Fort Walton Beach — Fiscal Year 2022-23 Adopted Budget — reading text

future and identifying future priorities. The Strategic Plan is a multiyear plan and the budget process determines which parts of the Plan receive resources each year. Each Objective is in line with the City’s Vision, Mission Statement and Core Values. Throughout this document, Strategic Plan Objectives have been tied to expenses, capital improvement projects, and performance measures – look for the icons below Objective #1 – City Employees In April 2022, City Council directed Staff to focus on City Employees moving forward. Numerous employee incentives are included in the FY 2022-23 budget. Objective #2 – Downtown Master Plan / Around the Mound Implementation In Fall 2022, FDOT will award the contract for the PD&E phase of Around the Mound to which the City has allocated up to $1 million as a match; the PD&E phase will take approximately two years to complete; in FY 2021-22, the implementation of the Downton Master Plan proceeded with the completion of an Infrastructure Master Plan and Library Relocation Study. Objective #3 – Expansion of City Recreation Amenities In FY 2022-23, the design of the Preston Hood Athletic Complex Expansion will be completed by January 1, 2023 with construction starting in April 2023. Objective #4 – Public Safety For FY 2022-23, new pay scales for Fire and Police Departments will be implemented to allow the City to remain competitive for recruitment and retention of Firefighters and Police Officers. 3 City Manager’s Budget Message September 7, 2022 Honorable Mayor, City Council Members, and Citizens: It is my pleasure to submit the FY 2022-23 municipal budget. The City of Fort Walton Beach budget is designed to meet the highest standards of municipal budgeting. This budget continues the City’s commitment of providing high quality services in a cost-controlled manner, developing an assortment of revenues to fund programs and maintaining prudent cash reserves. This year’s budget process emphasizes sound fiscal management and sustainability to achieve the goals established by citizens, City Council, and staff. The FY 2022-23 proposed budget of $56,767,451 is $3.9M, or 7.39%, higher than the adopted FY 2021-22 budget; the increase is primarily due to the inclusion of major Capital Improvement Projects in the General Fund, Enterprise Funds (Utilities & Stormwater), and the CRA Fund. The proposed budget is predicated on lowering the millage rate to 4.9999 mills; as a result, ad valorem revenues will increase by 2.57% citywide as compared to the final 2021 Certification of Taxable Value DR-420. This is the third year (out of four) that City Council has lowered the millage. ECONOMIC ENVIRONMENT FY 2020-21 and FY 2021-22 brought about numerous challenges, including reopening from the COVID-19 Pandemic, which required the employees of the City of Fort Walton Beach to rise to the challenge and adapt on-the-fly to continue conducting the business of the City in a professional and safe manner. COVID-19 resulted in a shutdown of the local economy from late March to the end of May in 2020, which negatively affected many of the State-shared revenue sources for FY 2020-21. However, because the State of Florida reopened before most other states, State-shared revenues rebounded in FY 2021-22. Current State-shared revenues are in-line with the State of Florida’s estimates. Emerging from the COVID-19 Pandemic, City employees adapted quickly and developed alternative service delivery methods to remain available to our customers. As a result, the City continues to provide services more efficiently through the adoption of new procedures on how to conduct business while maintaining the highest level of customer service that our constituents have grown accustomed to. The unemployment in Okaloosa County is 1.9% as compared to 3.7% a year ago. Unemployment in the State of Florida is 3.0% with the National average at 3.6%. Although this figure is positive, inflation has risen to a 40-year high of 9.2% negatively impacting our employees and significantly increasing the cost of our day-to-day operations. For example, fuel costs have increased 30% resulting in a year-over-year increase of $192,682 in the proposed budget. State-shared revenues continue to surpass estimates and are forecast to increase 16.33% year-over- year. These changes show increases in demand for services and consumption of goods. However, the Communication Services Tax revenues have declined in projections over the last few years due to the bundling of taxable wireless services. On a brighter note, the Okaloosa County Property Appraiser anticipates a 15.1%, or $247M, increase in taxable assessed property values for the City, as the real estate market continues its recent boom. City of Fort Walton Beach, FL 4 City Manager’s Budget Message TOP BUDGET ISSUES Current Year – FY 2022-23 Prior Year – FY 2021-22 CIP’s $5,692,500 ▲ CIP’s $4,800,000 ▲ Capital Improvements Programs were added Capital Improvements Programs were added throughout the various Funds. throughout the various Funds. Insurance Benefits Insurance Benefits Health insurance premium rates remained flat for Health insurance premium rates remained flat for FY22-23. FY21-22. State-Shared Revenues $484,134 ▲ State-Shared Revenues $222,824 ▲ Have rebounded and show a healthy 16.33% increase Have rebounded and show a healthy 8.13% increase year-over-year. year-over-year. Property Taxes The City’s 2022 gross taxable property value for operating purposes is $1.884 billion, an increase of $247 million, or 15.10%, from the 2021 final gross taxable property value of $1.636 billion. Property taxes primarily fund General Fund operations. However, property taxes paid by certain residents and businesses located in areas targeted for specific improvements to eliminate blight and improve infrastructure are allocated to the Community Redevelopment Agency (CRA) Fund. 2,000 10 1,800 9 1,600 8 Ad Valorem Taxes (millions) Taxable Value (millions) 1,400 7 1,200 6 1,000 5 800 4 600 3 400 2 200 1 - - 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 General Fund CRA Fund Tax Revenue Millage Staffing and operational cuts were made in FY 2011-12 and FY 2012-13. In FY 2013-14, the City simply did not have room to “do more with less” and raised the millage rate to 5.7697 mills. As property values continue to rise, the City lowered the millage rate to the rolled-back rate of 5.6395 mills in FY 2019-20 and lowered it to 5.3293 mills in FY 2020-21. The FY 2022-23 proposed budget is predicated on lowering the millage rate to 4.9999 mills; this is the third year (out of four) that City Council has lowered the millage. One mill equals $148.78 per $1,000 of taxable property value. City of Fort Walton Beach, FL 5 City Manager’s Budget Message Wage Adjustments In the proposed FY 2022-23 Budget, there is a 3% Cost of Living Adjustment (COLA) effective on October 1, 2022 and a 2.0% Length of Service Adjustment (effective on the employee’s anniversary date) for all general employees. Sworn Police Department employees will receive the 3% COLA on October 1, 2022 and step increases on their anniversary date based on the current pay grades and step plans. Step increases for Fire Bargaining Union Members will be based on the current pay grades and step plans adopted with the newly negotiated Collective Bargaining Agreements. The COLA equates to an increase of $400K and the Length of Service adjustments will equate to an increase of $178K for an overall cost of $578K in the budget. The budget also includes new pay scales for both Fire and Police employees to bring the City’s wages for those departments to a competitive level for both recruitment and retention. The new pay scales for the Fire Department increases the minimum salary for a newly hired Firefighter/EMT from $37K to $43,680 and also increases the Paramedic Add Pay from $5,591 to $7,500. The steps for the Fire Department change from $2,000 per step to 3% per step. The new pay scales equate to an increase of $194.5K in Fire. For the Police Department, the new pay scales increase the minimum salary for a newly hired Police Officer from $42,248 to $46,615, which is competitive with the area average for starting pay for Police Officers. The new pay scales equate to an increase of $352.2K in Police. A new Pay Study is in progress for the remainder of the City’s positions and should be completed in October 2022. Pension Defined Benefit Changes The City is required to maintain its three defined benefit pension plans in a fiscally sound manner. Investment earnings and employee/employer contributions comprise the plans’ income. General employees and police officers currently contribute 5% of wages while firefighters contribute 8% of wages into their respective plans. The City’s annual contribution, as a percent of payroll, is based on actuarially determined contribution levels except for the General Pension Plan which has