To Honorable Mayor, City Commission and Residents:
I am pleased to present the proposed 2009-2010 Fiscal Year Budget. The attached documents are in compliance with Sections 5.02 and 5.03, Article V, of the City Charter. It is the Mission of the City of Hallandale Beach to provide effective leadership and high quality municipal services while reducing cost, being more efficient, and finding strategies to implement best management practices, for the purpose of improving quality of life and promoting public safety and well-being within our community.
This proposed Budget also fulfills the major goals and objectives of the City Commission, including:
- To ensure the City’s future financial sustainability.
- To provide diverse programs that meet the quality of life standards of our valued community.
- To provide superior services which meet the needs of our community.
- To continue to improve operations to fulfill federal, state and local requirements.
- To lead our City through one of the worst economic times our City has experienced.
In preparing the proposed FY09-10 Budget, my number one goal was to ensure the future financial sustainability of the City while continuing to provide essential services to our community and maintain the quality of life for our valued residents and business partners. Input from the community was received during the five City Commission/City Manager Community Forums held in March and April of this year and was considered in preparation of this budget. Nonetheless preparing the FY09-10 Budget has demonstrated to be challenging. My staff and I have worked diligently in preparing this document to ensure that we were able to meet the Commission’s goals of providing the most efficient and effective level of quality services for our residents while being fiscally responsible to ensure the long-term financial sustainability of the City. This has been accomplished through a combination of personnel evaluations, transfers, and reductions, one-time fund transfers, a review of all City programs and services, the continuous use of technology, changes to reserve accounts, as well as by evaluating current and future economic conditions.
The City, like all businesses, is not shielded from the troubles of the economy, but rather driven by the economy, and is additionally challenged with balancing the needs of the community while instilling strong fiscal management. With foreclosures and unemployment rates at an all time high and development at a standstill, the City is feeling the immediate effects of the economy. These effects are demonstrated by the dramatic 15.3% loss in the City’s taxable value. That loss, coupled with the legislative tax reform, unmet gaming potential, revenue decline, unfunded legislative mandates, and increased operational costs beyond the City’s control, required examination of every fund, revenue, project, and line item expenditure, including personnel, programs, and services for its need, use and efficiency.
Appreciating these difficult economic times and losses, as the Chief Executive Officer of the City, I stand resolved and committed to come to a balance and ensure the City remains steadfast in providing our residents, employees, businesses, and the entire community the best services and quality of life. Right now we are besieged by one of the most difficult budget years Hallandale Beach has ever faced. Given the above factors and taking into consideration the pending union negotiations, it has truly been the most challenging and difficult time we can have. To ensure we are able to meet our City’s service requirements, it was imperative for me to examine and scrutinize both essential and non-essential services and programs while at the same time focusing on the quality of life for the residents.
Deciphering between essential and nonessential services may seem an easy task; however, what is essential to one may not be essential to another. For the person that has no vehicle, the continuation of the minibus service may be essential while to the resident who has his/her own vehicle, repairing the street is essential. Or to the parents who depend on the services offered by the City, such as parks and afterschool programs, which ensure their children are in a safe, structured environment as opposed to being unsupervised at home, or on the street while they are at work. Inescapably, there are fundamental services the City must provide such, as utility services, which require infrastructure maintenance and improvements, and public safety services, which require vehicles/equipment, training, and personnel resources.
Ensuring the City’s future financial sustainability is imperative as this year the City is faced with an unprecedented taxable value decrease of 15.3% or $744 million from the prior fiscal year. This decrease was quickly realized while preparing the FY09-10 budget as the City was facing a $14 million shortfall despite the fact that we are doing more with technology and consolidating our resources to provide quality services to the community. Even by dissecting the budget to the fullest extent, including every capital project and line item expenditure, keeping the millage rate at its current level of 4.9818, we were only able to reduce that shortfall from $14 million to $5.5 million. Included as part of that reduction, is the termination, elimination and reallocation of a total of forty-nine personnel positions. I additionally examined the options of deferring and decreasing capital projects and equipment and vehicle purchases, exploring alternative revenue sources, and outsourcing various City services and programs. Although initially privatization appears to be a cost savings means of accomplishing initial financial goals and objectives, this option was not necessarily cost effective when workforce consolidation was factored into the equation. As you will see, all viable cost reductions and options have been considered and are hereby presented with the proposed FY09-10 Budget.
The long-term financial proposals presented herein are essential to secure the City’s future financial sustainability and to make certain that we preserve our community’s current quality of life and services. The City has been advised by the County Property Appraiser that we should anticipate seeing next year’s property values decrease at the same magnitude as this year, resulting in an additional $3 to $4 million loss in revenue. As a result of the above factors and the anticipated future valuation loss, notwithstanding the proposed budget reduction measures, I cannot see the City sustaining itself at its current millage level. The result of this loss in valuation requires the City to adjust the millage rate to provide for the same ad valorem revenue generated in FY08-09 (the rolled-back rate) to accomplish the City’s goals and objectives. The rolled-back rate is defined as that millage rate which, exclusive of new construction, will provide the same property (ad valorem) tax revenue as was levied during the prior year. This rate is calculated by dividing the prior year tax by the current year adjusted taxable value (excluding new construction). In order for the City to collect the same amount of tax revenue as the prior year, the millage rate would be set at 5.9552 (the rolled-back rate). Should the City kept its current millage rate of 4.9818, the tax revenue loss for FY09-10 would be over $3.8 million. Adoption of the rolled-back rate will provide for more manageable future budgets and allow the City to work towards financial sustainability. Therefore, I am recommending adoption of the July 1st rolled-back rate of 5.9552.
Prior to the budget, a detailed planning process took place, whereby the entire organization was evaluated including every service, program, expenditure, and revenue. As a result, the overall Fiscal Year 2009-2010 City budget for all funds totals $ 96.5 million, representing a decrease of 5.4% or $5,535,314 below the FY 2008-09 Budget, with a General Fund decrease of 9.4% or $5,259,581. These decreases were primarily due to personnel reductions, deferral and decreases of capital projects and various equipment, program cuts and modifications, operating expense reductions, and one-time fund transfers. Where appropriate, funding for certain positions was reallocated, and utilization of various funding mechanisms, such as the Law Enforcement Trust and Police Equitable Sharing, was also instituted to aid the General Fund.
Due to the City’s excellent Worker’s Compensation and Safety programs, the Worker’s Compensation Self-Insurance Fund has a healthy reserve balance of $4,142,972 as of the end of FY08-09. As reflected in the proposed FY09-10 Budget, $3 million has been transferred out of this reserve account into various funds based on a percentage formula. This is a one-time transfer and therefore future transfers out of this Fund should not be anticipated.
Additional changes to the reserve accounts reflected in the FY09-10 budget include the transfer of $250,000 from Equipment Reserves to Renewal and Replacement (R&R) Capital Reserves in the Water and Sewer funds to help stabilize those respective reserves. To ensure the longevity of the City’s Membrane Water Treatment Plant and to guarantee the City receives the highest quality of water, the Water R&R Capital Reserve Fund is being increased from 5% to 7.5% of the gross operating revenue of the previous year’s Water Fund. Additional changes in the Reserve Accounts include a decrease to both the Water and Sewer Equipment Reserves from 2% to 1% of the prior year’s revenues, and the Hollywood Wastewater Capital Reserve created last fiscal year is decreased from 10% to 5% of the prior fiscal year’s sewer gross revenues. The Hollywood Wastewater Capital Reserve was created to account for the future capital expansion of Hollywood’s wastewater treatment facility as a result of an unfunded legislative mandate.
Personnel have always been the City’s greatest asset and expense. As part of the FY08-09 budget, I imposed a six-month hiring freeze saving the City approximately $2,444,800 million. Unfortunately, the City must take more severe measures to balance the FY09-10 budget. As a result, vacant positions are being eliminated and several filled positions terminated, resulting in a total estimated savings of over $2 million. Reduced staffing levels require staff to work harder with added responsibilities while balancing the needs of the community. In addition to these salary savings and other benefit-related savings, the proposed budget includes no cost of living adjustments (COLA), which is anticipated to save the City approximately $1.4 million. Lastly, a permanent hiring freeze has been put into effect as of July 2009, which will result in further savings to the City.
Over the past several years, the City has focused on workforce consolidation. Through workforce consolidation, employees are cross-trained among different divisions and responsibilities to provide for maximum efficient use of all resources. A prime example of workforce consolidation was the redevelopment of Foster Park. As part of its construction and redevelopment, employees from all divisions of the Public Works, Utilities and Engineering, Development Services, and Parks and Recreation Departments worked together to design and construct the park. As part of the proposed FY09-10 Budget, I have consolidated the General Services, City Clerk and Risk Management Departments which will operate under one General Services Director who will oversee all three divisions.
The City’s utmost priority is to provide our community with the highest quality of life. Over the past several years, the City has offered numerous programs and services above and beyond what many other cities provide. With the current economic situation, the City cannot sustain all of the programs and services offered. After offering years of a successful public transportation program, the planned expansion of the minibus service will have to be delayed due to the Florida Department of Transportation’s (FDOT) withdrawal of funding needed to establish the minibus fourth route. Our Transportation Fund took a significant hit over the last year resulting in a $1.5 million deficit for the FY09-10 budget. This deficit was as a result of capital projects, increased operational costs beyond the City’s control, and funding for the planned expansion of the minibus fourth route. By reducing capital projects and services such as the minibus’ fourth route, the Transportation Fund budget was balanced. Like the free minibus program, the biweekly yard waste collection program is a City program not offered by many other Cities. The biweekly yard waste collection program, which is utilized by 846 residents out of 4,258 sanitation accounts, with an additional nine multi-family accounts, is recommended to be eliminated. The total cost to operate the weekly yard waste collection program is $94,433 with approximately $28,960 of revenue received annually. Elimination of this program will save the City approximately $65,473 in FY09-10.
For the past several years the Police Department has operated a Marine Patrol with the assistance of a County-funded grant. The total cost to operate the Marine Patrol is $78,665.19, of which $39,680.00 is reimbursed by the County and the City expends $38,985.19. This total amount covers 102 daytime patrols to be used exclusively on weekends and 22 nighttime aggressive patrol operations by two officers that must be conducted after 4:00 p.m., and has resulted in two citations issued this fiscal year. In addition to the program’s increasing operating costs, the current vessel utilized by the Marine Patrol is in need of replacement, with an expected cost of $135,000. Due to increasing operating and personnel-related costs to this program, I am recommending its elimination for FY09-10.
While examining the City’s programs and services, current programs and services that are currently privatized were also closely scrutinized. When evaluating privatization of City services, the City not only evaluates the cost of outsourcing, but also whether current outsourced services are the most cost efficient and effective. In evaluating the current Street Sweeping Program, which is currently privatized, it was found that the City can reduce the operating costs of the program by performing the work in-house. Accordingly, as part of the FY09-10 Budget the City will purchase the necessary equipment and hire a part-time employee to operate the equipment.
Additional costs beyond the City’s control include increased operational costs, such as fuel and electricity, and unfunded mandates, including the State Incentive Pay for police officers, required minimum benefits for police and fire pension funding, and elimination of ocean outfalls. These additional costs were evaluated and the budget reviewed and analyzed for potential financial transfers and adjustments. However, these transfers are only one-time adjustments. These budget adjustments are just one of the measures the proposed budget utilizes to make up for these additional operation costs, valuation loss, and other revenue decline. Many may have thought the gaming industry would bring additional revenue and provide a significant benefit to the City, when in fact it has not. In FY09-10 total General Fund Revenues of $48,833,722 million will be a decrease of $164,809 or .3% below the prior year’s Revenues (based on the 5.9552 rolled-back rate). Keeping the current millage rate, FY09-10 total General Fund revenues received will be $44,990,531 million which will be a decrease of $4,008,000 or 8.2% below the prior year’s Revenues.
Even with the reductions in personnel, programs, services, and expenditures, keeping the current millage rate of 4.9818 will result in $5.5 million use of General Fund Reserves, leaving a projected General Fund balance of $9.6 million. On the other hand, the adoption of the rolled-back rate will result in the use of $1.6 million in General Fund Reserves, leaving a General Fund balance of $13.4 million. Adoption of the rolled-back rate will lay the foundation to help ensure the future financial sustainability of the City.
Special challenges of declining revenues and continuing heavy demands for quality services have required the implementation of creative approaches and solutions to satisfy the needs of our citizens, costumers, employees and the City Commission. In order to ensure the financial stability of our City, various user fees and cost-saving techniques and efficiencies are included in the FY09/10 Proposed budget.
Given the fiscal constraints, many difficult choices had to be made in setting priorities, taxation level and fees in order to maintain the basic service levels and for continuing progress towards these goals. The key principles on which this proposed budget has been developed include:
- Budget for basic services to respond to community needs.
- Projection of revenues at realistic rates.
- Amend user fees to more closely cover the full cost of services.
- Enhance quality of life through City-wide capital planning, including traffic, parks, water and sewer projects and programs.
- Maintaining the undesignated Reserve Balance at the highest possible level to ensure that the City can sustain itself in the future.
In closing, it is without question that future years will hold many financial challenges for our City. Only through sound conservative budgeting will our City be prepared for what could be some hard economic years. I am confident that with the Commission’s leadership, staff’s determination and management’s use of sound financial practices we will get through these difficult economic times.
Finally, I want to thank all department directors and their staff for their hard work and sacrifices they put forth in evaluating their departments and setting their budgets to the minimum level possible. The City of Hallandale Beach is extremely fortunate to have a highly dedicated staff that truly places the needs of the Community before their own. Special acknowledgement and thanks should be afforded to those directly responsible for the preparation of this Budget. These individuals on the Budget Committee have diligently worked to create this document, scrutinizing every request, and assisted in making many tough decisions for the presentation of the proposed Fiscal Year 2009-10 budget.
Mayor, Vice-Mayor and members of the Commission, the staff and I appreciate you for the time and attention given to the proposed budget. Your support, hard work throughout the year, and dedication is truly admirable and appreciated.
Sincerely,
D. Mike Good
City Manager
