FY 2016 Budget Kick-Off April 14, 2015

Transcription

1 2016 Budget Kick-Off April 14, 2015

2 2016 Budget Kick Off Agenda Bottom Line Up Front Economic Conditions 2016 Budget Process Budget Schedule

3 B U S I N E S S M O D E L Why Are We Here? Data Analysis Citizen Input Strategic Plan Policy Business Plan Operations Budget Output to Citizens

4 Bottom Line Up Front 1) Capital funding levels are grim; to the point of being virtually non-existent. 2) General Fund operating expenses are outpacing revenues at an alarming rate. While there has been a gap between revenues and expenditures in previous fiscal years, this gap is continuing to grow. The projected 2016 deficit is $2.7 million.

5 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Expenditures Growing Faster Than Revenues During Forecast Period 4.2% 4.0% 1.6% 2.7% 3.8% 3.8% 4.2% 2.8% 2.9% 3.0% Revenue Increase Expenditure Increase

6 How Did We Get Here? Surviving the Recession In retrospect, our financial strategies didn t quite go far enough in matching up changes in revenues with long term changes in expenses. Deferral of capital projects and our use of reserves, and other one time funding sources, was intended to hold us over until revenues bounced back. However, revenues have not returned to pre recession levels and we are left without reserves and other one time money to continue our current standard of living. We were able to cover the first few years but the slow revenue recovery now forces us to confront the expense side of the house and bring it in line with revenue.

7 How We Got Here $10 Million Public Safety Building Economic Recession Taxable value Ad Valorem Revenues Other Revenue Renovation change orders were funded by drawing down capital reserves The Great Recession impacted all revenue sources. Declined almost 20% Dropped by $4.2 M Intergovernmental by $1.6 million Interest Income by $1.2 million Licenses and Permits by $800,000

8 How Did We Make Up For This Revenue Revenue Decline Doubled Solid Waste Franchise Fee Doubled Residential Special Assessment Increased Fines and Forfeitures Doubled revenue by charges to $500,000 other Funds (e.g., W/S, Fire Fund) Landlord Registration for singlefamily homes Charges for Service (by increasing user fees by the rate of inflation) by $140,000

9 Service Levels Did Not Decline Departmental budgets increased by $12.2 million between 2007 (actual) and 2014 (actual) Increase Distribution Line Items (Major Increase) Non salary related items Parks $1.4M Others $1.9M Mowing Contractual Services Police $8.9M Crossing Guards

10 Increased Service Levels Used limited funds for broader purposes 30 additional vehicles added to the Fleet fuel, maintenance, insurance cost increases. Computer Replacement Program used for servers and MS Office license. Facilities Reserve used to cover cost of repairs for AC and roofing that were not high enough priorities to obtain the limited capital funding that was available. Tree trimming equipment purchased from Tree Trust Fund. Part time spending increased 39% from ($585,000). Added 44 full time positions between 2011 and 2015.

11 # of Budgeted Positions More Full Time Employees Despite No Increase In Ad Valorem Revenue Additions to Public Safety Additions to Parks Ad Valorem revenue 2007 = $35.4 M Ad Valorem revenue 2015 Budget = $35.3 M

12 Although Property Tax Revenue Returning to 2007 Level, Property Taxes Make Up Just One Third of Budget $36,000,000 $35,000,000 $34,000,000 $33,000,000 $32,000,000 $31,000,000 $30,000,000 $29,000, Budget Revenue $35,337,291 $33,678,537 $31,880,960 $31,302,051 $31,252,848 $31,142,750 $32,726,176 $33,847,000 $35,299,267

13 Where the Money Comes From 2015 General Fund License/Permits/Misc. 10.4% Property Taxes 34.2% Fines 2.0% Inter-Governmental 18.9% e.g., sales tax, gas tax, communication service tax, E911 revenue Fees for Service 14.0% Utility Service Tax 10.7% Franchise Fees 11.9%

14 Parks & Recreation 13.9% Where The Money Goes CMO/CC 4.0% HR 1.6% City Attorney 1.0% 2015 General Fund Development Services 6.5% Police 44.0% Financial Services 2.4% IT 3.1% Public Works 4.5% Non-Departmental 10.3% EMS 8.7% Public Safety = 52.7%

15 Where The Money Is Allocated By Category 2015 General Fund

16 $9,000,000 Some Demand Driven Revenues Are Beginning to Recover Half Cent Sales Tax Revenue $9,000,000 Electric Utility Service Tax $7,000,000 $7,000,000 $5,000,000 $5,000,000 $3,000, $3,000, $6,000,000 $4,000,000 $2,000,000 State Shared Revenue $6,000,000 $4,000,000 $2,000,000 Solid Waste Special Assessment $ $

17 Others Are Not. $8,000,000 Communication Service Tax $9,000,000 Electric Franchise Fee Revenue $6,000,000 $7,000,000 $4,000,000 $5,000,000 $2,000, $3,000, $4,000,000 $2,000,000 $0 Local Option Gas Tax Revenue $6,000,000 $4,000,000 $2,000,000 $0 Building Permit Revenue

18 Managing Capital The decline in reserves negatively impacts our ability to equity fund capital expenditures. The ability to service debt for capital purchases is limited. Capital projects have been delayed due to limited capital funding but these needs are growing more urgent as maintenance costs rise. Big ticket aesthetic improvements have taken priority over maintaining existing infrastructure. Cost overruns have lead to the need to supplement some projects. GO Bond projects must be closely managed to prevent cost overruns and scope creep.

19 Economic Outlook The Grumpy Cat Recovery

20 7.0% But I Thought The Recession Was Over? While The Great Recession officially ended in June 2009, it didn t end in Florida for another 32 months. 2.0% 3.0% % US Florida Region Citation U.S. Bureau of Economic Analysis: US: Table Percent Change from Preceding Period in Real GDP, (accessed April 10, 2015) FL: GDP by State, Real GDP in Chained Dollars (accessed April 13, 2015) Region: GDP by Metropolitan Area, Real GDP in Chained Dollars, Miami Ft. Lauderdale W. Palm Beach MSA (accessed April 13, 2015)

21 Unemployment Rate Continues to Improve 12% 11.2% 10% 8.9% 9.5% 10.5% 8% 6% 4% 5.1% 5.0% 3.3% 3.4% 5.4% 4.1% 4.7% 7.6% 8.5% 8.8% 8.5% 8.9% 6.8% 8.7% 8.1% 7.5% 5.7% 7.6% 5.4% 5.7% 5.60% 5.50% 5.6% 5.1% 2% 3.3% 3.2% 0% * Coral Springs National Florida Source: FL Dept. of Economic Opportunity Labor Market Statistics 21

22 A Mixed Recovery Translates To Lower Than Average Growth Consumer confidence has not translated to consumer spending. Middle class feeling loss of wealth from home equity and pensions. Unemployment rate is low but more people looking for work keeping a lid on wages. Home prices increasing faster than wages. A strong dollar is holding down export growth. Businesses and investors are taking a wait-and-see attitude regarding these three federal programs, The Affordable Care Act. Dodd-Frank financial regulations. End of Quantitative Easing.

23 What Does This Mean For 2016? Revenues have not returned to pre recession levels. We are left without excess reserves and other one time money for capital expenditures. We will not be able to grow our way to a spending increase. Potential projects on the horizon will not be on line in time to provide relief. In Fiscal 2021 and 2022, the City will pay off loans leaving more than $3 million available for use in the operating budget, about half of which will be used to pay debt service on the Municipal Complex. Therefore, we must focus on controlling expenses and bring them in line with revenues.

24 2016 General Fund Outlook

25 For Your Information Your 2016 Base Budget Includes 4.0% growth in Ad Valorem revenue 4.0% wage increase for all employees Full-time and part-time Uniform and civilian 0% increase in operating budget

26 General Fund Five Year Forecast Pre Budget Comparison $0.0 Starting Point Mar 2014 Starting Point Mar 2015 Deficit (Millions) $2.0 $4.0 $6.0 $8.0 $10.0 $2.7 $4.0 $4.2 $4.6 $5.6 $5.4 $6.2 $6.6 $

27 2016 Budget Process

28 Reminders Staffing If you plan to make a salary adjustment (above the 4%) or are contemplating a reclassification, you must consult with HR first Do not increase the salary on the staffing sheet you received in your Budget Manual it will not be reflected in your final budget. Position reclassifications have been placed on hold pending the outcome of the compensation study. Findings from compensation study unlikely to be reflected in 2016 budget. Only make changes on the staffing sheet if updated information is not reflected.

29 Reminders Information Technology If you plan to recommend a new employee as part of a Business Plan Initiative, you must include the cost of purchasing a desktop, laptop, desk phone, cell phone, and other hardware You must also include cost of software including software licensing and maintenance fees. This includes Microsoft Office and any job specific software. Exception if changing part-time to full-time position (must be a BP initiative) and you already own the software/hardware Grant funded computer purchases are NOT part of the Computer Replacement Plan. If you want them replaced your department must budget the replacement in the CIP or begin paying depreciation.

30 Reminders Information Technology (continued) You must consult with IT before submitting a Business Plan Initiative that requires IT resources and/or expertise You must consult with IT before meeting with a software vendor or purchasing any new software You must consult with IT before you modify any hardware or purchase new hardware

31 Reminders Vehicles To ensure we can purchase new vehicles in a timely manner we cannot make changes to plan once finalized Replacing existing vehicles is funded through the Equipment Replacement Plan The purchase of new vehicles (i.e., those not included in the Equipment Replacement Plan) should be requested in the capital budget process These new vehicles must be included in a Business Plan initiative New vehicles will be added to the Equip. Replacement Plan after the first year which means the department will carry a depreciation charge beginning in year 2.

32 Reminders Grants Make sure to include any matching funds required by a grant even if you do not know whether or not you will receive said grant in your department CIP request Cell phones Charge your cell phone bills to Communications account (41-00 or 41-01) Credit cards When entering credit card charges into H.T.E. make sure to include the item being purchased, do not leave blank

33 The Budget Process 1. Develop your base budget 2. Submit new initiatives (Do not include in base budget) 3. Prepare capital request

34 1. Develop Your Base Budget No (0%) increase in discretionary operating budget an increase in one item must be offset by a decrease in another item(s) Cost-saving or revenue-enhancing steps should be included in line item budget Resetting priorities requires a focus on work flow and outcomes not just line items

35 2. New Initiatives Additional resources will come as the result of a new Business Plan initiative that would allow a Department to: Meet new/specified service levels address a performance gap Requests must be justified in terms of your performance measures/customer expectations

36 2. New Initiatives Initiatives are tangible plans that moves the City s vision toward reality. They direct how you will operate in order to address the Strategic Priorities. Generally projects in which you would expect the Commission to have an interest Tend to involve increase in service levels or providing a new service Additions to staff

37 2. Submit New Initiatives Available performance data include Surveys, SWOC, KIO s, departmental measures, in process measures, industry standards, etc. Performance gap can be addressed with new resources, reallocation of resources, managing expectations, focus on work flow/process Do not include request in your base budget.

38 3. Prepare Capital Requests Carefully review the capital projects you have open to determine which can be closed Ask yourself how many projects your department can realistically complete Capital resources will be extremely limited.

39 3. Prepare Capital Requests Replacement Plans Our specialized funds like Equipment, Facilities, and Computer Replacement only work if we are disciplined in using them as they were intended All computers, cars, equipment for new employees need to be budgeted in the operating budget the first year that employee comes on as a one-time cost associated with that add to staff Nothing new can be purchased out of these funds; only replacements for items that have made a contribution over their useful lives

40 3. Prepare Capital Requests A new process this year is the completion of a CIP Project Ranking Summary. The goal of the CIP project ranking process is to reduce subjectivity when comparing projects and assist in balancing needs and budget with strategic objectives. Only complete this Project Ranking Worksheet for 2016 General Fund capital projects. In other words, this does NOT apply to Fire Fund or Water & Sewer Fund capital projects. Capital projects in the out years (i.e., s ) do not need to have a Project Ranking Worksheet. This new process will be explained at the budget training sessions.

41 2016 Budget Calendar April 15 or 16 April 17 May 5 May 15 June 1st June 24 July 1 & 15 Sept. 11 & 24 Budget Training (attend 1 session) 4/15: 10:00 am, West Wing Conf. Room 4/16: 2:30 pm, West Wing Conf. Room CC Strategic Plan Workshop Budget Package Due to MBO Departmental Meetings with CMO Commission Business Plan Review Workshop (5 p.m.) Commission Business Planning Workshops Public Budget Hearings 41

42 Questions?