Agenda 02/28/2012 Item #11A2/28/2012 Item 11.A.
EXECUTIVE SUMMARY
Recommendation to adopt the FY 2013 Budget Policy
OBJECTIVE: That the Board of County Commissioners (Board) adopt policies to be used in developing the Collier County
Government budget for FY 2013.
CONSIDERATIONS: In order for staff to begin preparation of the FY 2013 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 2013 budget. The
purpose of today's discussion is for the Board to reach consensus on the policies upon which the budget will be based. The County
Manager met with the Productivity Committee to share the proposed FY 2013 policies prior to this Board presentation.
The budget policy document is broken down into three distinct elements. The first consists of budget policies proposed in FY 2013
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).
The Board needs to establish June budget workshop dates. Tentative dates are Thursday, June 21, 2012 and Friday, June 22, 2012
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 18 through June 22, 2012 in the City of Orlando.
'or informational purposes, adoption of the maximum tentative millage rates is scheduled for Tuesday, July 24, 2012. The Board is
required by Florida Statutes to provide the Property Appraiser with the proposed millage rates by August 1, 2012 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 2013 budget. The School Board has
tentatively scheduled September 11, 2012 for their final budget hearing. Recommended dates for the Collier County budget public
hearings are Thursday September 6, 2012 and Thursday September 20, 2012.
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 all budget and ad valorem taxation
issues for FY 2013.
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, 2012 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
Packet Page -459-
2/28/2012 Item 11.A.
COLLIER COUNTY
Board of County Commissioners
Item Number: 11.A.
Item Summary: Recommendation to adopt the FY 2013 Budget Policy. (Mark Isackson,
County Manager "s Office)
Meeting Date: 2/28/2012
Prepared By
Approved By
Name: UsherSusan
Title: Management/Budget Analyst, Senior,Office of Manage
Date: 2/22/2012 12:33:18 PM
Name: IsacksonMark
Title: Director -Corp Financial and Mgmt Svs,CMO
Date: 2/22/2012 1:39:37 PM
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2/28/2012 Item 11.A.
RESOLUTION NO. 2012-
A RESOLUTION PURSUANT TO SECTION 129.03, FLORIDA STATUTES,
REQUIRING THE FY 13 TENTATIVE BUDGETS OF THE SHERIFF, THE
SUPERVISOR OF ELECTIONS AND THE CLERK TO BE SUBMITTED TO THE
BOARD OF COUNTY COMMISSIONERS BY MAY 1, 2012.
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 13 fiscal year
to the Board of County Commissioners by May 1, 2012.
This Resolution shall be effective on its adoption.
This Resolution adopted this 28th day of February, 2012, after motion, second and
majority vote.
ATTEST: BOARD OF COUNTY COMMISSIONERS
DWIGHT E. BROCK, Clerk COLLIER COUNTY, FLORIDA
form
legal
Jeffrey
County
By:
Fred Coyle, Chairman
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I
2/28/2012 Item 11.A.
Fiscal Year 2013 Proposed Budget Policies
Submission to the Collier County Board of County
Commissioners
February 28, 2012
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 fonnat continue, the policy document will also
cover significant budget influences; discuss the strategies which may be utilized to address these
influences as the budget document evolves for FY 2014 and beyond.
Annual Budget Policies to be Adopted
Significant Budget Influences:
The decision to set a millage rate and property tax levy is impacted by a number of factors and for FY
2013, key factors include;
• Compliance with bond covenants and the ability to continue debt restructuring.
• Beginning year General Fund cash balance.
• Credit Rating
• Level of operational cuts to agencies and departments which are funded within the General
Fund and Unincorporated Area General Fund.
• Level of General Fund operating support extended to constitutional officers.
• 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 asset maintenance responsibility
including equipment replacement.
• Funding for new or re- prioritized initiatives such as asset management; economic
development; retention/attraction incentives; etc...
• Extent of non ad valorem revenue projected to support operations such as sales tax, state
shared revenues and departmental revenue from general fund operations.
Millne Targets for the County -Wide General Fund
For FY 2012, General Fund (001) property tax revenue, using the recapitulated taxable value report
from the Property Appraiser for October 2011, totals $207,495,900. This is based upon a County-
wide taxable value of $58,211,791,976. The decrement between the July and October taxable value
numbers amounted to $187,906,925 equating to an ad valorem revenue reduction of $669,800 from
the adopted budget. This influences FY 2012 revenue forecasted and subsequently forms part of fund
balance for budget purposes in FY 2013.
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2/28/2012 Item 11.A.
County Wide taxable value (including a projected five percent drop in FY 2013) has dropped by 1 /3`d
or $27.2 billion since FY 2008. The State Ad Valorem Estimating Conference released numbers in
September 2011 for the 2012 tax year (FY 2103). The report projects that Collier County taxable
values on July 1, 2012 will decrease 3.6 %. The challenge is to quantify from local experts what is
happening in the Collier County market with the objective of establishing a realistic taxable value
estimate. After preliminary talks with area subject matter experts as well as monitoring general state
wide discussions among various county property appraiser offices, a decline of 5% appears
reasonable and conservative for budget planning purposes. Any positive difference in taxable value
and the resulting increase in ad valorem revenue (the levy) can be used to shore up the Board's
General Fund and Unincorporated Area General Fund reserves and /or applied to programs and
services as directed by the Board. The County Manager is proposing to submit one millage neutral
budget along with service level and related budgetary and millage implications. Holding the millage
rate at $3.5645, for the fourth consecutive fiscal year, (millage neutral scenario) would equate to an
$11,044,600 reduction in General Fund (001) ad valorem revenues under a 5% reduction in taxable
value based upon a budget to budget comparison.
Table 1 shows a history of county wide and unincorporated area taxable value over the past five years
(tax year 2007 -2011) as well as the budget projection for tax year 2012 (FY 2013). Table 2 depicts
millage rates for the past seven (7) years.
Table 1.
Tax Year
County Wide
County Wide %
Unincorporated
Unincorporated
FY10
Taxable Value
inc. (dec)
Area Taxable
Area % inc.
$3.5790
$3.1469
$3.1469
Value
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) w/o
final VAB
$58,211,791,976
(5.2 %)
$36,022,200,173
(5.6 %)
F,P'rqj 012 (FY 2013)
ected
$55,301,202,377
(5.0 %)
$34,221,090,164
(5.0 %)
Table 2.
Milla e Area
FY 06
FY 07
FY 08
FY 09
FY10
FY 11
FY 12
General Fund
$3.8772
$3.5790
$3.1469
$3.1469
$3.5645
$3.5645
$3.5645
Unincorporated
Area
$.8069
$.8069
$.6912
$.6912
$.7161
$.7161
$.7161
For FY 2013, achieving a millage neutral budget will require a combination of operating and capital
cuts which will not be taken across the board, rather the cuts will be targeted and measured based
upon need, priorities, and service levels. A calculated risk is assumed when non - reoccurring capital
dollars are cut to achieve the desired millage neutral outcome. This is particularly true if taxable
values were to decline for a sixth straight year in FY 2013 (tax year 2012).
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2/28/2012 Item 11.A.
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 General Fund cuts during FY 2012 amount to approximately $14,300,000. These cuts
consist of operating (recurring) and capital (one time) reductions.
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.
General Fund Budget Reductions
$40
$35 Total Reductions
$30 $124,039,600
$25
$20
° $15
$10
$5
$0 j
FY 09 FY 10 FY 11 FY 12 FY 13
a Reductions for the Adopted Budget 8 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 given the inadequate level of general fund reserves, persistent
revenue shortfalls, reliance upon ad valorem tax revenue, regular assault by the state legislature on
the ad valorem tax structure and public expectation to maintain 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 2013, continue into FY 2014 and progressively
deteriorate as shown below.
Of course this analysis is intended to illustrate the point that continuation of current practices
and policies will have a detrimental impact upon fiscal stability within the General Fund. A
close look at transfer policies, service levels and related funding sources is necessary in the
future in order to avoid any fiscal instability in the General Fund and maintain what is now a
very solid and fiscally stable corporate position. This position has been maintained through
careful management and staff has every intention on maintaining this position going forward.
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2/28/2012 Item 11.A.
General Fund An*sis
For FY 2012, budgeted capital transfers (exclusive of debt) from the General Fund totaled $21.7
million or 66.4% of the total debt/capital transfer dollars. Transfers to support revenue bond debt
totaled $11.0 million. Of the $32.7 million in General Fund debt /capital transfers, that component
attributable to the 1 /3rd mil equivalent transfer (or less) to cover revenue bond debt debt and general
capital accounts totaled $11.2 million. Transfer to roads was $13.7 million and $6.9 million was
earmarked for storm water as part of the not to exceed 0. 15 00 mil equivalent transfer.
For FY 2013, budgeted capital transfers including that component required to support
continuing debt obligations will total $32.1 million - a $600,000 decrease from FY 2012. The 1 /3rd
mil equivalent transfer will once again primarily support debt service. It is projected that the 1 /3rd
mil equivalent transfer will total $13.7 million with approximately $11.4 million committed to pay
debt. Inclusive within this figure is a $5.1 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 $13.7 million. The storm water transfer will be sized at the equivalent of 0.1000 mils and this
transfer is projected to total $5.6 million.
Recommendation: Develop a General Fund (00 1) budget for FY 2013 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.
4
Packet Page -465-
Adopted Budget
Forecast
Forecast
Forecast
Forecast
Forecast
,
F 201:
F17 .1012
FY 2013
FT 2014
FT 2015
FT 201b
Revenues:
Ad Valorem
208:165,700
199,594,200
-4.1556
IS9.614.400
-5.C;;
153,926,000
3.o°e
183926,000
Sates Tax
27-000.000
4000.000
3. ?%
2S.000.000
o.e,%
28?80.000
:.0°
28987,000
Revalue Sharing
7.400,000
7.500,000
:.4%
7.500.000
u%
7.575.000
1.o%
7.764,400
54<
OthaRevenues
32.2-11,40D
32 076,400
-0.5%
34,293,000
34 „480,700
o.5 °j
34,4951W
o 04�1.
Less 5% Required bylaw
(13.105.600)
0
0
0
CauFforward
43867.400
53,646.600
?.?,ti
43,254, 400
_1- 5%
25,642,800
-43.3%
0
6,284,140
-755.5%
(11,803,000)
Total Revenues
309,545.900
32017-200
3 :6.55
304.661,800
-5.0,
279,904.500
S. is
261.457.400
-5.6%
ExRnditur•es.
Departments
59,635,500
50,440:600
-15,4%
56;895 ;000
2.8%
55,954.700
: ' 1ke
55,954,700
10.0%
Debt Service
7.509,200
8504,200
-33%
6,38 800
-24.9%
3.536,600
-39.9%
3,070,700
0.0°f
Cap - Loans to impact Fee Fds
3,479,200
3,479 2(10
o.0%
5.043,600
4 5.0%
6,450,600
9 °,
7,00# 500
6.5°
Capital
21,7752,200
15;781.300
-27.4%
20; 655.100
30.9 =,i�
20;792000
0.7%
20hu -000
4 „r
Transfers
34; 390,800
32 ,972..100
- 4.'_;m
29,408;400
-2e 8 :
29,049.100
'n
29.049,100
o.oGt
ConstivationalOfficers
164,601.100
1643S5,400
4.1.A
160,630.100
- z
157:537:400
-'.9,,
157537.400
Reserves
18380.900
0
0
0
0
Total Expenditures
304,545,900
275:562.800
- 12.04x.
279,019,000
1.1%
273,620.400
- 1.94.E
2?3260,400
C'S"
Revenues less Expenditures (Carryforward)
45,254,400
25,642,804
6284,104
5511,803,00055
Total Amt of
Amt of Equity (CF) reduced to balance the budge
8,392,200
19,611,600
19.355,700
18.08;.100
fig191y Consumed
(651449.600)
Budeeted Reserves
18,091300
18,01551;900
18-010.900
For FY 2012, budgeted capital transfers (exclusive of debt) from the General Fund totaled $21.7
million or 66.4% of the total debt/capital transfer dollars. Transfers to support revenue bond debt
totaled $11.0 million. Of the $32.7 million in General Fund debt /capital transfers, that component
attributable to the 1 /3rd mil equivalent transfer (or less) to cover revenue bond debt debt and general
capital accounts totaled $11.2 million. Transfer to roads was $13.7 million and $6.9 million was
earmarked for storm water as part of the not to exceed 0. 15 00 mil equivalent transfer.
For FY 2013, budgeted capital transfers including that component required to support
continuing debt obligations will total $32.1 million - a $600,000 decrease from FY 2012. The 1 /3rd
mil equivalent transfer will once again primarily support debt service. It is projected that the 1 /3rd
mil equivalent transfer will total $13.7 million with approximately $11.4 million committed to pay
debt. Inclusive within this figure is a $5.1 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 $13.7 million. The storm water transfer will be sized at the equivalent of 0.1000 mils and this
transfer is projected to total $5.6 million.
Recommendation: Develop a General Fund (00 1) budget for FY 2013 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.
4
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2/28/2012 Item 11.A.
General Fund Budget Allocations by Agency 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 2012 Percent of General Fund Budget
ro
Appraiser
Courts Clerk of %�
Tax Collector
Courts
4.1%
Supervisor
Reserves
of Elections
BCC / Co
Debt/Capital
Subsidy
Attorney
f
Road • Program
Airport
Subsidy
Authority
4.4%
Considering that transfers to the Constitutional Agencies in FY 2012 account for 53.1% of total
General Fund budgeted expenses and 79.1 % of the General Fund ad valorem budgeted revenue, their
participation in reductions is essential to achieving a millage neutral budget. It should be noted that
these expense percentages do not account for constitutional officer turn back. Constitutional turn
back revenue totaled $11,130,054 and $8,113,901 respectively for FY 2010 and FY 2011.
Recommendation: Continuation of this policy.
Millage Targets for the Unincorporated Area General Fund
For FY 2012, the estimated MSTD General Fund (I 11) property tax revenue, using the recapitulated
taxable value report for October 2011, totals $25,795,500. This is based upon an Unincorporated
Area taxable value of $36,022,200,173. The decrement between the July and October taxable value
numbers amounted to $147,122,602 equating to an ad valorem revenue reduction of $105,400.
For FY 2013, taxable values are projected to decrease 5.0% resulting in an unincorporated area
taxable value of $34,221,090,164. Millage neutral would generate $24,505,700 in property tax
revenue — a decrease of $1,395,200 based upon a comparison to the FY 2012 adopted budget.
5
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2/28/2012 Item 11.A.
Limitations on Expanded Positions to Maximize Organizational Efficiencies
We are faced with the continuing challenge of maintaining public services as we look at strategic
cuts, reorganizations and re- alignments required to meet financial constraints. We are focused on
ensuring a rational basis for any changes, be they for improved efficiency and effectiveness, cost
savings or all of these. 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. 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.
In cases where changes have already been made, teams of business process professionals are working
hand in hand with management to review process opportunities that will maintain or increase service
levels with reduced staff to manage the workflow. In all cases, the goal of the management team is to
continue to meet the needs of the citizens as efficiently as possible. To help ensure the success of this
rational focus, staff members with appropriate skills sets have been reassigned to these efforts at no
additional cost to taxpayers. As such, no net new positions in the County Manager's Agency will be
continued for FY 2013. This proposed guidance also 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:
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 the current economic environment. 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: Given the current economic environment, a salary adjustment for FY 2013 is not
recommended. However, on an event driven basis most likely triggered by taxable values higher than
anticipated, the Board may wish to consider a merit pool to be applied as a bonus and not on an
employee's base salary. 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
Cost of Living
4.70%
4.10%
4.20%
0.00%
0.00%
0.00%
0.000/.
Awards Program
1.50%
1.50%
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%
Total
6.45%
5.85%
4.20% 1
0.00%
0.00%
0.00%
0.00%
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2/28/2012 Item 11.A.
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. For FY 2012, the County
experienced a 15.7% rate increase. This increase resulted in an average employee increase of $27.50
per month in health contribution. As a one -time only event, the FY 2012 budget contains a nominal
pay adjustment in the amount equal to the employees increased cost of premium payment. It is likely
that the County will experience a rate increase for FY 2013. This increase may be in the 5% to 7%
range. 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.
At the beginning of FY 2009, a new health care initiative and approach was launched to address the
underlying causes of catastrophic claim cases. This new plan re- design and structure provides
participation incentives to members in an attempt to; identify and measure existing risk factors;
promote participation in wellness related programs to help members reduce and/or manage these risk
factors; improve the employee /physician relationship and to provide one on one advocacy services
assisting employees with their health care needs. It is anticipated that these and other cost
containment and program attributes will position the County to continue providing low cost and high
quality health care coverage.
Recommendation: In FY 2013, the average cost distribution of health insurance premiums between
the Board of County Commissioners and employees will remain 80% (employer) and 20%
(employee).
It is still recommended that the 80% employer share and 20% employee share be uniform across
all agencies, including the Constitutional Officers. This policy treats all county employees equally
in terms of cost sharing for health insurance premiums.
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
Chapter 2011 -68 second year rates (rates that will go into effect July 1, 2012 if the legislators fail to
establish new rates for state fiscal year 2012 -2013.
Recommendation: Adherence to the OMB rates published within the OMB budget instructions.
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2/28/2012 Item 11.A.
Accrued Salary Savings
The limitation 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. Consideration is being given to reducing the attrition rate to 2% with the objective of
eliminating attrition as a budgetary tool in FY 2014 or after.
Recommendation: Continue the accrued salary savings policy at a 2% rate.
Storm Water Management Capital Funding
The Board previously adopted (County Resolution 2010 -1.37) a policy with funding equivalent up to
0.1500 mills annually. 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.
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 2013 is the same as FY 2012 at $13.7 million. Gas
tax revenue from all sources in recent years has ranged between $18 million and $18.5 million per
year.
Recommendation: Continue the Board's FY 2012 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 supporting all of the debt service payments.
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2/28/2012 Item 11.p.
General Fund Debt Contribution
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 2012 $10.9 million of
this $11.2 million transfer will cover debt service. Due to the lack of impact fee revenue, $3.5
million represents a loan from the General Fund to cover growth related debt.
For FY 2013, the General Fund (001) transfer (loan) will be sized sufficient to cover debt service
which cannot be covered by impact fees.
Payment of debt is a top priority. Under a 5% decrease in taxable value, dollars generated from the
1 /3rd mil equivalent allocation will be sufficient to cover this debt service requirement. The full 1 /3rd
mill equivalent transfer has not been made since FY 2010. Of the $13.7 million projected transfer in
FY 2013, $5.1 million will be required to cover the growth related debt service gap due to insufficient
impact fee collections and $6.4 million is budgeted to cover non growth related debt. The remaining
$2.2 million will be devoted to general capital items. It is likely that the transfer required to cover
debt service due to insufficient impact fee collections will grow from $5.1 million in FY 2013 to $6.5
million in FY 2014 and $7.0 million in FY 2015. Although limited, staff will continue to explore re-
directing certain impact fee revenue to cover priority debt payments with consequences that include
either deferral or postponement of impact fee funded capital improvements. Impact fee collections
have declined by 82% between FY 2007 and FY 2011.
The County's current debt position is fully funded and policy compliant. Efforts continue to explore
fiscally responsible means to refund existing general government revenue and enterprise debt. Over
the past two fiscal years, the County eliminated variable interest rate exposure by converting $59.0
million in commercial paper loans into traditional tax exempt fixed rate bonds. In addition, $117.0
million in sales tax capital improvement revenue bonds were refunded thus reducing the cost of
borrowing by $6.3 million, eliminating onerous bond covenants and freeing up over $10 million in
encumbered utility funds used to fund up the required debt service reserve fund necessitated by the
collapse of the bond insurance market. While staff's goal is to continue exploring every opportunity
to restructure the County's current debt portfolio, existing low interest rates on remaining maturities
may be an impediment.
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.
10
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2/28/2012 Item 11.A.
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 10% 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.
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 2012 total $6,454,700 — representing 2.50% of total operating
appropriations. This reserve level is $1,244,500 higher than the FY 2011 level which represented
1.96% of total operating appropriation. The FY 2012 . reserve for cash flow grew by $3,600,000 to
$12,600,000.
For FY 2013, 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. Mid -year cuts will continue to be a regular practice unless and until
budgeted reserves reach a level where beginning General Fund cash balances total between $40 -$45
million. 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.
When Hurricane Wilma hit in October 2005 (FY 2006), the County drew down budgeted contingency
reserves by $3,875,000 and cash flowed some $27,125,000 over six months as Federal and State
Disaster funding was received.
Recommendation: Build General Fund (00 1) and Unincorporated Area MSTD General Fund (I 11)
reserves pursuant to this policy.
11
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2/28/2012 Item 11.A.
Scheduling Issues
Decisions Required
Staff Recommended Date (s)
Establish Budget Submission Dates
May 1, 2012 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 21 and Friday June 22 2012
FAC Conference is June 18 — June 22, 2012 in Orlando.
Submission of Tentative FY 2013
Friday July 13, 2012.
Budget to the Board
Adoption of Tentative Maximum FY
July 24, 2012 (Tuesday)
13 Milla e Rates
Establish Public Hearing Dates (see
September 6, 2012 (Thursday at 5:05 pm)
note)
Se tember 20, 2012 (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 11, 2012. 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,
2012 budget submittal dates for the Sheriff, the Supervisor of Elections and the Clerk.
Comparative Budget Data
Provide comparative budget data using FY 2012 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
12
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2/28/2012 Item 11.A.
Continuing Existing Budget Policies for FY 2013
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 ALTency Funding: 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 67.3% of the total FY 2012 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, 2011, actual General Fund carryforward balance totaled
$53,646,600 which represented approximately 18.8% of actual FY 2011 expenses.
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 2013. 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.
13
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2/28/2012 Item 11.A.
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 to the General Fund equal to the
prior year General Fund millage rate multiplied by the prior year gross (non- depreciated) value of
property, plant, and equipment or such other method as determined by staff all pursuant to state law.
Debt Service: Any capital projects financed by borrowing money shall limit the repayment period to
the useful life of the asset.
Interim Financing: Collier County may also borrow funds on an interim basis to fund capital
projects. In these cases a repayment source shall be identified and the financing source that has the
lowest total cost shall be employed.
The Collier County Debt Management Policy provides that advance refunding for economic savings
will be undertaken when a present value savings of at least five percent of the refunded debt can be
achieved. The policy also states that five percent savings is often considered a benchmark and that
any refunding that produces a smaller net present value savings may be considered on a case by case
basis. A smaller net present value savings may be prudent for example when the intent is to eliminate
old antiquated and limiting bond covenant language.
Ad Valorem Capital and Debt Funding: Continuation of a fixed General Fund equivalent millage
dedicated to capital projects, debt financing and impact fee fund debt loans. The recommended rate
is up to the equivalent of 0.3333 mills. (See history below).
General Fund Capital Equivalent Millage History
(FY 1991- FY 2015)
1.2000
1.0000
0.8000
an
0.6580
0.6000
0.4000
0.2000 16
0.0000
General economic sluggishness and depressed construction markets continue to affect impact fee
collections. As a result, the General fund continues to loan money to impact fee funds in order to pay
their annual debt service payments. Therefore the first priority for the 1/3 of a mil equivalency
capital allocation is to assist the General Governmental impact fees with loans in order to satisfy debt
service requirements.
14
Packet Page -475-
0.5474
0.5426
0.414
0.3809
0.3333 0.3333
0.3040
0.2792 0.2474
0'
0.2354
0.2568
0.2102 0.2384
General economic sluggishness and depressed construction markets continue to affect impact fee
collections. As a result, the General fund continues to loan money to impact fee funds in order to pay
their annual debt service payments. Therefore the first priority for the 1/3 of a mil equivalency
capital allocation is to assist the General Governmental impact fees with loans in order to satisfy debt
service requirements.
14
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2/28/2012 Item 11.A.
Capital Improvement Protiram WIP) 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.
15
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2/28/2012 Item 11.A.
Three -Year Budget Projections
Ad Valorem Tax Funds
(FY 2013 - FY 2015)
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) Milla2e History
As a point of reference, the following graph plots the historical General Fund millage rate, as well as
the projected tax neutral millage rates from FY 2012 through FY 2015.
Millne Rates
While the County Manager will be recommending a millage neutral budget in FY 2013, the Board
may be inclined to consider the implications of services cut and the cost to restore any service levels.
Staff will provide the Board with the millage rate adjustment necessary to restore various service
level packages which are eliminated as part of a millage neutral budget — remembering that property
tax loss will total $11.0 million and overall revenue loss will total $9.4 million. The following table
offers the respective estimated TRIM tax neutral (rolled back) millage rates for FY 2013, 2014 and
2015.
16
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2/28/2012 Item 11.A.
General Fund
FY 12 Adopted and
Projected Tax Neutral
Milla e Rates
Inc. (Dec.) per $100,000
Taxable Value
FY 12
3.5645
$ 0.00
FY 13
3.7847
$22.02
FY 14
3.9054
$12.07
FY 15
3.7916
($11.38)
The projected millage rates assume a 5% decrease in taxable value of existing property in FY 2013
(the 2012 tax year). For FY 2014, taxable value on existing property is projected to decrease 3%
although the new construction component is projected to increase modestly. Taxable value in FY
2015 is projected to be flat. The Property Appraiser will provide preliminary taxable value estimates
for FY 2013 on June 1, 2012. 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.
17
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2/28/2012 Item 11.A.
FY 2013 Significant Expense Assumptions
A millage neutral budget reflecting $9.4 million in expense reductions will be presented and the
Board will have the option of considering service level adjustments with the cost to restore
service level packages provided. A millage neutral budget will mean that most ad- valorem
division operating budgets will be reduced 5% on a targeted basis based upon the net General
Fund impact.
• Allocation for compensation administration — 0 %.
• 2% attrition rate on regular salaries assumed in the County Manager's Agency.
• Continue General Fund debt payment and impact fee loan transfer equivalent up to 0.3333
mills annually ($13,680,000).
• Storm water capital funding equivalent to 0.1000 mills or $5,530,100. This millage
equivalency rate represents no change from FY 2012 but represents a decrease in dollars
totaling $1,435,700.
• General Fund support of road construction and maintenance funded at $13,735,000
consistent with FY 2012 levels.
• General Fund support of EMS established at $11,316,100 — no change from FY 2012 base
figure. (EMS fund 490 received an additional $691,500 in FY 2012 due to reduced fee
collections and EMS capital fund 491 received $800,000 for the replacement of
ambulances.)
• Continue if possible the shift in Transportation Operations funding from MSTD General
Fund (111) to General Fund (001).
• Mandates to be absorbed if possible within operating budgets, including Constitutional
Officers.
Significant Revenue Assumptions
• FY 2012 ad valorem tax revenue forecast is 96% of actual taxes levied. FY 2012 forecast
totals $199,594,200 — a reduction of $8,571,500 off budget. A millage neutral position for FY
2013 produces a levy of $197,121,100, $11,044,600 lower than the FY 2012 levy.
Sales tax revenue forecast for FY 2012 is projected at $28,000,000 representing an increase of
3.7% over budget. FY 2013 budgeted revenue is projected at the FY 2012 forecast amount of
$28,000,000.
• State Revenue Sharing for FY 2013 is projected to increase $100,000 or 1.35% over budget.
• Constitutional Officer turn back is a very conservative budget estimate and for FY 2013
$6,160,000 is projected — a decrease of $640,000 over the FY 2012 budget.
• Measures to maintain beginning fund balance at approximately $45,000,000 continue to be
necessary and include continued growth in budgeted reserves coupled with any combination
of revenue receipts over budget and appropriation adjustments.
• Interest income is projected flat and it is anticipated that interest rates will moderate to offset
what will likely be a continued reduction in the investment pool (capital spend down).
IN
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2/28/2012 Item 11.A.
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:
The FY 2012 transfer includes $800,000 for the purchase of replacement ambulances. 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 2013.
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.
While taxable values are projected to decrease for a sixth straight year, the General Fund budgeted
contribution to road construction and maintenance is expected to remain at $13.7 million as indicated
on the following graph. As future budgets are planned and scarce resources allocated, future
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.
19
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2/28/2012 Item 11.A.
General Fund Support of Road Construction
(FY 2003 - FY 2015)
$45
$40
$35
$30
CA $25 $6.0
c $1.5
$20
$15 15.
$10
$5
$0
FY 03 FY 04 FY 05 FY 06 FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15
K Transfer from General Fund ❑ Returned to General Fund ❑ Additional Funds Transferred
FY 2014
A millage neutral budget in FY 2014 with a decrease of 3% in taxable value will likely require
modest operating reductions — in the area of 3% plus a substantial and service limiting mid -year FY
2013 cut to achieve an acceptable beginning cash balance. This is continuing budget management
theme has played out since FY 2009. Without supporting impact fee collections and under
conservative general revenue assumptions, allowances on the operating side will be necessary in
order to fund priority debt service payments.
The projected General Fund tax neutral millage rate for FY 2014 is 3.9054 or $390.54 per $100,000
of taxable value. This is the projected rolled back rate and represents an increase of $34.09 per
$100,000 of taxable value from a millage neutral FY 2013 position.
In addition to annual inflationary cost increases, the following items were included in the FY 2014
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.
• Contingency reserves are maintained at policy.
• Maintain General Fund road subsidy.
• Maintain General Fund support for Transportation Operations expenses.
In summary the FY 2014 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 2014 without a sufficient budgeted beginning fund balance would likely result in a
$19.4 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.
20
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2/28/2012 Item 11.A.
Ensuring a sufficient beginning fund balance 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.
While every fiscal year presents new challenges and predicting revenue sources is difficult in any
out -year, continued use of non - reoccurring capital and operating dollars to achieve required cuts will
eventually be replaced by reoccurring operating cuts with front line service level impacts.
FY 2015
A millage neutral budget in FY 2015 coupled with flat taxable value 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 2015 deficit approaches $18.1 million as
indicated within the trend analysis.
The projected General Fund tax neutral millage rate is 3.7916 or $379.16 per $100,000 of taxable
value. This is the rolled back rate and represents a decrease of $11.38 from the FY 2014 tax neutral
level per $100,000 of taxable value.
The following items were included in the FY 201.5 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
• Contingency reserves are maintained at policy.
• Maintain General Fund road subsidy.
• Maintain General Fund support for Transportation Operations expenses.
21
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2/28/2012 Item 11.A.
General Fund Trend Analvsis
Revenues less Expenditures (.Carry ard) 45,254,400 15,642,800 6,284,100 (11.803,000)
Total Amt of
4uihv Consumed
Amt of Equity (CF) reduced to balance the budge S39 -2-200 19,611,600 19358,700 18,087,1DD (65,44+9,600)
Budgeted Reserves 18,091,300 1 9-010,900 15,010,900
22
Packet Page -483-
General Fund Analysis
Adopted Budget
Forecast
Forecast
Forecast
Forecast
Forecast
F5`2012
FS'2012
IT 20 3
FY2014
IT 2015
Fi'2016
Revenues:
Ad Valorem
208.165,700
199594,200
- 4.1°.%0
189,614,400
- 5.04'9
183,926,000
-3.0%
183,926,000
0.0%
Sales Tax
27t000,00D
28,000,000
3.7%
28,000,000
0.0%
2&1-90.000
28,987,000
25%
Revenue Sharing
7,4Mi,000
7500,000
:.444
7,500.000
0.0%
7,575,000
1.0%
7;764,400
2.5%
Other Revenues
31.111,400
31076,400
-0.5%
34293.000
6.9'4
34,480,700
0.5•,m
34,495900
0.0%
Less S%Required by Law
(137105fm)
0
0
0
0
Carryforward
47,867;400
53.64600
12.1.6
45.254400
-15.6%
25,642,800
-43.3%
6,284.100
-,3,4 4 (11,803,000)
Total Revenues
309.548.900
320,817200
3.6%
304.661,800
-5.0%
279.904-500
-8.1%
261,457,400
-6.644
EAvenditures-,
Departments
59,635500
50,440,600
- 15.40,4
56,898;000
12.8%
55,954,700
- 1.70.4
55,954,700
0.014
Debt Service
7.50.2M
8.904200
13.3%
6,383,800
- 24.9",4
3,836,600
- 39.944
3,070 700
- 2.0.014
Cap - Loans to impact Fee Fds
3.479200
3,479.24D
0.0074
5,043.W
45.0%
6,450-600
27.9*4
7,00,000
8.6%
Capital
21,752200
15791,300
- 27.40.8
20,655,100
30.944
20,791OD0
0.7%
20,644,000
- 0.7 1.4
Transfers
34390,800
32972.100
-41%
29,40 &400
- 10.8%
29,04900
-12%
24049,100
0.0%
Constitutional Officers
161,601,100
164,385,400
4.2i-
160,630,100
2a%
157,537,400
- .9?
157,537,400
0.o%
Reserves
1S.1S09D0
0
0
0
0
Total Expenditures
309;448,900
275562,800
-i1.0%
279,019,000
:349.
273,620,400
- '0.944
273?60400
-0.1%
Revenues less Expenditures (.Carry ard) 45,254,400 15,642,800 6,284,100 (11.803,000)
Total Amt of
4uihv Consumed
Amt of Equity (CF) reduced to balance the budge S39 -2-200 19,611,600 19358,700 18,087,1DD (65,44+9,600)
Budgeted Reserves 18,091,300 1 9-010,900 15,010,900
22
Packet Page -483-
2/28/2012 Item 11.A.
Unincorporated Area General Fund (111)
MSTD General Fund (111) MillaLie History
As a point of reference, the following graph plots this historical MSTD General Fund (I 11) millage
rate, as well as the projected millage rates for FY 2013 through FY 2015 based on tax neutral (rolled
back) millage rates.
Results of Unincorporated Area General Fund Analysis
While the County Manager recommending a millage neutral budget, the Board may be inclined to
consider the implications of services cut and the cost to restore any service levels. Staff will provide
the Board with the millage rate adjustment necessary to restore various service level packages which
are eliminated as part of a millage neutral budget — remembering that a cut of $4,092,500 will be
necessary. The following table offers the respective tax neutral (rolled back) millage rates for FY
2013, 2014 and 2015.
Unincorporated
General Fund
FY 11 Adopted and
Projected Tax Neutral
Millage Rates
Inc. (Dec.) per $100,000
Taxable Value
FY 12
0.7161
$0.00
FY 13
0.7613
$4.52
FY 14
0.7860
$2.47
FY 15
0.7636 1
($2.24)
23
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2/28/2012 Item 11.A.
Unincorporated MSTD General Fund (111) Analysis
Of course this analysis is intended to illustrate the point that continuation of current practices
and policies will have a detrimental impact upon fiscal stability within the Unincorporated
Area General Fund. A close look at transfer policies, service levels and related funding sources
is necessary in the future in order to avoid any fiscal instability in the MSTD General Fund and
maintain what is now a very solid and fiscally stable fund position. This position has been
maintained through careful management and staff has every intention on maintaining this
position going forward.
FY 2013
The FY 2013 budget projection is based upon a millage neutral position with a projected 5%
decrease in taxable value. Under millage neutral, property taxes will decrease $1,395,200. Property
taxes and the communications services tax represents on average approximately 77% of the operating
revenue within the MSTD General Fund (111). The communications services tax has held relatively
constant and has not been affected by the economic downturn. 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 will require mid -year budget reductions to maintain beginning cash
at required levels. This fund is predominately operating in nature with very little capital or capital
transfer expense. Therefore any required mid -year cuts will likely affect operations such as
landscape maintenance, parks and recreation, road maintenance and transportation operations.
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.
24
Packet Page -485-
Adopted Budget
Forecast
Forecast
Fo recast
Forecast
Forecast.
FY 2012
FY 2012
FY 2013
FY 2014
FY 2015
FY 2016
(Less 5 %N)
(Less 3% TV)
(TV Fiat)
Revenu
Ad Valorem
25,900,900
24,864,900
- 4,0",0
23,525,500
-5.4%
22,819,700
-3.0%
22,819,700
C.C%
Communication Services Tax
5,335,100
5,200,000
-2.5%
5,ODD,000
-3.8'A
5,050,000
1.0%
5,176,300
25%
Other Revenue
4,250,700
4,007,300
-5-7%
4,955,900
233%
5,005,500
1.0%
5,055,600
1.096
Less 5% Required By Law
(1,735,100)
0
- 100.0%
0
0.0:0
0
0.0%
0
0.0%
Cam1fonward
6,720,600
8,403,900
25.05.0
4,533 „200
- 46.1%
3,278,900
-27.7%
1,332,100 �
53.3%
(40,300)
Total Revenues
40472,200 42,476,10D
5.0°.6 38,014,600
- 10.5%
36,154,100
-4.9% 34,582,700
-4.3%
Expenditures
Landscape Maintenance
4,845;800
4,635,700
-4.3%
4,720,300
1.8%
4,720,300
0.0%
4,720,300
0.0%
Roads
6,010,ODO
6,000,000
-0.2%
6;000,000
0.0%
6,060,000
0.0%
6,000;000
0.0%
Parks &. Rec.
11,137,90D
11,010,600
-1.1%
10,583,800
-3.9%
10,471,100
-1.19;
10,471,100
0.0%
Code Enforcement
4,203,200
4,043,000
-3:8%
4,014,700
-07%
4,014,700
0 .0%
4,014,700
ODD,
Other Departmental
7,320,200
7,038,000
-5.9%
7,102,000
O9%
7,102,DD0
.0.0%
7,102,000
0.096
Transfers
5,215,600
5,215,600
0.0%
2,314,900
-55.6%
2,314,900
0.0%
2,314,900
0:016
Reserves
1,739,500
0
- 100.0%
0
0
0
Total Expenses
40,472,200 37,942,900
-6.2%
34,735,700
-85% 34,623,000
-0.3%
34;623,00
0.0%
Fund Sa ?once
4,533,200
3,278,900
1,531,100
(40,300)
Equity Reduction to balance budget
3;870,700
1,254,300
1,747,800
1,571,400
8,444,200
Budgeted Reserves
1,644,000
1,644,000
1;644,000
Of course this analysis is intended to illustrate the point that continuation of current practices
and policies will have a detrimental impact upon fiscal stability within the Unincorporated
Area General Fund. A close look at transfer policies, service levels and related funding sources
is necessary in the future in order to avoid any fiscal instability in the MSTD General Fund and
maintain what is now a very solid and fiscally stable fund position. This position has been
maintained through careful management and staff has every intention on maintaining this
position going forward.
FY 2013
The FY 2013 budget projection is based upon a millage neutral position with a projected 5%
decrease in taxable value. Under millage neutral, property taxes will decrease $1,395,200. Property
taxes and the communications services tax represents on average approximately 77% of the operating
revenue within the MSTD General Fund (111). The communications services tax has held relatively
constant and has not been affected by the economic downturn. 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 will require mid -year budget reductions to maintain beginning cash
at required levels. This fund is predominately operating in nature with very little capital or capital
transfer expense. Therefore any required mid -year cuts will likely affect operations such as
landscape maintenance, parks and recreation, road maintenance and transportation operations.
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.
24
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2/28/2012 Item 11.A.
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). The following table depicts budgeted dollars transferred to
support transportation operations from the General Fund and Unincorporated Area General Fund.
For FY 13, a concerted effort will be made to revert this transfer back solely to the General Fund.
Divisional expenses will be reduced on a targeted basis by 5 %.
Contingency reserves will be budgeted at 2.5% of operating expense.
FY 2014
Assuming that taxable values will decrease by 3% in FY 2014, a millage neutral budget coupled with
a reduction in beginning fund balance could result in a potential budget planning deficit of $1.7
million 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 $8.4 million to $3.3 million is
anticipated. This model is certainly not sustainable and budget reduction measures would be
instituted.
FY 2015
Continuation of millage neutral into FY 2015 under a flat taxable value would generate the same
amount as FY 2014 — assuming the rolled back rate is not adopted. For planning purposes and
assuming continued decline in beginning budgeted fund balance, a deficit of $1.5 million could be
encountered. Absent budget management mid -year, the model depicts a total fund equity loss from
FY 2012 through FY 2015 totaling $8.4 million.
25
Packet Page -486-
General Fund (00 1)
MSTD (I 11)
Total
Y 08
$18,066,900
$0
$18,066,900
FY 09
$9,864,700
$7,693,500
$17,558,200
Y 10
$7,935,400
$8,786,900
$16,722,300
FY 11
$12,971,400
$2,912,800
$15,884,200
Y 12
$12,366,900
$2,825,400
$15,192,300
For FY 13, a concerted effort will be made to revert this transfer back solely to the General Fund.
Divisional expenses will be reduced on a targeted basis by 5 %.
Contingency reserves will be budgeted at 2.5% of operating expense.
FY 2014
Assuming that taxable values will decrease by 3% in FY 2014, a millage neutral budget coupled with
a reduction in beginning fund balance could result in a potential budget planning deficit of $1.7
million 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 $8.4 million to $3.3 million is
anticipated. This model is certainly not sustainable and budget reduction measures would be
instituted.
FY 2015
Continuation of millage neutral into FY 2015 under a flat taxable value would generate the same
amount as FY 2014 — assuming the rolled back rate is not adopted. For planning purposes and
assuming continued decline in beginning budgeted fund balance, a deficit of $1.5 million could be
encountered. Absent budget management mid -year, the model depicts a total fund equity loss from
FY 2012 through FY 2015 totaling $8.4 million.
25
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2/28/2012 Item 11.A.
Collier County Government Productivity Committee
3301 East Tamiami Trail
Naples, FL 34112
February 22, 2012
Board of County Commissioners
3301 East Tamiami Trail
Naples, FL 34112
Subject: FY13 Proposed Budget Policies
Dear Commissioners,
The Productivity Committee met with County Manager Leo Ochs, and Mark
Isackson, CFO on February 15th 2012, to discuss the proposed FY13 Budget
Policies. We are in agreement with the policy guidance. We believe the County
Manager has performed an exemplary job in maintaining superior community
services during the past several years in a declining revenue environment.
Concerns were articulated at the meeting regarding sustainability of the current
budgeting trends of reduced revenue and corresponding requisite expense
reductions beyond FY13. The county is perpetually challenged to balance short term
asset maintenance costs with long term replacement costs. The County
management team is implementing tools to ensure that this balance is carefully
managed to minimize cost and risk. It was also pointed out during the meeting that
updated strategic plans may not be fully implementable without a refinement of the
revenue /expense relationship.
Millage Targets for the County -wide General Fund
We agree with the County Manager's recommendation to prepare the FY13
budget at the millage neutral level. The level of $3.5645 was instituted in FY10 and
maintained. County wide taxable value has decreased by a substantial 1/3 or $27.2
Billion since FY 2008.
If the estimated 5% reduction in county -wide taxable value is accurate, the
resulting $11.0 million reduction in general fund revenues, and potentially
expenditures, will have to be carefully managed.
We agree with Mr. Ochs' recommendation to apply reductions in a targeted
manner "based on need, priorities and service levels." We also agree that any
positive difference in taxable value and the resulting increase in ad valorem revenue
Packet Page -487-
2/28/2012 Item 11.A.
be used to shore up the Board's General Fund, Reserves, and /or applied to
programs and services as directed by the board.
Deferral of capital projects could provide significant budget reductions and, when
combined with reductions to operating program of the county manager and
constitutional officers, make a millage neutral budget possible. It should be noted
that an additional $14.3 Million in mid -year General Funds reductions were
necessary to achieve current projections.
General Fund Budget Allocations by Agency
We agree with the need to have "all agencies share in any budget reductions
necessitated by reductions in property tax revenues, new tax reform initiatives,
reductions in state shared revenue and unfunded mandates."
"Considering that transfers to the Constitutional Officers account for 53.2% of
total General Fund expenses and 79.1 % of General Fund ad valorem receipts, their
participation in reductions is essential to achieving a millage neutral budget."
Millage Targets for the Unincorporated Area General Fund, Collier County
MSTUs /MSTDs
We agree with the millage neutral recommendation for FY13.
Revenue Centric Budgets
We support continuation of this policy.
Limitations on Expanded Positions to Maximize Organizational Efficiencies
We support the County's goal to continue to meet the needs of the citizens as
efficiently as possible based on analysis of customer needs, review of organizational
structures, underlying processes and service delivery models. This guidance
continues the agency freeze on new hires funded with ad valorem funds with limited
exceptions authorized by the county manager.
Compensation Administration
We support the compensation policy for FY2013.
Health Care Program Cost Sharing
For FY12, the County experienced a 15.7% rate increase. This resulted in a
$27.50 per month increase in employee health contributions. As a onetime event,
the FY12 budget contains a nominal pay adjustment equal to the premium payment
increase. The County is anticipating an increase in costs in the 5% to 7% range in
FY2013 with possible offsets attributed to wellness programs, and the new
healthcare initiative launched in 2009. We support the 80% employer share and 20%
employee share with uniformity across all agencies and Constitutional Officers.
Retirement Rates
We support the County's policy of adherence to the OMB published rates and
budget instructions.
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2/28/2012 Item 11.A.
Accrued Salary Savings
Given the economic environment and reduced employee mobility, the County is
planning on reducing the attrition rate assumption to 2% vs. the historical 4% rate.
Consideration is being given for elimination attrition as a budgetary tool in FY14 or
after. We feel this policy should be evaluated each year based on experience and
any anticipated change in trends.
Storm Water Capital Funding
Millage neutral budget required this transfer be set at. 1000 mils consistent with
County Resolution 2010 -137.
Gas Tax Use
We support the continuance of the FY2012 policy to utilize gas taxes for road
construction and to partially pay for debt service instead of utilizing funds from the
general fund.
General Fund Debt Contribution
General Fund 001 has provided via transfer of 1/3 mil to non - impact fee capital
functions and debt repayment. Impact fee collections have declined 82% since
FY2007 necessitating the transfer from the General Fund. This contribution covers
non - growth related debt.
Reserves
We support building the General Fund 001 and Unincorporated Area MSTD
General Fund 111 reserves pursuant to the 2.5% of total budgeted appropriation
policy.
Productivity Committee Involvement in the FYI Budaet Review
We welcome an opportunity to review and comment on the full FY13 budget
submitted to you in early June, to include the relative program priorities, the affected
service levels and any unfunded programs.
Conclusion
Mr. Ochs has done an excellent job preparing the budget guidelines for FY13. They
are realistic, recognize the relative priorities of capital and operating programs and
should give you the necessary information to make informed decisions at the June
budget workshop.
As always, we appreciate the opportunity to comment on the proposed budget
policies. If you have any questions, please feel free to contact us.
Sincerely,
Stephen A. Harrison, Chair
Productivity Committee
Cc: County Manager Leo Ochs
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