2012-27960 Reso RESOLUTION NO.t 2012 -27960
A RESOLUTION OF THE MAYOR AND CITY COMMISSION
OF THE CITY OF MIAMI BEACH, FLORIDA, SETTING THE
PROPOSED MILLAGE RATES FOR FISCAL YEAR (FY) ;
2012/13, THE CALCULATED "ROLLED- BACK" RATE, AND
THE DATE, TIME, AND PLACE OF THE FIRST PUBLIC
HEARING; FURTHER AUTHORIZING THE CITY MANAGER
TO TRANSMIT THIS INFORMATION TO THE MIAMI -DADE
COUNTY PROPERTY APPRAISER IN THE FORM
REQUIRED BY SECTION 200.065, FLORIDA STATUTES
WHEREAS, Section 200.065, Florida Statutes, has specified the method by which
municipalities may fix the millage rate and adopt an annual budget; and
WHEREAS, development of the FY 2012/13 budget began early in the year and has
included discussions with the Commission that included 'a review of priorities, economic
f projections and their impacts on the budget, preliminary projected revenues and
expenditures; and .
WHEREAS, over the last several years, the City of Miami Beach has adopted
budgets that provided tax and fee relief while at the same time providing improved services
that address needs and priorities identified by the community and providing structural
changes that enhanced capital funding and reserve; and
WHEREAS, maintaining and enhancing the City's' priorities have become
increasingly more challenging in the last five years: first through property tax reform where
tax rates were dramatically reduced; and subsequently with the decline in property as well
as increasing pension costs; and
WHEREAS, the July 1; 2012 Certification of Taxable Value from the Miami -Dade
County Property Appraiser reflects a 5 percent increase in Citywide property tax values
from the July 1, 201.1 tax roll. certification, a.5.4 percent increase in the City Center
Redevelopment area (RDA), and a 4.9 percent increase in values outside the City Center
RDA, which impacts the City's General Fund revenues; and
WHEREAS, in the last four years, the General Fund has absorbed almost $42
million in reductions (and more than $48 million and 269 positions across all funds) in a
General Fund budget that is $244.3 million in FY 2011/12, an almost 17 percent reduction;
and i
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WHEREAS, a total of approximately $15 million in employee "give- backs" were
achieved between FY 2009/10 and FY 2010/11 and $20 million through FY 2011112,
which, along with more than $48 million in efficiencies and reductions, represents more
than $69 million in combined "givebacks" and reductions over 5 years; and
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3) The first public hearing on the proposed millage rate and the tentative budget for FY
2012/13 shall be held on Wednesday, September 12, 2012 at 5:01 P.M., in the City
Commission' Chambers, City Hall, 1700 Convention Center Drive, Miami Beach,
Florida.
PASSED and ADOPTED, this 18th day of July 2012.
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ATTEST: R
I
CM 'CLERK
�P�'' C�
.INCORP ORATED:
APPROVED AS TO
"FORM & LANGUAGE
&FOR EXECUTION
om�') f. Date
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COMMISSION ITEM SUMMARY
Condensed Title:
RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA SETTING 1)
HE PROPOSED OPERATING MILLAGE RATE; 2) THE REQUIRED DEBT SERVICE MILLAGE RATE; 3) THE
C ALCULATED "ROLLED- BACK" RATE; AND, 4) THE DATE, TIME, AND PLACE OF THE FIRST PUBLIC HEARING
O CONSIDER THE MILLAGE RATES AND BUDGETS FOR FISCAL YEAR (FY) 2012/13; FURTHER AUTHORIZING
HE CITY MANAGER TO TRANSMIT THIS INFORMATION TO THE MIAMI -DADE COUNTY PROPERTY
1 0 , PPRAISER IN THE FORM REQUIRED BY SECTION 200.065, FLORIDA STATUTES
Key Intended Outcome Supported:
Ensure expenditure trends are sustainable over the long term; Control costs of payroll including salary and fringes;
Minimize taxes; Improve the City's overall financial health and maintain overall bond ratin
Supporting Data (Surveys, Environmental Scan, etc.):
Over the last several years, the City of Miami Beach has adopted budgets that provided tax and fee relief while the
providing improved services that address needs and priorities identified by the community and enhancing capital
funding and reserves. However, these objectives became increasingly challenging in the last five years: first
through property tax reform where tax rates were dramatically reduced; and subsequently with the decline in
property values as well as increasing pension costs. In the last four years, the General Fund has absorbed more
than $42 million in reductions (and more than $48 million and 269 positions across all funds) in a General Fund
budget that is $244.3 million in FY 2011/12, almost 17 percent. Further, a total of approximately $20 million in
employee "give- backs" were achieved between FY 2009/10 and FY 2011/12. Along with efficiencies and reductions,
this represents more than $68 million in combined "aivebacks" and reductions over 5 years.
In FY 2010/11 the city's approach to addressing the then deficit of $32 million included a distribution of the shortfall
between taxpayers and employees. Taxpayers had their tax rate increased from 5.6555 to 6.2155, an increase of
0.56 mills. The goal of the Commission has been to bring them back to that level as property values increase over
time. It should be remembered that between FY 2009/10 and FY 2010/11 values declined by $2.6 billion driving the
need for an increase in the millage. FY 2012/13 values are still short of FY2009/10 values by $1.6 billion. As values
approach FY 2009/10 values, through further increases in the future, this will provide the opportunity for further
reductions in the millage. In FY2011 /12 the City took its first step in that direction with a reduction in the millage rate
of 0.05 mills. The proposed millage rate for FY2012/13 reduces the operating millage by an additional 0.0533 mills
and a total reduction of 0.0849 mills including the'reduction in debt service millage for a total'of 0.1033 mills
between FY 2010/11 and the proposed FY 2012/13 millage. Over two years, this reduction represents 17% of the
goal to get back to a millage rate of 5.6555:
On the employee side, the costs across all employee groups have increased due to cost of living adjustments,
health cost increases and continuing increase in pension costs, driving the need for further employee givebacks.
These givebacks will similarly be discussed and evaluated over the summer.
Issue:
Shall the Mayor and City Commission adopt the resolution?
Item Summa /Recommendation:
The total proposed operating millage is 6.1122 mills, including a general operating millage rate of 6.0039 and a
Capital Renewal and Replacement millage of 0.1083. The proposed voted debt service millage rate is reduced from
0.2884 to 0.2568.
Advisory Board Recommendation:
C July 9th, 2012 .
Financial Information:
Source of Funds: Amount Account ,.
OBPI otal
Financial Impact Summary The July 1, 2012 Certification of Taxable Value from the Miami -Dade County
Property Appraiser reflects -a 5 percent increase in Citywide property tax values from the July 1, 2011 tax roll
certification. Given that the City Center RDA had a 5.4 percent increase, the increase outside the City Center RDA,
which impacts the City's General Fund.revenues, was 4.9 percent. The proposed millage reduces this increased
revenue by app roximately $1 million.
City Clerk's Office Legislative Tracking:
Sign-Offs:
De artment Director , Akdistg City Manager ity Manager
AGENDA ITEM R'7
�� DATE
� A BEACH
MI MI
City of Miami Beach, 1700 Convention Center Drive, Miami Beach Florida 33139, www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Mayor Matti Herrera Bower and Members of the City Commission
FROM: Kathie G Brooks, Interim City Manager
DATE; July 18, 2012
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION.OF THE CITY OF
MIAMI BEACH, FLORIDA SETTING 1) THE PROPOSED OPERATING MILLAGE
RATE; 2) THE REQUIRED DEBT SERVICE MILLAGE RATE; 3) THE CALCULATED
"ROLLED- BACK" RATE; AND, 4) THE DATE, TIME, AND PLACE OF THE FIRST
PUBLIC HEARING TO CONSIDER THE MILLAGE RATES AND BUDGETS FOR
FISCAL YEAR (FY) 2012/13; FURTHER AUTHORIZING THE CITY MANAGER TO
TRANSMIT THIS INFORMATION TO THE MIAMI -DADE COUNTY PROPERTY
APPRAISER IN THE FORM REQUIRED BY SECTION 200.065, FLORIDA
STATUTES..
ADMINISTRATION RECOMMENDATION
The Administration recommends that the Mayor and City Commission adopt 'the attached
resolution which authorizes the City Manager to transmit the following information.to the Miami-
Dade County Property, Appraiser:
1) Proposed Millage Rates for FY 2012/13:
General Operating 6.0039 mills
Capital Renewal & Replacement 0.1083 mills
Sub -Total Operating Millage 6.1122 mills (6.1655 last year, .0533 decrease)
Voted Debt Service 0.2568 mills (0.2884 last year, .0316 decrease)
Total 6.3690 mills (6.4539 last year, .0849 decrease)
2) "Rolled- Back" Rate (Truth in Millage) 5.6184 mills
3) The first public hearing to consider the proposed millage rates and tentative budgets for FY
2012/13 shall be Wednesday September 12, 2012 at 5:01 p.m., in the City Commission
Chambers, City Hall, 1700 Convention Center Drive, Miami Beach, Florida
The "Rolled- Back" millage rate for FY 2012/13 is the millage rate required to produce the same
level of property tax revenues in the General fund in FY 2012/13 as anticipated to be received
in FY 2011/12. It is important to note, that the January 1, 2011 tax roll Citywide declined by $1.2
billion (5.6 %) between the July 1, 2011 valuation and the July 1, 2012 valuation due to appeals,
adjustments, etc, which is part of the reason the FY 2012/13 "roll -back rate" is dramatically lower
than the FY 2011/12 current millage rate and lower than it would be if the rollback rate was only
adjusted for the increase in revenues generated by higher property values. The area outside of
City Center RDA, which impacts General Fund revenues, declined in value by almost $1 billion
during the same period of time.
FY 2011/12 Proposed Millage Rate
July 13, 2011
Page 2
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SUMMARY
In FY 2010/11 the city's approach to addressing the then deficit of $32 million included a
distribution of the shortfall between taxpayers and employees. Taxpayers had their tax rate
increased from 5.6555 to 6.2155, an increase of 0.56 mills. The goal of the Commission has
been to bring them back to that level as property values increase over time. It should be
remembered that between FY 2009/10 and FY 2010/11 values declined .by $2.6 billion driving
the need for an increase in the millage. FY 2012/13 values are still short of FY 2009/10 values
by $1.6 billion. As values approach FY 2009/10 values, through further increases in the future,
this will provide the opportunity for further reductions in the millage.
In FY 2011/12 the City took its first step in that direction with a reduction in the millage rate of
0.05 mills. The proposed millage rate for FY 2012/13 reduces the operating millage by an
additional 0.0533 mills and a total reduction of 0.0849 mills including the in debt
service millage for a total of 0.1 mills between FY 2010/11 and the proposed FY 2012/13
millage. Over two years, this reduction represents 17% of the goal to get back to a millage rate
of 5.6555.
On the employee side, givebacks for general employees have continued, however wage
concessions by the International Association of Firefighters (IAFF) and the Fraternal Order of
Police (FOP) have expired. Further, the costs across all employee groups have increased due to
cost of living adjustments, health cost increases and continuing increases in pension costs,
driving the need for further employee givebacks. These givebacks will similarly be discussed
and evaluated over the summer.
The Administration is recommending a total combined millage rate for the City of Miami Beach
of 6.3690. The total proposed operating millage declines to 6.1122 mills, including a general
operating millage rate of 6.0039 and a General Fund Capital Renewal and Replacement millage
of 0.1083. The proposed voted debt service millage rate is adjusted from 0.2884 to 0.2568, a
decrease of 0.0316 mills.
It is important to remember that in prior years, the City of Miami Beach significantly reduced tax
rates as property values increased. Between FY 1999/00 and FY 2009/10, total combined City
of Miami Beach property tax rates declined approximately 2.8 mills. In FY 2007/08 alone, the
millage rate declined by approximately 1.8 mills, with annual savings to ; the average
homesteaded property of over $400. Further, despite an adjustment of 0.56 mills in the
operating tax rate in FY 2010/11, City of Miami Beach proposed combined millage rates today
remain more than 2.3 mills lower than in FY 1999/00 (25 percent), and approximately 1.3 mills
lower than 2007/08 when property values were above today's values.
The budget development process is still underway, and the City's Proposed Work Plan and
Budget will be released later this summer. However, at this point in time, the, gap between
current service level revenues and expenditures is estimated at $4.2 million primarily due to
previously bargained salary increases for union positions and continued increases in health and
pension costs, offset by increased revenues. It is also important to point out that, subject to
Commission approval in September, the Current Service Level (CSL) (i.e. the cost of providing
the same level of service as in the prior fiscal year — CSL expenditures) budget will need to be
increased by approximately $200,000 to incorporate the impact of adjustments to the living wage
that will be presented to the Commission at that time, as well as the maintenance impacts for
capital projects coming on line by 2012/13.
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FY 2011/12 Proposed Millage Rate
July 13, 2011
"Page 3
Through refinements to revenue projections that typically occur over the summer (estimated at
$1 million), potential efficiencies at levels similar to past years (estimated at $0.6 million), and
use of approximately $4 million in projected increases in Resort Tax revenues, it is anticipated
that the gap could be replaced by a surplus of approximately $1.2 million, which could be used
to reduce the millage. Every million results in a reduction of 0.533 mills, which together with the
0.316 mills decline in debt service results in a total decline of 0.816 mills.
However, at the July 9, 2012 Finance and, Citywide Projects Committee ( FCWPC) meeting, the
Committee supported the transfer of approximately $1.4 million to the City's Pay -As- You -Go
fund to support ongoing and previously unfunded capital projects but at the same time provided
direction that the millage should be reduced. This reduction of 0.8 mills brings the gap backup
to $1.4 million,
This additional shortfall as well as any desired service enhancements would need to be
addressed through additional efficiencies, employee givebacks or service reductions.
POTENTIAL ADDITIONAL REDUCTIONS TO FURTHER REDUCE MILLAGE OR FUND
ENHANCEMENTS
At the July 9th FCWPC meeting, the committee gave direction to further explore opportunities to
further reduce the millage rate, as well as offset increased funding for enhancements. As a
result, efficiencies, employee givebacks and potential service reductions will be considered prior
to final budget adoption in September. At the July 9th FCWPC meeting several residents spoke
in favor of keeping the millage rate at the current level. These residents expressed the opinion
that they would rather see no further service reductions or delays in capital projects, even if it
meant paying higher taxes.
Employee Givebacks
One of the categories of cost under consideration is employee givebacks. The timing for this is
appropriate given that all of the union contracts except AFSCME are set to expire on September
30, 2012 ( AFSCME expires April 30, 2013). The process of negotiating these contracts is just
beginning and potential givebacks will be discussed during those meetings. The FY 2009/10
budget, which was developed for year one of an equivalent contract period when the city was
negotiation during part of the contract year, included $4.1 million in givebacks ($3.'5 million in the
General Fund). Subsequent negotiations resulted in actual savings of $1.5 million'in FY 2009/10
and $15 million over 2 years. Examples of potential employee givebacks to be considered for FY
2012/13 include:.freezes in merits and steps, Fair Labor Standards Act guidelines for overtime
and holiday pay, and elimination of shift differential.
Efficiencies, Service Reductions and Revenue Enhancements
As with the preparation of budgets for the last four years, departments are continuing to analyze
and present their budget from two perspectives: 1) a review for potential efficiencies,
reorganizations to reduce cost, etc. without impacting services; and 2) performing a modified
zero -based analysis of each department budget, identifying potential service reduction
alternatives versus core functions. For each of the potential service reductions, departments
FY 2011/12 Proposed.Millage Rate
July 13, 2019
Page 4
provided the type of impact and the magnitude of the impact: Core *.functions were defined as
those functions which, if cut, render it impossible for the department to provide basic service at a
reasonable level.
The July 25, 2012 FCWPC is scheduled for the review of potential efficiencies, potential service .
reductions and revenue enhancements. While the proposed operating millage recommended
for adoption - reflects today a modest amount of decrease based on discussions at FCWPC
meetings on July 9 th and 10th, it is anticipated that additional cost. reductions or revenue,
enhancements recommended by the Committee at subsequent meetings will be used to further
reduce the millage or provide service enhancements.
BACKGROUND
Over last several years, the City of Miami Beach has adopted budgets that provided tax and
fee relief while at the same time providing improved ,services that address needs.and priorities
identified by the community (primarily in public safety, , cleanliness, landscaping and
beautification, recreation and cultural arts programming, renewal and replacement funding for
-our facilities, and building /development functions);. and providing structural changes that
..enhance capital funding and reserves. .
However, these objectives became increasingly, more challenging in the last five years: first
through property tax reform where tax rates were dramatically reduced to offset increases in
property values; and subsequently with the decline in property values without revisions to the
property tax rate, as well as increasing pension costs. In the last four years, the General Fund
has absorbed almost $42 million in reductions (approximately 17 percent of the $244 million FY `
2011/12 General Fund budget) and reductions of more than $48 million and
across all funds.
Further, a total of approximately $15 million in employee "give- backs" were achieved between
FY 2009/10 and FY 2010/11, and $20 million through FY 2011/12, through a combination of
freezing cost of living adjustments for all employees for two and one -half years, - elimination of
merit increases for all employee except members of - the Fraternal Order of Police (FOP) and .
International Association of Firefighters) . IAFF, increased contribution to' pension for all .
employees except members of FOP and IAFF, pension .plan changes for the Niami. Beach
Employees Retirement Plan increased contributions.for take -home vehicles by FOP members
for 18 months, reduced holiday pay for IAFF members, and increased contributions to health
insurance, by members of the FOP.and IAFF for 18 months:. Along with more than $48 million in
reductions, this represents almost $69 million in combined "giyebacks" and reductions
over 5 years.
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FY 2011/1.2 Proposed Millage Rate i
July 43, 2011
.Page 5
' FY 2011112 Adopted 5 -Year Total
General Fund $ Impacts Fr PT $ Impacts FT. PT
Public Safety ($352,755) $ (7,635,095) (69.0) 1.0
Operations (89,331) (1.4) - (5,805,867)" (61.0) (23.0)
Administrative Support (61,184) (1.0) 1.0 (2,858,694) (32.9) 1.0
Ecwn & Cultural Dev (1,193,426) (17.0)
Citywide (75,000) - (1,467,642) -
Subtotal $ (578,270) (2.4) 1.0 $' .,. (18,960,724) (179.9) (21.0) .
Transfers. (114,115) (22,734,851) -
Total $ (692,385) (2.4) 1.0 $ (41,695,575) (179.9) (21.0)
Internal Service Funds 100,000
( ) -. - (3 (37.1)
Enterprise Funds (774,293) _ (7.6) - (3,333,021) (39.0) 8.0
GRAND TOTAL REDUCTIONS J1 $ ( 1,566,678) (10.0) 1.0 $ (48,526,821) (256.0) (13.0)
GIVEBACKS $. _ ( 20349,360)
GRAND TOTAL REDUCTIONS AND "
GIVEBACKS $ (1,566,678) (10.0)1 1.0 $ (68,876,181) (256.0) (13.0)
* FY 2010/11 Budget included reductions for contracting out/converting positions to part-time mid =year, resulting in '
$221,901 in department savings offset by increased operating contingency in the General Fund. These were not
implemented and the FY 2010/11 reductions shown above exclude these "Plan B" reductions
*" City Center RDA also includes the reduction of 1 full time position as part of minimal service impact
efficiencies (4 full time positions as part of "Plan B" were not implemented)
Although the economy has stabilized, the impact of the recent recession has impacted both
property tax revenues as well as pension costs for FY 2010%11 and FY 2011/12 and likely further
into the future. Therefore, the City's strategy continues 'to consider the long term financial
sustainability of the City. Beginning with the development of the FY 2009/10 budget, a strategy
Was developed to address short - term, mid -term and long -term financial needs.,;r
}
• Strategies to address short-term financial needs included ongoing efficiencies and wage
concessions by employees.
• Mid -term financial sustainability was addressed by'pension concessions from current
employees in the Miami Beach'Employees Retirement Plan
Longer term financial sustainability is enhanced by the pension plan restructures that
have been put in place for new employees in the Miami Beach Employee Retirement
Plan. For example, for General Employees, the plan restructure proposed for new
employees is projected by the City's to reduce the City's annual required
contribution by almost $1 million in FY 2012/13, with additional reductions annually as
the number- of employees in the Miami Beach Employees Retirement Plan hired after -
October 1, 2010 continues to increase. Further, additional, pension plan reform
recommendations have been developed by the City's Budget Advisory Committee for the
Fire and Police Pension Plan which are anticipated to be reviewed by the Commission
over the summer.
All, the givebacks achieved, except the 18 month increased contribution to health by FOP and `
IAF' and the increased contributions for take -home vehicles by FOP members for 18 months,
represent ongoing, recurring savings to the City and the employee give -backs contribute
significantly towards the City's strategic, goal (key intended outcome) to control payroll costs.
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FY 2011/12 Proposed Millage Rate
July 13, 2011
Page 6
INITIAL BUDGET GAP
On the revenue side for FY 2012/13, based on the July 1; 2012 Certification of Taxable Value
from the Miami -Dade County Property Appraiser, values of existing properties increased by 5
percent from the July 1, 2011 tax roll certification. This increase compares to taxable value
increases of at least 8 percent per year from July 1, 2001 through July 1, 2007, but decreases of
an average of 6.4% per year between FY 2008/09 and FY 2011/12.
In total, revenues are expected to increase by $5.3 million for FY 2012/13 principally due to
increased property tax as a result of higher property values as well as increased licenses and
permits revenue offset by decreases across a number of categories. These decrease include
decreases in the following categories: other taxes due to declining telephone utility tax revenue,
intergovernmental revenue due to trends in gas tax revenue and revenues received for 911
costs which have been moved to a separate fund, charges for services due to fire transport fees,
fines & forfeits due to lower than expected red light camera revenue, investment interest due to
market conditions, miscellaneous revenue due to corporate sponsorship one -time signing bonus
revenue in FY 2011/12 and other revenue due to a small decrease in the year end set aside of
-surplus revenue.
Further, similar to the FY 2010/11 and FY 2011/12 budgets, FY 2012/13 CSL revenues reflect
the use of $3.4 million in prior- year surplus specifically set aside for this purpose along with $7.2
million in prior year Parking Fund operating surplus as planned last year during the development
of the FY 2011/12 budget. Building Department reserves of $1.5 million are also included.
On the expenditure side, CSL expenditures typically have increased between 6% and 8%
annually due to salary and benefit increases and other normal cost of living adjustments. In FY
2012/13, increases are estimated to result in an approximately $9.5 million (3.9 %) increase in
expenditures, the majority of which is due to the following:
- A $1.5 million increase to reflect previously bargained salary adjustments for employees,
including the impact of 5% step increases for employees not at the maximum of their range
in the FOP and IAFF bargaining units; and a maximum of 2 percent performance -based
merit increase for employees in the Government Supervisor's Association (GSA) bargaining
unit, the American Federation of State, County and Municipal Employees bargaining unit
(AFSCME) and unclassified employees. There is no COLA included for any employees nor
are there merits for CWA employees consistent with the status quo of their current
agreement.
• A $0.2 million increase primarily due to Fire Department overtime cost.
• A $4.1 million increase in pension costs which includes an increase of approximately $6:1
million ($7.6 million citywide) offset by a onetime credit of $2.1 million ($2.5 million citywide),
as well as $0.1 million increase in other pension costs.
• A $1.6 million increase in health care costs which reflects both an anticipated 10% increase
in health insurance costs as well as the impact of the expiration of the IAFF and FOP 5.0
percent of salaries to reduce city health costs.
• A $0.3 million increase in Other Benefits, primarily due to leave payouts associated with
employees leaving employment with the City.
• A $3.2 million Increase in Internal Service Fund charge -backs to Departments primarily due
to similar increases in salary and pension costs as described above that are'then charged
back to the General Fund, as well as equivalent increases in health insurance costs for
retirees, increases in Police liability claims and increases in debt service for fleet vehicles. It
is important to note that fuel prices in FY 2012/13 are budgeted at current prices. Should
FY 2011/12 Proposed Millage Rate
July 13, 2011
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Page` 7 f.
prices increase further, the General Fund will need to -fund. these increases.
• A $1.5 million drop in other operating costs primarily due to the offsetting' move; of 911
expenditures to a separate,fund, decreased rent as Fire Prevention is now in a city facility,
decreased copier rental costs associated with the new contract, as well. as continued ,
refinement and efficiencies in operating needs. i
A $.1 million increase in capital costs due to. increased transfers to the Renewal and
Replacement Fund as a result of the increased values and the dedicated millage:
The resulting gap between General Fund CSL expenditures and CSL revenues as of the July 1,
2011 Certified values is approximately $4.2 million; and improved from the June1 estimate by
approximately $1 million. Attachment 1 summarizes the revenues -and expenditures:
DECISION- MAKING PROCESS
Development of the FY 2012/13 budget began early with a discussion at the June 6 th Committee
of- Whole meeting that included a review of the preliminary General Fund budget',with
„ projected revenues and expenditures. - Prirhary,drivers for revenues and .expenditures, were
discussed with the Committee.
Additional budget briefings were held with `the FCWPC on July 9 and July 10 The next
meeting is scheduled for July 25, 2012 to review potential employee givebacks, efficiencies,
potential service adjustments and enhancements, and potential revenue.enhancements.
It is anticipated thatthe Proposed Work Plan and Budgetthatwill be published later this summer,
will continue our focus on providing "value of services for tax dollars paid ".
STATUTORY REQUIREMENTS
FS 200.065, entitled "Method of Fixing Millage`' establishes specific guidelines that must be used
by all local government entities in setting millage (property tax) rates. Under the statute, the. City
is required, within 35 days of receipt of the "Certification of Taxable Value" (received July 1,
2011), to advise the Miami -Dade County Property Appraiser of'the proposed. generaI operating
n millage `rate, the calculated "rolled- back" rate and. the date; time; and place of the first public
hearing to consider the proposed millage rates..-and tentative :budgets for FY 201 The
required Debt Service inillage rate must also be set at the same time as the general operating
millage:
After setting the proposed operating millage rate; the Commission may, at any time prior to the
final adoption, lower the rates by adjusting,priorities. However, increasing the millage rate may
only be accomplished by an expensive mailing and process to every property owner
on Miami Beach. `.
ANALYSIS OF PROPERTY VALUES IN MIAMI BEACH
On July 1, 2012, the City received the "2012 Certification of Taxable Value" from the Property
Appraiser's Office stating that the taxable value for the City of Miami.Beach is $23,072,321,980
including $96,864,874 in. new construction. The preliminary 2012 value represents an increase
of $ .1.1 billion or 5.0 percent more than the July 1; 2011 Certification of Taxable Value of
$21,978,289,928 , and an increase of percent excluding new construction.
The comparative assessed values for the Miami Beach Redevelopment Agency City Center
FY201'1/12 Proposed Millage Rate
July 13, 2011 i
{" Page. 8 '
redevelopment district increased from $3,423,353,944 to $3,608,718,451, an increase of'.
$0.1854, billion or a 5.4 percent increase in values over 2011 certified values' In addition,
assessed values within the geographic area formerly known as the South Pointe redevelopment
district increased from $3,446,036,913 to $3,618,097,360, an increase of $0.172 billion, or a 5
percent increase in values, over 2011 certified values. As a result, taxable values in the areas
outside the City Center RDA/South Pointe area increased by 4.9 percent, from $15.1089. billion
to $15.8455 billion; an increase of'$0.7366 billion.
Citywide values excluding City Center increased from $18.555 billion to $19.4,63 billion, an
increase of $0.9086 billion or 4.9 percent. Values outside the City Center area determine _
General Fund revenues.
Jan. 1 2012
Value (in' Change from 201 1
Jan. 1 2011.Value (in billions) -billions) Value (Budget)
s ot July I Kew se s - 0 uy
2011 Value (For 2011
(For FY FY Change in (For
2011/12 2011/12 2011 2011/12 $
Budget) Projection) Values % Chg. Budget) (in billions) % Chg
RDA - City Ctr $ 3.4234 $ 3.1299 $ (0.2935) -9% $ 3.6087 . _$ ,0.1854 5.4%
South Pointe * 3.4460 3.2393 (0.2067) ` -6% 3.6181 $. 0.1721 5.0%
General Fund excl S. Pte
15.1089 14.3860 (0.7229) 5% 15.8455 $ :0.7366 4.9%
Total Citywide $ 21.9783 $ 20.7552 $ (1.2231) -6% $23.0723,- $ 1.0940 5.0%
Citywide Net of City Ctr -5 ° /
$ 18.555 ".$ 17.625 $ (0.930) $ 19.464 $ .0.9087 4.9%
Revised values for South Pointe not available, but are assumed to be impacted by the same percentage as citywide.
DETERMINING THE OPERATING MILLAGE LEVY
The first building block in developing a municipal budget is the establishment of the value of one
mill of taxation, wherein the mill is defined as $1.00 of ad valorem tax for each $1,000 of
property value. For the City of Miami Beach, this value for each mill'is determined by the 2012
Certification of Taxable Value and has been set at $23,072,322. Florida Statutes permit a
discount of up to five percent for early payment discounts, delinquencies, etc. Therefore, the 95
percent value of the mill is $21,918,706.
i
Impacts of Decline in Property Values
In FY 2011/12, the operating millage rate for general City operations was adopted at 6.1655.
Based on the July 1, 2012 Certification of Taxable Value,. 6.1655- mills would generate
approximately $ 135,139,781 in general tax revenues, an increase of $6,407,992 over FY
2011%12 budgeted property tax revenues Citywide (General Fund, City Center'RDA and the
South Pointe area).. The General Fund property tax revenues will increase by $5.76 million, if
the FY 2011/12 millage rate is maintained.
Further, the January, 1 2011. tax roll Citywide declined by $1.2 billion between the July 1, 2011
valuation and the -July 1, 2012 valuation due to appeals, adjustments, etc., which is part of the'
reason that the FY 201203 "roll -back rate.' is significantly less than.the FY 2011/12 current
millage rate. The area outside of City Center RDA declined by almost $1 billion.'
FY 2011/1 '2 Proposed Millage Rate
July 13, 2011 r
Page 9
Further, pursuant to recently enacted State legislation,; the City.may elect to approve millage
rates above the roll -back rate up to the constitutional cap of 10 mills subject to the following
votes by the Commission or referendum:
• Option. I: A majority of the, Commission is- required to approve a millage! up to 8.0844
(equivalent to 100.447% of prior year maximum ad valorem proceeds allowed' by a majority
vote, net of the impact of the Tax Increment Districts). The adjustment of 100:447% reflects
the statewide per capita personal income increase for the prior. year
• Option II: A two- thirds approval (5 of 7 votes) of the Commission is required to approve a
millage up to 8.8928 (equivalent to a 10% increase .in the ad valorem revenues above
Option 1).
• Option III: A unanimous approval of the Commission or referendum is required to approve a
millage above 8.8928. up to the 10 mill cap
DETERMINING THE VOTED DEBT'SERVICE MILLAGE LEVY
The general obligation debt service payment for FY,.2012/13 is approximately $5.9 million.
Based on the July 1, 2012 Certified Taxable Value from the Property Appraiser, -these bonds
would require the levy of a voted .debt service millage of 0.2568 mills. This; represents a
decrease of 0.0316 mills.
OPTIONS FOR REDUCING THE MILLAGE
An analysis was performed to determine what the impact on property tax revenue would be with
differing levels of millage reduction. The following table illustrates the corresponding millage rate
for several scenarios: Scenario one reduces the additional property tax revenue by $1 million.
(which is inclusive of the debt service millage reduction), reduces the overall millage by
approximately 0.8 mills; Scenario two reduces`one half of the additional property tax revenue
and scenario three eliminates all of the additional revenue.
General
Fund Renewal & ,Operating Debt Total Change In
Millage Replmnt Millage Millage Millage Total Millage
Rate Rate Rate Rate Rate Rate Revised Gap
1 Decrease of $1 million from
revenue at current millage rate 6.0039 0.1083 6.1122 0.2568 6.3690 (0 b8) (5,192,000)
2 Decrease of 1/2 from 'revenue at
current millage rate 5.9154 01083 6.0237 0.2568 6.2805 (0.17) (6,853,000)
3 Eliminate all additional property
tax revenue 5.7736 0.1083 5.8819 0.2568 6.1387 (0;32) (9,514,000)
State Defi R o ll back rate 5.5101 0.1083 5.6 0.25681 5.8752 ( 0:58) (13,145,000)
The recommendation is. to initially reduce the millage rate in accordance with Scenario one,
which; reduces the millage rate by .0849 with the possibility of further millage rate reductions to
be determined before the budget is adopted...
FY 2011 /12 Proposed Millage Rate
July 1.3, 2011
Page 10
COMBINING THE OPERATING.AND VOTED DEBT SERVICE MILLAGE LEVIES
Illustrated below is a comparison of the combined millage rates and ad valorem revenues to the
City of Miami Beach for FY 2010/11 (final) and FY 2011/12 (preliminary) including RDA. It is
recommended that in the General Fund, 0.1083 mills of the total operating millage continue to
be dedicated to renewal and replacement, resulting'in approximately $1.86 million in renewal
and replacement funding.
E % Inc /(Dec)
....w ........
From From, FY
FY 06107 FY 11112. FY 12113 Incl(Dec) FY10111 E 06107
City of Miami Beach Millage Rates _... -. _ _.. .� .
Operating - 7.1920 6.0572` 6.0039 - 0.0533
Capital Renewal & Replacement 0.1820 0.1083
p p , 0.1083, 0.0000
Ca
Sub -total Operating Millage 7.3740 6.1655E 6.1122 - 0.0533 -0.9% '-17%
Operating _., 7.
Debt Service 0.2990 0.2884 0.2568E 40316
Tota 1 ! . 7.67301 6.4539: - 0.0849 A.3% -17% .
If these recommended millage rates are tentatively adopted, then the City of Miami Beach's total
operating millage will decrease by .0533 from the current year,, and - the voted debt service
millage will decrease by 0.0316 mills.
IMPACT OF JULY 18 PROPOSED MILLAGE LEVY IMPACT ON PROPERTY'OWNERS
Homesteaded Properties
Amendment 10 to the State Constitution took effect on January 1, 1995 and limited the increase
in assessed value of homesteaded property to the percentage increase in the consumer price
index (CPI) or three percent (3 %), whichever is less. For2011, the CPI has been determined.to
be 3.2 percent and therefore, the increase is capped at 3% for increased values as of January 1, .
2012.
Overall, based on an analysis, of the homesteaded properties in the 2010 tax roll (the latest
available from the Miami -Dade County Property Appraiser at this time) the median value of
homesteaded property in Miami Beach for 2012 (as.of August 2011) was $119,461, and the
average $277,201. Applying the increase to the market value of all existing homesteaded
properties from the 2011 tax roll, and the 3 percent CPI adjustment, the impact,of the millage
rate adjustment to homesteaded properties would be as shown in the following table..
FY 2011 /12 Millage Rate
July 13, 2011.
Page 11 .
Homesteaded Properties
1
FY 2011/12 (as of '
January 1.2011)* with 3% CPI
Median T Average Median I Average
Taxable Value $ 119,461 $ 277,201 $ 123,045 $ 285,517
City of Miami Beach
Taxes
Operating $ 737 $ 1,709 $ 752 $ 1,745
Voted Debt 34 71 32 73
Total Miami Beach $ 771. $ 1,780 $ 784 $ 1,818
$ Change in Taxes
Operating $ '15 $ 36
Voted Debt „ (2) , • 2
Total Miami Beach $ 13 $ 38
* Source: Miami -Dade County Property Appraiser File as of 8117110
Historical Perspective
It is important to remember that in prior years, the City of Miami Beach significantly reduced tax
rates as property values increased. Between FY 1999/00 and FY 2009/10, property tax rates
declined approximately 2.8 mills. In FY 2007 /0$ alone, the property tax rate .declined by .
approximately 1.8 mills, with annual savings to the average homesteaded property of over $400.
In addition, in FY 2005/06 and FY 2006/07, the City funded $200 and $300 homeowner
dividends paid to homesteaded property owners in the City.. .
Total Combined Millage
p Milla eRate
F%
� fn
4 fV
O
98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 11 12 13
Fiscal Years
The combined millage rate -overall remains approximately 2.3 mills lower than it was in FY
1999/00: In addition, the millage rate is almost 1.3 mills•lower than it was in FY 2006 /07, when
property values were above the July 1,•2012 certified values: As a result, the proposed property .
tax levy is lower in FY 2012/13 than it was in 2006/07.
FY 2011 /12 Proposed Millage Rate
July 13, 2011 '
Page. 12
Property Values and Tax Levy, i
25.0 .
. 30 a
200 .
20
50
1 < a
X 100 . CD
y
50 W
10 r
c o
0
0
0 �,
'07 '08: '09 '10 11 '12 '13
C;:E Property Values --Tax Levy including Debt
Property Value, Millage and Prove Tax Le
Millage Rates Tax Levy (in millions)
General Fund
Final/ Total
Taxable Revised - (including S.
Property Taxable Total General Total; Pointe, and
Values. Value Citywide: Fund /RDA including Renewal &
Budget Year (billions) (billions) Millage Millage Debt Replcmnt)
FY1997/98 $ 6.46 $ 6.40 9.2100 7.4990 $ 57.45
- 46.78
FY1998/99
6.97 $ 6.87 8.9830 7.4990 $, 60.37 $ 44.66
FY1999/00 7.66 $ 7.54' 8.6980 7.4990 $ 64.29 $ 47.36
•.,.
FY2000 /01 8.37 $ 8.22 8.5550 7:3990 $ 69,08 $ 49.75
FY2001/02 9.40 $ 9.22 8:3760. 7.2990 $ 75.97 $ 54.37
FY2002/03 10.56 $ 10.41 8.3220 7.2990 $ 84.81, $ : 61.05
FY2003/04 12.09 $ 11.85 8.1730. 7.2990 $ 95.39' . $ 68.17
FY2004/05 14.04 $ 13.86 8.1730 ' 7.4250 $ -110.74 $ 79.38
FY2005/06 . 17.45 $ 17.15 8.0730 7.4810 . $ 135.91' $ 111.69
FY2006/07 22:74 $ 22.26 7.6730 7.3740 , $. 168.38 $ 140.31
FY2007/08 26.85 $ 26.14 5.8970 5.6555 $ .150.42 $ 125.33
FY2008/09 26.90 $ 25.89 5.8930 5.6555 $ 150i59 $ 125.94
FY2009/10 24.70 $ . 23.24 5.9123 - 5.6555 $ 138.70 , $ 115.73
FY2010/1.1 22.10 $ 20.97 6.5025 6.2155 -$ 136.55 $ 112.14
F.Y2011/12 - 21.98 $ 20.76 6.4539 6.1655 $.., 135.80 $ 111.29 .
fY2012/13 23.10 6.3690 6.1122 $ 140.91 . $ 114.72 he
final millage column contains final property values except for FY 2011/12 which is not finalized yet.
FIRST PUBLIC HEARING
The first public hearing. on -the proposed millage rates and tentative budgets for FY 2011/12
must be held no later than 80 days (September 18,th) or earlier than' 65.days (September 3rd)
from the start of the TRIM ( "Truth In Millage") calendar (July 1st): Other guidelines are:, 1) the
public hearing cannot be scheduled on a Sunday or on those days utilized by Miami -Dade
County or the Miami -Dade County School Board for their public hearings; and'2) if on a, day '
FY 2011/12 Proposed Millage Rate
July 13, 2011
Page 13
other than Saturday, the public hearing must be after 5:00 P.M.
Based on these guidelines, the first hearing must be held between September 3rd and
September 18th. These dates are unavailable for the following reasons:
September 9 and 16 Sundays
September 6 and 20 Proposed dates for Miami -Dade County Public
Hearings
July 26 and September 5 Miami -Dade County School Board Public Hearing
Of the remaining days, it is recommended that the first public hearing be set for Wednesday,
September 12, 2012 at 5:01 P.M., in the City Commission Chambers, City Hall, 1700
Convention Center Drive, Miami Beach, Florida.
KGB:PDW:T.F
Attachm
MIAMI E ATTACHMENT 1
FY 2012/13 GENERAL FUND BUDGET
AS OF JULY 2012
GENERAL FUND REVENUES
FY 2012/13
Prelim. Est. as of
FY 2011/12 July 1- Current $ Change from
Budget Millage Budget % Change from Budget
Property Taxes $110,394,099 $ 115,717,000 $5,322;901 4.8%
Property Taxes - Normandy Shores $108,469 $ 129,000 20,531 18.9%
Other Taxes $24,278,385 $ 24,023,000 (255,385) -1.1%
Licenses & Permits $17,074,053 $ 19,383,000 2,308,947 13.5%
Intergovernmental $10,091,000 $ 9,547,000 (544;000) -5.4%
Charges For Services $10,684,371 $ 10,437,000 (247,371) -2.3%
Fines and Forefeits $2,574,000 $ 2,192,000 (382,000) -14.8%
Interest $3,430,000 $ 2,983,000 (447,000) -13.0%
Rents and Leases $6,034,143 $ 6,439,000 404,857 6.7%
Miscellaneous $12,423,449 $ 11,750,000 (673,449) -5.4%
Resort Taxes $26,965,440 $26,965,000 (440) 0.0%
Other 7,981,502 $7,978,000 (3,502) 0.0%
Reserves - Bldg Dept $1,546,709 $1,500,000 (46,709) -3.0%
Parking Surplus Transfer $7,200,000 $7,200,000 0.0%
Prior year set aside $3,551,120 $3,400,000 (151,120) -4.3%
Total $ 244,336,740 $ 249,643,000 $ 5,306,260 -5%
GENERAL FUND EXPENDITURES
COLA: 0.0%
MERIT /STEP: 2% Max for General Merit except CWA - CWA 0% - Police and Fire Steps
HEALTH & LIFE INS 10% increase (plus increases due to the expiration of IAFF and FOP health giveback)
FY 2012/13
FY 2011/12 Prelim. Est. as of $ Change from
Budget July 1 Budget % Change from Budget
Salaries $101,126,813 102,645,000 $1,518,187 1.5%
Overtime /Other Wages $10,419,043 $10,658,000 $238,957 2.3%
Benefits
Pension - F &P $35,602,142 $37,330,000 $1,727,858 4.9%
Pension - MBERP 10,964,684 $13,198,000 $2,233,316 20.4%
Other Pension Costs 5,802,867 $5,913,000 $110,133 1.9%
Health and Life 9,147,658 $10,792,000 $1,644,342 18.0%
Other Benefits 4,043,146 $4,302,000 $258,854 6.4%
Total Benefits $ 65,560,497 $ 71,535,000 $ 5,974,503 9.1%
Total Salary and Benefits $ 177,106,353 $ 184,838,000 $ 7,731,647 4.4%
Operating $26,983,687 $25,465,000 ($1,518,687) -5.6%
Internal Service Funds 36,131,881 1 39,322,000 3,190,119 1 8.8 o
Capital & Debt $4,114,819 1 4,210,000 $95,181 2.3%
Total 244,336,740 1 253,835,000 1 9,498,260 2.2%
Net Revenues Less Expenditures 1 $ 1 $ ( 4,192 1 000) $ (41192,000)