Fort Walton Beach Council agenda — 05-20-08 special agenda - budget policy issues — reading text

alsoalso desirabledesirable forfor politicalpolitical andand socialsocial reasons.reasons. AnAn optimaloptimal revenuerevenue structurestructure includesincludes aa balancebalance amongamong majormajor taxestaxes ( ( e.e. g.g. property,property, ( ( e.e. g.g. recreationrecreation fees,fees, buildingbuilding permits)permits) wherewhere feasible.feasible. TaxesTaxes shouldshould bebe sales)sales) andand reliancereliance onon useruser feesfees asas broadlybroadly basedbased asas possible possible toto allowallow forfor lowerlower taxtax ratesrates andand improveimprove economiceconomic efficiency.efficiency. AA diversifieddiversified propertyproperty taxtax basebase isis desirable desirable becausebecause itit willwill bebe lessless vulnerablevulnerable toto economiceconomic shifts.shifts. TheThe City'City' ss taxtax basebase isis 55% 55% residential,residential, 34% 34% commercial,commercial, andand 1111% % other.other. TheThe objectivesobjectives ofof thisthis budgetbudget policypolicy meetingmeeting are:are: AssistAssist CityCity CouncilCouncil inin understandingunderstanding thethe City'City' ss available available revenuerevenue sourcessources andand planplan ofof operation,operation, andand allowallow revisionsrevisions asas desired.desired. EstablishEstablish serviceservice levelslevels andand fundingfunding mechanismsmechanisms inin accordanceaccordance withwith CityCity Council'Council' ss serviceservice priorities.priorities. AscertainAscertain CityCity CouncilCounci ' l' ss positionposition onon certaincertain policypolicy issuesissues criticalcritical toto development development ofof thethe FiscalFiscal YearYear 20082008 - - 0909 budgetbudget givengiven thethe currentcurrent fiscalfiscal constraints.constraints. StaffStaff respectfullyrespectfully requestsrequests thatthat CityCity CouncilCouncil reachreach aa consensusconsensus onon thethe policypolicy issuesissues presented presented inin orderorder toto guideguide thethe FYFY 20082008 - - 0909 budgetbudget developmentdevelopment process.process. 3of343of34 FY 2008 -09 Budget Policy Meeting ECONOMIC INDICATORS NATIONAL ECONOMY Consumer Price Index Consumer Confidence Index Help Wanted Advertising Index Note: arrow indicates direction of performance and color denotes if the change has a positive ( green) or negative (red) impact.* National and local economic indicators are useful for evaluating the framework within which the City of Fort Walton Beach operates. The Consumer Price Index ( CPI) - prepared by the US Bureau of Labor Statistics and the most widely used gauge of inflation - is 3. 9% higher than a year ago. The Consumer Confidence Index - prepared by The Conference Board based on a representative sample of US households - is 41. 4% less than a year ago due to the sluggish economy. The Help Wanted Index - also prepared by The Conference Board and measuring job offerings in major newspapers across the country is 34. 5% lower than a year ago due to layoffs. LOCAL ECONOMY 4 t- * - Bed Taxes t 1 Housing Affordability Unemployment Rate Note: arrow indicates direction of performance and color denotes if the change has a positive ( green) or negative ( red) impact.* Our local economy by and large follows the national economy. Bed Taxes - as reported by the Haas Center for Business Research and Economic Development - are 9. 6% more than the prior year. The affordability of housing - as reported by the Haas Center - improved 22. 3% over a year ago due to declining home prices and mortgage rates. The standard definition of housing affordability is that the cost of buying a house uses less than 30% of annual household income. Local unemployment - as computed by the Agency for Workforce Innovation - is currently 3. 6 %, up 33. 3% from a year ago. POPULATION Since the 2000 census, the City' s population ( currently 21, 008) has increased 5. 2 %. As the City is nearly built -out and few 25 property owners voluntarily annex, population growth is limited. 20 Many state revenue sharing formulas are population based, y 15 resulting in only marginal increases in intergovernmental 0 10 revenues for the City. While our population is not increasing, . our residents demand that current service levels and 5 infrastructure be sustained or improved while enjoying the benefits of new programs and services such as two CRA ° 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 officers, advanced life support ( ALS), increased parks and recreation facilities, e- government, neighborhood improvements, sewage pump -out stations, and septic tank replacement. 4of34 FY 2008 -09 Budget Policy Meeting FY 2007 -08 Budgeted Revenues —All Funds 36, 610, 668 State Revenue Recreation Fees Sharing, Intergov't, 1. 1% Fines, Forfeitures, Water & Sewer etc. i & Other Fees Fees 7. 9% 19. 1%. Garbage Fees 9. 3% Licenses & Permits 1. 1% Other Taxes 15. 0% Golf Club Fees 6. 6% Ad Valorem Taxes J Reserves J Interest & Misc. 16. 1% Interfund Transfers o 4. 6% 4.4% 12. 3% Ad Valorem Taxes — Ad Valorem taxes comprise 25% of General Fund revenues and 100% of Community Redevelopment Agency ( CRA) Fund revenues, and are budgeted at $ 5. 9M ( exclusive of County TIF) in FY 2007 -08. Taxable Assessed Value 1, 200 Prior to FY 2006, Ad Valorem revenue in the General Fund increased 3. 8% 1, 000 annually on average, reflecting moderate 800 assessed value increases. This marginal annual revenue growth covered soo inflationary increases in operating aoo expenses such as fuel, utilities, and office supplies; augmentation of pension 200 contributions as well as public safety 0 wages to maintain competitive with 2000 2001 2002 2003 2004 2005 2006 2007 2008 surrounding jurisdictions and Budget Non -CRA CRA EMT /Paramedic pay for ALS program; and new programs such as Click2Gov, Ferry Park fitness trail, Police Ad Valorem Revenue Department accreditation and citizen 6 newsletters all without necessitating a 5 rise in the millage rate. $ 4 For FY 2006, the City' s taxable $ assessed value surpassed the $ 1 billion = 0$3 mark, increasing 19. 8% or $ 182M. This $ 2 yielded additional property tax revenues of 18. 3% or $ 803K, which funded the $ 1 new or expanded programs and $ o services listed on the following page. 2000 2001 2002 2003 2004 2005