Fort Walton Beach Council agenda — 05-17-11 special — reading text

Cemetery, & Other 2 ss WaFm & Sewer JFees Ad Val145% orem Garbage Fees 7 0% Coll Club Fees Other 08%Fees '• ° ° "` t] ° Z. of Diversity in the revenue structure is an important indicator of economic health and a predictor of the City' s ability to cope with changes to the economic and financial environment, and is also desirable for political and social reasons. An optimal revenue structure includes a balance among major taxes ( e. g. property, sales) and reliance on user fees ( e. g. recreation fees, building permits). Taxes should be as broadly based as possible to allow for lower tax rates and improve economic efficiency. A diversified property tax base is desirable because it will be less _ a vulnerable to economic shifts. The City' s tax base is about 55 % residential, 34% commercial, T and I1 % other. ° Ad Valorem Taxes — Ad valorem taxes levied by the City comprise $ 5. 2M or 14. 6% of total revenues and contribute to 25% or $ 4. 3M of General Fund revenues and 57% or $ 899K of Community Redevelopment Agency ( CRA) Fund revenues. Legislation passed in June 2007 limits the millage rate the City may levy by simple majority vote of the governing body. Florida voters in January 2008 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. 1, 200 6 1, 000 5 900 4 a 600 3£ d 400 2¢ 200 1 0 a o po o so01 p PI 01 IF v \ g ° °, ti° ^ ti°' ti &, a, ry e g0 fllllllllllGeri, CRAnd Revenue General Fund flevenue — CRA Fund Revenue 1 —CRA FUnU Revenue 2 of 15 Packet Pg. 7  3. 1. a FY 2011. 12 Budget Policy Meeting The Property Appraiser is required to certify the City' s preliminary taxable assessed value by July 1. Based on the Ad Valorem Tax Estimating Conference held in March by the Office of Economic and Demographic Research ( EDR), staff anticipates a 3% or $ 144K decline in General Fund ad valorem revenue at the current millage rate of 4. 5383. 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 15 of revenue for the City. Unlike taxes, these $ 12 — — service charges are directly related to the service $ received. User fees include leisure services such $ 9 as recreation programs, senior center, library, 6 museum, and golf; development activities such $ s—— as building permits; and infrastructure such as $ water, sewer, and storrnwater. Fees are set by $ o City Council based on the cost of providing 2006 -07 200708 2008 09 200910 2010 tl neeraarxn W. a, S / ewer Budget these services, reviewed and adjusted annually as part of the budget process. a Other Garbage/ Recycling - Building Permits 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 well as treatment of sewage by the County. The tipping component of garbage fees was adjusted in January 2010 due to a contractual rate adjustment with BFI. Golf membership and green fees were adjusted in August 2009. A stormwater management fee was implemented in October 2008. The Utilities, Sanitation, and Stormwater funds are on track to make a profit this year. The cost allocation interfund transfer to the General Fund may need to be reduced to ensure the Golf Fund breaks even this year. Other Malor Revenues — This category includes franchise fees, utility taxes, communications services tax, local option fuel tax, half cent sales 10 tax, and municipal revenue sharing. $ 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 , salesTax 0Reoenue Basing gross electric and gas sales and a $ 1. 75 per ton sanitation host fee is also collected per contract. The City' s electric franchise fee agreement expires in October 2011. The solid waste franchise agreement expires in December 2012. The gas franchise agreement expires in March 2016. The interloeal agreement for local option fuel tax expires in FY 2012 -13. State revenue sharing is allocated via population -based distributions, resulting in only marginal increases for the City, which is nearly built-out and relies on voluntary annexation. Half cent sales lax distributions are derived from net sales tax revenue and generate the largest amount of municipal revenue sharing 3 0115 Packet Pg. 8  F3 1.. a FY 2011 -12 Budget Policy Meeting 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. Appropriations from Reserves — Appropriations from fund balance ( governmental funds) or net assets ( enterprise funds) may be budgeted. 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. There are two types of General Fund reserves: Reserved — funds committed for identified purposes or legally required to be segregated i. e. encumbrances, Harvey Trust). Unreserved — funds not required to be on hand and have not been identified for a particular purpose; available for capital projects or to balance the budget. At the May 2008 Budget Policy Meeting, City Council endorsed maintaining a minimum General Fund unreserved fund balance of 30% of total annual expenditures. ESIimA iS Allocallm ga ee e, m vuoe fl.—- fl.—- 6wi on oa21M2wl 1 Gb/ pa5, 199 N of Ill 6 es Expnaolo- v 5, 250. 080 2 PS] 916 2f1A 2Jt All Vnesnv. umaobm