“I’m comfortable with it, but just barely.”
Those were the words Town Manager Dave Bullock used more than once Monday at a Longboat Key Town Commission special budget workshop to describe a draft of his recommended 2013-14 fiscal year budget.
The town began the current fiscal year with a general fund balance of $4,464,151 and forecasts a balance of $4,097,651 when the fiscal year ends Sept. 30 — a reduction of approximately $366,500, or 8.2%, because of unanticipated revenue shortfalls stemming from 3% cost-of-living allowance (COLA) increases for town employees that went into effect earlier this year; and the use of the commission contingency to hire zoning and Comprehensive Plan consultants.
Further complicating matters, until the town’s pension actuary releases actuarial impact statements in late June that show how much the town’s pension plans will cost annually once they are frozen, Bullock doesn’t know whether to build a budget based on a $2.7 million number (the lowest number) or a higher $3.3 million number. If it’s the higher number, Bullock told commissioners, “I go from being barely comfortable, to uncomfortable.”
Bullock showed charts that reveal the town’s fund balance running out of general fund balance by 2017, if the status quo for revenues and expenditures remains.
“This year, I want to discuss a fund-balance policy that everyone is comfortable with moving forward,” said Bullock, who wants policies put in place for all of the town’s balances. Bullock currently operates with a budget that has at least 90 to 120 days of general fund balance to run the town in case of an emergency.
While Bullock said he’s fine with the commission keeping the millage rate flat for another year, Commissioner Jack Duncan suggested the commission “consider our tax strategy going forward.”
“Are we going to try to avoid a tax increase every year or forecast a tax increase later on?” asked Duncan.
Duncan suggested the town could keep the millage rate the same, but July 1 set its maximum millage rate higher than the current millage rate, to let taxpayers know that the tax rate can’t stay the same forever. The maximum millage rate is just a number the commission uses to set a maximum tax rate; the town can’t set its tax rate higher than the maximum rate once it’s established.
Other commissioners also agreed the tax rate eventually will have to increase.
Bullock maintains his budget allows the town to operate with no visible decrease in service for taxpayers.
“We must remember taxpayers are willing to pay a premium for the services we have, though,” said Vice Mayor David Brenner.
Bullock also showed the commission two provisions in its code that it currently doesn’t follow. Both measures could provide additional revenue for the town’s general fund.
The town code states the town’s utility find is obligated to generate 5% a year to the town’s general fund annually. That mandate alone could generate up to $150,000 a year of revenue to the general fund.
Town code also states the town must levy a tax of 4% for electricityservice revenues and 6% for water-service users. Based on the town code, the electricity levy could generate up to $140,000 and the water levy could generate up to $203,000 in revenue to the general fund.
“I have no problem if you don’t want to levy these, but if you don’t, I need to know so we can change the code,” Bullock said.
Bullock said it’s his intent to levy the taxes per the town code, calling the utility fund “healthy enough” to do so.
The town will get final assessed property values for town property July 1 and anticipates a 3% increase in ad valorem taxes.
Bullock will present his recommended budget to the commission Aug. 1, and the commission will adopt the budget on first and second reading in September. The 2013-14 budget begins Oct. 1.
FUND BALANCE SUMMARY
FY14 beginning balance: $4,097,651
Net reduction to FY14 revenue projections: ($557,453)
• Savings in capital expenditures $206,223
• Increase to personnel costs (not including pension) ($941,667)
• Decrease to operating costs $19,860
• Decrease to pension (using UAAL and admin. exp. only) $399,832
Projected FY14 beginning balance: $3,224,446
Target ending balance (90 Days): $3,510,000
Amount needed to balance budget while retaining sufficient fund balance: ($285,554)