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Agenda 02/23/2016 Item #11A 2/23/2016 11 .A. EXECUTIVE SUMMARY Recommendation to adopt the FY 2017 Budget Policy OBJECTIVE: That the Board of County Commissioners (Board) adopt policies to be used in developing the Collier County Government budget for FY 2017. CONSIDERATIONS: In order for staff to begin preparation of the FY 2017 budget, direction is needed from the Board on major policy issues. Attached to this Executive Summary is a listing of pertinent policy issues that will affect preparation of the FY 2017 budget. The budget policy document is broken down into three distinct elements. The first consists of budget policies proposed in FY 2017 that require policy direction from the Board. The second element consists of standard budget policies that the Board has endorsed for a number of fiscal years. The third element consists of a three-year analysis of the General Fund(001) and the Unincorporated Area General Fund(111). Establishing broad goals to guide governmental decision makers is the first of four budget process principles developed by the National Advisory Council on State and Local Budgeting(NACSLB)and endorsed by the Governmental Finance Officers Association(GFOA). The Board needs to establish June budget workshop dates. Tentative dates are Thursday, June 16, 2016 and if necessary Friday, June 17, 2016 with meeting times scheduled from 9:00 a.m. to 5:00 p.m. The Florida Association of Counties annual conference is scheduled for June 28 through July 1,2016 in Orlando(Orange County). For informational purposes, adoption of the maximum tentative millage rates is scheduled for Tuesday, July 12, 2016. The Board is required by Florida Statutes to provide the Property Appraiser with the proposed millage rates by August 1, 2016 in order to prepare the Notice of Proposed Property Taxes. Finally,the Board needs to establish September public hearing dates for the adoption of the FY 2017 budget. The School Board has tentatively scheduled September 13, 2016 for their final budget hearing. Recommended dates for the Collier County budget public hearings are Thursday September 8,2016 and Thursday September 22,2016. LEGAL CONSIDERATIONS: The County Attorney has approved this item as to form and legality. Majority support is required for Board approval.—JAK FISCAL IMPACT: The adopted policies will serve as the framework for the development of budget and ad valorem taxation issues for FY 2017. GROWTH MANGEMENT IMPACT: There is no Growth Management impact. RECOMMENDATIONS: That the Board adopts budget policies as detailed in the attachments to this Executive Summary, establishes June budget workshop dates and September public hearing dates. In addition, the Board needs to adopt the attached Resolution establishing a May 1,2016 deadline for the Supervisor of Elections,the Sheriff's Office and the Clerk's budget submittals. PREPARED BY: Mark Isackson,Director of Corporate Finance and Management Services Packet Page -104- 2/23/2016 11 .A. COLLIER COUNTY Board of County Commissioners Item Number: 11.11.A. Item Summary: Recommendation to adopt the FY 2017 Budget Policy. (Mark Isackson, Corporate Financial Planning and Management Services Division Director) Meeting Date: 2/23/2016 Prepared By Name: Valerie Fleming Title: Operations Coordinator,Office of Management&Budget 2/16/2016 8:48:57 AM Submitted by Title: Operations Coordinator, Office of Management&Budget Name: Valerie Fleming 2/16/2016 8:48:59 AM Approved By Name: KlatzkowJeff Title: County Attorney, Date: 2/17/2016 2:58:34 PM Name: IsacksonMark Title: Division Director-Corp Fin&Mgmt Svc, Office of Management&Budget Date: 2/17/2016 3:04:54 PM Name: OchsLeo Title: County Manager, County Managers Office Date: 2/17/2016 3:51:48 PM Packet Page -105- 2/23/2016 11 .A. RESOLUTION NO. 2016- A RESOLUTION PURSUANT TO SECTION 129.03, FLORIDA STATUTES, REQUIRING THE FY 17 TENTATIVE BUDGETS OF THE SHERIFF, THE SUPERVISOR OF ELECTIONS AND THE CLERK TO BE SUBMITTED TO THE BOARD OF COUNTY COMMISSIONERS BY MAY 1,2016. WHEREAS, Chapter 129, Florida Statutes, addressing the County annual budget, provides specifically in Section 129.03, Florida Statutes, that the Board of County Commissioners may, by resolution,require the tentative budgets of the Sheriff,the Supervisor of Elections and the Clerk to be submitted by May 1 of each year. NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY COMMISSIONERS OF COLLIER COUNTY, FLORIDA,pursuant to Section 129.03,Florida Statutes, that the Sheriff, the Supervisor of Elections and the Clerk of the County of Collier, Florida, are hereby required to submit their respective tentative budgets for the FY 17 fiscal year to the Board of County Commissioners by May 1, 2016. This Resolution shall be effective on its adoption. This Resolution adopted this 23"I day of February, 2016, after motion, second and majority vote. ATTEST: BOARD OF COUNTY COMMISSIONERS DWIGHT E. BROCK, Clerk COLLIER COUNTY, FLORIDA By: Donna Fiala, Chairman Appr eve - as to form and lega su: i ncy: rt It Jeffro�, • Klatzkow Count'\ torncy Packet Page -106- 2/23/2016 11 .A. NISPe Fiscal Year 2017 Proposed Budget Policies Collier County Board of County Commissioners February 23, 2016 Historically, the annual budget policy approved by the Board of County Commissioners (Board), has consisted of three (3) sections which are "annual budget policies to be adopted" "continuing budget policies to be reaffirmed" and a "three year forecast for the General Fund and the Unincorporated Area General Fund". Policy recommendations are highlighted in gray. While it is suggested that this format continue, the policy document will also cover significant budget influences and discuss the strategies which may be utilized to address these influences as the budget document evolves for FY 2017 and beyond. The FY 2017 budget will be prepared within a stable local and regional economic environment where all housing, employment and demographic indicators point to continued growth. Taxable Value County wide has increased for four (4) consecutive years. Median home prices continue to outpace state and national averages, visitation to the destination is at record highs, new construction permitting remains robust and the County's unemployment rate is dropping. While these are positive economic signs, caution must prevail in budgeting for continued recurring operational expansion without considering alternatives designed to reduce the County's exposure in the event of an economic downturn. This is especially true as the County continues to fund deferred asset replacement and maintenance which will be given top priority in FY 2017. The FY 2017 budget must strike a reasonable balance between funding for recurring operational expenses and the urgent need to fund replacement capital infrastructure and maintenance as well as new capital initiatives. Capital and operational competition for limited resources will place continued pressure on the General Fund (001) and Unincorporated Area General Fund (111). That said, the budget document must continue to remain flexible - a key component of the budget management process. Anticipating and planning for potential new Board policy initiatives is an important part of FY 2017 budget planning. These initiatives may include; restarting the median landscape program, expanded storm-water improvements, impacts from any new policy or increased service level directives (e.g. EMS), and AUIR/CIE obligations. Controlling operating expenses will be discussed not only for ad valorem supported operations but also enterprise operations in the form of working capital requirements consistent with Government Finance Office Association (GFOA) guidelines. On the revenue side, any introduction of new revenue sources which the Board may consider would likely be earmarked for specific capital initiatives. The issuance of new debt will be discussed in the policy document. Short term commercial paper and long term bonded debt will be previewed with the option to fund various general governmental and transportation network new capital and replacement capital projects. Continuing the transition out of the worst recession in 80 years, our core conservative values must continue to guide our budget planning as we prepare the FY 2017 fiscal plan. Packet Page -107- 2/23/2016 11 .A. Annual Budget Policies Adopted Significant Budget Influences: Each fiscal year based upon fiscally conservative budgetary guidance, limited resources are allocated to competing services, programs, projects and capital initiatives. Within the pyramid of service and program delivery, significant resources have and will continue to be been devoted to public safety, public health, debt management and replacement of priority mission critical infrastructure and equipment. Ad valorem taxes will once again dominate the County's budgetary revenue mix — comprising about 43% of total net annual operating revenue and 67% of General Fund revenue sources. Seventy nine (79%) of General Fund revenue is comprised of property taxes, sales tax and state shared revenue. Sources of Current County Government Operating Revenues all Funds(FY 2016) FY 2016 General Fund Revenue Sources Service Ad Valorem Charges Impact Fees 67% Intergov'taI 32% 5% Revenues Bond Sales Tax 2% Proceeds/ 10% Interest 1% State Revenue Transfers from Sharing Consitutional 2% Officers Intergov'tal Permits/ 2% Interest Revenues Assessments Interfund Carryforward &Misc. 0% Fines Ad Valorem Transfers and 13% 0% Fines,Permits, 8% Gas/Sales Tax 43% Payments Charges 9% 3% 3% Property Tax by Major Funds General Fund MSTU's 3% 86% rv. Pollution Control 1% Unincorporated Area General Fund 10% Thus, significant attention is paid to ad valorem taxes and those factors that can influence millage rate and tax levy decisions. For FY 2017, significant influences and potential strategies include; • Extent of capital, debt and operating transfer dollars appropriated by the General Fund (001) and Unincorporated Area General Fund (111). Maintain a millage neutral General Fund (001) position within an increasing taxable value environment to capture additional levy dollars. Pursue strategy which resets the Unincorporated Area General Fund tax rate to $.8069 — an increase of$.0908 — with additional levy dollars dedicated exclusively to restart the landscape capital program (discussion to follow). 2 Packet Page -108- 2/23/2016 11 .A. • Proper level of resources to cover the organizations priority asset maintenance and equipment replacement obligation. Competing priorities between operating and capital programming remains a challenge within a revenue structure heavily reliant upon property taxes. • General Fund and/or Unincorporated Area General Fund support for new or re-prioritized operating and capital programming such as storm-water, landscaping, asset management, equipment replacement, EMS helicopter, ambulances, EMS Station, Constitutional capital, Project (25) digital enhancements to the public safety radio system, impact fee policy initiatives and, changes in service levels. • Ability/desire to transition from the current pay go capital funding approach connected with some or all of the above initiatives and new initiatives to debt financing. • Level of General Fund operating and capital support extended to Constitutional Officers. • Protecting the beginning General Fund and Unincorporated Area General Fund cash balance. • Continue strategy growing General Fund reserves. • Maintaining the County's investment quality credit rating. • Balancing modest discretionary operational spending increases to agencies and departments which are funded within the General Fund and Unincorporated Area General Fund with a continuing commitment to high priority public health and safety programs, asset maintenance and replacement, and non discretionary expenses such as health insurance, fuel, and utilities. • Focused enterprise budget parameters tied to best practice working capital guidelines, capital obligations from the capital improvement element (CIE), adherence to rate or fee study stipulations, and priority agency wide initiatives. • Continued investment in the County's work force especially in a strong economic environment where competition within the skilled trades and various professional subsets intensifies. • Impacts of potential unfunded mandates including continued state legislative attacks to limit a counties ability to raise property tax revenue and repeated attempts to alter existing shared revenue sources like the Communication Services Tax; potential mandates to require law enforcement officers to wear body cameras; further reductions in state health care funding as well as ongoing federal mandates like the Affordable Care Act (ACA)which affects a counties health insurance eligibility requirements. • Extent of capital, debt and operational transfer dollars expended by the General Fund and Unincorporated Area General Fund. • Non ad valorem revenue collections to support operations such as sales tax, state shared revenues and departmental revenue from general fund operations. 3 Packet Page -109- 2/23/2016 11 .A. Taxable Value and Millage Targets for the General Fund (County-Wide) and Unincorporated Area General Fund While four (4) consecutive increases in county-wide taxable value since FY 2013 is good news, continued increases as projected by the State over the next three (3) years through FY 2019 at an average rate of roughly seven (7) percent annually would eliminate the remaining tax base loss of$12.4 billion which remains from the economic collapse and housing bubble. This tax base loss represents about 15% of the $82.5 billion taxable value recorded in FY 2008. Based upon the current General Fund millage rate, the current tax base loss equates to $44.4 million. The following table provides a history of General Fund (county wide) and Unincorporated Area General Fund taxable value over the past nine (9) years (tax year 2007-2015) as well as the budget planning projection for tax year 2016 (FY 2017). County Wide County Wide Unincorporated Unincorporated Tax Year Taxable Value % inc.(dec) Area Taxable Value Area%inc. (dec.) 2007(FY 2008) $82,542,090,227 $53,397,231,747 2008(FY 2009) $78,662,966,910 (4.7%) $50,860,023,424 (4.8%) 2009(FY 2010) $69,976,749,096 (11.0%) $44,314,951,279 (12.8%) 2010(FY 2011) $61,436,197,437 (12.2%) $38,146,886,403 (13.9%) 2011 (FY 2012) $58,202,570,727 (5.2%) $36,013,774,963 _ (5.6%) 2012(FY 2013) $58,492,762,303 .50% $36,026,786,779 .04% 2013 (FY 2014) $60,637,773,315 3.7% $37,207,018,234 3.3% 2014(FY 2015) $64,595,296,747 6.5% $39,634,174,211 6.5% 2015(FY 2016)October DR 422 Pre-VAB close (not final) $70,088,827,067 8.5% $43,076,754,259 8.7% 2016(FY 2017)Projected $74,995,044,962 7.0% $46,092,127,057 _ 7.0% The December 2015 State Ad Valorem Estimating Conference Report was released in January 2016 for the 2016 tax year (FY 2017). The report projects that Collier County taxable values on July 1, 2016 will increase 7.5%. For budget planning purposes at this time a 7.0% positive taxable value adjustment will be used. Any positive difference in taxable value above the planning threshold and the resulting increase in ad valorem revenue can be applied to General Fund and Unincorporated Area General Fund reserves and/or competing operating and capital programs and services as directed by the Board. The General Fund and Unincorporated Area General Fund tax or "millage" rate has varied over the years and has been influenced by the taxable value environment and State legislation. Tax or "millage"rates for the past eleven(11) years are shown in table form below. Millage Area FY 06 FY 07 FY 08 FY 09 FY 10-FY 16 General Fund $3.8772 $3.5790 $3.1469 $3.1469 $3.5645 Unincorporated $.8069 $.8069 $.6912 $.6912 $.7161 Area 4 Packet Page -110- 2/23/2016 11 .A. The following table depicts taxable values and levies at increases of four (4), six (6), seven (7), eight (8) and nine (9) percent assuming a millage neutral General Fund tax rate. The County Manager is recommending to reset the Unincorporated Area General Fund tax rate to $.8069 (the FY 2007 level) with the incremental rate above current millage neutral or $.0908 earmarked to restart the unincorporated area median landscape capital program, consistent with the Board's direction from the Median-Landscape Capital Workshop on October 6, 2015. The respective unincorporated area dollar values at a millage neutral tax rate and that tax rate connected with the landscape capital restart at the various taxable value scenarios are shown below. Current FY 2017 @4% FY 2017 @6% FY 2017,417% FY 2017 @8% FY 2017 @9% Tai4k g, lue Policy Planning Numbers General Fund $70,088,827,067 $72,892,380,150 $74,294,156,691 $74,995,044,962 $75,695,933,232 $76,396,821,503 Unincorporated Area $43,076;784;259 $44,799,824,429 $45,661,359,515 $46,092,127,057 $46,522,894,600 $46,953,662,142 General Fund Current l evyy General Fund $249,833,624 $259,824,889 $264,821,522 $267,319,83$ $269,818,154 $272,316,470 Unincorporated Area $30;847;264] $32,081,154 $32,698,100 $33,006,572 $33,315,045 $33,623,517 GF(millage neutral) Unincorporated Area $36,148,978 $36,844,151 $37;191,737 $37,539,324 $37,886,910 GF(at FY 07 level of $.8069) Levy Variance Levy Variance Levy Variance Levy Variance Levy Variance General Fund $9,993,265 $14,989,897 $17,488,214 $19,986,530 $22,484,846 (millage neutral) Unincorporated Area $1,233,891 $1,850,836 $2,159,308 $2,467,781 $2,776,254 GF(millage neutral) UeincorporatedArea $4,067,824 $4,146051 $4;185„165 $4,224,279 $4,263,393 Landscape Capital restart at($.0908) Should a majority of the Board direct staff to budget and plan for an increase to the Unincorporated Area General Fund (111) tax rate in the amount shown above to restart the landscape capital program, a typical unincorporated area property owner would expect an increase of$27 to the property tax bill assuming a $300,000 property. This equates to roughly $2.27 per month. If taxable values fall below the 7.0 percent planning scenario, budget planning will be reduced accordingly. Conversely if taxable values exceed the planning benchmark, additional ad valorem dollars can be used to increase reserves and/or applied to programs and services as directed by the Board. It is likely that budgeted ad valorem revenue will be millage rate driven rather than a strategy of setting the millage rate based upon a targeted ad valorem revenue number. The County Manager is proposing to submit one FY 2017 millage neutral General Fund budget along with service level and related budgetary and millage implications. Holding the General Fund millage rate at $3.5645 for the eight (8th) consecutive fiscal year in FY 2017, (millage neutral scenario) under an increasing taxable value planning scenario will result in targeted and measured divisional operating increases coupled with an ability to continue systematically replacing much needed equipment and asset maintenance deferred during the economic recession. 5 Packet Page -111- 2/23/2016 11 .A. Proposed guidance for the Unincorporated Area General Fund includes resetting the millage rate to $.8069 (the rate in FY 2007) and earmarking $.0908 or the marginal increase above the current millage rate to fund a restart of the median landscape capital program. This millage rate was lowered in FY 2008 due to property tax limiting legislation passed by the State. The existing millage rate of$.7161 will be used to fund existing and expanded operations as well as capital transfers. It is anticipated that elimination of the median landscape capital backlog will take at least four(4) years to complete at $4 million per year. Thereafter, the Board could adjust the millage rate to that equivalent level necessary to raise an amount required to maintain the constructed capital landscape asset or redirect property tax dollars to priority programs and services. Increasing operating expenses are expected and will be appropriated to account for new programs and services instituted during FY 2016, inflationary adjusted fixed costs and maintaining a competitive compensation package. The December 2014 over December 2015 CPI is 1.6 percent. A component increase of 3% devoted to operations at the department level is planned. This means that department operations for FY 2017 which rely on the General Fund and Unincorporated Area General Fund for dollars will be restricted to a two and one half percent (2.5%) increase for current programs and services. This includes operating transfers. For FY 2017, the percentage operating adjustment will be translated into a dollar value for each department head to allocate as priorities dictate. Regarding expanded service and program requests, departments will be restricted to one half of one percent(.5%) and the equivalent dollar value will be provided to each department head for distribution as priorities dictate. A significant portion of remaining budget planning dollars will be applied to Agency wide capital equipment and asset replacement. This will manifest itself primarily through General Fund capital transfers for general governmental and constitutional facilities, transportation, parks, storm-water and heavy equipment. For the second time since FY 2009, no mid-year operating cuts are contemplated in FY 2016. This does not mean that management of the budget will cease. To the contrary, close expenditure controls are always in place and monitored continually. Likewise, execution patterns are scrutinized along with transfer dollars to make sure that appropriations are properly executed and spent for the intended purpose. The table on the top of page 7 identifies the level and extent of adopted and mid-year budget reductions since FY 2009. Between FY 2009 and FY 2014 mid-year budget cuts and/or transfer adjustments based upon execution patterns were necessary to achieve a millage neutral tax rate budget during taxable value declines and maintain adequate General Fund cash balances consistent with an investment quality credit rated organization. 6 Packet Page -112- 2/23/2016 11 .A. General Fund Budget Reductions $30 $20 $10 . so ILJ1111 -.116 o -$10 ���� E -$20 Total Reductions -$30 $71,917,200 — FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 Changes in the Adopted Budget E Mid-Year Budget Reductions While it is important to continue the recovery process from significant budget reductions necessitated by the economic recession, this recovery and the level of dollars devoted to replacing deferred assets must be measured against the continued need to maintain prudent reserve levels; protect against any revenue shortfalls; guard against any assault by the state legislature on the ad valorem and general county tax/revenue structure; and fulfill public expectation to maintain/enhance service levels. Maintaining sufficient General Fund and Unincorporated Area General Fund equity is always a major focus and that beginning year cash balance by policy is a minimum of 10% of actual expenditures. Given our current general governmental budgeted reserve levels, it has been necessary to maintain a cash position in these general governmental funds at around 20% or between$55 million and $59 million within the General Fund. The following table presents the estimated backlog of various categories of deferred general governmental asset maintenance and or replacement between FY 2007 and FY 2012 during the economic recession. These deferrals summarized below include facility infrastructure maintenance; park infrastructure maintenance; storm-water maintenance and; road maintenance where the primary funding source is the General Fund and Unincorporated Area General Fund. Vehicles and heavy equipment backlog as well as future replacement acquisitions are being addressed through the motor pool replacement funds and related charges to division budgets which restarted in FY 2016. Category Growth Management Public Services Administrative Total Services Vehicles and Equipment $5,246,000 $1,456,000 $2,053,000 $8,906,000 Governmental Facilities and Infrastructure Assets $0 _ $5,625,000 $18,860,000 $24,485,000 Storm-Water $9,550,000 $0 $0 $9,550,000 Road Maintenance $7,629,700 $0 $0 $7,629,700 Total $22,425,700 $7,081,000 $20,913,000 $50,570,700 A detailed breakdown of the general governmental asset maintenance and replacement backlog will be developed for Board review at the June workshop similar to last year. This detailed table will show the FY 2017 backlog; the dollars budgeted in FY 2017 to reduce the backlog and the estimated FY 2018 roll over amount. Generally, the beginning FY 2016 backlog number of $41.2 million was reduced during the FY by$8.6 million. 7 Packet Page -113- 2/23/2016 11 .A. While the FY 2016 deferred maintenance and replacement general governmental capital inventory was reduced in accordance with our planning scenario, the FY 2017 planning number has grown reflecting additional capital items not previously identified in certain departmental areas. The total FY 2017 backlog value is estimated to increase $9.4 million from last year's planning number of$41.2 million. For FY 2017, funding will be earmarked for priority backlog vehicles, equipment and infrastructure. Once again, budget savings from fuel purchases budgeted within each user division will be calculated and savings will be transferred to the respective motor pool capital replacement funds for use in augmenting deferred equipment purchases assigned to that user division in FY 2017. The general governmental savings (excluding transit and enterprise operations) is estimated at approximately $897,000 and will serve to reduce the vehicle and equipment backlog shown above. Fuel savings across all funds is approximately$1,375,000. Staff is planning to increase the allocation devoted to deferred capital maintenance and replacement from $8.5 million to between $12-15 million per year. Under this strategy, the majority of deferred general governmental capital maintenance and replacement will be addressed over a five (5) year time horizon. This increased annual planning set aside would start to address the rollover adjustment that exists from one year to the next. Management recognizes that a certain level of backlog will always exist and this methodical pay as you go strategy is predicated on addressing mission critical equipment and infrastructure first followed by general capital categories. The following table provides a description of what is currently planned in FY 2017 from the General Fund budget to support ongoing and new capital requirements; continue to address part of the backlog described in the previous table; and fund growth and non-growth debt obligations. Category Non Growth Loans to Loans to County Transfer Transfer to Transfer to Transfer to Total General Debt Impact Fee Impact Fee Wide for other Roads Storm- Parks Fund Funds- Funds- Capital Capital Water Debt Projects FY 2014 $3,657,700 $4,342,300 $0 $6,841,400 $3,800,000 $8,768,800 $4,730,100 $0 $32,140,300 FY 2015 $3,079,600 $3,307,100 $7,813,200* $7,788,600 $3,441,200 $9,499,900 $4,627,600 $500,000 $40,057,200 FY 2016 $3,077,500 $5,376,500 $900,000* $10,677,500 $4,020,000 $14,559,800 $1,549,600 $750,000 $40,910,900 FY 2017 $3,075,800 $3,438,800 $0 $11,356,100 $4,020,700 $14,560,000 $1,550,000 $1,000,000 $39,001,400 *FY 2015: EMS Station,SOE Complex,and Sheriff Substation. FY 2016:Additional funding for Sheriff Substation Strong capital contributions have recently been appropriated within the Unincorporated Area General Fund to augment the County's commitment to capital programming. The following table depicts these capital contributions. Category Unincorp. Transfer Transfer to Transfer Total Area General Fund to Roads Storm-Water to Parks FY2014 $0 $1,300,000 $0 $1,300,000 FY 2015 $3,860,000 $1,050,000 $500,000 $5,410,000 FY2016 $2,427,800 $4,011,800 $500,000 $6,939,600 FY 2017 $3,000,000 $4,350,000 $750,000 $8,100,000 Non growth related debt serviced by legally available non- ad valorem revenue from the General Fund remains relatively flat year over year reflecting the various debt restructurings approved by the Board. Through the County's debt restructuring and normal debt retirement, non growth related annual revenue bond debt service paid from the General Fund has decreased 62% or over $5.1M since FY 2010 when the debt restructuring initiative began. 8 Packet Page -114- 2/23/2016 11 .A. Cumulatively across all debt types (General Governmental and Business), non growth related annual debt service has dropped 35%. The FY 2017 impact fee loan figure is decreasing primarily due to the recent spike in impact fee receipts. County-wide capital allocations have traditionally included new money components for general governmental capital projects as well as maintaining and replacing existing general governmental infrastructure. The following chart provides a summary description of dollars programmed and subsequently forecast for transfer in FY 2016 versus dollars planned for FY 2017 by category. General Fund Supported Capital FY 16 Budget FY 16 Forecast FY 17 Budget Category Sheriff Orange Tree Sub-Station $900,000 $900,000 $0 Helicopter $2,000,000 $2,000,000 $2,000,000 Jail Repairs $664,200 $664,200 $650,000 Sheriff's replace accounting system $1,000,000 $1,000,000 $0 800 MHz $6,200,000 $6,200,000 $2,400,000 State&Regional Eco Development $475,000 $475,000 $500,000 Library Capital/Books $350,000 $350,000 $450,000 General Building and A/C Repairs $1,500,000 $1,500,000 $4,500,000 Other General Governmental $488,300 $488,300 $2,856,100 Park Capital(includes Goodland payment) $1,070,000 $1,070,000 $1,320,700 Museum Capital $200,000 $200,000 $200,000 General Governmental Vehicle $1,500,000 $1,500,000 $1,500,000 Replacement Supplement Total $16,347,500 $16,347,500 $16,376,800 After setting aside the first $2,000,000 in FY 2015, a total of $6,000,000 is available at the beginning FY 2017 (October 2016)to purchase a new helicopter. Funds continue to be set aside for the phased upgrade of the county-wide public safety communication system. In total, $16,100,000 will be devoted to this project as follows; in FY 2014 and FY 2015 $1,500,000 and $3,900,000 was allocated respectively. Continuing along the planned five (5) year phased implementation schedule, $6,200,000 is allocated in FY 2016, while $2,400,000 and $2,100,000 is planned for FY 2017 and 2018 respectively. As the project moves toward completion and project execution patterns are monitored, budget will be sized appropriately by FY to close the project out. Again, this follows the philosophy of not moving money out of the General Fund until and unless execution on those transfer dollars will occur in the FY. Funding for transportation related system improvements and related operations from the General Fund and Unincorporated Area General Fund will increase modestly in FY 2017 under the current planning scenario from that budgeted in FY 2016 by $806,200 to $49,703,500. Of course the allocation may change as the FY 2017 budget evolves leading into the June workshop. This allocation includes dollars for road resurfacing, intersection improvements, bridges, storm- water, landscape maintenance and operations, and general maintenance of infrastructure network. Management has the flexibility to allocate these General Fund and Unincorporated Area General Fund transfer dollars to mission critical projects or initiatives at the expense of those efforts not deemed a high priority. 9 Packet Page -115- 2/23/2016 11 .A. This has and will continue to be the management strategy given the competition for general government resources, planned cuts in the communication services tax and heavy reliance upon property taxes. Gas tax dollars within Gas Tax Fund (313) totaling $1,000,000 annually have been freed up and are available for system maintenance and improvements above that transferred from the General Fund and Unincorporated Area General Fund beginning in FY 2015 due to restructuring of the gas tax debt at substantially lower interest costs. These gas tax dollars not devoted to paying debt service will be available annually until the debt expires in 2025. The requirement to pay Marco Island $1,000,000 by agreement ends in July 2017 freeing up gas tax dollars in FY 2018 for system maintenance and improvements. Overall, capital transfers from the General Fund and Unincorporated Area General Fund to all program areas have increased if you include all one time and ongoing equipment replacement fund contributions. Sheriff Capital until otherwise known is planned consistent with the AUIR. Existing capital projects like the Sheriff's ops facility,jail A/C repairs and Sheriff's accounting system are in progress and no new money has been allocated in FY 2017. The Governor will likely propose $1 billion in state tax cuts according to news accounts. Staff will monitor the nature and extent of any cuts that affect state shared revenue streams (like the Communication Services Tax—CST) as bills move through the legislative process. On the ad valorem tax front, SB 1222 has been filed which would restrict a local government's ability to levy property tax revenue. A similar bill HB 1015 has been filed in the House. Essentially the legislation, under a simple majority local government vote, would limit millage rates to what was levied the previous year (the Rolled Back Rate) modified for the some growth factor such as per capita Florida personal income. A millage rate above the state imposed maximum rate could only be levied by a 4/5`h's vote or unanimous vote. If this type of legislation was in effect for FY 2016, and if the Collier County Board only approved a General Fund millage rate by simple majority, the millage neutral rate of$3.5645 would have been reduced to $3.4186 resulting in a levy loss of$10.2 million. According to the Florida League of Cities, Inc. — Department of Financial Services — "virtually every local government service was substantially reduced more than public safety since 2008...and 43-44% of all property taxes levied now pay for schools due to the Legislature's shift in funding". That percentage figure is spot on for Collier County when looking at the proportionate share of an unincorporated area property owner's residential tax bill. All thirty eight (38) non distressed Florida counties have been subject to a revised and arbitrary annual Department of Juvenile Justice (DJJ)funding formula for payment of juvenile detention costs since 2004. Between 2009 and 2013, the DJJ calculated the counties share at 75% based upon annual estimated costs with counties then subject to a lump sum true up bill at the end of the billing cycle. In 2013, the Ft District Court of Appeals upheld an administrative law judge ruling that the cost shift was not justified based upon the law. Thereafter Gov. Scott and the DJJ settled upon the current formula which assesses counties 57 percent of the costs which counties contend is still too high. A second point of DJJ dispute are the overbilled amounts due counties from previous years (2008-2013) based upon the flawed funding formula described above which amount to millions of dollars. Collier County is owed roughly$5.7 million. 10 Packet Page -116- 2/23/2016 11 .A. Based upon discussions, efforts to address the dollar backlog in legislation may range from due nothing and the counties are left with no recourse to instituting some type of credit system over time. Last year, the legislation to settle this continuing unfunded mandate failed. Optimistically, enough pressure may be applied to finally resolve this matter through legislation. The legislature will consider a 50/50 annual cost distribution to pay for juvenile detention costs based upon the previous year's actual costs. This proposed legislative solution will likely not address the millions in overpaid county contributions. The Florida Association of Counties has identified this matter as an extremely high priority. Recommended Board Policy: Develop a General Fund (001) budget at millage neutral and provide the Board with a summary divisional description of what millage neutral purchases in terms of services and the progress made in devoting dollars to asset maintenance, equipment replacement and capital initiatives planned within the AUIR. Approve guidance for the Unincorporated Area General Fund (111) which includes resetting the millage rate to $.8069 (the rate in FY 2007) and earmarking $.0908 or the marginal increase above the current millage rate to fund a restart of the median landscape capital program. Remember that the Unincorporated Area General Fund millage rate was forced lower in FY 2008 due to state property tax limiting legislation. The existing millage rate of$.7161 will be used to fund existing and expanded operations as well as capital transfers. General Fund Budget Allocations by Agency and Component The purpose of this allocation is to identify those agency appropriation components within the General Fund. All agencies work diligently with the County Manager in support of budget policies adopted by the Board. Equally important is the premise that all agencies would share in any budget reductions necessitated by taxable values below the planning threshold, reductions in property tax revenues, new state tax reform initiatives, reductions in state shared revenue and unfunded mandates. FY 2016 Percent of General Fund Budget Property Appraiser 2% Clerk of Courts 2% Sheriff 43% Courts 1% Supervisor of 8% ° Elections 1% Reserves 8% � . Debt/Capital Tax Collector 3% Subsidy 6% BCC/Co Road Program County Attorney 3% Subsidy 4% Managers Agency 27% 11 Packet Page -117- 2/23/2016 11 .A. Considering that transfers to the Constitutional Agencies in FY 2016 account for 52% of total General Fund budgeted expenses and 75% of the General Fund ad valorem budgeted revenue, their participation in any necessary reductions due in part to unexpected ad valorem revenue shortfalls or unforeseen unfunded mandates is essential. It should be noted that these expense percentages are gross figures and do not account for statutorily required year ending constitutional officer turn back. This turn back revenue is budgeted and forecast each year. Constitutional turn back revenue totaled $7,922,885 and $7,659,792 respectively across all funds for years ending FY 2014 and FY 2015. The General Fund receives roughly 91 percent of all turn back revenue. Turn back by the Tax Collector accounted for 72% of all turn back revenue in FY 2014 and 83% of all turn back revenue in FY 2015. Recommended Budget Policy: Continue this policy. Millage Targets for Collier County MSTU's/MSTD's MSTU's are created by ordinance and generally there are provisions governing the maximum millage rate that can be levied. Local ordinance is the control, even if the rolled back rate exceeds the ordained millage cap. There are twenty two (22) dependent MSTU's or MSTD's active under Collier County's taxing umbrellas. Of these, thirteen (13) have advisory boards which provide recommendations to the Board of County Commissioners. Recommended Budget Policy: For FY 2017, it is suggested that those MSTU's/MSTD's without advisory board oversight be limited to a rolled back millage rate position unless staff presents a compelling reason for additional funds during budget presentations. Additionally, it is suggested that MSTU's and MSTD's with advisory board oversight be allowed to consider tax rate options ranging from tax neutral (rolled back rate) to `village neutral depending upon program requirements and taxable values with specific advisory board recommendations offered during the budget review cycle. Revenue Centric Budgets It is generally recognized that all budgets and expense disbursements regardless of fund or activity are revenue and cash dependent. This concept establishes that enterprise funds, internal service funds, certain special revenue funds and other operational funds which rely solely on fee for service income with zero reliance upon ad valorem revenue should be allowed to establish budgets and conduct operations within revenue centric guidelines dictated by cash on hand and anticipated receipts. For FY 2017,the following budget priorities must be satisfied for enterprise operations; working capital guidelines established through policy or best practices; capital obligations from the capital improvement element (CIE); any fee or rate study expense stipulations;priority agency wide initiatives; any statutory or ordinance spending restrictions. This concept also presumes continual monitoring of cash and receipts and, if necessary, subsequent operational adjustments dictated by cash flow. As such, ad valorem agency limitations suggested above will not apply. 12 Packet Page -118- 2/23/2016 11 .A. Certain cost centers or functions have a net cost to the General Fund (001) or Unincorporated Area General Fund(111). In these instances where fee for services offset the ad valorem impact, then the budget reduction guidance should account for this positive impact upon the net cost to the General Fund (001) or to the Unincorporated Area General Fund (111). Under this revenue centric approach, Departments will be held to their fee for service projections and any negative fee variances will be addressed through service cuts and not subsidized by Ad Valorem taxes. Department Head discretion upon guidance by the County Manager should be afforded in these scenarios. Recommended Budget Policy: Adopt this Enterprise Fund and revenue centric budget policy. Expanded Positions The County Manager's Agency added 62.25 FTE's to the operation between adoption of the FY 2015 budget and adoption of the FY 2016 budget. These positions were distributed relatively equally throughout the agency reflecting the continued need to invest in human capital among various strategic position categories to address ongoing service demands and agency initiatives. We are faced with the continuing challenge of conducting the business of government within the context of evaluating strategic organizational efficiencies and re-alignments required to match service demands with available resources. Consequently, as part of any decision to make major organizational, service or other changes, proper analysis is undertaken. This analysis includes review of the customer needs, the organizational structure, the underlying processes and service delivery models and the proper full time equivalent employee mix. Outcomes include Avok streamlined business processes, elimination of any wasted effort in the processes, and a management and staffing structure that is expected to be able to deliver the required services. For FY 2017, expanded positions will be limited to mission critical functions such as but not limited to capital project execution, asset maintenance and replacement execution, asset management implementation and front line service delivery. Expanded positions and programs will be reviewed by the County Manager and his recommendations will be presented as part of FY 2017 budget workshop discussions in June. Recommended Budget Policy: Expanded position requests will be limited to mission critical functions, fully vetted with the Board and enumerated within the Budget document including details of expanded operational costs and any offsetting program revenue. Compensation Administration The philosophy of Collier County Government is to provide a market-based compensation program that meets the following goals: 1. Facilitates the hiring and retention of the most knowledgeable, skilled and experienced employees available. 2. Supports continuous training,professional development and enhanced career mobility. 3. Establish equitability in position pay ranges and to rates paid incumbents in those positions 4. Recognizes and rewards individual and team achievements. 13 Packet Page -119- 2/23/2016 11 .A. The Consumer Price Index 12 month percent change from December 2014 to December 2015 is 1.6% for the Miami-Fort Lauderdale area. This is one of the indices that Collier County l! traditionally uses when considering a general wage adjustment. The annual Florida Relative Price Index, an index comparing the relative cost of living among the State's 67 counties, is also used as a basis for compensation plan recommendations. Similar to last year, rather than waiting to appropriate dollars for a compensation adjustment on an event driven basis, the County Manager proposes to appropriate dollars for the adjustment as part of budget planning for FY 2017 with the recommended structure submitted for Board consideration at the June Workshop meeting. For FY 17, the County Manager is recommending a 3% general wage adjustment in an effort to remain competitive in a highly aggressive labor market and recognize existing employees for their continued commitment, service and loyalty to the agency. This proposed adjustment also represents an effort to regain certain payroll buying power which was eroded through introduction of an FRS payroll deduction, previous health insurance co payment increases and the three(3)year absence of salary increases as depicted in the summary table below. As point of reference, the FY 16 Pay and Compensation Plan was also funded at the 3% level with allocations split between a 1.5% general wage adjustment and targeted market based pay plan adjustments to designated positions that were out of alignment with the recommendations of the compensation plan review completed by Cody and Associates. Overall FY 16 adjustments to the compensation plan totaled approximately$3,100,000. ' Recommended Budget Policy: Appropriate dollars equivalent to a 3% general wage adjustment as part of FY 2017 budget planning and that the structure of such adjustment be submitted by the County Manager for Board consideration at the June workshop meeting. In previous years the Board of County Commissioners has authorized adjustments to the compensation plan as shown within the following table.; Program Component FY 07 FY 08 FY 09 FY 10— FY 13 FY 14 FY 15 FY 16 FY 17 FY 12 Recommended General Wage Adjustment 430% 4.10% 420% 0.00%% 2.00% $1,000 2.00%/ 1.50%/ 3.00% $1,000 $1,000 Awards Program 1.50% 1.50% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% Pay Plan Maintenance 0.25% 0.25% 0.00% 0.00%; 0.00% 0.00% 0.00% 1.50% 0.00% Total 6.45% 5.85% 4.20% I 61 2.00% $1,000 2.00% 3.00% 3.00% Health Care Program Cost Sharing The County is self funded and seeks to operate the health plan with the same diligence as a small insurance company. Like an insurance company, the County faces a significant budget risk within the health plan due to the potential for a statistical claim cost variance of 10% around the expected mean claims cost. Such variance is normal statistically and has its roots in the fact that total medical costs are extremely sensitive to the number of claimants who experience catastrophic losses. The expected number and size of large claimants is by nature extremely random and volatile. To manage and prevent this variability, the County reinsures catastrophic losses and maintains a prudent reserve to comply with Florida Department of Insurance requirements as well as to protect the General Fund from this volatility. 14 Packet Page -120- I 2/23/2016 11.A. There are several goals that guide how the County operates the plan within the small insurance company context. These are: 1. Comply with all legal and regulatory requirements for plan operation 2. Manage plan cost trends to be 30% or more below published trends 3. Maintain overall controllable expenses,reinsurance costs, network fee arrangements and reserves at prudent levels 4. Protect our employees from the economic impacts of illness or injury 5. Prevent illness when possible by helping our employees and their spouses become aware of their health, and act on that knowledge Coverage under the Plan extends to all County employees, with the exception of the Sheriff's Office, which operates its own self-funded plan. Nationally, as well as here in Florida, medical plan costs, and the premium dollars required to fund them, continue to increase annually. The County's medical plan has the potential to be similarly impacted by these rising costs. For FY 2016, the County experienced no (0%) health insurance rate increase. Due to exceptional plan performance over the past four plan years, plan reserves exceed statutory minimums. Therefore, it is recommended that there be a no (0%) rate increase for FY 2017. It should be noted that employer health insurance contribution increases are absorbed within operating appropriations. Since 2009, Collier County Government has invested in processes to heighten employees and spouses awareness of their health and make available resources to assist covered employees and spouses in improving and maintaining their health. These programs have achieved meaningful reductions in risk and improvements in outcomes for the covered participants. For example; • 51% of those with LDL (cholesterol) in the high risk level in 2011 were able to lower their risk in 2015. • 62% of participants measured with hypertension in 2011 made significant positive progress in controlling their blood pressure. Employees and spouses have embraced the County's preventive educational and qualifier processes which have contributed greatly toward the financial strength of the health program. As such, it is not uncommon to provide a level of reward or "dividend" to our employees for their effort and participation. This may manifest itself in a one-time premium holiday with the level and extent determined annually. With the objective of mitigating increases to the plan, the County will continue to emphasize participation in existing wellness program, proper structuring of reinsurance to manage adverse plan impacts and prudent plan management. Historically, Board budget guidance has required all agencies to uniformly share health insurance contributions between employers and employees. If all agencies maintained the recommended cost distribution percentages of 80% employer and 20% employee, it is estimated 15 Packet Page-121- 2/23/2016 11 .A. that for FY 2016, $3.0M in General Fund constitutional transfer savings would have been realized. 2016 Health Plan Contributions by Agency Average Average 2016 Savings if Monthly Monthly all Agencies Agency EE Rate ER Rate Total EE% ER% EE's Sgl Fam were @ 80/20% BCC $271.00 $ 1,084.00 $1,355.00 20.00% 80.00% 1610 709 901 $ - SOE $271.00 $ 1,084.00 $1,355.00 20.00% 80.00% 21 11 10 $ - COC $271.00 $ 1,084.00 $1,355.00 20.00% 80.00% 150 67 83 $ - PA $ 15.50 $ 1,339.50 $1,355.00 1.14% 98.86% 56 25 31 $ 675,756.00 TC $ 15.56 $ 1,339.44 $1,355.00 1.15% 98.85% 151 57 94 $ 462,852.00 CCSO $ 78.77 $ 975.23 $1,053.99 7.47% 92.53% 1212 427 785 $1,920,273.60 Total 3200 1296 1904 $3,058,881.60 Certain provisions of the federal Affordable Care Act(ACA) could have a negative fiscal impact to Collier County if not managed properly. The most penal is the "Pay or Play"provision. This provision imposes a $2,000 penalty per eligible employee working more than 30 hours per week or 130 hours per month if the employer does not offer coverage to 95% of the eligible population. The 95% provision took effect on January 1, 2016 with penalties, if any, being assessed in calendar year 2017 or the County's FY 2017. Right now, the employee group which must be managed is the "job bank" pool. These employees are generally classified as temporary in nature, are not eligible for health insurance and are not considered FTE's approved by the Board. However for ACA purposes they are considered part of the eligible health insurance population if they work in excess of 30 hours per week or 130 hours per month. As of December, 2015 approximately 64 job bank employee's worked at or over 130 hours per month. Therefore, the County met compliance. Based upon the December eligible population, the 95% test would equate to 84 employees or less. If somehow the County failed to satisfy the 95%provision, the fine could total approximately$3.2 million. This issue will require ongoing management and the Board should be aware that job bank employees working 30 hours a week or more may transition to FTE status as part of the budget process or via separate executive summary and others may have their hours reduced depending upon operational considerations. Regardless, the existing CMA covering this employee classification will be revised to stipulate that those employees working 30 hours a week or more will be eligible for health insurance benefits under the County's program. Recommended Budget Policy: In FY 2017, the average cost distribution of health insurance premiums between the Board of County Commissioners and employees will remain 80% (employer) and 20% (employee). It is still recommended that the 80% employer share and 20% employee share be uniform across all agencies, including the Constitutional Officers. This policy treats all county employees equally in terms of cost sharing for health insurance premiums. NW Of 16 Packet Page -122- 2/23/2016 11 .A. Retirement Rates All agencies including Constitutional Officers must use the retirement rates published within the OMB budget instructions. OMB is monitoring all proposed bills. The legislature usually establishes the new retirement rates in the beginning of May with the Governor signing the bill into law at the end of May. The preliminary retirement rates that will be published in the instructions are based on proposed House and/or Senate Bills. (Florida Statute Chapter 121) Recommended Budget Policy: Adherence to the OMB rates published within the OMB budget instructions. Accrued Salary Savings Today's economic climate has led to an increased movement of employees to and from the organization. When employees leave,they are generally replaced and the process of replacement takes varying lengths of time depending on the position being recruited. This fact coupled with the full budgeted amounts for health insurance and worker's compensation being transferred to the self-insurance funds, impacts the amount of accrued salary savings due to position vacancies. For FY 2016, this rate was established at 2%. For FY 2017, it is suggested that the attrition rate remain at 2%. Recommended Budget Policy:Continue the accrued salary savings policy at a 2%rate. Financing New and Replacement Capital Infrastructure The last time Collier County issued debt for capital improvements was through various commercial paper loans between September 2007 (FY 2007) and September 2008 (FY 2008) totaling $78.4 million to finance various general government and public safety projects. All commercial paper loans outstanding were refinanced through long term debt in July 2010. The issuance of debt for capital improvements is generally considered as an alternative to pay as you go under the philosophy that future tax payers who will also enjoy the capital improvements should participate in funding capital improvements rather than that burden falling solely to existing tax payers. Pursuant to the Collier County Debt Management Policy, several guiding principles have been identified that provide the framework within which the issuance, management, continuing evaluation of and reporting on all debt obligations issued by the County takes place. Asset Life: The County will consider long-term financing for the acquisition, maintenance, replacement or expansion of physical assets (including land) only if they have a useful life of at least five (5) years. Debt will be used only to finance capital projects and equipment, except in case of emergency. County debt will generally not be issued for periods exceeding the useful life or average useful lives of the project or projects financed. Capital Financing: Debt of longer amortization periods will be issued for capital projects when it is an appropriate means to achieve a fair allocation of costs between current and future beneficiaries. Debt shall not, in general, be used for projects solely because insufficient funds are budgeted at the time of acquisition or construction. 17 Packet Page -123- 2/23/2016 11 .A. To the degree possible, the County will rely on specifically generated funds and or grants and contributions from other governments to finance its capital needs on a pay as you go basis. To achieve this it may become necessary to secure short term (not exceeding 5 years amortization) construction funding. Such financing is anticipated and allows maximum flexibility in CIP implementation. Should the issuance of debt become a policy reality, the environment is favorable for obtaining such credit. First, Collier County has and continues to maintain an excellent investment quality credit rating. Second, the interest rate environment remains attractive for issuance of short and/or long term debt. Third, the County's total principal debt has been reduced $286 million since FY 2008 and with over $379 million in general governmental debt restructuring since FY 2010, interest (cost of capital) on the portfolio has been reduced from roughly 5% to approximately 3.5%. Fourth,the County's self imposed debt limit has fallen well below the 13% debt to bondable revenue ceiling and the ratio is currently 7.6%. Through FY 2020, the transportation network has an estimated $154.8 million in new and replacement infrastructure improvements which are outside the current AUIR/CIE representations. The following table highlights these improvements; Roads FY 17 FY 18 FY 19 FY 20 Total 1. Vanderbilt Beach Road $0 $4,000,000 $8,600,000 $56,900,000 $69,500,000 2. Randall Blvd. $1,620,000 $14,700,000 $0 $0 $16,320,000 3. Collier Blvd. $1,900,000 $2,500,000 $39,600,000 $0 $44,000,000 Bridges $15,000,000 $0 $0 $0 $15,000,000 Storm-water $2,500,000 $2,500,000 $2,500,000 $2,500,000 $10,000,000 Total $21,020,000 $23,700,000 $50,700,000 $59,400,000 $154,820,000 In addition to those transportation network improvements, there will be capital costs associated with constructing the Big Corkscrew Regional Park. Total costs over time could range between $40 million to $50 million depending on design, permitting parameters. In FY 2016, $3,800,000 in new money was allocated toward this project bringing the cumulative total available budget to $9,000,000. The County currently has several capital projects which are in progress and proceeding under the current pay as you go philosophy. Existing budget amended for FY 2016 total approximately $25.8 million among the following projects; 800MHz County wide communications system; Sheriffs Accounting System; EMS Helicopter; EMS Substation; Sheriff's Orange Tree Substation and; the SOE facility. Interim financing could be issued to fund remaining dollars allocated to these projects freeing up one time dollars for other ongoing or new capital initiatives. Any interim commercial paper loans would be refinanced through long term debt matching the useful life of the asset. A decision to issue some component of short or long term debt is based upon level of service standards, the timing of any capital improvement, ability to execute, the credit market environment, and cost of capital. 18 Packet Page -124- 2/23/2016 11.A. The County had pursued a strategy in recent history(FY 2008 and prior years)by incurring short term commercial paper loans for capital projects and refinancing that short term debt with longer term bonds or other long term credit instruments which match the asset's useful life. Short term commercial paper loans carry a very low variable interest rate—currently about 1.22% and funds can be accessed within about 30-45 days. There is currently no variable rate short term commercial paper in the County's debt portfolio. The advantage of long term debt especially in a low interest rate environment is that budget certainty for the cost of credit will be achieved. Generally, a project should be ready for construction and proceeds must reasonably be expected to be spent within a three year window from debt issuance or adverse tax consequences may occur. Long term debt can be issued normally within a 60-90 day window. The County's current general governmental long term debt portfolio is comprised primarily of special obligation revenue bond debt under a covenant to budget legally available non ad valorem revenue. It is anticipated that this type of long term debt would be used under future new credit scenarios. The following illustrates various long term financing scenarios and the respective interest rates. New Financing Scenarios $10 c• $8 $6 c x . a) $4 �n 4 v, $2 O• $0 ■ t To $50m Bond $75m Bond in 10 yr Bond ■15 yr Bond IA 20 yr Bond approx 2.5% approx 3.1% approx 3.5% Recommended Budget Policy: While it is not suggested that any financing strategy be built into the FY 2017. adopted budget, it is recommended that the Finance Committee continue to work with the County's various agency division stakeholders regarding project scope, timing and execution patterns and with our debt issuance team to craft a strategy and recommendation on the type and composition of debt as well as a schedule of potential issuance. Storm Water Management Capital Funding The strategy proposed is to fund storm-water improvements from the General Fund and Unincorporated Area General Fund consistent with the capital improvement element (CIE), ability to execute, integration with other utility construction scheduling and identified watershed benefits per engineering reports. It is expected that the funding burden will shift to the Unincorporated Area General Fund based on the identified watershed benefit. Dollars allocated will depend upon whether or not the current "pay go" strategy will continue or whether a component of financing will be introduced. 19 Packet Page -125- 2/23/2016 11 .A. Under the current "pay go" approach, it is anticipated that the FY 2017 transfer contribution will be no less than the FY 2016 contribution of$5.6 million. The purpose of this dedicated funding source is to address long-standing capital project needs in the storm water program area, as well as to identify to grantor agencies that Collier County has a dedicated funding source to provide local matching requirements to available grants. Recommended Budget Policy: Establish funding between the General Fund and Unincorporated Area General Fund in an amount no less than $5,600,000 under a pay as you go strategy and continue studying the storm-water utility concept for further Board consideration during FY 2017. Proposed Use of Gas Taxes Previously, the Board directed through policy that all available uncommitted gas taxes will be used to support maintenance of the transportation network and related capital initiatives. Historically, the General Fund has transferred dollars to Gas Tax Fund (313) supporting the maintenance and improvement of the transportation network. Immediately prior to the decline in taxable values, this General Fund transfer amounted to $24 million. Gas taxes are the pledged source of repayment on the current Series 2012 and Series 2014 Gas Tax Refunding Bonds. Current debt service is approximately $13.1 million per year. The Series 2012 refunding debt expires in June 2023 while the Series 2014 refunding debt expires in June 2025. The recent debt restructuring has resulted in a $1.0 million annual savings in debt service which began in FY 2015. This savings will manifest itself in additional dollars for maintenance and infrastructure improvements. The General Fund transfer proposed for FY 2017 is $14,560,000 representing a slight increase from FY 2016. Also, the Unincorporated Area General Fund transfer proposed for FY 17 is $3,000,000 and increase of$500,000 from FY 2016. These dollars support maintenance on the roadway network including intersection improvements, resurfacing, bridges and other critical maintenance needs. Gas tax revenue from all sources in recent years has averaged approximately $18.5 million per year. When you consider the payment of annual debt service ($13.1M), the remaining $5.4 million is programmed for construction and maintenance of the transportation network. Recommended Budget Policy: Continue the Board's policy applying gas tax revenue to pay for debt service on the Gas Tax Revenue Bonds, and that the remaining gas tax revenue and transfer dollars from the General Fund and Unincorporated Area General Fund continue to support/supplement maintenance on the roadway network. General Fund General Capital/Debt Contribution and Debt Management The General Fund (001) has provided via transfer the sum equivalent of up to 1/3 mil to non impact fee eligible county wide capital functions and a debt payment component since FY 2006. For FY 2016, the equivalency rate was .3039 and for FY 2017 the equivalency rate is planned at .2586. During the economic downturn, the majority of this transfer evolved into a debt service payment. However, over the past four (4) fiscal years restructuring the debt portfolio has eased 20 Packet Page -126- 2/23/2016 11 .A. the debt burden freeing up more dollars to support county-wide capital projects and necessary maintenance (Fund 301). For FY 2016, $10,677,500 of the $20,031,500 equivalency transfer was planned for capital projects. For FY 2017, $11,356,100 of the $17,870,700 equivalency transfer is devoted to capital projects. This contribution is down $2,160,800 from FY 2016 due primarily to a reduced General Fund impact fee trust fund loan requirement in FY 2017. For FY 2017, the General Fund (001) transfer (loan) will be sized to cover debt service which cannot be covered by impact fees. This amount totals $3,438,800. Total loans outstanding to the impact fee trust funds (i.e. EMS, Libraries, Corrections, Law Enforcement and General Government Facilities) from the General Fund since inception (FY 2005) through FY 2016 total $92,181,581. Payment of debt is a top priority. Under the FY 2017 budget planning scenario dollars generated from the up to 1/3rd mil equivalent allocation will be sufficient to cover revenue bond debt service. Of the $17.9 million projected transfer in FY 2017, $3.4 million will be required to cover the growth related debt service gap due to insufficient impact fee revenue and $3.1 million is budgeted to cover non growth related debt. Going forward, the level of General Fund loan subsidy is heavily dependent upon the level of impact fee collections. Collier County embarked upon an aggressive debt restructuring program in the summer of 2010 and to date over $379M in general governmental debt has been refinanced. As a result, the cost of borrowing has been reduced by $1,640,000 annually with this recurring savings applied toward high priority operating and capital programs. The cumulative net interest rate of the general governmental debt portfolio has been reduced from approximately 5% to roughly 3.5% and annual principal and interest payments servicing outstanding general governmental debt represents 5.24% of the County's net adopted FY 2016 budget. The following charts depict the managed drop in annual debt service payments servicing all debt and annual debt service connected with our general governmental credit. Total Annual Debt Service Payments General Governmental! Annual Debt Service Payments $100 $100 $80 --- -- — — — — $80 $60 c $60 $40 $40 �. $20 $20 $0 I i i , i r i 1 1 > > 1 1 1 I r l i i i r t 7 r CO O N lD 00 O N a lD CO O N V lD $0 O .-1 ci .-i ci N N N N N N m m m m > > > >- >- > > >- r > r > >- r Collier County's total principal debt outstanding at 9/30/16 totals $502M of which $321M is connected with infrastructure improvements by population growth and related service demands. The County's principal debt has been reduced by $286M since FY 2008. Annual principal and 21 Packet Page-127- 2/23/2016 11 .A. interest payments servicing the County's current total outstanding debt represents 5.2% of the County's net FY 2016 budget. s a a at ' s � f a44. vk :64 ! �" o ® „ e °b a e e ® a 4 ® o ® Q lie,;14.10ct t® 4 r r i tre atc a # 6 g d to'fund ritt h eed a;getieral 9II;Ofity capifatneeds General Governmental, Enterprise Fund, and Other Fund Reserve Policies General: Reserve is a budget/policy term referring to resources set aside to provide a buffer against risk. Likewise reserves may also be referred to as a portion of fund balance—only on the expense side of the equation. Reserves are the cornerstone of financial flexibility and provide government with options for responding to unexpected issues and a buffer against shocks and other forms of risk. It is essential for governments to maintain adequate levels of fund balance to mitigate current and future risks such as revenue shortfalls, natural disasters and unanticipated expenditures. As such, budgeted reserves serve to protect beginning cash position in a fund and are an essential component of Collier County's overall financial management strategy and a key factor in external agency measurement of Collier County's financial strength. Various bond rating agencies recognize that the best reserve policies provide both specificity and flexibility accomplishing one or more of at least the following three criteria: • establishing a target level of reserves or a reserve floor • specifying the appropriate circumstances for drawing down reserves • directing the replenishment of reserves In general, rating agencies view positively higher reserve levels, although local governments can maintain high credit ratings with lower reserve levels if other indicators of financial flexibility such as revenue raising ability, stable diverse revenue structure, expenditure flexibility and conservative budgeting practices are strong. A reserve for contingency is typically budgeted in all operating funds, with the exception of the Constitutional agency funds. Reserves for the Constitutional Agency funds shall be appropriated within the County General Fund. The following is a history of budgeted reserves within the General Fund and Unincorporated Area General Fund since FY 2008 as well as the% of reserves against total operating expenses. Fiscal Year General Fund Unincorporated Area General %of General %of Unincorporated Reserves Fund Reserves Fund Expenses GF Expenses 2017(Planning) $33,439,700 $2,224,200 9.6% 4.8% 2016 $27,890,800 $1,905,600 8.4% 4.4% 2015 $26,670,700 $2,220,100 8.5% 5.6% 2014 $26,217,400 $1,715,000 8.9% 4.5% 2013 $24,844,400 $1,596,200 8.7% 4.3% 2012 $18,180,900 $1,739,500 6.2% 4.5% 2011 $14,210,200 $2,925,100 4.7% 7.4% 2010 $15,569,100 $3,422,400 4.9% 7.2% 2009 $17,541,200 $2,853,500 5.0% 5.8% 2008 $20,506,000 $6,336,600 5.5% 12.9% 22 Packet Page -128- 2/23/2016 11 .A. Optimally, and in order to achieve a regular and sustained General Fund beginning fiscal year cash position of at least $55 million, budgeted reserves should be a minimum of $35 million. Unless and until General fund reserves rise to this level, expense side management of the budget will be necessary. For the second consecutive year, mid-year operating cuts and/or transfer reductions regardless of execution patters were not made. While this is good news, management of the budget remains a regular occurrence especially as it relates to scrutinizing regular expenditure patters and monitoring transfers out of the General Fund to insure that dollars leaving are programmed for project expenditures within the FY. Florida State Statutes: In all respects, budgeted reserves shall conform to requirements of Florida State Statutes. The State establishes maximum limitations on certain reserves. The maximum limitations for contingency reserves and for cash flow reserves are 10% and 20% of a fund's total budget respectively. There is no statutory limit on capital reserves. Recommended Budgeted Policy Reserve Position for the General Fund: The Governmental Finance Officers Association (GFOA) recommends as a baseline, or floor, that general fund reserves be set at 16% of regular operating revenues or 2 months of regular operating expenses. This would put Collier County's General Fund reserve floor (minimum) in the $55M-$58M range. Collier County has never attained a General Fund budgeted reserve position higher than the FY 2017 proposed position of$33,439,700. This reserve position includes a contingency reserve set at the recurring policy level equivalent to 2.5% of operations. While Collier County is vulnerable to extreme weather events given its coastal location,the County's revenue sources are relatively stable and expenditure patterns are not volatile. In addition, the County's total all funds reserve position is stable and would be used to cash flow a significant weather event or other natural disaster. This suggests a less aggressive reserve position with a floor or minimum of 8% of operating expenses and a ceiling or maximum not to exceed 16% of operating expenses. Applying these percentages to our current FY 2017 proposed planning budget, the reserve floor and ceiling would total $27,718,600 and $55,437,200, respectively. Planned reserves within the General Fund fall within this range. Replenishment of reserves that drop below the targeted floor (minimum) would occur in succeeding budget cycles in such amounts as deemed prudent under existing economic conditions as approved by the Board. The goal will be to recover at least 25% of the reserve shortfall in year one; 25% in year two; and the remaining shortfall in year three. Recommended Budgeted Reserve Position for Other General Governmental Funds including the Unincorporated Area General Fund: The Unincorporated Area General Fund is primarily an operating fund with minimal capital transfer requirements. Although the level of capital transfers is increasing. Thus the reserve requirements for this MSTD should be set at a minimum of 2.5% of operating expenses ($1,156,500) with a ceiling or maximum of no more than one month's expenses which for FY 2017 is approximately$3.85 million. 23 Packet Page -129- 2/23/2016 11 .A. Reserve requirements for other General Governmental Funds including those that receive significant transfer revenue from the General Fund will be sized sufficient to cover operations during the first month or until the first General Fund transfer is scheduled pursuant to the OMB Transfer Schedule. Reserves Policy Position for the Motor Pool Replacement Family of Funds (409, 472, 491, 496, 523) The Motor Pool Replacement Funds were re-established in FY 2016. The annual funding of the Reserve will be through an annual billing to the applicable user Divisions in an amount equal to the cost of the vehicle divided by the useful life of the vehicle. In FY 2016, the Motor Pool Replacement Fund was established for the various General Governmental Funds (523), Water/Sewer District(409), Solid Waste(472), and Airport(496). In FY 2017, the balance of user Divisions will participate, ie: EMS (491) and Road and Bridge (Funds 101/523). In a few years, the Motor Pool Replacement Funds should build up and then maintain a Motor Pool Replacement Reserve (reserve for future capital) equal to a minimum of one year's estimated replacement cost of vehicles currently in service. Reserve Policy Position for the Pelican Bay Services Division Family of Funds (109, 778, 320 and 322). Operating Reserves Fund (109) — It is recommended that the funds reserve position be established at between 15% and 30% of operating expense. This is particularly important given the districts coastal nature, level of infrastructure investment, natural assets and commitment to maintenance and resource protection. Street Lighting Fund (778) — The level of reserves 'in this fund will be established in such amounts necessary to set aside funding to accomplish lighting projects consistent with the Pelican Bay Community Improvement Plan. Capital Project Funds (320 & 322) — Reserve levels are generally minimal with the majority of budgeted dollars appropriated within defined and active projects. Reserve Policy Position for Enterprise Funds, including the Collier County Water-Sewer District Fund (408, 412, 414) and the Solid and Hazardous Waste Management Funds (470, 471,472, 473,474). General: According to the GFOA, It is essential that a government maintain adequate levels of Reserves in its enterprise funds to mitigate current and future risks like revenue shortfalls and unanticipated expenses and to ensure stable services and fees. Collier County Water-Sewer District (CCWSD): Like a General Fund reserve, a utility system reserve position may be measured as a percent of regular revenues or regular expenditures, depending on the predictability or volatility of each. 24 Packet Page -130- 2/23/2016 11.A. The Collier County Water-Sewer District reserve policies should be based on sound fiscal principles designed to enable the utility to maintain continuity of operations in adverse conditions and avoid user rate shock(rate stabilization). In addition, various bond rating agencies, particularly Fitch Ratings, recognizes that the best reserve policies provide both specificity and flexibility, accomplishing one or more of at least three main criteria: • Establishing a target level of reserves, • Specifying the appropriate circumstances for drawing down reserves, and • Directing the replenishment of reserves For enterprise funds, the GFOA recommends starting with an assumption of 90 days, and adjusting based on relevant risks with 45 days as a bare minimum, and recognizes the difference between enterprise funds that are supported from the general government and those that are not. The utility system, with gross assets of approximately $1.2 billion, should maintain a reserve position necessary to ensure the maintenance of life sustaining services to the public during non- routine and unforeseen disaster situations such as hurricanes or other related weather events, other environmental or natural disasters, or other events that cause disruptions in public services, such as system failures and line breaks. Collier County lies within a coastal zone highly susceptible to hurricane and storm damage to water and sewer treatment facilities, transmission lines and distribution/collection mains. Many of the buried water and wastewater lines sit in sandy soil that is prone to shifting during heavy rain events. Uncertainty in economic markets with regards to cost of construction materials, interest rates,personnel and health costs add to the risk factors facing the utility. In the CCWSD, user fee revenue is used to support the operating budget as well as the capital repair and rehabilitation program for the horizontal(in-ground) and vertical (above ground) assets. Reserves can be classified as either"restricted"or"unrestricted": • Restricted Reserves - are those established for specific purposes only, such as debt reserves required by bond covenants, and/or reserves for growth in the impact fee funds which can be utilized only for growth projects. • Unrestricted Reserves — are available to ensure continuity of services as identified above. Unrestricted reserves in the CCWSD include general contingencies reserves (i.e. "rainy day" significant unforeseen events), cash flow reserves in the event of revenue disruptions, or capital reserves for necessary but unforeseen repair and rehabilitation projects. Recommended Reserve Policy for the;;CC)WSA: At a;minimum, the,unrestricted reserves she i ld'#he; budgeted within a range' of S% to 15Y9 of budgeted;:revenues!(revenues"are fairly table, but mays he subject to temporary;disruptions from hurricanes or natural,: disasters), or withm a range of 45=90 days of budgeted operating expenses (operating expenses are more olatxle given aging utility infrastructure and unforeseen events) ° Forty,,five (45) to ninety (90) days ofirese 0 based,on Fund (i08), (412), and (414) budgeted PY 2016 operating expenses 25 Packet Page -131- 2/23/2016 11 .A. FY 2016 budgeted Working Capital resources total $23.3 million representing sixty nine (69) days of reserves. Replenishment'of unrestricted reserves that may drop below the targeted floor(45 days) or $15.1 million using FY 2016 numbers would occur in succeeding budget cycles in such amounts as deemed prudent under existing economic conditions as approved by the Board. Solid and Hazardous Waste Management Enterprise Funds: The Solid and Hazardous Waste program in Collier County includes the operation of the solid and hazardous waste disposal program, the recycling program, and the management of the mandatory residential curbside collections program. These funds also include both restricted capital reserves (for landfill closure) and unrestricted operating and capital reserves. The department is responsible for the right of way disaster debris removal on County roads and monitoring project for Collier County in the event of a natural disaster, such as the Hurricane Wilma (Category 3, dry storm cash flow exposure of$25 million)event in the 4th quarter of 2005. As such, the Solid Waste System should maintain unrestricted reserves of 60 to 90 days of operating expenditures to be used to ensure the maintenance of services to the public during non- routine and unforeseen disaster situations such as hurricanes and other weather-related events, as well as other environmental or other natural disasters that cause disruptions in public services. Recommended Reserve Policy for the Solid and Hazardous Waste Enterprise Funds: Sixty (60) to ninety (90) days of reserves based on Fund (470), (473), and (474) budgeted FY 2016 operating expenses would range from $7.1 million to $10.7 million. FY 2016 reserves for the Solid and Hazardous Waste Management Enterprise Funds total $7.8 million or sixty five (65) days of reserves. Replenishment of unrestricted reserves that may drop below the targeted floor (60 days) or $7.1M would occur in succeeding budget cycles in such amounts as deemed prudent under existing economic conditions as approved by the Board. Growth Management Division (GMD) - Planning & Regulation Enterprise Fund 113 and Enterprise Fund 131: Fund 113, referred to as the Building Department Fund, collects revenues primarily related to building permit activities, including building permits, structural, electrical, plumbing, and mechanical inspections, plans reviews, and the licensing and oversight of building contractors. GMD Building Permit Fund (113)Recommended Reserve: Targeted reserves for this fund shall be 6 months of the total operating budget of the current fiscal year. The Growth Management Division/Planning & Regulation Fee Schedule, adopted by resolution of the Board of County Commissioners, provides the guidelines to implement fee adjustments if total reserves rise or fall below established thresholds. Fund 131, referred to as the Land Development Services Fund, collects revenues primarily related to land development permit activities, including planning and zoning, engineering, and environmental and natural resources. 26 Packet Page -132- 2/23/2016 11 .A. GMD Planning Fund (131)Recommended Reserve: Targeted reserves for this fund shall be 9 months of the total operating budget of the current fiscal year. The extra 3 months of targeted reserves required in comparison to Fund 113 reflects the unpredictable nature and length of processing time for land development related activities. Internal Service Fund Reserves Reserves for Internal Service funds reflect amounts that are intended for and must be used to meet a specific purpose. The restriction can be set by legal agreement, statute, regulations, and/or mandatory reserves. For purposes of this policy emphasis is placed on the risk management group of funds and information technology. Recommended Policy: In order to establish sufficient cash flow for the Internal Service Funds, a benchmark of 90 days of the prior year's working capital is calculated. Contingency reserves represent amounts available for appropriation by the Board to meet any lawful, unanticipated need of that fund. These reserve amounts are limited by Florida Statutes and cannot exceed 10% of the total appropriations of the fund. Collier County is self-insured and is subject to `mandatory reserves for losses. Each year an actuarial study is completed for each of the County's self-insurance funds and the present value of all outstanding losses is determined. This amount represents the first level of restricted reserves for our Risk Management Funds. Within the Risk Management's restricted reserve balance, the Board has designated$5,000,000 for wind deductible maximum limits coverage for potential catastrophic losses associated with named storm events. A margin based upon a confidence interval is then added to this base amount to assure that the estimate is sufficient to meet future claim payments. The Board of County Commissioners has traditionally adopted, as contained within budget policy, a 75% confidence interval. The Group Life and Health hlsurance Fund within Risk Management have additional statutory reserve requirements that are calculated each year and added to the restricted reserve category. The Information Technology Capital Fund's restricted reserve amounts are determined by the total of committed capital projects they have in progress at the end of the year. Once the projects are completed, any remaining funds may be re-appropriated. Designated reserves are established to provide funds for a specific purpose where the actual cost is unknown. CPI Based Enterprise Fee Adjustments On June 10, 2014, the Board during discussions on the water, wastewater, irrigation quality water and bulk potable water rate study provided unanimous guidance to index all enterprise fees annually equal to the year over year December adjustment in the Consumer Price Index (CPI) — Miami, Fort Lauderdale SMSA. Rather than going through time consuming and potentially costly rate studies, the Board suggested that the CPI adjustment be programmed and subsequently be reviewed by the Board during the budget process. 27 Packet Page-133- 2/23/2016 11 .A. This allows the Board discretion in approving the CPI adjustment and not simply passing the adjustment on automatically. Recommended Budget Policy: Provide the Board with an annual report on potential enterprise rate and fee adjustments in accordance with CPI changes as indicated above and that any rate or fee adjustments be included within the proposed budget for Board consideration. Scheduling Issues Decisions Required Staff Recommended Date(s) Establish Budget Submission Dates May 1, 2016 by Resolution for the Sheriff, the Supervisor of Elections and the Clerk of Courts. FY 2017 June Budget Workshops (BCC Agency/Courts and Constitutional Officers Budget Workshops) Thursday, June 16 and if necessary Friday June 17, 2016 FAC Conference is June 28 — July 1, 2016 in Orlando (Orange County). Adoption of Tentative Maximum FY July 12, 2016 (Tuesday) 2017 Millage Rates Submission of Tentative FY 2017 Friday July 15,2016. Budget to the Board Establish Public Hearing Dates (see September 8, 2016 (Thursday at 5:05 pm) note) September 22, 2016 (Thursday at 5:05 pm) Note: The School Board has first priority in establishing public hearing dates for budgets. The School Board's final budget hearing is tentatively scheduled for September 13, 2016. The Commission chambers are reserved for the tentative dates for Collier County Government budget public hearings. Recommended Budget Policy: Approve the dates identified above and attached resolution establishing May 1, 2016 budget submittal dates for the Sheriff, the Supervisor of Elections and the Clerk. Comparative Budget Data Provide comparative budget data using FY 2016 adopted budget data (cost and employees per capita based on unincorporated area population) by Agency with Budget Submittals for Similar Sized Florida Counties. Recommended Budget Policy: Counties for comparison purposes include: • Sarasota County • Lee County • Charlotte County • Manatee County • Martin County 28 Packet Page -134- 2/23/2016 11 .A. Continuing Existing Budget Policies for FY 2017 Grant Funded Positions: Any positions formerly funded with grant funds being recommended for inclusion in a general (non-grant funded) operating budget shall be treated as expanded service requests. Self-Insurance: To conduct an actuarial study of the self-insured Workers' Compensation, Property and Casualty, and Group Health Insurance programs. Program funding to be based upon an actuarial based confidence interval of 75%, with the exception of group health to which a confidence interval is not applicable. Contract Agency Funding: The Board will not fund any non-mandated social service agencies. Median Maintenance: Recognize the Unincorporated Area General Fund MSTD (111) as the appropriate, dedicated funding source for median beautification maintenance costs. Carry forward: All funds that are unexpended and unencumbered at the end of the fiscal year will be appropriated as carry forward revenue in the following year. Carry forward revenue represents not only operating funds but also previously budgeted operating, debt service, and capital reserves that are "carried forward" to fund these same reserves in the new year or to fund capital projects in the current or future years. The largest sources of carry forward are the capital, debt service, and enterprise funds. In both the General Fund and MSTD General Fund, carry forward fund balance is maintained to provide cash flow for operations prior to the receipt of ad valorem taxes and other general revenue sources. General Fund balance is required to meet significant public safety and priority operating needs for October and November, prior to the receipt of any significant ad valorem tax revenue (ad valorem taxes represent 67.0% of the total FY 2016 General Fund adopted operating revenues). Fund balance is also an important measure used by bond rating agencies in determining the County's credit worthiness. Specific concerns for Florida communities were reliance on the tourism industry and sales tax revenue, and the ongoing threat from hurricanes and wildfires. For Florida coastal communities, a minimum carry forward balance of 10% of total General Fund expenditures was recommended by the ratings agencies. Of course this figure and recommendation was general in nature and subject to each county's individual cash flow needs. A higher percentage would be considered positive—especially during any ratings surveillance. The recommended level of year ending cash and cash equivalents (carry-forward) in the General Fund should be a minimum of 10% of actual expenditures. At year ending September 30, 2015, actual General Fund carry forward balance totaled $57,690,000 which represented approximately 18.7% of actual FY 2015 expenses. Indirect Cost Allocation Plan: The policy of charging enterprise, special revenue, and grant funds for support services provided by General Fund departments will be used again in FY 2017. The basis of these charges is a detailed indirect cost allocation plan prepared, periodically, by a consultant and adjusted by staff to reflect the organizational environment on a real time basis. Impact Fees: Collier County will assess impact fees at such levels as allowed by law, established by the Board of County Commissioners and supported by impact fee studies. 29 Packet Page -135- 2/23/2016 11 .A. Enterprise Fund Payment in Lieu of Taxes: The Solid Waste Fund and the Collier County Water-Sewer District will once again contribute a payment in lieu of taxes (PILT)to the General Fund. For FY 2016, the payment in lieu of taxes calculation was based upon a "franchise fee equivalent basis" commonly referred to as a percentage of gross receipts. Five percent (5%) of gross receipts were applied in FY 2016 and this method and percentage is planned for in FY 2017. This method is a common approach used by local governments and is generally consistent with fees paid by private utilities operating in a local government jurisdiction. Prior to FY 2013, PILT was based upon the prior year General Fund millage rate multiplied by the prior year gross (non-depreciated)value of property,plant, and equipment. Debt Service: Any capital projects financed by borrowing money shall limit the repayment period to the useful life of the asset. Interim Financing: Collier County may also borrow funds on an interim basis to fund capital projects. In these cases a repayment source shall be identified and the financing source that has the lowest total cost shall be employed. The Collier County Debt Management Policy provides that advance refunding for economic savings will be undertaken when a present value savings of at least five percent of the refunded debt can be achieved. The policy also states that five percent savings is often considered a benchmark and that any refunding that produces a smaller net present value savings may be considered on a case by case basis. A smaller net present value savings may be prudent for example when the intent is to eliminate old antiquated and limiting bond covenant language. Ad Valorem Capital and Debt Funding: Continuation of a fixed General Fund equivalent millage dedicated to capital projects, debt financing and impact fee fund debt loans. The recommended rate is up to the equivalent of 0.3333 mills. (See history below). General Fund Capital Equivalent Millage History (FY 1991 -FY 2017) 1.2000 1.0000 h0000 0.8000 bA 0.6580 - 0.6000 0s426 0.5474 0.4148 0.3809 0.3333 0.3333 0.3520 0.4000 0.371 6 . 0.2783r. 0.3039 0.2000 0.3040 0.33_ . 0.2186 0.2354 0.1931 0.2451 0.0000 F a t 1 4 + a 0ti Cc' 01) 0)t)` °)F) 0)6 0^ 09'' 0)() 4) 6\ 61' O") 4‘ 45 4) O^ 6c6 6°1 `O 'N') \5‘ \-) ti� <1 30 Packet Page-136- 2/23/2016 11 .A. The General Fund continues to loan money to impact fee funds in order to pay their annual debt service payments. This of course is in addition to normal and customary debt service on non growth related revenue bond debt. Capital Improvement Program (CIP) Policies: On an annual basis, the County shall prepare and adopt a five-year Capital Improvement Element (CIE) consistent with the requirements of the Growth Management Plan. • Capital projects attributable to growth will be funded, to the extent possible, by impact fees. • Capital projects identified in the five-year CIE will be given priority for funding. The five-year plan for water and wastewater CIE projects will be based on projects included in the adopted master plans. Unlike operating budgets that are administered at the appropriation unit level, capital project budgets will continue to be administered on a total project budget basis. The minimum threshold for projects budgeted in capital funds is $25,000. 31 Packet Page-137- 2/23/2016 11 .A. Three-Year Budget Projections Ad Valorem Tax Funds (FY 2017- FY 2019) OMB staff prepares annually a three-year projection of General Fund and MSTD General Fund revenues and expenditures to improve financial planning and to understand the long-term impact of funding decisions. These projections are complimented by a trend analysis of revenues and expenses which conclude the General Fund and Unincorporated Area General Fund sections respectively. The following 3-year budget projections are for the General Fund (001) and the MSTD General Fund(111). General Fund General Fund (001)Millage History and Millage Rates As a point of reference, the following graph plots the historical General Fund millage rate, as well as millage neutral tax rates for FY 2017 through FY 2019. Millage neutral rather than tax neutral rates are used for planning purposes considering the belief that taxable values will continue to increase in the future. General Fund Millage History and Recommended Millage Neutral Tax Rates (FY 2005 to FY 2019) 4.5000 3.8772 3.8772 4.0000 3.5790 3.5645 3.5645 3.5645 3.5645 3.5000 ■ ■ . III ■ 3.0000 2.5000 ■ 11 III, 111 1111 111 III III 2.0000 ■ ■ ■-- ■ ■ ■ 1.5000 ■ ■ • NI rd • 1.0000 ■ ■ ■MMiI ll 0.5000 ■ ■ ■, M ■ ■ A\o 4 While the County Manager will be recommending a General Fund millage neutral budget in FY 2017 and while this millage neutral budget will contain funding for priority public safety and other significant asset maintenance/replacement initiatives, the Board should note the magnitude of our future asset maintenance responsibility and devote additional future dollars which may be generated from an increasing taxable value base to maintaining and or replacing corporate assets. 32 Packet Page -138- 2/23/2016 11 .A. The following tables depict the respective millage neutral tax rates for FY 2017, 2018 and 2019 as well as additional ad valorem dollars which could be raised under certain increasing tax base assumptions. FY 16 Adopted and Recommended Additional Budgeted Ad Valorem General Fund Millage Neutral Millage Rates Revenue Projection Each Year FY 16 3.5645 FY 17 3.5645 $17,250,800 @ 7.0%TV Increase FY 18 3.5645 $18,712,400 @ 7%TV Increase FY 19 3.5645 $20,022,300 @ 7%TV Increase In order for Collier County to continue providing high quality best value services; continue to address deferred infrastructure maintenance; replace backlog equipment and vehicles; maintain its reserve and cash positions pursuant to policy and representative of a investment quality credit rated organization, it is essential to capture those additional ad valorem dollars generated by increasing taxable values. Failure to do so will jeopardize service levels and make it very difficult to maintain the extraordinary infrastructure investment which this community enjoys. As an example, in FY 2017, the projected rolled back rate within the General Fund is $3.4049 which would raise $11,969,600 less than millage neutral or levying the current rate of$3.5645. While the FY 2017 estimated rolled back rate would produce $5,281,200 more than the FY 2016 levy due to new construction taxable value, relying simply on new construction taxable value is not a sustainable model going forward when attempting to recover from an economic recession and knowing the level of investment required to simply maintain our assets let alone expand services and facilities based upon AUIR requirements and servicing the needs of an expanding population. The projected millage rates assume that the tax base will increase 7.0% in FY 2017 (the 2016 tax year). For FY 2018, our planning model assumes that taxable value on existing property will increase 7%. Taxable value in FY 2019 is projected to also increase 7%. The Property Appraiser will provide preliminary taxable value estimates for FY 2017 on June 1, 2016. Actual and assumed changes in County taxable values are as follows: Historical and Projected Changes in Collier County Taxable Values 30.0% (F_y_,2,Qp5- +3-2=(11-8) 25.4% 25.0% 19.9% 20.0% - 15.0% -119% r w 10.0% { Y o 6 5% 7:5°76-7.0%-7-.0-%-770%- 5„ �, z gg„!� .'a. .y°t4.2F'. 'b .'^sre . X.111 . -4.7% , �'? -5.2% -10.0% -15.0% _ — -1L01o_1.2..2_%...-. FY05 FY06 FY07 FY08 FY09 FY10 FYI1 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Notes to Graph: FY 2007: The General Fund(001)millage rate adopted in FY 2007 was based upon a 16%increase in taxable value pursuant to BCC direction. FY 2008: As part of the Florida Legislative Property Tax Reform package implemented in FY 2008, Collier County adopted its final millage rate at 91%of the rolled back rate. 33 Packet Page -139- 2/23/2016 11 .A. FY 2017 Significant Expense Assumptions A millage neutral budget assuming an increasing taxable value base provides the County with those important additional ad valorem dollars necessary to maintain our assets, invest in our personnel, and service those who live and visit Collier County. Significant expense assumptions include; • Allocation for compensation administration—3%. • 2% attrition rate on regular salaries assumed in the County Manager's Agency. • Motor pool replacement dollars for continued regular routine ambulance replacement. Backlog replacement satisfied in FY 2015. • $2,000,000 allocation toward replacement of EMS Helicopter. • Five year funding/phased approach to upgrading the county-wide 800MHz radio system platform. FY 2014 allocated $1,500,000 to network switching and console enhancements. FY 2015 allocated $3,900,000 for P25 site upgrades. FY 2016, allocated $6,200,000. For FY 2017, the allocation is $2,400,000 for continued P25 upgrades and microwave/site connectivity. The final set aside is $2.1 million in FY 18. • Continued additional David Lawrence Center Funding in the amount of$300,000 • Continue General Fund general governmental capital, debt payment and impact fee loan transfer equivalent up to 0.3333 mills annually. • Storm water capital funding of $1,550,000 for continued countywide storm-water projects and storm-water operations; additional dollars may be allocated at the Boards discretion to address other county wide critical storm-water maintenance issues. • General Fund support of road construction and maintenance funded at $14,560,000. • General Fund support of EMS Operations established at $14,130,700—up 2.5% from last year reflecting the recurring costs of additional services to equalize response times county-wide. This planned allocation includes funding for two regular routine ambulance replacements. Also, additional money will be transferred from the General Fund to establish a Motor Pool Replacement Fund for EMS vehicles and ambulances. • Full support for Transportation Operations from the General Fund (001) exclusively. Also additional money will be transferred from the General Fund to establish a Motor Pool Replacement Fund for Road and Bridge vehicles. • Mandates to be absorbed if possible within operating budgets, including Constitutional Officers. Significant Revenue Assumptions • FY 2016 ad valorem tax revenue forecast is 96% of actual taxes levied. FY 2016 forecast totals $241,010,500 — a reduction of $9,058,500 from the adopted budget. Collections are within the 5% budgeted revenue reserve. A millage neutral position for FY 2017 produces a levy of$267,319,800. • Sales tax revenue forecast for FY 2016 is projected at $38,000,000 representing an increase of 2.7% over budget. FY 2017 budgeted revenue is projected at $38,850,000 or 5% over the adopted 2016 budget. 34 Packet Page -140- 2/23/2016 11 .A. • State Revenue Sharing for FY 2016 is projected to increase $300,000 or 3.3% over budget. FY 2017 budgeted revenue is projected at $9,450,000 or 5% over the adopted 2016 budget. • Constitutional Officer turn-back is a conservative budget estimate and for FY 2017 $6,600,000 is projected—an slight decrease of$30,400 over the FY 2016 budget. • Measures to maintain beginning cash balance at between $50 million and $55 million continue to be necessary and include continued growth in budgeted reserves coupled with any combination of revenue receipts over budget and expense side budget management. • Interest income is projected to increase modestly by $450,000 to $600,000 reflecting stable fund balances. EMS Fund EMS Operations Fund 490 is another fund that impacts significantly on the General Fund. Typically, this ad valorem support in recent years accounted for 50% to 55% of total EMS operating revenues. However, the percentage is likely to increase given instability in fee revenue collections and any Board policy directives. Historical and projected General Fund support of EMS operations by fiscal year is as follows: General Fund Support in EMS (FY 2005-FY 2019) $16 5-0 $13.3 $13.8 $14.1 $14.6 $14 $12.0 $12 $11.3 $11.3 $11.6 I I° $11.0 I. $10.7 I $10 $8 .13 $6 • . IIIIIIIIIIII $4 IIIIIIIIIIIIII $2 IIIIIIIIIIIIII $0 I .I III ' I I 111 ,.I rI I FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Use of General Fund dollars to support this life/safety function has and continues to be a priority. Road Construction Program The Board approved road financing plan was based historically on using growth in taxable value and maintaining the General Fund millage rate to provide increasing dollars to meet the road funding commitments. These dollars are depicted on the following graph. 35 Packet Page -141- 2/23/2016 11.A. With taxable values projected to increase,the General Fund contribution to road construction and maintenance is expected to total $14.5 million. As future budgets are planned and scarce resources allocated, infrastructure maintenance and non growth related improvements will certainly require a dedicated commitment of general revenue resources to protect this important investment. Capital obligations necessitated by state or federal agreement, like JPA's and DCA's will be funded. General Fund Support of Road Construction (FY 2003 -FY 2019) $45 $40 $35 $30 6.• $25 $1.5 $20 $15 I , I , 15.6 $10 II I ' —$8. .,6 . Atli $5 I I II I I I II I III 111 $0 FI'03 FY OS FyO7 Pk 09 Fy11 F)'13 Fy1S Fy1j FyJ9 re Transfer from General Fund ❑Returned to General Fund 0 Additional Funds Transferred ®Vehicle Replacement FY 2018 A millage neutral budget in FY 2018 with an increase of 7% in taxable value will continue to allow for priority funding of public safety capital initiatives and AUIR capital programming like the EMS Stations; sheriff capital requests; and 800 megahertz equipment replacement. This of course is in addition to other infrastructure replacement needs and continuing expanded service requirements in those operations funded within the General Fund. In addition to annual inflationary cost increases, the following items were included in the FY 2018 budget analysis: • Maintain Capital projects funding in an equivalency up to 0.3333 mills. • Stormwater capital projects funding for county-wide initiatives. • Maintain General Fund support of EMS. • Final phase of funding to upgrade the county-wide 800MHz radio system platform by allocating $2,100,000 to upgrade the site network. • Contingency reserves are maintained at policy. • Maintain General Fund road subsidy. • Maintain General Fund support for Transportation Operations expenses. In summary, the FY 2018 analysis signals caution especially when critical variables like taxable value, market conditions and general revenues are difficult to predict. Pursuing a millage neutral budget in FY 2018 without a sufficient budgeted beginning fund balance would likely 36 Packet Page -142- 2/23/2016 11.A. result in a $3.6 million budget planning deficit as depicted in the trend analysis. Of course required correction on the expense side assuming revenue assumptions are accurate would be necessary. FY 2019 A ',tillage neutral budget in FY 2019 coupled with a 7% taxable value increase allows for continued funding of backlog asset maintenance and replacement while funding those programs and services enjoyed by an expanding population base. Once again, management of the budget will be important to achieve a sufficient beginning fund balance. The following items were included in the FY 2019 budget analysis: • Maintain Capital projects funding in an equivalency up to 0.3333 mills. • Stormwater capital projects funding for county-wide capital initiatives. • Maintain General Fund support of EMS. • Contingency reserves are maintained at policy. • Maintain General Fund road subsidy. • Maintain General Fund support for Transportation Operations. General Fund Trend Analysis General Fund Analysis Adopted Budget Forecast Forecast Forecast Forecast Forecast FY 2016 FY 2016 FY 2017 FY 2018 FY 2019 F1'2020 Revenues: Ad Valorem 250,069,000 24L010,500 -3.6% 257,851200 7.0% 275,932,900 7.0% 295 8.287 7.0% Sales Tat 37000,005 33,000,000 2.7% 35,850,000 2.2% 39,627,000 2.6% 40,419,500 .4% Revenue Sharing 9,000,000 9,300,000 33% 9,450,000 .6% 9,639,000 2.0% 9,531800 2.1% Other Revenues 31,532,700 31,603,900 0.2% 32,048,400 1.4% 32.261,300 0.7% 32,165,530 -0.3% Less 5%Required by Law (15,643,100) 0 0 0 0 Canyfonvard 48,509,000 57,690,000 78.9% 48,727,500 -15.5% 44,188,400 -9.3% 40,633,700 -30% 37,865,317 Total Revenues 360,467,600 377,604.400 4.55% 384957,100 2.5% 401649,100 3.1% 418,295,817 3,.1'% Expenditures: Departments 65,051,700 64,227,800 5.6% 66,560,400 3.6% 65,354,400 2.7% 69,991,100 2.4 Debt Service 3,077,500 3,077,500 0.6% 3,075,100 -9.1% 2,537,900 -17.5% 2,532,400 -0.2% Cap-Loans to Impact Fee Fds 6276,500 6.276,500 0.0% 3,435 800 -45.2% 5,465 200 59.0% 4,863,300 -__._„ Capital 330,370,005 30,380,400 0.005 31299,900 3.0.- 34,773900 11.2.> 38,820,000 1.6% Replacement Vehicles&Equip 1,500,005 1,500,000 1,V A 1,500050 N A 1,500000 0.0% 1,500,000 0.0', Transfers 36,853,000 36,966,600 03% 41,821300 53.-% 41,047,100 -1.9% 42,314,700 3.5% Constitutional Oficers 186,448,105 186,445,100 0.0% 195,072,500 4.6% 207,333,909 5.3% 220,412,000 53 Reserves 27,890,800 0 0 0 0 Total Expenditures 360,467,600 328,876,900 -99.1% 342,768,700 4.2% 351,015,400 5.3% 380,433,500 5405 Revenues less Expenditures(Can\fonw-ard) 48,727,500 44,188,400 40,633,700 37,865,317 Total amount of Equity consumed Amt of Equity(CF)(reduce d)_++increasedto (5,962,500) (4,539,100) (3,554,700) (2,768,333) (19,824,683) balance the budget Budgeted Reserves 33,439,700 33,773,400 34,175,500 37 Packet Page -143- 2/23/2016 11 .A. Unincorporated Area General Fund (111) MSTD General Fund(111)Millage History As a point of reference, the following graph plots the historical MSTD General Fund (111) millage rate, as well as the policy proposed millage rate for FY 2017 through FY 2019, which includes the proposed marginal millage rate increase to restart the landscape median capital program. Unincorporated MSTD General Fund(111)Millage History and Recommended Millage Neutral Tax Rates 0.8500 (FY 2005 to FY 2019) 0.8069 0.8069 0.8069 0.8069 0.8069 0.8069 0.8000 - — 0.7500 0.7000 III tz cl ,, 0.6912 0.6912 0.7161 ll II II 0.6500 0.6000 IIIUIIII Results of Unincorporated Area General Fund Analysis The County Manager will be recommending a reset of the Unincorporated Area General Fund millage rate to $.8069 or that rate levied in FY 2007. The table below depicts the marginal dollar increase which will be devoted to general operations and general government capital as well as that component allocated toward restart of the median landscape capital program. Incremental ad valorem dollars obtained through taxable value increases under the current $.7161 millage rate will fund recurring operations and provide resources to maintain the road network, storm-water system, and community park capital. The marginal rate to $.8069 or $.0908 will be used exclusively to fund median landscape capital as well as landscape maintenance going forward. The Board should also note the magnitude of our future maintenance and asset replacement responsibility and dedicate resources gained through an increasing taxable value base toward this purpose. FY 16 Adopted and Additional Budgeted Additional Budgeted Unincorporated Area Recommended Millage Neutral Ad Valorem Revenue Projections Each Ad Valorem Revenue Projections General Fund Tax Rates Year—Operations and General Capital Each Year—Median Landscape Capital Restart FY 16 0.7161 FY 17 0.8069 $2,159,300 @ 7.0%TV Increase $4,185,200 @ 7.0%TV Increase FY 18 0.8069 $2,310,200 @ 7.0%TV Increase $4,478,100 @ 7.0%TV Increase FY 19 0.8069 $2,472,200 @ 7.0%TV Increase $4,791,600 @ 7.0%TV Increase 38 Packet Page -144- 2/23/2016 11 .A. In order for Collier County to continue providing high quality best value services; continue to address backlog infrastructure maintenance; replace backlog equipment and vehicles; maintain its reserve and cash positions pursuant to policy and representative of a investment quality credit rated organization, it is essential to capture those additional ad valorem dollars generated by increasing taxable values as shown above. Failure to do so will jeopardize service levels and make it very difficult to maintain the wonderful infrastructure investment which this community enjoys. As an example, in FY 2017, the projected rolled back rate within the Unincorporated Area General Fund is $.6881 which would raise $1,291,900 less than levying the current rate of $.7161. While the rolled back rate would produce $825,800 more than the FY 2016 budgeted levy due to new construction taxable value, relying simply on new construction taxable value is not a sustainable model going forward when attempting to recover from an economic recession and knowing the level of investment required to simply maintain our assets let along expand services and facilities based upon AUIR requirements and servicing the needs of an expanding population. FY 2017 The FY 2017 budget projection is based upon a 7.0% tax base increase. Property taxes and the state shared communications services tax represents on average approximately 92% of the operating revenue (less transfers) within the Unincorporated Area General Fund (111). Once again, changes to distribution and structure of the communication services tax could be discussed as part of the Governor's $1 billion tax cut package. Also, there is the assumption that no legislation will be passed further eroding a local government's ability to set and raise ad valorem taxes. Transfers from the Unincorporated Area General Fund grew by $1.5 million between FY 2015 and FY 2016 to $6.9 million. For FY 2017, transfer expense is planned at $8.6 million. These transfer dollars are programmed for Park, Transportation, and Storm-Water replacement capital purposes plus vehicles and equipment. Sustaining these capital appropriations and maintaining necessary transportation, landscaping park, code, planning and general operations in this fund requires at the very least a millage neutral tax position along with continued state shared communication services tax revenue. This model is not sustainable under a rolled back millage rate and /or loss of the communication services tax without mid— year budget reductions or the introduction of replacement revenue sources like a franchise fee. Any required mid-year cuts will likely affect transportation operations, park and recreation programs and other non public safety services. Beginning in FY 2009, the Unincorporated Area General Fund absorbed part of the Transportation operating transfer which had been borne previously by the General Fund (001). State Law and specifically section 129.02 requires the establishment of a separate County Transportation Trust Fund to "carry on all work on roads and bridges in the county..." Collier County Transportation operations are funded primarily within Transportation Operating Fund (101). Since inception of the Transportation Division in FY 2001 and continuing through FY 2008, Transportation Fund (101) has received as its primary revenue source a transfer from General Fund(001)—not MSTD General Fund(111). 39 Packet Page-145- 2/23/2016 11 .A. The following table depicts budgeted dollars transferred to support transportation operations (Fund 101) from the General Fund and Unincorporated Area General Fund. General Fund(001) Unincorporated Area Total General Fund(111) FY 08 $18,066,900 $0 $18,066,900 FY 09 $9,864,700 $7,693,500 $17,558,200 FY 10 $7,935,400 $8,786,900 $16,722,300 FY 11 $12,971,400 $2,912,800 $15,884,200 FY 12 $12,366,900 $2,825,400 $15,192,300 FY 13 $11,496,300 $2,272,200 $13,768,500 FY 14 $15,548,500 $0 $15,548,500 FY 15 $16,091,300 $0 $16,091,300 FY 16 $15,858,400 $0 $14,503,400 FY 17 $15,332,400 $0 $15,332,400 The FY 2014 transfer was increased one time by an additional $2.4 million to fund needed equipment replacement and certain operations. This additional transfer reduced the road (fund 313) transfer one time accordingly. For FY 2017, this transfer will once again be solely funded from the General Fund. FY 2018 Assuming that taxable values will increase by 7.0% in FY 2018, a millage neutral budget coupled with a reduction in beginning fund balance could result in a potential budget planning deficit of $3.9M as depicted within the preceding trend analysis. This analysis has built in an anticipated communication services tax reduction. The trend analysis shows continued erosion of the funds cash position. This model is certainly not sustainable and absent revenue side enhancements budget reduction measures would be instituted. Continued funding for median landscape capital improvements is planned. FY 2019 Continuation of millage neutral into FY 2019 under a 7.0% increase in taxable value would generate a modest increase in ad valorem revenue. This increase is certainly not enough to compensate for the loss in fund equity and planned capital asset maintenance. Continued funding for median landscape capital improvements is planned. For planning purposes and assuming continued decline in beginning budgeted fund balance, a deficit of $6.4 million could be encountered. Absent multi-year budget management mid-year, the model depicts a total fund equity loss from FY 2017 through FY 2020 totaling $14.2 million. 40 Packet Page -146- 2/23/2016 11 .A. Unincorporated Area General Fund Trend Analysis Unincorporated Area MSTD General Fund(111)Trend Analysis Adopted Budget Forecast Forecast Forecast Forecast Forecast FY 2016 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 (Increase 7%TV) (Increase 7%TV) (Increase 7%1V) Revenues Ad Valorem 30,888,800 29,653,200 -4.0`% 31,686,300 6,911 33,904,300 7.4% 36,277,600 70% Ad Valorem-Landscaping Component 0 0 NIA 4017,800 N/A 4,299,100 7.0% 4,600,000 Communication Services Tax 4,700,000 4,700,000 0,41'5 4,700,000 0,1 t 3,700000 -21-3`.4; 2,700,000 -27.0% Other Revenue 6,481,900 6,512,400 05% 8,082,200 24.1% 8,324,666 3.f% 8,407,883 10% Less 5%Required By Law (2,030,500) 0 100 CM: 0 N/A 0 N,OA 0 N/A Carryforward 5,667,800 8,413,900 45_53,4 6,325,200 74_;6 4,576,300 27.5% 641,066 350% (5,754,211) Total Revenues 45,708,000 49,279,500 7.8',x, 54,811,500 '211% 54,804,366 5 011 52,626,549 -4-0% Expenditures Landscape Maintenance 5,506,000 5,579,300 1.3<- 5,833,900 .9% 6,417,300 10- ' 7,059,000 10.0 Roads 2,500,000 2,500,000 0-03-3 2,562,500 2-5% 3,062,500 15.53. 3,562,500 15,3% Parks&Rec, 13,084,200 12,650,000 -5 314 13,405,000 5 410 14,062,800 4.9% 14,765,900 5 051 Code Enforcement 4,488,200 4,416,000 -1.6% 4,587,600 3.9% 4,817,000 5,fl% 5,057,800 500=:5 Other Departmental 8,223,700 7,808,700 5.0(1 8,543,300 9.411 8,970,500 5:0% 9,419000 5.05: Transfers 10,000,300 10,000,300 00% 15,302,900 530; 16,833,200 10 0% 18,516,560 10.0`73 Reserves 1,905,600 0 -10105/. 0 0 0 Total Expenses 45,708,000 42,954,300 -5052 50,235,200 17.0(1 54,163,300 7.:5% 58,380,760 7.5% Fund Balance 6,325,200 4,576,300 641,066 (5,754,211) Total Amount of Equity Consumed Equity Reduction to balance budget (2,088,700) (1,748,900) (3,935,234) (6,395,277) (14,168,111) Budgeted Reserves 2.224,200 2,224,200 2,224,200 41 Packet Page-147-