Fort Walton Beach Council agenda — 08-18-08 special agenda - budget — reading text

legislative changes, or collection levels. Most revenues are budgeted based on historical collection and growth levels. However, certain revenues distributed by the State ( e. g. municipal revenue sharing, sales tax) are budgeted based on estimates provided by the Legislative Committee on Intergovernmental Relations. Enterprise revenues ( utilities, sanitation, golf) are based on historical usage and /or number of customers adjusted for the current rates. 2. The current millage rate of 4. 1986 has been used in preparing the budget. Net revenues from City property taxes are anticipated to decrease $ 409, 509 from last year, with the General Fund decreasing $ 410, 727 and the Community Redevelopment Agency Fund increasing $ 1, 218. 3. Reductions are anticipated for the following revenues: Communication Services Tax - $ 156, 249 or 10% Half -Cent Sales Tax - $ 171, 038 or 10% Interest Income - $ 181, 612 or 21 % Municipal Revenue Sharing - $ 84, 905 or 10% Local Option Fuel Tax - $ 29, 715 or 4% 4. A comprehensive fee schedule review has been completed and rates adjusted as appropriate effective October 1. The fee schedule resolution will be brought forth at the first public hearing in September for adoption. Major changes include: Utility Tax — Removal of utility tax caps and exemptions. Per Chapter 4. 05 of the City's Code of Ordinances, a utility tax is levied at a rate of 10% against electric, gas, and water purchases. The tax is currently limited to $ 20 /month for residential consumers and $ 50 /month for non -residential consumers. Additionally, the tax is not levied on the first 50 kilowatt hours per month of residential use. The Attorney General has issued several opinions stating that caps and limitations on the dollar amount taxed under Florida Statute 166. 231 " Public Service Tax" are improper. Additional revenues from removal of the caps and exemption are estimated as follows: 250K electric, $ 55K water, and $ 80K gas. Sanitation Fuel Surcharge — A new fee proposed in lieu of a rate increase. Fuel expense is anticipated to be $ 53, 680 higher in the Sanitation Fund in FY 2008 -09. A fuel surcharge of 0. 045 per pickup allocates the cost purely based upon the number of collections per week. Residential customers will pay the majority of the surcharge because they receive the most service — they comprise the most number of customers and also receive frequent service ( twice weekly garbage collection and weekly yard waste collection). Since the fuel surcharge is based on the number of pickups, and residential customers receive 3 pickups per week, commercial customers with 3x /week service would pay the same monthly fee as residential customers. A monthly charge of $ 0. 54 for residential and $ 0. 36 to $ 1. 08 for commercial, depending on the number of weekly pickups, is proposed. This results in a monthly increase of 3. 5% for residential customers, which is well below the consumer price index ( 5% for June) and is purely to cover fuel expense. Late Charge — Increase from 5% to 10% of balance. An analysis of surrounding jurisdictions revealed that Crestview, Auburn Water Users, Okaloosa County Water & Sewer, and Destin Water Users all charge a 10% penalty if the water /sewer bill is not paid by the due date. The City's returned check fee, disconnect/ reconnect fee, and deposit amount are all comparable to surrounding providers. Stormwater Management Fee — A new fee to cover the cost of implementing and complying with existing and proposed Federal and State stormwater regulations is included. The consultant' s revenue projection report will be available in mid -August. Based on staff's cost projections, the proposed fee of $ 3 /month per equivalent residential unit ( ERU) is anticipated to generate $ 594K City of Fort Walton Beach, FL 14- City Manager' s Budget Message annually, or sufficient revenues to support divisional and future capital improvement needs. A new enterprise fund has been established for this revenue and the corresponding expenditures. 5. The following transfers from fund balance or net assets are budgeted, but the full amounts may not actually be incurred if revenues come in higher or expenditures are lower than estimated: a. General Fund — $89, 821 from retirement designated fund balance, $ 2, 660 from K -9 designated fund balance, and $ 178, 000 from undesignated fund balance to transfer to the Golf Fund. b. Law Enforcement Trust Fund — $ 28, 943 from undesignated fund balance since the City cannot legally budget for fine /forfeiture revenue. c. Law Enforcement Training Fund — $32,282 from undesignated fund balance. d. Sanitation Fund — $ 177, 231 from designated net assets for renewal & replacement ( truck replacement). EXPENSES (detailed discussion on pages 42 -461 1. Wages have been adjusted as follows: a. Cost of living adjustment — Employees customarily receive a cost of living adjustment effective October 1. This year' s 2% adjustment represents half of the 3. 9% April consumer price index the most recent data available prior to Council' s May Budget Policy Meeting). The CPI was 5% as of June. This adjustment is estimated to cost $ 217, 606 for general and police employees. b. Performance adjustment — Employees have traditionally been eligible for an increase on their anniversary date contingent upon a satisfactory performance evaluation. General employees would receive 3 %, police officers 3. 5 %, and department directors, division managers, supervisors, and professional staff would receive 1 % to 3. 5% depending on their evaluation score. Due to budget constraints, these employees will not receive an increase on their anniversary date during FY 2008 -09. c. Fire Union — City Council approved a three -year contract in March 2008 that provided for a 5% cost of living adjustment on October 1, 2008 and a 7. 12% step increase on a firefighter's anniversary date. An early -out retirement provision is currently being finalized. Wage increases are offset by lower wages for new personnel, elimination of a fire prevention captain, and a six - month delay in hiring the Deputy Chief —for a net savings of $235K. 2. Benefits have been adjusted as follows: a. Pension contributions — The City's pension contributions to the general employees plan will remain the same, but contributions to the police and fire plans will increase $ 180, 110 over the prior year. In accordance with direction received at the Budget Policy Meeting, staff is exploring alternatives to possibly reduce the City's pension contribution expense in the future. b. Medical insurance —The City currently contributes 75% of the premium for both single and family medical and dental coverage. At the Budget Policy Meeting in May Council voted to reduce the City's medical insurance contribution for new hires effective October 1, 2008 to 50 %. Based on current utilization levels, insurance increases of 12% medical, 5% dental, and 5% life are A new City Council will take office in April and the anticipated at an estimated cost of $ 188, 291. budget does not consider any health insurance coverage changes that may result. c. Workers compensation — Class code rates have decreased for the FY 2008 -09 year, which combined with a reduction in the number of positions, results in a workers compensation expense decrease of $84, 590. 3. Personnel changes from mid -year FY 2007 -08 reductions, the early retirement and voluntary separation incentive programs, the operational reorganization, and budget cuts result in savings of 1. 4M. A portion of the savings - $ 271 K - is offset in the first year by the incentive program payouts. Funded full -time equivalent ( FTE) postions total 339.56 compared to 363. 24 last year, a decrease of 23. 68 FTE' s or 6. 5 %. All position eliminations have been achieved through existing vacancies, attrition, or voluntary separation. City of Fort Walton Beach, FL 15- City Manager' s Budget Message4 4. Pr Federal and State regulations will require a substantial expenditure by the City over the next several ; years to implement and maintain critical stormwater programs. Current revenue sources are insufficient, grant funding is minimal and not guaranteed, and a regional stormwater utility has garnered little support. This budget proposes a new Stormwater enterprise fund with revenues derived from an estimated $ 3 /month fee per ERU. The environmental specialist and conservation program manager from the Utilities Fund and a foreman I, heavy equipment operator, 2 service worker I, and 2 service worker II positions from the General Fund would move to the Stormwater Fund to address water quality, flooding, and regulatory issues. For the implementation of this new , enterprise fund, all of the stormwater program directives will be met with existing personnel and equipment allocations. M,, 5. For the second year in a row, capital outlay ( i. e. computers, vehicles, equipment) purchases are minimal. No police vehicles are being replaced and only 18 computers /laptops, one pickup truck, one side loader, and four mowers are being replaced citywide. 6. Similarly, capital improvements ( i. e. infrastructure) are minimal in the General Fund with only $ 75K for street paving and $ 25K for the City Hall Annex roof replacement. 7. Department goals and capital improvement projects are tied directly to the Vision Plan and /or Strategic Plan, as illustrated by the use of icons ( reference pages 4 -7) throughout the document. The following projects are directly related to 2008 Strategic Plan goals: Large Scale Structural Change a. Conduct departmental operational reviews —> streamlining and grouping like activities through organizational restructure b. Reexamine health and benefits for new hires —> City contribution for new hire medical coverage reduced from 75% to 50% Natural Environment a. Create stormwater utility —> stormwater enterprise fund is included with funding from new stormwater management fee