2007-26604 ResoRESOLUTION NO. 2007-26604
A RESOLUTION OF THE MAYOR AND CITY COMMISSION
OF THE CITY OF MIAMI BEACH, FLORIDA, SETTING THE
PROPOSED MILEAGE RATES FOR FISCAL YEAR (Fl()
2007/08, THE CALCULATED "ROLLED-BACK" RATE, AND
THE DATE, TIME, AND PLACE OF THE FIRST PUBLIC
HEARING; FURTHER AUTHORIZING THE CITY MANAGER
TO TRANSMIT THIS INFORMATION TO THE MIAMI-DADE
COUNTY PROPERTY APPRAISER IN THE FORM
REQUIRED BY SECTION 200.065, FLORIDA STATUTES
WHEREAS, Section 200.065, Florida Statutes, has specified the method by which
municipalities may fix the millage rate and adopt an annual budget; and
WHEREAS, in the April 2007 Commission Retreat, the Commission directed
Administration to prepare a budget that reflected, at a minimum, property taxes generated
from a millage set at the "Rolled-Back" Rate; while generally preserving recently enacted
City initiatives in support of community priorities; and
WHEREAS, pursuant to legislation adopted in June 2007, the State of Florida
further directed that the City of Miami Beach operating millage shall be set at the "Rolled-
Back" Rate, plus a minimum of nine (9) percent unless the City Commission elects to
approve millage rates above these levels subject to an extraordinary vote by the
Commission or referendum; and
WHEREAS, at the June 29~', 2007 Finance and Citywide Projects Committee
meeting, the Committee directed staff to set the tentative operating millage in July at the
state-mandated "Rolled-Back Rate" plus an additional nine (9) percent reduction; and
WHEREAS, the City of Miami Beach is required to advise the Miami-Dade County
Property Appraiser of the Proposed Millage Rates, the "Rolled-Back" Rate, and the date,
time, and place of the first public hearing.
NOW THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND THE CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the following
recommendations of the Administration be and are hereby ratified for transmittal to the
Miami- Dade County Property Appraiser, as specified in Section 200.065, Florida Statutes:
1) Proposed Millage Rates for FY 2007/08
General Operating 5.5173 mills
Capital Renewal & Replacement 0.1382 mills
Total Operating Millage 5.6555 mills
Debt Service 0.2415 mills
Total Combined Millage 5.8970 mills
Agenda Item 1~~~
Date ~-/ 1-0 7
2) "Rolled-Back" Rate 6.2212 mills
3) The first public hearing on the proposed millage rate and the tentative budget for FY
2007/08 shall be held on Wednesday, September 12, 2007 at 5:01 P.M., in the City
Commission Chambers, City Hall, 1700 Convention,~enter grive, Miami Beach,
Florida. ~ I /
PASSED and ADOPTED, this 11th day of Jam,
AT ST:
CITY CLER Robert Parcher
Dermer MAYOR
APPROVED AS TO
FORM & LANGUAGE
o~
COMMISSION ITEM SUMMARY
[_nnrlpncpd Title
A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA
SETTING 1) THE PROPOSED OPERATING MILEAGE RATE; 2) THE REQUIRED DEBT SERVICE
MILEAGE RATE; 3) THE CALCULATED "ROLLED-BACK" RATE; AND, 4) THE DATE, TIME, AND
PLACE OF THE FIRST PUBLIC HEARING TO CONSIDER THE MILEAGE RATES AND BUDGETS FOR
FISCAL YEAR (FY) 2007/08; FURTHER AUTHORIZING THE CITY MANAGER TO TRANSMIT THIS
INFORMATION TO THE MIAMI-DADE COUNTY PROPERTY APPRAISER IN THE FORM REQUIRED
BY SECTION 200.065, FLORIDA STATUTES
Ke Intended outcome 5u ortea:
Ensure expenditure trends are sustainable over the long term; Improve the City's overall financial
health and maintain overall bond ratin ;Increase communit satisfaction with cit services
Supporting Data (Surveys, Environmental Scan, etc.):
46% of residents and 55% of businesses rate the value of city services for tax dollars paid as
excellent or good. The value of city services for tax dollars paid appeared as a key driver for
residents' perceptions of overall quality of life and city government meeting their needs. Taxes
appeared as one of the areas most important to resident's quality of life in the City of Miami Beach. It
also appeared as a key driver for businesses' perceptions of City government and interested in
hearing their concerns, Miami Beach as a place to run a business, and whether the City is doing
better, the same, or worse versus a few years ago.
Between FY 1999/2000 & FY 2006/07 City of Miami Beach Total Combined Millage decreased by
1.025 mills (11.8%) to 7.673. In FY 2006/07, total millage for all taxing jurisdictions within the City of
Miami Beach was 23.427, with 20 communities in Miami-Dade County above Miami Beach and 15
communities below. The hi hestwas O a Locka 28.205 . The lowestwas Ke Bisca ne 19.360 .
Issue:
Shall the Mayor and City Commission adopt Proposed General Fund Operating Millage Rate; set the
Calculated Rolled-Back Rate; and set the date, time and place for the first public hearing?
Item Summa /Recommendation:
The Administration is recommending the City's total millage rate be reduced by a 1.7760 mills to a rate of
5.8790 mills, an unprecedented 23 percent decrease in millage. The operating millage rate will decrease to
the rate of 5.5173, a decrease of 1.6747 mills, and debt service millage rate will decrease by 0.0575, from
0.299 to 0.2415. The General Fund Capital Renewal and Replacement millage will decrease from 0.182 to
0.1382, a decrease of 0.0438, generating the same level of funding for renewal and replacement as in FY
2006/07. Further, the combined millage rate overall is almost 2.8 mills lower than itwas in FY 1999/00, and
remains lower than most municipalities in Miami-Dade County.
Board Recommendation:
I•
Financial Information:
Source of Amount Account
Funds: ~
0 2
OBPI Total
Financial Impact Summary: For FY 2006/07, the total combined operating millage was adopted at 7.374.
Based on the June 29, 2007 Certification of Taxable Value, the reduction to 5.6555 mills represents a
reduction of $44 million in property tax revenues. FY 2006/07 combined Property tax (ad valorem tax)
revenues was budgeted at $161.8 million, excluding debt service. If approved, the recommended millage
will generate $144.3 million for the FY 2007/08 budget year which is a reduction of $17.5 million (11 %)
from FY 2006/07 bud eted ro ert tax revenues.
M 11~N11 B E~-C H AGENDA ITEM ~ ~ 'J
DATE 7' ~ ~ - O
Ci Clerk's Office Le islative Trackin
m MIAMIBEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Mayor David Dermer and Members of the City Commission
FROM: Jorge M. Gonzalez, City Manager
DATE: July 11, 2007
SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF
MIAMI BEACH, FLORIDA SETTING 1) THE PROPOSED OPERATING MILEAGE
RATE; 2) THE REQUIRED DEBT SERVICE MILEAGE RATE; 3) THE
CALCULATED "ROLLED-BACK" RATE; AND, 4) THE DATE, TIME, AND PLACE
OF THE FIRST PUBLIC HEARING TO CONSIDER THE MILEAGE RATES AND
BUDGETS FOR FISCAL YEAR (FY) 2007/08; FURTHER AUTHORIZING THE
CITY MANAGER TO TRANSMIT THIS INFORMATION TO THE MIAMI-DADE
COUNTY PROPERTY APPRAISER IN THE FORM REQUIRED BY SECTION
200.065, FLORIDA STATUTES.
SUMMARY
The Administration is recommending the City's total millage rate be reduced by a 1.7760 mills
to a rate of 5.8970 mills, an unprecedented 23 percent decrease in millage. The operating
millage rate will decrease to the rate of 5.5173, a decrease of 1.6747 mills, and debt service
millage rate will decrease by 0.0575, from 0.299 to 0.2415. The General Fund Capital
Renewal and Replacement millage will decrease from 0.182 to 0.1382, a decrease of 0.0438,
generating the same level of funding for renewal and replacement as in FY 2006/07. Further,
the combined millage rate overall is almost 2.8 mills lower than it was in Fiscal Year 1999/00,
and remains lower than most municipalities in Miami-Dade County.
For FY 2006/07, the total combined operating millage was adopted at 7.374. Based on the
June 29, 2007 Certification of Taxable Value, the reduction to 5.6555 mills represents a
reduction of $44 million in property tax revenues. FY 2006/07 combined Property tax (ad
valorem tax) revenues was budgeted at $161.8 million, excluding debt service. If approved,
the recommended millage will generate $144.3 million for the FY 2007/08 budget year which
is a reduction of $17.5 million (11 %) from FY 2006/07 budgeted property tax revenues.
ADMINISTRATION RECOMMENDATION
The Administration recommends that the Mayor and City Commission adopt the attached
resolution which authorizes the City Manager to transmit the following information to the
Miami-Dade County Property Appraiser:
FY 2007/2008 Proposed Millage Rate
July 11, 2007
Page 2
1) Proposed Millage Rates for FY 2007/08:
General Operating 5.5173 mills (7.192 last year, 23% decrease)
Capital Renewal & Replacement 0.1382 mills (0.182 last year, 24% decrease)
Sub-Total Operating Millage 5.6555 mills (7.374 last year)
Debt Service 0.2415 mills (0.299 fast vear, 19% decrease)
Total 5.8970 mills (7.673 last year, 23% decrease)
2) "Rolled-Back" Rate (Truth in Millage) 6.2212 mills
3) The first public hearing to consider the proposed millage rates and tentative budgets for
FY 2007/08 shall be Wednesday, September 12, 2007 at 5:01 p.m., in the City
Commission Chambers, City Hall, 1700 Convention Center Drive, Miami Beach, Florida
Pursuant to the Roll-Back component of the legislation adopted by the Florida legislature in
June the City of Miami Beach is required to set its FY 2007/08 to the roll back rate plus an
additional 9% reduction. The rollback rate is the millage rate required to produce the same
level, of property tax revenues in FY 2007/08 as collected in FY 2006/07, thereby forgoing any
revenues associated with growth in assessed values. The rollback rate is calculated by
dividing the prior year property tax revenues by the current year property values, after new
construction, major improvements, annexations, and tax increment districts are removed from
current year property values. In future years, growth in property tax revenues will be indexed
to a rate based on growth in personal income.
In addition, the legislation provided for a special election to be held in January to approve
constitutional changes to the homestead exemption and changes in the assessment of
affordable housing, working waterfronts and a $25,000 exemption of tangible personal
property. The constitutional changes, if approved, would be applicable in the FY 2008/09
budget and, therefore, are not factored into our calculations at this time. Further, the state
may consider additional changes in the next legislative session, which may have additional
impacts for future years.
Under the new legislation, the City may elect to approve millage rates above these levels up
to the constitutional cap of 10 mills subject to an extraordinary vote by the Commission or
referendum:
• Millage above the 9% reduction but at or below rollback requires a supermajority of the
Commission.
• Millage above rollback but at or below current millage requires unanimous approval of the
Commission.
• Millage above current levels requires a referendum.
BACKGROUND
Over the last several years, the City of Miami Beach has_ strived to adopt budgets that
provided tax and fee relief while at the same time providing service levels enhancements
(primarily in public safety, cleanliness of rights-of-ways and other public areas, landscaping
and beautification, parks and cultural arts programming, and building/development functions)
that address needs and priorities identified by the community; and providing structural
changes that enhance capital funding and reserves.
FY 2007/2008 Proposed Millage Rate
July 11, 2007
Page 3
To this end, in FY 2005/06 and FY 2006/07 the City of Miami Beach provided for additional
tax relief by issuing Homeowner Dividends of $200 and $300, respectively, to all homeowners
in the City; enhanced free services to the community; and absorbed fee increases in water,
sewer and sanitation. In FY 2006/07 the overall combined millage rate went from 8.073 to
7.673, an unprecedented reduction of 0.4 mills. Further, the combined millage rate overall for
FY 2006/07 was set at an entire 1.0 mill lower than it was in FY 1999/00.
DECISION-MAKING PROCESS
The budget development process has included participation from within and from outside City
Hall. In follow-up to the City's first ever set of community satisfaction surveys in 2005, the
City conducted a set of follow-up community surveys in January 2007. Based on the 2007
Community Satisfaction Surveys, it appears that many of the recent service level
enhancements have been increasing community satisfaction levels with our services,
particularly businesses satisfaction; and resident satisfaction with cleanliness, availability of
family-friendly cultural activities, handling of special events (by South Pointe residents), and
increased satisfaction with the amount of information received from the City (when getting
information directly from the City).
A Commission Retreat was held on April 27 and 28 where preliminary budget information was
provided to the Commission and priorities were established. Given the positive results from
the surveys related to recently implemented initiatives, the focus for the FY 2007/08 budget
development process was to provide further tax relief and the direction was given to prepare
a budget that reflected, at a minimum, the millage roll back rate.
At the time of the Commission Retreat, various approaches for property tax relief were being
debated in Tallahassee. Therefore, it was determined that the impact of any reductions to the
FY 2007/08 budget beyond aroll-back rate would be addressed pending the outcome of the
property tax legislation in Tallahassee. Further direction for the preparation of the FY
2007/08 budget was that every effort should be made to preserve recently enacted City
initiatives in support of community priorities as well as core services.
At the June 29, 2007, Finance and Citywide Projects Committee, the impacts of the June
2007 property tax legislation was presented. The Committee recommendation was to set the
tentative millage for the July 11th meeting at the State mandated level of Roll-Back plus an
additional 9 percent reduction. This will require the City to further identify approximately $13
million in a combination of revenue enhancements and cost reductions. Specific approaches
to balance the budget due to these measures would be reviewed with the Commission and
the City's Budget Advisory Committee over the summer.
STATUTORY REQUIREMENTS
FS 200.065, entitled "Method of Fixing Millage" establishes specific guidelines that must be
used by all local government entities in setting millage (property tax) rates. Under the statute,
the City is required, within 35 days of receipt of the "Certification of Taxable Value" (received
June 30, 2006), to advise the Miami-Dade County PropertyAppraiserof the proposed general
operating millage rate, the calculated "rolled-back" rate and the date, time, and place of the
first public hearing to consider the proposed millage rates and tentative budgets for FY
FY 2007/2008 Proposed Millage Rate
July 11, 2007
Page 4
2007/08. The required Debt Service millage rate must also be set at the same time.
After setting the proposed operating millage rate, the Commission may, at any time
prior to the final adoption, lower the rates by adjusting priorities. Increasing the
millage rate may only be accomplished by an expensive mailing and advertising
process to every property owner on Miami Beach.
ANALYSIS OF PROPERTY VALUES IN MIAMI BEACH
On June 29, 2007, the City received the "2007 Certification of Taxable Value" from the
Property Appraiser's Office stating that the taxable value for the City of Miami Beach is
$26,850,061,663, including $291,141,109 in new construction. The preliminary 2007 value
represents an increase of $4.1 billion or 18 percent over 2006's July 1 Certification of Taxable
Value of $22,739,947,828.
However, 2007 Certification of Taxable Value" from the Property Appraiser's Office, also
decreased the estimated "2006 Taxable Value" from $22.740 billion to $22.258 billion, a
decrease of $483 million. This difference between 2006's preliminary and final values
represents the loss of 2.1 percent due to appeals, value adjustments, etc. The majority of
this loss occurred in areas outside the City Center Redevelopment District and the South
Pointe area, and is significantly higher than in prior years.
The revised taxable values for 2006 alone have several ramifications, including:
• Reductions to FY 2006/07 property tax collections
• Further reductions to the calculated Rolled-Back Millage for FY 2007/08
• Revision to the assumed rate of appeals, value adjustments and resulting collections in
FY 2007/08
The comparative assessed values for the Miami Beach Redevelopment Agency City Center
redevelopment district increased from $3,003,565,939 to $3,585,310,480, an increase of
$581,744,541, or a 19% increase in values over 2006 values. In addition, assessed values
within the geographic area formerly known as the South Pointe redevelopment district
increased from $2,905,687,850 to $3,452,319,916, an increase of $546,632,066, or a 19%
increase in values over 2006 values. As with Citywide values, 2006 Taxable Values for City
Center and the South Pointe area, were revised to $2,967,904,551 and $2,867,705,107, a
decrease of $36 million and $38 million, respectively.
DETERMINING THE OPERATING MILEAGE LEVY
The first building block in developing a municipal budget is the establishment of the value of
one mill of taxation, wherein the mill is defined as $1.00 of ad valorem tax for each $1,000 of
property value. For the City of Miami Beach, this value for each mill is determined by the
2007 Certification of Taxable Value and has been set at $26,850,061,663. Florida Statutes
permit a discount of up to five percent for early payment discounts, delinquencies, etc.
Therefore, the 95 percent value of the mill is $25,507,559.
FY 2007/2008 Proposed Millage Rate
July 11, 2007
Page 5
Impacts of Millage Roll-back
In FY 2006/07, the millage rate for general City operations was adopted at 7.192 mills. An
additional 0.182 mills was adopted for Renewal and Replacement, for a total combined
operating millage of 7.374. Based on the June 29, 2007 Certification of Taxable Value,
7.374 mills would generate approximately $188 million in tax revenues, an increase of $26
million over current year budgeted fiscal year tax collections. This increased revenue would
have allowed us to absorb normal increases in salary and fringes and other normal increases
due to inflation, as well as provide significant tax relief to the community.
The Commission direction to prepare a budget based on a roll-back rate means that the
millage rate needs to be reduced such that the City will receive the same level of property tax
collections in FY 2007/08 as in FY 2006/07. The rollback rate is the millage rate required to
produce the same level of property tax revenues in FY 2007/08 as collected in FY 2006/07,
thereby forgoing any revenues associated with growth in assessed values. The rollback rate
is calculated by dividing the prior year property tax revenues by the current year property
values, after new construction, major improvements, annexations, and tax increment districts
are removed from current year property values. For FY 2007/08, the resulting Roll-Back Rate
is 6.2212, more than 1 mill less than the millage rate adopted for FY 2006/07.
In addition, pursuant to the recently enacted State legislation, The City of Miami Beach is
required to reduce property tax collections in FY 2007/08 to the roll back rate plus an
additional 9% reduction. This results in a millage rate of 5.6555.
As a result, approximately $17.5 million is reduced from FY 2006/07 budgeted property tax
revenues collections in FY 2007/08. These estimates of revenue impacts are for the City as
a whole, FY 2007/08 impacts beyond rollback to specific jurisdictions are estimated as
follows:
Impact to City Property Tax
Collections
City Center RDA $1.1 million
South Pointe Area $1.4 million
General Fund $15.0 million
Total $17.5 million
On June 29th, 2007, the estimated reduction of property tax collections were presented to the
Finance and Citywide projects Committee. At the time, the impact was estimated at $13.8
million. The components of the change from $13.8 million to $17.5 million less in FY 2007/08
budgeted revenues are summarized in the following table.
FY 2007/2008 Proposed Millage Rate
July 11, 2007
Page 6
$ Value
July 29, 2007 Estimated reduction in Property
Tax Collections
$
13.8
million
Changes Due to revised taxable values for 2006
Reductions to the calculated Rolled-Back Millage $ 3.1 million
Revision to the assumed rate of collection
(appeals, revaluations, etc.
$
2.3
million
New Construction Im acts $ 1.7 million
Sub-total $ 3.7 million
Total $ 17.5 million
DETERMINING THE DEBT SERVICE MILEAGE LEVY
The general obligation debt service payment for FY 2007/08 is approximately $6.2 million,
reflecting a decrease of $400,000. Base on the June 29 Certified Taxable Value from the
Property Appraiser, these bonds would require the levy of a reduced debt service millage of
0.2415 mills. This represents a reduction of 0.0575 mills.
COMBINING THE OPERATING AND DEBT SERVICE MILEAGE LEVIES
Illustrated below is a comparison of the combined millage rates and ad valorem revenues to
the City of Miami Beach for FY 2006/07 (final) and FY 2006/07 (preliminary) including RDA.
~ 06107 FY 07108 Inc/(Dec) % Inc/(Dec)
City of Miami Beach Millage Rates
Operahng_ 7.1920 _ 5.5173: .. (1.6747) -23%!
Capital Renewal ~ Replacement 0.1820 0.1382 (0.0438) -24%'
Debt Service _ _ __ 0.2990 0.2415 .... (0.0575) -19%
Total 7.6730 5.8970';. (1.7760)I -23%
If these recommended millage rates are tentatively adopted, then the City of Miami Beach's
overall combined tax rate millage will decrease by 1.7760 mills as compared to the current
year, the total operating millage will decline by 1.7185 mills and the debt service millage will
decrease by 0.0575 mills.
FY 2007/2008 Proposed Millage Rate
July 11, 2007
Page 7
COMBINING JURISDICTIONAL OPERATING AND DEBT SERVICE MILEAGE LEVIES
City of Miami Beach property owners must also pay property taxes to Miami-Dade County, the
Miami-Dade County School Board, the South Florida Water Management District, and the
Florida Inland Navigation District.
As of the June 1 Preliminary estimates of Taxable value, the countywide tax rate was
estimated to decrease to 4.6433 mills. Estimated changes in tax rates for other jurisdictions
are unavailable at this time and are shown as unchanged.
Using tax rates known at this time, the changes in tax rates is estimated as follows:
Of
OVERLAPPING TAX MILEAGE FY 06107 FY 07108 Inc/(Dec) Inc/(Dec) Budget
City of Miami Beach Millage Rates
Operating 7.1920 5.5173!' -1.6747:
Capital Renewal & Replacement 0.1820 0.1382 -0.0438
Debt Service 0.2990 0.2415 -0.0575
Total 7.6730''. 5.8970 -1.7760: -23%; 29%
Miami Dade County
_ _
. _ _
_
. _ _
Countywide 5.6150.. 4.6433 -0.9717
Library _ 0.4860.... . ......0.4860 ...0.0000.....
Debt Service _ _ 0.2850 0.2850 ....0.0000',
Subtotal'. 6.3860' 5.4143!: -0.9717'i -15% 26%
School Board _ _ _ 8.1050 8.1050 ......0.0000:.. 0% 39%
Children's Trust 0.4220
_ _ _
_ 0.4220 O.000O
..... 0%
_ 2%
Other
0.7360 0.7360 0.0000 0% 4%
Total' 23.3220: 20.5743 -2.7477! -12%' 100%
In FY 2006/07, the Miami Beach portion of the total tax bill was 33 percent. The
recommended millage rates for FY 2007/08 will place the Miami Beach portion of the
tax bill at 29 percent based on tax rates known at this time.
COMBINED MILEAGE LEVY IMPACT ON PROPERTY OWNERS
Homesteaded Property Owners
Amendment 10 to the State Constitution took effect on January 1, 1995 and limited the
increase in assessed value of homesteaded property to the percentage increase in the
consumer price index (CPI) or three percent (3%), whichever is less. For 2006, the CPI has
been determined to be 2.5 percent and therefore, the increase is capped at 2.5% for
increased values as of January 1, 2006. The $25,000 homestead exemption is applied after
the increase in value as follows.
FY 2007/2008 Proposed Millage Rate
July 11, 2007
Page 8
Below are examples on the impact of the reduced millage and the 2.5% increase in values
based on the prior tax rates.
Change in Taxes Paid by Homesteaded Properties
FY 2006 Assessed Value ' $ 250,000 $ 295,000 ! $ 500,000 ! $ 1,000,000
Less $25,000 Exemption $ (25,000); $ (25,000) $ (25,000) $ (25,000)
FY 2006 Taxable Value $ 225,000: $ 270,000: $ 475,000 ' $ 975,000
2006 Taxes _ _ _
City of Miami Beach $ 1,726 $ 2,072 $ 3,645 $ 7,481
Miami Dade County $ 1,437 $ 1,724 $ 3,033 $ 6,226
....Other $ _ 2,084 `
.. $ ..2,501 ' $ 4,400 $ 9,031....
..
Total,: $ ...
.5,247 '.. . $ 6,297 $ 11,078 $ 22, 739
FY 2007 Taxable Value with 2.5% incr. ` $ 231,250 ` $ 277,375 ' $ 487,500 ! $ 1,000,000
2007 Taxes
City of Miami Beach $ 1,364 ' $ 1,636 $ 2,875 $ 5,897
Miami Dade County
... _ _
.
. $ 1,252 $ 1,502
.
. $ 2,639 $ 5,414
.Other
. $ 2,142 $ .
.
..2,569 $ ....4,516 $ 9,263
Total $ 4,758 $ 5,707. $ 10,030 ' $ 20,574
$ Change in Taxes
_
City of Miami Beach
.... _ $ (363)
__ $ _ (436)
:. $
.. (770) $_ (1,584)
Miami Dade County
__ $ (185); $ (222)
_ .$ (394)
... $_ (812)
Other $ 58 $ 68 $ 116 $ 232..
Total. $ (490): ...$ (590).:,. ..$ (1,048) $ (2,165)
Non-homesteaded Properties
Impacts of the decrease for non-homesteaded properties will vary based on the increase in
assessed value for each individual property.
FY 2007/2008 Proposed Millage Rate
July 11, 2007
Page 9
Change in Taxes Paid by Non-Homesteaded Properties
FY2006 Table Value $ 500,000 ` $ 1,000,000 $ 5,000,000 $ 10,000,000
2006 Taxes
CityofMiamiBeach $ 3,837 $ 7,673 $ 38,365 $ 76,730
Nfami Dade County $ 3,193 $ 6,386 $ 31,930. $ 63,860
Other $ 4,632 $ 9,263 $ 46,315 $ 92,630
Total $ 11,661 $ 23,322 $ 116,610 $ 233,220
FY 2007 Taxable Value - No increase ; $ 500,000 $ 1,000,000 '! $ 5,000,000 ' $10,000,000
2007 Taxes
CiiyofMiami Beach
$
2,949
$ _~
5,897
$
29,485
$
58,970
Miami Dade County $ 2,707 $ 5,414 $ 27,072 $ 54,143
Other $ 4,632 $ 9,263 $ 46,315 $ 92,630
Total $ 10,287 $ 20,574 $ 102,872 $ 205,743
$ Change in Taxes
CityofNfami Beach $ (888) $ (1,776)! $ (8,880) $ (17,760)
Miami Dade County
...:.. _
_ $ (486) $ (972) $ (4,859) $ (9,717)
Other $ _ $ $
.......Total. $ (1,374) $ (2,748) $ (13,739).. .$... (27,477)
FY2007 Taxable Value - 10% increase $ 550,000 $ 1,100,000 $ 5,500,000 ' $ 11,000,000
2007 Taxes
_ _
CityofN~ami Beach
$
3,243
" $
6,487 !
$
32,434
$
64,867
Miami Dade County
_ $ 2,978 $ 5,956 $ 29,779 $ 59,557
Other $ 5,095 $ 10,189 $ 50,947 $ 101,893
Total $ 11,316 $ 22,632 $ 113,159 $ 226,317
$ Change in Taxes
CityofN~ami Beach $ (593) $ (1,186)' $ (5,932) $ (11,863)
Miami Dade County
.....
__ $ (215) $ (430)
_ $ (2,151) $ (4,303)
.
..
Other $ 463 $ 926 $ 4,632 $
..
. 9,2
63
.
Total $ (345) $ (690): $ (3,451). $ (6,903)
FY2007 Table Value - 20% increase $ 660,000 $ 1,320,000 $ 6,600,000 ' $ 13,200,000
2007 Taxes
CityofMiami Beach $ 3,892 $ 7,784 $ 38,920 $ 77,840
Nfami Dade County $ 3,573 $ 7,147 $ 35,734 $ 71,469
Other $ 6,114 $ 12,227
~ $ 61,136 $ 122,272
Total $ 13,579 $ 27,158 $ 135,790 $ 271,581
$ Change in Ta~aes
CityofNiamiBeach $ 56 $ 111 $ 555 $ 1,110
Miami Dade County $ 380 $ 761 $ 3,804 $ 7,609
Other $ 1,482 $ 2,964 $ 14,821 $ 29,642
Total $ 1,918 $ 3,836 $ 19,180 $ 38,361.
FY 2007/2008 Proposed Millage Rate
July 11, 2007
Page 10
GENERAL FUND BUDGET STATUS
General Fund Revenues
Based on current projections, non ad valorem revenues are anticipated to grow by
approximately $7.6 million. The increased revenues include:
• Increased resort tax transfers to the General Fund
• New revenues from the Live Nation agreement for the Jackie Gleason;
• Increased interest earning due to higher interest rates
• Increased electrical franchise revenues;
• Increased licenses and permits with the re-instatement of Fire Inspection fees,
programmed increases in occupational licenses, and increased revenues from right-of-
wayand building permits;
• Increased other revenues include full project charge-backs by CIP, full year
implementation of the off-duty fee increased in FY 2007/08, increased revenues from
rents and leases, and revenues anticipated from the mid-year re-opening of Normandy
Shores Golf Course ($167,900).
Operation Millage
Property Tax Citywide $ 129,064,617 $ 114,114,196 $ (14,950,421) -8.9%
Property Tax South Pointe 7,718,251 7,718,251 $ - 0.0%
Subtotal 136,782,868' 121,832,447: $ (14,950,421)!.. -8.9%
Capital Renewal and Repl. 3,266,096 3,266,096 $ - 0.0%
Interest Revenues 5,300,000 6,200,000 $ 900,000 0.5%
Franchise Fees and Taxes 22,153,300' 22,953,300 $ 800,000 0.5%
Licenses and Permits 13,025,335 14,575,335 $ 1,550,000 0.9%
Intergovernmental Revenues 11,160,640 11,160,640 $ - 0.0%
Live Nation JGTAgreement - 1,000,000 $ 1,000,000 N/A
Resort Tx Transfer 19, 571, 309 ` 20, 571, 309 $ 1, 000, 000 0.6%
All Other Souroes* 26,413,548 28,781,448 $ 2,367,900 1.4%
Subtotal' 100,890,228 108,508,128 7,617,900' 4.5%
:;~~ ''
* Charges for Services, Fines & Forfeits, Rents & Leases , Miscellaneous & Other
FY 2007/2008 Proposed Millage Rate
July 11, 2007
Page 11
Expenditures Projections
Historically, Current Service Levels expenditures have increased between 6% and 8%
annually due to salary and fringe increases and other normal CPI adjustments to other
operating expenses.
In FY 2007/08 Current Service Level expenditures were projected to increase by $g.3million
(an increase of 4%). Major drivers of expenditures in FY 2007/0$ continue to be:
• Increases in salaries and fringes due to previously approved 5% COLA increase as well
as average merit increases of 2%;
• Increases in pension contributions, primarily for the Fire and Police Pension based on
the actuarial estimates;
• Increases in health insurance, based on a 10% cost increase;
Current Service Level expenditure projections for FY 2007/08 also include:
• Decreased property insurance costs based on reduced property insurance levels
previously approved by the Commission;
• Increases in other internal service costs primarily due to increases in property
management and increased maintenance costs in Information Technology as new
systems come on line;
• Elimination of the one-time transfer for the delayed partial payment of FY 2005/06 Miami-
Dade County wholesale water and sewer rates;
• Expenditures associated with the July re-opening of the Normandy Shores Golf Course
are also included in Current Service Level Expenditures ($445,812); and
• Reduced operating expenditures.
Each year, as part of the budget process, Departments are directed to review their Current
Service Level budgets to identify potential efficiencies, line items that can be reduced, etc.
However, as discussed, at the April 2007 Commission retreat, I directed staff to review their
budgets even more carefully this year for efficiencies and savings, and where possible, to
reduce expenditures to the same level as FY 2006/07 despite the increases in salary and
fringe and other normal CPI adjustments.
The resulting department review was extensive. In the first phase of this effort, each line item
was reviewed to ensure that it was budgeted as tightly as possible; contingencies were
removed, and departments made significant reductions in items such as outside contracts,
overtime, travel, training, subscriptions, supplies, etc. In this initial effort alone, departments
identified approximately $2 million in savings across a wide range of operating expenditures
that are anticipated to have minimal impact on services delivered to the community.
Current Service Level expenditures also include elimination of additional transfers to the 11
percent Emergency Reserve as it is anticipated that the budget for FY 2007/08 will be less
the current year FY 2006/07 budget.
In combination, at this point, the net overall increase is $6 million (2.5%).
FY.2007/2008 Proposed Millage Rate
July 11, 2007
Page 12
FY 2006/07 Operating Budget..... $ .237,673,096
COLA & Merits $ 6,808,435 2.9%
Pension -Fire & Police 1,973,229 0.8%
Pension -General 436,956 0.2%
Health Insurance 861,897 0.4%
Other Fringes & Overtime 754,514
_ 0.3%
Property Insurance (550,000)' -0.2%
Other Internal Services 1,512,342 0.6%
WASD Payment
- _ (1,000,000)' -0.4%
Dept CSL - FuII Year Costs 545,812 0.2%
Other O~eratina Costs (2.000.0001 -0.8%
Subtotal 9,343,185 3.9%~
Transfer to 11% Emergency Reserve $ (3,338,419) -1.4%
The net effect of these changes in revenues and expenditures is a gap of approximately $13
million, prior to any reorganizations, reductions in positions, service reductions, etc.
Projected Revenues $ 237,673,096 i 230,340,575
Projected Expenditures ' $ 237,673,096 $ 243,677,862
Difference - (13,337,287)
ADDRESSING THE GAP
As stated above, our first step in addressing the reduced level of property tax revenue in FY
2007/08 was the direction given to departments early this year to present FY 2007/08
budgets as close as possible to the FY 2006/07 levels. While challenging, the net effect of
this effort has been successful, with the remaining difference between projected revenues
and expenditures being essentially the additional nine (9) percent reduction in revenues from
the new legislation.
FY 2007/2008 Proposed Millage Rate
July 11, 2007
Page 13
The second step in the process to address the remaining gap is based on a thorough review
of a combination of measures, including:
• Further reductions with minimal service impact through reorganizations, etc.
• Service reductions
• Revenue enhancements and reallocation of resources/transfers
As part of this review, every effort is being made to preserve key enhancements made to the
operating budget in prior years in response to community priorities as directed at the
Commission Retreat, including:
• Enhancements in sanitation, bikeway coordination, maintenance of right-of-way
landscaping and up-lighting, etc., family-friendly cultural activities, communications,
enhanced green space management etc.;
• Elimination of most park fees and expansion of free programs;
• Renewal and replacement funding to maintain our facilities; and
• Capital funding through pay-as-you-go and capital reserve.
In order to conduct a thorough review of potential reorganizations and service reductions,
directed staff to break down their budget into a listing of potential reorganizations and service
reductions versus core functions. Reductions such as elimination of the Homeowners
Dividend and the $1 million annual transfer to the Risk Management Fund will have no impact
on services. Additional reductions through re-organizations are anticipated to have minimal
service impact, and include eliminating positions that have been vacant for some time and
where functions have essentially been absorbed by other positions or outside contracts;
combining certain functions and positions, particularly at the management level; etc.
On the other hand, each of the potential service reductions have stakeholders who would be
impacted in some way and each of them has been implemented in response to a need or
priority in our community. In order to ensure a thorough review of potential service
reductions, staff was directed to provide the type of impact and the magnitude of the impact.
Core functions were defined as those functions which, if cut, render it impossible for the
department to provide that service at any reasonable level. As represented on the next
chart, the impacts of the recent property tax legislation allows us to continue funding our core
services and much of the services identified as potential service reductions.
$243 M
$184M
$o
otal General Fund Revenues
Net of Property Tax
Legislation Impacts
Service Reductions
Services
FY 2007/2008 Proposed Millage Rate
July 11, 2007
Page 14
A different approach to address some of the gap is though revenue enhancements.
Departments also were directed to present alternatives for revenue enhancements, in
particular to review costs/revenue ratios, comparisons to other jurisdiction fees, etc.
Summary
We have already conducted several rounds of meetings with departments to develop and
consider lists of cost reduction, re-organization, service reduction, and revenue enhancement
alternatives. For each of these measures, a range of options exists. The chart below
presents a set of combinations anticipated for each of the measures, however, these can be
refined subject to direction from the Commission.
Additional Minimal Service Impact Reductions
Eliminate Homeowners Dividend ;
Eliminate Transfer to Risk Mgt Fund
Cost Cutting/Efficiencies, Reorganizations, Reallocations, etc.
$
$
$
4,900,000
1,000,000
2,000,000
Subtotal ' $ 7,900,000
Service Reductions TSD
RevBnue Enhancements TBD
Sub-total $ 5,437,287
Through this effort we believe we can identify approximately $2 million in additional cost
cutting/efficiencies, reorganizations, etc. As a result, approximately $22 million in property tax
reductions has been identified to date through the following:
• $7.6 million in increased Current Service Level revenues,
• $2 million reduction previously achieved in operating cost reductions,
• Elimination of $3.3 million in additional transfers to the 11 percent reserve
• Elimination of the $1 million one time water and sewer fee payment
• Elimination of the $4.9 million in funding for the Homeowners Dividend, and
• $1 million in risk management transfer,
• $2 million in additional cutting/efficiencies, reorganizations, etc
As with most things, the reductions with less impact have been identified first. The first $22
million impact has been achieved while preserving initiatives that support our community-
driven Key Intended Outcomes. The remaining $ 5.5 million will be harder, and will have
service impacts to a lesser or greater extent. However, as more revenue enhancements are
selected, fewer service reductions are needed.
FY 2007/2008 Proposed Millage Rate
July 11, 2007
Page 15
Potential revenue enhancements under review include:
• Increased EMS transport fees to equal Miami-Dade County proposed levels ($720,000)
• Increased resident fees for Miami Beach Golf Course ($177,700)
• Elimination of special event permit fee waivers ($117,485)
• Increased film and print permit fees ($139,000)
• Increased sidewalk cafe revenues ($372,000 for each $5 increment)
• Increase right-of-way permit fees ($56,000)
Further, rather than select easy fixes for FY 2007/08 alone; it is important to consider the long
term financial sustainability of the City. In addition to additional reductions that may occur in
FY 2008/09 if the constitutional changes are approved, the City will continue to be subject to
growth constraints each year going forward. And there may be additional legislated changes
going forward. None-the-less, the efforts we have taken this year will continue to provide
insight for us as we work on budgets in future years.
Next Steps
We will be scheduling a Finance and Citywide Projects Committee to review the potential
alternatives to address the remaining $5.5 million gap to balance the budget. Based on input
from the Committee, we will then prepare a Proposed FY 2007/08 Operating Budget for
consideration at the September Public Hearings.
Over the summer, we will also update our capital plans, including those of City Center and
South Pointe to reflect the impacts to those areas.
FIRST PUBLIC HEARING
The first public hearing on the proposed millage rates and tentative budgets for Fiscal Year
2007/08 must be held no later than 80 days (September 18th) or earlier than 65 days
(September 3rd) from the start of the TRIM ("Truth In Millage") calendar (July 1st). Other
guidelines are: 1) the public hearing cannot be scheduled on a Sunday or on those days
utilized by Miami-Dade County or the Miami-Dade County School Board for their public
hearings; and 2) if on a day other than Saturday, the public hearing must be after 5:00 P.M.
Based on these guidelines, the first hearing must be held between September 3rd and
September 18th. These dates are unavailable for the following reasons:
September 9 and 16 Sundays
September 6 and 20 Proposed dates for Miami-Dade County Public
Hearings
September 5
Miami-Dade County School Board Public
Hearing
Of the remaining days, it is recommended that the first public hearing be set for Wednesday,
September 12, 2007 at 5:01 P.M., in the City Commission Chambers, City Hall, 1700
Convention Center Drive, Miami Beach, Florida.
FY 2007/2008 Proposed Millage Rate
July 11, 2007
Page 16
ACKNOWLEDGEMENTS
The development of this year's Proposed Operating Budget has taken significantly more time,
energy, and hard work than in prior years. Although we still have selection of final
alternatives to address the $5.5 million gap, I would like to thank Mayor Dermer, and the
Members of the Miami Beach City Commission, for your continued guidance, support and
leadership with the budget process and in helping to accomplish so much on behalf of our
residents and for the entire Miami Beach community. I would also like to recognize our
employees for their continued commitment to the City's mission of providing excellent public
services and working so hard to help accomplish so many positive results that benefit the
entire community despite the challenges and uncertainty of the past several months.
Finally, I would like to thank all staff from throughout the City who worked so hard to identify
every opportunity for cost reductions in their departments, as well as itemize altematives with
a wide range of service impacts to meet the required cost reductions. I would particularly like
to thank my Assistant City Managers, Chief Financial Officer, and all Department and Division
Directors. I appreciate all of us working together towards a reduced budget that still allows us
to accomplish our goals.
In particular, I would like to recognize and thank Kathie Brooks, Director of the Office of
Budget and Performance Improvement (OBPI), Jose Cruz, Budget Officer, Carmen Carlson,
William Gonzalez and Joseph Reilly, Senior Management and Budget Analysts, Management
Consultant Isabel Stillone, and Office Associate Sailyn Arse-Christiansen. OBPI continues to
work particularly hard to continue to enhance the budget process by facilitating greater input
and direction from the City Commission and all City departments in developing the Proposed
Operating Budget, as well as ensuring that we continue to focus on our community's priorities
and measurable performance results, despite reductions in revenues.
JMG:KGB