LTC 264-2010 Analysis of BudgetMIAMIBEACH
OFFICE OFTHE CITY MANAGER
No. LTC # ~ 264-2010
TO:
.FROM:
DATE:
SUBJECT
C,-3
,-.a ~
..~, ~
C~7
~«__
LETTER TO COMMIS~101~,
~:;
Mayor Matti Herrera Bower and Members of the City Commission " ~.
~= W
Jorge M. Gonzalez, City Manager `~'; ~`'
October 5, 201.0
ANALYSIS OF BUDGET TO AC L REVENUES AND EXPENSES FOR THE
NINE MONTHS ENDED JUNE 30, 2010, WITH OPERATING BUDGET
PROJECTIONS THROUGH SEPTEMBER 30, 2010 FOR THE GENERAL FUND
The purpose of this LTC is to provide the Mayor and Commission with the status of the FY
2009/10 budget to actual revenue and expenses at the end of the third quarter with projections
through September 30, 2010.
As we are now at the end of the fiscal year, the year-end estimate is more firm. However, there
are still areas which we are continuing to refine particularly through the .year-end close-out
process, including the potential for appeals and refunds related to red-light camera revenues,
the unusual impact on taxes from the delays in completing appeals for.the prior fiscal year and
the current fiscal year property tax revenues, and General Fund fee revenues related to the
Building Development Process.
Summary
Based on the review, it is projected that, overall, there will bean operating budget shortfall of
just under $750,000 (approximately 0.33%) in the General Fund, a considerable improvement
from the second quarter projection of a $2.3 million. shortfall and significantly less than the
$3.5 million from the General Fund component of the FY 2009/10 budgeted employee
givebacks which were uncertain at the beginning of the fiscal year. Revenues are projected to
surpass the budget by 0.04%.
It is important to note that the City has successfully completed negotiations with all five unions
and savings have been achieved for FY 2009/10 due to merit freezes effective October 1,
2009 for GSA, unclassified and "other" employees, and freezes in merits for AFSCME
employees effective May 1, 2010. The 2% pension contribution for AFSCME and GSA
(effective July 1, 2010) and for ,unclassified and "other" employees (effective January 18,
2010) will accrue to FY 2010/11 as explained further in this memo.
Further,. the City has worked to address the shortfall, including pursuing further contracts
savings by rebidding expiring contracts, holding off on hiring for non-essential positions, etc.,
in order to close-out the fiscal year in a position better than what was projected from the
second quarter information.
..~
s 't~
. ~.
~~~'
x
:',~
LTC ANALYSIS OF BUDGET TO ACTUAL REVENUES AND EXPENSES FOR•THE NINE MONTHS ENDED JUNE
30, 2010, WITH OPERATING BUDGET PROJECTIONS THROUGH SEPTEMBER 30, 2010 FOR THE GENERAL
FUND
-Page 2
Overview
An analysis of the actual .nine month operating revenues and expenditures .for the period
October 1.,2009 through June 30, 2010, reveals an operating surplus of $1.6,473,282. While
. the surplus as of June 30th seems unusual as compared to the shortfall projected for the year
ending on September 30th, it should be noted that the City receives a greater percentage of its
revenues in the first half ofthe year, Ad valorem tax revenues representing approximately 51
of total revenues have been just over 91 % received, a similar level as of the third quarter of ,
last fiscal year. The remaining 49% of revenues are approximately at the 66% level as of June
30th as compared. to 67% as of the same. period, last fiscal year.
The projected year-end. operating revenues and expenditures through September 30, 2010; is,
therefore, a more realistic snapshot of anticipated shortfall at this point in time: Further, while
.the actual revenues and expenditures presented are as of June 30, 2010, the projections have
incorporated more recent-information, as available.
A summary of preliminary projected General Fund :Revenues and ..Expenditures as. of
September 30, 2010 is as follows:
Budget/
Budget FY Projected Projected Over/
General Fund 2009/10 ~ Sept.30,2010 (Under)
Revenues $ 226,336,026 $ 226,429,150 $ 93,124
Expenditures 226,336,026 227,178,076 842,050
Surplus/ (Deficit) $ 0 $ (748,926) $ (748,926)
While property tax revenues were significantly reduced. in FY 2008/09. (2.3% of budget at year-
end),. we are projecting collections to be 99% of budget for FY 2009/10; based on the latest
information received and property tax collection levels in the last few months of the prioryear.
It is important to note that a component of the projected year-end revenues is, once again, due
to Building permit revenues in excess of budget (Licenses and Permits). This is due in part to
the ongoing review of permits at closeout, as welh as the increased revenues from elevator
inspection due to a catch up from prior year collections and increased elevator inspection fees
adopted February 1, 2010.- As stated in prior quarterly reports, it is anticipated that these
additional revenues will be at least partially offset by additional expenses in the Building
Department as a result of increased elevator inspections to eliminate past due inspections, as
well as the continuation of process improvement initiatives being implemented.
However, the General Fund budget had also assumed an increase of $1.5 million in revenues
outside of the Building Department due~to the implementation of the new fee structure for
Building Development Process Fees. The fee restructure was approved in January 2010 and
became effective on February 1, 2010, thereby reflecting 8 months under the new fee
' structure instead of the 12 months budgeted, and projects that were initiated under the old
process will continue to be in effect for some time. Further, kiuilding permit demand has
decreased from prioryears.While improved from the second quarterestimate, the projections
. reflect a slight decrease from budget in-the revenues from General Fund fees related to the
Building Development Process.'
t
LTC ANALYSIS OF BUDGET TO ACTUAL REVENUES AND EXPENSES FOR THE NINE MONTHS ENDED JUNE
30, 2010, WITH OPERATING BUDGET PROJECTIONS THROUGH SEPTEMBER 30, 2010 FOR THE GENERAL
FUND v
. ~ Page 3
In addition, the projections continue to assume increased telephone and electricity franchise
. taxes (Other Taxes), slightlyincreased sales tax revenues (Intergovernmental Revenues), and
increased Fire-Rescue. Transport revenues, at least in part due fo increased Fire-Rescue
Transport fees approved by the Commission in February, 2010. We are continuing to assume
that these increases will be partially offset by decreases in golf course revenues, fines and
forfeit revenues, interest earnings, and miscellaneous revenue. Consistent with the second
quarter projection, we are now projecting red light camera collections for the current fiscal year
will be significantly less than budgeted. This is primarily due to new legislation which provides
that the sfate receive $83 of each fine from red light camera infractions leaving the,City $75
` ratherthan $125 in'revenue. The legislation also includes restrictions of fines related to turning
. right on a red light that will likely reduce the overall number of citations issued. In addition, the
full deployment of all 15 cameras did not occur mid-fiscal year as budgeted.
The expenditure projection continues to reflect the impact of pro`=active initiatives by the City to
reduce expenses .below the adopted budget given the continued deterioration of economic
conditions and the resulting impacts on the City's FY2009/10 budget and for several years to
come. These initiatives included the continuation ofa modified hiring freeze, delayed hiring of
other positions, re-bidding of contracts where appropriate to take advantage of the .more
competitive economic environment, close scrutiny of major purchases, .and continuous
evaluation of opportunities to reduce costs in all departments.
However, these savings are offset by the impacts of merit and step increases as well as
,pension costs not included in the FY 2009/10 budget. Specifically, the .operating budget
` ' assumed.approximately $3.5 million in employee givebacks including an increased employee
` ,pension contribution of 2 percent ($2.055 million impact to the FY 2009/10 General Fund
Operating Budget) and elimination of merits and steps across all salary groups (approximately
$1.4, million): Half of the budgeted salary savings from merits and steps has been achieved
' through implementation for the GSA bargaining unit as well as Unclassified. and "Others"
' effective October 1, 2009 and the freezes in merits for AFSCME employees effective May 1,
-2010 (approximately $800,000 across all funds).
Similarly, the additional deduction of 2% from salaries fo,r the employee pension contribution
' for aII active AFSCME and GSA members who participate in the Miami. Beach Employees'
' ° Retirement. Plan - MBERP -- (effective July, 2010), as well as the Unclassified and "Others"
employee groups- simultaneously with .the GSA salary group (effective January, 2010) is
anticipated to generate approximately $670,000 in FY 2009/10 across all funds. However, as.
part of the terms and conditions of the Agreements with AFSCME and GSA, the additional 2%
pension contribution was placed in an Agency Account (where the Cify acts on kiehalf of the
employee in collecting the funds and transmitting those funds to the appropriate agency) until
- such -time -as~ the employee contribution. for all members of the Miami Beach Employees'.
.Retirement Plan is finalized. In September, 2010, the CWA agreed to the increased 2%
pension contribution. Given that the City normally makes its employer annual required
contribution (ARC) to the pension. fund on October 1St of each year, the timing of negotiations . .
has resulted in the City already making its required contributions. for FY 2009/10 in full on
October 1St, 2009. As a result,.while.the City will. realize pension savings from the 2%
contributions already implemented for the AFSCME,. GSA; Unclassifieds and "Others" salary
groups, the savings to the City realized from these contributions will occur in FY 2010/11
rather than FY 2009/10. In additior, the FOP and 1AFF salary groups agreed to a 5% health
contribution effective July 1, 2010, thereby generating.approximately"$700,000 in health care
savings.
LTC ANALYSIS OF BUDGET TO ACTUAL REVENUES AND EXPENSES FOR THE NINE MONTHS ENDED JUNE
' 30, 2010, WIl'H OPERATING BUDGET PROJECTIONS THROUGH SEPTEMBER. 30, 2010 FOR THE GENERAL
FUND '
Page 4
It is important to note that this projection continues to assume that the Citywide operating -
contingency of approximately $1 million will be fully spent. To the extent that it is not, the
shortfall will be reduced, , ,
For a detail of General Fund Revenues by category and Expenditures by Department, see
attached schedule. Detailed comments on those revenue and expenditure categories with
significant variances over $300,000 are shown below.
General Fund Operating Revenues
- As of June 30,2010. revenues collected were 79% of budget or $178,621,692. Historically, the
City receives a greater percentage of its revenues in the first half of the year, which must be
"considered when analyzing actual revenues and formulating year-end revenue projections.-
_ ~ Year-end. projections through September 30, 2010 which total $226.4 million indicate that
revenues will be above budget by $0.09 million or approximately 0.04%.
1. Other Taxes -This category includes franchise and utilitytaxes on services. Projections
- indicate that year-erid collections will exceed budget by 4% or $0.89 million. This is
primarily due to an increase in revenues from phone services and electricity.
2. .Licenses and Permits-This category is comprised of licenses and building and special
use permits. Collections are projected to surpass the budget by 12%, mainly due to '
- increase in revenues from the City Business.Tax receipts, Certificate of Use and Building
.permits.
3. Charges for Services -.Non Golf Course Revenues Projections indicate that year-end
collections will be above .budget by 17% or $0.66' million. This is due to recently
implemented increases in transport fees. '
4. Charges for Services -Golf Course Revenues Projections indicate that year-end
.collections will be below budget by 9% or $530,000. This is mainly due to lower than
expected revenues which reflect the decline in visitor and group business for the Miami
- Beach and the Normandy Shores Golf Clukis as well as an ,unusually cold and rainy
winter. However, this amount is projected to be offset by similar savings in golf course
expenditures.
- 5. fines and Forfeits -Projections indicate that year-end collections will.be below budget
_ by 21 % or $671,000. This is mainly due to lower than budgeted fines from. red light
cameras.
6. Interest -Projections indicate that year-end collections will be below budget by 15% or
$782,000. This is mainly due to reduced investment returns from long term investment
vehicles that are maturing in the current fiscal year and will be reinvested at lower interest
rates. .
F
LTC ANALYSIS OF BUDGET TO ACTUAL REVENUES AND EXPENSES FOR THE NINE MONTHS ENDED JUNE
30, 2010, WITH OPERATING BUDGET PROJECTIONS THROUGH SEPTEMBER 30, 2010 FOR THE GENERAL
FUND
. Page 5
7. Miscellaneous -This category .includes concessions, planning fees., and other
reimbursements. Projections indicate that year-end revenues will be 4% below budget or
by $308,000. This is due primarily to lower than anticipated revenues as a result of
savings in the CIP Department .and therefore lower cost allocations to capital
. ' ~ improvement projects.
General Fund Operating Expenditures
As of June 30, 2010, actual expenditures were 72% of budget or $162,148,410. Year-end
projections through September 30, 2010-indicate that expenditures will be $227.1 million,
approximately 0.4% over budget for the reasons noted above.
Significant variances to budget in excess of $300;000' by General Fund department are
. explained below:
4. Building
. Budget ~ .Projected Budget/Projected
FY 2009/10 Sept. 30, 2010 Over/(Under)
$8,601,507 $9,453,586 $852,079
As outlined in the second quarter projection, in addition to the impacts from
unbudgeted FY 2009/1:0 merits and steps. projected through year-end, and
approximately $115,000 from the 2% pension contribution impact, the Building
Department is projected to exceed its budget due to professional services fees for
. increased elevator inspections (offset by increased revenues), the impact of riot
n .. outsourcing permits clerks as of this time, as well as the ongoing space reconfiguration
initiative as recommendations by Watson Rice as part of their performance and
organizational review of the Building Department between 2008 and 2009. The space
configuration project includes reconfiguration for electronic plan review on the second
floor, .records management, and reconfiguration of the lobby to be more customer-
friendly. Building Permit revenues in excess of budget ($1.6 million) are more than
sufficient to offset these additional expenditures.
2. Parks & Recreation -Golf Courses
Budget Projected Budget/Projected
FY 2009/10 Sept. 30; 2010 "Over/(Under)
$6,295,105 ~ $5,723,731 ($ 57,1,374)
Approximately $571,000 (9% of budget) is also anticipated from savings in
. ~ 'expenditures at the City golf courses as a result of several cost savings measures
introduced iri response to reduced demand arid corresponding reduced revenues at
. the golf courses.
- LTC ANALYSIS OF BUDGET TO ACTUAL REVENUES AND EXPENSES FOR THE NINE MONTHS ENDED JUNE `
. 30, 2010, WITH OPERATING $UDGET PROJECTIONS THROUGH SEPTEMBER 30,, 2010'FOR THE GENERAL
. FUND
Page 6 •
3. Parks & Recreation -Other -
Budget Projected Budget/Projected ,
FY 2009/10 Sept. 30, 2010 Over/(Under)
` $22,764,1.1.9 $21,775,232 ($988,887) ,
Despite the impacts from unbudgeted'FY.2009/10merits and steps projected through
year-end, and .approximately $205,000 from the 2% pension contribution impact,
.approximately $988,000 in savings (4% of .budget) is anticipated in the'Parks and
Recreation Departmentfrom the rebidding and continued management of contracted .
landscaping cycles, as well as salary savings and .savings across multiple operating
accounts in the Recreation divisiori.
... 4.. Police
Budget Projected Budget/Projected
FY 2009/10 Sept., 30, 2010 Over/(Under)
- $81,127,849 $82,424,797 $1,296,948
The Police Department is expected to overspend its budget by approximately $1.2
.million (1.6% of budget), of which $740,000 is from the 2% pension contribution impact
and the balance is primarily due to step increases that are projected through year-end.
5. Fire..
Budget Projected ~ Budget/Projected -
FY 2009/10 Sept. 30, 2010 -Over/(Under)
' $50,900,788 $52,441,908 $1,541,120
- The Fire Department is expected to overspend its budget by approximately $1.5 million
(3% of budget), of which $530,000 is from the 2% pension contribution impact,
overtime above budgeted levels, and step increases that are projected through year-
end.
6. Citywide Accounts
Budget Projected Budget/Projected
. FY 2009/10 Sept. 30, 2010 Over/(Under)
$10,601.,432 $9,923,750 ($677,682}
' ~ Approximately $677,000 in savings, is projected in Citywide accounts, of which
- approximately $350,000 is: due to lower than anticipated overtime usage during the
Super Bowf and Pro Bowl. Accumulated leave payouts are also projected to be lower
• ~ than budget by $200,000. •
CONCLUSION ~ .
This analysis of budgetto actual operating.revenues and expensesfor_the General Fund with
projections through September 30, 2010, provides the status of the FY 2009/10 General Fund
Budget as of the first nine months of the Fiscal Year. The Administration continues to monitor
- revenues and expenses and make every effort to close the fiscal year in a positive position
- with overall .revenues exceeding overall expenses.
,
JMG/KG ~ C
I., ~ ~ •
FY 2009/10 General Fund Operating Summary Projection
Adopted Actual 1Q Projected 2Q Projected 3Q Projected Proj-Adptd
FY 2009110 June 3Q 2010 FY 2009/10 FY 2009/10 FY 2009!10 Over/ Under
Ad Valorem Taxes
Ad Valorem Taxes-S Pte Costs
Ad Valorem Cap.Renewaf & Replace.
Ad Valorem Taxes-Norm Shores
Other Taxes
Licenses and Permits
Intergovernmental.
Charges for Services
Golf Courses
Fines and Forfeits
Interest
Rents and Leases
Miscellaneous
Other -Resort Tax contribution
Other -Non Operating revenues
Reserve-Building Department Ops.
$ 103,809,283 $ 94,840,983 $ 103,809,283 $ 103,809,283 $ 102,298,560
9,896,609 9,041,616 ' " 9,896,609 9,896,609 9,896,609
2,026,707 1,851,562 2,026,707 2,026,707 2,026,707
95,795 87,515 95,795 95,795 95,795
24,040,704 16,116,584 25,247,836 25,239,541 24,936,810
14,526,875 12,789,921 13,800,137 14,837,428. 16,315,806
9,172,470 6,285,022 9,299,562 9,374,282 9,428,100
3,961,750 3,482,090 4,125,137 4,352,161 4,624,513
5,731,538 4,148,687 5,366,538 5,321,538 5,201,538
3,182,000 1,698,903 3,037,200 2,321,274 2,511,209
5,336,000 (1,705,488) 4,751,000 4,519,000 4,554,000
4,578,161 3,859,959 4,288,091 4,631,479 4,869,915
8,590,050 3,743,308 8,197,598 8,233,351 8,281,504
22,465,440 16,849,080 22,465,440 22,465,440 22,465,440
7,375,935 5,531,950 7,375,935 7,375,935 7,375,935
1,546,709 0 1,546,709 .1,546,709 1,546,709
0 0 0 0 0
$ 226,336,026 $ 478,621,692 $ 225,329,577 $ 226,046,532 $ 226,429,150
1,510,723
0
0
0
896,106
1,788,931
255,630
662,763
(670,791)
(782,000)
291,754
(308,546)
0
0
0
0
EXPENDITURES
Mayor and Commission
City Manager
Communications
City Clerk
Finance
Office of Budget & Perf Improve.
Human Resources/Labor Relations
Procurement
City Attorney
Real Estate, Housing & Comm Dev
Community Services
Homeless Services
Building
Planning
Tourism & Cultural Development
Code Compliance
Parks and Recreation
Golf Courses
Public Works
Capital Improvement Program
Fire
Police
Citywide Accounts
Citywide Acc-Operating Contingency
Citywide Accounts-Normandy Shore
Citywide Accounts-Transfers
Capital Renewaf & Replacement
CWA/FOP/IAFF/AFSCME Steps/Merits
$ 1,478,523 $ 1,056,718 $ 1,487,555 $ 1,473,155 $ 1,452,615
2,293,523 1,651,747 2,322,154 2,322,154 2,288,383
914,249 628,448 914,249 919,972 880,954
1,567,479 1,069,577 1,555,204 1,555,204 1,531,045
4,416,396 3,274,537 4,428,104 4,448,129 4,440,929
1,993,560 1,485,897 2,040,234 2,033,207 1,973,703
1,764,137 1,242,819 1,784,877 1,755,101 1,732,414
901,633 662,955 915,349 916,349 917,349
4,227,546 3,029,053 4,319,536 4,177,536 4,123,789
860,446 622,943 871,302 876,302 824,226
410,332 313,891 416,403 421,403 417,971
673,763 457,702 686,296 688,296 692,748
8,601,507 6,584,032 9,396,534 9,396,534 9,453,586
2,983,728 2,088,324 3,004,443 2,921,394 2,939,765
2,644,076 2,071,097 2,628,322 2,644,076 2,602,392
4,094,956 3,008,885 4,201,572 4,166,462 4,157,106
22,764,119 14,971,128 22,274,507 22,187,507 21,775,232
6,295,105 4,511,423 5,924,328 5,859,324 5,723,731
6,545,304 4,478,371 6,565,592 6,501,213 6,443,313
3,843,831 2,554,619 3,565,443 3,565,443 3,584,626
50,900,788 38,932,465 52,041,978 52,315,978 52,441,908
81,127,849 60,598,248 82,144,010 82,262,351 82,424,797
10,601,432 6,848,734 9,843,432 10,230,432 .9,923,750
1,075,660 0 1,075,660 1,075,660 1,075,660
147,377 0 147,377 147,377 147,377
1,182,000 4,797. 1,182,000 1,182,000 1,182,000
2,026,707 0 2,026,707 2,026,707 2,026,707
0 0 380, 000 300, 000 0
$ 226,336,026 $ 162,148,410 $ 228,143,168 $ 228,369,266 $ 227,178,076
(5,140)
(33,295)
(36,434)
24;533
(19,857)
(31,723)
15,716
(103,757)
(36,220)
7;639
18,985
852,079
(43,963)
(41,684)
62,.150
(988,887)
(571,374)
(101,991)
(259,205)
1,541,120
1,296,948
{677,682)
0
0
0
0
EXCESS OF REVENUES OVER/
(UNDER) EXPENDITURES $ 0 $ 16,473,282 $ 2,813,591 $ 2,322,734 $ 748,926 $ 748,926