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.