2011-27603 Reso RESOLUTION NO. 2011 -27603
A RESOLUTION OF THE MAYOR AND CITY COMMISSION
OF THE CITY OF MIAMI BEACH, FLORIDA, ADOPTING
THE FIRST AMENDMENT TO THE GENERAL,
ENTERPRISE, INTERNAL SERVICE AND RESORT TAX
FUNDS BUDGETS FOR FISCAL YEAR (FY) 2009/10 TO
APPROPRIATE PRIOR YEAR ENCUMBRANCES AND
AMEND CERTAIN BUDGETS
WHEREAS, Florida Statutes prohibit the over expenditure of departmental budgets
and funds; and
WHEREAS, certain departments reflect additional expenses in excess of budget in
large part due to the fact that the City did not realize much of the $3.5 million in employee give backs
anticipated for FY 2009/10, as the timing of negotiations deferred much of these savings to future
years and to provide for the transfer of year -end surplus to Sewer, Stormwater and Water rate
stabilization funds; and
WHEREAS, these additional expenses are offset by increased revenues 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 $1.6 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, however, the City's Capital Reserve was established in FY 2005/06 at
a time when the industry was at a peak, with project bids often coming in significantly higher than
budgeted; today is a very different market, with construction bids being received significantly under
project budgets; and the Capital Reserve has accumulated approximately $12 million in funding; and
WHEREAS, as a result, it is recommended that the Commission waive the policy
that requires that at least half of the FY 2009/10 year -end surplus be used to fund the City's Capital
Reserve Fund; and
WHEREAS, the City's financials will reflect approximately $1.95 million in "Unrealized
Losses on Investments" which has a non -cash impact for FY 2009/10; and
WHEREAS, the City is recommending the transfer of an additional $1.95 million from
the 2% Resort Tax Fund which has revenues in excess of budget by approximately $3.8 million; and
WHEREAS, with the transfer of the additional 2% Resort Tax revenues, the General
Fund will reflect a budget surplus of $1.6 million; and
WHEREAS, it is recommended that the General Fund budget be amended to use
the FY 2009/10 year -end $1.6 million budget surplus to be set aside in a reserve the FY 2011/12
budget; and
WHEREAS, amendments are needed for the Water, Sewer and Stormwater Funds
simply to allow the transfer of surplus revenues to rate stabilizations funds so that they can be
available for future years; and
WHEREAS, the FY 2010/11 adopted budget anticipated the transfer of these funds
so that the net revenues at FY 2010/11 year -end will be sufficient to exceed the bond coverage
requirements, thereby avoiding the need for Sewer, Stormwater, and Water fee increases; and
WHEREAS, the Internal Service Fund Budgets of the Central Service and
Information Technology Funds require an amendment; the Central Services Fund exceeded its
budget by $19,254 and the Information Technology Fund exceeded its budget by $589,901 offset by
charges to departments, use of retained earnings for certain capital expenses and other revenues;
and
WHEREAS, the Resort Tax Fund revenues are in excess of budget; and
WHEREAS, the Resort Tax Fund Budget requires an amendment for certain
expenditures which are based on a percent of revenues and are projected to exceed budget; and
WHEREAS, as outlined to the Commission in LTC #231 -2010 dated August, 2010,
the City was required to make a mandatory payment of the remaining principal balance of the
Sunshine State Loan in the amount of $2.93 million in September, 2010 and this repayment was
paid from the Resort Tax Fund requiring the payment of an additional $2.29 million from retained
earnings in addition to FY 2009/10 budgeted debt service payments; and
WHEREAS, as part of the ongoing clean -up of accounts in the City, certain Service
and Special Improvement Districts, previously funded by Resort Tax Funds, have deficits of
$735,553 going back many years which were never funded and research shows that they should
have been funded by Resort Taxes at that time; and
WHEREAS, it is recommended that Resort Tax retained earnings be used to fund the
additional debt service payments and the transfer of $735,553 to Service and Special Improvement
Districts, along with the additional $1.95 million transfer to the General Fund from the 2% Resort Tax
revenues in excess of budget.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the policy is waived for FY
2009/10 requiring that fifty percent of year -end surplus in the General Fund be used to increase
funding in the City's Capital Reserve Fund; and that the first amendment to the FY 2009/10 General
Fund, Enterprise Funds, Internal Service Funds, and Resort Tax Fund budgets is adopted as shown
on the following pages:
Changes in
FY 2009/10 Rev /Exp Rec. Additional FY 2009/10
GENERAL FUND Adopted Budget Appropriation Appropriation Amended Budget
REVENUES
OPERATING REVENUES
Property Tax (5.5472) $ 103,809,283 $ (1,645,846) $ 0 $ 102,163,437
Property Tax (5.5472) -So Pt Costs 9,896,609 0 0 9,896,609
Property Tax (0.1083) - Capital R & R 2,026,707 0 0 2,026,707
Property Tax - Norm Shores (0.8567) 95,795 0 0 95,795
Other Taxes 24,040,704 720,455 0 24,761,159
Licenses and Permits 14,526,875 1,411,438 0 15,938,313
Intergovernmental 9,172,470 180,447 0 9,352,917
Charges for Services incl. Golf Courses 9,693,288 151,312 0 9,844,600
Fines and Forfeits 3,182,000 (436,806) 0 2,745,194
Interest 5,336,000 (1,658,418) 0 3,677,582
Unrealized Gains /(Loss) - Investments 0 (1,950,550) 0 (1,950,550)
Rents and Leases 4,578,161 234,845 0 4,813,006
Miscellaneous 8,590,050 (514,650) 0 8,075,400
Other- Resort Tax 22,465,440 0 1,950,550 24,415,990
Reserves - Buildig Department Revenues 1,546,709 0 0 1,546,709
Other - Non-Operating 7,375,935 0 0 7,375,935
Total General Fund $ 226,336,026 $ (3,507,773) $ 1,950,550 $ 224,778,803
FY 2009/10 Changes in FY 2009/10
Adopted Rev /Exp Rec. Additional Amended
GENERAL FUND Budget Appropriation Appropriation Budget
APPROPRIATIONS
Department
MAYOR & COMMISSION 1,478,523 (38,701) $ 0 $ 1,439,822
CITY MANAGER 2,293,523 (28,928) 0 2,264,595
Communications 914,249 (49,264) 0 864,985
BUDGET & PERFORMANCE IMPROVE 1,993,560 (12,063) 0 1,981,497
FINANCE 4,416,396 25,516 0 4,441,912
Procurement 901,633 6,038 0 907,671
HUMAN RESOURCES /LABOR RELATIONS 1,764,137 (65,818) 0 1,698,319
CITY CLERK 1,567,479 (75,382) 0 1,492,097
CITY ATTORNEY 4,227,546 (115,244) 0 4,112,302
REAL ESTATE, HOUSING & COMM DEVEL 860,446 1,997 0 862,443
BUILDING 8,601,507 672,112 0 9,273,619
PLANNING 2,983,728 (95,645) 0 2,888,083
TOURISM & CULTURAL DEVELOPMENT 2,644,076 (1,204) 0 2,642,872
CODE COMPLIANCE 4,094,956 116,166 0 4,211,122
COMMUNITY SERVICES 410,332 (1,005) 0 409,327
HOMELESS SERVICES 673,763 (123,456) 0 550,307
PARKS & RECREATION incl Golf Courses 29,059,224 (1,808,788) 0 27,250,436
PUBLIC WORKS 6,545,304 (292,665) 0 6,252,639
CAPITAL IMPROVEMENT PROJECTS 3,843,831 (254,770) 0 3,589,061
POLICE 81,127,849 559,005 0 81,686,854
FIRE 50,900,788 987,884 0 51,888,672
Citywide Accounts -Other 11,677,092 (2,390,809) 0 9,286,283
Citywide Accounts - Normandy Shores 147,377 0 0 147,377
Sub Total General Fund $ 223,127,319 $ (2,985,024) $ 0 $ 220,142,295
Transfers
Capital Reserve Fund $ - $ 0 $ 0 $ 0
Pay -As- You -Go Capital Fund 0 0
Capital Investment Upkeep Account 382,000 (172,769) 209,231
Info & Comm Technology Fund 800,000 800,000
Reserve Future Building Dept Needs 0 0
Reserve - Future Budget Shortfalls 0 1,600,570 1,600,570
GASB 45 Reserve -OPEB 0 0
CAPITAL RENEWAL & REPLACEMENT 2,026,707 0 2,026,707
Sub Total Transfers $ 3,208,707 $ (172,769) $ 1,600,570 $ 4,636,508
Total General Fund $ 226,336,026 $ (3,157,793) $ 1,600,570 $ 224,778,803
FY 2009/10 Changes in FY 2009/10
Adopted Rev /Exp Rec. Additional Amended
Budget Appropriation Appropriation Budget
ENTERPRISE FUNDS
REV /EXP APPROPRIATIONS
Convention Center $ 14,095,401 $ 0 $ 0 $ 14,095,401
Parking 31,337,778 0 0 31,337,778
Sanitation 16,351,303 0 0 16,351,303
Sewer Operations 35,700,599 0 4,068,622 39,769,221
Stormwater Operations 11,439,438 0 3,542,948 14,982,386
Water Operations 31,693,409 0 1,828,069 33,521,478
Total Enterprise Funds $ 140,617,928 $ 0 $ 9,439,639 $ 150,057,567
INTERNAL SERVICE FUNDS
REV /EXP APPROPRIATIONS
Central Services $ 825,568 $ 19,254 $ 0 $ 844,822
Fleet Management 8,813,996 0 0 8,813,996
Information Technology 14,053,320 589,901 0 14,643,221
Property Management 8,414,159 0 0 8,414,159
Risk Management 17,695,708 0 0 17,695,708
Total Internal Service Funds $ 49,802,751 $ 609,155 $ 0 $ 50,411,906
SPECIAL REVENUES
REV /EXP APPROPRIATIONS
Resort Tax $ 38,888,000 $ 2,487,147 $ 2,686,103 $ 44,061,250
7th Street Garage Operations 2,070,000 0 0 2,070,000
5th & Alton Garage- City's Share of Shortfall 162,511 0 0 162,511
Art in Public Places 2,592,324 0 0 2,592,324
Information and CommunicationsTechnology Ft 586,593 0 586,593
Total Special Revenues $ 44,299,428 $ 2,487,147 $ 2,686,103 $ 49,472,678
Passed and adopted this 9th day of February 2011.
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M. yor`
ATTEST:
P RA-LbA APPROVED AS TO
City Clerk FORM & LANGUAGE
& FOR EXECUTION
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Condensed Title:
A resolution to adopt the first amendment to the General, Enterprise, Internal Service, and Resort tax Funds
Budgets for Fiscal Year (FY) 2009/10 to appropriate prior year encumbrances and amend certain budgets
A resolution to adopt the first amendment to the General Fund Budget for Fiscal Year (FY) 2010/11 to set aside
a reserve for the FY 2011/12 Budget
Key Intended Outcome Supported:
Ensure expenditure trends are sustainable over the long term
Improve the City's overall financial health and maintain overall bond rating
Supporting Data (Surveys, Environmental Scan, etc.):
The FY 2010/11 General Fund budget included the use of $3.7 million FY 2008/09 year -end surplus which had
been set -aside for FY 2010/11. This one -time revenue will not be available for FY 2011/12, immediately
creating a gap that will need to be addressed in FY 2011/12. Therefore, I am recommending setting aside
funds from the FY 2009/10 year -end surplus as a reserve for FY 2011/12 as well as an additional $1.95 million
anticipated to be available from fund balance in FY 2010/11.
Issue:
Whether to adopt the first amendments to the FY 2009/10 and FY 2010/11 operating budgets.
Item Summary/Recommendation:
Overall, General Fund expenditures are $3,157,793 below budget and there is a General Fund operating budget
surplus of $1,600,570 (0.7 %). This surplus reflects the impact of on -going pro- active initiatives by the City to
reduce expenses and is despite the fact that the City did not achieve much of the $3.5 million in employee give
backs budgeted for FY 2009/10, as the timing of negotiations will yield much of these savings in FY 2010/11
and future years. Had the full $3.5 million been achieved the year -end surplus would have been closer to $3.8
million.
However, the City's financials also reflect approximately $1.95 million in "Unrealized Losses on Investments ".
Although this is a non -cash impact for FY 2009/10, it will reflect on the financials as a loss for FY 2009/10, if not
addressed, potentially creating concems with credit rating agencies, etc. Therefore, I am recommending the
transfer of an additional $1.95 million from the 2% Resort Tax Fund which has revenues in excess of budget.
The City's financial policies require that one time revenues (such as the year -end surplus) must be used for
non - recurring expenses, and that at least half of the annual year -end surplus must be al located to the
City's Capital Reserve Fund. However, the City's Capital Reserve was established at a time when project bids
were often coming in significantly higher than budgeted. I am recommending that the Capital Reserve transfer
requirement be waived for the FY 2009/10 year -end surplus, and that the General Fund budget be amended to
reflect a $1.6 million set aside reserve for the FY 2011/12 budget. Since the "Unrealized Losses on
Investments" is a non -cash impact, and covering the losses will result in additional cash in the General Fund, I
am also recommending amending the FY 2010/11 budget to set aside these funds for the FY 2011/12 budget.
Amendments are needed for the Water, Sewer and Stormwater enterprise funds to allow the transfer of surplus
revenues to rate stabilizations funds so that they can be available for future years as anticipated in the FY
2010/11 adopted budget, avoiding the need for fee increases. The Internal Service Fund Budgets of the Central
Service and Information Technology Funds require an amendment of $19,254 and $589,901, respectively,
offset by charges to departments, use of retained eamings for capital expenses and other revenues.
The Resort Tax Fund operating revenues are in excess of budget and, as a result, certain expenditures, based
on a percent of revenues, are projected to exceed budget. Further, as outlined to the Commission in LTC #231-
2010 dated August, 2010, the City was required to make a mandatory payment of the remaining principal
balance of the Sunshine State Loan in September, 2010. This was paid from the Resort Tax Fund, requiring a
budget amendment. In addition, the amendment includes funding for certain Service and Special Improvement
Districts that were pending payment of Resort Taxes from prior years.
Financial Information:
Source of Amount Account
Funds:
2
OBPI Total
Financial Impact Summary:
Sign -Offs:
D pa ent D or Assistant City Manager City Manager
Q
AGENDA ITEM " I D 1M IA M I BEA C H DATE 1 19 I1
1
MIAM1BEAH H
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeach {I.gov
COMMISSION MEMORANDUM
TO: Mayor Matti Herrera Bower and Members of the City Co .' - on
FROM: Jorge M. Gonzalez, City Manager IIPV
DATE: February 9, 2011
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION
OF THE CITY OF
MIAMI BEACH, FLORIDA, ADOPTING THE FIRST AMENDMENT TO THE
GENERAL, ENTERPRISE, INTERNAL SERVICE AND RESORT TAX FUNDS
BUDGETS FOR FISCAL YEAR (FY) 2009/10 TO APPROPRIATE PRIOR
YEAR ENCUMBRANCES AND AMEND CERTAIN BUDGETS
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA, ADOPTING THE FIRST AMENDMENT TO THE
GENERAL FUND BUDGET FOR FISCAL YEAR (FY) 2010/11 TO SET ASIDE
A RESERVE FOR THE FY 2011/12 BUDGET
ADMINISTRATION RECOMMENDATION
Adopt the resolution amending the FY 2009/10 General Fund, Enterprise Funds, Internal
Service Funds and Resort Tax Fund Budgets, appropriating funds to cover prior year
encumbrances, and amend certain department budgets.
Adopt the resolution amending the FY 2010/11 General Fund Budget, setting aside a
reserve for the FY 2011/12 budget.
GENERAL FUND ANALYSIS
The year -end budget to preliminary actual comparisons are presented in the following
pages.
These comparisons show that, overall, there is an operating budget surplus of $1,600,570
(0.7 %) in the General Fund. A summary of the preliminary General Fund Revenues and
Expenditures as of September 30, 2010 is as follows:
Preliminary
Budget FY Actual FY Budget/ Actual
General Fund 2009/10 2009/10 Over/ (Under)
Revenues* $ 226,336,026 $ 224,778,803 $ (1,557,223)
Expenditures 226,336,026 223,178,233 (3,157,793)
Surplus/ (Deficit) $ 0 $ 1,600,570 $ 1,600,570
Note: * Excludes $1.95 million in Unrealized Losses on Investments
First Amendment to the FY 2009/10 General Fund, Enterprise, Internal Service and Resort Tax Budgets
First Amendment to the FY 2010/11 General Fund Budget
Page 2
This surplus reflects the impact of on -going pro- active initiatives by the City to reduce
expenses below the operating budget given the impact of the economy on the City's
budget in recent years and given the continuing challenges anticipated, at least in the
short-term. These initiatives included the continuation of a 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.
It is important to note that this surplus is despite the fact that the City did not realize much
of the $3.5 million in employee give backs anticipated for FY 2009/10 in the General Fund
based on an assumption of a freeze in merit or steps ($1.4 million), an additional 2%
pension contribution for all employees for the entire year ($2.055 million). In employee
givebacks, it is estimated that the freezes in merits for non - bargaining employees and
those in the Government Supervisors Association (GSA) Unions which was implemented
October 1, 2009 and for the American Federation of State, County and Municipal Service
Employees, implemented mid fiscal year, resulted in savings of approximately $800,000.
Although assumed, no step savings were achieved for the Fraternal Order of Police (FOP)
or for the International Association of Fire Fighters (IAFF). However, the City did achieve
approximately $430,000 in savings from these two unions during FY 2009/10 through
additional employee contributions to health insurance which became effective July, 2010.
Savings from the additional pension contributions by non - bargaining, GSA and AFSCME
employees, while generating approximately $500,000, will accrue to future pension
payments, rather than to FY 2009/10 as previously assumed. No savings were achieved
during FY 2009/10 for the Communications Workers of America (CWA) employees. Had
the full $3.5 million in savings been achieved as assumed rather than only the $800,000 in
merit savings from non - bargaining, GSA and AFSCME employees and the $430,000 in
health insurance savings from FOP and IAFF employees, the year -end surplus would
have been closer to $3.8 million.
However, the City's financials will also reflect approximately $1.95 million in "Unrealized
Losses on Investments" which have a non -cash impact for FY 2009/10. Govemmental
Accounting Standards Board Statement #31 (GASB 31), requires the City to report its
investments at fair market value as if they were immediately liquidated on September 30
each year, and to recognize these as "unrealized gains or losses in investments ", although
the actual cash impact is not felt until future years. By comparison, in the prior fiscal year,
the City had a gain of $2.3 million. Although this is a non -cash impact, it will still reflect on
the financials as a loss for FY 2009/10, if not addressed, potentially creating concerns with
credit rating agencies, etc. Therefore, I am recommending the transfer of an additional
$1.95 million from the 2% Resort Tax Fund which has revenues in excess of budget by
approximately $3.8 million, as explained further in the resort tax section below.
A component of the projected year -end revenues is, once again, due to Building permit
revenues in excess of budget (Licenses and Permits) by $1.76 million, in part due to the
ongoing review of permits at closeout ($1 million). As stated in prior quarterly reports,
these additional revenues are partially offset by additional expenses in the Building
Department as a result of increased eased elevator inspections to eliminate ast due inspections,
P p ,
as well as the continuation of process improvement initiatives being implemented.
First Amendment to the FY 2009/10 General Fund, Enterprise, Internal Service and Resort Tax Budgets
First Amendment to the FY 2010/11 General Fund Budget
Page 3
The City has performed its annual analysis of building permit fee revenues and Building
Department expenses. Pursuant to Florida Statutes, it is required that unexpended
building fee revenue be carried forward to future years to fund allowable activities in
enforcing the Florida Building Code. The analysis as of September 30, 2009 showed a
carryforward balance of approximately $12.5 million, of which $6.2 million had been set -
aside in a Building Operations Reserve, and the balance intended to be paid down over
future years.
The FY 2009/10 budget assumed $7.7 million in Building revenues and $10.1 million in
expenses (included indirect costs related to support provided by administrative
departments and the Building Department's share of the City's liability for "Other Post
Employment Benefits "). This resulted in a budgeted subsidy of $2.4 million from other
General Fund revenues to the Building Department. This subsidy would have reduced the
amount to be paid to the Building Department in future years. The analysis as of
September 30, 2010 reflects $9.4 million in Building revenues and $10.8 million in
expenses, reducing the "subsidy" to $1.4 million.
Preliminary
Budget FY Actual FY Budget/ Actual
Building Department 2009/10 2009/10 Over/ (Under)
Revenues $ 7,687,750 $ 9,443,040 $ 1,755,290
Department Expenditures 8,601,507 9,273,619 $ 672,112
Other Expenditures 1,493,612 1,578,808 85,196
Surplus/ (Deficit) $ (2,407,369) $ (1,409,387) $ 997 982
Interest on Funds "Owed" $ 339,120 $ 291,534
Change from Prior Year in
Amount "Owed" $ (2,068,249) $ (1,117,853)
As a result, the carryforward balance is approximately $11.4 million, of which the City has
already funded $6.2 million in prior years, leaving a remaining balance of $5.2 million to be
repaid in future years, a decrease of $1.1 million from the prior year.
The City's financial policies adopted pursuant to Resolution 2006 -26341 and Resolution
2002 -24764 require that one time revenues (such as the year -end surplus) must be
used for non - recurring expenses, and that at least half of the annual year -end
surplus must be allocated to the City's Capital Reserve Fund. However, the City's
Capital Reserve was established in FY 2005/06 at a time when the industry was at a peak,
and project bids were often coming in significantly higher than budgeted. The market for
the last couple of years, however, has been very different, with construction bids being
received significantly under projects budgets, and at the same time, the Capital Reserve
has accumulated approximately $12 million in funding. Therefore, I am recommending
that the Capital Reserve transfer requirement again be waived for the FY 2009/10 year-
end surplus similar to what was done last year.
Further, as in FY 2008/09, no use of the General Fund is recommended to address the
City's FY 2009/10 accrued liability for post employment benefits (primarily health
insurance) pursuant to recently enacted reporting requirements of Governmental
Accounting Standards Board #44 (GASB 45).
First Amendment to the FY 2009/10 General Fund, Enterprise, Internal Service and Resort Tax Budgets
First Amendment to the FY 2010/11 General Fund Budget
Page 4
The FY 2010111 Adopted Budget was the most challenging in recent years, with a budget
gap of approximately $30 million, and following 3 prior years of reduced revenues and
cuts. Overall the City's budget has absorbed reductions of approximately $48 million and
260 positions over 4 years. The employee "give- backs" totaled approximately $12 million
in savings in FY 2010/11 and almost $15 million between FY 2009/10 and FY 2010/11,
representing more than $60 million in combined "givebacks" and reductions over 4
years.
However, in order to address such a significant gap, the FY 2010/11 budget also included
the use of $3.7 million in FY 2008/09 surplus previously set aside to address the
significant shortfall anticipated for FY 2010/11. Since the FY 2008/09 revenue is a one-
time revenue, it will not be available for FY 2011/12, thereby, immediately creating a gap
that will need to be addressed in FY 2011 /12. Other potential impacts to the FY 2011/12
budget include the possibility of further declines in property taxes (for example, a 5%
decline represents $7.5 million); and potential pension increases as poor investment
experience from FY 2007/08 and FY 2008/09 continue to be recognized (although these
may be somewhat mitigated by recent changes to the pension plans and investment gains
in FY 2009/10). For this reason, I am once again recommending that the General Fund
budget be amended to set aside the $1.6 million in a reserve for possible use to address
potential shortfalls in the FY 2011/12 budget.
Also, accompanying this agenda item is a separate resolution amending the FY 2010/11
budget to set aside the $1.95 million. As explained above, the $1.95 million in additional
2% Resort Tax transfers to address "Unrealized Losses on Investments" is required so as
not to show a loss on the financials for FY 2009/10. However, since the "Unrealized
Losses on Investments" is a non -cash impact, it will result in additional cash in the General
Fund. As a result, I am also recommending an amendment to the FY 2010/11 budget
setting aside the $1.95 million as a reserve for possible use to address potential shortfalls
in the FY 2011/12 budget.
GENERAL FUND OPERATING REVENUE AND EXPENDITURE VARIANCES
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 in the following section.
Revenues
1. Ad Valorem Property Taxes — Year -end collections of $102,163,437 are 1.6% under
budget, creating a net shortfall of $1,645,846. This is primarily due to higher than
anticipated property value appeals approved by Miami -Dade County as well as delays
in processing those appeals.
2. Other Taxes - This category includes franchise and utility taxes on services. Based
on actual collections of $24,761,159, an excess of $0.720 million or 3% resulted at
year -end. This is primarily due to an increase in revenues from electric and telephone
utility taxes.
3. Licenses and Permits - This category is comprised of licenses and building and
First Amendment to the FY 2009/10 General Fund, Enterprise, Internal Service and Resort Tax Budgets
rP 9
First Amendment to the FY 2010/11 General Fund Budget
Page 5
special use permits. In total, the actual collections for Licenses and Permits
exceeded budget by $1,411,438, or 9.7 %. Of this amount, over $400,000 was due to
increased collections from Business Tax Receipts, primarily due to increased
enforcement of businesses who had not paid their tax. An additional $1.3 million is
due to Building Department revenues in excess of budget of which $1.0 million is due
to the ongoing review of permits at closeout. 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. In addition, building permit
demand has decreased from prior years. While improved from projections during the
year, the actual revenues reflect a slight decrease from budget in the revenues from
General Fund fees related to the Building Development Process.
4. Charges for Services — Non Golf Course Revenues - Year -end collections are
above budget by 17.5% or $0.7 million. This is due to recently implemented
increases in rescue transport fees.
5. Charges for Services — Golf Course Revenues Year -end collections are below
budget by 9% or $0.54 million. 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 Clubs as well as an unusually cold and rainy winter.
However, this amount is offset by similar savings in golf course expenditures.
6. Fines and Forfeits - Year -end collections are below budget by 14% or $0.4 million.
This is mainly due to lower than budgeted fines from red light cameras.
7. Interest - Year -end collections are below budget by 31 % or $1.66 million. This is
mainly due to reduced investment returns from long term investment vehicles that
matured in the current fiscal year and are reinvested at prevailing interest rates which
are much lower in this investment climate.
8. Miscellaneous — This category includes concessions, planning fees, and other
reimbursements. Year -end revenues are 1% below budget or by $0.5 million. 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.
First Amendment to the FY 2009/10 General Fund, Enterprise, Internal Service and Resort Tax Budgets
First Amendment to the FY 2010/11 General Fund Budget
Page 6
Operating Expenditures
1. Building
Budget Prelim. Actual Budget /Prelim. Actual
FY 2009/10 Sept. 30, 2010 Over /(Under)
$8,601,507 $9,273,619 $672,112
As outlined in prior quarterly projections, in addition to the impacts from
unbudgeted FY 2009/10 merits and steps for the entire fiscal year for CWA
employees, and approximately $115,000 from the 2% pension contribution impact,
the Building Department exceeded its budget primarily in professional fees, legal
fees, and operating capital. Professional services charges increased primarily due
to increased elevator inspections, legal fees were related to building closures, and
capital costs were related to 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 included reconfiguration for electronic plan review on the
second floor, records management, and reconfiguration of the lobby to be more
customer- friendly. Building Department revenues (permits and code violations) in
excess of budget ($1.76 million) are more than sufficient to offset these additional
expenditures.
2. Parks & Recreation — Golf Courses
Budget Prelim. Actual Budget /Prelim. Actual
FY 2009/10 Sept. 30, 2010 Over /(Under)
$6,295,105 $5,818,869 ($ 476,236)
Approximately $476,236 (8% of budget) in expenditures savings at the City's golf
courses occurred as a result of several cost savings measures introduced in
response to reduced demand and corresponding reduced revenues at the golf
courses.
3. Parks & Recreation - Other
Budget Prelim. Actual Budget/Prelim. Actual
FY 2009/10 Sept. 30, 2010 Over /(Under)
$22,764,119 $21,431,567 ($1,332,552)
Despite the impacts from unbudgeted FY 2009/10 merits and steps projected
through year -end, and approximately $205,000 from the 2% pension contribution
impact, approximately $1.3 million in savings (6% of budget) was achieved in the
Parks and Recreation Department from the rebidding and continued management
of contracted landscaping cycles, as well as salary savings and savings across
multiple operating accounts in the Recreation division.
First Amendment to the FY 2009/10 General Fund, Enterprise, Internal Service and Resort Tax Budgets
First Amendment to the FY 2010/11 General Fund Budget
Page 7
4. Fire
Budget Prelim. Actual Budget/Prelim. Actual
FY 2009/10 Sept. 30, 2010 Over /(Under)
$50,900,788 $51,888,672 $ 987,884
The Fire Department overspent its budget by almost $1 million (2% of budget), of
which $530,000 is estimated to be from the unrealized 2% pension contribution
impact, $520,000 from overtime above budgeted levels, and step increases
throughout the year that were not budgeted. These increases were offset by
approximately $200,000 in increased employee health insurance contributions,
thereby decreasing the City's required contribution.
5. Police
Budget Prelim. Actual Budget/Prelim. Actual
FY 2009/10 Sept. 30, 2010 Over /(Under)
$81,127,849 $81,686,854 $ 559,005
The Police Department overspent its budget by approximately $0.6 million (0.7% of
budget), less than the $740,000 estimated impact from the unrealized 2% pension
contribution and the impact of step increases throughout the year that were not
budgeted. These were offset by approximately $230,000 in increased employee
health insurance contributions, thereby decreasing the City's required contribution.
6. Citywide Accounts
Budget Prelim. Actual Budget/Prelim. Actual
FY 2009/10 Sept. 30, 2010 Over /(Under)
$15,033,176 $12,469,598 ($2,563,578)
Approximately $2.5 million in savings (17% of budget) was achieved in Citywide
accounts, primarily due to lower than anticipated overtime usage during the Super
Bowl and Pro Bowl resulting in savings of $370,000, and unspent contingency of
$1.3 million. Accumulated leave payouts are also lower than budget by $200,000
and property management charges for bus bench maintenance were reduced by
almost $185,000.
First Amendment to the FY 2009/10 General Fund, Enterprise, Internal Service and Resort Tax Budgets
First Amendment to the FY 2010/11 General Fund Budget
Page 8
GENERAL FUND BUDGET AMENDMENT
Although the total General Fund expenditure is below budget, Florida Statues require that
the actual expenditures not exceed budget at the level at which the budget is adopted,
which in Miami Beach is at the Department level. Therefore a budget amendment is
required for departments that overspent their appropriation and to allow the transfer to the
Set Aside Reserve for FY 2011/12. A summary of the resulting increases and decreases
to revenues and expenditures and the resulting proposed amended budget for FY 2009/10
is provided below and on the following pages.
Changes in
FY 2009/10 Rev /Exp Rec. Additional FY 2009/10
GENERAL FUND Adopted Budget Appropriation Appropriation Amended Budget
REVENUES .
OPERATING REVENUES
Property Tax (5.5472) $ 103,809,283 $ (1,645,846) $ 0 $ 102,163,437
Property Tax (5.5472) -So Pt Costs 9,896,609 0 0 9,896,609
Property Tax (0.1083) - Capital R & R 2,026,707 0 0 2,026,707
Property Tax - Norm Shores (0.8567) 95,795 0 0 95,795
Other Taxes 24,040,704 720,455 0 24,761,159
Licenses and Permits 14,526,875 1,411,438 0 15,938,313
Intergovernmental 9,172,470 180,447 0 9,352,917
Charges for Services incl. Golf Courses 9,693,288 151,312 0 9,844,600
Fines and Forfeits 3,182,000 (436,806) 0 2,745,194
Interest 5,336,000 (1,658,418) 0 3,677,582
Unrealized Gains/(Loss) - Investments 0 (1,950,550) 0 (1,950,550)
Rents and Leases 4,578,161 234,845 0 4,813,006
Miscellaneous 8,590,050 (514,650) 0 8,075,400
Other - Resort Tax 22,465,440 0 1,950,550 24,415,990
Reserves - Buildig Department Revenues 1,546,709 0 0 1,546,709
Other - Non - Operating 7,375,935 0 0 7,375,935
Total General Fund $ 226,336,026 $ (3,507,773) $ 1,950,550 $ 224,778,803
Total Net of Unrealized Gains /(Loss) $ 226,336,026 $ (1,557,223) $ 1,950,550 $ 226,729,353
First Amendment to the FY 2009/10 General Fund, Enterprise, Internal Service and Resort Tax Budgets
First Amendment to the FY 2010/11 General Fund Budget
Page 9
FY 2009/10 Changes in FY 2009/10
Adopted Rev/Exp Rec. Additional Amended
GENERAL FUND Budget Appropriation Appropriation Budget
APPROPRIATIONS
Department
MAYOR & COMMISSION 1,478,523 (38,701) $ 0 $ 1,439,822
CITY MANAGER 2,293,523 (28,928) 0 2,264,595
Communications 914,249 (49,264) 0 864,985
BUDGET & PERFORMANCE IMPROVE 1,993,560 (12,063) 0 1,981,497
FINANCE 4,416,396 25,516 0 4,441,912
Procurement 901,633 6,038 0 907,671
HUMAN RESOURCES/LABOR RELATIONS 1,764,137 (65,818) 0 1,698,319
CITY CLERK 1,567,479 (75,382) 0 1,492,097
CITY ATTORNEY 4,227,546 (115,244) 0 4,112,302
REAL ESTATE, HOUSING & COMM DEVEL 860,446 1,997 0 862,443
Community Services 410,332 (1,005) 0 409,327
Homeless Services 673,763 (123,456) 0 550,307
BUILDING 8,601,507 672,112 0 9,273,619
Code Compliance 4,094,956 116,166 0 4,211,122
PLANNING 2,983,728 (95,645) 0 2,888,083
TOURISM & CULTURAL DEVELOPMENT 2,644,076 (1,204) 0 2,642,872
PARKS & RECREATION incl Golf Courses 29,059,224 (1,808,788) 0 27,250,436
PUBLIC WORKS 6,545,304 (292,665) 0 6,252,639
CAPITAL IMPROVEMENT PROJECTS 3,843,831 (254,770) 0 3,589,061
POLICE 81,127,849 559,005 0 81,686,854
FIRE 50,900,788 987,884 0 51,888,672
Citywide Accounts -Other 11,677,092 (2,390,809) 0 9,286,283
Citywide Accounts - Normandy Shores 147,377 0 0 147,377
Sub Total General Fund $ 223,127,319 $ (2,985,024) $ 0 $ 220,142,295
FY 2009/10 Changes in
Adopted Rev /Exp Rec. Additional FY 2008/10
GENERAL FUND Budget Appropriation Appropriation Amended Budget
Transfers
Capital Reserve Fund $ - $ 0 $ 0 $ 0
Pay -As- You -Go Capital Fund 0 0
Capital Investment Upkeep Account 382,000 (172,769) 209,231
Info & Comm Technology Fund 800,000 800,000
Reserve Future Building Dept Needs 0 0
Reserve - Future Budget Shortfalls 0 1,600,570 1,600,570
GASB 45 Reserve -OPEB 0 0
CAPITAL RENEWAL & REPLACEMENT 2,026,707 0 2,026,707
Sub Total Transfers $ 3,208,707 $ (172,769) $ 1,600,570 $ 4,636,508
Total General Fund $ 226,336,026 $ (3,157,793) $ 1,600,570 $ 224,778,803
First Amendment to the FY 2009/10 General Fund, Enterprise, Internal Service and Resort Tax Budgets
First Amendment to the FY 2010/11 General Fund Budget
Page 10
ENTERPRISE FUNDS
The City accounts for proprietary operations in Enterprise Funds. Convention Center,
Parking, Sanitation, Sewer, Stormwater, and Water are included in this grouping. No
amendments are anticipated for the Sanitation and Parking Funds. Amendments are
needed for the Water, Sewer and Stormwater funds simply to allow the transfer of surplus
revenues to rate stabilizations funds so that they can be available for future years. The FY
2010/11 adopted budget anticipated the transfer of these funds so that the net revenues at
FY 2010/11 year -end will be sufficient to exceed the bond coverage requirements. Were
these funds not available from the FY 2009/10 surplus, sewer, stormwater and water rate
increases would have been needed in FY 2010/11 to meet debt coverage requirements.
ENTERPRISE FUNDS
Sewer Stormwater Water
Revenue Appropriation
Charges for Service $ 1,796,420 $ 73,334 $ 3,155,973
Prior Year Rate Stabilization Fund - 3,558,172 -
Other 2,272,202 (88,558) (1,327,904)
Total Revenue Increase $ 4,068,622 $ 3,542,948 $ 1,828,069
Expenditure Appropriation
Payroll and Fringes $ (10,855) $ (147,465) $ 218,463
Operating Costs (1,232,616) (318,608) (993,971)
Sewer Treatment (1,789,758) - -
Water Purchase 435,664
DERMA Fee (17,113) - 47,742
Depreciation 483,144 (78,516) 520,945
Debt Servce (210,588) (1,470,433) (286,905)
Rate Stabilization 6,764,332 5,312,986 1,890,766
Capital 82,076 244,984 (4,635)
Total Expenditure Increase $ 4,068,622 $ 3,542,948 $ 1,828,069
As in prior years, we do not have preliminary numbers for the Convention Center Fund at
this time.
First Amendment to the FY 2009/10 General Fund, Enterprise, Internal Service and Resort Tax Budgets
First Amendment to the FY 2010/11 General Fund Budget
Page 11
INTERNAL SERVICE FUNDS
The City accounts for those goods and services provided by one department to other
departments citywide on a cost reimbursement basis. Central Services, Fleet
Management, Information Technology, Property Management, and Risk Management
(Self Insurance) are included in this grouping.
Despite absorbing unbudgeted merit increases and not realizing the additional 2% pension
contribution for CWA employees, the Risk Management, Property Management and Fleet
Management Funds are anticipated to be under budget. Further, it is important to note
that the Risk Management Fund reflects a surplus of FY 2009/10 revenues over
expenditures of over $3 million as a result of revised actuarial liability estimates, thereby
helping to reduce the prior year deficit in the fund for Incurred But Not Reported claims.
However, it is necessary to amend the appropriations for the Central Services and
Information Technology Funds which our preliminary year -end expenditures indicate will
exceed their budget appropriation.
The Central Services Fund exceeded its budget by $19,254 or 2.3% primarily due to
higher than anticipated postage usage and a higher contribution to the OPEB Trust than
the prior year. However, the increased operating expenditures are offset by increased
interdepartmental charges.
The Information Technology Fund exceeded its budget by $589,901 or 4.2% primarily due
a higher contribution to the OPEB Trust than the prior year and prior year- encumbrances
for capital. However, the increased operating expenditures are offset by retained earning
set aside from FY 2008/09 for those prior year encumbrances for capital as well as other
revenues.
INTERNAL SERVICE FUNDS
CENTRAL INFORMATION
SERVICES TECHNOLOGY
Revenue Appropriation
Interdepartmental Revenues $ 19,254 $ (28,117)
Other 164,848
Retained Earnings - Capital 453,170
Total Revenue Increase $ 19,254 $ 589,901
Expenditure Appropriation
Payroll and Fringes $ 11,447 218,295
Operating Costs 5,820 (81,564)
Depreciation 1,987 -
Capital - 453,170
Total Expenditure Increase $ 19,254 $ 589,901
First Amendment to the FY 2009/10 General Fund, Enterprise, Internal Service and Resort Tax Budgets
First Amendment to the FY 2010/11 General Fund Budget
Page 12
RESORT TAX FUND
The City's Resort tax Fund is primarily supported by resort taxes collected pursuant to
Chapter 67 -930 (Section 6) of the Laws of Florida, as amended, and Section 5.03 of the
City of Miami Beach Charter, as amended. This legislation authorizes the use of resort
taxes for the promotion of the tourist industry, which includes, but is not restricted to the
following: Publicity, advertising, news bureau, promotional events, convention bureau
activities, capital improvements and the maintenance of all physical assets in connection
therewith; and for the payment of the reasonable and necessary expenses of collecting,
handling and processing of said tax.
Typically, the City has considered the following services as "Services related to the
promotion of tourism ":
• Police officers serving entertainment areas
• A portion of Fire rescue services from Fire Stations 1&2
• Ocean rescue Services
• Sidewalk pressure cleaning in south, middle and north beach visitor areas
• South Beach sanitation
• Enhanced code compliance provided to respond to evening entertainment area
violations and staffing of special events
• Other code compliance activities in tourism and visitor related facilities /areas
• Tourism and Culture Department and the Cultural Arts Council
• Museums and Theatres (Garden Center, Bass Museum, Colony and Byron Carlyle
Theatres)
• Golf courses (net of revenues)
• Memorial Day and other special event costs
• Homeless services
• July 4 Visitor Center funding, Holiday Lights, Festival of the Arts, Jewish
Museum, MDPL, Orange Bowl, Monuments, etc.
These allowable uses have led to increased tourist activities, such as special events, Art
Basel, and various concerts.
The 2% Resort Tax Fund operating revenues are in excess of budget by approximately
$3.8 million and, as a result certain expenditures which are based on a percent of
revenues are projected to exceed budget.
Further, as outlined to the Commission in LTC #231 -2010 dated August, 2010, the City
was required to make a mandatory payment of the remaining principal balance of the
Sunshine State Loan in the amount of $2.93 million in September, 2010. This repayment
was paid from the Resort Tax Fund. In addition to current year budgeted payments, an
additional $2.29 million in retained earnings was used for the repayment and a budget
amendment is required to reflect this additional amount.
In addition, as part of the ongoing clean -up of accounts in the City, the following Service
and Special Improvement Districts, previously funded by Resort Tax Funds, have deficits
of $735,553 going back many years which were never funded and research shows that
they should have been funded by Resort Taxes at that time.
First Amendment to the FY 2009/10 General Fund, Enterprise, Internal Service and Resort Tax Budgets
First Amendment to the FY 2010/11 General Fund Budget
Page 13
• Lincoln Road Management District
• Washington Avenue Special Improvement District
• South Beach Hotel Management District
• Ocean Drive Special Improvement District
• 41 Street Business District
I am therefore recommending that Resort Tax retained earnings be used to fund those
amounts at this time, along with the additional $1.95 million transfer to the General Fund
discussed earlier in this memorandum funded from the 2% Resort Tax revenues in excess
of budget.
In addition to the uses listed above, the proceeds of the additional one percent (1 %) tax
are used as follows. Fifty percent of the amount earned is committed to the payment of a
portion of the debt service on the Miami Beach Redevelopment Agency City Center/
Bonds. The remaining fifty percent is allocated equally among North Beach, Middle
Beach, and South Beach for capital projects that enhance Miami Beach's tourist related
areas and various arts and cultural programs. Revenues from the additional one percent
that exceed budget are automatically allocated to these categories, although unspent.
The resulting recommended changes are summarized below.
RESORT TAX FUND
Additional Revenue Appropriation
2% Resort Tax $ 2,138,287
Retained Earnings 3,034,963
Total Revenue Increase $ 5,173,250
Additional Expenditure Appropriation
General Fund Contribution $ 1,950,550
Other Operating /Other Uses 187,737
Transfer to Service and Special Improvemetn Districts Funds 735,553
Debt Service 2,299,410
Total Expenditure Increase $ 5,173,250
CONCLUSION
It should be noted that this actual is preliminary in nature due to the fact that the City's
financial records will not be closed until after the external auditors complete their review.
Historically, this occurs in April, with the City's Comprehensive Annual Financial Report
(CAFR) For the Year Ended September 30, 2010, usually available in May. However, this
analysis has considered all year -end entries to date and, typically, any additional changes
are minor in nature.
The attached resolution will allow the first amendment to the departmental appropriations
within the General Fund, Enterprise Funds, Internal Service Funds and Resort Tax Fund
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