· City of Key West ·
· Annual Budget Fiscal Year 2001 - 2002 ·
This budget book consists of the following major sections:
· Introduction and Summary – Overview of all funds.
· Detailed Budgets – Each fund includes an overview, the fund revenue and expenditure budgets in summary form, personnel budget, and capital budget.
· Additional Information – Information on Key West History and Demographics, Interfund Transfers, Personnel Services, Historical Trends, Budget Procedures and a Glossary of Terms.
Graphs and charts include the following information:
Fiscal Year Financial Information
1996 – 1997 Actual
1997 – 1998 Actual
1998 – 1999 Actual
1999 – 2000 Amended Budget
As noted in the City Manager’s letter of transmittal, budgets were developed to improve services and add new services while maintaining overall expenditures at reasonable levels. Importantly significant efforts were made in the General Fund to reduce ad valorem property taxes so as to reduce the millage rate as close to rollback as possible. The following challenges were paramount during the initial stages of development:
· A possible lessening of tourist volume.
· The request of local human service agencies for additional support, given State budget reductions made necessary by a drop on tourists in central Florida.
· The need to add police officers to patrol and marine activities.
· The need to increase wages to retain staff in view of increases to an already high cost of living.
· Significant increases in the cost of health, windstorm and flood insurance.
Other funds were faced with challenges to a lesser extent. The Infrastructure (Sales Surtax) Fund was faced with the initial challenge to fund the construction of a multi million dollar community services and recreation center. The fund could not sustain the debt service for such a project and continue its ongoing obligations. The project was suspended for the year to allow the search for supplemental funding and a clearer definition of project scope and costs.
The most significant challenge was the adoption of the budget in the immediate aftermath of the September 11, 2001, terrorist attack upon the United States. The City is totally dependent upon domestic and foreign tourism for its income. The ultimate impact on the national and local economy was unknown at budget approval. Thus, an implementation plan was developed as explained in the City Manager’s memo. It consists of the following:
There are two major sources of revenue for the General Fund, property taxes and other revenues.
The General Fund ad valorem property tax at $10,956,897 or 39% of total revenues is a significant source of revenue. This tax is the product of the millage rate (rate per $1,000 of assessed property value) times the assessed property value. Assessed property values have continued their historic increase as depicted in the property value graph below.
Thus, an increase in assessed value will increase property taxes even if the rate remains as in the prior year. The rollback millage rate neutralizes the effect of property value increases by reducing the millage rate to a level that keeps total taxes at the same level as the prior year. The maintenance millage rate maintains the prior year’s rate and results in increased taxes based on increased property values. The assessment of property values is the responsibility of the Monroe County Property Appraiser. The methods used to assess value are explained in the General Fund Overview section of this book.
General Fund tourist related and other revenues including sales taxes, gasoline taxes, parking revenues, interest income, and payments from other City Funds at $17,268,132 have been projected to decrease by $12,014 from the current budget. Most components of this category were budgeted to increase. These increases were offset by the loss of the one time transfer of $450,000 in the FY 00-01 budget. The effect of the above forced a greater reliance on property taxes as a funding source for current and new programs.
Increases in expenditures due to wage agreements, supply cost increases and capital projects have been included in budgets. Budgets were prepared to hold the line on cost increases and staff explored methods to provide services in a more cost efficient manner.
Of note are the Quality of Life Improvement services and programs that were included in the budget by the Commission budget hearings. These are detailed in the management plan section that follows.
Budgets included in this document are the product of several months’ work on the part of City staff. Department Heads prepared budget requests with the objectives of improving services to the citizens while being as fiscally conservative as possible. Budgets were reviewed several times and reductions were effected.
Based on the evaluation of management goals and objectives for Fiscal 2000-2001 and the needs of the Citizens as expressed by the Mayor and Commissioners, major goals have been established for FY 2001-2002. They are listed below.
· Completion of the first phase of the comprehensive citywide records management program.
· Receiving and activating the initial improvement of the Navy Truman Annex property.
· Improved community security with the addition of three Police Patrol Officers, three Police Marine Officers and one Crime Scene Detective.
· Improved community appearance by the replacement of chain link with historic designed fencing for the Cemetery.
· Maintaining essential community services by supporting the Southernmost Homeless Assistance League.
· Maintaining readiness for the acquisition of Navy property by reserving unspent Navy pier lease funds for the addition maintenance and security services.
Infrastructure (Sales Tax) Fund
· Completing improvements to the selected public areas.
· Improving the appearance of the Old Town tourist area by acquiring a sidewalk steam cleaner.
· Improving public safety by acquiring a new radio system.
· Improving recreational facilities by roofing the in line hockey rink.
· Improving public safety by transferring funds to the Internal Improvements Fund for street and sidewalk improvements.
· Improving public health by transferring funds to the Sewer Fund for the final completion of the system improvement program.
· Maintaining readiness for the acquisition of Navy property by reserving funds for capital improvements and grant matches.
Internal Improvements (Gas Surtax) Fund
· Continued maintenance of and increased improvements to street -lights, streets and sidewalks.
· Continued financial support of the Transit System.
Fort Taylor (Admission Surcharge) Fund
· Continue services at no rate increase.
· Prepare for and initiate the solid waste to energy plant retrofit.
Key West Historic Seaport (Bight) Fund
· Complete the Key West Ferry Terminal building to allow for increased service to and from the Gulf and East coast of Florida and expanded rental space availability.
· Complete improvements to marina facilities.
City Marina at Garrison Bight Fund
Transit System Fund
· Continue service improvements.
· Add 2 new busses dependent upon receipt of grant funding.
· Completed the examination of health insurance coverage to mitigate the impact of increasing costs.
Bahama Village Caroline Street Tax Increment Fund
· Continued support of the Key West Historic Seaport capital program.
· Continued support of Bahama Village projects.
The Financial Plan supports the management plan. It will fund the routine operations of the City, allow for the initiation of new programs including the Quality of Life Improvement Initiatives and support ongoing capital projects. All funds projected to be self-sufficient (prior year carry forwards plus revenues will equal or be in excess of expenses). Open issues remained at the time of budget approval. The issues and the financial strategy associated with each are listed below:
· Actual tourist driven revenues may be less than budgeted due to the national economy and or the drop in tourist travel due to the threat of terrorism. This is being countered by the strategy noted in the city manager’s letter. All discretionary spending is being suspended pending a review of revenues and tourist volumes at the end of the first quarter and each quarter thereafter. After each quarter, cash available for programs and projects will be reviewed. Recommendations to proceed will be made to the Commission. Action will take place upon approval of the Commission.
· At the time of budget approval final health and general liability insurance costs were not available. Indications were that actual cost increases would be above the earlier budget projections. Increases over budgeted amounts will be apportioned to each fund and will ultimately impact reserves. Insurance fund and General Fund reserves will be available as a last resort.
· Final wage increases were not determined at budget approval. Increases over budgeted amounts will be apportioned to each fund and will ultimately impact reserves. General Fund reserves will be available as a last resort.
The General Fund has been budgeted in accordance with a strategy that calls for an aggressive estimation of revenues and the realistic development of expenses that will support the continued provision and improvement of services to the public. In the past, revenues were estimated on a conservative basis. That strategy resulted in the development of strong General Fund reserves. The revised strategy is expected to continue to increase reserves. Reserves in the beginning of the year are expected to be at a level sufficient to provide more than 90 days of operation. This year, more importantly than ever, the presence of strong reserves is an important safeguard to the continued provision of services. Other funds have also been planned in accordance with the above strategy. Their soundness is expected to continue.
The Annual Budget supports the Management and Financial Plans.
The Budget Plan
Expenditures in all funds are subject to the Commission – City Manager plan as outlined above and in the City Manager’s memo.
Infrastructure Surtax Fund
The Infrastructure Surtax Fund is budgeted at $5,073,096. Its revenue source (the sales surtax) is shared with other incorporated and unincorporated areas of Monroe County and is budgeted at $4,800,000 the same as FY 00-01. The fund will begin the year with a projected carry forward of $273,796 from FY 00-01. No interest is budgeted as expenditures were projected to be complete and the year- end balance would not be achieved until the end of the year.
The fund will support:
· General Improvements to public areas.
· Acquisition of public safety equipment.
· Various parks improvements.
· Transfers to the Internal Improvements fund to support street and sidewalk improvements.
· A transfer to the Sewer Fund to support the Sewer project.
· A capital projects reserve for Navy property improvements upon transfer.
Internal Improvements Fund
The Internal Improvements (Gas Tax Surcharge) Fund is budgeted at $3,738,952 the same as FY 00-01. It is also a shared revenue tax source fund and is allocated by an agreement. The fund will receive:
· A $400,000 transfer from General Fund parking charges to support a transfer to the Transit Fund.
· An $800,000 transfer from the Infrastructure Fund to support street and sidewalk improvements.
Prior year balances including restricted balances total $1,289,193 and interest income totals $49,759.
In past years, the fund supported stormwater activities. This year they will be transferred to the Stormwater Utility Fund. The fund supports the following activities:
· Street and traffic light operation and maintenance program $ 377,051
· Street maintenance and improvement program $1,089,000
· Truman Annex Impact (Restricted) $ 339,294
· Sidewalk maintenance and improvement program $ 765,000
· Transfer to the Transit System $ 914,707
· Fund Reserve $ 211,971
§ Parking Impact Fund Restricted Reserve $ 41,929
Fort Taylor Trust Fund
The Fort Taylor Trust Fund receives income from a surcharge on Fort Taylor admission fees. These are projected to be $121,693. A grant from the Monroe County Tourist Development Commission is projected at $150,000. Interest is projected at $13,291 and the balance from FY 00-01 is projected at $319,276.
In FY 00-01 the fund acquired the Berg property, a natural wetland. It received funding from the Trust for Public Lands and a, FEMA storm mitigation grant for the acquisition. During FY 01-02, $300,000 is budgeted to convert the property into a natural wetland park. With a year - end balance of $308,993.
Law Enforcement Trust Fund
The Law Enforcement Trust Fund is budgeted at $233,436 in reserves. It receives revenues from police seizures and supports improvements to law enforcement operations. Neither revenues nor expenses are budgeted per regulation.
Affordable Housing Fund
This fund receives revenues from excess cruise ship fees none of which are budgeted for FY 01-02. It will be used to support affordable housing initiatives. No uses are budgeted for the year as the fund is in its initial stages.
Capital Projects Fund
The Capital Projects Fund is budgeted at $5,073,096 and is dependent upon the Infrastructure Surtax Fund for funding. In the upcoming year, construction of the Police building will be a major project.
The Sewer Fund is budgeted at $12,933,702, a decrease of $15.8m from the prior budget, reflecting the completion of nearly the entire construction program. Revenues and reserves totaling $8,778,789 will be supplemented by a State of Florida loan in the amount of $2,197,949. A base unit rate decrease will be implemented.
The expenditure budget includes the following major elements:
Reconstruction program (final completion) $ 2,366,803
Debt service (current and new issue) $ 3,257,145
System Operations $ 3,698,691
Lateral Testing Program $ 901,370
Reserves (operating and future construction) $ 1,033,895
Stormwater Utility Fund
This will be the first full year of operation for this newly created fund. It is budgeted at $15,640,000. Funding sources include grants in the amount of $12,100,000 and utility fees of $1,740,000. The fees have been suspended as a part of the Commission – Manager budget implementation plan pending a review of the local economy during the year. The expenditure budget consists of:
New construction and rehabilitation will be suspended pending receipt of grant funds. System operations involving maintenance of the existing system must continue and will be funded by a loan from Solid Waste System reserves.
Solid Waste Fund
The Solid Waste Fund is budgeted at $16,727,852. It will continue to support plant improvements and operations with no rate increase. Revenue sources include $8,041,452 from operations transfers and interest. A total of $8,686,400 will be carried forward from FY 00-01. The expenditure budget consists of:
Per the Commission – Manager budget implementation plan plant retrofit depends upon the completion of an alternatives analysis to determine the cost benefit of continued operations compared to alternatives.
Key West Historic Seaport Fund
The Key West Bight (Historic Seaport) is a municipal enterprise operated under the direction of the Key West Bight Board appointed by the City Commission. It is managed as a section of Port Operations. The bight is progressing beyond its startup phase. In recent years, it has been able to cover fixed and variable expenses while developing revenues in excess of expenses. The Board and management are developing business and financial strategies to govern the future course of business and plant development. This is further discussed in the Key West Bight section.
FY 00-01 revenues in excess of expenses are projected at $256,734 and will be carried forward. Revenues are budgeted at $6,394,214. Revenue/service centers with their budgeted amounts consist of:
Revenues and carry forwards total $6,650,948. Expenses by category are projected as follows:
The resultant, budgeted excess of carry forwards plus revenues, less expenses is $256,733. A major project will be the completion of the Ferry Terminal.
Key West City Marina (Garrison Bight) Fund
The Garrison Bight (City Marina) is a municipal enterprise operated under the direction of the Port Advisory Board appointed by the City Commission. It is managed as a section of Port Operations. It has progressed beyond its startup phase. It has covered expenses while developing revenues in excess of expenses thus creating reserves. The Board and management have begun an aggressive maintenance and construction program to improve the marina, prepare for expansion and develop a new service. All are discussed in the Garrison Bight section.
An excess of $565,745 of revenues in excess of expenses are projected to be,
carried forward from FY 00-01. Revenues are budgeted at:
Total revenues and carry forwards are $1,659,898. Expenses by category are projected as follows:
The resultant budgeted excess of carry forwards plus, revenues less, expenses is $453,169.
Transit System Fund
The Transit System Fund includes the City Transit system and the Park and Ride facility. The transit system is funded by State grants for operations, a transfer from the Internal Improvements Fund for operations and operating revenues. Park and Ride is funded by parking revenues that have increased in recent years reflecting increased customer utilization and a market based pricing structure. Carry forwards are estimated at $150,000. Revenues are budgeted as follows:
· Operating Grants $ 308,000
· Transit Fares and Advertising $ 134,436
· Parking Fees and Building Rents $ 291,207
· Transfer from Internal Improvements $ 914,706
· Total $1,648,349
Expenses by area are budgeted as follows:
· Administration $ 541,042
· Transit Operations $1,014,718
· Building $ 105,000
· Park N’ Ride $ 137,589
· Total $1,648,349
Since this fund depends upon other funds for support, the creation of a year-end balance was not budgeted.
Total Insurance Fund revenues are estimated at $8,414,821 consisting of the following components:
· General Liability and Workers Compensation:
o Prior Year Balances (self insurance reserves) $2,548,644
o Interest $ 135,098
o Insurance Policy Payments $ 225,000
o Transfers from Other Funds $2,157,300
· Health and Life
o Prior Year Balances (self insurance reserves) $ 142,263
o Interest $ 5,623
o Transfers from Other Funds $2,365,211
o Employee and Retiree Payments $ 835,682
· Total $8,414,821
Insurance Fund expenses are as follows:
· Staff $ 98,942
· Operating (Includes premiums and payments) $4,778,024
· Reserves $3,537,854
· Total $8,414,821
This fund has been impacted by increases in the cost of general liability and health insurance. These increases are expected to be over budgeted increases. Actual cost allocations to other funds will be at the increased rates.
Bahama Village Caroline Street Corridor Tax Increment Fund
This fund was established in Fiscal year 97-98 to receive funds from a portion of incremental property taxes generated from the respective areas as a result of property value increases. The funds were to be used for improvements to the respective areas. The fund is budgeted at $1,233,685. Of the total $676,013 will come from tax increments, $50,669 will be from interest income on the Bahama Village portion and $506,973 will be from unspent Bahama Village funds. Revenues are allocated to the respective areas based on the increment for the specific area. Expenditures and reserves are accounted for separately. A total of $908,875 is allocated to the Bahama Village reserve. Specific expenditures will be identified during the year. In addition $324,810 will be transferred to the Key West bight to fund part of the capital improvements budget.
Poinciana Housing Fund
The Key West Housing Authority administers this fund. It funds the administration, security services, operation and maintenance of the Poinciana Housing complex. Revenues are projected at $1,445,400 and consist of utility payments in excess of expenses, interest and rents. Expenses are allocated for:
· Maintenance and support staff $ 370,860
· Operating Expenses $ 766,196
· Improvements and Equipment $ 261,450
· A reserve of $ 46,904
Community Development Office
The Community Development Office operating budget of $230,865 is funded through grants and grant income. The office manages community development and housing assistance grants. Expenditures consist of:
· Staff $169,095
· Operating Expenses $ 61,770
The office is financially self-sufficient and requires no operational support from the General Fund.
Detailed descriptions of each of the above funds are contained in the Budget Detail section.