Fort Walton Beach Council agenda — 05-15-2007 special agenda - budget policy — reading text

the average of jurisdictions. Consequently, staff believes the current accrual benefit is fair and reasonable. 2. Regarding payment for unused vacation leave upon separation of employment, the City' s current policy of paying out 320 hours is reasonable based on the survey results. 3. Based on the results of the survey, the City' s 800 hours of eligible sick leave accrued hours is higher than the average. Policv Impact 1. Staff recommends the following changes to the sick leave policies effective October 1, 2007: a. Eliminate policy of permitting employees to convert excess sick leave to vacation leave ( new & existing employees). b. Increase months of service for payout of unused vacation accrual from 6 to 12 months ( new employees). c. Add a provision whereby employees who do not provide a 2- week notice ( 4-week notice for Department Directors) upon separation of employment are required to use vacation leave, if available, to fund any or all of this notice period ( new & existing employees). d. Add a provision whereby new hires after October 1, 2007 may accrue a maximum of 600 hours of sick leave (new employees). 2. Adoption of the above modifications would reduce the City' s future liability associated with accruals and payout of accrued sick and vacation leave. Recommendation Modify sick leave policy to: Eliminate conversion of excess sick leave to vacation leave. Increase months of service for payout of unused vacation accrual from 6 months to 12 months. Require employees who do not provide a 2- week notice ( 4-week notice for Department Directors) upon separation of employment to use available vacation leave to fund this notice period. Permit new hires after October 1, 2007 to accrue a maximum of 600 hours of sick leave. 27 of 36 FY 2007. 08 Budget Policy Workshop fi"\" 28 of 36 FY 2007- 08 Budget Policy Workshop COMMUNICATIONS SERVICES TAX Policv Decision How should the Communications Services Tax (CST) revenue overpayment be repaid? Backqround 1. The City budgets CST revenue based on information provided annually by the Florida Legislative Committee on Intergovernmental Relations ( LCIR). For FY 2006- 07, LCIR estimated the City' s revenue at $ 2, 334, 994; consequently, $ 2, 335, 000 was budgeted. 2. The Florida Department of Revenue ( DOR) has advised the City that ongoing audits indicate overpayments of approximately $ 1. 7M during the 28- month period June 2004 - September 2006. 3. DOR further advised that current year revenues are likely to be closer to $ 1. 5M rather than $ 2. 3M a decrease of $825K - as a result of corrected vendor filings. 4. On May 8 City Council approved Resolution 07- 07, reducing the Fiscal Year 2006- 07 General Fund budget by $ 722, 982 and appropriating an additional $ 102, 018 from undesignated fund balance in response to reduced CST revenues. Discussion 1. FY 2006- 07 budget cuts include reductions in vacant positions, programs, operating expense, and capital. Certain reductions can be continued into FY 2007- 08. 2. The FY 2007- 08 budget will be reduced approximately $ 900K as a result of decreased monthly CST revenues. 3. Legislation passed during the Regular Session permits repayment of the City' s $ 1. 7M CST overpayment over the same length of time as the error occurred. Staff does not know when the repayment period will commence, but anticipates funding $ 715K during FY 2007- 08. Policv Impact 1. The unreserved- undesignated fund balance of the General Fund is anticipated to be approximately 39% of annual General Fund operating revenues at the end of FY 2006- 07. Staff considers a level of 30% to be prudent. Recommendation Appropriate unreserved- undesignated fund balance to repay the Communications Services Tax overpayment. 29 of 36 FY 2007-08 Budget Policy Workshop FIRE ASSESSMENT FEE Policv Decision Should a portion of the Fire Department's budget be funded by an annual fire assessment fee? Backqround 1. The City began providing Advanced Life Support ( ALS) services in FY 2002- 03 out of Station 6 downtown. The program was expanded to Station 7 on Lewis Turner Blvd. in FY 2003- 04 and six additional EMT's/ Paramedics were hired in FY 2005- 06 along with the purchase of a rapid response vehicle. 2. Ad Valorem taxes comprise 25% or $ 5. 05M of General Fund revenues and the Fire Department comprises or $ 3. 02M of General Fund expenditures. A portion ( approx. $ 55K) of the Fire 150/.) Department's expenses is offset by permit & review fees, inspection fees, and supplemental compensation from the State of Florida. 3. Authority to enact and collect special assessments is found in sections 170. 201, 197. 3631, and 197. 3632 of the Florida Statutes. Discussion 1IIf'. 1. A fire assessment is a non- Ad Valorem fee levied by the City on property to fund any or all of the costs of fire services, facilities,or programs providing a special benefit to the property. The benefits of fire services include protecting the value of structures and improvements and lowering the cost of fire insurance through the presence of a professional and comprehensive City fire III program. 2. An assessment may only be levied for fire services ( which benefit property) and not for ALS services ( which benefit people). Collecting a fee for fire services would free up Ad Valorem taxes iJ1!11 to fund the ALS program. A fire assessment fee would fairly apportion the cost of fire suppression services between the recipients of fire services rather than burdening only the Ad Valorem taxpayers. 3. A tiered structure is generally preferred because of its fairness relative to property size and fire suppression demand percentage. There are several components of the assessment: a. Property Category - determined using Department of Revenue property use codes from the Property Appraiser for each parcel ( Le. single family, multi- family, commercial, industrial/ warehouse, church, government, vacant). b. Demand Percent - percent of fire responses ( non- EMS related) to the property category. This percent was determined using the Fire Department's Incidence Report. 111" c. Assessed Cost - the dollar amount to be generated by the fee. This dollar amount is not the actual cosit of providing fire services, but rather an amount determined by staff to be an additional amount of revenue required to fund a portion of the Fire Department's budget. d. Total Dollar Amount (the revenue to be generated by each property category) - the assessed cost multiplied by the demand percent for the property category. Per unit residential cost - the total dollar amount for the property category divided by the number of units in the property category. Per building non- residential cost - the total dollar amount for the property category divided by the aggregate square footage for the property category, multiplied by the total square footage in the size category, and divided by the number of buildings in the size category. Policv Impact 1. In order to develop a legally defensible method of apportioning the assessment, staff recommends hiring a consultant specializing in fire assessments. Iif- t 30 of 36 FY 2007-08 Budget Policy Workshop 2. Developing a fire assessment program would be a six- month process involving the following: a. Identify full cost of fire services. b. Develop a method of apportioning the costs. c. Determine preliminary revenue requirements. d. Develop assessment roll database. e. Calculate schedule of rates. f. Prepare assessment ordinance and resolution. g. Prepare first year billing. h. Transition to tax bill collection method. Recommendation Budget a fire assessment rate study for Fall 2007. 31 of 36 FY 2007- 08 Budget Policy Workshop iiff" jjII+ iW'! 32 of 36 FY 2007- 08 Budget Policy Workshop GOLF FUND RATES Policv Decision Should golf club rates be increased effective June 1 as scheduled? Backqround 1. The City owns and operates two 18- hole championship golf courses, a driving range, and putting green. These activities are accounted for in the Golf Enterprise Fund and rates are intended to support operations. Fees are set by City Council based on the cost of providing these services and are published in the Comprehensive Fee Schedule. 2. City Council adopted a comprehensive multi- year golf club rate adjustment in March 2004 after implementing a Golf Club Business Operations Plan and forming a Golf Club Advisory Committee to address the long- term financial outlook of Golf Club Operations. 3. In order to minimize rate increases and still achieve financial stability, the expenditure levels projected in the multi- year rate plan reflected delayed equipment replacements and minimal capital improvements. However, earlier than anticipated equipment replacements were needed to maintain course conditions and bulkhead, seawall, and bridge repairs were necessitated by heavy rains and hurricanes. 4. The potential existed for the Golf Fund to have a total net asset deficit in FY 2005- 06 if additional fiscal remedies were not implemented. City Council revised the five- year rate plan in April 2006 with annual increases scheduled every June 1. Discussion 1. The Golf Fund incurred a net profit for FY 2005-06 due to two non- recurring events: trade- in for new golf carts ($ 126K) and Council forgiveness of the Golf Fund' s debts to the General Fund 100K) and Sanitation Fund ($ 173K). 2. Through April 30, member play is down 7, 121 rounds or 39% and non- member play is down 5, 707 rounds or 15%. Tournament and league play is up 1, 773 rounds or 84%. Compared to this time last year, paid play is down 10, 717 rounds or 19%. 3. FY 2006- 07 budgeted revenues of $ 3. 3M were