adopting the annual budget allows the budget to be amended by resolution provided that a corresponding funding source supports any additional expense. Transfers between funds and increases to a fund’s total budget are permitted by resolution adopted by City Council. Frequently, the budget is amended to record grants awarded to the City or other mid-year activities approved by City Council. The budget amendment increases or decreases the total amount of the adopted budget of each fund. FINANCIAL POLICIES The financial policies presented below set forth the basic framework for the overall financial management of the City, as well as provide guidelines for evaluating current activities and proposals for future programs. Financial Planning Long-Range Planning – Update the Vision Plan every ten (10) years and hold a Budget Policy Meeting annually to ensure current and proposed programs and services reflect the values shared by citizens, City Council, and staff and to evaluate the impact on revenues and/or reserves. Prepare current year budget development to highlight the long-term impact of current decisions. These forecasts include the following assumptions, based on current trends and a Strategic Plan that focuses on economic stability:  A new five-year utility rate study was implemented in October 2020; for FY 2023-24, Year four (4) of the rate study will be implemented. The implementation makes sure the required rates are in place to generate sufficient revenue to sustain renewal and replacement reserves and account for debt service requirements.  Personal Services in all funds have been adjusted by a 3.0% COLA (General/Police/Fire) on October 1, 2023 and 2.0% Length of Service and will be implemented on each employee’s anniversary date, except for sworn Fire and Police Department employees, who will follow their adopted grade and step plans.  Operating Expenses are adjusted based on historical patterns. City of Fort Walton Beach, FL 19 In each forecast, if needed, action has been taken using excess reserves to ensure that there is no deficiency in any Fund. Please reference the Table of Contents for these forecasts. Asset & Infrastructure Inventory – Evaluate (and reprioritize as necessary) the five-year capital needs of the City annually as part of the budget process. Assets, as defined for purposes of this review, include computers, vehicles, and motorized equipment. Infrastructure improvements (e.g. street resurfacing, water/sewer lines, parks) are evaluated during development of the five (5) year capital improvements program. Balanced Budget – Prepare a balanced budget each fiscal year in accordance with Florida statutory requirements for municipalities. The budget is considered balanced if the total of all available financial resources (either on hand at the beginning of the fiscal year or generated during the fiscal year) equals or exceeds the total of all financial requirements (either planned spending during the year or funds required to be on hand at the end of the fiscal year). The requirement for a balanced budget is established at the fund level and must be met for each individual fund budgeted. When anticipated revenues exceed budgeted expenses, a non-operating governmental expenditure line “Fund Balance – Reserved for Future Appropriation” or enterprise expense line “Reserved- Undesignated Net Assets” accounts for the excess. In reverse, when budgeted expenses exceed anticipated revenues, a non-operating governmental revenue line “Appropriation from Unassigned Fund Balance” or enterprise revenue line “Appropriation from Net Assets” funds the overage. Although the budget adopted by City Council is balanced, the budget may become unbalanced during the year due to a natural disaster, civic emergency, grant award, or other City Council action. When these changes occur, a budget amendment must be adopted by resolution of City Council. Financial Monitoring – Prepare monthly financial reports for the City Manager and Finance Director detailing revenues and expenditures by fund, department, and division. Identify and explain any significant variances between budget and actual. Report financial information to City Council on a quarterly basis. Revenues Taxes – Maintain the millage and other tax rates at levels commensurate with the service levels being provided. Services which have a citywide benefit shall be financed with revenues generated from a broad base, such as property and other taxes. Evaluate annually as part of the budget process. User Fees – Maintain fees and rates at appropriate levels to fund their corresponding purpose, especially in the Enterprise funds. Services where the customer determines the use shall be financed with user fees, charges, and assessments related to the level of service provided. User fees shall be maximized in lieu of general revenue sources for services that can be individually identified and where costs are directly related to the level of service. The extent to which the total cost of providing the service is recovered depends on the nature of the service. For governmental services provided for the public good (e.g. police and fire protection, street maintenance, and land use regulation), it may be appropriate for a substantial portion of the cost to be borne by the taxpayers. For proprietary services provided for the enjoyment of specific residents (e.g. recreation programs, cemetery operations), total cost recovery may be warranted. Evaluate annually as part of the budget process. City of Fort Walton Beach, FL 20 Non-Recurring Revenues – Fund recurring expenditures with recurring revenues. One-time revenues will be reserved for future emergencies or projects identified by City Council to the greatest extent possible. Unpredictable Revenues – Budget unpredictable revenues at conservative levels (e.g. building permits) to safeguard against a shortfall. Expenditures Operating Expenses – Pay all current year operating expenses with current year revenues and/or available fund balance. Contingencies – Appropriate contingency funds in the General Fund and Enterprise Funds to guard against unanticipated price increases (e.g. fuel, utilities), emergency repairs, or revenue shortfalls. The State of Florida allows up to a maximum of 10% of anticipated revenues to be allocated toward contingencies. City practice is to budget 1% of personnel and operating expenses as contingency funds to be used as a last resort. Budget residuals (excess budget funds transferred out of an account by the Finance Department once the budgeted expense has been incurred) will be exhausted before contingency funds are used. The City currently meets this policy for the applicable funds. Special Project Carryovers – Carry forward into the new year through the budget resolution with the corresponding revenue source of the prior year. These are projects and/or purchases that are incomplete as of September 30th of any fiscal year that will be continued and made part of the appropriations for the ensuing year. These are budget funds for large items (usually capital purchases, projects, or studies) that were authorized and appropriated by City Council in a prior fiscal year but were not spent due to time constraints. Encumbrance Carryovers – Carry forward into the new year through the budget resolution with the corresponding revenue source of the prior year. In general, purchase orders close out at the end of the fiscal year unless they are identified for carryover as part of the budget process of the ensuing year. These encumbrances were authorized, budgeted, and appropriated by City Council in a prior fiscal year but were not fully receipted in due to the ongoing nature of the expense. Fund Balance (governmental funds) Fund balance refers to the difference between current financial assets and liabilities reported