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

- - 0606 20062006 - - 0707 20072007 - - 0808 est.est. Capital,Capital, netnet ofof debtdebt RestrictedRestricted MUnrestrictedMUnrestricted Capital,Capital, netnet ofof debtdebt RestrictedRestricted OUnrestrictedOUnrestricted 9of349of34 FY 2008 -09 Budget Policy Meeting EXPENSES FY 2007 -08 Budgeted Expenses —All Funds 36, 610, 668 Capital Culture & Improvements Recreation 4. 9% Interfund Transfers Economic 12. 8% Capital Outlay 10. 9% t, Development 3. 3% 30 o/o I Debt Service 5. 2% Contingencies & Transportation Reserves 4. 9% 1. 6% Physical Environment 18. 0% General Government Public Safety 13. 1 / o 22. 1% Wages —As a full -service government, employees are the City' s most important asset in providing police and fire protection; cultural and recreational facilities and programs; planning and zoning services; infrastructure maintenance and construction such as streets, Funded Full- Tim Equi%alW Positions 380 sidewalks, and cemeteries; utilities such as water, wastewater, and storm water management; and garbage and recycling collection. Despite the number and quality of 370 City services improving since FY 2001 -02, the number of funded full -time equivalent ( FTE) employees has decreased 4. 1 % to 363. 24. Citywide, wages have increased 25% or 360 2. 8M during the past five years. City Council' s commitment to public safety has contributed to nearly half of the increase, with police department salaries increasing 23% or $ 638K 350 and fire department salaries increasing 52% or $ 710K 2ooa 2005 Zoos 2007 including paramedic and EMT pay added in FY 2003 -04 and udget 6 new EMTs /Paramedics added in FY 2005 -06. The Wages balance of the increase is due to cost of living, merit, and 15. 0 pay plan adjustments for other employees. 12. 0 Over the past five years,the following employee wage $ adjustments have been made ( including cost of living, pay $ s. o plan, and performance): 26.49% general employees, 42. 80% o police officers, and 49. 14% firefighters. Even with these $ 6. 0 wage adjustments, the City has struggled to remain competitive with surrounding jurisdictions for police officers $ 3. 0 and firefighters. As property values have increased in recent 0. 0 years, Sheriffs Offices and Fire Districts, which have a bit $ 2004 2005 2006 2007 2008 more flexibility in setting their budgets, have been able to Budget increase salaries at a higher rate than the City. Benefits — Benefits include Social Security tax, Medicare tax, worker's compensation insurance, unemployment compensation insurance, medical insurance ( health, dental, & life), and pension benefits. Affordable health insurance providing quality coverage is an important part of the City' s benefits package. The City contributes 75% of the premium for both employee ( single) coverage and dependent ( family) coverage and currently offers three levels of coverage. Many local governments pay a lesser portion of dependent coverage. The City' s total medical benefits expense has increased 24% or $ 347K over the last five years despite several plan design changes ( both reducing benefits and increasing co -pays) to 10 of 34 FY 2008 -09 Budget Policy Meeting maintain affordable coverage. The City is required to maintain its three pension plans in a fiscally sound manner.Investment earnings and employee /employer contributions comprise the plans' income. General employees and police officers contribute 5% of wages and fire personnel contribute 6. 6% of wages into their respective plans. The City's actuaries estimate investment earnings at 8% annually for each plan and estimate annual Benefits salary increases as follows: General 5.4 %, Police 7. 5 %, and 2. 0- Fire 6. 5 %. The City's contribution is based on these estimates and must be adjusted in future years to make up for 1. 5 any deviation from these estimates. Factors such as lower y than anticipated investment earnings, higher than estimated 0$ 1. 0 salary increases for employees, and more participants due to the early -out retirement program and additional fire personnel 0. 5 have necessitated that the City contribution steadily increase over the past several years. Police and Fire receive state funds to offset some of their pension costs. According to the o. o 2004 2005 2006 2007 2008 March 2008 actuarial evaluation, the City' s contribution to its Budget general employees pension plan is anticipated to remain the Medical Pension same at $ 1. 268M for the upcoming budget year. Operations & Maintenance — This category of expenses includes materials and supplies, repair and maintenance, utilities and fuel, insurance, and other charges. This expense category is largely impacted by program and service delivery levels as well as fixed costs Fixed costs 1. 5 over which the City has little control, such as utilities, fuel, $ property & casualty insurance, concrete, and steel. il"i n Over the last five years, utilities expense increased 29% or $ 1. 0 310K and fuel expense increased 69% or $ 177K. High o petroleum prices, which also translate into higher prices for building materials such as concrete and steel, are most likely $ 0. 5 here to stay. Any refinery disruptions or hurricane activity in the gulf could easily push prices higher than their current record. Property and casualty insurance has increased 61 % $ 0. 0 or $ 247K 2004 2005 2006 2007 over the same period as the reinsurance market 2008 Budget escalated due to unprecedented hurricane activity in 2004 O Utilities