2013 Budget Workshop Presentation to Plantation City Council Mayor Diane Veltri Bendekovic Thursday, June 14, 2012
Agenda Agenda Rollback Reality Revenues Reductions Resources Responsibility
How we got here – 2007 “roll back” How we got here – 2007 “roll back” When economy and housing markets fell, we were once hit again (“double whammy”) Amendment One State mandated tax provides additional reforms that required $25,000 Homestead the City to roll back tax Exemption; $25,000 revenues to 2006 levels Tangible Personal with an additional 7% Property Exemption & reduction Portability A “one size fits all” approach that penalized cities like Plantation that have historically low millage rates
Introduction Introduction Going into this budget season … Difficult choices are ahead Reserves can no longer be used to balance budget Cannot rely only on incremental increases in property values Need to find : – $10.1 million to balance budget – $4.1 million for general obligation bond underwriters – $1 million designated capital This is the Reality of SUSTAINING & MAINTAINING Plantation as we know it today
$10.1 million shortfall $10.1 million shortfall Perfect storm of components that make up the gap 12 10 8 6 $10.1 4 $4.1 2 $1.0 0 $4.1 million $1 million needed $10.1 million needed to secure annually in needed to bonds designated balance budget capital
Need $10.1 million to balance the budget Need $10.1 million to balance the budget 12 Revenue sources 10 we can no longer $10.10 rely upon 8 In millions 6 $5.20 4 $2.40 $0.80 $0.21 $1.40 2 $0.10 0 Total Inflationary Reserves no Retirement/ Heathcare Comm. End of decrease cost of longer pension stop/loss tax share amnesty from 2012 doing available increase insurance from state program budget business increase
Need to build up capital Need to build up capital Five years without any significant capital investments Need to start funding capital to maintain the City’s assets and infrastructure Year Capital budget 2008 $2,454,900 2009 $795,900 2010 $565,100 2011 $524,800 2012 $365,133
Reserves used to balance the budget Reserves used to balance the budget 3,500,000 Over $10 million in the last 4 years 3,000,000 $3.0 million alone 2,500,000 $2.5 million $2.4 million $2.3 million 2,000,000 1,500,000 1,000,000 500,000 0
Reserves no longer available Reserves no longer available Need $4.1 million in unassigned reserves for underwriters General fund reserve balances (as of September 30, 2011) 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 $1.2 million 2,000,000 0 Non Restricted Committed Assigned Unassigned spendable
Increase in pension costs Increase in pension costs Pension cost increased $1.4 million General employees – 550 employees – Pension costs totaled $4.96 million – Increase of $800,000 FOP – 137 employees (164 in FOP; 27 already in DROP) – Pension costs totaled $6.07 million – Increase of $600,000 *As of Oct 2011 valuation report
Increase of consumable goods Increase of consumable goods Average retail price of fuel – 2004 to present Nationwide, Florida and locally (Miami)
Increase of consumable goods Increase of consumable goods Cost of living index Increase since 2007 = 9% 250 200 150 100 50 0
Revenue over time Revenue over time Tax base Ad valorem Year General fund Millage rate (property values) revenue 2000 41,791,845 3.7500 4,631,363,344 15,797,700 2001 44,905,526 3.8350 4,928,446,711 17,347,500 2002 51,366,950 4.0000 5,269,827,354 19,605,950 2003 56,929,050 4.0000 5,731,306,593 20,426,150 2004 63,063,500 4.2500 6,203,798,086 23,279,250 2005 68,672,050 4.3500 6,895,063,091 25,690,700 2006 74,222,250 4.5889 7,918,683,869 30,173,550 2007 82,457,200 4.5889 8,671,121,470 34,639,300 2008 81,219,600 3.9155 8,198,630,080 32,271,100 2009 80,554,700 4.0925 7,478,948,210 31,910,200 2010 78,513,650 4.5142 6,647,273,357 32,207,200 2011 77,901,707 4.5142 6,656,786,025 28,876,900 2012 81,141,241 4.6142 6,677,220,055 29,677,628 % change since 2007 -1.6% 0.6% -23.0% -14.3%
Other changes in revenue Other changes in revenue Stop/loss gap insurance – Increase this year of $800K due to 7-8 catastrophic illness claims – Premium last year $500,000; premium this year $1.3 million due to increase in claims Communication tax – $211,000 decrease in revenue – State reduced this revenue source Code amnesty program – $100,000 last year; no longer generating revenue
What’s at stake What’s at stake This Administration’s mission has been to sustain and maintain Plantation as we know it today Residents are used to a certain level of quality customer service For past 5 years, the City absorbed increased operating costs Cannot continue to provide that level of service without additional revenue
General fund expenditures General fund expenditures Expenditures by Category – Personnel costs represent 80.5% of the total General Fund budget Salaries & Benefits Services & Allocated Costs Materials & Supplies Capital Costs Grants in Aid
Expenditures by department Expenditures by department Nearly 50% of the total general fund budget Ad valorem revenue doesn’t even cover the Police budget! Police Parks & Rec Public Works/Central Svcs Office of the Mayor/Admin Information Technology Fire Building Financial Services Planning Zoning & Econ Dev Human Resources Engineering Library/Hist Mus City Clerk Design, Landscape & Const Mgmt
Reductions to date Reductions to date Have already cut one time expenses, such as Plantation Quarterly , “turkey money,” federal lobbyist, etc. Positions eliminated; departments realigned For third year, general employees are not getting an increase Neglecting much needed capital items and infrastructure Opened Employee Health & Wellness Center to help defray insurance costs Eliminated Choice Plus insurance plan for new employees and transferred 99.9% of existing employees into Preferred Choice Plan Implemented Standard Choice Insurance Plan Implemented Tier II pension plan for new employees Implemented benefit reductions and increased employee contribution for health benefits Departmental budget reductions
Bonds needed for capital purchases Bonds needed for capital purchases General obligation bond – $32 million – on hold Utilities revenue bond – $31 million – funding by Utilities, revenue generated 2003 bond – $2.3 million left to be used for Plantation Community Center at Kennedy Park Options: Repair Renovate Replace Remove
Revenue choices Revenue choices We do have choices to garner additional revenue to help balance budget, begin to shore up our designated capital and reserves and demonstrate stability for underwriters Most are not one-time revenue sources – Will help strengthen our financial position, provide for opportunities to fund much needed capital items Provide quality service and facilities that Plantation residents have come to expect
Fire assessment fee Fire assessment fee Most cities charge between $84 and $365 per year Impact per household – $60/year = $5/month (add’l $2.4 million) – $80/year = $6.65/month (add’l $3.2 million) – $100/year = $8.35/month (add’t $4 million) Won’t see impact for 1 year State law allows cities to use fee to pay for salaries – Free up even more general revenue funds Can be used to build new fire station #1, fire services, fire trucks, ladder truck, etc. $80/year will net the City an additional $3.2 million
Grants Grants Recent ARRA grant projects: – Paving of Park East roads ($139,000) – Reverse 911 system and laptops ($111,000) – Park East water lines ($970,539 plus $162,860 City contribution) – Energy Efficiency Team Center ($804,300 plus $1.4 million City contribution) – 84 th Avenue/Enclave wayfaring signage ($3.1 million grant) – Deicke Auditorium ($452,000) Single stream recycling grant ($1.3 million) Grant availability unknown at this time, but we will continue to monitor appropriate sources for additional grant opportunities
Increase millage rate Increase millage rate Property value estimated at $6.76 billion (2.0% increase from last year) Millage rate Revenue generated 4.6142 (current rate) $31,201,823 4.6642 $31,539,930 4.7142 $31,878,036 4.7642 $32,216,143 4.8142 $32,554,249 4.8642 $32,892,356 4.9142 $33,230,463 4.9642 $33,568,569 5.0142 $33,906,676 Just 4/10 mill increase would generate $2.7 million additional ad valorem revenue
Estimated taxes by millage rate Estimated taxes by millage rate $1,200 Comparison shows assessed $250,000 value with $50,000 homestead $1,000 exemption $200,000 $800 $165,000 $1,002.84 $600 $982.84 $962.84 $942.84 $922.84 $752.13 $737.13 $722.13 $707.13 $692.13 $400 $576.63 $565.13 $553.63 $542.13 $530.63 $200 $0 * With a 4/10 mill increase, a homeowner whose house is worth $250,000 w/ $50,000 homestead exemption would pay only $80 more/year
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