LTC 292-2017 2nd Quarter Analysis on Budget to Actual Revenues and Expenses for the 6 Months Ending March 31, 2017 with Projections to Sept 30, 2017MIAMI BEACH
OFFICE OF THE CITY MANAGER
NO. LTC# 292M2017 LETTER TO COMMISSION
TO:
FROM: Jimmy L. Morales, City Manager
DATE: June 2, 2017
suBJECT: SECOND QUARTER ANALYSIS OF BUDGET TO ACTUAL REVENUES AND
EXPENSES FOR THE SIX MONT S ENDING MARCH 31, 2017, WITH OPERATING
BUDGET PROJECTIONS THROUGH SEPTEMBER 30, 2017
The purpose of this LTC is to provide the Mayor and Commission with the status of the FY
2016/17 budget to actual revenue and expenses reflected at the end of the second quarter with
projections through September 30, 2017. The City's Charter requires that "the City Manager
shall make public a quarterly report showing the actual expenditures during the quarter just
ended against one quarter of the proposed annual expenditures set forth in the budget."
The first six months of any fiscal year do not provide a definitive indication of where we will be at
the end of the fiscal year. However, with six full months of data, we have more clarity of what
any potential issues could be. Certain assumptions on both revenue and expenditures were
made that are still developing and will be adjusted in later projections. Those assumptions, as
well as our continued effort at managing the City's resources and ongoing adjustments, will
affect our projections going forward.
The First FY 2016/17 budget amendment, adopted by the City Commission on November 18,
2016, recognized a preliminary year-end surplus of $4.558 million. Of this surplus, $2,230,250
was allocated to the 11 percent Emergency reserves, $1 ,092,000 funded rollover requests and
the remainder, $1,235,750, was set aside to supplement the 6 percent optional Emergency
Reserves. The Second Budget Amendment approved on February 8, 2017, added $445,740
from other sources to the General Fund, $733,260 from General Fund Balance, realigned
$491,000 within the General Fund and appropriated $1 ,218,000 to Special Revenue Funds.
The Third FY 2016/17 budget amendment was adopted by Commission on April 26, 2017, and
appropriated $7,111,389 to the Enterprise Funds, $297,000 to the Special Revenue Funds, and
realigned $70,000 within the General Fund.
Accordingly, the projections presented below are compared to the amended budget including
the three budget amendments to date.
GENERAL FUND
Based upon this second quarter analysis, it is projected that General Fund revenues will exceed
expenditures by $2.735,000, which is $2,108,000 higher than the $627,000 surplus projected in
the first quarter analysis.
LTC -Analysis Of Budget To Actual Revenues And Expenses For The Six Months Ending March 31,
2017, With Operating Budget Projections Through September 30, 2017
Page 2 of9
General Fund Overview
An analysis of the actual six-month operating revenues and expenditures for the period October
1, 2016 through March 31, 2017, reveals an operating budget surplus of $65.4 million. While
the surplus as of March 31st seems unusual as compared to the projection for the fiscal year
ending on September 30th, it should be noted that the City receives a greater percentage of ad
valorem taxes during the first and second quarter (historically 85-90 percent). Ad valorem tax
revenues represent approximately 50 percent of total budgeted revenues and represent 64
percent of the revenues received through the second quarter of the fiscal year.
As of March 31, 2016, revenues collected were approximately 66.3 percent of budget or $211.9
million. Expenditures are approximately 45.9 percent of budget or $146.6 million; however, there
are often delays in expenditures until the close-out of the fiscal year.
FY 201()/17 Budget
Variance from 1/2
Actuals as of Amended Budget
General Fund Adopted Budget Amended Budget 1/2 of Amended Budget 3/3112017 Over I (Under)
Revenues $ 317,252,000 $ 319,523,000 $ 159,761,500 $ 211,964,065 $ 52,202,565
Expenditures $ 317,252,000 $ 319,523,000 $ 159,761,500 $ 146,561 773 $ (13, 199,727
Surplus I (Deficit) $ 65,402,291
General Fund Year-End Projections
The projected year-end operating revenues and expenditures through September 30, 2017
provide a more realistic snapshot of anticipated year-end shortfalls or surpluses at this point in
time. Further, while the actual revenues and expenditures presented are as of March 31, 2017,
some of the projections have incorporated more recent information, if available.
A summary of preliminary projected General Fund Revenues and Expenditures as of
September 30, 2017, reflects a surplus of revenues over expenses totaling $2.735.000, which is
$2,108,000 higher than the $627,000 surplus projected in the first quarter analysis. It should be
noted that this analysis is a preliminary projection based on the experience of the first six
months of the fiscal year, which will continue to be updated over the next few months.
FY 2016/17 Budget
Variance
Projected v Amended
General Fund Adopted Budget Amended Budget Projected Budget % Over I (Under)
Revenues $ 317,252,000 $ 319,523,000 $ 319,062,000 $ (461,000) -0.1%
Expenditures $ 317,252,000 $ 319,523,000 $ 316 327,000 $ (3, 196,000) -1.0%
Surplus I (Deficit) $ 2 735,000
General Fund Operating Revenues
For a detail of General Fund Revenues by category, see attached Schedule A.
Based on historical collection rates, we have estimated that 84.3 percent of property tax
revenues have been collected as of March, 2017. This has resulted in a shortfall of projected
property tax revenues as compared to the budget in the amount of $25.1 million. It is important
to note that in the last few years, property tax collections have been below prior year levels due
to higher levels of appeals and adjustments. The impact of appeals and adjustments for the
FY2016/17 budget will be provided by the Miami-Dade County Property Appraiser in July.
LTC -Analysis Of Budget To Actual Revenues And Expenses For The Six Months Ending March 31,
2017, With Operating Budget Projections Through September 30, 2017
Page 3 of9
Overall revenues are projected to be 0.1 percent or $461,000 below the amended budget. As in
prior years, significant variances to budget in excess of $300,000 or 10 percent by revenue
category are explained below:
Other Taxes -This category includes franchise and utility taxes on electricity, gas, fuel,
cable-television and telephones. Collections are projected to be 1.9 percent or $440,000
below the amended budget due to declining costs and usage rates.
Licenses and Permits -This category includes business tax receipts, licenses/
building/special use permits, and sidewalk cafe fee revenues and is projected to be in
excess of the amended budget by 3.2 percent or $972,000 primarily due to increases in
revenues collected for building permits, certificates of occupancy, elevator inspections and
fire plan reviews.
Charges for Services -This category includes ambulance fees, off duty charges for fire
and police, Golf Course fees, and various parks and recreation fees. Actual collections for
Charges for Services are projected to be below the amended budget by 7.3 percent or
$894,000, primarily due to a reduction in revenues to the golf clubs. Due to the Convention
Center renovation project, there has been a significant reduction in business at the Miami
Beach Golf Club. In addition, $300,000 in funds from the Children's Trust, which were
previously budgeted in the General fund, are now being deposited in a separate Special
Revenue Fund.
Fines and Forfeits -This category includes traffic and parking fines, building code
violations, code enforcement violations, and is projected to be below the amended budget
by 19.4 percent or $349,000. This is primarily due to lower revenue recognition in Building
Code Violations, which is expected to rebound in the second half of the fiscal year.
Rents and Leases -This category includes revenue from various rentals and leases
realized from city properties. Projected collections are 7.7 percent or $496,000 lower than
the amended budget primarily due to changes in contract terms for Colony Theater
($190,000) and Live Nation ($142,000).
Miscellaneous -This category includes revenue from various categories such as
concessions, reimbursements and miscellaneous revenue categories like beach access
fees and sale of city property. Projected collections are 11.4 percent or $1 ,435,000 higher
than the amended budget primarily due to previously unbudgeted fee collections for
Concessions ($365,000) and an increased projection in Design Review fees ($843,000).
General Fund Operating Expenditures
As of March 31, 2017, actual expenditures were approximately 45.9 percent of budget or $146.6
million. Year-end projections through September 30, 2017 indicate that expenditures will be
$316.3 million, approximately 1.0 percent or $3.2 million below the amended budget. The
expenditure projections are based through the second quarter and will be continually monitored
and updated.
A comparison of actual and projected expenditures to budget by Department is provided in the
attached Schedule A As in prior years, Departments projected to exceed budget or with
significant variances to budget in excess of $300,000 or 10 percent are explained below:
LTC -Analysis Of Budget To Actual Revenues And Expenses For The Six Months Ending March 31,
2017, With Operating Budget Projections Through September 30, 2017
Page 4 of9
Communications-The department is projected to be 5.5 percent or $108,900 above the
amended budget primarily due to promotions and the addition of three positions within the
department.
Communications
Variance
Projected v Amended
Amended Budget Projected Budget % Over I (Under)
Expenditures $ 1,995,000 $ 2,104,000 $ 109,000 5.5%
Emergency Management -The department is projected to be 2.4 percent or $254,000
above the amended budget primarily due to increases in the usage of contracted services
for security guard services citywide to enhance public safety, as well as emergency call
taker services due to staffing shortages in the E-911 call center managed by the
department's Public Safety Communications Unit (PSCU). The PSCU is responsible for
operating the City's centralized emergency call center where all emergency calls are
received and routed to the appropriate first responders. Since this unit requires mandatory
staffing levels 24 hours per day/7 days per week, and the department has been unable to
fill numerous vacancies, the department has relied on outside call taker services and
additional overtime for existing personnel.
Emergency Management
Variance
Projected v Amended
Amended Budget Projected Budget %Over I (Under)
Expenditures $ 10,370,000 $ 10,624,000 $ 254,000 2.4%
Police -The department is projected to be 0.5 percent or $519,000 million below the
amended budget primarily due to savings in regular, court, and holiday overtime for sworn
personnel resulting from organizational changes in the department, as well as several
vacancies being filled.
Police
Variance
Projected v Amended
Amended Budget Projected Budget % Over I (Under)
Expenditures $ 104,401 '000 $ 103,882,000 $ (519,0001 -0.5%
Planning -The department is projected to be 2.4 percent or $104,000 above the amended
budget primarily due to $38,000 in salary changes to various positions and an increase in
overtime by $67,000 which is off-set by the revenues for After Hours Review.
Planning
Variance
Projected v Amended
Amended Budget Projected Budget % Over I (Under)
Expenditures $ 4,306,000 $ 4,410,000 $ 104,000 2.4%
Public Works -The department is projected to be 3.3 percent or $492,000 below the
amended budget primarily due to savings in personnel services expenditures resulting from
several vacancies, as well as savings in contract maintenance for citywide grounds
maintenance, which include right-of-ways and city facilities.
LTC -Analysis Of Budget To Actual Revenues And Expenses For The Six Months Ending March 31,
2017, With Operating Budget Projections Through September 30, 2017
Page 5 of9
Public Works
Variance
Projected v Amended
Amended BudQet Projected Budget % Over I (Under)
ExPenditures $ 14,746,000 $ 14,254,000 $ (492,000) -3.3%
Citywide Accounts -The Citywide accounts are projected to be 5.5 percent or $1 million
below the amended budget primarily due to savings in accumulated leave settlements and
the excess pension plan. In addition, savings are also projected for the tuition assistance
reimbursement resulting from lower participation in the program than anticipated.
Cit ide Accounts
Variance
Projected v Amended
Amended Budaet Proiected Budaet % Over I !Under)
ExPenditures $ 18 237 260 $ 17 234 000 $ (1 003 260) -5.5%
ENTERPRISE FUNDS
The City accounts for proprietary operations in Enterprise Funds. Sanitation, Sewer,
Stormwater, Water, Parking, and Convention Center are included in this grouping. The
expenditures for these funds are budgeted to be fully offset by charges for services.
An analysis of the actual six-month operating expenditures for the period October 1, 2016
through March 31, 2017, reveals that all enterprise funds except the Water Fund have
expenditures less than one-half of their budget. However, this may not be fully representative of
expenditure trends, as there is often a lag in expenditures, particularly related to those billed by
outside entities.
The projected year-end operating revenues and expenditures through September 30, 2017 is,
however, a more realistic snapshot of anticipated surplus or shortfalls at this point in time. In
addition, while the actual revenues and expenditures presented are as of March 31, 2017, the
projections have incorporated more recent information, as available.
As represented below, revenues are projected to be equivalent or in excess of expenditures for
all funds.
LTC -Analysis Of Budget To Actual Revenues And Expenses For The Six Months Ending March 31,
2017, With Operating Budget Projections Through September 30, 2017
Page 6 of9
INTERNAL SERVICE FUNDS
The City accounts for those goods and services provided by one Department to other
Departments citywide on a cost reimbursement basis in Internal Service Funds. Central
Services, Fleet Management, Information Technology, Property Management, Risk
Management, and Medical & Dental Insurance (Self Insurance) are included in this grouping.
An analysis of the actual six-month operating expenditures for the period October 1, 2016
through March 31, 2017 reveals that all funds have expenditures less than one-half of the FY
2016/17 amended budget.
Based on the more realistic projection of year-end operating revenues and expenditures through
September 30, 2017, and incorporating more recent information as available, Fleet
Management, Information Technology, Property Management, Risk Management and the
Medical & Dental Insurance funds are expected to have revenues equal to or in excess of
expenditures. The Central Services Fund is projected to have a minor shortfall of $2,000.
SPECIAL REVENUE FUNDS
Special Revenue Funds are used to account for revenues and expenditures that are legally
restricted or committed for specific purposes other than debt or capital projects. Special
Revenue Funds include the Resort Tax Fund as well as 7th Street Garage Operations; 5th &
Alton Garage Operations; Art in Public Places; Tourism and Hospitality Scholarship Program;
Green/Sustainability Fund; Waste Hauler Additional Services and Public Benefit Contribution
Fund; Education Compact Fund; Red Light Camera Fund; Emergency 911 Fund; Information
and Communications Technology Fund; People's Transportation Plan Fund; Concurrency
LTC -Analysis Of Budget To Actual Revenues And Expenses For The Six Months Ending March 31,
2017, With Operating Budget Projections Through September 30, 2017
Page 7 of9
Mitigation Fund; Miami Beach Cultural Arts Council; Police Special Revenue Account; Police
Confiscation Trust Funds (Federal and State); and Police Training and School Resources Fund.
All special revenue funds are projected to be at or under the amended budget. More detailed
information is provided for the Resort Tax fund below.
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/Enforcement provided to respond to evening entertainment
area violations and staffing of special events
• Other Code Compliance/Enforcement activities in tourism and visitor related
facilities/areas
• Tourism and Cultural Development 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 4th, Visitor Center funding, Holiday Lights, Festival of the Arts, Jewish Museum,
MDPL, Orange Bowl, Monuments, etc.
These allowable uses have led to increased tourism related activities, such as special events,
Art Basel, and various concerts.
The 2% Resort Tax Fund operating revenues are projected to be below the amended budget by
approximately 5.7 percent or $3.4 million and, as a result, payments to the Visitor's Convention
Authority (VCA), which are based on a percent of revenues, are projected to be below budget.
The proceeds of the first 1% Resort Tax Fund operating revenues are used as follows: 45% is
allocated for Transportation initiatives in tourist-related areas; 15% is allocated equally among
North Beach, Middle Beach and South Beach for capital projects that enhance Miami Beach's
tourist related areas, and 10% is allocated to various arts and cultural programs. The 1 percent
Resort Tax Fund operating revenues are projected to be below the amended budget by
approximately 6.7 percent or $941,000.
LTC -Analysis Of Budget To Actual Revenues And Expenses For The Six Months Ending March 31,
2017, With Operating Budget Projections Through September 30, 2017
Page 8 of9
The proceeds of the additional 1% bed tax for the Convention Center debt service are also
projected to be below the amended budget by approximately 6. 7 percent or $941,000.
In total, the projected revenues are estimated to be below the amended budget by 5.9 percent
or $5.3 million and expenditures to be below the amended budget by approximately 3.2 percent
or $2.9 million. This results in a projected net operating deficit of approximately $2.4 million for
Resort Tax revenues and expenditures, combined in FY 2016/17.
CONCLUSION
This analysis of budget to actual operating revenues and expenses with projections through
September 30, 2017, provides the status of the FY 2016/17 Budget for the first six months of the
fiscal year. Although the first six months of any fiscal year do not provide a definitive indication
of where we will be at year-end we have more clarity of what any potential issues could be.
Based on preliminary projections, the General Fund is anticipated to have a $2,735,000 surplus
at year-end, which is $2,108,000 higher than the $627,000 surplus projected in the first quarter
analysis. At this time, all other funds are projected to break even or have surpluses with the
exception of the Resort Tax Fund which is projected to close the fiscal year with a deficit of $2.4
million. We will continue to monitor the revenue collections and expenditures on an ongoing
basis for both the General and Resort Tax Funds.
JLM/CGR
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LTC -Analysis Of Budget To Actual Revenues And Expenses For The Six Months Ending March 31,
2017, With Operating Budget Projections Through September 30, 2017
Page 9 of9
OF MIAMI BEACH
2016/17 GENERAL FUND
nd QUARTER
Charges for Services
Golf Courses
Fines and Forfeitures
Interest
Rents and Leases
Miscellaneous
Other-Resort Tax Contribution
Other-Non-Operating Revenues
Fund Balance/Retained Earnings
Transfer In from South Pointe RDA
Transfer in from Proceeds from Segafredo Colony Cafe
lease
Improvement Projects
City Alto rney
City Clerk
City Manager
Code Compliance
Communications
Emergency Management
Environment & Sustainablllty
Finance
Fire
Housing & Comm Services
Human Resources/Labor Relations
Mayor and Commission
I of Budget & Performance lmprov
Development & Perf I nitlatives
ormandy Shores
nfo & Comm Technology Fund
Go Capital Fund
FY 2016/17
Adopted Budget
159,950,000
662,000
169,000
23,732,000
30,348,000
11,439,000
6,167,000
6,007,000
1,799,000
2,500,000
6,426,000
12,575,000
37,609,000
11,469,000
0
15,146,000
5,051,000
5,370,000
1,560,000
3,625,000
5,845,000
1,995,000
9,509,000
1,064,000
5,746,000
71,938,000
2,798,000
2,780,000
2,093,000
2,499,000
629,000
31,934,000
4,156,000
104,470,000
2,258,000
14,698,000
3,680,000
14,694,000
257,000
395,000
SCHEDULE A
Amended Actuals as of
FY 2016/17
Budget
March 31, 2017
159,950,000 134,786,337 84.3% 159,950,000
662,000 662,000 100.0% 662,000
169,000 169,000 100.0% 169,000
23,732,000 9,515,310 40.1% 23,292,000
30,348,000 17,388,065 57.3% 31,320,000
11,439,000 4,828,089 11,310,000
6,167,000 2,483,109 5,727,000
6,007,000 3,158,513 5,553,000
1,799,000 548,008 30,5% 1,450,000
2,500,000 465,111 18.6% 2,500,000
6,426,000 3,466,553 53.9% 5,930,000
12,575,000 6,627,971 52.7% 14,010,000
37,609,000 18,804,498 50,0% 37,609,000
11,469,000 5,861,500 51.1% 10,908,000
1,825,260 0.0% 1,826,000
370,000 0,0% 370,000
75,740 0.0%
15,083,000 6,652,930 44.1% 14,857,000
5,051,000 2,359,074 46.7% 4,899,000
5,370,000 2,387,507 44.5% 5,341,000
1,622,000 724,249 44.7% 1,532,000
3,630,000 1,803,559 49.7% 3,629,000
5,947,000 2,805,641 47.2% 5,869,000
1,995,000 932,725 46.8% 2,104,000
10,370,000 5,045,858 48.7% 10,624,000
1,223,000 450,446 36.8% 1,169,000
5,816,000 2,494,924 42.9% 5,650,000
71,938,000 35,068,519 48.7% 71,651,000
2,798,000 1,186,098 42.4% 2,793,000
2,780,000 1,312,879 47.2% 2,702,000
2,283,000 978,574 42.9% 2,220,000
2,658,000 1,047,618 39.4% 2,484,000
629,000 265,164 42.2% 626,000
31,934,000 14,174,276 44.4% 31,730,000
4,306,000 2,035,401 47.3% 4,410,000
104,401,000 52,231,734 50.0% 103,882,000
2,288,000 1,064,195 46.5% 2,276,000
14,746,000 5,798,801 39.3% 14,254,000
3,755,740 2,051,130 54.6% 3,729,000
15,185,260 3,690,474 24.3% 14,182,000
257,000 0.0% 257,000
0.0%
LTC-JUNE 2, 2017 PRELIMINARY ASSESSMENT ROLL ESTIMATE
Page 2 of2
July 2013 July 2014 July 2015
Certified Certified Certified
Propeu~tYA&§essment I
:
Existing Values 24,578,430,867 26,952,138,331 30,430,853,418
New Construction 78,146,022 152,208,101 267,037,447
Total 24,656,576,889 27,104,346,432 30,697,890,865
Percent Increase 12.0% 9.9% 13.3%
City Center RRh\. / ·. 3,87t,4Q9, 731 4;:18'6,68~,'074 A,s?J,e43, 1ss
Percent Increase 24.3% 8.1% 15.2%
Citywide Total 20,785,167,158 22,917,663,358 25,876,247,680
July 2016 June 2017
Certified Preliminary
:
33,532,510,312 36,482,000,000
1 '165,246,796 812,000,000
34,697,757,108 37,294,000,000
13.0% 7.5%
s,6i2;7:44,843 e. 17o,O.oo,ooo
16.4% 10.0%
29,085,012,265 31,119,000,000
The preliminary 2017 property assessment values also reflect a slowdown in the property value
increases we have experienced for the past several years, as shown in the decline from July
2015 increase in certified values to the June 2017 preliminary estimate.
Although the June 2017 preliminary property values increased 7.5 percent, the operating
budget, on average, has increased by about 5 percent which in FY 2016/17 translated to an
increase of about $16 million. Furthermore, as discussed during the FY 2016/17 budget
development process, the proposed FY 2017/18 Operating budget will include a proposed
reduction in the Parking Fund transfer to the General Fund of $4.4 million. Lastly, the declining
trends in Resort Tax collections we have experienced this current fiscal year could potentially
result in a lower transfer from Resort Tax to the General Fund in the FY 2017/18 Operating
budget. As we move forward in the FY 2017/18 Operating budget development, OBPI will work
with Staff to identify efficiencies in order to close any funding gap. I do not, however, anticipate
proposing any new enhancements to the General Fund portion of the FY2017/18 Operating
Budget beyond those that have already been incorporated or approved by the City Commission
during the course of the current fiscal year.
On July 1st, we will receive the certified property assessment values, which will be the values
used for budget purposes. Typically the difference between the preliminary and certified values
is minor.
If you have any questions or need additional information, please feel free to contact me.
JLM/CGR
~J~~~~-·