February 23, 1995
Feb 23 1995
The Board of County Commissioners of Brevard County, Florida, met in special session on February 23, 1995, at 2:00 p.m. in the Government Center Multipurpose Room, Building C, 2725 St. Johns Street, Melbourne, Florida. Present were: Chairman Nancy Higgs, Commissioners Truman Scarborough, Randy O'Brien, Mark Cook, and Scott Ellis, County Manager Tom Jenkins, and County Attorney Scott Knox.
Budget Director Kathy Wall advised an analysis of the Board's FY 95 budget of December 31st has been conducted; the emphasis was to review the revenues, collections and expenditures through the end of the first quarter in comparison with the County's adopted budget; the County's overall revenues were generally within budget; cash forward in the collection of ad valorem taxes, non-ad valorem assessments are a significant portion of the revenue recognized during the period; and this represents 60% of the total revenue and other sources projected. She related that the collection rate during this period has been traditionally higher than other quarters because cash forward and ad valorem receipts are recorded in this quarter; and the overall expenditures for County departments were within the provisions of the adopted budget and existing revenue streams. She reported that Jetty Park operations recorded a deficit cash forward and required a temporary loan from the Utility Fund; revenue collections for the month of January have increased significantly, while expenditures have remained within the appropriations budget; and it appears this operation will be able to meet its operating requirements and to repay the temporary loan.
Ms. Wall indicated the County's golf course operations are operating within the revenue streams during the County's first quarter and the first month of the second quarter; however, revenue collections are falling below budgeted projections. She related that on September 20, 1994, the Board approved a new fee structure to operate the County's Courses; a budget amendment adjusting the golf courses' budget will be submitted to the Board to bring their operations in line with Board's approval. She advised staff is monitoring the conditions under which the ad valorem revenues for the Environmentally Endangered Lands Program may be appropriated; several months ago, the Clerk's internal auditors recommended the use of tax receipts for debt service payment only; changes in these guidelines currently used by the County for appropriations of this Program could alter this budget; County staff is working with the Clerk's Office, County Attorney's Office, and the Florida Legislative Delegation to resolve this issue; and staff will continue to monitor these items for further development and inform the Board of the effects of change that these may require. Ms. Wall concluded that the County is in good financial condition for the first quarter as generally revenues and expenditures are within the guidelines set forth in the adopted budget.
Planner II Steve Swanke advised on October 18, 1994, the Board adopted the Capital Improvements Program; in that Program, there were more than 140 projects requesting funding in the current fiscal year; and the projected total funding exceeded $97 million. He reported that the projected expenditures for the first quarter totaled almost $20 million; however, the County has fallen significantly behind that, having actually spent during the first quarter almost $7.5 million. He stated each of the departments that submitted capital projects fell behind their projected first quarter expenditures, with the exception of Natural Resources Management Division, which did spend slightly more than it had projected on land acquisition projects.
Ms. Wall advised the cash forward represents unexpended funds and working capital carried from the previous fiscal year which includes cash, accounts receivables and current liabilities or other deferred income; the County's adopted budget included a projected cash forward of approximately $194 million; and the final cash forward recorded for this fiscal year was about 10% above that original projection. She indicated that during the budget development process in March, 1994, County agencies estimated cash forward projections for the coming fiscal year by conducting a review of the current revenues, projecting revenues and expenditure patterns for the remainder of the year. She stated for the month of August, 1994, after the preliminary budget was submitted to the Board, all County agencies updated cash forward estimates using more current information; unbudgeted cash forward for those agencies that draw a significant portion of their support from the general revenue funds amounted to approximately $2.5 million; and this unbudgeted cash forward is a result of both receipt of revenues in excess of estimations and spending restraint exercised by County operating agencies.
Ms. Wall advised staff recommends rewarding the conservative efforts of County agencies supported by general revenue funds by permitting these agencies to retain 25% of their unbudgeted cash forward; and because of the restrictions placed on special revenue funds, enterprise funds, internal service funds, and self-supporting general funds, staff recommends they remain in those funds.
Management Services Director Michael Managan advised the County's Budget and Fiscal Policies BCC-56 requires an annual review by the Board; staff has included in the Policies some minor changes, including County Administrator to County Manager; and one significant change submitted by the Finance Director is on Page 6 of the Policies, D.3. which reads, "Unless waived by the Board, the sponsors of the private activity bonds will agree to pay a fee of 1/4 of 1 per cent of the bond issue. This fee is independent of all other issuance costs and will be used by the County to defray the costs it incurred as part of the issue. The fee will be deposited in the County's General Fund." He indicated staff requests the Board consider a few other things; it would like to place in these Policies the criteria to support non-profit agencies or a grant program that some members of the Board have proposed; staff would propose to put the criteria for funding in these policies; staff would also like the Board to consider placing limitations on new and unusual investment mediums such as derivatives; and establish criteria for funding of capital improvement program projects for constitutional officers. Mr. Managan stated the fourth request is to incorporate capital improvement program policies and procedures that enable staff to solicit bids for an approved project; and the last consideration is to provide the County Finance Committee at least seven working days to coordinate the necessary information and analysis required to review all applications.
Motion by Commissioner Scarborough, seconded by Commissioner Cook, to appoint Commissioner Ellis to serve as a member of the Finance Committee. Motion carried and ordered unanimously.
Ms. Prokic advised this schedule will enable the Board to provide a timely direction to the staff concerning all changes that may be necessary; furthermore, timely preparation and review will contribute to an early completion of the final publication of the adopted budget, thus making it available for all users and readers in a timely manner.
Mr. Pelham outlined the second section entitled financial indicators which provide a historical look at where Brevard County has been; advised these were reviewed on an annual basis of completion of the audited financial statements; they are a mechanism for identifying potential problems that may be coming up; unfortunately, the data for FY 93-94 was not completed at this time, but the financial statements should be completed in the next three or four weeks; and staff will be able to provide that data to the Board. He advised the last portion compares Brevard County to several other counties within the State of Florida on a per capita basis; staff has taken information provided by the State Comptroller's Office and calculated revenues and expenditures on a per capita basis to make it a more realistic comparison; and it basically tells staff how the financial health of the County is compared to other counties. Mr. Pelham indicated the thing to remember when looking at the comparisons on a per capita basis is that each individual county may have different goals and objectives of where they want their money to go; any large discrepancies on a particular comparison may be explained by that; review of these trends and indicators give staff a basis for establishing where projected revenues and expenditures come from; and staff has to take these basis and indicators, along with direction from the Board and management, as to what kind of services and the level of services it is going to provide which makes up the preparation of the budget.
Mr. Pelham reported that nationally economic and financial analysts are currently seeing a slight decline in the economic growth within the State, Nation, and County as governments and businesses continue to cut spending and downsize their operations to become more efficient; locally with the continued cuts in defense and aerospace spending, the County will probably follow this trend of a slowing down in economic growth or a slight decrease; population projections indicate right now that the population will continue to grow with people moving from other states into this community area; and in terms of revenue projections for the County, the budgeted revenues probably should be more conservative than what the historical trend of these indicators and graphs present.
Discussion ensued between the Board and staff pertaining to comparisons with other Florida counties and taxable property values.
Senior Budget Analyst Neil Boynton advised revenue forecasting has received increased emphasis during the last few budget development cycles; in an area which emphasis in minimizing property taxes, increased accuracy in revenue forecasting has become important in addition to total expenditures; efforts to refine and improve revenue forecast, especially in the general revenue fund area, continues; and the Budget Office is actively engaged in collecting and developing a data base of economic, demographic and financial information. He related that the indicators will provide staff with the information necessary to give more accurate estimations of revenues and also for the budgeting of expenditures; one of the major tools staff uses in revenue forecasting is the Local Government Financial Handbook which is published in July of each year by the Advisory Council on Intergovernmental Relations (ACIR); this handbook contains projections of various general governmental revenue sources and related demographic data determined on a Statewide and county by county basis; and many of the major revenue sources are collected by the Florida Department of Revenue and are then paid over to the County. He stated the Budget Office has examined the track record of the ACIR in projecting these major revenue sources; and its revenue estimates adjusted for staff's perception of its track record have been useful tools in making the County's revenue estimates in many areas over the past two years.
Mr. Boynton explained that other revenue sources are measured and forecasted using a variety of measures, ranging from simple trend analysis to actual calculations based on the fee to be charged and the number of items to be charged for or other expected levels of service; the ad valorem revenues are a relatively precise calculation of revenues based on the action of the adopted millages to the taxable assessed property values as they are provided by the Property Appraiser; the only significant variable in the ad valorem tax revenues is the rate of collections; and all other revenues, with the exception of the property taxes, are estimated at the amount which the County reasonably expects to receive. He indicated from that, a 5% statutory reduction is made; and this means that the unappropriated revenues must be and are included in the determination of the subsequent years of cash forward. He noted accurate estimations of revenues and other sources are second only to the control of expenditures in minimizing property taxes; and County Management regards the accurate estimation of revenues as an area which should receive emphasis during this budget cycle and all future budget cycles.
The meeting recessed at 3:30 p.m.
The meeting reconvened at 3:45 p.m.
County Manager Tom Jenkins noted in regard to revenues and expenditures, staff attempts to do a form of modeling to forecast what they are going to be; every year there always seems to be a series of independent events that have a significant effect one way or the other on either one of these; and that is how the County ends up balancing its budget. He stated if everything remains basically status quo, this is what it is going to be; but there are always a number of variables which can dramatically affect that which the County seems to evolve as it goes through the budget process.
Mr. Boynton advised this section deals with a preliminary projection of all revenues, other sources, and appropriations for all funds and agencies for FY 95-96; this projection is given to the Board to provide a perspective of the size and scope of a budget potential financial scenario if there were no changes in the current operating or capital improvement programs; and staff has basically given the Board the basis for making the preliminary revenue projections in the previous memorandum. He noted projections for the revenues, the other sources, and appropriations make extensive use of two key general indicators of economic effect; one is the projected rate of increase in the County's population and the second one is the projected rate of increase in the CPI; and specifically, those two numbers turn out to be 2.25% as a rate of increase for the County's population and 3% for CPI. He indicated that certain expenditure categories such as debt service expenditures are based upon specific scheduled amounts and do include anticipated and scheduled increases for FY 1995-96; a list of expenditures totalling $3,788,163 remains unfunded under this scenario; and although it is not part of the total budget projection that the Board has been given, it must be considered to be an integral part of this report.
Mr. Boynton explained that the 1995 projected total appropriations, excluding interfund transfers, equals $454,830,630, a 10% decrease from the 1994-95 adjusted budget, also excluding interfund transfers; and this decrease has a significant potential for change because of the Capital Improvement Program (CIP) and its implementation schedule which has such a tremendous affect on the actual development of the budget for FY 95-96. He stated revenues and other sources are projected to equal $454,751,527 exclusive of interfund transfers; and that leaves a $79,103 in unfunded appropriations not detailed, but would be in addition to the other items that were excluded from the projected budget. He noted any CIP appropriations for 1994-95 which are not spent during this current fiscal year would be carried over to the 1995-96 budget and reappropriated; and this would alter the totals on both sides of the budget considerably, but would not have a significant effect on operating revenues or appropriations except to the extent that money not spent in a timely fashion should increase interest revenue.
Mr. Boynton advised the key element in the projections that the Board has is that ad valorem revenue is at the estimated rolled back millage; any variation from the projection of a 1% roll back in the aggregate millage will have an effect on the net gain in the ad valorem revenue caused by the new construction which was projected to be 2.4% increase from the tax base in the current year; previous projections which staff has provided indicate that millage increases may be needed in the Library District and the Fire Control MSTU; and this projection does not include those increases, but these areas will be subjected to intense scrutiny by staff during the budget development process to determine if these agencies do in fact require this additional funding. He related the effect of the economic and demographic drivers on this budget are reasonably predictable; and changes and the emphasis on existing or future programs, or the related levels of services have a much larger effect on the budget development.
Discussion ensued regarding various issues, including jail facilities, road deputies, public safety, roads, drainage, millage rates, ninth-cent gas tax, budget cuts, projects and programs, and other needs.
CONTINUATION, RE: PRE-BUDGET WORKSHOP
Motion by Commissioner Cook, seconded by Commissioner O'Brien, to continue the February 23, 1995 Pre-budget Workshop to February 27, 1995 at 4:00 p.m. Motion carried and ordered unanimously.
Upon motion and vote, the meeting adjourned at 4:50 p.m.
NANCY N. HIGGS, CHAIRMAN
BOARD OF COUNTY COMMISSIONERS
BREVARD COUNTY, FLORIDA
ATTEST:
SANDY CRAWFORD, CLERK
(S E A L)