Fort Walton Beach — Comprehensive Financial Report September 30, 2021 — reading text

fund balance increased by $1.1 million. This is mainly attributed to delays in planned expenditures due to permitting issues for The Landing Project. Proprietary Funds The City’s proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. Unrestricted net position of the proprietary funds totaled $15.6 million at September 30, 2021, of which the Utilities Fund reported $12.4 million, the Sanitation Fund totaled $2.1 million, and the Stormwater Fund reported $1.0 million. The factors concerning the finances of these three funds have already been addressed in the discussion of the City’s business-type activities. Fiduciary Funds The General Employees’ Retirement Fund’s net position as a percentage of the total pension liability, an indicator of the sustainability of the Plan, was 99.5%, an increase of 3.2% over the prior year. Employees contribute 5% of pay to the Plan and the City contributed $1.4 million, which was a decrease of $332,315 when compared to the previous fiscal year. 11  Fiduciary Funds – Continued The Police Officers’ Retirement Fund’s net position as a percentage of the total pension liability was 78.4%, a decrease of 0.4% from the previous fiscal year. Employees contribute 5% of pay to the Plan and the City and State contributed $1.0 million, an increase of $70,591 when compared to the previous fiscal year. The Firefighters’ Retirement Fund’s net position as a percentage of the total pension liability was 66.5%, an increase of 3.9% over the previous fiscal year. Employees contribute 8.0% of pay to the Plan and the City and State contributed $1.4 million, an increase of $204,728 when compared to the previous fiscal year. Additional information on the pension plans can be found on pages 52-68 of this report. The General Employees’ Retirement Fund was closed to new entrants in January 2010, and all new hires are required to participate in a defined contribution plan, which is administered by the International City Managers Association (ICMA) Retirement Corporation. Additional information on the defined contribution plan can be found on page 69 of this report. GENERAL FUND BUDGETARY HIGHLIGHTS A statement showing the original budget, the final budget, the actual results and the variance from the final budget to the actual results is included for the General Fund on page 21 of this report. The difference between the original and final budgeted appropriations was an increase of $3.7 million. Significant information related to this difference is summarized as follows:  Increase for golf course irrigation loan of $1.5 million.  Ladder fire truck financed purchase for an increase of $999,320.  Cares Act grant for an increase of $550,000.  Hurricane Sally damage grant for an increase of $363,340.  Various donations and fees for an increase of $54,598. Actual results, when compared to the final budget, show a variance of $8.5 million for expenditures. This variance is primarily due to amending the budget for expenditures planned, but not yet completed. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets The City’s investment in capital assets for its governmental and business-type activities, as of September 30, 2021, was $80.4 million (net of accumulated depreciation and related debt). This represents a net decrease of $2.1 million, or 2.5%. Highlights are summarized as follows:  Capital assets outdated, unserviceable, and no longer used are systematically disposed of on an annual basis.  The City purchased a fire ladder truck for $999,320 in FY21 but it will not be completed and placed in service until the subsequent fiscal year.  The City purchased a new sound system for the Council Chambers for $106,726. 12  Table 3 below highlights the overall changes in this category. Table 3 Total Capital Assets Net of Accumulated Depreciation Governmental Activities Business‐Type Activities Total 2021 2020 2021 2020 2021 2020 Land $10,935,286 $10,915,210 $709,678 $709,678 $11,644,964 $11,624,888 Buildings 22,459,386 23,700,410 77,608 83,760 22,536,994 23,784,170 Improvements other than Buildings 9,402,876 9,773,457 27,614,642 29,117,586 37,017,518 38,891,043 Machinery & Equipment 4,653,494 4,465,950 3,228,810 3,433,863 7,882,304 7,899,813 Equipment under Capital Lease 108,673 108,673 - - 108,673 108,673 Easements - - 39,742 39,742 39,742 39,742 Construction in Progress 1,084,543 30,110 111,042 111,042 1,195,585 141,152 $48,644,258 $48,993,810 $31,781,522 $33,495,671 $80,425,780 $82,489,481 Additional information on the capital assets of the City can be found in Note 6 of this report on pages 48-50. Long-Term Debt As shown in the following table, as of September 30, 2021, the City had total outstanding long- term debt of $40.4 million. All of the City’s debt represents notes and bonds secured solely by specified revenue sources (i.e., revenue notes) and capital leases. The City has no general obligation or special assessment debt. The State of Florida does not place a legal limit of debt on municipalities. For general obligation debts greater than one year, the City is required to conduct a voter referendum. Table 4 Outstanding Debt Governmental Activities Business‐Type Activities Total 2021 2020 2021 2020 2021 2020 Revenue Notes & Bonds $21,593,776 $21,175,487 $6,637,000 $7,093,000 $28,230,776 $28,268,487 State Revolving Fund - - 11,186,723 11,907,259 11,186,723 11,907,259 Capital Leases 944,447 67,035 - - 944,447 67,035 $22,538,223 $21,242,522 $17,823,723 $19,000,259 $40,361,946 $40,242,781 Additional information on the City of Fort Walton Beach’s long-term debt can be found in Notes 14-16 of this report on pages 75-81. ECONOMIC FACTORS AND NEXT YEAR’S BUDGET AND RATES Economic indicators and factors that are useful for evaluating the framework within which the City operates are discussed below.  The Consumer Price Index (CPI) is 5.8% higher than a year ago for the Southern Region. This indicator is a widely used gauge of inflation and translates into a higher cost of providing services to residents. 13   The local unemployment rate was 3.7%, which represents an approximate 0.1% decrease from September 2020. The State of Florida’s unemployment rate was 5.0%, which represents an approximate 2.2% decrease from September 2020. The unemployment rate will impact the City’s fee and usage-based revenues and shared portions of the State of Florida’s usage-based taxes.  The published state revenue sharing distribution estimate is up by 2.0% over the prior year, the half-cent sales tax distribution estimate is up by 11.1% over the prior year, and the communication services tax distribution estimate is down by 4.0% compared to the prior year.  The military has a significant presence in our community with Eglin Air Force Base, Hurlburt Field, and Duke Field. Combined, these three installations employ over 72,000 military and civilian personnel. The military and defense-related industries have a $22 billion annual impact on Northwest Florida’s economy, according to the Florida Defense Industry Economic Impact Analysis. These financial policies, as well as other indicators, were considered when adopting the City’s budget for fiscal year 2022. The City’s budget for fiscal year 2022 totals $52.9 million, which is $3.2 million higher than the fiscal year 2021 approved budget. The 2022 budget allocates $27.7 million, a 3.4% increase as compared to the fiscal year 2021 budget, to the General Fund, $19.9 million to the enterprise funds, and $5.3 million to other funds. For the fiscal year 2022 budget, the City Council adopted a millage rate of 5.3293 mills, which is the same rate adopted for FY21. Personnel expenses account for approximately 46.7% of the City’s budget. The City’s fiscal year 2022 budget remains relatively stable in this category, at 317.1 full-time equivalent (FTE’s) positions, an increase of only 4.5 FTE’s over the prior year. REQUESTS FOR INFORMATION This financial report is designed to provide citizens, taxpayers, customers, and creditors with a general overview of the City of Fort Walton Beach’s finances and to demonstrate the City’s accountability for the money it receives. Questions concerning any of the information provided in this report, or requests for additional information, should be addressed to the City Manager, 107 Miracle Strip Parkway S.W., City of Fort Walton Beach, Florida, 32548. This document and other financial information are available on the City’s website at www.fwb.org. Inquiries may also be sent via email to the Finance Department at finance@fwb.org. 14  CITY OF FORT WALTON BEACH, FLORIDA STATEMENT OF NET POSITION SEPTEMBER 30, 2021 Primary Government Governmental Business-Type Activities Activities Total ASSETS Cash and cash equivalents $ 11,984,790 $ 980,202 $ 12,964,992 Investments 24,978,956 16,256,927 41,235,883 Receivables, net 537,976 1,052,979 1,590,955 Internal balances 82,622 (82,622) - Due from other governments 715,943 - 715,943 Inventory, at cost 259,960 25,692 285,652 Prepaid assets - 4,534 4,534 Restricted assets Cash and cash equivalents