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08-27-01 Changes to Proposed Operating BudgetChanges to Proposed Operating Budget After the conclusion of two budget workshops, the only definitive changes to be made to the proposal are: 1. To change the Commission member's salary back to the current rates, reducing the General Fund budget by $1,360. 2. To eliminate the $10,000 budgeted to fund next year's First Night Event. This is also a General Fund reduction. Issues remaining to be resolved are the following: 1. Health Care renewal rate increase not budgeted, $283,150 2. Pay and Classification Study implementation of $142,876 3. Discretionary capital items previously discussed, but not funded 4. Other items Issue 1 Health Care Premium Rate Increase Funding of the health care renewal rate increase of $283,150 over the proposed budget is a tremendous hit to the budget. It is important when discussing this item to understand that this may be a short-term problem that emulates an emergency. Funding options include the following: 1. Simply add the amount required to the budget, allowing the shortfall to be absorbed by existing reserves. All funds affected currently have sufficient reserves to cover what appears to be a short-term problem. This is what reserves are for. 2. Adopt a budget without funding the increased cost. This would imply that we expect to resolve the problem before the funding that was budgeted runs out. Current proposed funding would get us to mid -year if rates do go up dramatically. If we find an alternative to the AHL renewal rates, the proposed budget will probably not need an adjustment. If we do not solve the problem, we can then adjust the budget using one of the other options. 3. Make compensating cuts in the proposed budget that could include new positions, salaries, equipment or operating funds needed to provide the intended level of service originally planned. Deferring select capital items may also be done. These decisions would be made by staff in such a way as to have the least impact on the operations as proposed. 4. Shift the funding of existing capital projects from the General Fund and Utilities to the Half Cent Sales Tax. The Half Cent Sales Tax could be used to fund a larger portion of the Selva Marina Project. This would mitigate the impact of the health care cost increase in the Storm Water, General, Water and Sewer Funds. The proposed budget includes 223,500 in the Half Cent Sales Tax fund already. The Storm Water Utility Fund has 160,000 budgeted and the Water and Sewer Funds combined have a budget of $245,000 for the Selva project. Utilizing Half Cent Sales Tax fund to pay for the Selva project would free up the funds necessary for the Health care increase. 5. Some combination of the above solutions. 6. Raise revenues either by new sources or increasing existing rates. Break Down of Cost Impact. General Fund $215,998 Water & Sewer 51,338 Storm Water Utility 10,966 Other Miscellaneous Funds 4,848 Total $283,150 Issue 2 Implementation of the Pay and Classification Study Funding for the Pay and Classification Study implementation requires approximately 142,876 of additional funds. Funding for this item will be on-going which requires a revenue source into the future. Using reserves for this type of expenditure is not sound budgeting and should be avoided. In preparation of the proposed budget, this item was partially anticipated and can be fully funded for those portions affecting the General Fund. Funding options are as follows: 1. The General Fund Proposed Budget has a surplus of revenues of $184,095. The estimated cost to the General Fund is $109,722, which includes funding the Storm Water and Internal Service Fund portions since they have no available revenues to cover. 2. The remaining balance of the implementation cost is $33,153 and is located in the Water and Sewer Funds combined. This represents a very small portion of the total budget of over 8 million dollars. This addition to the budget could be handled in a number of ways such as: Simply add to the budget allowing the capital expenditures to be funded more from reserves. Future budgets will have fewer funds available for capital outlay. Make compensating cuts within the existing proposal to other operating expenses as prescribed by staff. The Utility Director would need to select those items. Shift funding of the Selva Project to the Half Cent Sales Tax fund for a portion of the Water and Sewer improvements. This option is also a solution to the Health Care issue and would be combined with that. Do not adjust the budget at this time allowing midyear savings to fund the increase. Typically, in these funds there are funded positions that remain vacant for some portion of the year that would then offset the increase projected. 3. The Pay and Classification Study could be abandoned, reduced, phased in or deferred in a number of ways. All of which defeat the purpose for which the study was done. 4. Rather than identify specific cuts within the budget, to do an arbitrary cut of the amount needed with the intention that we will find a way to get by with what is left in those accounts. This option could create other problems down the road by trying to operate with insufficient resources causing a decline in level of service. This approach is also not recommended. 5. Raise revenues either by new sources or increasing existing rates to cover the shortfalls. Pay Plan and Classification Study Implementation Break Down of Cost Impact. General Fund $101,506 Water & Sewer 33,153 Storm Water Utility 5,755 Other Miscellaneous Funds 2,461 Total $142,875 List of Discretionary Capital Projects not included in proposed budget Item 7/26/01 Price Parks & Recreation Projects New soccer field at Donner Park Howell Park Gazebo Plaza Park, Phase II Park Signs; upgrade to new design Fence, benches for new walking track Pocket Park; Mayport Rd. Tideviews floating dock Russell Park, additional parking Land Purchase per Rec. Board Bull Park restrooms Dutton; 2 additional pavilions Dutton fishing pier Dutton cabin for on-site security Skateboard Park Water/ Sewer Projects Sewer extensions to unserved areas Wastewater reuse at AB plant Other projects Church Rd. extension (50%) Town Center extension on Ocean New sidewalks/ pedestrian paths Funds for tree plantings Total Items without pricing Community Center Post Office drive onto Plaza City Hall Expansion 17,000 20,000 45,000 8,000 10,000 12,000 8,000 5.000 100,000 50,000 40,000 100,000 112,000 170,000 500,000 1,100,000 45,000 100,000 50,000 10,000 2,502,000 Changes to Proposed Budget already discussed and direction given: 1. Cut City Commissioner's salary budget increase by $1,360. This will keep it the same as the current amount. 2. Cut funding for First Night in the amount of $10,000 from the General Fund. 3. Add a 5% adjustment to retiree benefits paid out. This will increase the Pension budget by $22,000. The actuary will factor this increase into the calculation of City Contributions for next years budget. Original estimate was approximately $8,000 annually. There are sufficient revenues to cover this increase. 4. Discussed were the fact that the utility master plan had not been finalized and therefore there would be changes to the capital items in the utility budget. The Utility Director has now indicated that the original request can remain unchanged and accommodates the necessary items in the plan. 5. The list of discretionary projects was discussed and there was some indication that we may want to hold off until the Core City bids are received. To the extent these funds are used to help pay for projects already in the budget, (Selva Marina), in order to help fund the Health Care issue, the $550,000 of available funds would be reduced.