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

switched from a percentage to a fixed dollar amount. The actuary determines City contribution requirements using estimated future earnings of members of the plan, as well as other assumptions on investment returns, retirement age, and, among others, expected mortality. Minimum benefits for both the Police and Fire Defined Benefit Plans are mandated by Chapters 175 & 185 of the Florida Statutes. The Police and Fire Plans both meet or exceed these minimum benefit levels. The City’s contribution to the General Employees defined benefit plan is budgeted at $330K, which is a decrease of $250K over the prior year. This plan was closed to new entrants in January 2010. The City’s contribution to the Police Officers plan is budgeted at $1.42M and the contribution to the Firefighters plan is budgeted at $1.43M, which is a combined increase of $152K. Health Insurance Benefits In 2010, the Federal Government passed the Patient Protection and Affordable Care Act. The Act, which mandates, among other things, that employers offer specific medical insurance for any employee working more than thirty (30) hours per week, has had a negative impact on the cost of providing such insurance. City of Fort Walton Beach, FL 6 City Manager’s Budget Message The City contributes 100% of the premium for employee coverage in its Standard Insurance Plan and 75% of the employee coverage for those who elect the Premium Insurance Plan. For employees hired before October 1, 2008, the City contributes 75% of all dependent coverage. Employees hired after this date receive a 50% contribution from the City for all dependent coverage. The City issued a Request for Proposals for insurance coverage in FY 2020-21 that resulted in a 0% increase in premiums for FY 2021-22 as well as FY 2022-23. Fleet Replacement The City’s Fleet Replacement Program (FRP) is a planning and budgeting tool that identifies the replacement of vehicles with a value greater than $10,000 and a useful life of eight years or more. The replacement criteria provides a mechanism for the systematic evaluation of vehicle utilization and repair/maintenance costs and serves as a guide for efficient and effective replacement. Generally speaking, police patrol vehicles are replaced on an 8-year cycle and the remainder of the fleet on a 10–12-year cycle. Each year as part of the budget process, the fleet is evaluated based on established replacement criteria and a ten-year schedule of replacements is developed depending on a projection of available fiscal resources and the evaluation scoring. Vehicle replacements are funded objectively based on established criteria and funding resources. To maximize the useful life of vehicles and meet service delivery levels, vehicles may be transferred between departments prior to disposal. Prior to replacing a vehicle, an analysis is performed to determine if a less expensive mechanism would meet employee needs at a reduced operating expense to the City or if the vehicle should be removed from the fleet without replacement. According to the economic theory of vehicle replacement, over time vehicle capital costs decline while vehicle operating costs increase. Ideally, vehicles should be replaced around the time that annual operating costs begin to outweigh annual capital costs. Since 2014, the City, working under a future sustainability plan, has funded replacements based on the FRP. Vehicles totaling $1.58M are scheduled for replacement in FY 2022-23. Detailed information on vehicle replacement can be found in the Fleet Replacement Schedule (reference Table of Contents). To stay ahead of supply shortages Staff recommended, and City Council approved, the replacement of seven (7) Police Department patrol vehicles in the current fiscal year. The corresponding amount was removed from the FY 2022-23 proposed budget. OTHER ASSUMPTIONS & CHANGES REVENUES (reference Table of Contents for detail location) 1. Revenues are estimated at conservative levels to guard against unanticipated economic shifts, legislative changes, or collection levels. General government revenues are largely budgeted based on historical collection and growth levels. Ad Valorem and State shared revenues are budgeted based on external estimates received from their respective authorities. Enterprise revenues are based on historical usage and/or number of customers. A new five-year utility rate study, which includes water & sewer, sanitation, and stormwater has been completed. The study determines the required rates to generate sufficient revenue to sustain renewal and replacement reserves and account for debt service requirements and will be updated on an annual basis to account for real-time revenues, expenses, and changes within the enterprise systems. The proposed FY 2022-23 Budget implements Year Three (3) of the five-year rate study, which was adopted by City Council on August 11, 2020. City of Fort Walton Beach, FL 7 City Manager’s Budget Message The Fire Services Assessment was implemented in January 2020 on the City’s utility bill. For FY 2022-23, the Fire Services Assessment is included on the property tax bill and collected through the Uniform Collection Methodology. Information about the FY 2022-23 Fire Services Assessment was included on the TRIM Notice mailed out to property owners in August 2022. The Fire Services Assessment rates for FY 2022-23 remain unchanged from FY 2021-22. The State of Florida’s revenue projections for FY 2022-23 are significantly higher than FY 2021- 22 and are a result of the early reopening of the State and continued recovery from the COVID-19 Pandemic. 2. Use of Reserves – Appropriations from fund balance (governmental funds) or net assets (enterprise funds) are budgeted as follows: a. General Fund – no need for a transfer of unassigned Fund Balance. b. Law Enforcement Trust Fund - $9K from fund balance for forfeiture and equipment related expenses. c. Florida Building Code Fund - no need for a transfer of unassigned Fund Balance. d. Utilities Fund – $2.4M from unassigned Fund Balance to complete the Water Meter Replacement CIP. e. Sanitation Fund - $199K from unassigned Fund Balance to purchase a new side loader truck. f. Stormwater Fund - $60K from unassigned Fund Balance. 3. Grants – The City was awarded various State & Federal grants for FY 2022-23 as follows: a. Lewis Turner Traffic Improvements - $1.5M State grant through FDOT (50% City Match Required, will be adopted via resolution when the contract arrives) b. Martisa Road Stormwater Improvements - $287.5K State grant through FDEP (50% City Match Required, will be adopted via resolution when the contract arrives) c. Landing Improvements - $1.6M NRDA grant through FDEP; $500K grant through Okaloosa County TDD; $1M RESTORE Act grant through U.S. Treasury EXPENSES (reference Table of Contents for detail location) 1. Wages have been adjusted as previously discussed. 2. Benefits have been adjusted as follows: a. Medical insurance – health insurance premiums remained flat. b. Employee defined benefit pension – as previously discussed, for a total impact of $3.1M. 3. Computer replacements are budgeted at a total cost of $28K; reference the Table of Contents for detail location of the FY 2022-23 IT replacement schedule, which details each replacement. 4. The following vehicle and equipment replacements and capital outlay items are budgeted at a total cost of $1.19M. Reference the Table of Contents for the FY 2022-23 vehicle replacement schedule location. a. General Fund – 6 Trucks/SUVs. City of Fort Walton Beach, FL 8 City Manager’s Budget Message b. Utilities Fund – 3 Trucks; 1 Vactor Truck. c. Sanitation Fund – 1 Truck; 1 Side Loader. 5. The following Capital Improvement Programs (CIPs) are budgeted at a total cost of $5.69M. Please reference the Table of Contents for location of more detailed information for CIPs. a. General Fund – street resurfacing, sidewalk improvements, Police Department Carport, Preston Hood Batting Cage Structure, and Ferry Park area traffic analysis. b. Community Redevelopment Agency Fund – Landing Improvements, Liza Jackson waterfront park design, Heritage Park and Cultural Center building, Branding & Wayfinding, Arts & Culture League Strategic Plan Implementation. c. Utilities Fund – Brooks Bridge Water & Sewer Relocation, Water Meter Replacement Program, Sewer Grouting and Lining. 6. Certain capital improvement projects, grants, and/or purchases that were authorized, budgeted, and appropriated by City Council in a prior fiscal year but are incomplete as of September 30th are carried forward into the new fiscal year. These special projects and purchase order encumbrances are identified in the budget resolution at the end of the document. ACKNOWLEDGEMENTS Preparation of this budget would not have been possible without the resiliency and dedication of the Finance Department Staff, including Julio Lacayo, Jr., Finance Director, and Carol Godwin, Budget Analyst. I would like to express my appreciation to all Department Directors and staff who assisted and contributed to the preparation of this budget. I would also like to thank the Mayor and City Council for their commitment to conducting the financial operations of the City of Fort Walton Beach in a responsible and progressive manner. Sincerely, Michael D. Beedie City Manager City of Fort Walton Beach, FL 9 City Manager’s Budget Message City of Fort Walton Beach, FL 10 Budget Overview The fundamental purpose of the City’s budget is to link what City Council wants to accomplish for the community with the resources necessary to do so. As such, the budget offers more than just financial elements – it presents an overview of the City's overall operations. This document is intended to provide City Council and our citizens with a plan addressing financial, operational, and policy issues. The budget serves as a: Policy Document – The budget presents financial policies, addresses Strategic Plan The City’s Business is SERVICE goals, and identifies the short and long-term We are committed to providing quality service to impact programs, services, and capital our community in ways that are responsive and improvements will have on the City’s caring by working together to serve our residents. operations and finances. We believe that the success of our organization depends upon the teamwork, mutual trust, and honesty Financial Plan – The budget outlines the achieved through our commitment to the following financial structure and operational changes Core Values: required for financial stability, including the  Integrity: we will conduct ourselves in an honest, capital improvements program and debt trustworthy, and ethical manner.