Okaloosa County BOCC — 2013 meeting #1142 (date undetermined) — FY2013-14 Transmittal Letter — reading text

County Administrator’s Office State of Florida July 15, 2013 Honorable Members of the Okaloosa County Commission: By this letter, your budget staff formally transmits the recommended Fiscal Year 2013-2014 Okaloosa County Budget. This document has been prepared through a cooperative effort between the County Administrator’s Office and the Clerk to the Board’s Finance Office. Over the past five years, the County budget has been reduced by Board action from $313,000,000 in Fiscal Year 2008, to $257,000,000 in Fiscal Year 2013. During this five year period, the budget was reduced by almost $56,000,000 (18%). Ad Valorem (property taxes) collected by Okaloosa County is practically the same this year, Fiscal Year 2013, as it was eight years ago in Fiscal Year 2005, $42,400,000 and $43,475,000 respectively. All County departments under the County Commission, as well as other elected officials, have been affected by these cutbacks. The Board is to be commended in their efforts to reduce expenditures for the last five years. There are currently eighty-nine fewer employees working under the Commission than there were five years ago. These reductions were done in order for the Board not to have to raise any taxes. For this to be achieved, strategies had to be implemented such as, 1) reducing staff and operational expenses, 2) delay of vehicle and equipment replacement, 3) limiting of capital projects and, 4) the drawing down of discretionary reserves. Every County Department and agency has shared in the responsibility of reducing their budgets. County employees have not received any cost-of-living raises during these last five years. This budget includes a 3% salary increase for our employees starting on October 1, 2013. This tentative budget being presented to you reverses this five year trend. Okaloosa County has fallen significantly behind in addressing levels of service on a number of fronts. Major capital project funding remains a challenge. Any desire to step up road construction, resurfacing, or stormwater projects will require additional funding. While several additional staffing requirements have been identified, without revenue increases, further staffing reductions may be necessary to meet the fiscal challenges in Fiscal Year 2013-14. The County’s fleet is aging and growing unreliable. Regular replacement of vehicles has been suspended since Fiscal Year 2007. Fiscal Year 2013 is the sixth consecutive year with the County’s General Fund fleet having no significant replacement of equipment and vehicles. The Okaloosa County Administration Building 1804 Lewis Turner Blvd., Suite 400 Fort Walton Beach, FL 32547 (850) 651-7515 * FAX: (850) 651-7551 e-mail: epadgett@co.okaloosa.fl.us lack of replacement vehicles has resulted in soaring maintenance costs and not enough vehicles in an operationally reliable condition for County work crews to depend on day-to-day. The Road division has ten essential pieces of equipment needing immediate replacement, the $1,531,000 cost of which is in the budget. Our IT Department staff manages more than 600 computers for departments of the Board. Over 360 of these are five years old or older and need to be replaced. To be on a 5-year rotation of replacement, it is necessary to purchase 125 computers each year at an estimated cost of $90,000 per year. Systems and Networks also manage over 85 servers that provide applications and vital data to departments and offices. These servers are the core of County operations and 51 of them are over five years old and need replacement. Regular computer and server replacements have not been funded for several years and the County continues to fall behind in the replacement of both PCs and servers. In our Corrections Department, the jail population has been hovering around 600 inmates for the last six months. If the inmate population increases much further during the coming year, it will be necessary to add correctional officers in order to reopen a 46-bed unit at a cost of $275,000 annually. By State action, Okaloosa County is required to increase our Florida Retirement System (FRS) contribution for employees by about $1,500,000. Between Fiscal Year 2008-09 and Fiscal Year 2012-13, the County Commission, working with the Sheriff, reduced the law enforcement budget by $2,100,000 (7%). For Fiscal Year 2013-14, the Sheriff has requested a $4,700,000 budget increase. I am recommending the Board approve a $2,000,000 increase. Over $600,000 of this amount is required as a result of State action relative to increased FRS contributions that counties are required to pay. Another $600,000 is for a 3% salary increase for Sheriff Office employees. The remaining $800,000 is for the Sheriff to allocate to other needs in his budget. During the Board’s five budget workshops this year, the Commissioners will hear, in detail, from our County departments relative to their budgetary needs. This year’s presentations by departments will be more in-depth and informative. My approach to budgeting is for the Commission to be given the necessary information in order to set budget policy for the upcoming year. In order for Okaloosa County Government to provide acceptable levels of service to our citizens, increased revenue is required. I am recommending an increase in two funding sources. One is the gas tax and the other is ad valorem. The tentative budget calls for an increase of 5 cents in the gas tax. This additional revenue is needed in order for the County to start addressing the backlog of transportation and stormwater needs. The increase will generate an additional $3,300,000 per year. Since this increase in the gas tax would take effect January 1, 2014, the County will realize only 75% of this amount for Fiscal Year 2013/14. The Board will hear from Transportation during our first budget workshop. They will detail our needs and challenges. Also, I recommend a millage increase of approximately 10%. This will increase the rate from the current 3.2899 mils to 3.6249 mils. This will generate an additional $4,300,000 annually. The increased revenue is required in our general fund in order to meet many pressing needs. As stated earlier, we have a large backlog of needs in fleet, facilities, information systems and corrections. In absence of the pay increase recommended in this budget for County employees, this will be the sixth year without an increase. In conclusion, by increasing the above stated revenue (gas tax and ad valorem) Okaloosa County will be able to start addressing a number of very important unmet needs. The longer Okaloosa County waits to start addressing these needs, the more costly it will be over time. I request the Board to hear all the presentations from various departments and officials during the month of July before making any decision relative to the recommended increases in the two tax sources. The Commission has until August 4" to certify a tentative millage. In the event the Board does not accept my recommendation to increase gas tax and ad valorem, we will have to continue pulling down from various reserves in order to balance the Fiscal Year 2013-14 budget. The following reserve sources are available for your consideration: 1) Self-Insurance Reserve (Pro-Share) — there is presently $2,800,000 in this account 2) Capital Outlay for Judicial renovation at the Shalimar Annex - $1,900,000; The fund level was at $6,000,000 a few years ago 3) General Fund Reserves - $3,000,000 The total of these three reserve funds is $7,700,000. We can use these reserves to balance the budget with the $1,500,000 required for increased Florida Retirement System contributions and the $1,260,000 for a 3% salary increase left in the budget. I’m confident the Commission will find the workshop presentations very informative and helpful. As your new County Administrator I have asked for and received much help from many dedicated County employees in formulating this budget. Respectfully submitt ie bP Ernie Padgett Okaloosa County Administrator