Mayor Commissioners S. Scott Vandergrift

Mayor
S. Scott Vandergrift
City Manager
Robert Frank
Commissioners
John Grogan, District 1
Rosemary Wilsen, District 2
Rusty Johnson, District 3
Joel F. Keller, District 4
MEMORANDUM
TO:
Honorable Mayor and City Commissioners
FROM:
Robert D. Frank, City Manager
DATE:
August 1, 2013
RE:
Budget Message for Fiscal Year 2013-2014
I am pleased to submit for your consideration the recommended budget for Fiscal
Year 2013-2014. Over the past few years we have worked to provide high quality
facilities and services while being fiscally conservative. This has proven to be
difficult, but I have been very proud of the work that we have accomplished in
maintaining a track record of reducing taxes. We enter this budget season with a
slightly different atmosphere. This year’s budget preparation benefitted by a slight
turnaround in the City’s economy, as with most other cities in Central Florida.
During the previous year’s budget process I reported to you that the economic
decline was slowing; this year, I have better news. Last year, the City’s gross taxable
value decreased 2.9% from the previous year, a combined 21.7% decrease over
the past three years. I am pleased to say that the City’s gross taxable value for the
coming year is $1,676,861,448, a small but encouraging 1.2% increase from the prior
year’s value (a $110,627 increase in revenue), which show’s that our statement last
year that the decline was slowing was correct.
As we are all aware, the City of Ocoee, like all Florida local governments, relies
primarily on Ad Valorem and Intergovernmental revenues for our income. This
reliance imposes stresses on the City’s budgeting process, as the value of residential
and commercial real estate fluctuates. Of course, the last few years have seen a
steady decline in property values and in the revenue property taxes generate.
Since the real estate peak of 2008, overall property values have fallen by 25%. In
2010 alone, the city’s four largest commercial properties declined in value by a
total of over $29 million. We are beginning to see a slight rebound in the nonresidential markets; however, it should be noted that a slight lag time is expected
between residential and non-residential economic growth. The decline has been
more severe with residential property. The average home value in the city in 2008
was $183,554. This year, it is $153,977, an increase of 12.4% from 2011. Other sources
City of Ocoee ▪ 150 North Lakeshore Drive ▪ Ocoee, Florida 34761
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Budget Message
of revenue, such as development impact fees, are still well below the level required
to pay related bond debts. The shortfall places an additional stress on the General
Fund, which must make up the difference.
We continually look for ways to provide better services with less dollars. The City has
benefitted from some of our reorganization efforts in last year’s budget resulting in
savings on technology programs and capital projects. Despite a previous year in
which we had less revenue and again lowered the millage, the City was able to
preserve and enhance services provided. The City Commission’s visionary efforts
have resulted in a new iconic community center that will be completed later this
year, an expanded capability of providing reclaimed water to our customers
(benefitting the environment and saving dollars), and a gateway and entryway
sign program sporting a new City logo that will be complete by the time you adopt
the proposed budget. Additional projects include enhancements at parks (Central
Park lighting), and continued improvements at the Tom Ison Center for Seniors and
Veterans, by leveraging federal and local grants.
Despite our continued challenges and the beginning economic recovery, the City
will begin the next year with a solid financial outlook. The City continues to be proactive in efforts to mitigate effects of property tax reform and to help control costs.
Over the years, these practices have included our self insurance strategy which has
been extremely effective with implementation of the employee clinic, as well as
newfound success with outsourcing of our fleet auto parts shop, which will continue
to save the City dollars. While many of the practices for fiscal health in declining
economies are already in place, we have once again prepared a budget that is
below the rolled back rate. In the current fiscal year we continue to evaluate our
workforce to optimize quality of resources and streamlined government. I am very
proud of the fact that the City’s strong financial management practices and fiscal
conservatism have allowed us to produce a balanced budget without substantially
reducing basic services.
Total appropriations for the coming year are $55,232,710, which includes the
General Fund, the Utilities Fund, the Stormwater Fund, the Water and Sewer Fund,
the Solid Waste Fund, and the Impact Fee Funds. The total General Fund budget is
$34,741,730. This is decrease from the current year budget of 1.19% ($35,161,555).
The current year’s millage rate is 5.8460. Based on this, the rolled-back rate for the
coming year is 5.9307 which is less than last years rolled back rate of 6.1304 due to
our slight increase in property values. I am very pleased to report that the
recommended budget is balanced at a conservative 5.8460 millage rate. This rate
is actually a 9.77% decrease from the rolled-back rate (compared to 4.86% in FY
2012-13), resulting in a $93,852 reduction in ad valorem revenues.
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Budget Message
For example:
A Homeowner with a $200,000 home and a $50,000 Homestead
exemption will pay $876.90 at the current rate and $889.61 at the
rolled back rate.
A Homeowner with a $150,000 home and a $50,000 Homestead
exemption will pay $584.60 at the current rate and $590.37 at the
rolled back rate.
As seen on the following chart, the general fund revenues are partitioned as
follows: Ad Valorem taxes and Intergovernmental Revenues comprise 55% of
general fund revenues. Franchise fees and utility fees comprise 16% of the general
fund budget. These percentages are comparable to previous years, and the City
continues to provide exceptional services with fewer dollars per capita.
I wish to point out that we are once again taking a conservative approach to the
revenue projections, as evidenced below in the chart. As noted by our auditors in
our recent year end up-date (2012), the ratio of revenue to population for Ocoee is
$722 (this number decreased from $783) compared to $754 for the benchmark
cities with populations of 15,000 to 49,999.
Like most municipalities, the single largest cost component of the budget is
personnel costs. Total personnel costs for the General Fund are $21,653,935 which is
down from $22,533,668 in the current year’s budget. Our employees remain our
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Budget Message
single greatest asset, and I have gone to great lengths to keep personnel costs to a
minimum by continued reliance on strategic management versus relying on layoffs.
The City plans to continue reviewing each position as it becomes vacant and
focusing on optimizing resource allocation and continuing expedient operations at
no loss of service.
The next chart illustrates the apportionment of expenditures for the General Fund.
As a percentage of total expenditures, personnel costs have remained steady at
64%. Operating expenses account for approximately 24% and capital expenditures
are approximately 6% of the general fund budget. The City’s proposed General
Fund capital outlay budget of $2,187,830 reflects a decrease over the current
year’s budget.