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

1. 6 and 3. 0 for special risk employees, compared to 2. 75 for all City employees. Inflation (i. e. Consurrel' Price Index) 5.0% Operations & Mainte!nance - category of expenses This includes materials and supplies, repair and maintenance, 4. 0% utilities and fuel, insura.nce, and other charges. This expense 3. 0% category is largely impacted by program and service delivery 2.0% III' levels as well as fixed costs over which the City has little control, such as utilities, fuel, property & casualty insurance, 10% concrete, and steel. 0.0% 2003 2004 2005 2006 2007 From FY 2001 to FY 2006, utilities expense increased 34% or 317K and fuel expense increased 127% or $ 247K. High petroleum prices, which also translate to higher prices for 2.0 Fixed Costs building materials such as concrete and steel, are most likely here to stay due to U. S. refineries hovering around 90% 1. 5 capacity and political uncertainty. Any further refinery disruptions or hurricane activity in the gulf could easily push c prices higher. g$ 1. 0 Ii The City' s current year property and casualty insurance was 0. 5 quoted at $ 427K - an increase of 60% or $ 258K. The increase is mainly due to the reinsurance market escalating 0. 0 due to unprecedented hurricane activity over the past two $ 2003 2004 2005 2006 2007 years, with building and contents coverage nearly Budget quadrupling from $ 96K to $ 380K. DUtilities . Fuel . Insurance Capital Outlav - Includes the purchase of computers, vehicles, equipment, and other assets with a value greater than $ 500 and a useful life of more than two years. Capital outlay purchases are identified in a five- yearreplacement schedule, but due to funding constraints replacements are limited to essential, ageing assets required to maintain current service levels. Capitallmprovement!~ -The acquisition, construction, replacement, renovation, or repair of facilities and infrastructure with a value greater than $ 25, 000 and a useful life of ten years or more ( e. g. buildings and 10 of 36 FY 2007- 08 Budget Policy Workshop facilities, parks, streets and sidewalks, as well as water and sewer lines, tanks, and pumps) are identified in the City' s five- year Capital Improvements Program. These expenses fluctuate yearly depending on the projects in progress. Deferring capital improvement projects due to funding constraints is the main reason the budget for this category remains relatively stable (with the exception of grant- funded projects). Interfund Transfers - As discussed in the revenue section, interfund transfers account for reimbursement of business services provided by the General Fund to Enterprise Funds and the City' s Cost Allocation Plan provides the basis from which to assess the value of General Fund services. Debt Service - This category includes principal and interest payments for the City' s facilities funded via bond issue and equipment funded via lease/ purchase. FY 2006- 07 debt service payments ( principal and interest) total $ 2. 1 M annually and include the following: Bond Lease/ Purchase 1998 Bond - Refund Utility Tax Revenue Certificate Street Sweeper 1999 Bond - Golf Clubhouse Fire Pumper 2000 Bond - Pump Station 1 Improvements Backhoe 2001 Bond - Municipal Facilities ( Police, Fire, Library) Wheel Loader 2005 Bond - Water/Sewer System Improvements Golf Carts 2005 Bond - Fairgrounds/ Softball Complex Purchase Golf Maintenance Equipment Golf Landscaping Equipment 11 of 36 FY 2007-08 Budget Policy Workshop POLICY DECISIONS The City' s fiscal year 2007- 08 budget must be prepared within two fiscal constraints: Communications Senfices Tax Revenue Reduction The Florida Department of Revenue ( DOR) formally notified the City in April that ongoing audits indicate overpayments in Communications Services Tax ( CST) revenue of approximately $ 1. 7M during the 28- month period June 2004 - September 2006. Legislation passed during the Regular Session March 27 - May 4 permitting repayment over the same length of time as the error occurred. Staff estimates a $ 900K reduction in annual CST revenue for FY 2007- 08, as well as $ 715K in expense for 12 months ( of 28 months total) reimbursement for prior year overpayments. Propertv Tax Reform The Special Legislative Session on property tax reform convening June 12 - 22 in Tallahassee will greatly impact the FY 2007-08 budget. The House and Senate offered multiple proposals during the Regular Session for reducing local government revenues from property taxes, including: Roll back milla!~e to 2000- 01 level adj. for inflation - a $ 1. 7M loss ($ 1.4M or 7.4% GF loss). Roll back milla!~e to 2003- 04 level adj. for inflation - a $ 1. 5M loss ($ 1. 2M or 6. 6% GF loss). Roll back milla!~e to 2005- 06 level adj. for growth - a $ 567K loss ($ 477K or 2. 5% GF loss). Replace homestead properties with increased sales tax - a $ 2M net loss to the City. Double the homestead exemption - a potential $ 0. 5M loss to the City. In the five years prior to FY 2005- 06, the City' s taxable assessed value increased an average of 4.8% annually, translating to an increase in revenues from property taxes of 5. 1 % or $ 193K annually in the 1fiI.. General Fund and CRA Fund combined. This marginal annual revenue growth covered inflationary increases in operating expenses such as fuel, utilities, and office supplies; augmentation of pension contributions as well as public safety wages to maintain competitive with surrounding jurisdictions and EMT/ Paramedic pay for ALS program; and new programs such as Click2Gov, Friday Night Flicks, Ferry Park fitness trail, POliCl3 Department accreditation, and citizen newsletters without necessitating a rise in the millage rate. For FY 2006, the City' s taxable assessed value surpassed the $ 1 billion mark, increasing 19. 8% or 182M. This yielded additional property tax revenues of 18. 3% or $ 803K, which funded the new or expanded programs and services listed below. Program Ad Valorem Expansion Increase FY 2006 Land Acquisition on Lewis Turner Blvd. 255,270 Purchased 42 acres from Division of Forestry - debt payment ALS Program Phase 3 298,018 Purchased Rapid Response Vehicle & Hired 6 Addt' l Firefighters jf,"" Address Affordable Housing 175,000 Funding Workforce Housing Initiative Maintain Competitive Public Safety Salaries 191, 622 Police COLA 7. 55%, Fim COLA 4. 0% Improve Recruitment & Retention of Police Officers 10,440 Expanded T ake-Home V,~hicle Policy - fuel only FY 2006 Total 930, 350 803,385 For FY 2007, the City' s taxable assessed value increased 23. 3% or $ 256M, resulting in a further 15.6% or $ 814K increase in property tax revenues in the General Fund and CRA Fund combined. In addition to the new and expanded services of FY 2006, in FY 2007 the City to added or expanded additional services and programs while reducinq the mil/aqe rate 6. 6% from 4. 9700 to 4. 6458. 12 of 36 FY 2007-08 Budget Policy Workshop Program Ad Valorem Expansion Increase FY 2007 Maintain Competitive Public Safety Salaries 324, 904 Police COLA 9. 0%, Fire COLA 2. 99% Underground Utilities Initiative 135, 827 Continue Theme on Eglin Pkwy between Hughes & Hollywood Improve Recruitment & Retention of Police Officers 128, 200 Pre-Service Hiring; Take-Home Vehicle Policy - new vehicles Reduce Drug Activity 89,429 Added CRA Police Officer Improve Code Inspections and Compliance 74,416 Added Code Inspector I ALS Program Phase 3 96,401 Full Year Funding for 6 Addt'l Firefighters Improve Emergency Response Capabilities 55, 000 Purchased Command Vehicle Maintain Professional Sporting Event 40, 740 Updated and Repaired Tennis Center FY 2007 Total 944,917 814, 480 The City of Fort Walton Beach uses ad valorem revenues to enhance the quality of life for its citizens. With respect to the double digit property tax revenues increases of the past two years, the City' s budget reflects additional and expanded programs and services ( at a cost greater than the ad valorem revenue increase) directed by City Council through annual Budget Policy Workshops held in April, Budget as Workshops held in August, and Public