Agenda 02/26/2013 Item #11G2/26/2013 11.G.
EXECUTIVE SUMMARY
Recommendation to adopt the FY 2014 Budget Policy
OBJECTIVE: That the Board of County Commissioners (Board) adopt policies to be used in developing the Collier
County Government budget for FY 2014.
CONSIDERATIONS: In order for staff to begin preparation of the FY 2014 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 2014
budget. The budget policy document is broken down into three distinct elements. The first consists of budget policies
proposed in FY 2014 that require policy direction from the Board. The second element consists of standard budget
policies that the Board has endorsed for a number of fiscal years. The third element consists of a three -year analysis of
the General Fund (001) and the Unincorporated Area General Fund MSTD (111). Establishing broad goals to guide
govermnental decision makers is the first of four budget process principals developed by the National Advisory Council
on State and Local Budgeting (NACSLB) and endorsed by the Govermnental Finance Officers Association (GFOA).
The Board needs to establish June budget workshop dates. Tentative dates are Thursday, June 20, 2013 and Friday, June
21, 2013 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 25 through June 28, 2013 in the City of Tampa.
For informational purposes, adoption of the maximum tentative millage rates is scheduled for Tuesday, July 23, 2013.
The Board is required by Florida Statutes to provide the Property Appraiser with the proposed millage rates by August 1,
2013 in order to prepare the Notice of Proposed Property Taxes.
Finally, the Board needs to establish September public hearing dates for the adoption of the FY 2014 budget. The School
Board has tentatively scheduled September 10, 2013 for their final budget hearing. Recommended dates for the Collier
County budget public hearings are Thursday September 5, 2013 and Thursday September 19, 2013.
LEGAL CONSIDERATIONS: The County Attorney has reviewed this item which is ready for Board action. This is a
regular item requiring simple majority vote. —JAK
FISCAL IMPACT: The adopted policies will serve as the framework for the development of budget and ad valorem
taxation issues for FY 2014.
GROWTH MANGEMENT IMPACT: There is no Growth Management impact.
RECOMMENDATIONS: That the Board adopts budget policies as detailed in the attachments to this Executive
Summary, establishes June budget workshop dates and September public hearing dates. In addition, the Board needs to
adopt the attached Resolution establishing a May 1, 2013 deadline for the Supervisor of Elections, the Sheriff s Office and
the Clerk's budget submittals.
PREPARED BY: Mark Isackson, Director of Corporate Finance and Management Services, County Manager's Office
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2/26/2013 1 1.G.
COLLIER COUNTY
Board of County Commissioners
Item Number: 11.11.G.
Item Summary: Recommendation to adopt the Fiscal Year 2014 Proposed Budget Policy.
(Mark Isackson, Corporate Finance and Management Services Director)
Meeting Date: 2/26/2013
Prepared By
Name: LehnhardPat
Title: Operations Coordinator,Transportation Administrati
2/20/2013 9:51:24 AM
Submitted by
Title: Director -Corp Financial and Mgmt Svs,CMO
Name: IsacksonMark
2/20/2013 9:51:26 AM
Approved By
Name: UsherSusan
Title: Management/Budget Analyst, Senior,Office of Manage
Date: 2/20/2013 11:42:58 AM
Name: KlatzkowJeff
Title: County Attorney
Date: 2/20/2013 11:43:40 AM
Name: FinnEd
Title: Senior Budget Analyst, OMB
Date: 2/20/2013 11:53:33 AM
Name: IsacksonMark
Title: Director -Corp Financial and Mgmt Svs,CMO
Date: 2/20/2013 12:09:43 PM
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2/26/2013 11.G.
RESOLUTION NO. 2013-
A RESOLUTION PURSUANT TO SECTION 129.03, FLORIDA STATUTES,
REQUIRING THE FY 14 TENTATIVE BUDGETS OF THE SHERIFF, THE
SUPERVISOR OF ELECTIONS AND THE CLERK TO BE SUBMITTED TO THE
BOARD OF COUNTY COMMISSIONERS BY MAY 1, 2013.
WHEREAS, Chapter 129, Florida Statutes, addressing the County annual budget,
provides specifically in Section 129.03, Florida Statutes, that the Board of County
Commissioners may, by resolution, require the tentative budgets of the Sheriff, the Supervisor of
Elections and the Clerk to be submitted by May 1 of each year.
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF COUNTY
COMMISSIONERS OF COLLIER COUNTY, FLORIDA, pursuant to Section 129.03, Florida
Statutes, that the Sheriff, the Supervisor of Elections and the Clerk of the County of Collier,
Florida, are hereby required to submit their respective tentative budgets for the FY 14 fiscal year
to the Board of County Commissioners by May 1, 2013.
This Resolution shall be effective on its adoption.
This Resolution adopted this 26th day of February, 2013, after motion, second and
majority vote.
ATTEST:
DWIGHT E. BROCK, Clerk
and
legal
Jeffrey A.
County A
BOARD OF COUNTY COMMISSIONERS
COLLIER COUNTY, FLORIDA
f:
Georgia A. Hiller, Esq.
Chairwoman
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2/26/2013 1 1.G.
Fiscal Year 2014 Proposed Budget Policies
Submission to the Collier County Board of County Commissioners
February 26, 2013
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 ". 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 2014 and beyond.
The FY 2014 budget will likely be prepared within an improving economic environment which
saw taxable values County wide rise slightly for the first time since FY 2008. Median home
prices have stabilized, visitation to the destination increased year over year, new construction
permitting is up and the County's unemployment rate is dropping. While these are positive
economic signs, the new economic reality of a global economy dictates that continued caution be
exercised as the County moves forward with future financial planning.
Collier County continues to exhibit proactive and fiscally conservative budget practices which
have included Board directed policy guidance requiring no increases in property tax rates;
growth in General Fund reserves; fully funded and policy compliant debt management, no new
fees or service charges to County residents: no planned County Manager Agency layoffs; facility
closures; or front line operating service cuts; and continued high priority asset maintenance and
equipment replacement. The fiscal year 2014 budget will once again challenge management and
the elected leadership to allocate scarce resources in a manner which maintains critical front line
services and sustains those services customarily associated with the standard and quality of life
demanded by Collier County residents and visitors.
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 and projects. Within the pyramid of service and
program delivery, significant and recurring resources have been devoted to public safety, public
health, debt management, reserve growth and replacement of critical priority infrastructure and
equipment. Ad valorem taxes will once again dominate the County's budgetary revenue mix —
comprising about 45% of total net annual operating revenue and 65% of General Fund revenue
sources.
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Sources of Current County Government
Operating Revenues all Funds (FY 2013)
Bond
Proceeds/
Impact Fees Interest /Fine
Service 3'k 1%
Charges
32%
Intergov'tal
Revenues
4%
Permits/
Assessments
7%
General Fund
81 %.
2/26/2013 11.G.
FY 2013 General Fund Revenue Sources
Property Tax by Major Funds
MSTU's S%
Collier4%
Carryforwardl Interest &
14% Misc.1%
Sales Tax 9%
State Revenue
Sharing 2%
_ Intergov'tal
Revenues 0%
Fines, Permits,
Charges 4%
Thus, significant attention is paid to ad valorem taxes and those factors that can influence
millage rate and tax levy decisions. For FY 2014, significant influences include;
• Pay off of all remaining Conservation Collier bonded debt in FY 13; elimination of the
voter approved $.25 per $1,000 of taxable value levy for FY 14; and continued ability
to aggressively restructure and pay down our general governmental and enterprise debt
which at 9/30/12 had a principal outstanding of $627M, a reduction of $48.7M from
9/30/11. Interest rates remain at historically low levels.
• Protecting beginning year General Fund and Unincorporated Area General Fund cash
balance.
• Maintaining the County's investment quality credit rating.
• Extent of discretionary operational cuts to agencies and departments which are funded
within the General Fund and Unincorporated Area General Fund necessary to offset
high priority public health and safety programs; asset maintenance and replacement;
and non discretionary expenses such as health insurance, fuel, and utilities.
• Level of General Fund operating and capital support extended to Constitutional
Officers.
• General Fund support for new or re- prioritized operating and capital initiatives such as
beach renourishment/pass maintenance; emergency destination marketing; asset
management; economic development; EMS helicopter; ambulances; Project (25) digital
enhancements to the public safety radio system; and unfunded mandates including
health care coverage for part time employees working at least 30 hours a week.
2
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Ad Valorem
Ad Valorei
65%
45%
Transfers fro
Consitutional
Officers 2%
Interfund
Gas /Sales
Transfers and
Tax
Payments 3%
8%
Property Tax by Major Funds
MSTU's S%
Collier4%
Carryforwardl Interest &
14% Misc.1%
Sales Tax 9%
State Revenue
Sharing 2%
_ Intergov'tal
Revenues 0%
Fines, Permits,
Charges 4%
Thus, significant attention is paid to ad valorem taxes and those factors that can influence
millage rate and tax levy decisions. For FY 2014, significant influences include;
• Pay off of all remaining Conservation Collier bonded debt in FY 13; elimination of the
voter approved $.25 per $1,000 of taxable value levy for FY 14; and continued ability
to aggressively restructure and pay down our general governmental and enterprise debt
which at 9/30/12 had a principal outstanding of $627M, a reduction of $48.7M from
9/30/11. Interest rates remain at historically low levels.
• Protecting beginning year General Fund and Unincorporated Area General Fund cash
balance.
• Maintaining the County's investment quality credit rating.
• Extent of discretionary operational cuts to agencies and departments which are funded
within the General Fund and Unincorporated Area General Fund necessary to offset
high priority public health and safety programs; asset maintenance and replacement;
and non discretionary expenses such as health insurance, fuel, and utilities.
• Level of General Fund operating and capital support extended to Constitutional
Officers.
• General Fund support for new or re- prioritized operating and capital initiatives such as
beach renourishment/pass maintenance; emergency destination marketing; asset
management; economic development; EMS helicopter; ambulances; Project (25) digital
enhancements to the public safety radio system; and unfunded mandates including
health care coverage for part time employees working at least 30 hours a week.
2
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2/26/2013 1 1.G.
• Extent of capital, debt and operational transfer dollars expended by the General Fund
and Unincorporated Area General Fund.
• Proper level of resources to cover the organizations priority asset maintenance and
equipment replacement obligation.
• Extent of non ad valorem revenue projected to support operations such as sales tax,
state shared revenues and departmental revenue from general fund operations.
Taxable Value and Milla2e Targets for the County -Wide and MSTD General Fund
Collier County has lost 29% of its taxable value since FY 2008. While it has taken six years
to erode the taxable value base, recovery to FY 2008 levels will take significantly longer. The
following table provides a history of County wide and unincorporated area (MSTD) taxable
value over the past six years (tax year 2007 -2012) as well as the budget planning projection for
tax year 2013 (FY 2014).
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)
October DR 422
Number
$58,497,796,462
.51%
$36,031,604,374
.05%
2013 (FY 2014) J
$58,497,796,462
Flat
$36,031,604,374
Flat
The State Ad Valorem Estimating Conference released numbers in December 2012 for the 2013
tax year (FY 2014). The report projects that Collier County taxable values on July 1, 2013 will
increase 2.1 %.
For budget planning purposes at this time a flat taxable value scenario will be used. Any
positive difference in taxable value and the resulting increase in ad valorem revenue can be
applied to General Fund and Unincorporated Area General fund reserves and /or operating and
capital programs and services as directed by the Board.
The General Fund and MSTD 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 eight years are shown in table form below.
illage Area
FY 06
FY 07
FY 08
FY 09
FY 10
FY 11
FY 12
FY 13
General Fund
$3.8772
$3.5790
$3.1469
$3.1469
$3.5645
$3.5645
$3.5645
$3.5645
Unincorporated
Area
$.8069
1 $.8069
1 $.6912
1 $.6912
1 $.7161
1 $.7161
1 $.7161
1 $3161
3
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2/26/2013 11.G.
Taxable value County wide from that certified by the Property Appraiser on July 1, 2012 to the
recapitulation report in October 2012 (DR 422) decreased .17% or $101,083,090. This taxable
value decrease equates to $360,300. Taxable values between June and the final numbers post
Value Adjustment Board (VAB) do change and this resulting change has an impact upon the
succeeding year's value. Projecting a flat taxable value under a FY 2014 millage neutral rate
($3.5645) will likely result in the same General Fund dollar levy as FY 2013 or $208,875,700,
assuming continued increases in new construction taxable value and recovery of the taxable
value loss which occurred between July and October 2012.
Taxable value within the unincorporated area (MSTD) General Fund decreased .24% or
$85,422,300 from the certified value in July to the October recapitulation report (DR 422). This
decrease equates to a dollar value of $61,200. Projecting a flat taxable value within the
unincorporated area under a FY 2014 millage neutral rate ($.7161) will likely result in the same
dollar levy as FY 2013 or $25,863,400, assuming continued increases in new construction
taxable value and recovery of the values lost between July and October 2012.
It is likely that budgeted ad valorem revenue will be millage rate driven rather than a strategy of
setting the millage rate based upon a targeted ad valorem revenue number.
The County Manager is proposing to submit one FY 2014 millage neutral budget along with
service level and related budgetary and millage implications. Holding the General Fund millage
rate at $3.5645, for the fifth consecutive fiscal year in FY 2014 (millage neutral scenario) under
a flat taxable value planning scenario will likely result in continued targeted operating cuts to
offset expected increases in health insurance electricity, internal service charges and other non
discretionary costs. Likewise targeted cuts will also be required for operations within the
unincorporated area General Fund. Any combination of operating and capital cuts will not be
taken across the Board, rather cuts will be targeted and measured based upon need, priorities and
service levels.
Also noteworthy and concerning is the continued necessity to engage in County Manager agency
mid — year expenditure cuts to ensure that a sufficient amount of beginning fiscal year cash is
available within the General Fund (00 1) and Unincorporated Area General Fund (111).
Planned mid -year General Fund cuts during FY 2013 amount to approximately $5,000,000.
These FY 2013 cuts consist primarily of redirected capital transfer dollars back to the General
Fund due to project close outs, budgetary savings from recently bid projects and excess year
ending FY 2012 fund balance over budget within certain funds linked to the General Fund.
The table below identifies the level and extent of adopted and mid -year budget reductions since
FY 2009 to achieve a millage neutral tax rate budget and maintain adequate General Fund cash
balances consistent with an investment quality credit rated organization.
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2/26/2013 1 1.G.
General Fund Budget Reductions
$10
I
$0
FY FY FY 14
-$10
N
o -$20
-$30 Total Reductions
$115,062,300
-$40
0 Reductions for the Adopted Budget v Mid -Year Budget Reductions
It is expected that this level of budgetary reduction and cash management will be necessary and
continue in FY 2014 and beyond to preserve general fund reserves; protect against revenue
shortfalls and reliance upon ad valorem tax revenue; guard against any assault by the state
legislature on the ad valorem tax structure; and fulfill public expectation to maintain/enhance
service levels. Within this environment and without the continuation of mid -year cuts coupled
with changes to the County's General Fund revenue structure and /or service level reductions, a
substantial erosion of General Fund equity will become evident at fiscal year ending 2014,
continue into FY 2015 and progressively deteriorate as shown within the three year General
Fund Analysis on Page 23.
For FY 2014, budgeted capital transfers including that component required to support
continuing growth and non growth related debt obligations will total $27.7 million — a $1.2M
decrease from FY 2013. The 1 /3rd mil or less equivalent transfer will once again primarily
support debt service. It is projected that the 1 /3rd mil equivalent transfer will total $11.0 million
with approximately $8.8 million committed to pay debt. Inclusive within this figure is a $4.9
million growth related debt gap due to reduced impact fee collections. The General Fund
transfer to support much needed intersection maintenance, resurfacing, bridge repairs and other
network infrastructure maintenance is recommended to remain at $11.2 million. The storm
water transfer will be sized at the equivalent of 0.1000 mils and this transfer is projected to total
$5.5 million.
Also programmed and new for FY 2014 are certain priority public safety capital transfers
totaling $6,800,000 covering ambulance replacement, phased upgrades to the county -wide
800MHz platform and year one of a two year set aside to replace the EMS helicopter in FY
2015.
Through our aggressive debt restructuring and normal debt retirement, non growth related
revenue bond debt service payable from all General Fund legally available non ad valorem
revenue sources has decreased 51% or over $4M since FY 2010.
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2/26/2013 11. G.
Recommendation: Develop a General Fund (00 1) and unincorporated area General Fund (I 11)
budget for FY 2014 at millage neutral and provide the Board with a summary divisional
description of what millage neutral purchases in terms of service, the cost and description of
services cut, and the corresponding ad- valorem impact to restore any cut service.
General Fund Budget Allocations by ALPency and Component
The purpose of this allocation is to identify those critical 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 will share in
any budget reductions necessitated by reductions in property tax revenues, new tax reform
initiatives, reductions in state shared revenue and unfunded mandates.
FY 2013 Percent of General Fund Budget
Property
Appraiser 2%
Supervisor of
Elections 1%
Clerk of Courts
2%
Courts 0%
Tax Collector 4%
Reserves 8%
I
BCC / Co
Debt / Capital
Attorney 3%
Subsidy 6%
Road Program
Airport Authority
Subsidy 4%
0%
Considering that transfers to the Constitutional Agencies in FY 2013 account for 52.7% of
total General Fund budgeted expenses and 78.3% of the General Fund ad valorem budgeted
revenue, their participation in any necessary reductions due in part to unexpected ad valorem
revenue shortfalls or unforeseen unfunded mandates is essential to achieving a millage neutral
budget. 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 $8,113,901 and
$10,322,248 respectively for FY 2011 and FY 2012.
Recommendation: Continuation of this policy.
Millaee Targets for Collier County MSTU's/MSTD's
With a simple majority vote in FY 2014, the Board has the latitude to levy the rolled back
millage rate (tax neutral), plus an inflationary adjustment based on the growth in Florida per
capita personal income.
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2/26/2013 11.G.
MSTU's are created by ordinance and generally there are provisions governing the maximum
millage rate that can be levied. Local ordinance is the control, even if the rolled back rate
exceeds the ordained millage cap.
There are twenty two (22) dependent MSTU's or MSTD's active under Collier County's taxing
umbrellas which are managed by staff. Of these, thirteen (13) have advisory boards which
provide recommendations to the Board of County Commissioners.
Recommendation: For FY 2014, it is suggested that those MSTU's/MSTD's without advisory
board oversight be limited to a millage neutral position unless staff presents a compelling reason
for additional funds during budget presentations. Additionally, it is suggested that MSTU's and
MSTD's with advisory board oversight be allowed to consider tax rate options ranging from
millage neutral to tax neutral (rolled back) 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.
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 MSTD 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 MSTD General Fund (111). Under this revenue centric approach,
Divisions will be held to their departmental fee for service projections and any negative fee
variances will be addressed through service cuts and not subsidized by Ad Valorem taxes.
Division Administrator discretion upon guidance by the County Manager should be afforded in
these scenarios.
Recommendation: Continuation of this revenue centric budget policy.
Limitations on Expanded Positions to Maximize Organizational Efficiencies
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.
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2/26/2013 11.G.
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 2014, it is possible that expanded position requests will be
recommended, especially within various growth management division functions in order to
facilitate the customer expected delivery of permitting, inspections and plan review services.
Otherwise, to the extent possible, no net new positions in the County Manager's Agency will be
continued for FY 2014. This proposed guidance continues the agency freeze on new hires funded
with ad valorem funds with limited exceptions authorized by the County Manager. Remember
that the budget document only portrays those positions funded within the agency.
Recommendation: Continuation of this budget policy.
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. Recognizes and rewards individual and team achievements.
These goals, while important, are mitigated somewhat by available financial resources. Focus
will shift on retaining the employment base where possible given revenue parameters and
maintaining the expertise and professional development of the work force.
Recommendation: Recognizing current resource planning, a salary adjustment for FY 2014 is
not proposed. However, on an event driven basis most likely triggered by taxable values higher
than anticipated, the County Manager may propose some form of employee compensation
adjustment. In previous years the Board of County Commissioners, has authorized adjustments
to the compensation plan as shown within the following table.
Program Component
FY 07
FY 08
FY 09
FY 10
FY 11
FY 12
FY 13
FY 14
Cost of Living
4.70%
4.10%
4.20%
0.00%
0.00%
0.00%
2.00%
0.00%
Awards Program
1.50%
1.50%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Pay Plan Maintenance
0.25%
0.25%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Total 16.45%
15.85% 14.20%
10.00%
J 0.00% 11
0.00%
2.00%
0.00%
Health Care Program Cost Sharing
Collier County provides a self - funded Group Benefits Plan for health care and prescription drug
coverage. Coverage under the Plan extends to all County employees, with the exception of the
Sheriff's Office, which provides 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 is similarly impacted by these rising costs.
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2/26/2013 11.G.
For FY 2013, the County experienced a 4.4% health insurance rate increase. This increase
resulted in an average annual employer premium increase of $528 and an average employee
premium increase of $144. It is anticipated that health plan costs will increase for FY 2014. A
combination of premium increase and plan design changes will be required to hold any employee
premium contribution increases to no more than that experienced in FY 2013. It should be noted
that employer health insurance contribution increases are absorbed within operating
appropriations requiring general budget reductions in other program areas under a flat taxable
value planning scenario for those operations funded by ad valorem revenue.
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
2013, $10M in General Fund constitutional transfer savings would have been realized.
2013 Health Plan Contributions by Agency
Recommendation: In FY 2014, 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% emplovee share be uniform
across all agencies, including the Constitutional Officers. This policy treats all county
employees equally in terms of cost sharing for health insurance premiums.
9
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Average
Average
2013 Savings if
Monthly
Monthly
all Agencies
Agency
EE Rate
ER Rate
Total
EE %
ER %
EE's
Sgl
Fam
were @ 80/20%
BCC
$260.52
$ 1,042.10
$1,302.62
20.00%
80.00%
1382
559
823
$
SOE
$260.52
$ 1,042.10
$1,302.62
20.00%
80.00%
18
9
9
$
COC
$260.52
$ 1,042.10
$1,302.62
20.00%
80.00%
176
73
103
$
PA
$ 16.68
$ 1,285.94
$1,302.62
1.28%
98.72%
47
19
28
$ 109,420.05
TC
$ 17.72
$ 1,284.90
$1,302.62
1.36%
98.64%
134
39
95
$ 406,417.34
CCSO
$ 43.17
$ 1,031.05
$1,074.22
4.02%
95.98%
1227
412
815
$ 2,527,667.61
Total
'---------------------------------------------------------------------------------------------
$ 3,043,505.00
------ --'-------- - --- -'
Recommendation: In FY 2014, 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% emplovee share be uniform
across all agencies, including the Constitutional Officers. This policy treats all county
employees equally in terms of cost sharing for health insurance premiums.
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2/26/2013 11.G.
Retirement Rates
All agencies including Constitutional Officers must use the retirement rates published within the
OMB budget instructions. OMB is monitoring all proposed bills. The legislature usually
establishes the new retirement rates in the beginning of May with the Governor signing the bill
into law at the end of May. The preliminary retirement rates that will be published in the
instructions are based on Florida Statutes Chapter 121 second year rates (rates that will go into
effect July 1, 2013 if the legislators fail to establish new rates for state fiscal year 2013- 2014).
Recommendation: Adherence to the OMB rates published within the,OMB budget instructions.
Accrued Salary Savings
Reduced FTE counts, low turnover and stringent limitations on expanded positions, 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.
Previously, a 4% attrition rate for each Agency funded by the General Fund and for all of the
County Manager Agency was calculated on Regular Salaries. For FY 2014, it is suggested that
the attrition rate remain at 2% with the objective of eliminating attrition as a budgetary tool in
FY 2015 or after.
Recommendation: Continue the accrued salary savings policy at a 2% rate
Storm Water Management Capital FundinLy
The Board previously adopted (County Resolution 2010 -137) a policy with funding equivalent
up to 0.1500 mills annually from the General Fund for countywide storm water initiatives. The
purpose of this dedicated funding source is to address long - standing capital project needs in the
storm water program area, as well as to identify to grantor agencies that Collier County has a
dedicated funding source to provide local matching requirements to available grants.
Addressing storm water funding needs in the unincorporated area, staff plans to dedicate via
transfer from the MSTD General Fund (I 11) at least $250,000, similar to funding in FY 2013.
Recommendation: Recognize the current policy pursuant to 2010 -137 with the understanding
that a millage neutral budget will likely require that this transfer be set at an equivalency of
0.1000 mils.
Proposed Use of Gas Taxes
Previously, the Board directed through policy that all available gas taxes will be used to support
the Road Construction Capital Improvement program. Immediately prior to the decline in
taxable values, this transfer amounted to $24 million. Recent reductions in the General Fund
(001) transfer to roads has meant that gas taxes (the pledged revenue source) fund a significant
portion of debt service on the 2003 and 2005 Gas Tax Revenue Bonds. Current debt service is
approximately $14 million per year and the General Fund transfer proposed for FY 2014 is the
same as FY 2013 at $11.2 million. Gas tax revenue from all sources in recent years has averaged
approximately $18.5 million per year.
io
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2/26/2013 11.G.
Recommendation: Continue the Board's FY 2013 policy and allow gas taxes to support not only
the road construction improvement and maintenance program but to also pay for a portion of the
debt service, instead of the General Fund legally available non ad valorem revenue supporting all
of the debt service payments.
General Fund 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.
The majority of this transfer has evolved into a debt service payment and for FY 2013 $10.7
million of this $12.1 million transfer will cover debt service. Due to the lack of impact fee
revenue, $4.3 million represents a loan from the General Fund to cover growth related debt.
For FY 2014, the General Fund (001) transfer (loan) will be sized to cover debt service which
cannot be covered by impact fees.
Payment of debt is a top priority. Under a flat taxable value planning scenario dollars generated
from the 1 /3rd mil equivalent allocation will be sufficient to cover this debt service requirement.
Of the $11.0 million projected transfer in FY 2014, $4.9 million will be required to cover the
growth related debt service gap due to insufficient impact fee revenue and $3.8 million is
budgeted to cover non growth related debt. The remaining $2.3 million will be devoted to
general capital items. It is likely that the transfer required to cover debt service due to
insufficient impact fee revenue will grow from $4.9 million in FY 2014 to $6.0 million in FY
2015 and $7.7 million in FY 2016. Impact fee collections have declined by 82% between FY
2007 and FY 2011 from a high of $105.4M to $19.1 M. For FY 2012, impact fees across all
categories totaled $22.9M. For budget planning purposes, impact fee revenue for FY 2013 and
FY 2014 is projected in the $19.5M range.
Within the framework of a fully funded and policy compliant debt management program, the
County has taken advantage of historically low interest rates and reduced further the cost of
borrowing through aggressive restructuring of the debt portfolio. During fiscal years 2010
through 2012, the County restructured $219.3M in long term debt and variable rate commercial
paper, achieving a level of budget certainty, reducing the cost of borrowing within the portfolio
by $10.1M and returning $9.1M of the $19.5M borrowed from Enterprise funds to establish a
debt service reserve debt surety necessitated by collapse of the bond insurance market.
Collier County's principal debt outstanding at 9/30/12 totals $627M of which $351M is
connected with infrastructure improvements by population growth and related service demands.
The County's principal debt has been reduced by $177M since FY 2008. With the County
continuing to aggressively pay down its current debt obligation and with no plans to issue new
debt, approximately 50% of existing debt will be retired over the next ten (10) years.
Efforts continue to explore fiscally responsible means to refund existing general government
revenue and enterprise debt. Staff is currently planning and will be bringing back to the Board
over the next few months, $25M in utility debt restructuring and $63.1 M in sales tax capital
improvement debt restructuring which would eliminate the series 2003 and 2005 issues entirely
in favor of refunded special obligation debt with a basket pledge of all legally available non ad
valorem revenue. It is expected that these restructuring initiatives will reduce the cost of
borrowing within the portfolio further by $8M to $9M dollars without altering the debt term. In
11
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2/26/2013 11.G.
addition the debt service reserve cash surety necessitated by collapse of the bond insurance
market will be eliminated and all remaining borrowed proceeds returned to the respective
enterprise funds.
Recommendation: Continue to 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 general
governmental priority capital needs.
Reserves
A reserve for contingency is typically budgeted in all operating funds, with the exception of the
Constitutional Agency funds. Reserves for the Constitutional Agency funds shall be
appropriated within the County General Fund.
The State establishes maximum limitations on certain reserves. The maximum limitations for
reserves for contingency and for cash flow are l0% and 20% of a fund's total budget,
respectively. Previously, the General Fund and the MSTD General Fund contingency reserves
are generally established by Board policy at 2.5% of total budgeted appropriations. There is no
statutory limit on capital reserves.
The reserves for cash flow, in both funds, varies based on the budget; however, cash flow
reserves will never exceed the statutory limits.
Despite recent reductions in ad valorem tax revenues, it is strongly recommended that efforts
continue to grow General Fund reserves — an effort which began in FY 2011. Budgeted General
Fund contingency reserves for FY 2013 total $6,381,300 — representing 2.50% of total operating
appropriations. This reserve level is $73,400 below the FY 2012 level. The FY 2013 reserve for
cash flow grew by $6,300,000 to $18,900,000.
For FY 2014, it is recommended that the contingency reserve once again be established at 2.5 %.
To the extent possible in this economic environment, staff will strive to increase overall General
Fund budgeted reserve growth. Optimally and in order to achieve a regular and sustained
General Fund beginning fiscal year cash position of $50M, budgeted reserves should be a
minimum of $35M. Mid -year cuts will continue to be a regular practice unless and until
budgeted reserves reach this level. Before the first quarter of a fiscal year, and prior to the
collection of substantial property tax revenue, the General Fund expends on average $40 -$45
million on various public safety and priority operational items.
Regular and measured growth in General Fund reserves sends a strong message of fiscal health
and stability to the bond rating agencies and financial community, especially when revenue
streams are constrained. Reserves provide a level of protection against unknown costs and costs
associated with unfunded state and federal mandates.
Recommendation: Build General Fund (001) and Unincorporated Area MSTD General Fund
(I 11) reserves pursuant to this policy.
12
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2/26/2013 1 1.G.
SchedulinE Issues
Decisions Required
Staff Recommended Date (s)
Establish Budget Submission Dates
May 1, 2013 by Resolution
for the Sheriff, the Supervisor of
Elections and the Clerk
June Budget Workshops
(BCC Agency /Courts and Constitutional Officers
Budget Workshops) Thursday, June 20 and Friday June
21, 2013
FAC Conference is June 25 — June 28, 2013 in Tampa.
Submission of Tentative FY 2014
Friday July 12, 2013.
Budget to the Board
Adoption of Tentative Maximum FY
July 23, 2013 (Tuesday)
14 Milla e Rates
Establish Public Hearing Dates (see
September 5, 2013 (Thursday at 5:05 pm)
note)
September 19, 2013 (Thursday at 5:05 m)
Note: The School Board has first priority in establishing public hearing dates for budgets. The
School Board's final budget hearing is tentatively scheduled for September 10, 2013. The
Commission chambers are reserved for the tentative dates for Collier County Government budget
public hearings.
Recommendation: Approve the dates identified above and attached resolution establishing May
1, 2013 budget submittal dates for the Sheriff, the Supervisor of Elections and the Clerk.
Comparative Budget Data
Provide comparative budget data using FY 2013 adopted budget data (cost and employees per
capita based on unincorporated area population) by Agency with Budget Submittals for Similar
Sized Florida Counties.
Recommendation: Counties for comparison purposes include:
• Sarasota County
• Lee County
• Charlotte County
• Manatee County
• Martin County
13
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2/26/2013 11.G.
Continuing Existing Budget Policies for FY 2014
Grant Funded Positions: Any positions formerly funded with grant funds being recommended
for inclusion in a general (non -grant funded) operating budget shall be treated as expanded
service requests.
Self- Insurance: To conduct an actuarial study of the self - insured Workers' Compensation,
Property and Casualty, and Group Health Insurance programs. Program funding to be based
upon an actuarial based confidence interval of 75 %, with the exception of group health to which
a confidence interval is not applicable.
Contract Aeencv Fundine: The Board will not fund any non - mandated social service agencies.
Median Maintenance: Recognize the Unincorporated Area General Fund MSTD (I 11) as the
appropriate, dedicated funding source for median beautification maintenance costs.
Carry forward: All funds that are unexpended and unencumbered at the end of the fiscal year
will be appropriated as carry forward revenue in the following year. Carry forward revenue
represents not only operating funds but also previously budgeted operating, debt service, and
capital reserves that are "carried forward" to fund these same reserves in the new year or to fund
capital projects in the current or future years. The largest sources of carry forward are the capital,
debt service, and enterprise funds. In both the General Fund and MSTD General Fund, carry
forward fund balance is maintained to provide cash flow for operations prior to the receipt of ad
valorem taxes and other general revenue sources. Since FY 2009, mid -year budgeted
appropriation reductions were required to ensure that adequate fund balances were available in the
new fiscal year.
General Fund balance is required to meet significant public safety and priority operating needs
for October and November, prior to the receipt of any significant ad valorem tax revenue (ad
valorem taxes represent 65.0% of the total FY 2013 General Fund adopted revenues).
Fund balance is also an important measure used by bond rating agencies in determining the
County's credit worthiness. Staff from Moody's Investors Service was contacted previously to
determine an appropriate level of carry forward revenue. Specific concerns for Florida
communities were reliance on the tourism industry and sales tax revenue, and the ongoing threat
from hurricanes and wildfires. For Florida coastal communities, a minimum carry forward
balance of 10% of total General Fund expenditures was recommended by the ratings agencies.
Of course this figure and recommendation was general in nature and subject to each county's
individual cash flow needs. A higher percentage would be considered positive — especially
during any ratings surveillance.
The recommended level of fund balance in the General Fund should be a minimum of 10% of
actual expenditures. At year ending September 30, 2012, actual General Fund carryforward
balance totaled $57,522,000 which represented approximately 21.0% of actual FY 2012
expenses.
14
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2/26/2013 1 1.G.
Indirect Cost Allocation Plan: The policy of charging enterprise and special revenue funds for
support services provided by General Fund departments will be used again in FY 2014. The
basis of these charges is a detailed indirect cost allocation plan prepared, periodically, by a
consultant and adjusted by staff to reflect the organizational environment on a real time basis.
Impact Fees: Collier County will assess impact fees at such levels as allowed by law,
established by the Board of County Commissioners and supported by impact fee studies.
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 2013, the payment in lieu of taxes calculation was based upon a "franchise fee
equivalent basis" commonly referred to as a percentage of gross receipts. Five percent (5 %) of
gross receipts were applied in FY 2013 and this method and percentage is planned for in FY
2014. 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 FundinLY: Continuation of a fixed General Fund equivalent
millage dedicated to capital projects, debt financing and impact fee fund debt loans. The
recommended rate is up to the equivalent of 0.3333 mills. (See history below).
15
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2/26/2013 11.G.
General Fund Capital Equivalent Millage History
(FY 1991 - FY 2016)
1.2000
1.0000
0.8000
0.6580
Z
0.6000
0.4000 0.5474 0.4148 0.3809 0.3333
0.2000
10
0.0000 0.2354 0.1931 0.1878 0.2
O" ZOO Oq NO
The General Fund continues to loan money to impact fee funds in order to pay their annual debt
service payments. This of course is in addition to normal and customary debt service on non
growth related revenue bond debt.
g
Capital Improvement Proram (CIP) Policies: On an annual basis, the County shall prepare
and adopt a five -year Capital Improvement Element (CIE) consistent with the requirements of
the Growth Management Plan.
• Capital projects attributable to growth will be funded, to the extent possible, by impact
fees.
• Capital projects identified in the five -year CIE will be given priority for funding. The
five -year plan for water and wastewater CIE projects will be based on projects included
in the adopted master plans.
Unlike operating budgets that are administered at the appropriation unit level, capital project
budgets will continue to be administered on a total project budget basis. The minimum threshold
for projects budgeted in capital funds is $25,000.
16
Packet Page -493-
0.5426
0.3333
37
0.2783
0.2067 0.2001
0.3040
The General Fund continues to loan money to impact fee funds in order to pay their annual debt
service payments. This of course is in addition to normal and customary debt service on non
growth related revenue bond debt.
g
Capital Improvement Proram (CIP) Policies: On an annual basis, the County shall prepare
and adopt a five -year Capital Improvement Element (CIE) consistent with the requirements of
the Growth Management Plan.
• Capital projects attributable to growth will be funded, to the extent possible, by impact
fees.
• Capital projects identified in the five -year CIE will be given priority for funding. The
five -year plan for water and wastewater CIE projects will be based on projects included
in the adopted master plans.
Unlike operating budgets that are administered at the appropriation unit level, capital project
budgets will continue to be administered on a total project budget basis. The minimum threshold
for projects budgeted in capital funds is $25,000.
16
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2/26/2013 1 1.G.
Three -Year Budget Projections
Ad Valorem Tax Funds
(FY 2014 - FY 2016)
OMB staff prepares annually a three -year projection of General Fund and MSTD General Fund
revenues and expenditures to improve financial planning and to understand the long -term impact
of funding decisions. These projections are complimented by a trend analysis of revenues and
expenses which conclude the General Fund and Unincorporated Area General Fund sections
respectively.
The following 3 -year budget projections are for the General Fund (001) and the MSTD General
Fund (111).
General Fund
General Fund (001) Millage History and Millage Rates
As a point of reference, the following graph plots the historical General Fund millage rate, as
well as millage neutral tax rates for FY 2014 through FY 2016. Millage neutral rather than tax
neutral rates are used for planning purposes considering the belief that taxable values will
continue to increase modestly in the future.
While the County Manager will be recommending a millage neutral budget in FY 2014 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.
17
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2/26/2013 11.G.
A separate Board workshop covering the extent, condition and programmatic aspects of asset
management is anticipated during FY 2013. The following tables depict the respective millage
neutral tax rates for FY 2014, 2015 and 2016 as well as additional ad valorem dollars which
could be raised under certain increasing tax base assumptions.
General Fund
FY 13 Adopted and
Recommended Millage
Neutral Milla e Rates
Inc. (Dec.) per $100,000
Taxable Value
FY 13
3.5645
$ 0.00
FY 14
3.5645
$ 0.00
FY 15
3.5645
$ 0.00
FY 16 1
3.5645
$ 0.00
The projected millage rates assume a flat taxable value position to existing property in FY 2014
(the 2013 tax year). For FY 2015, taxable value on existing property is projected to increase 1%
although the new construction component is projected to increase modestly. Taxable value in
FY 2016 is projected to also increase 1 %. The Property Appraiser will provide preliminary
taxable value estimates for FY 2014 on June 1, 2013. Actual and assumed changes in County
taxable values are as follows:
Historical and Projected Changes in Collier County Taxable Values
(FY 2005 - FY 2016)
30.00%
25.38%
25.00%
19.86%
20.00%
j15.00%
11.48%
en
10.00%
5.00%
0.51% 0.00% 1.00% 1.00%
0.00%
iFY05 FY06 FY07 FY08 IM FY13 FY14 FY15 FY16
- 5.00% I
- 4.70% - 5.26%
! - 10.00%
I - 15.00% - 11.04% - 12.20%
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.
18
Packet Page -495-
Flat Taxable
1%
1.5%
2%
2.5%
3%
Value (FY
2014
County -Wide
$58,497,796,462
$2,085,200
$3,127,700
$4,170,300
$5,212,900
$6,255,500
Taxable Value
for FY 2013
The projected millage rates assume a flat taxable value position to existing property in FY 2014
(the 2013 tax year). For FY 2015, taxable value on existing property is projected to increase 1%
although the new construction component is projected to increase modestly. Taxable value in
FY 2016 is projected to also increase 1 %. The Property Appraiser will provide preliminary
taxable value estimates for FY 2014 on June 1, 2013. Actual and assumed changes in County
taxable values are as follows:
Historical and Projected Changes in Collier County Taxable Values
(FY 2005 - FY 2016)
30.00%
25.38%
25.00%
19.86%
20.00%
j15.00%
11.48%
en
10.00%
5.00%
0.51% 0.00% 1.00% 1.00%
0.00%
iFY05 FY06 FY07 FY08 IM FY13 FY14 FY15 FY16
- 5.00% I
- 4.70% - 5.26%
! - 10.00%
I - 15.00% - 11.04% - 12.20%
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.
18
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2/2612013 11.G.
FY 2014 Significant Expense Assumptions
A millage neutral budget assuming a flat taxable value base will require modest operating
cuts within ad valorem supported functions in order to offset planned increases in health
insurance costs, various indirect charges, priority equipment replacement and other non
discretionary costs. Significant expense assumptions include;
• Allocation for compensation administration — 0 %. Event driven basis only.
• 2% attrition rate on regular salaries assumed in the County Manager's Agency.
• $800,000 for continued ambulance replacement.
• $3,000,000 first set aside to replace EMS Helicopter in FY 2105.
• Five year phased approach to upgrading the county -wide 800MHz radio system
platform. First phase allocates $3,000,000 to network switching and console
enhancements.
• Continued additional David Lawrence Center Funding in the amount of $300,000
• Continue General Fund debt payment and impact fee loan transfer equivalent up to
0.3333 mills annually ($10,987,900).
• Storm water capital funding equivalent to 0.1000 mills or $5,530,100. This millage
equivalency rate represents no change from FY 2013.
• General Fund support of road construction and maintenance funded at $11,230,800
consistent with FY 2013 levels.
• General Fund support of EMS established at $11,333,100 — no change from FY 2013
base figure. (EMS fund 490 received an additional $691,500 in FY 2012 due to
reduced fee collections). Capital contributions noted above and separate from
operating subsidy.
• Continue if possible the shift in Transportation Operations funding from MSTD
General Fund (I 11) to General Fund (001).
• Mandates to be absorbed if possible within operating budgets, including
Constitutional Officers.
Significant Revenue Assumptions
• FY 2013 ad valorem tax revenue forecast is 96% of actual taxes levied. FY 2013 forecast
totals $200,925,100 — a reduction of $7,950,600 off budget. A millage neutral position
for FY 2014 produces a levy of $208,515,400.
• Sales tax revenue forecast for FY 2013 is projected at $29,000,000 representing an
increase of 1.8% over budget. FY 2014 budgeted revenue is projected at $29,500,000.
• State Revenue Sharing for FY 2014 is projected to increase $250,000 or 3.4% over
budget.
• Constitutional Officer turn-back is a very conservative budget estimate and for FY 2014
$5,600,000 is projected — a decrease of $300,000 over the FY 2013 budget.
• Measures to maintain beginning fund balance at approximately $50,000,000 continue to
be necessary and include continued growth in budgeted reserves coupled with any
combination of revenue receipts over budget and mid - year appropriation adjustments.
• Interest income is projected to increase modestly by $50,000 to $500,000 due to
increasing fund balances in FY 2013.
19
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2/26/2013 11.G.
EMS Fund
EMS is another fund that impacts significantly on the General Fund. Typically, this ad valorem
support in recent years accounted for 45% to 50% of total EMS operating revenues. However,
the percentage is increasing given the decline in fee revenue. Historical and projected General
Fund support of EMS operations by fiscal year is as follows:
Use of General Fund dollars to support this life /safety function has and continues to be a priority.
No reduction in General Fund base transfer dollars is anticipated in FY 2014.
Road Construction ProLyram
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.
While taxable values are projected to stabilize, the General Fund budgeted contribution to road
construction and maintenance is expected to remain at $11.2 million as indicated on the
following graph. 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.
Current General Fund revenue constraints require that gas taxes be used to cover a larger portion
of debt service as well as the functions stated above.
20
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2/26/2013 1 1.G.
FY 2015
A millage neutral budget in FY 2015 with an increase of I% in taxable value will likely require
continued operating reductions plus a substantial and service limiting mid -year FY 2014 cut in
order to establish sufficient resources to fund priority public safety capital initiatives like the
final EMS helicopter set aside; continued ambulance replacement; sheriff capital requests; and
800 megahertz equipment replacement. This of course is in addition to other infrastructure
replacement needs.
In addition to annual inflationary cost increases, the following items were included in the FY
2015 budget analysis:
• Maintain Capital projects funding in an equivalency up to 0.3333 mills.
• Stormwater capital projects funding equivalent to 0.10 mills.
• Maintain General Fund support of EMS.
• Continued ambulance replacement.
• Set aside final $3,000,000 to replace EMS Helicopter.
• Year two funding to upgrade the county -wide 800MHz radio system platform by allocating
$3,900,000 to upgrade the site network.
• Contingency reserves are maintained at policy.
• Maintain General Fund road subsidy.
• Maintain General Fund support for Transportation Operations expenses.
In summary, the FY 2015 analysis signals caution especially when critical variables like taxable
value, market conditions and general revenues are difficult to predict. Pursuing a millage
neutral budget in FY 2015 without a sufficient budgeted beginning fund balance would likely
result in a $20.3 million budget planning deficit as depicted in the trend analysis. Of course
required correction on the expense side assuming revenue assumptions are accurate would be
necessary.
2]
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2/26/2013 11.G.
These corrections could mean reducing or eliminating the General Fund road subsidy forcing the
use of gas taxes to completely support the approximately $14 million annual road debt service
payment. This would leave approximately $4 million of gas tax revenue for capital,
maintenance, right -of -way acquisition and the Collier Area Transit (CAT) subsidy. Other
operating transfer subsidies would also be targeted including dollars in support of the
transportation operations.
FY 2016
A millage neutral budget in FY 2016 coupled with a modest taxable value increase presents a
significant challenge to a balanced budget under a scenario where fund balance continues to
erode. Once again, without a sufficient beginning fund balance, the projected FY 2016 deficit
approaches $18.5 million as indicated within the trend analysis.
The following items were included in the FY 2016 budget analysis:
• Maintain Capital projects funding in an equivalency up to 0.3333 mills.
• Stormwater capital projects funding equivalent to 0.10 mills annually.
• Maintain General Fund support of EMS.
• Year 3 funding to upgrade the county -wide 800MHz radio system platform committing
$4,400,000 to continued network site improvements, and microwave connectivity.
• Contingency reserves are maintained at policy.
• Maintain General Fund road subsidy.
• Maintain General Fund support for Transportation Operations expenses.
ON
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2/26/2013 11.G.
General Fund Trend Analysis
23
Packet Page -500-
General Fund Anahsis
Adapted Budget
Forecast
Forecast
Forecast
Forecast
Forecast
FY 2013
FY 2013
FY '.014
FY 2015
FY 2016
FY 201
Revenues:
Ad Valorem
208.975:700
200-1923J00
-3.8't.
200925-00
201-934-200
1.0,
204961'20
Sales Tax
29.500,000
29300.000
2.1! _
2MKODD
30.090-000
211%
30-94230D
2.
Revenue Shanrip
7.600,000
717700.000
1. 31,
7134T000
In".
S.050.400
2.",
OtherRevenues
33.921300
33,941,300
31360.400
-'.3%
31.321500
31290294
Less 5016 Requtred by Law
(13-105A00)
0
0
0
0
Caffvforward
44283-700
57.511000
2455:
—,.— 31-559-500
11.166-900
-6,1.61: r,.397-596)
TotalRevermes
309-925j00
3289SL400
-2.5,t
303-154200
296i 13.604
EiRcnittures:
Departments
55:764j00
59,035,000
47 .
62.410500
--v,
63,034-700
Debt Service
630-000
6-395.040
3-537-200
-329
3.070-940
-20.0�i
3.05l-900
8.
Cap - Loans to Impact Fee Fds
4312.9N
4312900
o.ct,
4-990J00
6OSS-900
22 O
7.7233,600
26.s%
Capital
15,953300
16 .6IS300
2.5:720900
4.95,
27-370-M
24260.900
Transfers
33-165,600
29J73.900
28.951700
�, i�',
141.400
29J
0
-%
2933-900
-5
Constitunonal Officers
163.499.940
1621845300
-,4 %
162_S39.900
164,409.100
A,
165,995.300
.-C%
Reserves
24,S44440
0
0
0
0
Total Expenditures
300,9225.100
-178.7731400
288,13:.900
3-11:
29'.392304
29' VIl.200
rl.41-
Revenues less Expenditures (Carryfamard)
50-208,000
31,5-59.500
11.166.900
(7397.596)
Total Amt of
F4--Consume
Amt ofEquity (CF) reduced to balance the budge
7307MO
18,645,500
20392.600
18564,496
(64.912J96)
3udgpetedlleserves
24580900
24-610,500
24-666;200
23
Packet Page -500-
2/26/2013 1 1.G.
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 (I H)
millage rate, as well as millage neutral rates for FY 2014 through FY 2016. Millage neutral
rather than tax neutral rates are used for planning purposes considering the belief that taxable
values will continue to increase modestly in the future.
Results of Unincorporated Area General Fund Analysis
While the County Manager will be recommending a millage neutral budget in FY 2014, and
while this millage neutral budget will contain funding to maintain the road network, storm -water
system, community park capital and landscape asset, the Board should note the magnitude of our
future maintenance and asset replacement responsibility and dedicate resources gained through
an increasing taxable value base toward this purpose.
24
Packet Page -501-
2/26/2013 1 1.G.
The following tables depicts the respective millage neutral tax rates for FY 2014, 2015 and 2016
as well as additional ad valorem dollars which could be raised under certain increasing tax base
assumptions.
Unincorporated Area
General Fund
FY 13 Adopted and
Recommended Millage
Neutral Tax Rates
Inc. (Dec.) per $100,000
Taxable Value
FY 13
0.7161
$0.00
FY 14
0.7161
$0.00
FY 15
1 0.7161
$0.00
FY 16
1 0.7161
$0.00
FY 2014
The FY 2014 budget projection is based upon a millage neutral position assuming a flat taxable
value base. Under millage neutral, property taxes will remain flat. Property taxes and the
communications services tax represents on average approximately 79% of the operating revenue
within the MSTD General Fund (111). Changes to distribution and structure of the
communication services tax is being debated in Tallahassee. The Florida Association of Counties
(FAC) is participating in a communication services tax working group which is discussing ways
to modernize the structure of this revenue source.
Traditionally strong cash balances have provided a level of built in protection in recent years
from mid -year cuts. However, continued millage neutral budget positions and an increasing
commitment to landscape and road network maintenance as well as Community Park
improvements will require mid -year budget reductions to maintain beginning cash at required
levels. This fund is predominately operating in nature with minimal capital or capital transfer
expense. Any required mid -year cuts will likely affect transportation operations, park and
recreation programs and other non public safety services.
Beginning in FY 2009, the MSTD General Fund (I 11) absorbed part of the Transportation
operating transfer which had been borne previously by the General Fund (001). State Law and
specifically section 129.02 requires the establishment of a separate County Transportation Trust
Fund to "carry on all work on roads and bridges in the county... ". Collier County Transportation
operations are funded primarily within Transportation Operating Fund 101.
Since inception of the Transportation Division in FY 2001 and continuing through FY 2008,
Transportation Fund 101 has received as its primary revenue source a transfer from General
Fund (001) — not MSTD General Fund (111).
25
Packet Page -502-
Flat Taxable
Value
1%
1.5%
2%
2.5%
3%
Unincorporated
$36,031,604,374
$258,000
$387,000
$516,000
$645,100
$774,100
Area General
Fund Taxable
Value for FY
2013
FY 2014
The FY 2014 budget projection is based upon a millage neutral position assuming a flat taxable
value base. Under millage neutral, property taxes will remain flat. Property taxes and the
communications services tax represents on average approximately 79% of the operating revenue
within the MSTD General Fund (111). Changes to distribution and structure of the
communication services tax is being debated in Tallahassee. The Florida Association of Counties
(FAC) is participating in a communication services tax working group which is discussing ways
to modernize the structure of this revenue source.
Traditionally strong cash balances have provided a level of built in protection in recent years
from mid -year cuts. However, continued millage neutral budget positions and an increasing
commitment to landscape and road network maintenance as well as Community Park
improvements will require mid -year budget reductions to maintain beginning cash at required
levels. This fund is predominately operating in nature with minimal capital or capital transfer
expense. Any required mid -year cuts will likely affect transportation operations, park and
recreation programs and other non public safety services.
Beginning in FY 2009, the MSTD General Fund (I 11) absorbed part of the Transportation
operating transfer which had been borne previously by the General Fund (001). State Law and
specifically section 129.02 requires the establishment of a separate County Transportation Trust
Fund to "carry on all work on roads and bridges in the county... ". Collier County Transportation
operations are funded primarily within Transportation Operating Fund 101.
Since inception of the Transportation Division in FY 2001 and continuing through FY 2008,
Transportation Fund 101 has received as its primary revenue source a transfer from General
Fund (001) — not MSTD General Fund (111).
25
Packet Page -502-
2/26/2013 11.G.
The following table depicts budgeted dollars transferred to support transportation operations
from the General Fund and Unincorporated Area General Fund.
For FY 14, a concerted effort will be made to revert this transfer back solely to the General Fund.
Targeted divisional expenses will be reduced under a flat taxable value assumption to account for
expected increases in employer health insurance premiums, electricity, fuel, and other non
discretionary costs.
FY 2015
Assuming that taxable values will increase by I% in FY 2015, a millage neutral 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. Ensuring a sufficient budgeted beginning
fund balance would likely require elimination of the transfer to support transportation operations.
The trend analysis shows continued erosion of the funds cash position and in fact without
concentrated budget management, a reduction in fund equity from $5.1 million to $2.1 million is
anticipated. This model is certainly not sustainable and budget reduction measures would be
instituted.
FY 2016
Continuation of millage neutral into FY 2016 under a modest I% increase in the tax base 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. For planning
purposes and assuming continued decline in beginning budgeted fund balance, a deficit of $2.1
million could be encountered. Absent budget management mid -year, the model depicts a total
fund equity loss from FY 2013 through FY 2016 totaling $10.4 million.
26
Packet Page -503-
General Fund (001)
MSTD (I 11)
Total
FY 08
$18,066,900
$0
$18,066,900
FY 09
$9,864,700
$7,693,500
$17,558,200
FY 10
$7,935,400
$8,786,900
$16,722,300
FY 11
$12,971,400
$2,912,800
$15,884,200
FY 12
$12,366,900
$2,825,400
$15,192,300
FY 13
$11,496,300
$2,272,200
$13,768,500
For FY 14, a concerted effort will be made to revert this transfer back solely to the General Fund.
Targeted divisional expenses will be reduced under a flat taxable value assumption to account for
expected increases in employer health insurance premiums, electricity, fuel, and other non
discretionary costs.
FY 2015
Assuming that taxable values will increase by I% in FY 2015, a millage neutral 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. Ensuring a sufficient budgeted beginning
fund balance would likely require elimination of the transfer to support transportation operations.
The trend analysis shows continued erosion of the funds cash position and in fact without
concentrated budget management, a reduction in fund equity from $5.1 million to $2.1 million is
anticipated. This model is certainly not sustainable and budget reduction measures would be
instituted.
FY 2016
Continuation of millage neutral into FY 2016 under a modest I% increase in the tax base 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. For planning
purposes and assuming continued decline in beginning budgeted fund balance, a deficit of $2.1
million could be encountered. Absent budget management mid -year, the model depicts a total
fund equity loss from FY 2013 through FY 2016 totaling $10.4 million.
26
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2/26/2013 1 1.G.
Unincorporated Area MSTD General fund (11.1) Trend Analysis
27
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Adopted Budget
Forecast
Forecast
Forecast
Forecast.
Forecast
FY 2013
FY 2013
FY 2014
FY 2015
FY 2016
FY 2017
(Fiat TV)
(increase-'%TV)
(Increase 1%N)
Revenues
Ad Valorem
25,863,400
24,828,900
-4.7«
24.770,100
- ,.2° 25.017 ,800
L4°6 r
25,268.00{!
1_G
Communication Services Tax
4,800,000
4.800,000
0.0%
4,80D,000
O.C96
4.848,ODD
! -M5 r
4,969,200
Other Revenue
4,046,500
4,269,600
5.51:
5,078,600
18.9%'
5,129,400
1.0 %r
5,186,700
1 r",,.
Less 5% Required By Law
(1,696,900)
0
- 1010.01/
0
0.056
0
1.0%
0
w.Cld
Carryforward
5,853,300
7,902.900
35.015',
5,104,800
- 35.4'tt
2,131,300 -58.214
(375,300) r
- 117.6°
(2,459,20D)
Total Revenues
38,866,300
41,801,400
7.65-. 39,753,500
-4.9% 37,126,500
-6.5%
35,042,600
- 5.69:.
Expenditures
Landscape Maintenance
4,442,200
4,314,200
-2.9%
4,.642,200
7.6%
4,642,200
4,642,200
0.0lill.
Roads
5.760,00
5,650,000
-1.9%
5,SW,00C
2.75-
5,800=
0.0:6
5,800.000
uC b
Parks & Rec.
10,652,500
10,5$6.000
-0.6%
10.802,500
-1-1'
'10,682,100
-1.1::
10,682.100
0.055
Code Enforcement
4,096,200
4,050,500
-1.l 1
4,096,200
1.15c
4,096,200
C.0%
4,096,200
v.O
Other Departmental
7,402.000
7.216.600
2.5225
7,402,00.'0'
22.65:.
7.402,060
0.0'5
7,402,000
0_C?6
Transfers
4,917,200
4,.879;300
-OAS,
4,879,300
0.0'x:.
4,879,300
0.09/
4,879,300
0.05,
Reserves
1,596,203
0
-100.0::
0
0
0
Total Expenses
38,866,300
36,696,600
-5.6%
37,622,200
2.555
37,561,800
-C.3%
37,501,800
C_Ch:
Fund Balance
5,104.800
2.131.300
(375300)
(2.459,200)
Equity Reduction to balance budget
2,795,160
2,973,500
2,506,600
2,083,900
(10,362,100)
Budgeted Reserves
437,400
437,400
437,400
27
Packet Page -504-