Fort Walton Beach — Fiscal Year 2019-20 Adopted Budget — reading text

for our actions, resources, and attitudes. Teamwork We will work together to provide quality services. Customer Service We will be professional, use all available resources, and strive to meet the needs of our customers. Continual Improvement We will promote a culture that seeks to better our organization. Adopted by City Council in September 2011, after a collaborative effort by Department Directors and the City Manager, the updated Vision and Mission for the City are as follows: Vision The City of Fort Walton Beach: a recognized leader in the provision of Community Services. Mission To enhance and protect the Community by providing quality services. 2  Strategic Plan Adopted in July 2019 City Council’s primary responsibility is to shape public policy to achieve the citizens’ desires for the future. As time passes, the complexion of a community, its residents and leaders change, as do the priorities of the community. There is probably no more daunting a task that any community faces than planning for its 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 – Safe and Livable Community for Citizens Quality of Life Survey Data, Crime Stats, Traffic Injury Stats, Pedestrian and Bike Safety, and Reducing Congestion Objective #2 – A Government that Maximizes the City Budget, Tax Revenue, and Population Stats Objective #3 – Support Intelligent Growth City Population Data, Percentage of People Under 25, Building Permits and Parks and Recreation Data Objective #4 – Maintain a Well-Trained, Talented and Engaged Municipal Workforce Employee Engagement and Turnover 3 4 City Manager’s Budget Message October 1, 2019 Honorable Mayor, City Council Members, and Citizens: It is my pleasure to submit the FY 2019-20 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 2019-20 budget of $47,231,660 is $5.5M, or 13.23%, more than the adopted FY 2018-19 budget. Ad Valorem revenues will remain consistent with prior year, as the City Council has set the millage rate at the roll-back rate, which is the rate that would generate the same amount of property tax revenue as the prior year. Assessed values are anticipated to increase 3.21% in the General Fund and 22.88% in the CRA fund. The budget is predicated on reducing the millage rate to 5.6395 mills. ECONOMIC ENVIRONMENT National economic indicators - somewhat useful for evaluating the local framework within which the City of Fort Walton Beach operates - indicate economic recovery that continues to show growth in each of the past few budget years. Consumer Price Municipal Cost Consumer Confidence Leading Economic Index Index Index Index *Arrow indicates direction of performance during past year; Color denotes if change has a positive (green) or negative (red) impact* The Consumer Price Index (CPI) – prepared by the US Bureau of Labor Statistics and the most widely used gauge of inflation – is 2.2% higher than a year ago for the Southern Region. The Municipal Cost Index – prepared by American City & County to show the effects of inflation on the cost of providing municipal services – is relatively flat, at 0.96% higher than a year ago. The Consumer Confidence Index – prepared by the Conference Board based on a representative sample of U.S. households – is 9.17% higher than a year ago, which is an excellent indicator of solid economic recovery. The Leading Economic Index – also prepared by the Conference Board and designed to signal turning point patterns in economic data – has decreased slightly for the first time since December of 2018. Unemployment in Okaloosa County is 2.70%, which is the second lowest in the State. The State of Florida projects a decrease in local option fuel tax and communication services tax revenues, two of four of the City’s revenue sharing funds (local option fuel taxes, municipal revenue sharing and half-cent sales tax), which reflects slightly lower fuel prices. The communication services tax revenues have declined in projections over the last few years due to the bundling of taxable wireless services. The Okaloosa County Property Appraiser anticipates a 6.22%, or $84M, increase in taxable assessed value for the City, as the real estate market continues its recent boom. City of Fort Walton Beach, FL 5 City Manager’s Budget Message TOP BUDGET ISSUES Current Year – FY 2019-20 Prior Year – FY 2018-19 Fire Assessment Fee $2,500,000 ▲ Property Taxes $376,316 ▲ Fee has an effective date of 10/1/2019 and is designed Assessed value increase of $78M or 6.13% due to to cover the costs of Fire Protective Services. increasing property values. Millage rate unchanged. Pension Benefits $431,893 ▼ Pension Benefits $349,926 ▼ Decrease in Pension Contributions for DB Plans due Decrease in Pension Contributions for DB Plans due to to employee turnover and higher investment earnings. inactive retiree mortality, lower assumed CPI. Insurance Benefits $545,261▲ Insurance Benefits $545,240 ▲ Increase of 4.70% in overall rates for health, dental, 8.60% in overall health, dental, life, and vision life, and vision insurance; change to employer insurance. premium contributions. Property Taxes The City’s 2019 gross taxable property value for operating purposes is $1.440 billion, an increase of $84 million, or 6.22%, from the 2018 final gross taxable property value of $1.356 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. 1,600 9 1,400 8 Ad Valorem Taxes (millions) 7 1,200 Taxable Value (millions) 6 1,000 5 800 4 600 3 400 2 200 1 - - 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 General Fund CRA Fund Tax Revenue Millage As the chart above depicts, the City maintained its millage rate in FY 2009-10 and reduced personnel and other expenses in response to lower tax revenues as property values began to fall. The millage rate was increased in FY 2010-11 in order to maintain revenues, as the recession was in full swing. Further 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 has lowered the millage rate to 5.6395 mills, which is the millage rate that the proposed budget is predicated on. This rate, known as the rolled-back rate, generates the same amount of property tax revenue as the prior year, even with the increases in property values. One mill equals $1 per $1,000 of taxable property value. Wage Adjustments The last full Pay & Classification Study was completed in FY 2013-14. The FY 2018-19 budget City of Fort Walton Beach, FL 6 City Manager’s Budget Message allocated $35K to complete a new Pay & Classification Study. Work on the Study began in March 2019. The Study includes: • Conducting a comprehensive survey of public and private labor market comparables, designed to include salary range and actual salaries to ensure the City’s compensation is equitable and competitive in its compensation package relative to internal factors and external markets for substantially similar classifications. • An analysis that addresses the issue of internal equity and pay compression. • A job-task analysis audit of all employee positions to verify and validate information from existing job descriptions, including personal interviews with employees, supervisors and directors, as needed, to determine if classifications are correctly placed