Agenda 02/23/2010 Item #10A
Agenda Item No. 10A
February 23, 2010
Page 1 of 23
EXECUTIVE SUMMARY
Recommendation to adopt the FY 2011 Budget Policy
OBJECTIVE: That the Board of County Commissioners (Board) adopt policies to be used in developing the Collier County
Government budget for FY 2011.
CONSIDERA TIONS: In order for staff to begin preparation of the FY 2011 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 2011 budget. The
purpose of to day'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 2011 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 2011
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 (Ill).
The Board needs to establish June budget workshop dates. Tentative dates are Thursday, June 24, 2010 (Board Agency) and Friday,
June 25, 2010 (Constitutional Officers) with meeting times scheduled from 9:00 a.m. to 5:00 p.m. The available dates avoid any
conflict with the Florida Association of Counties annual conference scheduled from June 29 through July 2, 2010 in the City of
Tampa.
For informational purposes, adoption of the tentative millage rates is scheduled for Tuesday, July 27, 2010. The Board is required by
Florida Statutes to provide the Property Appraiser with the proposed millage rates by August 3, 2010 in order to prepare the Notice of
Proposed Taxes.
Finally, the Board needs to establish September public hearing dates for the adoption of the FY 2011 budget. The School Board has
tentatively scheduled September 16, 2010 for their final budget hearing. Recommended dates for the Collier County budget public
hearings are September 9, 2010 (Thursday) and September 23,2010 (Thursday).
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 2011.
GROWTH MANGEMENT IMPACT: There is no Growth Management impact.
RECOMMENDA TIONS: 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 1,2010 deadline for the Supervisor of Elections, the Sheriff's Office and the Clerk's budget submittals.
PREPARED BY: Mark Isackson, Corporate Financial Management
Agenda Item No. 10A
February 23, 2010
Page 2 of 23
COLLIER COUNTY
BOARD OF COUNTY COMMISSIONERS
Item Number:
Item Summary:
lOA
Recommendation 10 adopt the FY 2011 Budget Policy. (Mark Isackson, Corporate Financial
and Management Services, County Manager's Office)
2/23/2010 9:00:00 AM
Meeting Date:
Prepared By
Mark Isackson Management/Budget Analyst, Senior Date
Office of Management & Office of Management & Budget
Budget 2/4/201010:22:43 AM
Approved By
OMS Coordinator Date
County Manager's Office Office of Management & Budget 2/16/20104:17 PM
Approved By
Jeff Klatzkow County Attorney Date
2/16/20104:18 PM
Approved By
Susan Usher Management/Budget Analyst, Senior Date
Office of Management & Office of Management & Budget 2/17/20107:54 AM
Budget
Approved By
leo E. Ochs, Jr. County Manager Date
County Managers Office County Managers Office 2/17/20109:28 AM
Agenda Item No. 10A
February 23, 2010
Page 3 of 23
Fiscal Year 2011 Proposed Budget Policies
Submission to the Collier County Board of County
Commissioners
February 23, 2010
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 this format will 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.
Annual Budl!et Policies to be Adopted
Sil!nificant Budl!et Influences:
The decision to set a millage rate and property tax levy is impacted by a number of factors and for FY
2011, key factors include;
1. Board desired level of service.
2. Extent of capital, debt and operational transfer dollars expended by the General Fund and
Unincorporated Area General Fund.
3. Level of operational cuts to agencies and departments which are funded within the General
Fund and Unincorporated Area General Fund.
4. Level of General Fund ad valorem operating support extended to constitutional officers.
5. Extent of non ad valorem revenue projected to support operations such as sales tax, state
shared revenue and departmental revenue.
6. Beginning-year cash fund balance.
7. Compliance with bond covenants.
8. Credit rating
Millal!e Tarl!ets for the Countv-wide General Fund
For FY 2010, the estimated General Fund (001) property tax revenue, using the recapitulated taxable
value report from the Property Appraiser for October 2009, totals $249,503,707. This is based upon a
County-wide taxable value of $69,996,831,960. The decrement between the July and October taxable
value numbers amounted to $471,020,194 equating to an ad valorem revenue reduction of$I,678,951
from the adopted budget. This influences FY 2010 revenue forecasted and subsequently forms part
of fund balance for budget purposes in FY 2011.
Agenda Item No. 10A
February 23,2010
Page 4 of 23
For FY 2011, the County's taxable value according to the State's November 2009 Ad Valorem
Estimating Conference is projected to decrease 10.0% resulting in a county wide taxable value of
$62,997,161,838. The County Manager has indicated that he will submit a millage neutral budget
along with service level and related budgetary and millage implications. Two budgets will not be
submitted. Holding the millage rate at $3.5645 (millage neutral scenario) in FY 2011 would equate
to a $26,629,300 reduction in General Fund (001) ad valorem revenues under a 10% reduction in
taxable value based upon a budget to budget comparison.
In previous budget cycles, policy directives called for across the board operating and capital
expenditure reductions. For FY 2011, 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
predominantly non-reoccurring capital dollars are cut to achieve the desired millage neutral outcome.
This is particularly true if taxable values decline for the fourth straight year in FY 2012 (tax year
2011).
For FY 2010, capital transfers from the General Fund amounted to $52.2 million or 66% of the total
non constitutional transfer dollars. Ofthis amount, the .3333 mil equivalent transfer to cover debt and
general capital accounts totals $23.3M. Transferred to roads is $18.5M and $IO.4M is earmarked for
stormwater as part of the .1500 mil equivalent transfer. For FY 2010 and FY 2011, the .3333 mil
equivalent transfer will be earmarked to pay debt service. Conversely, ad-valorem dollars transferred
to roads and stormwater are subj ect to reduction in order to achieve a millage neutral position.
Reductions in the ad valorem transfer to roads would require a proportional shift toward gas taxes for
debt repayment resulting in a corresponding reduction in dollars available for general maintenance,
new road construction and right of way acquisition.
Recommendation: Develop a General Fund (001) budget for FY 2011 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 Budl!et Allocations bv Al!encv (County Manal!er, Sheriff. Supervisor of
Elections. Tax Collector. Property Appraiser and the Clerk)
The Board strives to limit the General Fund agency budget appropriations to no more than their
respective percentages (see following table) in the adopted FY 2004 budget. 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.
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Agenda Item No. 10A
February 23, 2010
Page 5 of 23
'''''~''~'_~_'''m_"
FY04 F-"---'pyi6-
Agency . % OF. oLIlud_~et,.'Vo GFofBtld!l.el.'
,BCC/CoAttomey 1.5%' 1.2%:
!,-.irp()rt~U!~ority_.._ 0.3%1 0.1%
il::()u.ll.t'y~~~g!r~g~ncy 1._ 2i.I~:= -~::i~.4o/~
:Iwad ProgmmSuhsidy 5.2%: 5.6%:
~bt.!.-CJ1pit-,,1 s..u.b~i~y' . ., .6,()"/c<.I._.!O.I % i
'Reserves 7.7%, 3.2%1
'Courts 2.2% 0.5%1
1'.'..---.--' ---..--,-----. ....---. --. [-....-.-...-- .. .....,
,CIetkofCourts' 3.4%: 1.7%'
!Sberift". '39.6%1 ... 44.6%1
l":::'--~-""-'---"~---"-"- '~_'____'_,~__."_'_"_w~"__.____~~
11'roP~y ~m~."!.____._ -\_____ 2.:.1JOJ..._......_ ...1,?'Voj
'TaxCoIlector i 3.8%' 4.1%'
:--...-+-- . .1
1s..u..l'!':Y_~or!,f~~tions_...______ ... _'<>:2"/~____l,Q"./c<j
, I
Total
! 100.ll"Io'
,-" ~_. ','-r-",..m '___m'_'~_~,____",__..,.G.",~,,___
, ,
loo.O%i
m'__W_"~'_i
I
; 'CJ~1i<:~dj~~;~di~~Arti~j;;V~2.2% ... ... ..... ........ ..... ..... ..... .... ........ .
~ "'_'~_'__'__"_'_"'''''_'__~__',_,_~,,,'''__'.___m.___._"~___.~~.,,,..)_,,.M"~"'_'~
,.~~ Sheriff aIlo!C~.tion in"..Ju.~~s$l c7_1!1i!I!.<>11.~~bt"';:.':Yic~(),:!~e..=.
. Special Opemtions facility.
FY 04 Percent of General Fund Budget
FY 10 Percent of General Fund Budget
Oerkof
Courts.
3.4"
Property
Appraiser
2.1"
Cleric of
Courts.
1.7"
Supervisor
of Elections
1.0"
ace I Co
Attorney
Airport 1.2"
Authority
0.1"
Courts
2.2"
Tax Collector
3.8"
Supervisor
of Elections
0.9"
Bee/Co
Attorney
1.5"
Courts
0.5%
Reserves
3.2"
OebVCapltal
Subsidy
10.1"
Debt/Capital
Subsidy
6.0%
Considering that transfers to the Constitutional Officers in FY 2010 account for 52.9% of total
General Fund expenses and 70.4% of the General Fund ad valorem receipts, their participation in
reductions is essential to achieving a millage neutral budget.
Recommendation: Continuation of this policy.
Millal!e Tarl!ets for the Unincorporated Area General Fund
For FY 2010, the estimated MSTD General Fund (111) property tax revenue, using the recapitulated
taxable value report for October 2009, totals $31,745,383. This is based upon an Unincorporated
Area taxable value of $44,330,936,052. The decrement between the July and October taxable value
numbers amounted to $306,812,923 equating to an ad valorem revenue reduction of$219,708.
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Agenda Item No. 10A
February 23, 2010
Page 6 of 23
For FY 2011, taxable values are projected to decrease 10.0% resulting in an unincorporated area
taxable value of $39,897,855,521. Millage neutral would generate $28,570,854 in property tax
revenue - a decrease of $3,394,238 based upon a comparison to the FY 2010 adopted budget
Operating expenses directly budgeted in Unincorporated Area General Fund (111) account for 68.3%
of total expenses.
Recommendation: Develop an Unincorporated Area MSTD General Fund (111) budget for FY 2011
at millage neutral and provide the Board with a swnmary divisional description of what milloge
neutral purchases in terms of service, the cost and description of services cut, and the corresponding
ad-valorem impact to restore any cut service.
MiIlal!e Tarl!ets for Collier Countv MSTU'sIMSTD's
With a simple majority vote in FY 2011, 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. 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 four (24) dependent MSTU's or MSTD's active
under Collier County's taxing umbrella which are actively managed by staff. Of these, twelve (12)
have advisory boards which provide recommendations to the Board of County Commissioners.
Recommendation: For FY 2011, it is suggested that those MSTU'slMSTD'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 rates ranging from millage neutral to tax
neutral depending upon their particular program requirements with specific advisory board
recommendations offered during the budget review.
Revenue Centric Budl!ets
It is.generally recognized that all budgets and expense disbursements regardless of fund or activity is
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
(Ill). 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
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Agenda Item No.1 OA
February 23, 2010
Page 7 of 23
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 Orl!anizational Efficiencies
Weare faced with the 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 2011. This proposed guidance also continues the agency freeze on new hires
funded with ad valorem funds with limited exceptions authorized by the County Manager. Note that
the FY 2011 budget document (Summary Form I Program and Budget Descriptions) will only
show the number of FIE positions funded. A high level summation at the beginning of each
Divisional budget will depict the current FIE reduction from FY 2010 authorized levels.
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 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.
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Agenda Item No. 10A
February 23, 2010
Page 8 of 23
Recommendation: Given the current economic environment and the consumer price index (CPI)
trend, a salary adjustment for FY 2011 is not recommended. In previous years the Board of County
Commissioners, has authorized adjustments to the compensation plan as shown within the following
table.
Program Component FY06 FY07 FY08 FY09 FY 10 FYll
Cost of Living 3.90% 4.70% 4.10% 4.20% 0.00% 0.00%
Awards Propam 1.50% 1.50% 1.50% 0.00% 0.00% 0.00%
Pl!LPlan Maintenance 0.25% 0.25% 0.25% 0.00% 0.00% 0.00%
Total 5.65% 6.45% 5.85% 4.20% 0.00% 0.00%
Health Care Prol!ram Cost Shann!!:
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. The County has successfully
maintained a stable rate structure (0% rate increase) during fiscal years 2006 through 2010. This is
attributable to the success of the existing wellness program, the 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 welIness 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.
Recommendation: In FY 2011, 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% emnlover share and 20% emnlovee share be uniform across
aU a!!:encies. includin!!: 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 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
2009-29 second year rates (rates that will go into effect July 1,2010 if the legislators fail to establish
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Agenda Item No. 10A
February 23,2010
Page 9 of 23
new rates for state fiscal year 2010-2011) and Senate Bill 1764 (increase to the health insurance
subsidy).
Recommendation: Adherence to the OMB rates published within the OMB budget instructions.
Accrued Salary Savin2s
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. A 4% attrition rate for each Agency funded by the
General Fund and for all of the County Manager Agency will be calculated on FY 2011 Regular
Salaries and budgeted within each cost center containing ten (10) or more positions.
Recommendation: Continue the accrued salary savings policy.
Storm Water Mana2ement Capital Fundin2
The Board previously adopted (County Resolution 2005-115) a policy with funding equivalent 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 2005-115 with the understanding that a
millage neutral budget will likely require a substantial cut in this transfer.
Proposed Use of Gas Taxes
Previously, the Board directed through policy that all available gas taxes will be used to support the
Roads Construction Capital Improvement program. With the prospects for scaling back the ad
valorem transfer to roads, gas taxes will be required to pay for a portion of debt service on the 2003
and 2005 Gas Tax Revenue Bonds. Earmarking certain gas taxes to pay debt due to the reduced ad
valorem transfer will mean that impact fees should be dedicated exclusively for right of way
acquisition and road construction.
Recommendation: Change the Board's policy and allow the gas taxes to support not only the road
construction improvement program but to also pay for a portion of the debt service, instead of the
General Fund supporting all of the debt service payments.
General Fund Debt Contribution
The General Fund (001) has provided via transfer the equivalent of 1/3 mil to non impact fee eligible
county wide capital functions and a debt payment component since FY 2006. This transfer has now
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Agenda Item No.1 OA
February 23, 2010
Page 10 of 23
evolved into a debt service payment and for FY 2010; the majority ofthis $23.5 million transfer will
be loaned to cover debt service due to the lack of impact fee revenue. For FY 2011, 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 10% decrease in taxable value, dollars generated from
the 1/3rd mil allocation will be sufficient to cover this debt service requirement.
The lack of capacity among pledged revenue sources such as sales tax and gas tax coupled with
current interest rate constraints limit short term flexibility in altering the COWlty'S debt structure in a
manner which can reduce the General Fund's immediate debt obligation. However, staff will
continue to explore the concept of 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. Further, the COWlty'S Finance committee should aggressively consider any and
all opportunities to restructure debt in light of the 2013 commercial paper debt repayment obligation
and cash funding requirements necessitated by the bond insurance rating collapse.
Recommendation: Continue to transfer an equivalent of 1/3 mil to the COWlty Wide Capital Fund
for purposes of paying non-growth related debt and to loan impact fee funds money to cover growth
related debt obligation.
Schedulinl! Issues
Decisions Re uired
Establish Budget submission dates for
the Sheriff, the Supervisor of
Elections and the Clerk
JWle Budget Workshops
Staff Recommended Dat s
May 1,2010 by Resolution
Ado tion of tentative milIa e rates
Establish public hearing dates (see
note
(BCC Agency/Courts)
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 16, 2010. The
Commission chambers are reserved for the tentative dates for Collier COWlty Government budget
public hearings.
Recommendation: Approve the dates identified above and attached resolution establishing May 1,
2010 budget submittal dates for the Sheriff, the Supervisor of Elections and the Clerk.
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Agenda Item No. 10A
February 23, 2010
Page 11 of 23
Comparative Budl!et Data
Provide comparative budget data using FY 2010 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
Reserves
A reserve for contingency is typically budgeted in all operating funds, with the exception of the
Constitutional Officer funds. Reserves for the Constitutional Officer funds shall be appropriated
within the County General Fund.
The State provides or establishes maximum limitations on certain reserves. The maximum limitations
for reserves for contingency and for cash flow are 10% and 20%, respectively. The General Fund and
the MSTD General Fund contingency reserves are generally established by 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.
Budgeted General Fund (001) contingency reserves for FY 2010 total $2,569,100 - representing
.75% of total appropriations. 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. Faced with a similar event in FY 2011,
the General Funds cash position would not allow for this fmancing. The alternative is loans from
special revenue, capital and enterprise funds.
Maintaining sufficient reserves is not only sound fiscal policy but provides a level of protection
against the unknown costs associated with unfunded State and Federal mandates.
Recommendation: Build General Fund (001) and Unincorporated Area MSTD General Fund (111)
reserves pursuant to this policy.
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Agenda Item No. 10A
February 23, 2010
Page 12 of 23
Continuing Existing Budget Policies for FY 2011
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 a
confidence interval of 75%, with the exception of group health to which a confidence interval is not
applicable.
Contract A!!encv Fundin!!: The Board will not fund any non-mandated social service agencies.
Median Maintenance: Recognize the Unincorporated Area General Fund MSTD (111) as the
appropriate, dedicated funding source for median beautification maintenance costs.
Carrv 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 Genera! 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. Over the last two fiscal years mid-year cuts and certain capital expenditure freezes were
required to ensure that adequate fund balances were available in the new fiscal year.
General Fund balance is required to meet operating needs for October and November of any given
fiscal year, prior to the receipt of any significant ad valorem tax revenue (ad valorem taxes represent
75.14% of the total FY 2010 General Fund adopted revenues).
Fund balance is also an important measure used by bond rating agencies in detennining 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. It was noted that bond ratings would improve as this percentage
increased.
The recommended level of fund balance in the General Fund should be a minimum of 10% of actual
expenditures, with a maximum fund balance level of 15%. If fund balance exceeds the 15% level,
the surplus above the 15% level should be used to fund non-recurring costs, as fund balance is a non-
recurring revenue source. At year ending September 30, 2009, actual General Fund fund balance
totaled $39,741,200 which represented 11.5% of actual FY 2009 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 2011. 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.
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Agenda Item No. 10A
February 23, 2010
Page 13 of 23
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 Pavment in Lieu of Taxes: The Solid Waste Fund and the Collier County Water-
Sewer District will 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 capita! projects financed by borrowing money shall limit the repayment period to
the useful life of the asset.
Interim Financinl!: 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 Canital and Debt Fundinl!: Continuation of a fixed General Fund equivalent millage
dedicated to capital projects, debt financing and impact fee fund debt loans. The recommended rate
is the equivalent of 0.3333 mills. (See history below).
General Fund Capital Equivalent Millage History
(FY 91 - FY 13)
1.2000
1.0000
1.0000
0.8000
0.6580
..
10.6000
:ii Q.4000
0.5474, 0.560
0.2354
0.2000
0.0000
~~~~~~~~~~~~~~~~~~~~~~~
91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Fiscal Year
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 capital allocation is
to assist the General Govemmental impact fees with loans from the 1/3 of a mil so that the debt
service payment can be made.
11
Agenda Item No. 10A
February 23,2010
Page 14 of 23
Capital Improvement Pro2ram (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 fimded, to the extent possible, by impact fees.
. Capital projects identified in the five-year CIE will be given priority for fimding. 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 fimds is $25,000.
12
Agenda Item No. 10A
February 23, 2010
Page 15 of 23
Three-Year Budget Projections
Ad Valorem Tax Funds
(FY 2011 - FY 2013)
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.
The following 3-year budget projections are for the General Fund (001) and the MSTD General Fund
(111).
General Fund (001) Millal!e Historv
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 2011 through FY 2013.
4.5000
4.0000
3.5000
3.0000
2.5000
2.0000
1.5000
1.0000
0.5000
General Fund Millage History and Projected Tax Neutral Rates
FY03 to FY 13
4.0398
4.1206
I "~"~"~"~"~"~"~"~"~"~"~
L
Millal!e Rates
While the County Manager will be presenting 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 $26.6M will be
necessary. The following table offers the respective tax neutral (rolled back) millage rates for FY
2011, 2012 and 2013 adjusted for any increase in the Florida Personal Income Growth Factor
pursuant to HE 1B:
13
Agenda Item No. 10A
February 23, 2010
Page 16 of 23
FY 10 Adopted and Inc. (Dec.) per $100,000
General Fund Projected Tax Neutral Taxable Value
MillllRe Rates
FY 10 3.5645 $ 0.00
FYlI 3.9606 $ 39,61
FYI2 4.0398 $ 7.92
FY13 4.1206 $ 8.08
The projected millage rates assumes a 10% decrease in taxable value of existing property in FY 2011
(the 2010 tax year) consistent with current State estimates. For FY 2012 and 2013, taxable values of
existing property as well as new construction are projected flat. The Property Appraiser will provide
preliminary taxable value estimates for FY 2011 on June 1,2010. Actual and assumed changes in
County taxable values are as follows:
Historical and Projected Changes in Collier County Taxable Values
(FY03 - FY 13)
30.00% ----
------------
25.38"
25.00%
5.00%
0.00% 0.00"
20.00%
15.00%
10.00%
0.00%
-5.00%
FY12 FY13
-10.00%
-15,00%
-11,02"
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.
14
Agenda Item No.1 OA
February 23, 2010
Page 17 of 23
FY 2011 Sil!llificant Expense Assumotions
. A miUage neutral budget reflecting $26.6M 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. Substantial adjustments to the customary ad valorem capital transfers will be
required to keep targeted operating cuts at 5%.
. Allocation for compensation administration - 0%.
. 4% attrition rate on regular salaries assumed in the County Manager's Agency for all cost
centers that have 10 or more FTE' s.
. Continue General Fund debt payment and impact fee loan equivalent to 0.3333 mills annually
($20,996,900).
. Storm water capital funding equivalent to 0.1000 mills or $6,299,700. This represents a
$3, 1M reduction from previous policy guidance of 0.1500 mills.
. General Fund support of road construction reduced from $18,554,800 to $13,574,000.
. Shift of Information Technology support out ofthe General Fund to an Internal Service Fund.
. Decreased General Fund support of EMS by $267,900 to $10,448,700.
. Continue 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.
Sil!llificant Revenue Assumptions
. Ad valorem tax revenue forecast is 96% of actual taxes levied plus a $2.5M uncollectable
allocation through the tax deed sale process.
. Sales tax revenue forecast to increase 2% over the FY 2010 budgeted amount.
. State Revenue Sharing projected flat.
. Constitutional Officer turn backs projected to decrease based upon slowing fee collections.
. Increasing use of gas taxes to pay debt thus reducing allocation to roadway maintenance, road
construction and right-of-way acquisition.
. Measures to increase beginning fund balance through a freeze on operating capital expenses
and a reduction in the transfer to road capital fund in FY 2010.
. Significant decrease in interest income is projected due to a reduction in the investment pool
(capital spend doW!).) and reduced rates ofretum.
Other Funds/Factors Impactinl!: the General Fund
Individual analyses of the Road and Bridge Fund, and the EMS Fund, and the road construction
program were undertaken to determine the relative impact on the General Fund.
15
Agenda Item No. 10A
February 23,2010
Page 18 of 23
EMS Fund
EMS is another fund that impacts significantly on the General Fund. Typically, this ad valorem
support accounts for 45% to 50% of total EMS operating revenues. Historical and projected General
Fund support of EMS operations by fiscal year is as follows;
General Fund Support in EMS (Adopted Budget)
(FY 03 - FY 13)
v; $14,000
."
l:
'" $12,000
~
:>
0
.<:: $10,000
t::.
1:
0 $8,000
0.
0.
:>
V1 $6,000
."
l:
:>
u.. $4,000
..
~
cu $2,000
l:
cu
<!J
$-
FY03 FY04 FYOS FY06 FY07 FY08 FYOg FY10 FYll FY12 FY13
-"-_._"'--~-"-'--'-~---'-'--'._-"-"~'-"-~'''---'-''-..-.----..-...........--.-.-.-.--. ---~"..-_.__..._--._.---,__..._ _____.'.._._n.__.. _.__....._____,_....____._
Use of General Fund dollars to support this life/safety function has and continues to be a priority.
Any reduction in transfer dollars is either offset by service charges or a draw from reserves.
Road Construction PrOl!:ram
The Board approved road financing plan was based historically on using growth in taxable value and
maintaining the General Fund millage rate to provide growth dollars to meet the road funding
commitments. These dollars are depicted on the following graph.
With taxable values projected to decrease for a third straight year, the ad valorem contribution to road
construction has dropped as indicated on the following graph. Within this environment, pursuing a
millage neutral budget in FY 2011, and out-years will require reduced ad valorem support for debt
service, road maintenance, right-of-way acquisition and funding capital construction. Capital
obligations necessitated by state or federal agreement; like JPA's and DCA's will be funded. Under
millage neutral, gas taxes must be used to cover a larger portion of debt service as well as the
functions stated above.
16
Agenda Item No. 10A
February 23,2010
Page 19 of 23
-;;
"CI
~ 45.000
6 40.000
t= 35.000
t:
g, 30.000
go 25.000
OIl
-g 20,000
"
... 15,000
n;
Iii 10,000
c
III 5,000
General Fund Support of Road Construction
(Adopted Budget)
(FY 03 - FY 13)
38,791
FY03 FY04 FYOS FY06 FY07 FY08 FY09 FY10 FYll FY12 FY13
FY 2012
A millage neutral budget in FY 2012 with no change in taxable value will result in an additional
$23M cut in General Fund expenses. This projected reduction assumes very conservative revenue
projections and forecast spending at budgeted amounts. This results in a $16.6M reduction in
beginning fund balance.
The projected General Fund tax neutral millage rate for FY 2012 is 4.0398 or $403.98 per $100,000
of taxable value. This represents an increase of $47.53 per $100,000 of taxable value from the
millage neutral FY 2011 position. This rate represents the rolled back (up) rate adjusted by any
increase in the Florida Personal Income Growth Factor pursuant to HB lB.
In addition to annual inflationary cost increases, the following items were included in the FY 2012
budget analysis:
. Maintain Capital projects funding equivalent to 0.3333 mills.
. Stonnwater capital projects funding equivalent to 0.1 0 mills.
. Maintain General Fund support of EMS - $10,448,700.
. Reserves are maintained at policy.
. Maintain General Fund road subsidy at $13,574,000.
. Maintain FY 2011 General Fund support for Transportation Operations expenses.
In summary the FY 2012 analysis offers caution especially when critical variables like taxable value,
market conditions and the County's debt structure are difficult to predict. Pursuing a millage neutral
budget in FY 2012 - assuming no increase in taxable value could mean eliminating the ad valorem
road subsidy forcing the use of gas taxes to completely support the approximately $14M annual road
debt service payment. This would leave approximately $4M of gas tax revenue for capital,
maintenance, right-of-way acquisition and the Collier Area Transit (CAT) subsidy. While every fiscal
year presents new challenges and predicting revenue sources is difficult in any out-year, continued
use of non-reoccurring capital dollars to achieve required cuts will be replaced by reoccurring
operating cuts with front line service level impacts.
17
Agenda Item No. 10A
February 23,2010
Page 20 of 23
FY 2013
A miUage neutral budget in FY 2013 with no change in taxable value will result in an additional
$22M cut in General Fund expenses. This projected reduction assumes very conservative revenue
projections and forecast spending at budgeted amounts. This results in further and deeper beginning
fund balance reductions.
The projected General Fund tax neutral millage rate is 4.1206 or $412.06 per $100,000 of taxable
value. This represents an increase of $8.08 from the FY 2012 tax neutral level per $100,000 of
taxable value. Once again, this rate represents the rolled back (up) millage rate accounting for any
increase in the Florida Personal Income Growth Factor allowed pursuant to HB IB.
The following items were included in the FY 2013 budget analysis:
· Maintain Capital projects funding equivalent to 0.3333 mills.
· Stormwater capital projects funding equivalent to 0.10 mills annually.
· Maintain General Fund support of EMS - $10,448,700.
· Reserves are maintained at policy.
. Maintain General Fund road subsidy at $13,574,000.
· Maintain FY 2012 General Fund support for Transportation Operations expenses.
18
Agenda Item No. 10A
February 23.2010
Page 21 of 23
Unincorporated Area General Fund (111)
MSTD General Fnnd (111) Mlllal!e Historv
As a point of reference, the following graph plots this historical MSTD General Fund (Ill) millage
rate, as well as the projected millage rates for FY 2011 through FY 2013 based on a tax neutral
(rolled back) millage rates, adjusted for any increase in the Florida Personal Income Growth Factor
pursuant to HB I B.
Unincoporated MSTD General Fund (111)
Millage Rate History & Projected Tax Neutral Rates
0.85
0.8
0.75
0.7
0.65
0.6
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Results of Unincorporated Area General Fund Analvsis
While the County Manager will be presenting 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$3.4M will be
necessary. The following table offers the respective tax neutral (rolled back) millage rates for FY
2011, 2012 and 2013 adjusted for any increase in the Florida Personal Income Growth Factor
pursuant to HB IB: .
FY I 0 Ad~pted and Inc. (Dec.) per $100,000
Unincorporated Projected Tax Neutral Taxable Value
General Fund Millage Rates
FYlO 0.7161 $ 0.00
FYll 0.7957 $7.96
FY 12 0.8116 $ 1.59
FY 13 0.8278 $ 1.62
19
Agenda Item No.1 OA
February 23, 2010
Page 22 of 23
FY2011
The FY 2011 budget projection is based upon a millage neutral position with a projected 10%
decrease in taxable value. Under millage neutral, property taxes will decrease $3 AM. Property taxes
and the communications services tax represents on average approximately 75% 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. Strong cash balances have provided a
level of built in protection in recent years. However, this fund is predominately operating in nature
with very little capital or capital transfer expense. Beginning in FY 2009, the MSTD General Fund
(111) absorbed part of the Transportation operating transfer which had been borne previously by the
General Fund (001). With decreasing property tax revenue, a portion of the transportation operating
transfer will be shifted back to the General Fund (001). Divisional expenses will be reduced on a
targeted basis by 5%. Contingency reserves will be budgeted at 2.5% of operating expense,
FY 2012
Assuming that taxable values will be flat in FY 2012, a millage neutral budget would mean the loss
of $3.8M in property tax revenue - the difference between tax neutral and millage neutral. This loss
of revenue would require a further shift in the transportation operating transfer to the General Fund
(001) and further service level cuts which would likely be recurring in nature. The projected tax
neutral millage rate is 0.8116 or $81.16 per $100,000 of taxable value - an increase of $9.55 per
$100,000 of taxable value from millage neutral.
FY 2013
Continuation of millage neutral into FY 2013 would mean an additional $4.5M property tax
reduction against tax neutral assuming flat taxable values, The tax neutral millage rate is 0.8278 or
$82.78 per $100,000 of taxable value.
20
Agenda Item No. 10A
February 23,2010
Page 23 of 23
RESOLUTION NO. 2010-
A RESOLUTION PURSUANT TO SECTION 129.03, FLORIDA STATUTES,
REQUIRING THE FY 11 TENTATIVE BUDGETS OF THE SHERIFF, THE
SUPERVISOR OF ELECTIONS AND THE CLERK TO BE SUBMITTED TO THE
BOARD OF COUNTY COMMISSIONERS BY MAY 1,2010.
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 11 fiscal year
to the Board of County Commissioners by May 1,2010.
This Resolution shall be effective on its adoption.
This Resolution adopted this 23'd day of February, 2010, after motion, second and
majority vote.
ATTEST:
DWIGHT E. BROCK, Clerk
BOARD OF COUNTY COMMISSIONERS
COLLIER COUNTY, FLORIDA
~y:
Fred Coyle, Chairman
App oved as to form and
leg u fi i cy
ow
mey