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

Budget Solid Waste & RecvclinQ Fees - The City provides curbside collection of residential garbage, recycling, yard waste, and white goods, as well as commercial garbage collection. These activities are accounted for in the Sanitation Enterprise Fund and rates are structured Solid Waste & Recyling Revenue 2. 5 to support operations. Fees are set by City Council based on the cost of providing these services and are published in the 2. 0 Comprehensive Fee Schedule. Rates for residential and 1. 5 commercial garbage have not increased since 1995. In fact, c: they were reduced by $ 1. 00 per month for residential 1. 0 customers in May 2001 resulting from decreased tipping fees at the SFI transfer station. Recycling rates remain unchanged 0. 5 since inception over ten years ago. Revenue growth, which is limited to new accounts, has remained stagnant for residential 0. 0 2003 2004 2005 2006 2007 garbage and recycling. New businesses have resulted in a Budget Garbage Tipping Recycling 5 of 36 FY 2007- 08 Budget Policy Workshop 4. 7% average annual increase. Tipping fees are based on the City' s 10- year contract with BFI, which was signed in 2001. However, staff has heard BFI may petition for a rate adjustment, which would be approved at the sole discretion of the City. InterQovernmental - Intergovernmental revenues include state and local revenue sharing, state and federal grants, and library funding from the county cooperative. Most revenue sharing is allocated via a population- based distribution, resulting in only marginal increases in intergovernmental revenues for the City, which is nearly built- out and relies on voluntary annexation; grant funds are becoming scarcer. Half- cent sales tax distributions, anticipated to generate $ 1. 8M in FY 2007-08, are derived from net sales tax revenue and generate the largest amount of municipal revenue sharing revenue for local governments. This revenue has averaged a 3. 3% annual increase over the past three years and the annual estimate is provided by the by the Florida Legislative Committee on Intergovernmental Relations ( LCIR). Municipal revenue sharing, anticipated to generate approximately $ 875K in FY 2007- 08, is funded by 1. 0715% of sales and use tax collections, 12. 5% of state alternative fuel user decal collections, and the net collections from the one- cent municipal fuel tax. This revenue estimate is also provided by LCIR and has remained relatively stable in recent years. Golf Revenues Golf Fees - The City owns and operates two 18- hole 2. 0 championship golf courses, a driving range, and putting green. These activities are accounted for in the Golf 1.5 Enterprise Fund and rates are intended to support on II'" operations. Fees are set by City Council based on the cost c: 1.0 '" of providing these services and are published in the E Comprehensive Fee Schedule. City Council adopted a five- 0. 5 year plan for golf fees in April 2006 with annual increases June 1. Budgeted revenues of $ 3. 3M in FY 2006- 07 were 0. 0 Iti< predicated on 90, 000 paid rounds. However, it does not $ 2003 2004 2005 2006 2007 appear that play will reach 90K rounds and revenues are Budget likely to come in comparable to last year at $ 2. 6M. ElGreen Fees . Cart Fees . Membership 1< Equipment purchases and capital improvement projects will be delayed in response to the revenue shortfall. In addition, the fund will not be able to begin to set aside resources to rebuild the fund' s net assets. FY 2007- 08 Golf Fund revenues are anticipated to be $ 2. 6M, which is consistent with FY 2005- 06 and FY 2006- 07, rather than the $ 3. 5M projected by the five- year rate plan. The City' s external auditors have recommended that the City " stay the course" with scheduled rate increases as additional time is needed to rebuild the unrestricted net assets of the Golf Fund. fMii< Interfund Transfers -- Transfers account for reimbursement of business services provided by the General Fund to Enterprise Funds, such as human resources recruitment and hiring; computer, fleet, and equipment maintenance and repair; purchasing; legal and professional services; and financial services including payroll and ac:counts payable. The City' s first Cost Allocation Plan was completed in September 1998 by KPMG Consulting based on data from FY 1997. In March 2003 an updated Cost Allocation Plan was completed by DMG- Maximus based on data from FY 2001. As a matter of budgetary policy, interfund transfers from the Enterprise Funds to the General Fund have been based on the Maximus study, adjusted marginally for inflation. In addition to interfund transfers, certain personnel and operating expenses are budgeted across funds. FY 2006- 07 Contributions to General Fund Interfund Transfer Personnel Splits Operating Splits Total CRA Fund $ 27, 500 $ 208,431 $ 14, 783 $ 250, 714 Utilities Fund $ 1,400, 000 $ 82, 952 $ 407,040 $ 1, 889, 992 Sanitation Fund $ 700, 000 $ 61, 746 $ 327, 264 $ 1, 089,010 Golf Fund $ 0$ 0$ 51, 385 $ 51, 385 Total $ 2, 127, 500 $ 353, 129 $ 800,472 $ 3,281, 101 The Golf Fund' s interfund transfer does not reimburse the full cost of General Fund services. Along with adopting a five- year rate plan in April 2006, City Council voted to have the General Fund continue to absorb a large portion of the Golf Fund' s cost allocation expenses ( approx. $ 350K) for the next three years ( after which time the issue would be reevaluated) in order to permit the Golf Fund to retain all 6 of 36 FY 2007- 08 Budget Policy Workshop revenues for operational use and to replenish net assets. Appropriations from Fund Balance I Net Assets - Appropriations from fund balance ( governmental funds) or net assets ( enterprise funds) are budgeted for either specific purposes ( i.e. designated or restricted) or to make up the shortfall between projected revenues and projected expenditures ( i.e. undesignated or unrestricted). The charts below show the five- year changes in fund balance or net assets. Fund Balance - General Fund Net Assets - Utilities Fund 15 30 25 12 20 i!! 9$ c 15 i $6 10 3 5 0 0 2002-03 2003- 04 2004- 05 2005-06 2006- 07 est. 2002- 03 2003-04 2004-05 2005- 06 2006-07 est. ReselVed . Designated [ JUndesignated Capital, net of debt . Restricted J Unrestricted Net Assets - Sanitation Fund Net Assets - Golf Fund 5 2 4 1 3 c 2 0 1 0 1 2002-03 2003- 04 2004- 05 2005- 06