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Longboat budget ready for wrangling

Longboat Key Town Manager Dave Bullock will present his budget to the Town and public at a budget workshop next Wednesday at 2 p.m.

The main issue at the first budget meeting was how to absorb increasing pension obligations. What follows is the actual budget report from Bullock along with the report on page 15.

 

BUDGET DISCUSSION

The Town’s General Fund ended fiscal year 2010-11 with a total fund balance of $5,010,000, a reduction of $357,000 from the previous year. The total General Fund fund balance at the end of 2010-11 was categorized the following ways: $154,000 was Nonspendable, $1,000,000 was Committed for future pension costs, $486,000 was Assigned, and $3,370,000 was unassigned.

Commission Contingency

The Town Commission Contingency Account began the year with $250,000. The current balance is $177,716. Resolution 2012-14 has been forwarded from the May Workshop to the June Commission Meeting for Commission review to increase funding for the pension study by $60,000. The following table summarizes the year’s activity which reduces the ending fund

 

Summary of FY 2011-12 Budget Impact

At the current time several expenditure reductions are being analyzed to offset the anticipated revenue reductions. If we cannot implement sufficient expenditure reductions without affecting citizens’ visible service levels, a net reduction in the beginning FY13 fund balance is possible. This situation is subject to change as the fiscal year progresses.

 

Fiscal Year 2012-13 Budget Discussion

General Fund

This Preliminary Budget was prepared based on an estimated 1.7% reduction in property values. This results in a reduction in ad valorem revenues of $137,000 or (1.62%) based on the current millage rate of 1.8872.

The CPI factor to be applied to homestead properties for fiscal year 2011-12 is 3.00%. This means that on properties that have the homestead exemption, and their 2012 assessed value is higher than their 2011 assessed value, the taxable value will go up by 3.0%, the maximum allowed by Statute. For those homesteaded properties where the 2012 assessed value is lower than the 2011 assessed value, their taxes would go down if the millage rate remains the same.

The non ad valorem revenues in the Preliminary Budget are estimated to be approximately $55,000 lower when compared to last year’s adopted budget.

The proposed Preliminary Budget is currently balanced taking into account an increase in the health insurance costs of up to 7%. Staff is currently exploring other types of health care plans and methods of providing health care services.

A police officer position vacancy will not be filled in FY 2012-13 resulting in savings to the General Fund of $100,000. Other personnel changes within the Town may result in an additional savings of up to $175,000.

There are no cost of living adjustments (COLA) or merit increases for employees included in this Preliminary Budget. I would like revisit employee pay and total compensation during the upcoming year.

The Preliminary Budget is essentially flat with last year and reduces General Fund operating expenditures by about $28,000 or 0.2% compared to the fiscal year 2011-12 adopted budget.

 

Preliminary Millage Discussion

Based on the preliminary valuations, the Town’s current millage rate of 1.8872 would generate $8,362,000, or $137,000 less than last year.

The recommended budget does not require the use of any of the $1,000,000 of General Fund balance reserved for pensions or any of the unreserved fund balance to offset the Town’s total pension contribution for FY 2012-13 to balance the budget. We have been able accomplish this due to higher than expected property values and expenditure reductions.

 

Building Fund

The Building Division increased its fund balance in fiscal year 2010-11 by $138,000 and began fiscal year 2011-12 with a fund balance of $568,000. Overall, permit revenues are coming in better than expected in fiscal year 2011-12.

 

Utility Fund

Public Works is in the early planning stages of replacing the waste water force main to Manatee County treatment plant. That project will be a very large capital project which may be ready for construction within three years. Once that project is better defined I will recommend we undertake a rate study for the Utility.

 

 

MAJOR BUDGET COMPONENTS

Beach Capital Project Fund

North End Structures — $6.2 million

In order to slow the rapid erosion rates on the North end of Longboat Key a number of structures need to be constructed. The Town’s objectives for this project include (1) the protection of homes, (2) uninterrupted lateral access on the North end beaches, (3) minimum environmental and shoreline impact and (4) to provide a minimum structural footprint.

The Longboat Pass Inlet Management Plan presented to the Town Commission in October 2011 evaluated various structural alternatives. In February 2012 the Town applied for a Joint Coastal Permit to the State of Florida and to the United States Army Corps of Engineers. It is expected the permit may be issued January 2013. Construction may start as early as May 2013 pending any challenges. Primary funding for this project comes from the General Obligation Bonds ($16 million) authorized by the March 2011 referendum. Other potential funding sources include the Phase III Infrastructure Surtax, Florida Department of Environmental Protection (FDEP) matching grants, and Tourist Development Tax (TDT) funds.

 

High Erosion Area Sand Placement (“Hot Spots”)  — $9.5 million

This project places sand, as determined by the latest beach surveys, in two general areas along the Town’s shoreline, (1) Greer Island to approximately Gulfside Drive and (2) Villa di Lancia condominium, 2175 Gulf of Mexico Drive, to The Colony, 1620 Gulf of Mexico Drive. Exact locations of sand placement are based on need as determined by preconstruction shoreline surveys and approved by the Town Commission. Approximately 350,000 cubic yards of sand will be placed.

Primary funding for this project comes from the General Obligation Bonds ($16 million) authorized by the March 2011 referendum. Other potential funding sources include the Phase III Infrastructure Surtax, Florida Department of Environmental Protection (FDEP) matching grants, Tourist Development Tax (TDT) funds and potential reimbursement for removal of sand within the proposed Liquefied Natural Gas (LNG) pipeline corridor from Port Dolphin, LLC.

 

Replace 3 Marked Police Cars — $108,000

Marked police vehicles are replaced every 2 years. This cycle replaces the vehicles at or near the time they achieve 100,000 miles. Actual hours on the vehicle place wear and tear closer to a vehicle with 200,000 miles. This replacement schedule helps increase reliability of our emergency vehicles and to reduce the increasing costs of maintenance on older vehicles.

Costs this year are slightly higher as Crown Victoria police cars are being phased out and we are not sure of how much equipment will be transferrable to the next model.

 

Fire Engine-Including Extrication Equipment — $630,000

The Fire Department proposes to replace the current first-out engine with a Class A pumper/ladder. The engine will be equipped for all Fire-Rescue operations including advanced life support (ALS).

The recommendation for a Class A pumper/ladder will be determined once an ISO audit has been completed.

It is anticipated the new apparatus will be equipped with new hydraulic extrication equipment designed to remove an entangled vehicle from a victim(s).

There is a cost difference between a Class A pumper and ladder truck with the ladder truck costing a significantly higher amount that a Class A pumper.

The anticipated cost for a new apparatus is between $450,000 and $650,000.

We are anticipating the sale value of the current ladder truck to be about $150,000.

 

Utility Fund

 

Subaqueous Potable Water Main Construction — $2 million

The existing water main attached to the Longboat Pass Bridge that delivers water from Manatee County is 30 years old. This project will replace the existing water main with a new subaqueous water main. The new subaqueous water main will be approximately 2,500 lineal feet in length. Engineering design has commenced with money encumbered in previous budgets. This budget request represents the construction portion ($2,000,000) of the project. The anticipated budget for the multi-year project is $2,500,000.

 

Water Meter Replacement Project — $1.5 million

The Town has approximately 2,900 water meters. More than half of the water meters are older than 10 years of age. Older meters tend to under measure the volume of water used, thereby potentially causing a loss of revenue. It is proposed to replace all meters and upgrade to newer technology. The newer technology will increase the volume accuracy, efficiency of meter reading, the availability of usage data and assist in water conservation efforts.

 

Water Storage Tank Mixers — $150,000

In order to preserve water quality (chlorine residual, etc.) in the two above ground storage tanks, mechanical mixing is needed. This budget request represents the installation of automatic mixers inside the tanks to maintain a homogenous mix and provide direct chemical addition.

 

Wastewater Collection, Subaqueous Forcemain — $1 million

Wastewater generated on Longboat is collected and sent to the Manatee County Southwest Regional Treatment Facility via a 16,000 lineal foot, 20 inch diameter ductile iron pipe. The existing pipeline is 40 years old. This multi-year project will begin this fiscal year with an engineering review, condition assessment, and preliminary design measures of the forcemain replacement. Planning level estimates of this major project are $16,000,000. More accurate costs will be established as the design progresses.

 

Slipline Gravity Sewers — $600,000

This budget item is a continuation of the ongoing slipline project to reduce inflow, chlorides, and maintain the stability of the wastewater collection system. Reduction of chloride levels is required in our wastewater contract with Manatee County. The areas of focus for the 2013 fiscal year are currently being reviewed through a system-wide study

 

Rehab of Lift Station E — $600,000

Rehab of Lift Station 9C — $350,000

 

Wastewater Collection System Evaluation — $300,000

The Town of Longboat Key has been rehabilitating various components of the wastewater collection system over the past 10 years. This budget item represents the system wide evaluation, condition assessment, and prioritization of the wastewater collection system program

 

Parks & Recreation Capital Project Fund

Recreation Center Improvements — $75,000

The Recreation Center was built in 1970 and relocated to its current site. The existing access ramp and front entrance stairs need to be repaired and reconfigured to meet ADA standards. The interior and exterior of the building needs painting. These projects will be funded with available funds in the Parks & Recreation Capital Project Fund.

 

BUDGET ANALYSIS

The following are analyses of major budget features including: Analysis of Assessed Valuations and Millage Rates, the Beach Districts A and B Debt Service Tax Millage Rates and an Operating Budget Variance Report

 

Assessed Valuations / Millage Rates

Sarasota and Manatee County Property Appraisers provide the Town with preliminary estimates of taxable values on or before June 1st of each year. Certification of the tax rolls occurs on July 1st of each year. The taxable value decreased 9-10% in fiscal years 2009 through 2011 and over 4% in fiscal year 2012. The preliminary valuations for fiscal year 2012 are showing a decrease of 1.7%.

 

G.O. Facility Improvement Bonds

For fiscal year 2012-13 General Obligation (G.O.) debt service is $285,145 as compared to $290,462 in fiscal year 2011-12. Based on the 1.7% decrease in property valuations, the G.O. bond debt service millage for fiscal year 2012-13 is 0.0557 mills compared to 0.0677 mills in fiscal year 2011-12. The decrease in millage, in spite of the drop in property values, is due to the refinancing of the debt and use of fund balance of $40,000.

 

Beach District Debt Service Taxes

The debt service millages for Special Districts A and B were not levied in fiscal years 2010-11 or 2011-12. A referendum was passed in March 2011 to issue bonds up to $16,000,000 for funding the next beach project that includes structures for the North End of the Key and sand in three locations.

Construction could begin in FY 13. If this schedule holds true, the Town could be issuing bonds in fiscal year 2012-13 and may be required to levy a debt service tax for the Beach Special Districts in fiscal year 2012-13. Amortizing the sand over five years and the structures over 20, the estimated millage for the first four years for District A would be about 0.8000 mills and the estimated millage for District B would be about 0.2000.

 

Operating Budget Variance Report

The comparison is broken down by the major categories of expenditures. Personnel costs are up in the General Fund by $147,814 or 1.31%. The operating/non-operating expenses are down by $175,421 or (6.49%) and do not include contingencies. The capital outlay budget is up $544,723 or 165.07% for fiscal year 2012-13. Most of the capital expenditures are funded by revenues other than ad valorem taxes. Overall, the expenditures for the General Fund are up $517,116 or 3.62%.

 

Explanation of Operating Budget Changes /Variance

General Fund Revenues

Ad Valorem Taxes — (-$137,334)

Assessed values are estimated at -1.7% from the previous year. This reduction is a result of this. This reduction is taxable values is the lowest we have seen since 2008.

 

Franchise Fees — (-$93,000)

Franchise fees are down mainly due to Electric Franchise fees coming in lower than previous years. This trend is likely to continue if we have another fair weather winter.

 

Miscellaneous — ($140,300)

Miscellaneous revenues are up due to the sale of the fire engine being replaced (estimated at $150,000).

 

General Fund Departmental Expenditures:

 

Town Attorney — (-$37,800)

The Town Attorney provides the Town with a letter each year estimating the amount of his legal costs for services to the Town. He anticipates that based on the Town Manager’s efforts to keep legal costs to a minimum that there will be a significant reduction next year.

 

Information Technology — (-$53,634)

The IT Office Automation Specialist is retiring at the end of this June. The near-term plan is to use staffing from a temporary type agency which will result in significant payroll savings. There were also reductions made in Computer Software and Professional Services.

 

Police — (-$131,551)

The Town Manager and Police Chief have decided to leave the unfilled police officer position vacant for the next year. The crime statistics and other factors will be reviewed to determine if the position should be filled for the following year.

 

Tennis — ($42,907)

The Tennis Center is providing more lessons and selling more merchandise. The increase in the personnel costs and cost of goods sold is made up for in increased revenues.

 

General Services — ($369,644)

The primary source of the increase in general services is from the increase in the Town’s contribution to its three pension plans

 

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