Exh 9 Part 1AGENDA ITEM #9
MARCH 26, 2001
City of Atlantic Beach
Long Term Financial Plan
Preliminary Information for:
Strategic Planning and Preparation of Fiscal Year 2001/2002
AGENDA ITEM #9
MARCH 26, 2001
Table of Contents
Introduction 1
Assumptions and Conclusions 1-4
General Fund 4-6
Gas Tax Fund 6
Convention Aevelopment Tax Fund 6
Better Jacksonville''/: Cent Sales Tax 6
Water and Sewer Combined Utility 7
Storm Water Utility 7
Utility Bond Construction Fund 8
Sanitation Fund 8
Conclusion 8-9
Schedules and Graphs 10-27
AGENDA ITEM #9
MARCH 26, 2001
Introduction
Annually, the City Commission, City Managerand staff go about the routine process of adopting
a budget. With this budget come decisions regarding setting the levels of service'that we deliver
to our community. With each election,. comes a new perspective of the needs of the community
and with that, a different set of priorities.
This report will help to identify theYesources which are to be available in the up-coming years
for the purpose of providing a framework for decision making. By settinglong term financial
boundaries and having annual strategic planning sessions, the City will be doing everything it can
to assure that the strong financial position we en}oy now is preserved into the future.
This report is intended to provide you with an understanding of our current position of each of
the major funds so that you may make better decisions during strategic planning. Those
decisions will be directly incorporated into this yeaz's annual budget process beginning in a few
months. As decisions are made and implemented, this report will continually be revised.
The following schedules and graphs should help management understand the available resources
for each fund and the relationships between them. The two types of funds described are the
general government and enterprise funds or utilities. A number of small grant funds and trust
funds aze not included in this report.
The version of the report to follow is an interim report for your review. If you have a need for
additional information or would like to see it presented in a different format, please forwazd your
comments to the City Manager and we will implement changes for the next version.
Assumptions and Conclusions
In the preparation of this report, l have made certain assumptions and conclusions with respect to
conditions that may occur in the future. While I believe these assumptions are reasonable for the
purpose of the report, they aze dependant on future events, and actual conditions may differ from
those assumed.
In addition, I have used and relied upon certain information provided by others. I believe these
sources to be reliable, but have not independently verified the accuracy of the information.
This report is a combination of assumptions, known variables and projections and as reality
occurs, the projections will change. For this reason the report will be an on-going,. constantly
changing effort with which we will use as a guide in the annual budget process.
AGENDA ITEM #9
MARCH 26, 2001
Revenues: In general, the revenue projections include no new revenue sources. All revenue
increases aze based on existing sources with a growth factor determined by the
history of that particular source. The only revenues with a projected increase in
rates aze the Water and Sewer Utilities. Interest earnings are based on 5% return
on the average projected cash balance.
Expenditures:
The expenditures are broken down into the five major budgeted categories. These
are Personal Services which includes Salary, Wages and Benefits, Operating,
Capital Outlay, Debt Service and Transfers-Out.. The basic assumptions for these
are as follows:
Salary and Wages are projected at a 3% increase per year. The basis is a
conservative estimate of 4% annual wage increase off=set by turnover and vacant
positions. In a few cases, there aze exceptions where an additionaLamount was
programmed in due to increasing demands on the department to provide the
existing level of service. Overtime and special pays aze projected from current
levels with the same 3% increase assumption as used with salary and wage
increases.
Benefits are projected with a direct relationship to salary and wages.
F.LC.A. is .0765 of Salary and Wages
Health Benefits aze projected to increase annually by 5%. The City's
.current provider is no longer going to provide service after October 2001
and therefore there may be a significant change in this item.
Pension Benefit cost is projected at 11.24% for General Employees and
11% for Police. These aze based on the most recent actuazial report.
Operating Expenditures are projected using a conservative 3% rate of increase.
As decisions to change levels of service aze made over the yeazs, those related line
items will get increasesor decreases as needed. Internal service charges aze a
major portion of operating expenditures and aze projected to increase at 4%. The
primary reason for this is that the internal services include charges for Finance,
Human Resources and the City Manager as well as the administrative expenses
for all the utility funds. The expenses related to these azeas aze projected to
increase slightly faster than the rest of the operating expenses due to the increase
2
AGENDA ITEM #9
MARCH 26, 2001
in costs related to information technology. This includes additional softwaze,
hardware, training and related maintenance: Although technology:. improvements
will help us do our jobs better and allow our customers greater access to City
activities and information, those improvements. will drive up the cost of doing
business. The extra percent gives an allowance for improving the service
delivery.
Capital Outlay includes purchases of land, buildings, infrastructure
improvements, equipment and vehicles. The acquisition of land or buildings is
rare. Most expenditures include only the routine items such as vehicle and '
equipment replacement. Most equipment with an estimated replacement value of
over $10,000 was scheduled for replacement. The City's fleet was analyzed by
our contract maintenance chief and the report was then altered to reflect keeping
some of the fleet longer than industry averages would suggest.
The major capital outlay for non-utility projects is projected as a transfer out to the
Governmental Capital Projects Fund. For purposes of a long term projection for
capital outlay which is sporadic and unpredictable, I have. included an annual
appropriation of about $200,000 from General Fund resources. Recent
expenditures of this type have included improvements to or the acquisition of
parks.
Additionally, the City will benefit from the new Better Jacksonville %2 Cent Sales
Tax of about $500,000 per year. This could be viewed as an addition to the
$200,000 from the General Fund or displace those funds accordingly. Also
contributing to the resources available for governmental projects is the
Convention Development Tax proceeds of about $60,000 per year.
The schedules that follow reflect the transfers from the General Fund and the
Convention Development Tax Fund to the Capital Improvement Fund but do not
reflect the additional '/s Cent Sales Tax which will be budgeted separately in the
up-coming budget process.
The major portion of capital outlay in the utilities is based on engineer's reports.
The Storm Water Master Plan, Water System Master Plan, Sewer Master Plan and
the recent estimates on the Core City project aze all included. The Utility Bond
Construction Fund is scheduled to be dissolved after FY-2003 when the Core City
project is complete. Also included in the utility capital outlay are the routine
equipment and vehicle replacements.
Debt Service is a projection of existing debt obligations. There are no plans to
AGENDA 1TCM tt9
MARCFI 26, 2001
issue any new debt at .this time. Both the General and Gas Tax Funds do not
reflect debt and as such there is no expense for debt payment. The debt is shown
in the Governmental Debt Service Fund which is funded by transfers from the
General and Gas Tax Funds based on their pro-rata share. The Debt for the
Utilities is allocated between the Water, Sewer and Storm Water Utilities based
on original cost estimates. After completion of the projects, this allocation will be
re-evaluated and adjustments made. This may shift the long term burden between
funds, however the total debt service will remain constant over the projection
period.
Transfers reveal the relationship between the various funds, (See Page 27).
Projected are the annual transfers from the Water, Sewer and Sanitation utilities to
the General Fund reflecting the return on investment. Also programmed are the
transfers from the General Fund, Gas Tax and Convention Development Tax
Funds for their restricted purposes which are capital improvements, promotional
and debt service.
Not shown aze transfers between the Water and Sewer Utilities because they aze
considered a combined utility for financial statement purposes. For each to have
positive cash flow in every year of the projection, there would need to be some
cross-subsidies. This report does not reflect those transfers. Also'showsis the
recent decision to fund storm water maintenance in the Storm Water Utility Fund
by a subsidized transfer from the General Fund. In order to eliminate the Storm
Water Utility subsidy, there would need to be a dramatic fee increase. This
increase is not projected.
Cash Balances
Cash balances and the changes to them aze the results of the beginning cash
balances increased by the revenue projections and decreased by the expense
projection. On a fund by firnd basis, an effort was made to preserve the strong
cash position we currently enjoy by spreading out the lazge capital. requirements to
match available funding.
General Fund.- (See Pages 10-14 j
The General Fund began FY-2001 with over four million in reserves. This cash
balance is projected to remain strong over the projection period, far exceeding the
25% operafing reserve requirement.
AGENDA ITEM #9
MARCH 26, 2001
The-General Fund revenues aze basically projected using an average change over
the last four years. Where there was no identifiable trend, projections were
conservatively low. Property Tax revenue was projected assuming that the City
will continue to experience the annual increase in tax base while keeping the
millage the same over the projection period.
At this time, there are no plans to enhance revenues with added charges for
services, taxes or rate increases in the General Fund.
Keep in mind that each year there are some general government programs which
benefit from grant revenues. These projections do not consider grant revenue as a
source to be depended on. The frequency and amounts aze not predictable with a
degree of certainty and therefore not included in this. report.
During the budget process for Fiscal Yeaz 2001, seven and a half new positions
were added to the General Fund budget. These positions were mostly for either
facility maintenance or grounds maintenance. These positions have been recently
filled and are projected into the future at full cost. With the exception of one new
maintenance position and one administrative position, there aze no other new
employees projected into the schedules.
.City Administration includes some, additional funding for record processing and
,retention in FY-2002 and 2003.. As part of the information technology, scanning,
indexing and storage of City records needs to be addressed.
The Plannine and Buildine departments aze projected into the future with the
basic assumptions and no abnormal expenses.
Public Saferi is projected with the basic assumptions for payroll and operating
expenses with the exception of the addition of an administrative staff person
added in FY-2004. There is funding for the replacement of three patrol cars per
yeaz as well as a periodic replacement of a specialty vehicle. Fire protection
services provided for by the City of Jacksonville aze programmed to increase by
3% according to the contract.
Pazks and Recreation is projected forward with all the additional staff added in
FY-2001 and no others, This is an azea that with the addition of so many new
facilities may need adjustment in the near future. The current plan is to provide
the new services with the current number of employees and amount of operating
expenses. There aze a few new vehicles added into the capital outlay schedule in
the next few yeazs to be used in maintenance.
General Government This division includes some operating expenses for
AGENDA ITEM #9
MARCH 26, 2001
insurance and building maintenance but the majority of the expenditures is
transfers to other funds. The transfer to debt service of $148,000 annually will
end in FY-2006. There is a $200,000 annual transfer to the governmental capital
projects fund for discretionary spending. Beginning in FY-2002, there are
substantial transfers of $600;000 and subsequently approximately'$400,000
thereafter to the Storm Water Utility fund. These transfers reflectlthe cost of
maintaining the storm water system which were previously accounted for in the
Streets Division of the General Fund. In FY-2002, the City will need to purchase a
vacuum jet truck which accounts for $200,000 of the FY-2002 transfer. This
division also accounts for the transfer to the Pension Fund for administrative
expenses.
Gas Tax Fund - (See Pages 15-16 )
Gas Tax revenues aze restricted for streets and roads and are projected to increase
by 3% per year. All available revenues have been programmed for existing debt
service, micro-resurfacing of roads and transfers to the Storm Water Utility to
assist in funding some drainage projects in the Royal Palms area. The lazge cash
balance existing at the beginning of FY-2001 includes $1,000,000'.. which was
designated for the Core City Project. These funds will roll forward until spent for
that purpose.
Convention Development Tax Fund - (See Page 17 )
Convention Development Tax proceeds are shown as an annual transfer to the
Governmental Capital Project Fund. The annual proceeds of $60,000 is restricted
for. capital improvements or promotional activities and is expected to grow by
only about 1 % per year. Recent uses of these funds include Town Center
Improvements and partial funding for Bull Pazk.
Better Jacksonville'/z Cent Sales Tax - (No Schedules )
It is estimated that the City will benefit from the. Better Jacksonville % cent
discretionary sales tax of approximately $500,000 per year. These funds can be
used for capital improvements or to serve debt for new capital improvements of a
governmental nature. No schedules were prepazed showing these funds as there is
no budget for them. These funds may be seen as available in addition to the
$200,000 annual contribution from the General Fund or they may displace those
AGENDA ITEM #9
MARCH 26, 2001
funds freeing them up for other things. Up-coming strategic planning sessions
may give direction as to the disposition of these fiords.
Water and Sewer Combined Utility - (See Pages 18-21 )
Water and Sewer charges aze based on a history of four years. The trend over that
time is relatively flat. Added to this are two subsequent rate increases in FY-2001
and FY-2002 of 8% each. Increases in projected years forward aze minimal and
reflect a C.P.I. adjustment policy which has yet to be approved. The projection
reflects a 3% growth with a 1 % C.P.I.. for. a total of 4% per yeaz.
In FY-2003 the City plans to restructure the current rates to work towards a rate
that will eliminate the 3,000 gallon minimum charge. This rate. structure will
affect some groups more than others, but the overall impact should be neutral As
a separate component, a C:P.I. index rate increase will be proposed as mentioned
above.
The rates discussed above along with the various other revenues of the utility are
projected to fund approximately $1,000,000 in annual capital outlay. Due to the
nature of spending on capital projects, this amount will fluctuate from year to
year. hi actuality, one year may incur double the amount and the next almost
none. This analysis simply attempts to smooth out the expenditures to match the
available resources.
The expenditures for the Water and Sewer Utilities are projected using the basic
assumptions for personal services, operating expenses and debt service. The
capital outlay for equipment and vehicle replacement is routine. The
infrastructure improvements aze forecasted according to the Water and Sewer
Master plans recently completed. Some of the master plan objectives have been
deferred pending future availability of funds but the majority are in place.
Storm Water Utility - (See Pages 22-23 )
When the Storm Water Utility was created, a rate of $3.00 per E.R.U. was
adopted. Today, this rate only covers the debt service on the Core City Project.
To capture full cost of providing storm drainage, the maintenance and capital
projects have to be funded from other sources until a rate adjustment occurs. The
long term projection assumes no change in rates and a continued subsidy from the
General Fund for maintenance and a continued subsidy from the Gas Tax fund for
drainage improvements. A Storm Water Utility rate increase would help the
burden on the General Fund or the Gas Tax fund where those funds would
AGENDA ITEM #9
MARCH 26, 2001
otherwise be spent on resurfacing projects. The drainage project begun in the
Royal Palms area accounts for the capital outlay and if deferred or scaled back
would also provide relief. Without the benefit of strategic priorities at this time,
the funding of this project is presented.
Utility Bond Construction Fund - (See Page 24 )
This fund accounts for the remaining balance of bond proceeds received
approximately five years ago. The revenues from that time aze simply interest on
the cash balance limited by an investment contract as to avoid arbitrage rebate.
This fund has been earning 5.75 % since inception. The investment contract
expires this yeaz and I expect a lowering of investment returns. These funds will
be invested in the State Board Administration until spent. According to the Public
Works Director, this project should be completed. before the end of FY-2003.
Sanitation Fund - (See Pages 25-26 )
The Sanitation Utility Fund revenues are projected without any rate adjustments
and aze sufficient to cover the expenses of providing the service for the near
future. The recent bid awazd to B.F.I. for collection included a reduction in
service by going to one day collection of yazd waste from two. The projection at
current rates with some growth shows an annual surplus being generated of about
$50,000. This surplus will be eroded over time as the annual increase in the cost
of collection grows over time. The projection shows a need to adjust rates in the
future, but no immediate changes aze necessary at this time.
Conclusion: The strongest measure of the long term financial position of the City is the
reliability of the revenue stream and cash balance. The City's revenue stream is
projected out as steady, reliable and growing. This trend appeazs to be sufficient
to sustain a moderate increase in expenses going into the future.
In regazds to the cash position of the General Fund and other related governmental
funds, the cash position is expected to stay very strong. Affecting this cash
position is the transfer from the General Fund to the Storm Water'Utility Fund for
storm drainage maintenance and the transfer from the Gas Tax Fund for Royal
Palms drainage improvements. As the Core City project is complete, the demands
for increased maintenance will put a strain on these existing resources.
AGENDA ITEM #9
MARCH 26, 200t
The cash position of the individual utilities fluctuates from yeaz to yeaz as the
programmed capital expenditures occur. The capital projects were scheduled to
assure that the cash balance in total. remains relatively constant over time. This
assumes that there are future rate increases relative to an annual C!.P.I. index
which aze not yet approved for the Water and Sewer utilities. The water utility
will be supporting the sewer utility in order to fund the $1,000,000 in annual
capital improvements projected and the storm water utility will have to be heavily
subsidized by the Gas Tax and General Funds. Of course additional rate increases
in any of the three utilities would help.
The Sanitation Fund continues to provide the General Fund with an annual
transfer of $200,000 and should be financially strong over the projection period.
The rate increase that was expected when the City rebid services was off-set by
reducing yard trash service to one day per week. This reduction of service had
little impact on the community.
Overall, at present, it appears as though the City will continue to be financially
strong as long as the decisions made. are made within the funding boundaries
highlighted in this report or are funded from new sources not yet identified.
City of Atlantic Beach
Long Term Financial Plan Projection Summary
General Fund
Actual Actual Actual Budget Proj. Proj. Proj. Proj. Proj. Proj. Proj. Proj. Proj.
FY-98 FY-99 FYAO FY-01 FY-02 FY-03 FY-04 FY-OS FY-O6 FY-O7 - FY-08 FY-09. FY-10
Cash Balance Forroard 2,925,177 3,574,330 4,009,332 4,302 327 4,273 134 3 963 476 3 779 383 3 610,036 3 856,100 3 636,399 4,062,681 4,391,177 4,826,628
Revenues
Taxes 2,636,885 2,867,974 3,040,813 3,193,267 3,304,885 3,422,147 3,545.261 3,674,450 3,809,959 3,952,049 4,100,999 4,257,105 4,420,683
Licenses and Permits 198,261 - 215,920 231,357 215,023 219,931 225,086 230,516 236,251 242,326 248,782 255,664 263,027 270,933
Intergovernmental Revenues 1,811,267 1,796,522 1,895,967 1,976,291 2,037,005 2,103,500 2,176,014 2,254 806 2,340,159 2,432,376 2,531,788 2,638,749 2,753,638
Charges for Services 106,836 106,037 107,153 ~ 114,721 115,717 116,743 117,800 118,889 120,011 121,166 122,354 123,578 124,837
Fines and Forteitures 83,076 121,742 204,818 113,716 118,025 122,503 127,159 131,998 137,028 142,257 147,692 153,342 159,216
Miscellaneous revenues 288,790 .249,019 348722 220,500 226,100 234,004 242,224 250,773 259,664 268,911 278,527 288,528 298,929
Interfund Transfers 645.192 600 000 624,740 600,000 618,000 636 540 655 636 675 305 695,564 716,431 737,924 760,062 782,864
Total Revenues ~ 5,770,307 5,957,214 6,453,570 6,433,518 6,639,663 6,860,524 7,094,610 7,342,473 7,604,711 7,881,971 8,174,949 8,484,392 8,811,101
Other Financing Sources 38,082 85154 -
Total Resources 8,733,566 9,616,698 10,462,902 10 735,845 10,912,797 10,844,001 10,873,993 11,152 509 11,460,811 11 718,370 12,237,630 12 875 569 13 637 t28
Expenditures by Department
Governing Botly 31270 23,036 22,635 46,252 46,539 46,834 47,139 47,A52 47,775 48,107 48,450 48,803 49,166
~ City Adminislration 216,981 221,738 220,134 255,400 329,555 319,428 276,531 285,470 294,709 304,256 374,124 324,323 334,865
Planning and Zoning 85,356 92,093 94,878 102,521 103,359 106,658 112,564 113,582 177,216 720,970 124,847 128,852 132,989
Building 129,791 132,807 767,145 281,517 267,855 276,095 284,602 293,383 302,448 317,808 327,470 351,447 367,749
Puhlic Safety 3,148,050 3,239,597 3,293,226 3389,069 3,507,231 3,758,159 3,765,924„ 3,888,478 4,008,218 4,137,275 4,278,764 4,389,827 4,520,587
Public Works-Streets ~ 604,119 804,526 1,011,728 685,880 634,433 689,066 660.338 701,277 782,888 765,277 748;264 772,071 856,659
Parks and Recreation 245,069 308,858 431,948 996,149 787,727 800,507 825,284 850,854 902,244 935,482 965,594 961,610 991,562
General Government 698,600 784,711 729,569 705,983 1,252,628 1,067,871 1,097,577 7,115,978 1,168,913 1,038,581 1,044,939 7,072,008 1,099,807
Total Expenditures 5,159,236 5,607,366 5,971,263 6,462,711 6,929 321 7,064 618 7 063 957 7,296 410 7 624 412 7,655,689 7,646,452 8,048,941 B 347 383
Revenues Less Expenditures 611,071 349,848 482,307 -29,193 -269,658 -204,094 30,653 46,064 -19,701 226,282 328,496 435,450 463,718
Other Financing Uses 189 312
Cash Reserves 3574,330 4009332 4,302327 42737134 3983,476 3779,383 3819036 3856100 $14$6,399-.. _4,062,681 -.4,391,177 4,826;628 --5290345-
Total Exp. & Reserves 8,73$,666 9,616,696 70,462,902 10,735,845 10,912,797 10,644,001 10,873 993 11,152 509 11,460 817 11,718 370 12 237 630 12 875,569 13 637 728
Resource Alloca[lon - ~ ~ 2
Personal Services 3,195,216 3,076,987 2,860,672 3,231,809 3,325,508 3,448,026 3,574,439 3,683,476 3,796,028 3,912,214 4,032,156 4,155,983 4,283,825 x a
Operating 1,336,948 7,727,808 2,425,778 2,383,606 2,487,099 2,565.487 2,593 264 2,675,166 2,759,667 2,846,873 2,936,873 3,029,756 3,125,616 ~
Capital Outlay
163,350
317,868
273,522
662,127
135,000-
262,380
92,288
178,223
233,788
192,692
156,725
125,300
782,406 ~
-3
~iy
'
Transfers Out 463 722 490 709 411 951 185,189 981,713 788.725 803,946 879,545 835,530 703,917 720 698 737 903 755 535 ~,
c „
~ 7k
..
Total Expenditures 5,159 236 5,607 366 5 971 263 6,462 711 6,929,321 7 066,618 7 063 957 7,296 410 7 624 412 7 655,689 7 646 452 B 048 941 8 347 363 e
AGENDA ITEM #9
MARCH 26, 2001
City of Atlantic Beach
Generale Fund
Total Revenues and Expenditures
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