Agenda 03/13/2018 Item #11F03/13/2018
EXECUTIVE SUMMARY
Recommendation to Adopt the FY 2019 Budget Policy.
OBJECTIVE: That the Board of County Commissioners (Board) adopt policies to be used in
developing the Collier County Government budget for FY 2019.
CONSIDERATIONS: For staff to begin preparation of the FY 2019 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 2019 budget. The budget policy document is broken down into three distinct elements. The first
consists of budget policies proposed in FY 2019 that require policy direction from the Board. The second
element consists of routine budget policies that the Board has endorsed for several 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 21, 2018
and if necessary Friday, June 22, 2018 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 26 through June 29, 2018 in
Orlando.
For informational purposes, adoption of the maximum tentative millage rates is scheduled for Tuesday,
July 10, 2018. The Board is required by Florida Statutes to provide the Property Appraiser with the
proposed millage rates by August 1, 2018 to prepare the Notice of Proposed Property Taxes.
Finally, the Board needs to establish September public hearing dates for the adoption of the FY 2019
budget. The School Board has tentatively scheduled September 11, 2018 for their final budget hearing.
Recommended dates for the Collier County budget public hearings are Thursday Septe mber 6, 2018 and
Thursday September 20, 2018.
FISCAL IMPACT: The adopted policies will serve as the framework for the development of budget and
ad valorem taxation issues for FY 2019.
GROWTH MANAGEMENT IMPACT: There is no Growth Management impact.
LEGAL CONSIDERATIONS: The County Attorney has approved this item as to form and legality.
Majority support is required for Board approval. - JAK
RECOMMENDATION: 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, 2018 deadline for the
Supervisor of Elections, the Sheriff’s Office and the Clerk’s budget submittals.
PREPARED BY: Mark Isackson, Director of Corporate Financial and Management Services
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03/13/2018
ATTACHMENT(S)
1. Budget Policy Resolution signed 2018 (PDF)
2. Fiscal Year 2019 Proposed Budget Policies-recommended (DOCX)
3. FY19 Budget Policy (PPTX)
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03/13/2018
COLLIER COUNTY
Board of County Commissioners
Item Number: 11.F
Doc ID: 5006
Item Summary: Recommendation to adopt the FY 2019 Budget Policy. (Mark Isackson,
Corporate Financial and Management Services Division Director)
Meeting Date: 03/13/2018
Prepared by:
Title: Operations Coordinator – Office of Management and Budget
Name: Valerie Fleming
03/07/2018 9:29 AM
Submitted by:
Title: Operations Coordinator – Office of Management and Budget
Name: Valerie Fleming
03/07/2018 9:29 AM
Approved By:
Review:
Office of Management and Budget Valerie Fleming Level 3 OMB Gatekeeper Review Completed 03/07/2018 9:29 AM
Budget and Management Office Mark Isackson Additional Reviewer Completed 03/07/2018 9:46 AM
County Attorney's Office Jeffrey A. Klatzkow Level 3 County Attorney's Office Review Completed 03/07/2018 10:54 AM
County Manager's Office Leo E. Ochs Level 4 County Manager Review Completed 03/07/2018 12:17 PM
Board of County Commissioners MaryJo Brock Meeting Pending 03/13/2018 9:00 AM
11.F
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11.F.1
Packet Pg. 175 Attachment: Budget Policy Resolution signed 2018 (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 1
Fiscal Year 2019
Proposed Budget Policies
Collier County Board of County Commissioners
March 13, 2018
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”. Annual policy recommendations to be adopted are
highlighted in gray on policy document pages 16 thru 20; 22 & 23; 25 thru 35. 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 2019 and beyond.
The FY 2019 budget will be planned and prepared within a regional economic environment
which remains relatively stable among key housing, employment, visitation and demographic
indicators. Taxable value County wide has increased for six (6) consecutive years. Collier’s
median home price was $418K in December 2017, up $11K from December 2016. Median home
prices have consistently reached the low to mid $400K value over the past year. Monthly single-
family home sales decreased in December 2017 year over year by 13 units or 4% to 328 units.
While January-December 2017 visitation to the destination was down 1.1%, those visiting the
destination during the period spent more producing a total economic impact which increased
3.4%. New construction permitting remains positive with 194 permits issued in December 2017
representing an increase of 31 permits over November 2017. The County’s unemployment rate
for December 2017 was 3.8%. This rate is slightly higher than the State unemployment rate of
3.7% for the same December period and lower than the national unemployment rate of 4.1%.
While the regional economy remains stable, fiscal conservatism must remain a guiding
philosophy in our operational and capital budgetary planning and the budget will continue to be
flexible to reduce the County’s exposure in the event of an economic downturn.
Hurricane Irma Budgetary and Financial Impact
The County has set up necessary budget in an amount totaling $169.8 million and will be cash
flowing all expenses anticipating reimbursement through insurance and FEMA. Since October
2017, regular reports have been prepared for every Board meeting documenting the budget
amendments processed and actual expenses paid. Actual expenses paid to date total $76.2
million and it is expected that total Hurricane Irma expenses paid will likely range between $110
and $125 million. The County’s local non-reimbursable share after receipt of FEMA
reimbursements is estimated at $20 million. This local share will be paid from the General Fund
to Solid Waste and general governmental capital funds; a loan from Public Utilities to Solid
Waste and/or a combination of the approaches.
It is conceivable that the County will not see a significant amount of reim bursement revenue
until FY 2019. Almost half of fiscal year 2018 is finished and no FEMA reimbursement revenue
has been received. We have no history of how long it will take to receive any reimbursement
revenue. To cash flow this natural disaster, three specific budget techniques were utilized. First,
in funds where sufficient cash exists, FEMA revenue was budgeted and corresponding expense
11.F.2
Packet Pg. 176 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 2
budget appropriated anticipating some level of reimbursement in the coming months. Note that
there is no cash behind budgeting FEMA revenue. Existing and routine incoming fund cash is
relied upon until the receipt of FEMA revenue. Second, $59.7 million in existing capital project
budgets were re-allocated – primarily in the public utility, storm-water and road program areas.
Third, reserves were drawn down from the General Fund and various utility funds.
The following summary table for FY 2017 and FY 2018 shows the extent of budget deferrals
necessary to fund Hurricane Irma recovery as of February 27, 2018.
Fund Category FEMA Revenue
Budgeted
Capital Project
Deferral
Reserves
(Reduced)
Total
Budget Deferrals
General Governmental $15,537,800 $18,139,000 $16,877,100 $50,553,900
Enterprise $48,500,000 $41,557,700 $22,300,000 $112,357,700
Constitutional - Sheriff $7,000,000 $7,000,000
Total $64,037,800 $59,696,700 $46,177,100 $169,911,600
Approximately 62.3% of all budget appropriations is intended to fund community wide debris
removal; 10.4% is appropriated for debris removal from canals; and the remaining 27.3% is
available to pay for various structural repairs and damage to the transportation network, parks
system, general governmental buildings, landscaping and water and wastewater systems.
The Office of Management and Budget (OMB) is monitoring very closely, the reimbursement
stream with a keen eye toward implementing any necessary FY 2018 budget cuts to ensure that
sufficient cash balances are maintained in affected funds. Any necessary budget cuts will mostly
affect capital transfers and direct capital budgets through reduction in general governmental
capital transfers and deferring appropriate capital projects. Budget management will also include
slowly reducing various budget allocations connected with funding hurricane expenses and
returning that budget to the appropriate donor operating and capital accounts.
There will be a significant budgetary impact both in FY 2018 and FY 2019 and this impact will
largely depend upon when reimbursement revenue is received. The FY 2018 impact is largely an
exercise in maintaining sufficient General Fund and Enterprise Fund cash heading into FY 2019
and the postponement or deferral of capital projects pending receipt of reimbursement revenue. If
reimbursement revenue is delayed significantly – well into the last quarter of FY 2018 and FY
2019, typical operational and capital transfers out of the General Fund and Unincorporated Area
General Fund will be cut/delayed protecting cash balances and existing capital dollars deferred
will not be restored until reimbursement revenue is received. Essentially, County financial
management is functioning as if a recessionary environment exists until most of the expected
reimbursement revenue is received.
County financial management and financial planning must always account for and cover any
natural disaster regardless of when the event may occur. Four months from now, Hurricane
season will begin and with resources stretched from Hurricane Irma, especially absent any
FEMA reimbursement, the County must be positioned to cover any event that may occur during
the 2018 season. Maintaining financial resources at current levels is certainly recommended to
reduce the level of risk and exposure which could materialize if the County was required to once
again prepare for and recover from a 2018 storm.
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Packet Pg. 177 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 3
General Budget Planning
The FY 2019 budget plan allocates funding for recurring operational expenses, new operational
expenses connected with capital facilities and continue funding for replacement capital
infrastructure and maintenance as well as new capital initiatives. For the past four (4) fiscal
years, capital and operational competition for limited resources have placed 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
and the County’s overall budget and financial model.
The budget as a flexible financial planning document will be subject to many changes in FY
2019 with several financial variables yet to be determined, including;
Timing and extent of new debt to finance planned capital projects like the amateur
sports complex, Corkscrew Park, bridge replacements, storm-water improvements,
roadway improvements and constitutional officer capital facilities
Extent of cash and carry from any new revenue sources like a local option
infrastructure sales tax, storm-water utility fee and/or franchise fee
Board policy guidance on issues like workforce housing and mental health
Impacts of the additional homestead exemption if approved by the voters on the 2018
ballot
Timing of FEMA and other Hurricane Irma reimbursement revenue.
From a revenue policy perspective, caution is urged as the Board considers the potential
introduction of new non-recurring and/or statutory restricted limited use revenue sources with a
proviso that there will be some form of property tax rate reduction. Trading or exchanging a
reduction in property taxes which is a recurring general-purpose revenue source for a non-
recurring limited use capital revenue source such as the local option infrastructure sales tax or
reducing property taxes in exchange for a limited use and statutorily restricted special revenue
source such as a storm-water utility fee is considered by all professional accounts risky revenue
policy. The County’s general governmental maintenance responsibilities will only increase in the
future as new capital facilities are built and existing infrastructure built over the last 10 -15 years
require servicing.
Annual Budget Policies to be 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 devoted to
public safety, public health, debt management and replacement of priority mission critical
infrastructure and equipment. For FY 2019, ad valorem taxes will once again dominate the
County’s budgetary revenue mix – comprising about 45% of total net annual operating revenue
and 69% of General Fund revenue sources. Eighty (80%) of General Fund revenue is comprised
of property taxes, sales tax and state shared revenue.
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Packet Pg. 178 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 4
Thus, significant attention is paid to ad valorem taxes and those factors that can influence
millage rate and tax levy decisions. The decision to develop the FY 2019 budget around the
rolled back rate, millage neutral rate or some other rate is a key decision made by the Board and
this decision will determine the level and extent of operational, capital and constituti onal
funding. Under millage neutral policy guidance, the FY 2019 General Fund levy will increase
$17,930,900 over FY 2018. Under a rolled back tax rate policy, the General Fund Levy will
increase $9,350,100 which is a $8,580 800 levy loss from millage neutral. The following points
are noteworthy in considering general governmental tax policy for FY 2019.
The County’s current General Fund millage rate of $3.5645 has been levied for the past nine
(9) years or since FY 2010. During the recession when taxa ble value dropped some $24
billion, this millage rate levy adopted by the BCC pursuant to policy required General Fund
budget reductions totaling $123 million between FY 2009 and FY 2013. Conversely, keeping
the millage rate neutral since FY 2014 when taxable value began increasing has allowed the
County to raise $81.5 million in additional dollars above the rolled back rate to fund general
governmental capital and operating programs cut during the recession or to maintain levels of
service deemed important by the BCC as part of annual budget guidance.
Property taxes comprise 72% of total General Fund revenue.
If you assume that half of the approximately 200,000 properties that receive TRIM notices
would be eligible for the additional $25,000 homestead exemption if approved in an
upcoming 2018 ballot initiative, taxable value for the 2019 tax year (FY 2020) could drop by
$2,500,000,000. As a result, the potential financial impact to the County’s General Fund of
Ad Valorem
45%Gas/Sales Tax
8%
Permits/
Assessments/
Fines
8%
Intergov'tal
Revenues
2%
Service
Charges
31%
Impact Fees
5%
Bond
Proceeds/
Interest
1%
Sources of Current County Government
Operating Revenues all Funds (FY 2018)
Ad Valorem
69%
Sales Tax
9%
State Revenue
Sharing
2%Intergov'tal
Revenues
0%
Fines,
Permits,
Charges
3%
Inter
est &
Misc.
0%
Carryforward
12%
Interfund
Transfers and
Payments
3%
Transfers from
Consitutional
Officers
2%
FY 2018 General Fund Revenue Sources
General Fund
85%
MSTU's 2%
Pollution
Control 1%
Unincorporated
Area General
Fund 12%
Property Tax by Major Funds
11.F.2
Packet Pg. 179 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 5
layering on another $25,000 homestead exemption could be as much as $8.5 million. This
equates to about 2.8 percent of the FY 2018 levy.
If the Board had voted to levy the rolled back rate in FY 2018, $14 million in General Fund
capital and or operating program cuts would have been necessary. This le vel of budget
adjustment would not simply be accomplished by reducing reserves since reserves are an
integral component of preserving General Fund cash at year end; provide a signal of financial
strength to the rating agencies; and serve as financial lever age for unforeseen natural
disasters and/or shifts in Board policy mid-year. Cuts would have likely come from reduced
capital transfers to transportation system improvements, storm-water and parks; elimination
of all expanded requests funded by the General Fund required to service new facility
improvements and current service County Manager Agency operating reductions.
Programmed within the General Fund annually is roughly $35 million dollars on average
supporting various general governmental capital init iatives in the areas of transportation,
parks and recreation, storm-water, airports, museums and of course all constitutional capital
needs.
Constitutional operating transfers out of the General Fund constitute 50% of all General Fund
appropriations. While the Board can control these appropriations, based upon history it is not
likely that cuts would be made to constitutional officer operations, especially the Sheriff.
Of the $414 million-dollar FY 2018 General Fund Budget only about 28 percent or $115.8
million is considered somewhat discretionary. The remaining appropriations are classified as
Health, Safety and Welfare; Debt Service and or Mandates where there is very limited to no
discretion over appropriations.
Each year as new general governmental capital improvements are brought on line pursuant to
Board policy, the level of operations required to support these facilities grows.
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Packet Pg. 180 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 6
New general governmental capital improvements over the next five years include projects such
as land acquisition for the amateur sports complex; constructing amateur sports complex
facilities; Big Corkscrew Regional Park; Sheriff’s capital projects including a new evidence
facility; Vanderbilt Beach Road extension; bridge rehabilitation and replacement; and storm-
water capital. Whether financed or funded through new revenue sources, maintaining this
enhanced level of infrastructure improvement will require substantial investment in general
governmental operating revenue which includes ad valorem taxes.
Other factors that will be significantly impacted by general governmental tax policy include;
1. Extent of capital, debt and operational transfer dollars expended by the General Fund and
Unincorporated Area General Fund. In the numbers estimate above, an $8.6 million
General Fund revenue loss between millage neutral and rolled back will impact mostly
capital transfers, expanded operations and recurring operations. Levying the rolled back
rate in the Unincorporated Area General Fund will result in a loss of $927,300 to the
median landscape capital program.
2. Level of service standards set by the Board for agencies and departments which are
funded within the General Fund and Unincorporated Area General Fund.
3. Proper level of resources to cover the organization’s asset maintenance responsibility
including equipment replacement. Competing priorities between operating and capital
expenses within a revenue structure heavily reliant upon property taxes.
4. General Fund and/or Unincorporated Area General Fund support for new or re-prioritized
operating and capital initiatives like general governmental facilities maintenance;
transportation system improvements, storm-water, landscaping, asset management,
equipment replacement, economic development; tax increment financing initiatives; EMS
capital; Constitutional capital; workforce housing; amateur sports complex management
and maintenance; natural disaster hardening including wildfire mitigation; social service
programming; and/or other unforeseen operational or capital policy directives.
5. Impacts of potential unfunded mandates including continued state legislative attacks to
limit a counties home rule ability to raise property tax revenue and repeated attempts to
alter existing shared revenue sources like the Communication Services Tax (CST);
potential mandates to require law enforcement officers to wear body cameras; further
reductions in state health care and social service funding as well as impacts from the
recently passed federal tax law revisions.
6. Level of General Fund Ad Valorem operating support extended to constitutional officers
and specifically the Sheriff.
7. Pressure on the Unincorporated Area General Fund given the anticipated capital and
operating service demands, heavy reliance upon property tax revenue and the uncertainty
surrounding the level and extent Communication Services Tax proceeds.
11.F.2
Packet Pg. 181 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 7
What will not be impacted by the Board’s tax policy decisions are;
1. Maintaining sufficient beginning year General Fund and Unincorporated Area
General Fund cash balance.
2. Continued growth in general governmental reserves.
3. Payment on the County’s debt service
4. Maintaining the County’s excellent investment quality credit rating.
Discussion of Taxable Values, Millage Targets for the General Fund (County-Wide) and
Unincorporated Area General Fund and Related FY 2019 Budget and Financial Strategies
With six (6) consecutive increases in county-wide taxable value since FY 2013, maintaining a
millage neutral policy position remains the recommended objective. County-wide taxable value
has exceeded the previous high mark of FY 2008. Unincorporated Area General Fund taxable
value remains below the high mark achieved in FY 2008, although at the FY 2019 budget
planning numbers, FY 2008 taxable values for the unincorporated area will also be surpassed.
The following table provides a history of County-wide and Unincorporated Area taxable values
over the past eleven (11) years (tax year 2007-2017) as well as the budget planning projection for
tax year 2018 (FY 2019).
Tax Year
County Wide
Taxable Value
County Wide %
inc. (dec)
Unincorporated Area
Taxable Value
Unincorporated 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) $70,086,389,131 8.5% $43,075,586,559 8.7%
2016 (FY 2017) $77,115,163,725 10.0% $47,455,161,371 10.2%
2017 (FY 2018) Pre-
VAB $83,612,179,281 8.4% $51,764,392,137 9.0%
2018 (FY 2019)
Planning $88,628,910,038 6.0% $54,870,255,665 6.0%
The January 2018 State Ad Valorem Estimating Conference Report was released recently for the
2018 tax year (FY 2019). The report projects that Collier County certified taxable values on July
1, 2018 will increase 7.6%. We have been adept over the years at sizing the budget around a
conservative yet functional taxable value planning number considering that most budget
planning is over before the certified taxable value number is received from the Property
Appraiser.
Property tax revenue comprises 69% of the General Fund (001) and 30% of the total net county
budget, including fund balances. From new money sources, which excludes fund balance,
property taxes comprise 45% of available total net operating revenue sources. According to the
Tax Policy Center of the Urban Institute and Brookings Institution, local governments across the
United States collected about $1.5 trillion of general revenue and 29.7% of these collections
were from Property Taxes.
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Packet Pg. 182 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 8
The taxable value estimate must allow for operational and capital programming needs as well as
reserve growth. Budget planning around a 6.0% taxable value increase is realistic. Any positive
difference in taxable value above the planning ceiling and the resulting increase in ad valorem
revenue can be used to strengthen the Board’s General Fund and Unincorporated Area General
Fund reserves and/or be applied to much needed 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 thirteen (13) years are shown in table form below.
Millage Area FY 06 FY 07 FY 08 FY 09 FY 10-FY 16 FY 17-FY 18
General Fund $3.8772 $3.5790 $3.1469 $3.1469 $3.5645 $3.5645
Unincorporated Area
General Fund $.8069 $.8069 $.6912 $.6912 $.7161 $.8069
The following table depicts taxable values (based upon the October DR 422 values) and levies at
increases of four (4), five (5), six (6), seven (7) and eight (8) percent assuming a millage neutral
General Fund operating tax rate; and maintaining the Unincorporated Area General Fund tax rate
at $.8069 with the incremental rate above current millage neutral or $.0908 earmarked to
continue funding the unincorporated area median landscape capital program.
The respective General Fund and Unincorporated Area General Fund gross dollar values at a
millage neutral operating tax rate and that tax rate connected with the landscape capital program
at the various taxable value (TV) scenarios is also shown below.
Current
Taxable Value
Pre VAB
FY 2019 @
4% TV
increase
FY 2019 @
5% TV
increase
FY 2019 @
6% Policy
Planning
Numbers
FY 2019 @
7% TV
increase
FY 2019 @
8% TV
increase
General Fund 83,612,179,281 86,956,666,452 87,792,788,245 88,628,910,038 89,465,031,831 90,301,153,623
Unincorporated
Area GF 51,764,392,137 53,834,967,822 54,352,611,744 54,870,255,665 55,387,899,587 55,905,543,508
Current Levy
Ad Valorem
revenue @ 4%
TV increase
Ad Valorem
revenue @ 5%
TV increase
Ad Valorem
revenue @ 6%
TV increase
Ad Valorem
revenue @ 7%
TV increase
Ad Valorem
revenue @ 8%
TV increase
General Fund 298,035,613 309,957,038 312,937,394 315,917,750 318,898,106 321,878,462
Unincorporated
Area GF
(Operating) 37,068,481 38,551,220 38,921,905 39,292,590 39,663,275 40,033,960
Unincorporated
Area GF
(Landscape Cap) 4,700,207 4,888,215 4,935,217 4,982,219 5,029,221 5,076,223
Total
Unincorporated
Area GF at
$.8069 41,768,688 43,439,435 43,857,122 44,274,809 44,692,496 45,110,183
11.F.2
Packet Pg. 183 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 9
4% Variance
from Current
Levy
5% Variance
from Current
Levy
6% Variance
from Current
Levy
7% Variance
from Current
Levy
8% Variance
from Current
Levy
General Fund
(millage neutral)
11,921,425 14,901,781 17,882,137 20,862,493 23,842,849
Unincorporated
Area GF
(Operating)
1,482,739 1,853,424 2,224,109 2,594,794 2,965,478
Unincorporated
Area Landscape
Capital at $.0908
millage neutral
188,008 235,010 282,012 329,014 376,017
Total
Unincorporated
Area GF Levy
Increase
1,670,747 2,088,434 2,506,121 2,923,808 3,341,495
If taxable values fall below the six (6.0) 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.
Summary of Significant FY 2019 Proposed Budget Strategies to Achieve a Structurally
Balanced Budget
The following table highlights certain FY 2019 budget strategies which will be detailed within
this document and which the Board will consider as part of Adopted Budget Policies. Policy
document pages are included for reference in the right-hand column.
1 The County Manager is proposing to submit one FY 2019 millage neutral General Fund (001)
operating budget along with service level and related budgetary and millage implications.
Designate approximately fifty-eight (58) percent of the planned ad valorem revenue increase after
constitutional transfers and satisfying reserve requirements to capital initiatives with the
remaining forty-two (42) percent after constitutional transfers and satisfying reserve requirements
to cover operations and recurring costs due to any expanded services. Any expanded services will
be limited to mission critical functions such as but not limited to capital execution, asset
maintenance and replacement execution, asset management and front -line service delivery.
Pg.’s 1
thru 16
2 Proposed guidance for the Unincorporated Area General Fund (111) includes maintaining the
millage rate at $.8069 and earmarking $.0908 or the marginal increase above the current operating
millage rate to continue funding the median landscape capital program. The operating millage rate
of $.7161 will be used to fund reserves at policy levels and fund existing and expanded operations
as well as capital transfers.
Pg.’s 1
thru 16
3 Over the past three (3) fiscal years a total of 187.5 expanded FTE’s was added to the County
Manager’s Agency (FY 2016 = 68.25; FY 2017 = 78.25; FY 2018 = 41). Of this total, general
governmental operations benefitted from the addition of 117.5 expanded FT E’s. County Manager
agency salaries grew by $6.8 million to $171.4 million or 50% of total Collier Co. government
salaries. As a side note Constitutional budgeted salaries grew by $11.4 million. Departments will
plan on a significantly diminished number of expanded positions in FY 2018 and requests will be
limited to mission critical functions like capital execution, asset maintenance and replacement
execution and front-line service delivery.
Pg. 19
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4 Pursue a strategy in FY 2019 which continues to plan for infrastructure replacement/maintenance
on a pay as you go basis while monitoring policy discussions and directives concerning the local
option infrastructure sales tax and storm-water utility. No debt will be programmed as part of the
adopted budget. Instead, any financing will be part of the amended budget based upon policy
directives.
Pg.’s 13
thru 16
and 23
thru 28
5 Continue budget parameters for enterprise operations which are tied to working capital guidelines
established by GFOA; capital obligations from the capital improvement element (CIE); any rate
or fee studies stipulations; priority agency wide initiatives; and statutory or ordinance spending
limitations. A critical review of reserve levels versus capital appropriations will be discu ssed
during budget deliberations especially considering the recent hurricane.
Pgs. 18
to 19
6 Continue County-wide capital transfers at an amount equal to or less than a 1/3rd mil equivalent
to continue General Fund contribution to cover growth related d ebt service and to help pay for
critically needed general governmental facility repairs.
Pg.’s 12
thru 13
and 27
7 Given Board discussions on February 13, 2018, it is anticipated that storm-water operating and
capital projects within the Unincorporated Area will be funded from proceeds collected through a
new storm-water utility. Further, projects with a general county-wide water shed benefit will still
receive modest funding through a transfer from the General Fund. The FY 2019 transfer is
programmed at $1.0 million. Dollars originally planned for transfer from the Unincorporated Area
General Fund in the amount of $4.5 million under a millage neutral budget would be generally
redirected to various capital and maintenance program areas such as park system improvements;
transportation network maintenance; soft capital infrastructure like IT, accounting system
upgrades; general governmental building maintenance; and expanded services connected with
new capital facilities.
Pg. 26
8 Continue to program the capital transfer designated to fund park capital projects from the General
Fund and Unincorporated Area General Fund. It is anticipated that the FY 2019 transfer will be no
less than the FY 2018 regular contribution of $2,350,000.
Pg.’s 13
thru 14
and 23
thru 25
9 Establish General Fund contingency reserve at 2.5% of total budgeted appropriation (less
capital/debt transfers). Grow the General Fund cash balance reserve by $5,000,000, bringing total
reserves to $45.5 million. It is projected that FY 2018 General Fund reserves will be reduced by
$12-15 million in support of hurricane clean up and restoration. The priority upon receipt of
reimbursement revenue will be reserve replenishment. Regardless, the $45.5 million reserve target
number will be achieved. This growth in the General Fund reserves is extremely important to
protect the funds beginning FY cash position, present a position of financial strength to the rating
agencies, avoid more aggressive expenditure controls as budget margins tighten and posit ion the
County to become more self-reliant knowing that federal and state funding as well as funding
guidelines will continue to tighten and become more onerous.
Pg.’s 28
thru 30
10 Use gas tax revenue to support road capital, maintenance and debt (with an emphasis on debt)
consistent with budget planning and statutory requirements
Pg.’s 26
and 27
11 Continue to discuss and pursue future new revenue sources intended to diversify the composition
of the County’s general governmental revenue mix
Pg.’s 3
thru 15;
39 thru
48
Limited general governmental operational expense increases are expected and will be
appropriated to account for new programs and services instituted during FY 2018, inflationary
adjusted fixed costs and maintaining a competitive compensation package. The December 2016
over December 2017 CPI is 1.8 percent.
A component increase of 2.5% devoted to operations at the department level is planned. This
means that department operations for FY 2019, 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 as well as expanded services. This includes
operating transfers. For FY 2019, the percentage operating adjustment will be translated into a
dollar value for each department head to allocate as priorities dictate.
11.F.2
Packet Pg. 185 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 11
A significant portion of remaining budget planning dollars will be applied to Agency wide
capital equipment, asset replacement and new projects. This will manifest itself primarily
through General Fund and Unincorporated Area General Fund capital transfers for general
governmental and constitutional facilities, the transportation network, parks, storm-water and
heavy equipment.
For FY 2019 planning purposes and discussion in this policy document, the total General Fund
Budget is represented to increase by $18,410,700. The following table depicts by category the
revenue and expense increases and decreases connected with the FY 2019 General Fund
Planning Budget and the variances from FY 2018. Also shown for comparison are the budget
variances by category between FY 2017 and 2018.
Major Revenue Variances: Variance between FY 2018
and Planning FY 2019
Variance between
FY 2017 and FY 2018
Ad Valorem Taxes $17,930,900 $23,028,000
Sales Tax 2,000,000 200,000
Revenue Sharing 1,000,000 200,000
Department Revenues 79,000 13,100
Enterprise and Federal PILT and Cost Allocation 1,181,300 413,900
Transfer Revenue (210,000) 113,100
Carryforward (2,502,500) 5,431,100
Less 5% Required Revenue Reserve (1,068,000) (1,167,400)
Total Revenue Increases $18,410,700 $28,231,800
Major Expenditure Variances
County Manager, Court’s and Other General
Operations $1,849,700 $1,648,200
Operating Transfer’s 860,300 1,585,600
Capital Transfer’s (1,773,200) 5,630,800
Sheriff Transfer 11,356,800 11,430,300
Other Constitutional Transfer’s 1,074,800 1,386,300
Reserves 5,042,300 6,550,600
Total Expenditure Increases $18,410,700 $28,231,800
Several observations can be made from this table. As we have noted continuously throughout
this document, ad valorem revenue dominates general governmental funding. Of significance
also is the importance of a healthy carry-forward (fund balance) at year end which influences
expenditure planning and the respective capital and operating allocations. Maintaining a healthy
fund balance requires priority funding of reserves as indicated in the analysis above. The drop-in
carryforward expected at year ending 9/30/18 is directly related to funding Hurricane Irma
expenses, lack of timely reimbursement revenue and the use of reserves to fund these expenses.
A reduced fund balance also has an adverse impact on capital transfers for FY 2019. It does not
help when the General Fund is required to loan the impact fee trust funds more than $9 million in
FY 2019 when these diverted dollars could be directly programmed for capital projects . But,
payment of debt is a top priority. Increase in the Sheriff’s transfer is planned for FY 2019 under
a 6% taxable value planning scenario in an amount similar to the FY 2018 amount when taxable
value increased 8.4%.
After much discussion about Conservation Collier and the stakeholders desire for a stand -alone
referendum authorizing a program restart, the Board remains in a position pending any
referendum on the program to pursue the purchase of select environmentally sensitive lands from
cash on hand within the maintenance fund in the amount of $32.5 million. Any dollars drawn
from the Conservation Collier maintenance fund to purchase environmentally sensitive land
11.F.2
Packet Pg. 186 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 12
would of course be re-paid either from additional tax proceeds from a separate referendum
authorized tax levy or a one-time increase in the General Fund millage rate. Maximizing return
on investment of program balances is the goal of all stakeholder’s and County agency
representatives. The County’s Investment Policy lists the authorized investment instruments as
well as all parameters under which said investments can be made. Investment of funds shall
generally have final maturities of not more than five (5) years. The combined program minimum
fund balance is currently established by the Board at $32 million.
The table below identifies the level and extent of adopted and mid-year budget reductions since
FY 2009. Between FY 2009 and FY 2013, a total of $118 million of General Fund budget
reductions were necessary to achieve a structurally balanced millage neutral tax rate budget
during taxable value declines and maintain adequate General Fund cash balances consistent with
an investment quality credit rated organization.
For the fourth (4th) time since FY 2009, no regular mid-year operating cuts are contemplated in
FY 2018. However, budget management is always ongoing and more magnified in FY 2018
considering Hurricane Irma. 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.
While it is important to continue the recovery process from significant budget reductions in the
years identified above which occurred due to the economic recession, this recovery and the level
of dollars devoted to asset maintenance and replacement 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 cash is always a major focus and by policy the cash and cash equivalent position is set at a
minimum of 10% of actual expenditures. Given our current General Fund reserve levels, it has
been prudent to maintain a cash position in this fund of between 15% and 20% or between $55
million and $60 million.
-$40
-$30
-$20
-$10
$0
$10
$20
$30
$40
FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16 FY 17 FY 18MillionsGeneral Fund Budget Reductions
Changes in the Adopted Budget Mid-Year Budget Reductions
Total Reductions since FY 2009
$18,432,100
11.F.2
Packet Pg. 187 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 13
Asset Management and Future General Governmental Capital Improvements
Asset Management
Each year a significant portion of available annual resources are devoted to the maintenance and
management of the County’s infrastructure base. The current pay as you go strategy recognizes
that satisfying all new capital requirements over the next five (5) years will require some level of
financing absent either enactment of a local option infrastructure sales tax and/or other new
revenue option. Further, maintaining and managing existing infrastructure assets requires
additional resources in certain strategic areas to achieve a level of proactive management beyond
break fix. Despite the challenge, available resources will continue to be allocated in the most
prudent and economical manner to fund operations at required service levels and construct
strategic capital improvements.
The following table provides a description of historical budget allocations and what is currently
planned in FY 2019 from the General Fund budget to support ongoing asset maintenance,
strategic new capital requirements; and fund growth and non-growth debt obligations.
Category
General
Fund
Non-Growth
Debt
Loans to
Impact Fee
Funds -
Debt
Loans to
Impact Fee
Funds -
Projects
County
Wide
Capital
Transfer
for other
Capital
Transfer to
Parks
Transfer to
Road
Network
Transfer
to Storm-
Water
Total
FY 2014 $3,657,700 $4,342,300 $0 $6,841,400 $3,800,000 $0 $8,768,800 $4,730,100 $32,140,300
FY 2015 $3,079,600 $3,307,100 $7,813,200* $7,788,600 $3,441,200 $500,000 $9,499,900 $4,627,600 $40,057,200
FY 2016 $3,077,500 $5,376,500 $900,000* $10,677,500 $4,333,100 $750,000 $14,559,800 $1,549,600 $41,224,000
FY 2017 $3,073,000 $2,476,900 $0 $10,697,500 $4,000,000 $2,495,700 $8,460,000 $2,525,000 $33,728,100
FY 2018 $2,855,200 $3,306,800 $2,000,000 $12,006,000 $4,313,500 $1,100,000 $11,650,400 $1,627,000 $38,858,900
FY 2019 $2,849,500 $7,149,200 $2,100,000 $11,192,000 $2,145,000 $1,100,000 $9,300,000 $1,000,000 $36,835,700
*FY 2015: EMS Station, SOE Complex, & Sheriff Substation. FY 2016: Additional funding for Sheriff Substation. FY18: EMS Station.
FY 19 EMS Station.
For FY 2019, funding as planned above will of course be subject to the level and timing of
expected reimbursements for Hurricane Irma expenses and replenishment of General Fund
budgeted reserves. FY 2018 General Fund reserves have been reduced to date by $15 million to
set up hurricane appropriations and while it is expected that some level of reserve use will be
required to fund the County’s local share of hurricane recovery and restoration costs, at least $5
million will be returned to reserves in FY 2018 either through reduced capital appropriations,
reimbursement revenue or a combination of the two. Preserving General Fund cash, maintaining
adequate reserves, protecting the County’s investment quality credit rating and paying debt
service will always take priority as expenditure planning evolves. Generally, these priorities are
strategically managed and sufficient allocations are made in harmony with other capital and
operating spending appropriations.
Robust 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.
Area General Fund
Transfer
to Parks
Transfer
to Roads
Transfer to
Storm-Water
Total
FY 2014 $0 $0 $1,300,000 $1,300,000
FY 2015 $500,000 $3,860,000 $1,050,000 $5,410,000
FY 2016 $500,000 $2,427,300 $4,011,800 $6,939,100
FY 2017 $750,000 $3,300,000 $4,172,000 $8,222,000
FY 2018 $1,250,000 $4,000,000 $4,267,900 $9,517,900
FY 2019 $1,350,000 $4,250,000 $4,500,000 $10,100,000
11.F.2
Packet Pg. 188 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 14
With introduction of the storm-water utility fee, the planned $4.5 million transfer for storm-water
programming would be re-prioritized to increase reserves; support much needed transportation
network improvements; increase contributions to park capital projects and make a final one-time
contribution to replace road and bridge heavy equipment deferred during the recession.
Non-growth-related debt serviced by legally available non-ad valorem revenue from the General
Fund continues to decline 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 from $8,154,400 in FY
2010 to $2,849,500 in FY 2019, a 65% decrease.
Cumulatively since FY 2010 across all debt types (General Governmental and Business), non-
growth related annual debt service has dropped 41.4%. The FY 2019 impact fee loan figure from
the General Fund is planned to increase year over year due primarily to lagging general
governmental facility impact fee receipts and the construction of a new EMS facility.
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 for transfer in FY 2016, FY 2017, FY 2018 and that planned for FY 2019 by
category.
General Fund Supported Capital Category FY 16 Budget FY 17 Budget FY 18 Budget FY 19 Budget
Sheriff Orange Tree Sub-Station $900,000 $0 $0
EMS Station and Ambulance $0 $0 $2,000,000 $2,100,000
Helicopter $2,000,000 $2,000,000 $1,250,000 $0
Jail & other Sheriff Facility Repairs $664,200 $1,059,500 $4,100,000 $1,000,000
Sheriff’s replace accounting system $1,000,000 $0 $0 $0
Voting Machines $0 $0 $345,000 $400,000
800 MHz Public Safety Communication System $6,200,000 $3,525,000 $850,000 $0
Domestic Animal Control Shelter $0 $0 $500,000 $0
State & Regional Eco Development $475,000 $500,000 $0 $0
Library Capital/Books $350,000 $450,000 $550,000 $650,000
General Building maintenance and A/C Repairs $1,500,000 $4,090,500 $5,250,000 $6,000,000
Other General Governmental $488,300 $1,072,500 $411,000 $3,142,000*
Museum Capital $200,000 $200,000 $313,500 $200,000
Airport Capital $313,100 $300,000 $1,000,000 $445,000
General Governmental Vehicle Replacement
Supplement $1,500,000 $1,500,000 $1,750,000 $1,500,000
Park Capital $1,070,000 $2,495,700 $1,100,000 $1,100,000
Transportation Capital $14,559,800 $9,935,500 $11,650,400 $9,300,000
Storm-water Capital $1,549,600 $2,525,000 $1,627,000 $1,000,000
Total $32,770,000 $29,653,700 $32,696,900 $26,837,000
*$3,142,000 = $1m SAP; $1m replace roof & AC on Bldg F&H; $800k replenish reserves; balance is minor maintenance $342k
After setting aside the first $2,000,000 in FY 2015, a total of $7,250,000 is available at the
beginning FY 2018 (October 2017) to purchase a new helicopter. An additional set aside may be
required prior to actual procurement and this number will be determined based upon the existing
helicopter’s trade value and final equipment options.
A major initiative funded on a cash and carry basis over the past five (5) years is the phased
upgrade of the county-wide public safety communication system. To date, $15,985,000 has been
encumbered/spent for this important public safety project which is expected to be completed in
FY 2018.
11.F.2
Packet Pg. 189 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 15
Transfer dollars and direct maintenance funding for transportation and storm-water related
system improvements and operations from the General Fund and Unincorporated Area General
Fund will decrease in FY 2019 under the current planning scenario from that budgeted in FY
2018 by $2,479,600 to $44,338,100. Of course, the allocation may change as the FY 2019 budget
evolves leading into the June workshop. This allocation includes dollars to operate the
transportation network, dollars for road resurfacing, intersection improvements, bridges, storm-
water and airport capital.
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. This has and will continue to be the management strategy given the
competition for general government resources, uncertainty with 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.
Future General Governmental Capital Improvements
At the height of the recession in FY 2012, taxable value dropped 30 percent or $24.3 billion from
its then high of $82.5 billion in FY 2008. When considering the County’s tax base erosion, the
recession began in FY 2009 (October 2008) which was the first year the tax base began to erode
significantly and continued until FY 2013. The National Bureau of Economic Research indicates
that the recession based upon their labor and other indicators began in December 2007 (County’s
FY 2008 FY). The effects of the recession in the County lagged just behind the nation. The
County began to pull out of the recession in FY 2014.
Future general governmental capital improvements like the Vanderbilt Beach Road extension,
Big Corkscrew Regional Park, bridge replacement initiative and storm-water improvements were
postponed and or simply underfunded due to the recession and now require significant attention
with the cost for these improvements in the $300 million range. Funding for these improvements
remain flexible pending Board policy direction with consideration being given to continuation of
the pay as you go approach augmented by the issuance of general governmental revenue bond
debt, the local option infrastructure sales tax, creating a storm-water utility and accompanying
fee, franchise fee or some combination of the above.
Any decision regarding funding for the capital improvements mentioned above must consider a
recurring capital maintenance funding component which for example is not available through the
local option infrastructure sale tax.
Trading or exchanging a reduction in the property tax levy which is a recurring revenue source
for a non-recurring revenue source such as the local option infrastructure sales tax or reducing
the property tax levy in exchange for a very narrow and statutorily restricted special revenue
source such as a storm-water utility fee is considered by all professional accounts is risky
revenue policy.
11.F.2
Packet Pg. 190 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 16
The issuance of revenue bond debt remains a viable and attractive option to finance the
improvements above and the County is positioned to issue some form of debt depending on
Board policy decisions.
Regardless, The County will program and complete the capital improvements and the County’s
elected leadership has options at its disposal to accomplish the objective.
State Legislative Update
On the State legislative front, the House and Senate are currently $100 million apart on an $87 billion
spending plan. Though close in total appropriations, they differ significantly in approaches to spending
on issues dealing with public and higher education, Medicaid spending, the Florida Forever preservation
program, and the continued use of housing trust fund moneys for other purposes. Both budgets are $2
billion above FY 2017-18 spending, including current Hurricane Irma recovery costs. Both budget
documents were drafted before a February tax collection estimate and may be affected by any changes
in collection forecasts for the remainder of the fiscal year.
Approximately $330 million is being allocated for local projects; however, the Senate budget contains
nearly twice as many local requests than the House document. It is expected that the Senate will have to
pare down its list, likely giving preference to Irma-related resiliency projects.
The Senate has moved $50 million in beach re-nourishment funding from the Land Acquisition Trust Fund
to General Appropriations. Legislation is also moving that would set new scoring criteria in determining
annual funding priorities for beach management and erosion control projects.
Staff will also monitor any proposed legislation that has an adverse impact on local government
revenue streams. Bills may be introduced that; alter the Communication Services Tax structure,
introduce certain sales tax exemptions (i.e. commercial leases), modify current aviation fuel
taxes, and further limit local control over the levy of ad valorem taxes.
Collier County will continue to work with the Florida Association of Counties on a myriad of transparency,
taxation, and preemption issues at the Legislature and at the Constitution Review Commission which is
currently deliberating ballot proposals for the November General Election. The Commission only meets
every 20 years and can place a proposed change to the Florida Constitution on the ballot with 22 of 37
commissioner votes.
Recommended Budget Policy: Develop a General Fund (001) operating 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 maintaining
the millage rate at $.8069 and earmarking $.0908 or the marginal increase abov e the current
operating millage rate to continue the median landscape capital program. The existing millage
rate of $.7161 will be used to fund existing and expanded operations as well as capital transfers.
11.F.2
Packet Pg. 191 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 17
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.
Considering that transfers to the Constitutional Agencies in FY 2018 account for 51% of total
General Fund budgeted expenses and 71% of the General Fund ad valorem budgeted revenue,
their participation in any necessary reductions due in part to unexpected ad valorem revenue
shortfalls, tax rate reductions 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 $7,838,435 and
$10,084,838 respectively across all funds for years ending FY 2016 and FY 2017. The General
Fund receives on average 90% to 95% of all turn back revenue. Turn back revenue from the Tax
Collector accounted for 88% of all fund turn back revenue in FY 2016 and 62% of all fund turn
back revenue in FY 2017.
Recommended Budget Policy: Continue this policy.
Millage Targets for Collier County MSTU’s, MSTD’s
A Municipal Service Taxing Unit (MSTU) is a mechanism by which a county can fund a service
from a levy of ad valorem taxes, not countywide, but within all or a portion of the county. In the
County budget, an MSTU is used to segregate the ad valorem taxes levied within the taxing unit
BCC / Co
Attorney 1%
County
Managers
Agency 29%
Road Program
Subsidy 3%
Debt / Capital
Subsidy 6%
Reserves 9%
Courts 1%
Clerk of Courts
2%
Property
Appraiser 1%
Sheriff 43%
Supervisor of
Elections 1%
Tax Collector 4%
FY 2018 Percent of General Fund Budget
11.F.2
Packet Pg. 192 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 18
to ensure that funds derived from such levy are used to provide the contemplated services within
the boundaries of the taxing unit as required.
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 nineteen (19) dependent MSTU’s or MSTD’s active under Collier County’s taxing
umbrellas. Of these, eleven (11) have advisory boards which provide recommendations to the
Board of County Commissioners.
The subject of enacting an All Hazard’s MSTU tax has been discussed previously by the Board.
Lee County collects from unincorporated residents such a tax for a multitude of hazard response
purposes like wildfire management and mitigation, incident command training, equipment,
facility upgrades, etc. The tax was established by ordinance after notice and public hearing
requirements and is provided within Florida Statutes, 200.065. The current levy in Lee County is
$0.0693 per $1,000 of taxable value. This separate levy, if enacted in Collier County at the rate
above and applied within the unincorporated area, would raise $3.5 million.
Recommended Budget Policy: For FY 2019, it is suggested that those existing
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 existing MSTU’s and MSTD’s with advisory
board oversight be allowed to consider tax rate options ranging from tax neutral (rolled back
rate) to millage 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 2019, the following budget priorities must be satisfied for enterprise
and special revenue 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 sp ending
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.
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
11.F.2
Packet Pg. 193 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 19
fee variances will be addressed through expenditure 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 General Governmental revenue
centric budget policy.
Expanded Positions
The County Manager’s Agency added 41 FTE’s to the operation as part of the FY 2018 approved
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
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
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 2019, Departments will carefully consider expanded positions since proposed operating
expenditure guidance will likely require a significant re-prioritization of current budget. Any
expanded requests 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. All expanded positions and programs will be
reviewed by the County Manager and his recommendations will be presented as part of FY 2019
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.
The Consumer Price Index 12-month percent change from December 2016 to December 2017 is
1.8% for the Miami-Fort Lauderdale area.
11.F.2
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This is one of the indices that Collier County 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.
Like 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 2019 with the recommended structure submitted for Board
consideration at the June Workshop meeting.
For FY 2019, the County Manager is recommending a 2.0% general wage adjustment 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 maintain employee payroll buying power which may be eroded through
Florida Retirement System payroll deduction or health insurance co- payment increases. This
compensation adjustment is estimated to total $2.6 million.
A General Wage Adjustment totaling 2.9% was allocated in FY 2018 at a total cost of
$3,571,600. Adjustments to the compensation plan was completed in FY 2018 at a cost of
$727,700 and no further pay plan maintenance is proposed for FY 2019.
Recommended Budget Policy: Appropriate dollars equivalent to a 2.0% general wage
adjustment as part of FY 2019 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 09 FY 10 –
FY 12
FY 13 FY 14 FY 15 FY 16 FY 17 FY 18
FY 19
General Wage
Adjustment
4.20% 0.00% 2.00% $1,000 2.00% / $1,000 1.50% / $1,000 3.00% 2.90% 2.00%
Awards Program 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Pay Plan Maintenance 0.00% 0.00% 0.00% 0.00% 0.00% 1.50% 0.00% 0.60% 0.00%
Total 4.20% 0.00% 2.00% $1,000 2.00% 3.00% 3.00% 3.50% 2.00%
Health Care Program and 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.
There are several goals that guide how the County operates the plan within the small insurance
company context. These are:
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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 eligible County employees, except for 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.
Due to exceptional plan performance over the past six (6) plan years, plan reserves exceed
statutory minimums. Therefore, it is recommended that there be a no (0%) rate increase for FY
2019. 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
spouse’s 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. In addition, the
County was recently approved as a Blue Zones Workplace.
For example, of participants with four (4) to five (5) risk factors, 51% improved their LDL
cholesterol; 57% improved their Triglycerides and; 24% of participants above the 7% A1C
hemoglobin blood sugar range lowered their level to at or below the 7% recommended level.
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.
Over the last eight (8) years, participation has been consistently more than 94% for those
meeting the necessary qualifiers. This rate far exceeds those of large employers nationwide.
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
that for FY 2018, $1.88M in General Fund constitutional transfer savings would have been
realized as depicted below.
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2018 Health Plan Contributions by Agency
Agency
Average EE
Rate/Month
Average ER
Rate/Month
Total Rate
per Month EE % ER % EE's Sgl Fam
2018 Savings if all
Agencies were @
80/20%
BCC $271.00
$1,084.00 $1,355.00 20.00% 80.00% 1658 761 897
$0
-
SOE
$271.00 $1,084.00 $1,355.00 20.00% 80.00% 22 11 11
$0
-
COC $271.00 $1,084.00
$1,355.00 20.00% 80.00% 156 69 87
$0
-
PA $16.00 $1,339.00 $1,355.00 1.18% 98.82% 56 24 32 $691,680.00
TC $41.89 $1,313.11 $1,355.00 3.09% 96.91% 148 48 100 $421,296.00
CCSO $175.00 $987.00 $1,162.00 15.06% 84.94% 1119 373 746 $771,662.40
Total 3159 1286 1873 $1,884,638.40
Since the Presidential and Congressional elections of 2016, it is likely that some or most of the
provisions of the Affordable Care Act (ACA) will be rescinded, amended or replaced with
alternative plan provisions. Staff will monitor the activities of federal policy makers and adjust
the County’s health plan accordingly. But for now, certain provisions of the current federal
Affordable Care Act (ACA) impact 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 beginning in calendar year 2018 or the County’s FY 2018.
These compliance provisions will continue until rescinded or amended and present the potential
for federal penalties.
Currently, 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 more than 30 hours per week or 130
hours per month. Based upon the December 2017 census, the 95% test would affect
approximately 97 employees or less. If somehow the County failed to satisfy the 95% provision,
the fine could total approximately $4.1 million. Current compliance is 99.9%.
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 pursuant to the ACA.
Recommended Budget Policy: In FY 2019, no rate increase is recommended and 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, incl uding the
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Constitutional Officers. This policy treats all county employees equally in terms of cost
sharing for health insurance premiums.
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 wil l 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 2019, 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 and
again in December 2017. 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
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beneficiaries. Debt shall not, in general, be used for projects solely because insufficient funds
are budgeted at the time of acquisition or construction.
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 as the Board continues to debate the merits
of a local option infrastructure sales tax, the environment continues to be 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 $367 million
since FY 2008 and with over $422 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 at an unaudited level of 6.5%.
Recent discussions over pursuing to referendum a local option 1% infrastructure sales tax has led
to the development of critical strategic general governmental infrastructure projects within the
transportation network, storm-water system and government facilities. Further, certain
community priority capital projects have been identified. Construction of these projects is
anticipated over a seven (7) year planning window coinciding with collection of the added 1%
sales tax.
If the Board does not pursue to referendum the local option infrastructure sales tax and it
becomes necessary to enter the debt market to finance the general governmental transportation
network, storm-water system and/or governmental facility projects, the County is positioned to
pursue this alternative.
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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.
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 2.10% and funds
can be accessed within about 30-45 days. Short term commercial paper will be pulled on or
about March 1st in the amount of $12 million to purchase property for construction of the
amateur sports complex. This short-term paper will be held for a few years and ultimately rolled
into a future long term general governmental debt issue.
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, the annual debt service and the
respective interest rates.
Issuance of debt in the areas financed would replace the pay-as-you-go approach and funding
would be re-directed from the program areas to fund debt service.
Recommended Budget Policy: It is not suggested that any financing strategy be built into the
FY 2019 adopted budget. It is recommended that the Finance Committee continue to work with
the County’s various agency department stakeholders regarding project scope, timing and
execution patterns and with our debt issuance team to develop a strategy and be ready to pursue a
debt issuance plan which accounts for eventual Board policy decisions regarding capital revenue
options currently under consideration.
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Storm Water Management Capital Funding
Given Board discussions on February 13, 2018, it is anticipated that storm-water operating and
capital projects within the Unincorporated Area will be funded from proceeds collected through
a new storm-water utility. Further, projects with a general county-wide water shed benefit will
still receive modest funding through a transfer from the General Fund. The FY 2019 transfer is
programmed at $1.0 million. Dollars originally planned for transfer from the Unincorporated
Area General Fund in the amount of $4.5 million under a millage neutral budget would be
generally redirected to various capital and maintenance program areas such as park system
improvements; transportation network maintenance; soft capital infrastructure like IT,
accounting system upgrades; general governmental building maintenance; and expanded services
connected with new capital facilities.
Recommended Budget Policy: Set up the budgetary structure and accounting controls required
to collect and appropriate proceeds from an Unincorporated Area Storm-Water Utility Fee
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. As the
expiration of these debt instruments approach, the Board will be asked to continue the local
option gas tax components and new debt will likely be issued to finance anticipated
transportation network improvements contemplated in 2023 and 2025.
The following table depicts dollars transferred from the General Fund in support of the
transportation network and related infrastructure typically funded within the Gas Tax Capital
Fund and related funds.
General Fund (001) Transfers to:
FY 2016 Budget* FY 2017 Budget FY 2018 Budget FY 2019 Budget
Gas Tax Road Capital (313) $9,756,500 $1,618,700 $9,480,000 $9,300,000
Goodland CR92A (313) $500,000
Transportation Capital (310) $6,841,300 $667,400
LED Lighting (310) $1,003,000
Total Transp Capital Transfers $9,756,500 $8,460,000 $11,650,400 $9,300,000
*In FY 2016, the Transfer in from the General Fund ($14,559,800) to the Gas Tax Road Capital Fund (313) provided funding to the Non-Gas Tax
funded capital projects ($9,756,500), the Transportation Engineering Division ($3,169,900), and the Transit System ($1,633,400).
The General Fund capital transfer proposed for FY 2019 is $9,300,000 representing a $2,350,400
decrease from FY 2018. The Unincorporated Area General Fund transfer proposed for FY 19 is
$4,250,000 and increase of $250,000 from FY 18. 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
$20 million per year. When you consider the payment of annual debt service ($13.1M), the
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remaining $6.9 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.
This does not include the limited fiscal year set asides for the helicopter replacement and motor
pool vehicle replacement start up.
For FY 2018, the equivalency rate was .2701 and for FY 2019 the equivalency rate is planned at
.2825. During the economic downturn, most of this transfer evolved into a debt service payment.
However, restructuring the debt portfolio has significantly eased the debt burden freeing up
budget to support county-wide capital projects and necessary maintenance (Fund 301).
For FY 2018, $16,419,500 of the $22,581,500 equivalency transfer was planned for capital
projects. For FY 2019, $15,037,000 of the $25,035,700 equivalency transfer is devoted to capital
projects. This contribution represents a planned decrease from FY 2018 and this decrease may
steepen knowing that any reimbursement for hurricane expenses will likely be delayed.
For FY 2019, the General Fund (001) transfer (loan) will be sized to cover debt service which
cannot be covered by impact fees. This amount totals $9,249,200 and includes a $2,100,000 loan
for construction of a new EMS facility. The loan amount for FY 2019 represents a $3.9 million
increase over FY 2018 reflective of a conservative budget projections of slowing impact fee
collections and the construction of a new EMS facility. 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 2018 totals
$98,980,150.
Payment of debt is a top priority. Under the FY 2019 budget planning scenario dollars generated
from the up to 1/3rd mil equivalent allocation will be sufficient to cover all revenue bond debt
service.
Of the $25 million projected transfer in FY 2019, $7.15 million will be required to cover the
growth-related debt service gap due to insufficient impact fee revenue; $2.1 million is allocated
as a loan to the EMS Impact Fee Fund for construction of a new station and $2.8 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 and any new growth-related
capital projects planned like an EMS station or other public safety or general governmental
building initiative.
Collier County embarked upon an aggressive debt restructuring program in the summer of 2010
and to date over $422.8M in general governmental debt has been refinanced. As a result, the
cost of borrowing has been reduced by $1,895,900 annually with this recurring savings applied
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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 all outstanding County debt represents
4.3% of the County’s net adopted FY 2018 budget. General governmental debt outstanding
represents 2.8% of the County’s net adopted FY 2018 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.
Collier County’s total audited principal debt outstanding at 9/30/17 totals $456M of which
$283.2M relates to infrastructure improvements driven by population growth and related service
demands. The County’s principal debt has been reduced by $332M since FY 2008.
Recommended Budget Policy: Transfer an equivalent sum of up to 1/3 mil to the County Wide
Capital Fund for purposes of paying non-growth-related revenue bond debt; to provide impact
fee fund loans to cover growth related debt obligations; and to fund much needed regular
ongoing general governmental priority capital needs.
General Governmental, Enterprise Fund, and Other Fund Reserve Policies
General Fund: 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
$0
$20
$40
$60
$80
$100
MillionsTotal Annual Debt Service Payments
$0
$20
$40
$60
$80
MillionsGeneral Governmental
Annual Debt Service Payments
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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, except for 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
Reserves
Unincorporated Area
General Fund Reserves
% of General
Fund Expenses
% of Unincorporated
GF Expenses
2019 (Planning) $45,492,600 $2,968,600 11.8% 5.3%
2018 $40,450,300 $3,255,000 10.8% 5.5%
2017 $33,899,700 $2,432,900 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%
Optimally, and to achieve a regular and sustained General Fund beginning fiscal year cash
position of at least $55 to $60 million, budgeted reserves should be a minimum of $45 million.
Otherwise, expense side management of the budget in the form of capital transfer reductions and
or reductions in operating transfers may become necessary.
For the fourth (4th) time since FY 2009, no regular mid-year operating cuts are contemplated in
FY 2018. However, budget management is always ongoing and more magnified in FY 2018
considering Hurricane Irma. Close expenditure controls are always in place and monitored
continually. Likewise, execution patterns are scrutinized along with transfer dollars – specifically
out of the General Fund to make sure that appropriations are properly executed and spent for the
intended purpose.
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.
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This would put Collier County’s General Fund reserve floor (minimum) based upon FY 2018
budget numbers in the $59M-$63M range.
Collier County has never attained a General Fund budgeted reserve position higher than the FY
2019 proposed position of $45,492,600. 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. Further, the General Fund budget is
flexible with capital transfers out representing on average ten (10) percent of appropriations. In
addition, the County’s total all funds reserve position is stable and will be used in part to cash
flow a significant weather event or other natural disaster. These factors suggest 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 2019
proposed planning budget, the reserve floor and ceiling would total $31,063,400 and
$62,126,700, 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. While capital transfers have increased over the past few years, the
Unincorporated Area General Fund and for that matter other general governmental funds do not
have nearly the cash flow requirements of the General Fund. Thus, the reserve requirements for
the Unincorporated Area General Fund should be set at a minimum of 2.5% of operating
expenses or $1.41 million with a ceiling or maximum of no more than one month’s expenses
which for FY 2019 is approximately $4.69 million.
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,
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), and Solid Waste (472).
In FY 2017, the balance of user Divisions were included in the appropriation plan, ie: EMS (491)
and Road and Bridge (Funds 101/523).
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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 most 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, 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) Funds 408, 412, and 414: 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.
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 $1.3 billion, should maintain a reserve
position necessary to ensure the maintenance of life sustaining services to the public during non -
11.F.2
Packet Pg. 206 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 32
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 CCWSD: At a minimum, the unrestricted reserves
should be budgeted within a range of 5% to 15% of budgeted revenues (revenues are stable, but
may be subject to temporary disruptions from hurricanes or natural disasters), or within a range
of 45-90 days of budgeted operating expenses (operating expenses are more volatile given aging
utility infrastructure and unforeseen events). Forty-five (45) to ninety (90) days of reserves
based on Fund (408), (412), and (414) budgeted FY 2018 operating expenses would range from
$20.6 million to $41.1 million. FY 2018 Working Capital resources total $26.7 million
representing fifty-nine (59) days of reserves.
Replenishment of unrestricted reserves that may drop below the targeted floor (45 days) or $20.6
million using FY 2018 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 470, 471, 473, and 474: 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 (fund 471 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
Irma (Category 3, dry storm cash flow exposure up to $100 million) event in the 4th quarter of
2017.
As such, the Solid Waste Division should maintain unrestricted reserves of 45 to 90 days of
operating expenditures to be used to ensure the maintenance of on-going health and safety
11.F.2
Packet Pg. 207 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 33
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.
Further, due to the magnitude of the impact that Collier County experienced in the Right of Way
debris mission following Hurricane Irma, the Solid Waste Division should establish a restricted
cash flow reserve equivalent to ten percent (10%) of solid waste revenues, to be used solely to
fund the upfront cash needs that accrue with significant natural disasters. This amount should
begin to approximate reimbursements that would not be forthcoming from FEMA and the State
of Florida (typically twelve and one-half percent (12.5%) of the cost of the debris removal
mission). Such a restricted reserve balance beginning in Fiscal 2019 would begin to eliminate
the need to borrow from other Enterprise Funds and/or the General Fund while awaiting
reimbursements from FEMA and the State.
Recommended Reserve Policy for the Solid and Hazardous Waste Enterprise Funds: Forty-
five (45) to ninety (90) days of unrestricted reserves based on Fund (470), (473), and (474)
budgeted FY 2018 operating expenses would range from $6.6 million to $13.1 million. FY 2018
unrestricted reserves for the Solid and Hazardous Waste Management Enterprise Funds total
$9.3 million or sixty-five (65) days of reserves.
Replenishment of unrestricted reserves that drop below the targeted floor (45 days) or $6.6M
would occur in succeeding budget cycles in such amounts as deemed prudent under existing
economic conditions as approved by the Board.
Establish a restricted reserve of ten (10) percent of the FY 2018 budgeted charges for services
would total approximately $4.1 million. Most likely this restricted reserve will be funded over a
three to five-year period.
Growth Management Division (GMD) - Planning & Regulation Enterprise Fund 113 and
Development Services 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 18 months of the total budgeted expenses 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.
GMD Planning Fund (131) Recommended Reserve: Targeted reserves for this fund shall be
24 months of the total budgeted expenses of the current fiscal year. The extra 6 months of
targeted reserves required in comparison to Fund 113 reflects the unpredictable nature and length
of processing time for land development related activities.
11.F.2
Packet Pg. 208 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 34
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: 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 Insurance 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. This allows the Board
discretion in approving the CPI adjustment and not simply passing the adjustment on
automatically.
11.F.2
Packet Pg. 209 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 35
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.
Suggested Scheduling Timeline
Decisions Required Staff Recommended Date(s)
Establish Budget Submission Dates for the
Sheriff, the Supervisor of Elections and the
Clerk of Courts.
May 1, 2018 by Resolution
FY 2019 June Budget Workshops (BCC Agency/Courts and Constitutional Officers Budget
Workshops) Thursday, June 21 and if necessary Friday June 22,
2018
FAC Conference is June 26 – June 29, 2018 in Orlando/ Orange
County.
Adoption of Tentative Maximum FY 2019
Millage Rates
July 10, 2018 (Tuesday)
Submission of Tentative FY 2019 Budget to
the Board
Friday July 13, 2018.
Establish Public Hearing Dates (see note) September 6, 2018 (Thursday at 5:05 pm)
September 20, 2018 (Thursday at 5:05 pm)
Note: The School Board has priority in establishing public hearing dates for budgets. The
School Board’s final budget hearing is tentatively scheduled for September 11, 2018.
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, 2018 budget submittal dates for the Sheriff, the Supervisor of Elections and
the Clerk.
Comparative Budget Data
Provide comparative budget data using FY 2018 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
11.F.2
Packet Pg. 210 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 36
Regular Routine Budget Policies for FY 2019
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%, except for 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 Unincorporated Area 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.
Proper General Fund cash balance is necessary to meet significant constitutional transfer, 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 69.0% of the total FY 2018
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 G eneral
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, 2017,
actual General Fund carry forward balance totaled $57,653,800, an increase of $2,894,700 over
year ending FY 2016. The FY 2017 carry forward balance represents approximately 16.4% of
actual FY 2017 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 2019.
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.
11.F.2
Packet Pg. 211 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 37
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.
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 2018, 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 and one quarter
percent (5.25%) of gross receipts of the Water/Sewer District were applied in FY 2018 and this
method and percentage is planned for in FY 2019. One and three-quarter percent (1.75%) of
Solid Waste tipping fees were applied in FY 2018 and this method and percentage is planned in
FY 2019. 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 ongoing regular capital projects, debt financing and impact fee fund debt
loans from the General Fund. The recommended rate is up to the equivalent of 0.3333 mills.
(See history below).
1.0000
0.6580
0.5474
0.5426
0.4148
0.3040
0.3713
0.2354
0.3333 0.3530
0.1931
0.3520
0.2495
0.2701
0.2825
0.0000
0.2000
0.4000
0.6000
0.8000
1.0000
1.2000
MillageGeneral Fund Capital Equivalent Millage History
(FY 1991 -FY 2019)
11.F.2
Packet Pg. 212 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 38
The General Fund continues to loan money to impact fee funds to pay their annual debt service
payments. This of course is in addition to normal and customary debt service on non-growth
revenue bond debt. Loans from the General Fund to the impact fee trust funds began in FY 2005
and the value of all loans made now totals $99 million.
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, b y 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.
11.F.2
Packet Pg. 213 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 39
Three-Year Budget Projections
Ad Valorem Tax Funds
(FY 2019 - FY 2021)
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 tax rates for FY 2019 through FY 2021. These rates do not include any marginal increase
which the Board may direct by policy for a specific program or initiative. Millage neutral rather
than tax neutral rates for general operations are used for planning purposes considering the belief
that taxable value will continue to increase in the future.
While the County Manager will be recommending a General Fund millage neutral base
operating budget in FY 2019 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.
3.8772 3.8772 3.5790
3.1469 3.1469
3.5645 3.5645 3.5645 3.5645 3.5645
-
0.5000
1.0000
1.5000
2.0000
2.5000
3.0000
3.5000
4.0000
4.5000
General Fund Millage History and Recommended Millage Neutral Tax Rates
(FY 2005 to FY 2021)
11.F.2
Packet Pg. 214 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 40
Diversifying the County’s tax base means in large part attempting to reduce risk. Risk of an
economic downturn which surely will stagnate resources and organizational risk where the risk
of stagnate resources exponentially impacts operations and capital resource allocation.
Significant future resources must be devoted to maintenance in numerous areas. We have
addressed our future heavy equipment, public safety and general vehicle replacement needs and
soon may address our storm-water system capital and maintenance needs. But there remains
substantial asset maintenance and replacement needs, not the least of which is general
governmental building maintenance, park’s system infrastructure, constitutional officer capital
requirements and other general governmental capital functions like, information technology
upgrades, accounting system replacement, and other soft infrastructure needs. Risk reduction is
certainly not achieved under a tax policy that reduces a general, flexible revenue source like
property taxes which can and will be used to offset the funding needs stated above when a very
narrow and statutorily restricted new revenue source like a storm-water utility fee is introduced.
The following tables depict the respective millage neutral tax rates for FY 2019, 2020 and 2021
as well as additional ad valorem dollars which could be raised under certain increasing tax base
assumptions. Again, the table does not account for any marginal rate increase which may be
earmarked by BCC policy for a specific program or initiative or for that matter any Board
policy decision reducing tax rates.
General Fund
FY 18 Adopted and Recommended
Operating Millage Neutral Millage Rates
Additional Budgeted Ad Valorem
Revenue Projection Each Year
FY 18 3.5645
FY 19 3.5645 $17,882,100 @ 6.0% TV Increase
FY 20 3.5645 $15,795,900 @ 5.0% TV Increase
FY 21 3.5645 $16,585,700 @ 5.0% TV Increase
For Collier County to continue providing high quality best value services; continue to address
infrastructure maintenance; replace public safety and general governmental equipment and
vehicles; maintain its reserve and cash positions pursuant to policy and representative of an
investment quality credit rated organization, it is essential to capture those additional ad valorem
dollars generated by increasing taxable values. Further, tax policy should also account for the
County’s effort to cash flow expenses connected with Hurricane Irma and the delay in receiving
FEMA reimbursements well into FY 2019. This anticipated delay will likely cause further capital
project deferral and draws on fund reserves.
Failure to capture additional property tax dollars resulting from increasing taxable values will
jeopardize service levels and make it very difficult to maintain the extraordinary infrastructure
investment which this community enjoys. As an example, in FY 2019, the projected rolled back
rate within the General Fund is $3.4677 which would raise $8,580,800 less than millage neutral
or levying the current planning operating rate of $3.5645. While the FY 2019 estimated rolled
back rate would produce $9,301,300 more than the FY 2018 levy due to new construction
taxable value and a higher taxable value base, this is not a sustainable model going forward
knowing the level of investment required to simply maintain our general governmental assets,
and fund Sheriff operations let alone expand services and facilities based upon AUIR
requirements and servicing the needs of an expanding population.
11.F.2
Packet Pg. 215 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 41
The projected millage rates assume that the tax base will increase 6.0% in FY 2019 (the 2018 tax
year). Taxable value in FY 2020 is projected to also increase 5%. The Property Appraiser will
provide preliminary taxable value estimates for FY 2019 on June 1, 2018. Actual and assumed
changes in County taxable values are as follows:
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.
FY 2019 Significant Expense Assumptions
A millage neutral operating budget, again assuming no marginal adjustment for special
policy initiatives of the BCC, 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 – 2%.
2% attrition rate on regular salaries assumed in the County Manager’s Agency.
Motor pool replacement dollars for continued regular routine ambulance replacement.
$6,000,000 for general building and a/c repairs.
New voting machines totaling $400,000.
Continued additional David Lawrence Center Funding in the amount of $300,000
General Fund loans to the impact fee trust funds total $9,249,100 which includes a
$2,100,000 loan to construct a new EMS Facility and ambulance unit.
Storm-water capital funding of $1,000,000 for continued countywide storm-water
projects and storm-water operations
General Fund transfer dollars supporting road construction and maintenance funded at
$9,300,000.
General Fund support of EMS Operations established at $18,018,600 – up 2.5% from
last year reflecting recurring costs of additional services to equalize response times
county-wide plus costs to operate a planned new facility.
Full support for Transportation Operations from the General Fund (001) exclusively.
Continue transfer of dollars from the General Fund to the Motor Pool Replacement
Fund for Road and Bridge vehicles.
11.9%
19.9%
25.4%
7.2%
-4.7%
-11.0%-12.2%
-5.2%
0.5%3.7%6.5%8.5%10.0%8.4%6.0%5.0%5.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21MillageHistorical and Projected Changes in Collier County Taxable Values
(FY 2005 -FY 2021)
11.F.2
Packet Pg. 216 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 42
Airport capital funding totaling $445,000.
Corporate IT capital funding totaling $750,000.
Capital funding for Sheriff Facilities totaling $1,000,000.
Mandates to be absorbed if possible within operating budgets, including
Constitutional Officers.
Significant Revenue Assumptions
FY 2018 ad valorem tax revenue forecast is 96% of actual taxes levied. FY 2018 forecast
totals $287,557,600 – a reduction of $10,429,200 from the adopted budget. Collections
are within the 5% budgeted revenue reserve.
A millage neutral position without any marginal increase which the BCC may apply for a
specific program or initiative for FY 2019 produces a levy of $315,917,700.
Sales tax revenue forecast for FY 2018 is projected at $40,000,000 representing an
increase of 2.6% over budget. FY 2019 budgeted revenue is projected at $41,000,000 or
5.1% over the adopted 2018 budget. Conservative revenue estimates are essential to
achieving the required beginning cash balance position.
State Revenue Sharing for FY 2018 is projected to increase $1,000,000 or 10.0% over
budget. FY 2019 budgeted revenue is projected at $11,000,000 or 10.0% over the
adopted 2018 budget.
Constitutional Officer turn-back is a conservative budget estimate and for FY 2019
$6,600,000 is projected. FY 2018 forecast totaling $11.1 million includes anticipated
reimbursement from FEMA to the Sheriff for salaries connected with Hurricane Irma
emergency preparedness.
Measures to maintain beginning cash balance at between $55 million and $60 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 for FY 2019 is projected to remain at $750,000.
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:
11.F.2
Packet Pg. 217 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 43
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.
With taxable values projected to increase, the General Fund contribution to road construction and
maintenance is expected to total $9.3 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.
$10.9
$9.2
$11.0
$13.3
$12.0
$10.7
$11.3
$12.8
$11.3 $11.6
$13.3 $13.8 $15.0
$17.6 $18.0 $18.5 $18.9
$0
$2
$4
$6
$8
$10
$12
$14
$16
$18
$20
FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY 21MillionsGeneral Fund Support of EMS
(FY 2005 -FY 2021)
11.F.2
Packet Pg. 218 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 44
FY 2020
A millage neutral operating budget in FY 2020 with an increase of 5% in taxable value will
continue to allow for priority funding of public safety capital initiatives and AUIR capital
programming like the EMS Stations and sheriff capital requests. 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
2020 budget analysis:
Maintain general governmental capital projects funding in an equivalency up to 0.3333 mills.
Maintain General Fund support of EMS.
Contingency reserves are maintained at policy.
Maintain General Fund road subsidy.
Maintain General Fund support for park system maintenance and replacement
Maintain General Fund support for Transportation Operations expenses.
In summary, the FY 2020 analysis signals caution especially when critical variables like taxable
value, market conditions and general revenues are difficult to predict. Pursuing a millage
neutral operating budget in FY 2019 without a sufficient budgeted beginning fund balance
would likely result in a $3.3 million budget planning deficit as depicted in the trend analysis. Of
course, required budget management to eliminate any actual equity reduction would occur in real
time.
$5.9 $13.7 $20.3 $38.8 $24.1 $24.0 $23.4 $2.9 $5.4 $7.6 $9.2 $8.8 $9.5 $14.6 $8.5 $10.5 $9.3 $19.2 $14.5
$0.1
$15.6
$8.3 $6.2 $2.0
$1.5
$6.0
$2.5 $2.0
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
MillionsGeneral Fund Transfer Support of Road Construction
(FY 2003 -FY 2021)
Transfer from General Fund Returned to General Fund
Additional Funds Transferred Vehicle Replacement
*In FY17, the Engineering Division's budget of $3.7 million was moved out of the Transportation Capital Fund and into the Road &
Bridge Operations Fund 101 . Also the Transit system transfer from Transp. Capital Fund of $1.5 million is now supported by the General
Fund.
11.F.2
Packet Pg. 219 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 45
FY 2021
A millage neutral operating budget in FY 2021 coupled with a 5% 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 2021 budget analysis:
Maintain general governmental capital projects funding in an equivalency up to 0.3333 mills.
Maintain General Fund support of EMS.
Contingency reserves are maintained at policy.
Maintain General Fund road subsidy.
Maintain General Fund support for park system maintenance and replacement
Maintain General Fund support for Transportation Operations expenses.
The General Fund Trend Analysis model shown below is intended to offer a picture of very
conservative revenue projections against operating and capital expenses which will likely be
faced in the out years. Of course, financial staff manages the budget in real time and will
mitigate unplanned equity reductions. But, imagine a scenario where major revenue sources like
property taxes or state shared revenues were cut or reduced. The obvious impact would be
subsequent expense reductions possibly coupled with new adopted revenue sources and thus the
need for budget flexibility.
General Fund Trend Analysis
11.F.2
Packet Pg. 220 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 46
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 2019 through FY 2021, which
includes the proposed marginal millage rate increase to continue the landscape median capital
program.
Results of Unincorporated Area General Fund Analysis
For FY 2018, the Board of County Commissioners maintained the Unincorporated Area General
Fund millage rate at $.8069 or that rate levied in FY 2007 to continue the median landscape
capital program and allocate recurring dollars for maintenance of the landscape investment. 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 continuing the median
landscape capital program. Incremental ad valorem dollars obtained through taxable value
increases under the current $.7161 operating millage rate will fund recurring operations and
provide resources to maintain the road network, storm-water system, and community park
capital. The marginal rate increase 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.
Unincorporated Area
General Fund
FY 18 Adopted and
Recommended future Tax Rates
Additional Budgeted
Ad Valorem Revenue Projections Each Year –
Operations and General Capital
Additional Budgeted
Ad Valorem Revenue Projections Each
Year – Median Landscape Capital and
Maintenance
FY 18 0.8069
FY 19 0.8069 $2,224,100 @ 6.0% TV Increase $282,000 @ 6.0% TV Increase
FY 20 0.8069 $1,964,600 @ 5.0% TV Increase $249,100 @ 5.0% TV Increase
FY 21 0.8069 $2,062,900 @ 5.0% TV Increase $261,600 @ 5.0% TV Increase
0.8069 0.8069 0.8069
0.6912 0.6912
0.7161
0.8069 0.8069 0.8069 0.8069 0.8069
0.6000
0.6500
0.7000
0.7500
0.8000
0.8500
MillageUnincorporated MSTD General Fund (111) Millage History and
Recommended Millage Neutral Tax Rates
(FY 2005 to FY 2021)
11.F.2
Packet Pg. 221 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 47
For Collier County to continue providing high quality best value services; continue to address
infrastructure maintenance; replace equipment and vehicles; maintain its reserve and cash
positions pursuant to policy and representative of an 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 2019, the projected rolled back rate within the Unincorporated Area General
Fund is $.7900 which would raise $927,700 less than levying the current millage rate of $.8069.
While the rolled back operating rate would produce $1,578,400 more than the FY 2018 budgeted
levy due to new construction taxable value and a higher taxable value base, this is not a
sustainable model going forward knowing the level of expanded funding commitment required to
operate and maintain the County’s current and future capital infrastructure investment enjoyed
by our Unincorporated Area residents and visitors.
FY 2019
The FY 2019 budget projection is based upon a 6.0% tax base increase. Property taxes and the
state shared communications services tax represent over 95% 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 any
state legislative budget proposal. 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.
Capital transfers from the Unincorporated Area General Fund have grown substantially since FY
14 and for FY 19 $14.5 million is programmed representing a $1.1 million increase over last
year. These transfer dollars are programmed for Parks, Transportation, Storm-Water
infrastructure, landscaping capital and heavy 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.
With introduction of the storm-water utility fee, the planned $4.5 million transfer for storm-water
programming would be re-prioritized to increase reserves; support much needed transportation
network improvements; increase contributions to park capital projects and make a final one-time
contribution to replace road and bridge heavy equipment deferred during the recession. 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.
FY 2020
If taxable values increase by 5.0% in FY 2020, a millage neutral operating budget coupled with a
reduction in beginning fund balance could result in a potential budget planning deficit of $2.5M
as depicted within the preceding trend analysis. This analysis assumes a state communication
services tax reduction. The trend analysis shows continued erosion of the funds cash position.
This model is certainly not sustainable and real-time budget management would always ensure
11.F.2
Packet Pg. 222 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Policy Document Page 48
that any equity erosion beyond that planned would be curtailed. Continued funding for median
landscape capital improvements is planned.
FY 2021
Continuation of millage neutral operating budget into FY 2021 under a 5.0% 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 depicted
in the model. Continued funding for median landscape capital improvements is planned. For
planning purposes and assuming continued decline in beginning budgeted fund balance, a deficit
of $3.2 million is depicted. Absent real-time budget management the model depicts a total fund
equity loss from FY 2019 through FY 2022 totaling $9.8 million.
The Unincorporated Area General Fund Trend Analysis model shown below is intended to offer
a picture of very conservative revenue projections against operating and capital expenses which
will likely be faced in the out years. Of course, financial staff manages the budget in real time
and will mitigate unplanned equity reductions. But, imagine a scenario where major revenue
sources like property taxes or state shared revenues were cut or reduced. The obvious impact
would be subsequent expense reductions possibly coupled with new adopted revenue sources and
thus the need for budget flexibility.
Unincorporated Area General Fund Trend Analysis
11.F.2
Packet Pg. 223 Attachment: Fiscal Year 2019 Proposed Budget Policies-recommended (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Collier County
FY 2019
BCC Budget Policy
March 13,2018
1
11.F.3
Packet Pg. 224 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
FY 2019 Budget Policy Highlights
1.Ke y Annual Policies for Consideration and
Board Direction (Policy Document Pages 1-35)
2.Continuing Policies to be Endorsed by
the Board (Policy Document Pages 36-38)
3.Three (3) Ye ar General Fund and
Unincorporated Area General Fund
Analysis (Policy Document Pages 39-48)
2
11.F.3
Packet Pg. 225 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Suggested Board Budget Guidance Action
After due consideration it is recommended that;
The Board approve all recommended Budget
Po licies with any changes dealt with on an
exception basis.
3
11.F.3
Packet Pg. 226 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Millage Rate Policy
Po licy Document Pages 1-16
—Hurricane Irma and the uncertain timing of reimbursement reve nue has
forced a different and ver y cautionar y expense planning environment!!!!
—Ta xable Value!!! Budget Planning Around a 6% TV Increase
—General Fund Millage Rate of $3.5645 per $1,000 of Ta xable Value;Why?
ü Property taxes comprise on ave rage 70% of general governmental revenues
ü Grow reser ves to ensure sufficient cash at YE and provide a buffer against unexpected
expense or Board policy shifts
ü Protect cash position while funding Hurricane Irma recover y
ü Ensure that dollars are available to cash flow another natural disaster in 2018-2019
ü Continue investment in public safety operations and infrastructure
ü Continued investment in capital infrastructure
ü Operate and maintain new capital facilities constructed
ü Additional Homestead Exemption looming
4
11.F.3
Packet Pg. 227 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Millage Rate Policy
Po licy Document Pages 1-16
Continue Unincorporated Area General Fund (111) millage rate at
$0.8069 per $1,000 of Ta xable Value
ü Allocate $0.0908 (amount increased by) to continue median
landscape capital program.
ü Equivalent transfer from Fund (111) to Capital Fund (112)
fencing landscape capital dollars.Maintenance costs
programmed in the Unincorporated Area GF
ü Use the existing millage rate of $0.7161 to fund operations &
capital transfers
Why? Public Health,Safety and We lfare
Prog ram Inve stment;Continuing
Infrastructure Inve stment;Human Capital
Inve stment and;Reser ve s
5
11.F.3
Packet Pg. 228 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Millage Rate Policy -MSTU’s
Po licy Document Pages 17-18
—MSTU’s –Assuming Increasing Taxable Value
•With Advisory Board Oversight –Ta x Neutral (Rolled Back Rate –same
revenue as last year) to Millage Neutral
•No Advisor y Board –Rolled Back Rate
•FY 2018 –12 millage neutral rates; 3 ro lled back rates; 4 Other
6
11.F.3
Packet Pg. 229 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Hurricane Irma Expenses
•The County has set up necessar y budget in an amount totaling $169.8 million and will be cash flowing all
expenses anticipating reimbursement through insurance and FEMA
•Actual expenses paid to date total $76.2 million and it is expected that total Hurricane Irma expenses paid
will likely range between $110 and $125 million.The County’s local non-reimbursable share after receipt of
FEMA reimbursements is estimated at $20 million.
•It is conceivable that the County will not see a significant amount of reimbursement revenue until FY 2019.
•To cash flow this natural disaster, t hree specific budget techniques were utilized.First,in funds where
sufficient cash exists,FEMA revenue was budgeted and corresponding expense budget appropriated
anticipating some level of reimbursement in the coming months.Note that there is no cash behind
budgeting FEMA revenue. E xisting and routine incoming fund cash is relied upon until the receipt of FEMA
revenue. S econd,$59.7 million in existing capital project budgets were re-allocated –primarily in the public
utility, s torm-water and road program areas.Third,reserves were drawn down from the General Fund and
various utility funds.
7
11.F.3
Packet Pg. 230 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Hurricane Irma Expenses (Recove ry Budget) and Budget
Management Process
Fund Category FEMA Revenue
Budgeted
Capital Project
Deferral
Reserves
(Reduced)
Total
Budget
Deferrals
General
Governmental
$15,537,800 $18,139,000 $16,877,100 $50,553,900
Enterprise $48,500,000 $41,557,700 $22,300,000 $112,357,700
Constitutional -
Sheriff
$7,000,000 $7,000,000
Total $64,037,800 $59,696,700 $46,177,100 $169,911,600
8
•Approximately 62.3% of all budget appropriations is intended to fund
community wide debris removal;10.4% is appropriated for debris
removal from canals;and the remaining 27.3% is available to pay for
various structural repairs and damage to the transportation network,
parks system,general governmental buildings,landscaping and water and
wastewater systems.
•Budget management will include monitoring all reimbursement proceeds
and directing those proceeds to the appropriate capital accounts where
expenses were incurred and/or reser ve s.
•Corresponding review of available Hurricane budgeted appropriations
and when appropriate , r edirecting budget back to the appropriate capital
accounts and/or reser ve s.
11.F.3
Packet Pg. 231 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
FY 2018 Adopted Gross Budget by
Fund Type
9
General Fund
24%
General Fund -
Constitutional Officers
13%
Special Revenue Funds
19%
General Gov't Debt
Service Funds
2%
General Gov't Capital
Projects Funds
8%
Enterprise Funds
27%
Internal Ser vice Funds
7%
Permanent (Trust)
Funds
0%
Unincorporated Gen Fd,
Conservation Collier, TDC,
Planning & Development Services,
Road & Bridge, MSTU's, Pelican
Bay, Grants
Water / Sewer;EMS, Solid
Waste, Public Transit
Services (This fund type
includes Operations, W/S
Debt, and Capital)
11.F.3
Packet Pg. 232 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
General Fund Expense Slide by
Categor y
10
11.F.3
Packet Pg. 233 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
General Fund FY 2019 Planning Proforma
11
11.F.3
Packet Pg. 234 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Agency Allocations
Po licy Document Page 17
—Premise is that all agencies will work together
and cooperatively should the need arise for
budget reductions due to taxable values below
the planning threshold;re ductions in proper ty
tax reve nue;any state tax reform legislation;
re ductions in state shared reve nue;or unfunded
mandates.
—Conve rsely –increases in reve nue above the
planning threshold will also be allocated based
upon Board direction.
12
11.F.3
Packet Pg. 235 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Reve nu e Centric
Po licy Document Pages 18-19
—Enterprise Funds;Internal Ser vice Funds;Special Revenue
Funds and other Operational Funds which are supported
by fees with no reliance upon ad valorem revenue will be
allowe d to establish budgets and conduct operations
around reve nue centric guidelines dictated by cash on
hand and anticipated receipts.
—Within the General Fund and Unincorporated Area
General Fund,net cost to these funds offset by fee
revenue will be monitored and negative fee variances will
be addressed through expense cuts and not subsidized by
ad valorem revenue .
13
11.F.3
Packet Pg. 236 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Agency Positions
Po licy Document Page 19
—Similar to FY 2018,expanded position requests
will be limited to mission critical functions,fully
ve tted with the Board and enumerated within
the budget document including details of
expanded operational costs and any offsetting
program reve nue .
14
11.F.3
Packet Pg. 237 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Compensation
Po licy Document Pages 19-20
—Appropriate a general wage adjustment of 2.0% as part of FY 2019
budget planning with the structure of such adjustment deve loped by
the County Manager and presented at the June budget workshop.
—No targeted pay plan maintenance appropriation for FY 2019 is
re commended.
—FY 2019 GWA for the CM Agency valued at $2.6 million
—FY 2018 GWA and Pay Plan Maintenance valued at $4.3 million.
•GWA -$3.6 million
•Pay Plan Maintenance -$727K
15
11.F.3
Packet Pg. 238 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Health Care
Po licy Document Pages 20-23
—Maintain for the County Manager Agency an
average cost distribution between the Board and
Employe es at 80% (Employe r) 20% Employe e.
—Fo r FY 2018,the County experienced no (0%)
health insurance rate increase . D ue to continued
exceptional plan performance and plan reser ve s
which exceed statutor y minimums,no (0%)
health insurance rate increase is proposed for FY
2019.
16
11.F.3
Packet Pg. 239 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Retirement Rates
Po licy Document Page 23
—Adherence to OMB rates published within the
OMB budget instructions.
—Rates Established based upon State Guidance .
17
11.F.3
Packet Pg. 240 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Storm-Wa ter Funding
Policy Document Page 26
—General Fund (001) storm-water funding planned at $1,000,000 to support
based upon identified and engineered watershed benefits county-wide and/or
used as a grant match.
—Given Board discussions on Februar y 13,2018,it is anticipated that
storm-water operating and capital projects within the
Unincorporated Area will be funded from proceeds collected
through a new storm-water utility.
—Dollars originally planned for transfer from the Unincorporated Area
General Fund in the amount of $4.5 million under a millage neutral
budget would be generally redirected to various capital and
maintenance program areas such as park system improvements;
transportation network maintenance;soft capital infrastructure like
IT, a ccounting system upgrades;general governmental building
maintenance;and expanded ser vices connected with new capital
facilities.
18
11.F.3
Packet Pg. 241 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Uses of Gas Ta xe s
Po licy Document Pages 26-27
—Continue Board policy where pledged gas taxes pay debt service on the gas
tax revenue bonds which have final maturities in June 2023 and 2025
respectively;remaining gas tax funds programmed to support construction
and transportation network improvements.
—Tr ansfer dollars totaling $9.3 million planned in FY 2019 from the General
Fund will provide the vast amount of funding support for maintenance of the
ro adway network and other transportation related expenses.
—Tr ansfer dollars from the Unincorporated Area GF will increase $250K to
$4,250,000 in FY 19 in addition to direct budget dollars in this fund for road
maintenance .
—Gas Taxes grew modestly up 6.4% to $21.8M in FY 17.Forecast FY 18 and
planning FY 19 revenue will be in the $22M range.
—$1M in gas taxes freed up annually for transportation network improvements
beginning in FY 2015 due to restructuring of the gas tax debt.
19
11.F.3
Packet Pg. 242 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
General Fund General Capital/Debt
Ser vice and Debt Management
Po licy Document Pages 27-28
—Tr ansfer an equivalent planning sum of up to
.3333 mils for county-wide capital purposes;
paying non-growth related reve nue bond debt;
provide impact fee trust fund loans to cover
growth related debt obligations and to fund
much needed general governmental priority
capital needs.
20
11.F.3
Packet Pg. 243 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
General Gove rnmental,Enterprise
Fund and Other Reser ve Po licies
Po licy Document Pages 28-34
—GF –floor ; 8 % of operating expenses or $31.1 million –Ceiling;16% of operating expenses or
$62.1 million;current planning reserve for FY 2019 is $45.5 million an increase of $5.0 million.
—Other Gen.Govt.Funds –Generally 2.5% of operating expenses with a ceiling of no more than
one months expenses.Ceiling for the Unincorporated Area GF is $4.7 million;current planning
reserve for FY 2019 is $2.97 million.
—Other general governmental funds that receive transfer revenue from the GF will have reser ves
sized to cover the first month of operations or until the first GF transfer is scheduled.
—Reser ve policy for Pelican Bay Ser vices Division (PBSD) operating fund (109) set between 15-
30 percent of operating expenses given the districts coastal nature,level of infrastructure
investment,natural assets and commitment to maintenance and resource protection.
—CCWSD user fee reserves established minimally between 5% and 15% of revenues with
working capital resources set between 45 days and 90 days.Within the family of CCWSD family
of user fee operating and capital funds reser ves will range between $20.6 and 41.1 million while
working capital resources will total roughly $26.7 million or 59 days.
—Over a three to five year period,establish a solid waste restricted reser ve of ten (10) percent
of the FY 2018 budgeted charges or $4.1 million.
—Ta rgeted reserves within the GMD building permit fund (113) and planning fund (131) set at 18
months and 24 months of total budget appropriations respectively.
21
11.F.3
Packet Pg. 244 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Financing New and Replacement Capital
Infrastructure
Po licy Document Pages 23-25
—County has not issued new capital debt since FY 2008
—Finance Committee is engaged and continually reviewing all appropriate capital
financing options
—FY 19 budget planning does not program issuance of debt as part of the adopted
budget
—Any debt issue recommendation will include a consolidated financing plan based
upon the number of current and future capital projects and initiatives to be financed,
the timing of project implementation,expected payout schedule, t he appropriate
type of debt and existing market conditions
—Issuance of debt in the areas financed would replace the pay-as-you-go approach
and funding would be redirected from the program areas to fund debt ser vice .
—Cost to finance always a concern,but County’s credit rating will reduce the interest
expense
—Long term debt means that future users of capital facilities and infrastructure and
not just current users will participate in paying for facilities
22
11.F.3
Packet Pg. 245 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)
Schedule
Po licy Document Page 35
—Resolution requiring budget submittals by the Sheriff;
Super visor of Elections and Clerk of Cour ts on May 1st.
—FY 2019 June Budget Wo rkshop Dates –Thursday June 21st
and if necessar y Friday June 22nd
—Adopt Tentative Maximum FY 2019 Millage Rates on Tu esday
Ju ly 10,2018
—Board Receives Tentative FY 2019 Budget Document on
Friday July 13,2018
—First FY 2019 Public Budget Hearing on Thursday
September 6th with the Final FY 2019 Budget Hearing on
Thursday September 20th
23
11.F.3
Packet Pg. 246 Attachment: FY19 Budget Policy (5006 : Recommendation to adopt the FY 2019 Budget Policy.)