Fort Walton Beach Council agenda — 04-19-05 — reading text

citizens' desires for the future. The core of the City' s budget process places an emphasis on sound fiscal management and operational decision- making in accordance with the goals and objectives established by the citizens, City Council, and staff through the City' s Vision and Strategic Planning processes. This workshop and report are intended provide the framework under which the FY 2005- 06 budgets will be prepared. It is not intended to be a detailed review of the budget. The objectives of this workshop are as follows: Assist Council in understanding the City' s available revenue sources and plan of operation, and allow revisions as desired. Establish service levels and funding mechanisms in accordance with Council's service priorities. Revenues and expenses are projected out five years. Ascertain City Council's position on certain policy issues critical to development of the Fiscal Year 2005- 06 operational budget and capital improvements i"'" program. RECOMMENDATION: Staff respectfully requests that City Council reach a consensus on the major policy decision points in order to guide the FY 2005- 06 budget development process. Respectfully submitted: Joyce Shanahan City Manager h04N Oocid: documents and settings\ jshanahan\ my documents\ citymngr\ agenda\ rg 10 14 03\ city of fort walton beach. doc c:\ Page ii FY 2005-06 Budget Policy Workshop TABLEOFiCONTENTS Introduction & Objectives 2 Economic Information 3 Revenues 5 Expenses 9 13 Policy Decisions Ad Valorem Taxes ( Millage) 14 Occupational Licenses 15 Sanitation Rates 16 Recruitment & Retention 17 Health Insurance 18 Retirement Early- Out 19 Softball Complex/Fairgrounds Land Acquisition 20 CRA Focus 21 Stormwater Utility 22 Police Take- Home Vehicles 23 Rapid Response Vehicle 24 Prepared by the Finance Department for the City Manager' s Office. 1 FY 2005. 06 Budget Policy Workshop INTRODUCTION City Council's primary responsibility is to shape public policy in order to achieve the citizens' desires for the future. The core of the City' s budget process places an emphasis on sound fiscal management and operational decision- making in accordance with the goals and objectives established by the citizens, City Council, and staff through the City' s vision and strategic planning processes. Citizens overwhelmingly report being satisfied with the level of services received for their tax dollars, as indicated by 92% of residents contacted as part of the Citizen Satisfaction Survey conducted in October 2003. The FY 2005- 06 budget will continue the City' s commitment to the Vision and Strategic Plans by providing quality services in a cost controlled manner, developing balanced sources of revenues to fund programs, improving and maintaining infrastructure, and maintaining prudent cash reserves for the betterment of the community' s citizens and businesses. OBJECTIVES to provide the framework. under which the FY 200p- This\o\'P{ k$ hc>p. isintended 06blJc.ig~ t,. t()be pr~ sent~dtoCQunciHn August, will be prepar~d. Jtis not intended to be a detailed review ofthe budget.. The objectives of this workshop are asfoUovvs: Assist. Council in understanding the City' s available revenue sourcesial1' .qii~lanof operation, and allow revisions as desired. Historical data is presented on <either a five or ten year basis. Establish service levels and funding mechanisms in accordance with Council's service priorities. Revenues and expenses are projected out five years. Ascertain City Council' s position on certain policy issues critical to development of the Fiscal Year 2005- 06 operational budget and capital improvements program. 2 FY 2005-06 Budget Policy Workshop NATIONAL ECONOMY A relatively healthy economy is predicted for this year with real gross domestic product ( GDP) growth at 3.4% according to the 2005 US Fearless Forecast, an annual survey of investment managers published by Mercer Investment Consulting. The Federal Funds rate is anticipated to continue a steady increase, inflation is expected to slow, and unemployment should remain relatively unchanged. The weak investment market has yielded lower earnings and necessitated an 11% mandatory pension contribution increase in the current budget year. The Consumer Price Index ( CPI), the most widely used gauge of inflation, increased 0.6% in February - up 3% from a year ago. The energy index increased 2. 0% in February, accounting for the vast majority of acceleration in the overall CPI. Fuel, oil, and utilities - components of the energy index - comprise 4% of the current year budget expenditures. According to the Winter 2005 edition of the Northwest Florida Economy, defense- related spending is likely to continue to outpace overall economic spending growth. U. S. Department of Defense and Homeland Security initiatives will drive this increase. lOCAL ECONOMY The FY 2005- 06 budget parameters must be examined within the narrower context of the specific environment within which the City of Fort Walton Beach operates. The defense- related aerospace industry continues to be a great source of competitive advantage and one of the most powerful economic influences in Okaloosa County. The capital and knowledge- intensity of these jobs translate to higher wages than available in other sectors of the regional economy. Local leaders must promote the mission of our military instillations and nurture the corresponding contracting relationships to ensure the county remains the technology leader in Northwest Florida. Approximately 21 % of the Okaloosa County workforce is comprised of military personnel and civilians working for the Department of Defense. Hurricane Ivan has also impacted the local economy - initially causing higher unemployment and loss of business revenues. Given the rapid influx of construction labor opportunities and reconstruction spending over the next two years, the subsequent gradual return to pre- hurricane levels will generate the appearance of an economic slowdown. Construction wages have increased as a result of the increased demand, making wages for City positions such as service workers less attractive than before the storm. ECONOMIC INDICATORS PODulation - Over the past ten years, the City' s population has decreased 6.3%, while the County has seen its unincorporated population grow 14. 2%. The population decrease seen in the year 2000 for the City and County is the result of census figure adjustments. As the City is City Population Population 25 25 20 20 J) J) ( 0 " 0 c: c: as 15 as J) 15 J) ( J : J 0 0 s::; I- I- 10 10 5 5 0 0 2002 2003 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995 1996 1997 1998 1999 2000 2001 3 FY 2005-06 Budget Policy Workshop limited. Many nearly built- out and few property owners voluntarily annex, population growth is state revenue sharing formulas are population based, resulting in only marginal increases in intergovernmental revenues for the City. While our population is not increasing, our residents demand that current service levels and infrastructure be sustained while enjoying the benefits of new programs and services such as a DUI officer, ALS, pump- out stations, septic tank replacement, parks and recreation facilities, and e- government. UnemDlovment - The unemployment rate is an indicator of the health of the local economy. The large military community and defense contractors help stabilize our local economy and insulate us from the negative influences that have Unemployment Rates affected other areas of the state. Because the 7% majority of visitors drive to the area, tourism has 5% 6% rebounded from the economic slump of previous 4% years despite high fuel prices. Local 3% 2% unemployment rates have consistently been below 1% the state and national averages ( data is only 0% 2004 available at the County level) and have been 2000