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TOWN OF PALM BEACH BUDGET MESSAGE


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Budget for Fiscal Year 2017-2018


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JULY 11, 2017


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July 11, 2017

Budget Message

Town of Palm Beach, Florida


Honorable Mayor and Town Council


I am pleased to submit this budget message, pursuant to the Town Charter, and to enable you to focus on the highlights of the proposed FY2018 budget. Details are found in the budget documents that accompany this summary.


The total proposed FY2018 town-wide budget including all funds is $209,173,610. The total proposed General Fund operating budget is $79,309,702.


The town-wide budget organized by fund type is as follows:


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Budget Message

FY18 Budget Presentation

Staff prepared the proposed budget using Zero Line Item Budgeting. This method of budgeting does not start with last year’s budget. Rather, departments are given a blank budget request form for each line item, instead of last year’s budget or actual expenditures as the starting point – hence, the label of zero – line item is applied. Departments then rebuild their budgets from the ground up, justifying each line item. Where possible, departments are asked to provide the drivers of cost. However, not providing sufficient detail for an expenditure can be an invitation for increased scrutiny of the request.


Department requests and justifications are sent to the Finance Department and Town Manager's Office (Administration) who review them in a series of meetings with staff using the justifications, rather than what was spent last year, as the point of comparison. The budget program requests are often accompanied by a program description to gauge purpose and intended output for the program. The Administration considers the requests, further discusses them with departments as necessary, and then develops a final recommended budget. You or the public never see the process and the forms used. This year we are sharing these forms with you so you can see the level of detail this work entails.


There are two sets of documents provided to the Mayor and Town Council at this junction. One encompasses the General Fund and the other document contains all other fund budgets. There is a significant amount of detail in each book, which provides the Town Council, and citizens information on what comprises the amounts for the line item budgets that are proposed. In some cases, the Departments have included a memorandum detailing some of the changes that they are proposing for their department programs.


Globally there are some points for the Town Council to be aware of as you review the detail included in the documents. This information is provided below.

Budget Message

section of the budget so that the costs can be tracked separately and highlighted for at least the next 4 years.

The increase in total defined benefit (DB) and defined contribution (DC) pension benefits of

$753,293 is due to the smoothing of the lower returns in FY15 for the pension fund and additional funding for the changes in the mortality tables. The pension amount reflects the benefit changes for the union firefighters that is in the process of being adopted and the general employees and lifeguard benefit changes that became effective May 1, 2017. The general employee and ocean rescue pension costs include the addition of the Town’s savings generated by the benefit change. The DC plan for union firefighters will be eliminated with their benefit change and the Town’s DC costs for general employees and ocean rescue have decreased with their new benefit change.

Health insurance costs increased (4.5%) for FY18 after 5 years without an increase. This will result in an increase to premiums that will be shared in the same manner as they currently are between the Town and our employees. Specific premium rates effective January 1, 2018 will be provided in September.

Contractual costs increased in the IT budget for consulting assistance, improved internet access and additional software services described in the IT budget. Landscape and building maintenance costs increased and details can be found in the Public Works account detail sheets.

Cost increases in commodities include uniform cost for the new firefighter positions, lockers for telecommunicators, patrol officer equipment and uniform items.

Capital outlay decreased due to purchases of new equipment made in FY17.

Coastal funding increased due to the planned 3% annual adjustment in anticipation of inflation over time.

The transfer to the Capital Improvement Fund increased by $129,800 over FY18. The increase in spending is for capital projects outlined in the capital improvement section of the document.

The actuarially determined transfer to the OPEB trust fund decreased by $173,000 due to favorable results in the fund.

The General Fund budget exceeded the long-term financial plan estimate by $684,170. The items included in the proposed budget that were not a part of the LTFP included the increase in fire-rescue personnel costs due to the results of successfully negotiating the firefighter union contract ($430,000), expenditures relating to POTUS and special dignitary visits ($226,980) and additional funding for Zika Prevention ($49,790). These items total

$706,770.


Fund Balance

Budget Message


The General Fund Unassigned Fund Balance as of September 30, 2016 was $21,615,082. This amount was $5,415,788 above the policy required minimum. The FY18 budget includes a transfer of $988,770 from unassigned fund balance to fund the contingency reserve and

$577,900 from the reserve for compensated absences to fund the compensated absence payouts. After the contingency transfer, the remaining balance in the unassigned fund balance will be $4,427,018.


I am proposing a transfer of $2,500,000 from the General Fund unassigned fund balance to the Retirement Fund as a supplemental Town contribution to reduce the unfunded liability. This transfer would represent the second year in a row that we were able to make an additional transfer to the Retirement Fund. The amount is included in the proposed FY18 General Fund budget.


Other Town Funds


The table on the following page is a summary of the Town’s other fund budgets. Additional information on these funds can be found in the second book labeled “Other Funds Budget Document.”

Budget Message


FY 18 Budget Summary by Fund Type, Revenues and Expenditures


Special Debt Capital Internal Trust &

General Revenue Service Projects Enterprise Service Agency Totals


Revenues

Ad Valorem Taxes

$51,293,180

$0

$0

$0

$0

$0

$0

$51,293,180

Non Ad Valorem Taxes

6,150,000

0

0

500,000

0

0

0

6,650,000

Licenses and Permits

9,947,975

0

0

0

0

0

0

9,947,975

Intergovernmental

1,185,450

0

0

800,000

100,000

0

0

2,085,450

Charges for Services

3,943,650

0

0

0

6,553,400

5,044,810

0

15,541,860

Fines and Forfeitures

1,138,800

0

0

0

0

0

0

1,138,800

Contributions

0

0

0

5,000

6,571,154

0

11,260,070

17,836,224

Interest Earnings

578,977

6,000

0

387,103

14,000

281,456

17,136,649

18,404,185

Miscellaneous

420,000

0

0

0

0

30,000

2,500

452,500

Special Assessments

0

5,080,000

710,000

258,638

0

0

0

6,048,638

Commercial Paper

0

4,180,000

0

0

0

0

0

4,180,000

Interfund Transfers

585,000

130,000

6,916,632

9,902,950

0

4,105,075

3,666,000

25,305,657

Subtotal

75,243,032

9,396,000

7,626,632

11,853,691

13,238,554

9,461,341

32,065,219

158,884,469

Appropriations from Fund Balance


4,066,670


8,759,000


15,001


27,519,928


3,237,868


6,690,674


0


50,289,141

Total Revenues

$79,309,702

$18,155,000

$7,641,633

$39,373,619

$16,476,422

$16,152,015

$32,065,219

$209,173,610


Expenditures

Salaries and Wages

$26,041,858

$0

$0

$169,540

$1,394,507

$207,095

$137,668

$27,950,668

Employee Benefits

17,643,501

0

0

65,123

661,262

5,660,604

2,079,710

26,110,200

Contractual

9,667,348

0

0

17,600

1,523,980

1,666,645

20,227,127

33,102,700

Commodities

1,958,554

0

0

6,063

453,970

6,687

300

2,425,574

Depreciation/Capital Outlay

2,460,907

18,155,000

0

37,933,615

11,491,137

2,610,984

0

72,651,643

Debt Service

0

0

7,624,846

0

0

0

0

7,624,846

Interfund Transfers

20,213,756

0

0

866,038

783,263

2,000,000

0

23,863,057

Other

1,323,778

0

16,787

315,640

168,303

4,000,000

0

5,824,508

Subtotal

79,309,702

18,155,000

7,641,633

39,373,619

16,476,422

16,152,015

22,444,805

199,553,196

Transfer to Fund Balance/Retained Earnings


0


0


0


0


0


0


9,620,414


9,620,414

Total Expenditures

$79,309,702

$18,155,000

$7,641,633

$39,373,619

$16,476,422

$16,152,015

$32,065,219

$209,173,610


Financial Ratios


General

Special Revenue

Debt Service

Capital Projects


Enterprise

Internal Service

Trust & Agency


Total

Ad Valorem Taxes as

percentage of total fund

budget

64.67%

0.00%

0.00%

0.00%

0.00%

0.00%

0.00%

24.52%

Ad Valorem Taxes per capita

(8,040 population)

$6,380

$0

$0

$0

$0

$0

$0

$6,380

Total expenditures per capita

(8,040 population)

$9,864

$2,258

$950

$4,897

$2,049

$2,009

$3,988

$26,017

Personnel as a percentage of

the total budget

32.84%

0.00%

0.00%

0.43%

8.46%

1.28%

0.43%

13.36%


Capital expenditures as

percentage of total fund

budget

3.10%

100.00%

0.00%

96.34%

69.74%

16.17%

0.00%

34.73%

Capital expenditures per

capita (8,040 population)

$306

$2,258

$0

$4,718

$1,429

$325

$0

$9,036

Budget Message

Highlights from the other funds include:


Budget Message

Tentative Millage Rate Resolution

Resolution No. 102-2017 adopting a tentative millage rate of 3.2706 is included in the backup. This rate is set slightly higher than the proposed rate of 3.2000 in case changed circumstances and/or Town Council decisions later this summer require the final millage rate to be set higher than our proposed rate. Florida law requires a first class mailing to all taxpayers if the millage rate is increased above the tentative millage rate adopted by the Town Council prior to the September public hearings. The final millage rate will be set at the public hearings in September.


Upcoming Meeting Schedule

The State mandated schedule requires that two public hearings be held in September to provide for the final adoption of the Town’s FY18 budget. The proposed public hearing meeting dates are as follows: (These dates must be finalized at the July 11, 2017 Town Council meeting)



Final Thoughts


This concludes the summary. Please see the FY2018 proposed budget document for detailed information.


I wish to acknowledge the efforts of Jane Struder, Director of Finance, Cheryl Somers, Assistant Director of Finance, Amy Wood, Accounting Supervisor, and Jay Boodheshwar, Deputy Town Manager for their efforts in compiling this document which was generated with the valuable input of each Department Director and their respective staffs.

Respectfully Submitted,


TBradford

Thomas G. Bradford Town Manager

cc: Department Directors

Jay Boodheshwar, Deputy Town Manager