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2008-26771 ResoRESOLUTION NO. 2008-26771 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, ADOPTING THE FIRST AMENDMENT TO THE GENERAL, ENTERPRISE, AND INTERNAL SERVICE FUNDS BUDGETS FOR FISCAL YEAR (FY) 2006/07 TO APPROPRIATE PRIOR YEAR ENCUMBRANCES AND AMEND CERTAIN BUDGETS. WHEREAS, Florida Statutes prohibit the over expenditure of departmental budgets and funds; and WHEREAS, additionally, $0.2 million in General Fund prior year encumbrances require an amendment because certain services and capital items were purchased during FY 2005/06 with FY 2005/06 budgeted funds and were paid during FY 2006/07; and WHEREAS, the budget for the Fire, Capital Improvement Projects, and Economic Departments reflect additional expenses in excess of budget that are offset by increased revenue and expenditure savings in other areas; and WHEREAS, the Administration has performed a detailed review and it is anticipated that the General Fund will have an overall operating budget surplus of $15.5 million; and WHEREAS, the City's financial policies adopted pursuant to Resolution 2006-26341 and Resolution 2002-24764 require one time revenues (such as the year-end surplus) must be used for non-recurring expenses, and that at least half of each annual year-end surplus must be allocated to the City's Capital Reserve Fund; and WHEREAS, the General Fund budget is proposed to be further increased by using the $15.5 million operating budget surplus to fund the City Capital Reserve and certain other one- time expenditures including :replacing Capital Investment Upkeep Account funds thatwere reduced in FY 2007/08 budget; reimbursing the City's FY 2007/08 operating contingency as included in the resolution adopting the City's Education Compact for International Baccalaureate implementation costs at the middle school and high school level as well as beginning to set aside additional funds towards implementation in the elementary schools; replacing Convention Development Taxes (CDT) funds used for Lincoln Road improvements and construction of the new Fire Station 2 based on the recent Miami-Dade County audit; reducing deficits in the City's Risk Management fund pursuant to the City's financial policy; and setting aside funds forthe City's accrued liability forpost-employment (retiree health) benefits pursuant to new requirements of GASB 45; and WHEREAS, the Enterprise Fund Budget of the Convention Center requires an amendment to fund expenditures in excess of its budget of $0.727 million that will be offset by higher than anticipated revenues; and WHEREAS, the Internal Service Fund Budgets of the Central Service, Fleet Management and Property Management Funds require an amendment to fund The Central Service Fund excess of expenditures of $37,195 due to higher than expected operating costs and the Fleet Management Fund excess of expenditures of $105,733 due to higher costs for tires and repair supplies. APPROPRIATIONS (continued) GENERAL FUND Transfers MB Homeowner's Dividend Fund Capital Reserve Fund Pay-As-You-Go Capital Fund Info & Comm Technology Fund Risk Management Fund 11 % Emergency Reserve Contribution Inc. FY 08 Cap. Invest. Upkeep CDT Fund Repayment Education Compact Repayment & Set aside GASB 45 Reserve CAPITAL RENEWAL & REPLACEMENT S.POINTE CAPITAL R & R Sub Total Transfers Total General Fund ENTERPRISE FUNDS APPROPRIATIONS Convention Center/TOPA Parking Sanitation Sewer Operations Stormwater Operations Water Operations Total Enterprise Funds Total General and Enterprise Funds INTERNAL SREVICE FUNDS APPROPRIATIONS Central Services Fleet Management Information Technology Property Management Risk Management Total Internal Service Funds "Includes prior year encumbrances. FY 2006/07 Changes Recommended FY 2006/07 Adopted Budget in Rev/Exp Additional Amended Budget Appropriation* Appropriation 4,900,000 $ 0 $ 0 $ 4,900,000 2,500,000 0 10,078,849 12,578,849 7,500,000 0 0 7,500,000 1,400,000 0 0 1,400,000 1,000,000 0 1,000,000 2,000,000 3,338,419 0 0 3,338,419 0 0 720,000 720,000 0 0 1,205,876 1,205,876 0 0 500,000 500,000 0 0 2,000,000 2,000,000 3,266,096 0 0 3,266,096 258,990 0 0 258,990 $ 24,163,505 $ 0 $ 15,504,725 $ 39,668,230 $ 237,673,096 $ (4,631,736) $ 15 504 725 $ 248 546 085 , , , , $ 16,630,117 $ 726,950 $ 0 $ 17,357,067 25,330,512 0 0 25,330,512 14,793,905 0 0 14,793,905 30,586,841 0 0 30,586,841 8,368,000 0 0 8,368,000 24,623,011 0 0 24,623,011 $ 120,332,386 $ 726,950 $ 0 $ 121,059,336 $ 358,005,482 $ (3,904,786) $ 15,504,725 $ 369 605 421 , , $ 861,167 $ 37,195 $ 0 $ 898,362 7,430,539 105,733 0 7,536,272 14,296,593 0 0 14,296,593 9,082,496 0 0 9,082,496 19,564,677 0 0 19,564 677 $ 51,235,472 $ 142,928 $ 0 $ , 51 378 400 , , Passed and adopted this 13th day of February of 2008. ATTEST: ~a~~.. City Clerk Robert Parcher . ~, Mayor Matti H. Bower APPROVED AS TO FORM & LANGUAGE 8~ FOR EXECUTION ~tY ~~ jute NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the first amendment to the Fiscal Year 2006/07 General Fund, Enterprise and Internal Service Funds budgets is adopted as follows: REVENUES FY 2006/07 Changes Recommended FY 2006/07 Adopted Budget in Rev/Exp Additional Amended Budget Appropriation* Appropriation GENERAL FUND OPERATING REVENUES Ad Valorem Taxes $ 136,782,868 $ (1,730,722) $ 0 $ 135 052 146 Ad Valorem Taxes-Capital Renew/Repl. 3 266 096 0 , , Ad Valorem Taxes-S.Pointe Cap R & R. , , 258 990 0 0 3,266,096 Ad Valorem Taxes-Normandy Shores , 87 949 0 0 258,990 Other Taxes , 22,153,300 1,083,217 0 0 87 949 23 236 517 Licenses and Permits 13,025,335 6,886,758 0 , , 19 912 093 Intergovernmental 11,160,640 164,552 0 , , 11 325 192 Charges for Services 7,490,350 994,076 0 , , 8 484 426 Fines and Forfeits 1,826,000 (218,821) 0 , , 1 607 179 Interest Rents and Leases 5,300,000 2,761,952 0 , , 8,061,952 Miscellaneous 2,934,251 1,100,253 0 4,034,504 Other-Resort Tax contribution 6,013,515 19 571 309 (76,671) 0 5,936,844 Other-Non Operating revenues , , 7,802,493 (91 605) 0 0 19,571,309 Total G l F , 7,710,888 enera und Revenues $ 237,673,096 $ 10,872 989 $ 0 $ 248 , ,546,085 APPROPRIATIONS Department MAYOR & COMMISSION $ 1,418,860 (106,417) $ 0 $ 1 312 443 CITY MANAGER 2,328,805 (15,142) 0 , , 2 313 663 Communications 1,188,552 (165,218) 0 , , 1 023 334 BUDGET & PERFORMANCE IMPROVE 1,985,126 (98 302) 0 , , FINANCE 4,559,048 , (197,726) 0 1,886,824 4 361 322 Procurement HUMAN RESOURCES/LABOR RELATIONS 902,160 (60,114) 0 , , 842,046 CITY CLERK 1,895,510 (16,829) 0 1,878,681 CITY ATTORNEY 1,683,647 (173,551) 0 1,510,096 ECONOMIC DEVELOPMENT 4,319,400 (493,719) 0 3,825,681 BUILDING 915,191 63,548 0 978,739 PLANNING 8,268,849 (465,903) 0 7,802,946 TOURISM & CULTURAL DEVELOP. 3,173,702 3 212 468 (184,149) 152 0 2,989,553 NEIGHBORHOOD SERVICES , , 5,646,042 ( ,207) (397 317) 0 0 3,060,261 PARKS & RECREATION 28,068,400 , (1 740 031) 0 5,248,725 PUBLIC WORKS 7,033,709 , , (616 822) 0 26,328,369 CAPITAL IMPROVEMENT PROJECTS 3,126 464 , 71 568 6,416,887 POLICE FIRE , 75,252,774 , (589,588) 0 0 3,198,032 74,663,186 CITYWIDE ACCOUNTS 43,303,018 1,319,944 0 44,622,962 Capital Investment & Upkeep 2,000,000 (504 124) 0 Normandy Shores District 135 254 , 0 1,495,876 Operating Contingency , 1,300 000 0 0 135,254 Other Accounts , 11,792,612 (109 637) 0 0 1,300,000 Sub Total G l F , 11,682,975 enera und $ 213,509,591 $ (4,631 736) $ 0 $ 208 , ,877,855 COMMISSION ITEM SUMMARY Condensed Title: A resolution to adopt the first amendment to the General and Enterprise Funds Budgets for Fiscal Year (FY) 2006/07 to appropriate prior year encumbrances and amend certain budgets. Intended Outcome Su I• 'Ensure expenditure trends are sustainable over the long term Im rove the City's overall financial health and maintain overall bond ratin Supporting Data (Surveys, Environmental Scan, etc.): • The City's Adopted 2007/08-2011/12 CIP includes project appropriations of $680.6 million through FY 2007/08 and $162.5 million is programmed through FY 2011/12, which may have unforeseen increases. • The 2005 Survey showed 73% of respondents support reallocating City tax dollars to improve schools. • The Risk Management deficit as of FY 2005/06 was $10.8 million. Our financial policies have a goal to fund 100% of pending claims and strive to fund 2/3 of the value of "claims incurred but not reported." • At the end of FY 2007/08, the City will be required to record it's accrued liability for post-employment (retiree health) benefits pursuant to new requirements of GASB 45 that are anticipated to be si nificant. Issue: Whether to ado t the first amendment to the FY 2006/07 Bud ets? item summa iKecommendation: Only 3 General Fund departments have prior year expenses in excess of appropriations, thereby requiring budget amendments: CIP, Economic Development, and most significantly the Fire Department. The year-end surplus in the General Fund is estimated at $15.5 million, net of these impacts. Much of the surplus was anticipated due to measures implemented early in response to Property Tax Reform, resulting incost-savings in almost every City department, and a total of $4.6 million Citywide. In addition, also anticipated was much of the $4.4 million in additional revenues due to increased electrical franchise fees, increased Police and Fire Off-Duty Fee and from Miami Beach Golf Club revenues, increased interest earnings, and increased rent and lease revenues due primarily to the new Live Nation agreement, that were partially offset by reduced ad-valorem property taxes. Further, building permit revenues exceeded budgeted revenues by over $6 million primarily due to reviews and audits of building permit fees. Our financial policies require one time revenues (such as the year-end surplus) to be used for non- recurring expenses, and at least half of each annual year-end surplus to be allocated to the Capital Reserve Fund. The General Fund $15.5 million surplus is recommended to fund the Capital Reserve and certain one-time expenditures including: replacing Capital Investment Upkeep Account funds reduced in FY 2007/08 budget; reimbursing contingency used for the City's Education Compact for middle and high school International Baccalaureate implementation costs, at the as well as beginning to set aside funds for implementation in the elementary schools; replacing CDT funds pursuant to the recent audit; reducing deficits in the Risk Management fund; and continuing to aside funds towards the accrued liability for post-employment (retiree health) benefits pursuant to new requirements of GASB 45. The Convention Center overexpenditure ($0.726million)tyill be offset by higher than anticipated revenues. The Central Services Fund overexpenditure ($37,195) due to higher mailing costs will be offset by Retained Earnings. The Fleet Management Fund overexpenditure ($105,733) due to higher costs for tires and repair supplies will be offset by hi her than anticipated interest income. Advisory Board Recommendation: I Financial Information: Source of Amount Funds: 1 $15,504,725 2 $ 726,950 3 $ 142,928 OBP Total $16,374,603 Financial Impact Su Clerk's Office Legislative General Fund Enterprise Funds Internal Service Funds nt ~~ ~~ ~ ~~ AGENDA ITEM ~ ~ J DAT€ 2'~ 3 f0~ First amendment to the FY 2006/07 General Fund, Enterprise and Internal Service Fund Budgets Page 2 Department Reappropriation of Prior Year Encumbrances Purpose Fire Department Capital Imp. Program Office Total Expenditure Increase $195,155 71,568 $266,723 Prof. Svcs./Operating Exp. Professional Service In addition to the prioryear encumbrances, additional appropriations are needed forthe Fire and Economic Development Departments where expenses exceeded budgeted appropriations: The Fire Department's increase is due primarily to relocation of offices during construction, higher internal service costs, and higher than anticipated overtime usage. • The Economic Development Department is due to higher personnel costs for prior year adjustments that were posted this year. The General Fund reflects a surplus of revenues over expenses of $15.5 million primarily due to the City's implementation of pro-active cost-saving measures very early in the Fiscal Year 2006/07 in response to Property Tax Reform discussions that were on-going during the fiscal year. These measures resulted in significant cost-savings in almost every City department except the Fire Department, for a total savings of approximately $4.6 million Citywide. In addition, on the revenue side, approximately $4.4 million in additional revenues were anticipated in the FY 2006/07 third quarter projections that were included in the FY 2007/08 Proposed Budget book primarily due to increased electrical franchise fees (Other Taxes), increased Police and Fire Off-Duty Fee revenue as well as revenues from Miami Beach Golf Club (Charges for Services), increased interest earnings due to higher than budgeted interest rates and fund balances, increased rent and lease revenues due primarily to the new Live Nation agreement, (Rents and Leases), and increased building permit revenues (Licenses and Permits). These increases were partially offset by reduced ad-valorem property taxes primarily due to higher than anticipated property value appeals approved by Miami-Dade County. Further, actual building permit revenues for FY 2006/07 exceeded the budgeted revenues by over $6 million primarily as a result of a comprehensive review of certain inconsistencies in the application of building permit fees, the implementation of new processes and an audit of existing open permits The City's financial policies adopted pursuant to Resolution 2006-26341 and Resolution 2002-24764 require one time revenues (such as the year-end surplus) mustbe used for non-recurring expenses, and that at least half of each annual year-end surplus must be allocated to the City's Capital Reserve Fund. It is recommended that the budget be further increased by using the $15.5 million surplus as follows: • $7.8 million to meet the minimum requirement of 50% of year-end surplus to the City's Capital Reserve Fund to continue to ensure funding for previously approved capital projects where expenditures have increased due to bids that are overbudget, change orders, or other unforeseen items; • $0.72 million to replace Capital Investment Upkeep Accountfunds thatwere reduced in FY 2007/08 budget pursuant to the second budget hearing; First amendment to the FY 2006/07 General Fund, Enterprise and Internal Service Fund Budgets Page 3 • $0.5 million to reimburse the City's operating contingency as included in the resolution adopting the City's Education Compact for International Baccalaureate implementation costs at the middle school and high school level ($223,000) as well as beginning to set aside additional funds towards implementation in the elementary schools ($277,000); • $1.206 million to replace CDT funds used for Lincoln Road improvements ($0.670 million) and construction of the new Fire Station 2 ($0.536 million) based on the recent Miami-Dade County audit regarding the use of Convention Development Taxes (CDT) granted pursuant to the Amended CDT Interlocal Agreement; • $1 million to reduce deficits in the City's Risk Management fund pursuant to the City's financial policy, and consistent with direction received in the preparation of the City's FY 2007/08 annual operating budget; • $2 million to continue to set aside funds for the City's accrued liability for post- employment (retiree health) benefits pursuant to new requirements of GASB 45; and • $2.3 million additional to the City's Capital Reserve Fund to continue to ensure funding for previously approved capital projects- almost 100% of funds appropriated for this purpose through FY 2007/08 have been allocated to ongoing existing projects, and the City's Adopted 2007/08-2011/12 Capital Improvement Plan includes project appropriations of $680.6 million through FY 2007/08 and an additional $162.5 million is programmed through FY 2011/12. Further augmenting the Capital Reserve is recommended to help ensure sufficient for projects should additional unforeseen needs occur in the future. A summary of the resulting increases and decreases to revenues and expenditures is provided in the following section. GENERAL FUND Revenues Reductions: Ad Valorem Taxes Miscellaneous Other Non-Operating Revenue Fines and Forfeits Total Reductions Increases: Other Taxes Licenses and Permits Intergovernmental Revenues Charges for Services Interest Rents and Leases Total Increases Total Inc./(Dec.) to Revenue (1,730,722) (76,671) (91,605) (218,821) (2,117,819) 1,083,217 6,886,758 164, 552 994,076 2, 761, 952 1,100,253 12,990,808 10,872,989 First amendment to the FY 2006/07 General Fund, Enterprise and Internal Service Fund Budgets Page 4 Expenses Reductions: Mayor and Commission City Manager Communications City Clerk Finance Office of Budget & Perf Improve. Human Resources/Labor Relations Procurement City Attorney Building Planning Tourism & Cultural Development Neighborhood Services Parks and Recreation Public Works Police Citywide Accounts Citywide Accounts-Transfers Total Reductions Increases: Economic Development Fire Capital Improvement Projects Total Increases Subtotal Inc./(Dec.) to Expenses Recommended Transfers Capital Reserve Fund Risk Management fund FY 08 Capital Investment Upkeep Account CDT Fund Repayment Education Compact Repayment & Set aside GASB 45 Reserve Total Increases (106,417) (15,142) (165,218) (173,551) (197,726) (98,302) (16,829) (60,114) (493,719) (465,903) (184,149) (152,207) (397,317) (1,740,031) (616,822) (589,588) (109,637) (504,124) (6,086,796) 63,548 1,319,944 71,568 1,455,060 (4,631,736) 10,078,849 1,000,000 720,000 1,205,876 500, 000 2,000,000 15,504,725 Total Inc./(Dec.) to Expenses ENTERPRISE FUNDS 10,872,989 The City accounts for proprietary operations in Enterprise Funds. Convention Center, Parking, Sanitation, Sewer, Stormwater, and Water are included in this grouping. In the Enterprise Funds, the Convention Center Fund Budget must be amended. The Convention Center Fund is over by $726,950 due to higher personnel and electricity expenses associated with a higher volume of events. These expenses will be offset by revenues from a higher than previously anticipated volume of events. First amendment to the FY 2006/07 General Fund, Enterprise and Internal Service Fund Budgets Page 6 CONCLUSION The attached Resolution will allow the first amendment to departmental appropriations within the General Fund and Enterprise Funds Budgets to be enacted. This action is necessary to comply with Florida Statutes which stipulate that we may not expend more than our appropriations provide. JMG:KGB:JC Page 1 of 1 Hernandez, Kerry From: Parcher, Robert Sent: Wednesday, April 23, 2008 9:36 AM To: Brooks, Kathie Cc: Hernandez, Kerry Subject: Resolution 2008-26771 Kathie, has this analysis been completed? I want to tie the analysis back to the Resolution. Bob 9:35:32 p.m. R7J A Resolution Adopting The First Amendment To The General, Enterprise And Internal Services Fund Budgets For Fiscal Year (FY) 2006/2007 To Appropriate Prior Year Encumbrances And Amend Certain Budgets. (Budget & Performance Improvement) ACTION: Resolution No. 2008-26771 adopted subject to the requirement that staff prepares the analysis that justifies the expenditures. Motion made by Commissioner Gross; seconded by Commissioner Wolfson; Voice vote: 7-0. Kathie Brooks to handle. M IAM 1 BEACH Robert Parcher, City Cterk CITY CLERK'S OFFICE 1700 Convention Center Drive, Miami Beach, FL 33139 Tel: 305-673-7411 /Fax: 305-673-7254 / ww.w_miamibeachfl.gov We are committed to providing excellent public service and safety to all who live, work and play in our vibrant, tropical, historic community. 04/23/2008 Page 1 of 3 Hernandez, Kerry From: Parcher, Robert Sent: Thursday, February 28, 2008 1:13 PM To: Brooks, Kathie; Hernandez, Kerry Subject: RE: Resolution 2008-26771 It's fine, I want to make sure that I know when the analysis is complete so the it can be tied back to the Reso. MIAMIBEACN Robert Parcher, City Clerk CITY CLERK'S OFFICE 1700 Convention Center Drive, Miami Beach, FL 33139 Tel: 305-673-7411 1 Fax: 305-673-7254 / www miambeachfl.go_v We are committed to providing excellent public service and safety to all who live, work and play in our vibrant, tropical, historic community. From: Brooks, Kathie Sent: Thursday, February 28, 2008 12:48 PM To: Hernandez, Kerry Cc: Parcher, Robert Subject: RE: Resolution 2008-26771 We are working on the analysis. Parcher: I thought we were wording in a way to avoid that. MIAMIBEACH Kathie G. Brooks, Director BUDGET & PERFORMANCE IMPROVEMENT 1700 Convention Center Drive Miami Beach, FL 33139 Phone 305-673-7000 ext. 6249/ Fax 305-673-7782 / www.miamibeachtl.eov We are committed to providing excellent public service and safety to all who live, work and play in our vibrant, tropical, historic community From: Hernandez, Kerry Sent: Thursday, February 28, 2008 12:46 PM To: Brooks, Kathie Cc: Parcher, Robert Subject: Resolution 2008-26771 Importance: High Kathie, We are holding off on the execution of Resolution 2008-26771 until the analysis that justifies the expenditures is prepared. If it has been prepared can we obtain a copy or if not, please send us a copy when prepared. Thanks, Kerry R7J A Resolution Adopting The First Amendment To The General, Enterprise And Internal Services Fund Budgets For Fiscal Year (FY) 2006/2007 To Appropriate Prior Year Encumbrances And Amend Certain Budgets. (Budget & Performance Improvement) 02/28/2008 Page 2 of 3 ACTION: Resolution No. 2008-26771. adopted subject to the requirement that staff prepares the analysis that justifies the expenditures. Motion made by Commissioner Gross; seconded by Commissioner Wolfson; Voice vote: 7-0. Kathie Brooks to handle. Jorge Gonzalez, City Manager, explained that $10 million out of the $15 million is going into the Capital Reserve Fund which. is where projects that come in higher than expected or changes in scope require additional money are funded. The balance of the money is being used to fully fund the educational compact commitments or start to meet more of the GASB 45 Retirees Health requirements, or to meet additional expenditures identified by the CDT audit and the annual $1. million to Risk Management fund. This fund needs to be balanced or closed to being balance before the meeting with the Wall Street rating agencies. Vice-Mayor Lbbin talked about the $6 million which was generated because of the new system. that has been implemented by the Building Department. Commissioner Gross stated that he understands that money generated in the Building Department must stay in the Building Department. He asked. the City Manager to explain how he can spend this money in capital improvement projects. Jorge Gonzalez, City Manager, explained that the money does not necessarily have to stay in the Building Department; it can be used for expenses associated with the building development process. The City incorporates into this process more than just the Building Department; there are costs associated with Public Works, Planning Department, etc. He can give an accounting of the projects and. the monies. Commissioner Gross stated that the accounting doesn't need to be to the penny but $6.5 million is a lot of money and asked when the study for lowering the fees will be completed. Jorge Gonzalez, City Manager, stated that the issue of lowering the fees will be looked at later in the fiscal year. He stated that as specified in the LTC distributed prior to the meeting, the City is contemplating having a consultant do a rate study and not just from a fee and collection perspective but also the volume. The bulk of this money is projects that have been approved three to five years ago and are now coming to completion. He stated that he does not want to artificially lower the rates thinking that this money will continue to come in. Theoretically it will correct itself since the money will be collected at the time of the application versus at closing. He added that he will provide an accounting of the $b.5 million via LTC. Motion made by Commissioner Gross to adopt the Resolution subject to the requirement that staff prepares the analysis that justifies the expenditures; seconded by Commissioner Wolfson; Voice vote: 7-0. MIAMIBEACH Kerry A. Hernandez, Office Associate V CITY CLERK'S OFFICE 1700 Convention Center Drive, Miami Beach, FL 33139 Phone: 305-673-7000 ext. 6534 / Fax: 305-673-7254 ! www.m.amibeachfl.gov We are committed to providing excellent public service and safety to a!I who live, work and play in our vibrant, tropical, historic community. 02/28/2008