Fort Walton Beach Council agenda — 05-15-12 special budget policy — reading text

City' s tax base is about 55% residential, 34% commercial, u and 11 % other. A Ad Valorem Taxes — Ad valorem taxes levied by the City comprise $ 5. OM or 13. 2% of total revenues and contribute to 24% or $ 4. IM of General Fund revenues and 57% or $ 804K of Community Redevelopment Agency ( CRA) Fund revenues. Funding from County property taxes comprises $ 583K or 41% of CRA Fund revenues. Property tax revenues are allocated to the CRA Fund based on the growth in assessed value from the base year ( i. e. year of CRA designation). Legislation passed in June 2007 limits the millage rate the City may levy by simple majority vote of the governing body. In January 2008, Florida voters approved a constitutional amendment providing additional exemptions and limiting increases in property values. These two initiatives, along with a decrease in assessed valuation due to the housing collapse, have impacted the City' s property tax revenue base, which supports existing service levels. avaearm vane E15oo _,,,__ __ one v. w. am n..: 5 E6 ° v8y 0 EI55 € 5 f O$ Q2 ; E300 $ I EO 200203 2003 04 2004 05 200506 2006 07 3007 08 300600 200910 201 01 1 201112 Compared to ten years ago, General Fund property tax revenues are 16. 6% higher and CRA Fund property tax revenues are 116. 000% higher, yet the City' s tax rate of 4. 5383 mills is 8. 7% 2 17 Packet Pg. 7  3. t. a FY 2012- 13 Budget Policy Meeting less. However, the municipal cost index — which illustrates the effects of inflation on the cost of providing municipal services - is up 35. 4% for the same period. A 2. 8% decline in property values is estimated for Okaloosa County in 2012 based on the Office of Economic and Demographic Research' s ( EDR) Ad Valorem Tax Estimating Conference held in January. According to MLS data, the average single family home sales price in December 2011 was 15. 9% higher than a year ago. The Property Appraiser is required to certify the City' s preliminary taxable assessed value by July I. User Fees — The City levies user fees to fund the cost of regulating an activity or providing a service or facility. These are the largest source of revenue for the City. Unlike taxes, these service charges are directly related to the service received. User fees include leisure services such as recreation programs, senior center, library, museum, and golf; development activities such as building permits; and infrastructure such as water, sewer, and stormwater. Fees are set by City Council based on the cost of providing these services, reviewed and adjusted annually as part of the budget process. Parks and recreation fees recover approximately 20% of the cost of those programs. State statute allows full cost recovery for implementing the Florida Building Code through building permits. A five -year plan for water and sewer rates was adopted in March 2010 to cover the cost to operate and maintain the City' s infrastructure as sz well as treatment of sewage by the County The tipping component of garbage fees was adjusted 59 3> in January 2012 due to a contractual rate : se a increase with BFI. Golf membership and green fees were adjusted in Augt us stormwater management fee was implemented 2009. A s° F P°° 9a1B x08 0-9 200910 2010.11 2011- Hod,, 12l The Utilities, Sanitation, Golf, and Stormwater RCCVii" n Nvcc' Ara • Grvbagc ¢ Ott" 19' —,' Ie funds are all on track to make a profit this year. Other Maior Revenues — This category includes franchise fees, utility taxes, communications services tax, half -cent sales tax, municipal revenue sharing, and local option fuel tax. Utility taxes are levied against electric, gas, and water revenues at the rate of 10 %. Electric and natural gas utility taxes are based on 1973 fuel prices. Although the entire base rate is taxable, a large portion of these utility bills is exempt ( since the current cost of these fuels is irrelevant). Franchise fee agreements provide a 6% rate on sm gross electric and gas sales and a $ 1. 75 per ton se sanitation host fee is also collected per contract. The City' s electric franchise fee agreement . 16 expired in October 2011 and renewal negotiations are ongoing. The solid waste £ s+ franchise agreement expires in December 2012. 9 The gas franchise agreement expires in March 2016. s° 200708 MOS09 DIII. 10 201011 zOt1 - 12 The interlocal agreement for local option fuel 1— h- F- UtLll, F- . csr and, SalOTa` • R .... " ash - ar F" a T.. tax expires in FY 2012 - 13. State revenue • sharing is allocated via population -based distributions, resulting in only marginal increases for 3 " f 17 Packet Pg. 8  3. 1. a FY 2012 - 13 Budget Policy Meeting the City, which is nearly built -out and relies on voluntary annexation. Half c- ent sales tax distributions are derived from net sales tax revenue and generate the largest amount of municipal revenue sharing revenue for local governments. Municipal revenue sharing is funded by 1. 3409% of sales and use tax collections, 12. 5% of state alternative fuel user decal collections, and the net collections from the one -cent municipal fuel tax. The City levies a 5. 62% communication services tax. Approoriations from Reserves — Reserves are an indicator of an accounting fund' s financial health. Credit rating agencies monitor reserve levels and strongly consider this when determining a local government' s creditworthiness. The use of reserves may be appropriated from fund balance ( governmental funds) or net assets enterprise funds) when appropriate. As reserves are non -recurring, it is critical they be used only for one -time expenditures such as capital replacement or improvements, reduction of unfunded pension liability, or debt defeasance rather than recurring operational expenses. In August 2011, City Council adopted a Fund Balance Policy for the General Fund, establishing a Disaster /Emergency Reserve at 30% of annual budgeted expenditures and establishing that the use of unassigned fund balance be limited to one -time, non -recurring expenditures. There is approximately S761K available in unassigned fund balance of the General Fund. Similarly, City Council adopted a policy that unrestricted net assets of the Enterprise Funds be maintained at 33% of operating and debt service expenses and transfers out. This policy is applicable to the Utilities, Sanitation, and Stormwater funds; all funds currently exceed the policy minimum. The Golf fund is currently exempt. Su snsn O 9n.9n. slo Is761x val' IbIb S, m) SIJSIJ X 9- lud 7 51 1L51L1 dd S6 Carom aad s N. aven S4S4 s emRe— Ran'.cc) nn Si S3 Rm'Idcletl 3030 UlnnasUlnnas PooaPooa 1- . onon PondPond GolfGolf udud smnnwarer smnnwarer FUMFUM 6060° °oo t9t9 -. -. 4'.4'. 76% 76% 00 9 CapitalCapital AZZiuAZZiu R-R-- - dd. . 11-11- 11ncicd11ncicd Nan - Spendable so Grncral FUnd 44 d17d17 PaeketPaeket Pg.Pg. 99  3. 1. a FY 2012 -13 Budget Policy Meeting EXPENSE SUMMARY FY 2011 -12 Budgeted Expenses 37,935,778 Public Wee, Gm' Tnmpov n 291 nu La9.8Z 1n11