Fort Walton Beach Council agenda — 06-10-08 regular agenda — reading text

some of the issues may not have enough information to make a decision tonight but Council will see them at the August,budget meetings. She mentioned staff continues to look at re- organization of the City as a whole and the issues about partnership opportunities and service levels will be presented in August. She also said staff did not plan to talk about the golf club, storm water utility, and fire assessment fee as they will be discussed at a separate workshop meeting. Charlotte Dunworth, Budget and Grants Manager, went through a PowerPoint presentation that started with the objectives of the meeting are to assist City Council in understanding the City' s available revenue sources and plan of operation, and allow revisions as desired, to establish service levels and funding mechanisms in accordance with City Council' s priorities, to ascertain City Council' s position on policy issues critical to developing the FY 2008 -09 budget, and to prepare a balanced budget that matches ongoing expenditures with ongoing revenues, provides maintenance of current infrastructure, and maintains prudent cash reserves. The presentation included information on the economy based on the local unemployment rate, bed taxes, housing affordability, and the City's population; a recap of the FY 07- 08 revenues of all funds and the general fund; the ad valorem revenues and the estimated loss of revenue as a result of Amendment One; the FY 07 -08 expenses of all funds and the general fund; personnel expenses for wage adjustments, cost -of- living adjustments, performance evaluations, medical benefits, and pension contributions; and other expenses for operations & maintenance, capital outlay, and capital improvements; the general fund reserve level of 31. 2 %; the benchmarks used to ascertain how the service levels compare with similar municipalities; and a local comparison of the assessed value and millage rate. City Council' s position on the following policy issues is critical to development of the FY 2008 -09 budget: Strategic Plan Goals — General Fund Reserve level, Cost -of- Living Adjustment, Compensation Alternative, Healthcare Benefits, and Defined Contribution Plan; and Other Issues — Separation Incentives, Utility Tax Cap, interfund Transfers, and Outside Agency Funding. 14sOcial Council 5 -20 -08 BUDGET POLICY ISSUES cont. Strategic Plan Goal: General Fund Reserve Level Policy Decision: Should the unreserved /undesignated portion be maintained at 30 %? The presentation included information that the fund balance is a measure of the financial resources available, that GFOA recommends 15% of operating revenues at a minimum and more for coast communities, a FLOC revenue expert recommends 25 -30% of expenses minimum for coastal _. communities, the City's auditors recommend 33% of operating expenditures, that the Fund balance should fund one -time outlays or capital projects and not fund recurring expenses, and a portion could be used for non -recurring expenses while maintaining a 30% reserve. Staff recommendation is to maintain unreserved /undesignated reserved at 30% of expenditures, and - adjust unreserved /designated fund balances as needed. Dr. Pullen moved to maintain unreserved /undesignated reserved at 30% of expenditures, and adjust unreserved /designated fund balances as needed. Mr. Minich seconded motion and it carried unanimously with Holmes, Reeves, Garvie, Pullen, Hartwell, and Minich in favor (Miller absent). Strategic Plan Goal: Cost -of-Living Adiustment Policy Decision: Should there be an annual cost -of-living increase effective October 1, 2008? The presentation included information on the COLA' s received in FY 03/ 04, 04/05, 05/ 06, 06/ 07 and 07/ 08 for the General, Police, Fire and the April CPI of 2. 6 %; to retain public safety personnel, police and fire COLA's are based on surrounding jurisdictions; and the purpose of the COLA is to ensure wages keep pace with inflation, exclusive of any additional reward for performance on an employee's anniversary date. Staff recommendation is to budget a 2% COLA for all employees (fire union excluded) effective October 1, 2008, pending funding availability. Kabe Woods, 240 Brooks Street, President of Okaloosa Citizens Alliance Inc. commented the question is should there be fewer employees who get a regular adjustment or the same employees who do not get as much. He then read the following statement: I am Kabe Woods and I live at 240 Brooks Street in Fort Walton Beach. I am President of KLW Properties, a private investment firm and real estate brokerage and I am the President of Okaloosa Citizens Alliance Inc. Over the next 2 -3 years Fort Walton Beach City government will be facing some of its most significant fiscal challenges in many years. Because of various citizens initiatives, legislative actions and a general downturn in the economy, the trend of annual revenue increases for the City will reverse and a new fiscal paradigm will prevail. Rough estimates of 5 % -15% in local revenue reductions may only be the beginning. With state revenues down $ 3 -$6B this year and the possibility of another $4 -$6B next year, aggressive action on the local level must be taken now. Tough budget times bring great opportunity and remind us of our core responsibility as fiscal stewards. We are also pushed to prioritize and focus our energies on Citizens most crucial needs and on what government does well - providing core government services. The Okaloosa Citizens Alliance has been looking at county and city spending now for several years and have talked with you on many occasions. We have committed to a solutions based approach and to bring ideas to you that are thought out and that have substance. To that end we have several suggestions for your consideration. First, aggressively pursue economic development opportunities. According to the Department of Commerce, our area has the fourth smallest Metropolitan GDP in Florida at $7. 8 billion. We also have the highest government share of GDP at 33% and the second highest dependence on the real estate industry at 29 %. We suggest a " blue ribbon" commission of elected officials and citizens be established as soon as possible whose mission is to grow and diversify our overall GDP.  Special Council 5 -20 -08 141 BUDGET POLICY ISSUES cont. Strategic Plan Goal: Cost -of-Living Adiustment cont. Kabe Woods continued: f Second, renew your commitment to providing core government services. Public safety and security is the highest priority and should not be compromised. Essential services such as fresh water, sewer, storm water management and street maintenance not only must be delivered, but in some cases need additional resources allocated in order to meet minimum service levels. With public safety and essential services requiring a greater proportion of a shrinking budget, quality of life areas such as parks, recreation, museums and libraries will need to manage with fewer resources or completely change their operating models to reduce costs. Consolidation, disintegration and elimination of some of these services are all possibilities that should be considered. Third, and more specific to this meeting, the Council and City leaders should put " laser focus" on delivering city services faster, with better quality and at lower cost to taxpayers. Some specific recommendations: 1. Decide today that ad valorem tax collections will be no more than the 2006 level of $ 5. 3MM. That is approximately a 10% reduction. We believe that service levels in 2006 were no different than today and this was just two years ago! 2. Cost per associate has risen from about $ 42K to $ 48K since 2006. Reduce this amount by 5 %. Areas to consider are changes to the benefit structure, increases in span of control for supervisors and combining management positions. This would save about $ 875K. 3. Continue the work to consolidate some services such as Fire, EMS and possibly vehicle maintenance. 4. Change from a defined benefit to a defined contribution retirement plan. 5. Require ALL Enterprise funds to have a balanced budget. 6. Take another hard look at the Management Advisory Group study and implement appropriate recommendations. Overall the recommendations made by the City Manager look productive, meaningful and are moving in the right direction. Now you are faced with the tough decisions and I know you are up to the task. Thanks for this opportunity to speak to you." Kabe Woods Jim Tucker, ,owner of The Boat Marina & Boat Yard at 36 Miracle Strip Parkway SW, stated it is very difficult to make a living in this town at this time; his business is off about 30 -50% than in 01/ 02. He commented Council is in a position now to do what needs to be done by cutting back. Mr. Minich moved to budget a 2% COLA for all employees (fire union excluded) effective October 11 2008 pending funding availability. Mr. Reeves seconded motion. Discussion ensued with varying views expressed on providing a COLA which included the need to look at employee cuts but those left should have a COLA; when business is soft you do not get an increase; a COLA destroys incentive to work hard; that the step /merit increase is the incentive; that the policy decision is to give guidance for budget preparation; that merit increases should be performance based; a merit increase should be for over and above and not satisfactory work to recognize employees doing outstanding work. There was consensus on the need for a workshop to discuss the step /merit performance compensation structure. The Mayor called for the vote on the motion to budget a 2% COLA for all employees ( fire union excluded) effective October 1, 2008 pending funding availability and it carried by a vote of 4 to 2 with Holmes, Reeves, Hartwell, and Minich in favor and Garvie and Pullen opposed (Miller absent).  Special Council 5 -20 -08 142 BUDGET POLICY ISSUES cont. Strategic Plan Goal: Compensation Alternative Policy Decision: Should one week of vacation be offered to full -time employees in lieu of a percentage step /merit anniversary adjustment? The presentation included information that employees are eligible for a step /merit performance increase on their anniversary date. General employees receive 3 %, police officers 3. 5 %, and firefighters 7. 0% contingent upon a satisfactory performance evaluation. Department directors, supervisors, and professional staff are eligible for up to 3.5% depending on their evaluation score; offering vacation hours to full -time, regular employees rewards performance without increasing the payroll costs; and under this program, 40 hours of vacation would be awarded on 10 -1 - 08 to all full -time, regular employees as of 10 -1- 08. There would be no payout of these hours in the event of separation from employment and any unused hours would be