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11 CITY OF SOUTH MIAMI OFFICE OF THE CITY MANAGER INTER-OFFICE MEMORANDUM TO: The Honorable Mayor & Members of the City Commission FROM: Steven Alexander, City Manager DATE: August 14, 2017 SUBJECT: PROPOSED FY 2017-18 Budget as of July 28, 2017 The proposed budget provides a continuation of the core FY 2016-17 budget as the base for the budget for FY 2017-18 and the following budget indicates existing (current year) and new funding levels (proposed) and priorities. The FY 2017-2018 Proposed Budget as presented here, is based on the proposed millage rate of 4.3000, which I recommended, and was subsequently set as the maximum rate by the City Commission. The value of the certified ad valorem (Latin for "according to value") tax roll for FY 2017-2018 was released by Miami-Dade County on July 1st, and was approximately 6% higher for South Miami than the prior year. When the increase in ad valorem revenues is considered in conjunction with the loss in revenues from the Tangible Personal Property proceeds and the increase in inflation or CPI, the net increase in revenues to the City as projected at the current and proposed millage rate is only $240,423 ($359,978-$119,555). Additionally, the possible continuation of revenue slippage from the Communications tax (land telephone lines) will add to the reduction in revenues projected for this year. Therefore, we believe maintaining the current millage rate is very conservative. Although this represents a slight increase in revenues, it is more importantly an indication that the real estate market, property values and, therefore, potentially our entire economy may be continuing a rebound. South Miami did not receive the greatest amount of increase nor the lowest amount of increase in property valuation of cities in Miami Dade County, but it should be viewed in part as a reflection of your efforts to continue to improve and enhance the quality of government and services here in South Miami. As we are witnessing, the country, and more specifically Miami-Dade County, continues to slowly extract itself from a very difficult and damaging economic period. Property values, foreclosure rates, and unemployment rates continue to improve. Accordingly, this budget process was a difficult one, as people are once again demanding more from their governments, but the 2 revenues for South Miami have not yet reached a level to give us the ability to provide the level of services they deserve. REVENUES The Property Appraiser will mail the required tax notices to all property owners in August, using proposed tax rates adopted by each of the taxing authorities in Miami-Dade County. Thus, the millage rate of 4.3000 set at the July City Commission meeting will be used in the notice and will be the millage rate used to calculate South Miami property taxes unless changed by the City Commission prior to its final budget meeting in September. The millage rate (South Miami’s share of the tax bill our residents will receive) is typically, approximately only 21 percent of the total yearly tax bill. In other words, for every dollar spent on yearly property taxes in South Miami, typically only 21 cents go to its City Government. Using the millage rate proposed of 4.3000 and the Miami-Dade County’s average taxable value, the average homesteaded residential taxpayer is projected to pay $974 in taxes to South Miami annually, which equals 2.66 dollars a day, on their 2017 annual tax bill. Furthermore, the millage rate of 4.3000 provides the City with an additional estimated revenue amount of ad valorem revenue of $359,978, when compared to FY 2016-17. Please find below a detail of the ad valorem revenue calculation. MILLAGE CALCULATION COMPARISON (PROPOSED) ACCOUNT CLASSIFICATION ADOPTED MILLAGE FY 2016-2017 PROPOSED MILLAGE FY 2017-2018 EST. DIFF MILLAGE RATE 4.3000 4.3000 0.00% REAL PROPERTY TAXABLE VALUE 1,624,995,959 1,727,378,539 6.30% PERSONAL PROPERTY TAXABLE VALUE 67,414,269 65,832,273 -2.35% TOTAL TAXABLE VALUE (REAL AND PERSONAL PROPERTY) 1,692,410,228 1,793,210,812 5.96% AD VALOREM REVENUE 7,277,364 7,710,806 433,443 95% OF TAXABLE VALUE (TO ALLOW FOR DELETIONS & DELINQUENCIES) 6,913,496 7,325,266 $411,770 DEDICATED TAX INCREMENT AMOUNT -631,530 -683,322 51,792 AD VALOREM BUDGET ESTIMATE 6,281,966 6,641,944 359,978 OTHER REVENUES Other significant operating revenue categories (non-ad valorem) are currently expected to decrease. Local Government Half-Cent Sales Taxes, State Revenue Sharing, Judgments and Fines, and other licenses and registrations (burglar alarms) are projected to decrease this coming fiscal year. However, the Legislature may, at any time, alter the formulas and even existence of some 3 of these revenue streams. These changes, if any, could significantly affect the City’s revenue streams. The City has reduced the projected revenues for Parking Meters Franchise by $67,500 for FY 2017-18. The Parking Meters Franchise is the City’s second greatest single revenue source behind Ad Valorem Revenue. For the last couple of years, the City continues to see businesses within the downtown area continue to close, which is due to many factors including the internet commerce economy and the impacts of the Shops at Sunset resulting in lower shopper traffic as it reinvents itself. This coupled with new shared riding services such as Uber and Lyft have left the City with less parking customers, hence requiring the City to reduce the projected revenue for parking for the upcoming fiscal year. It is important to add, the lack of occupancy within the City’s downtown area can beg in to have a negative effect on the assessed values within the properties in the downtown, hence also having a negative effect on the Ad Valorem revenue of the City as well. Should the City’s two greatest revenue sources begin to decline at the same time, without any other revenue source to help cover the reductions, the City may not be able to maintain the current millage rate, much less reduce it, without reducing the current level of City services. The revenues for the Red-Light Camera Program have been increased to more accurately reflect the estimated revenue expected in FY 2017-18. Currently, the City has four (4) cameras installed and is expecting to have two (2) more street-light cameras installed along US1, assuming the City receives the State and County’s approval, within the last 6-months of the fiscal year. EXPENDITURES In this year’s proposed budget, the City included Cost of Living Adjustments (COLA) increases for all eligible employees, including those required by the adopted Police PBA Upper Unit and AFSCME Collective Bargaining Agreements based on the Consumer Price Index - All Urban Consumers 12-Month Percent Change for the Miami-Ft. Lauderdale FL area (CPI), which shall have the effect of increasing the pay to ensure individuals do not lose earnings to inflation. The Annual Average CPI, which will take effect from October 1, 2017 through September 30, 2018 is 1.8% The City continues to negotiate with the Police-Lower Bargaining Unit and is not currently eligible for the COLA salary adjustment which is required to be negotiated. Hence, the FY 2017 -18 budget, as proposed, reflects no increases for the Police-Lower Bargaining Unit, and once a successfully negotiated agreement has been presented and approved by the Commission, and requires a salary increase/cost, the City will seek the Commission’s approval to use unassigned, unreserved fund balance to pay such amount. Furthermore, in this fiscal year’s proposed budget, the City will continue assuming the expense of multiple employees, which had previously been funded through the City of South Miami’s 4 Community Redevelopment Agency (SMCRA). The SMCRA is no longer able to continue to fund these necessary positions on a recurring basis due to its financial situation. The Department/Divisions that are immediately affected are:  The Grants and Sustainability Administrator was previously funded by the SMCRA in the amount of 50% of the position’s salary.  Code Enforcement has absorbed the expenses of the Senior Code Enforcement Officer. Additionally, the Special Events Coordinator, which has now been transferred to the Parks Department, were both previously funded at 100% by the SMCRA.  The Police Department rather than the SMCRA, will be funding 100% of one Police Officer. The SMCRA previously funded three full-time Police Officers; however, this year two full- time Police Officers will continue to be funded by the SMCRA.  The City Attorney’s expense was increased based on the firm’s adopted agreement and the newly implemented accounting policy which requires the City to fund 100% of the City Attorney’s consulting contract and obtain reimbursement from the SMCRA for 10% of the overall cost.  It is important to note the positions mentioned above are not new positions but exist currently as part of the City Administration, and amount to an estimated $264,617, which is reflected in this budget due to the SMCRA’s inability to continue to responsibly fund them on a recurring basis. The FY 2017-18 Budget, Capital Improvement Program 5-Year Plan, includes, multiple traffic calming projects throughout the City. The specific communities on which the City is focusing in FY 2017-18 are Pinecrest Villas, Snapper Creek and Twin Lakes. The City will continue working with Miami-Dade County, whom has jurisdiction over many of the permits needed, for the continued improvement to our roadways, including traffic calming. To continue maintaining a safe and efficient vehicular fleet, this coming fiscal year, the City is proposing to purchase eight new police vehicles. The upgrades of the City’s fleet are required to continue providing expected levels of service to the residents of the City. The older police vehicles that are being replaced will take the place of those vehicles in the City administrative fleet that are determined to have exceeded their useful life and may have safety or operational problems; the replaced vehicles will be auctioned for sale. Currently and in the future, the City will purchase extended warrantees for our vehicles and surplus the vehicles at the end of the warranty program in order to reduce maintenance costs to the City. The City is estimating $3 per gallon for the 2017 -18 budget, an estimated 14% less than the previous Fiscal Year. The City is requiring that the usage of City vehicles be limited only to the essential activities. City policy states that no City vehicle should be left running idle when not necessary (the K-9 vehicle is the exemption); furthermore, all take home Police cars should be used strictly pursuant to policy that stipulates that the vehicles will not be used for personal use. 5 The proposed budget is primarily a continuation of last year’s budget plan, as the City remains committed to the current level of services with a high-quality level of delivery. There are many priorities that need to be addressed, including the proper maintenance of the City’s parks system. Should revenues grow significantly, the City will be able to evaluate new priorities for the City, and with the authorization of the Commission, we will continue to increase the effectiveness and offered services of the City at an increasing rate. The proposed budget reflects the pending payoff of the last outstanding bond with the Florida League of Cities. It is our intent, which was echoed by the Budget and Finance Committee’s recommendation, to delay paying off the bond until the City has completed the settlement of any pending large lawsuit and union negotiations with the Police Lower Unit. This policy allows the most financial liquidity to the City to facilitate the funding of those potentially large items in the most fiscally responsible manner. The City no longer has any bank short-term debt and will no longer have any outstanding bonds. The payoff amount which is provided within the budget is approximately $1,310,000 and includes the principal payment amount of $40,000 which is due during the fiscal year. SUMMARY OF FINANCIAL ISSUES AHEAD Litigation expenses and exposures Currently, the City is involved in multiple litigations, which provide future financial uncertainties. The possible financial impact to the City is currently unknown. It is, at this time, unrealistic for the City to provide financial estimates to insert into the FY 2017-18 budget. Police Lower-Unit Union Negotiation As mentioned above, the City continues to negotiate with the Police Lower-Union members on obtaining a mutually agreed upon agreement. The future agreement may have a monetary value which will be paid from the City’s unassigned, unreserved fund balance to pa y such amount. Florida Homestead Exemption Increase Amendment Lastly, the Florida Homestead Exemption Increase Amendment is on the ballot in Florida as a legislatively referred constitutional amendment on November 6, 2018. Should the amendment pass, the City is estimated to have a revenue loss amount of approximately $222,513 , which is based on the 2016 Preliminary Assessed Roll and would take effect in Fiscal Year 2019 -20. 6 The chart below reflects key expenditure categories within the City’s budget. CONSOLIDATED ITEMS DETAIL BY DEPARTMENT FOR FY 2017-2018 DEPARTMENT F/T 1210 P/T 1310 HEALTH 2310 W/C 2410 FUEL 5230 PEN 2210 ICMA 2220 AUTO 4515 COPIER 4710 COMM 4120 CITY COMMISSION 62,000 0 38,934 186 0 0 0 0 0 5,000 CITY CLERK 204,043 0 23,360 612 0 11,018 0 0 1,230 360 CITY MANAGER 420,574 0 43,988 1,262 722 36,464 0 751 2,000 3,912 FINANCE DEPART 383,727 15,889 38,934 1,199 1,505 18,011 3,514 3,084 1,230 1,080 PROCUREMENT DIV 118,549 0 15,574 356 0 6,778 0 0 2,461 1,080 PERSONNEL DIV 132,354 15,885 15,574 445 0 0 9,265 0 2,460 2,160 BUILDING DEPART 256,822 140,926 31,147 8,535 1,204 3,869 12,962 767 1,640 4,020 PLANNING DEPART 334,857 0 38,934 1,005 108 14,387 4,790 477 1,640 3,240 CODE ENFORCE 241,725 14,414 31,147 7,560 2,065 13,010 0 3,030 1,640 4,920 PW OFFICE OF DIR 179,016 0 23,360 537 0 1,373 10,752 0 5,000 780 PW BLDG. MAINT. 87,273 0 15,574 4,093 0 4,907 0 0 0 780 PW SOLID WASTE 351,191 0 70,081 46,259 0 18,867 0 0 0 0 PW STREETS MAINT. 256,476 0 54,508 26,349 0 12,312 1,896 0 0 1,080 PW MOTOR POOL 139,710 0 23,360 4,952 141,388 7,728 0 32,000 0 780 PW ENG. & CONSTR 156,416 0 15,574 468 0 0 10,921 0 0 1,560 POLICE 3,640,592 0 459,433 113,367 163,383 491,808 24,668 73,601 7,380 61,440 PARKS & REC 307,914 0 38,934 12,594 11,378 12,456 5,407 8,357 5,003 5,100 PARKS - TENNIS 126,995 35,869 15,574 6,661 0 0 8,890 0 0 1,020 COMM CENTER 185,727 264,235 38,934 18,403 0 5,074 6,423 0 2,460 0 PARKS LAND MAINT 129,327 0 23,360 5,240 10,047 5,503 2,116 1,233 0 1,800 COMM POOL 0 52,540 0 2,149 0 0 0 0 0 0 TOTAL FY 2018 7,715,288 539,758 1,056,284 262,232 331,800 663,565 101,604 123,300 34,144 100,112 BUDGETED FY 2017 7,634,585 556,232 1,237,667 242,080 383,860 546,953 214,331 121,847 34,064 86,096 DIFFERENCES 80,703 -16,474 -181,383 20,152 -52,060 116,612 -112,727 1,453 80 14,016 Please find attached the City’s Proposed FY 2017-18 Budget as of July 28, 2017 along with a FY 2017-18 Budget Highlight Sheet which provides some detailed differences, using the threshold amount of $5,000, between what is being proposed and what was adopted in FY 201 6-17. 7 Budget Hearing Schedule The City is required to hold two formal Budget Public Hearings. There are guidelines on when these hearings must be held. Additionally, a local municipality cannot hold a budget hearing on the same date as either the County or the School Board budget hearings. There are also special advertising requirements for these hearings. Below please find the two formal required dates for the City’s Budget Hearings: First Budget Hearing Wednesday, September 13, 2017 7:00 PM City of South Miami City Hall Commission Chambers 6130 Sunset Drive South Miami, FL 33143 Second Budget Hearing Wednesday, September 20, 2017 7:00 PM City of South Miami City Hall Commission Chambers 6130 Sunset Drive South Miami, FL 33143 Miami-Dade County’s first and second public budget hearings are scheduled for 5:01 p.m. on September 7th and September 19th. The Miami-Dade School Board’s first and second public budget hearings are scheduled for 6:00 p.m. on July 26th and September 6th. Attachments: Proposed FY 2017-18 Budget as of July 28, 2017 FY 2017-18 Budget Highlight Sheet DEPARTMENT INCREASE DECREASE NET DIFF DETAILS City Clerk 5,280 The cost of Granicus Peak Agenda Management Software 20,000 Additional funds under line item "Legal Ads" for the Febraury 2018 election advertisement. 27,000 To allocate additional funds for the February 2018 Election. Dept. Total 52,280 0 52,280 7,000 CryWolf AOT Public Safety Processing Fee has decreased from 18% to 9% as per contract. 19,600 Contractual Services-Parking has decreased due to reduction in Pay Stations EMS fees and full warranty. Dept. Total 0 26,600 -26,600 7,200 A reduction in this line item is due to the implementation of E-Fax. Dept. Total 0 7,200 -7,200 5,547 Under line item #4632 Internet Services: $16,555 has been allocated for a dedicated AT&T 100mbps Metro E-Circuit that provides diverse path between City and County Data Center. Additionally, $5,280 to provide diverse path between Public Works, Gibson-Bethel Community Center and the County Data Center. Other projects have been completed during FY 2016-2017 therefore a combined increase of $5,547. 7,200 $7,200 has been allocated for the Implementation of the CJIS/FDLE new security requirement for the Police Department. Check Point-3100 Next Generation Threat Prevention. 10,000 The design and installation of the City's Police Department Vmware virtual server enviroment was completed in fiscal year 2016-2017. Dept. Total 12,747 10,000 2,747 46,640 The cost of the license fees, professional services and the maintenance of the new iTRAKiT Software. 3,800 Two copies of the new 2017 Edition of the Building Code. 4,410 Seven iPad Air Pro 9,7 inch 32GB. Dept. Total 54,850 0 54,850 8,400 $5,000 Additional for Arborist, $1,500 Educational Lecture Series for Sustainability Program and $1,900 Earth Day Event Dept. Total 8,400 0 8,400 Public Works-Building Maint. 12,000 An increase of $12,000 due to the addition of three new water meters installed at 6391X South Dixie Highway Dept. Total 12,000 0 12,000 41,700 An increase by Miami Dade County in the residential refuse disposal fees compared to FY 2016-2017. 35,500 $35,000 has been added for the replacement of garbage containers and $500 for the waste can liners. 25,000 Composting was reduced by $25,000 compared to FY 2016-2017. Dept. Total 77,200 25,000 52,200 25,000 An increase in the Landscape Maintenance Contract for City's Medians 30,000 An increase of $30,000 for miscellaneous landscaping materials and repairs. 20,000 A decrease of $20,000 for island replanting compared to fiscal year 2016-2017. 7200 An additional $7,200 has been allocated for the purchase of miscellaneous materials for the maintenance and repairs of streets and parkways. Dept. Total 62,200 20,000 42,200 20,056 FY 2016-2017 budget included a GPS Tracking software for all City vehicles- The proposed budget for FY2017-2018 excludes the Police Department's vehicles. Dept. Total 0 20,056 -20,056 40,000 In Fiscal Year 2017-2018 funds are not allocated for miscellaneous repairs and imrpovements under Public Works/Engineering Division. Therefore, reducing this line item by $40,000 compared to FY 2016-2017. Dept. Total 0 40,000 -40,000 FY 2017-2018 Proposed Budget as of 7/28/2017 General Fund Increases and Decreases (+/- 5K) Finance Department Procurement Division Information Technology Division Building Department Planning Department Public Works- Solid Waste Public Works- Streets & Landscaping Public Works- Motor Pool Public Works- Engineering & Construction 9,705 A total increase in this line item of $9,705 for the maintenance of the access control video cameras,fire extinguisher recharge and maintenance/storage of body cams. 102,480 In fiscal year 2016-2017 the budget was estimated for the cost of operating seven cameras.In fiscal year 2017-2018 only five red light cameras will be operating. This resulted in a decrease in expenditure of $102,480. 49,942 The number of crossing guards has increased.An additional $49,942 has been allocated to this line item as per the executed multi-year interlocal agreement with Miami Dade County and the Miami Dade Police Department.This agreement includes the cost of additional crossing guards compared to the previous agreement. 6,705 A reduction in funds for travel and conferences. 11,880 An increase of $11,880 compared to fiscal year 2016-2017,due to eleven additional cell phones assigned to SWAT and Sergeants. 5,269 The annual maintenance of the communications system, radio batteries and chargers has been increased by $5,269. 17,260 A total increase in supplies of $17,260 due to additional purchases of gas mask canisters,less lethal ammunitions and Taser replacement programs. Dept. Total 94,056 109,185 -15,129 7,620 A decrease of $7,620 as fiscal year 2016-2017 budget included the cost of mailing program guides and postcards to households. 7,835 This line item was increased by $7,835 to cover the cost of the weekend senior meals,assuming the grant funds are not available. Dept. Total 7,835 7,620 215 131,797 A decrease in personnel services due to the outsourcing of the landscape services. 67,476 The cost to outsource the landscape services at 6 parks has resulted in an overall increase in this line item. 5,150 A decrease in repairs and maintenance materials. Dept. Total 67,476 136,947 -69,471 9,336 An additional Tennis instructor will be contracted. Dept. Total 9,336 0 9,336 General Fund Total Changes 458,380 402,608 55,772 Police Department Parks & Recreation Department Tennis Division Parks Landscape Division