Fort Walton Beach Council agenda — 06-18-13--special--tentative millage — reading text

2. 12. 1. Staff has researched Fire Assessment Districts throughout the State. 2. 12. 2. A Fire Assessment would not begin until FY 2014 -15; therefore, the proposed FY 2013 -14 millage rate includes the requirements to bring the Fire Department towards sustainability. 2. 13. Surplus Property Sales 2. 13. 1. Staff received the initial report from NBI Properties for nine ( 9) City properties and will present the findings along with recommendations at the June 25'" City Council meeting. 2. 14. Grant Writing Consultant 2. 14. 1. Staff has met with one ( 1) grant writing consultant and is awaiting further information 2. 14. 2. Staff will attend a Grant Writing training course in Niceville in September. 3. RECOMMENDATION: 3. 1. Based on the above status updates, Staff requests City Council direction on the following item: 3. 1. 1. Staff requests City Council direction on whether to move forward with the Fire Assessment Fee study for the FY 2014 -15 budget. The proposed fee for the study is $ 30,000, and the deadline to determine how to bill the assessment would be December 31, 2013. 3. 2. The remainder of the items will either be brought back as part of the FY 2013 -14 budget or will be addressed at future City Council meetings. SIGNATURE BLOCK: Carole Jones Completed 06/ 14/ 2013 2: 35 PM Carole Jones Completed 06/ 14/ 2013 2: 35 PM City Manager Completed 06/ 14/ 2013 2: 35 PM City Council Pending Page 3 of 3 8>  5. 2 Allk City Council of Fort Walton Beach FINANCE MEMORANDUM To: Michael D. Beedie, City Manager From: Charlotte Dunworth, Budget and Grants Manager Date: June 18, 2013 Subject: FY 2013 - 14 Budget Discussion 1. 1. 1. Beginning in FY 1999 -2000, the City' s millage rate was at 4.9700 mills. In FY 2006- 07, the millage rate was decreased to 4. 6458 mills, and in FY 2007 -08, it was decreased to 4. 1986 mills. It was not until FY 2010 -11 that the millage was increased to 4. 5383 mills, which is the current millage rate. 1. 1. 1. Since FY 2006 -07, the revenue from ad valorem taxes has decreased from 5, 107, 896 to $4, 043, 901 in FY 2012 -13, a decrease of $1, 063, 995, or 20. 8 %. 1. 1. 2. Since FY 2006 -07, the overall General Fund budget has decreased from 20, 960,801 to $ 16, 801, 950 in FY 2012 -13, a decrease of $4, 158, 851, or 19. 8 %. 1. 1. 3. However, the costs to provide City services have increased. Services provided as part of the General Fund include Public Safety ( Police & Fire), Parks & Recreation, Community Development Services ( Code Enforcement & Planning), Rigbt -of W - ay Maintenance, and Streets, along with the internal functions of Human Resources, Finance, Purchasing, Information Technology, Fleet Maintenance, and Facilities Maintenance. 1. 1. 4. Since FY 2007 -08, General Fund staffing has been reduced by 31 %. However, no services have been reduced or eliminated. 1. 1. 5. For the past five years, the City has not had any structured renewal and replacement programs for vehicles, equipment, IT equipment, etc. 1. 1. 6. The last employee wage adjustment occurred on October 1, 2008 as part of the FY 2008 -09 budget. Since the last wage adjustment, the CPI has increased 7. 48 %. 1. 2. Staff received the preliminary assessment roll for 2012 from the Property Appraiser on May 28'". Overall, the taxable value for the City is projected to increase $ 11, 323,215 or 1. 0% to $ 1, 125, 581, 338. This is the first increase in taxable value since FY 2008 -09 but only results in approximately a $ 53, 000 increase in ad valorem revenues. 1. 3. However, other General Fund revenue sources have decreased in FY 2012 -13 and projected for FY 2013 -14, including Franchise Fees and the Sixth Cent Local Option Gas Tax. 1. 4. Other uncontrollable items, such as medical insurance premiums, pension contributions, utility fees, fuel, etc. have increased, which would require a reduction in operating expenditures across all departments, which is not feasible. Page 1 of 4  52 2. DISCUSSION: 21. At the Strategic Planning Session in April, Staff and City Council discussed numerous issues with Council providing direction on 14 items. The direction from the Strategic Planning Session allowed Staff to begin developing the preliminary FY 2013 -14 budget. 2. 2. The theme of the Strategic Planning Session was developing a sustainable budget that includes essential expenses related to current services and programs that is likely to be sustainable in future years assuming annual inflationary adjustments. 2. 3. In order to develop a sustainable budget, the following items must be included: 2. 3. 1. Employee Wage Adjustments - commensurate with the CPI, spread over a two year period, based on tenure, and granted on each employee' s anniversary date; the last wage adjustment occurred on October 1, 2008. 2. 3. 2. Renewal & Replacement Programs — to continue to provide the services to the City' s customers, it is imperative that the cyclical renewal and replacement Programs for Fleet and IT be re- implemented ( renewal and replacement schedules have not been utilized in four (4) years): 2. 3. 2. 1. Fleet Replacement Program - based on industry standards and replacement criteria, a 10 -year fleet replacement schedule is being developed ( 7 -year for police vehicles); this provides a mechanism for the systematic evaluation of vehicle utilization and repair /maintenance costs as well as efficient and effective replacement. 2. 3. 2. 2. IT Replacement Program — the IT Division has evaluated the condition of all existing IT equipment ( hardware and software) and has developed a five -year replacement program for computers, laptops, and servers. 2. 3. 3. Facilities Repair & Maintenance Program — a comprehensive Facilities Assessment will be conducted in FY 2013 -14 in order to develop a schedule of necessary repairs and maintenance for all City facilities. 2. 3. 4. Pension Contributions — Staff is awaiting the analysis from the actuary to determine the effects of various plan changes on the level of City contribution to the three pension plans. 2. 3. 5. Medical Insurance Premiums —Staff is evaluating the proposals for the Medical, Dental, & Vision Insurance RFP to determine the level of increase in insurance premiums, if any, and is also evaluating the effects of the Affordable Health Care Act on the FY 2013 -14 budget. 2. 4. Another issue that Staff has evaluated is the status of the Golf Club. Two years ago, the General Fund issued a ` loan" to the Golf Fund to pay off the outstanding debt on the clubhouse. However, the Golf Fund has an operational deficit that will require the relocation of the Golf Fund back into the General Fund, which will result in a significant savings or expense reduction in the General Fund. 2. 5. The City is no longer in a position to reduce costs without eliminating services. Over the last three to four years, City Council and the citizens of Fort Walton Beach have pledged to not eliminate or reduce any services the City provides. The FY 2013 -14 budget does not include any elimination or reduction of any City service. Page 2 of 4  5. 2 3, FINANCIAL INFORMATION: 3. 1. Based on the direction received at the Strategic Planning Session and the development of a preliminary budget, it is necessary to increase the millage rate to adopt a sustainable budget for FY 2013 -14. 3. 2. Per Florida Statute 200. 065( 5), the maximum millage rate that may be levied is determined by the number of affirmative votes of the members of the governing body. The maximums reflect what the millage rate would be had it been adjusted each year to account for changes in taxable value. Since assessed values have fallen over the last several years and the City has not proportionately adjusted its millage for these decreases, the maximum millage rates are significantly higher than the City' s currently adopted millage rate. Method of Adoption Maximum Millaee TV 2013 -14 Ad Variance from 4. 5383 Valorem Revenue Milla e 7, 178, 119 $ 2, 325, 304 Majority Vote (4 votes) 6. 7129 $ Two -Thirds Vote ( 5 7. 3842 $ 7, 895, 942 $ 3, 043, 127 votes) 3. 3. Staff is recommending a millage rate " cap" of 6. 0000 mills in order to provide a parameter within which a sustainable budget can be developed. The millage rate that is adopted at this meeting cannot be increased without additional advertisement expense. However, the final millage rate adopted in September may be lower than the rate set at this meeting. 3. 4. Staff is requesting a millage rate " cap" in order to continue to evaluate and compile the data from the outstanding unknown budget factors, including medical insurance premiums, state -shared revenues, county- shared revenues, and pension contributions,