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TOWN OF PALM BEACH, FLORIDA


COMPREHENSIVE ANNUAL BUDGET FISCAL YEAR 2020

(October 1, 2019 - September 30, 2020)

Mayor and Town Council Gail L. Coniglio, Mayor

Danielle H. Moore, Town Council President Margaret Zeidman, Town Council President Pro-Tem

Julie Araskog, Town Council Member Lew Crampton, Town Council Member Bobbie Lindsay, Town Council Member


Town Manager Kirk Blouin

Prepared by the Finance Department Jane LeClainche, Finance Director (561) 838-5400

www.townofpalmbeach.com

TOWN

ORGANIZ

TOWN

ORGANIZ

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OF PALM BEACH

ATIONAL STRUCTURE


CITIZENS OF PALM BEACH


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ELECT


MAYOR

Gail L. Coniglio


MAYOR

Gail L. Coniglio

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TOWN COUNCIL


PRESIDENT

PRESIDENT

PRESIDENT PRO‐TEM

PRESIDENT PRO‐TEM

Danielle H. Moore Margaret A. Zeidman

Danielle H. Moore Margaret A. Zeidman

Julie Araskog

Julie Araskog

Lew Crampton

Lew Crampton

Bobbie Lindsay

Bobbie Lindsay

APPOINTS


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TOWN ATTORNEY

John C. Randolph


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DEPUTY TOWN MANAGER

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Jay Boodheshwar


POLICE CHIEF

Nicholas Caristo


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DIRECTOR OF FINANCE

Jane Le Clainche


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DIRECTOR OF HUMAN RESOURCES

Danielle Olson

TOWN MANAGER

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Kirk Blouin

ADVISORY BOARD AND COMMISSIONS


DIRECTOR OF PUBLIC WORKS

H. Paul Brazil

DIRECTOR OF PUBLIC WORKS

H. Paul Brazil



FIRE‐RESCUE CHIEF

Darrel Donatto


FIRE‐RESCUE CHIEF

Darrel Donatto


DIRECTOR OF PLANNING, ZONING AND BUILDING

Josh Martin

DIRECTOR OF PLANNING, ZONING AND BUILDING

Josh Martin


DIRECTOR OF BUSINESS DEVELOPMENT & OPERATIONS

Carolyn Stone

DIRECTOR OF BUSINESS DEVELOPMENT & OPERATIONS

Carolyn Stone

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GUIDE FOR READERS


The following information might be helpful to the reader in finding information in the budget document for programs, services and financial information. The Town of Palm Beach Budget compiles financial and service delivery data in a single source document for easy reference. This guide explains the budget format and will assist in locating information that may be of particular interest. The budget is intended to serve four purposes.


THE BUDGET AS A POLICY DOCUMENT

As a policy document, the Budget indicates what services the Town of Palm Beach will provide during the upcoming fiscal year, and the reasons for these services. The Budget provides goals and objectives for each organizational unit in the Town of Palm Beach as well as the performance measures upon which programs will be monitored for the forthcoming fiscal year. All Town of Palm Beach funds are described in detail in their respective sections.


THE BUDGET AS AN OPERATIONS GUIDE

As an operations guide, the budget indicates how departments and funds are organized to provide services that will be delivered to the community. The Departments’ budget sections provide a mission statement, goals and objectives, organization chart, authorized personnel, revenue and expenditure summaries with descriptions, and performance measures for each Town of Palm Beach Department.


THE BUDGET AS A FINANCIAL PLAN

As a financial plan, the budget outlines the cost of the Town of Palm Beach services and how they will be funded. The Revenues and Expenditures Section provides an overview of the Budget including major revenue and expenditure breakdowns and categories for the following Funds: General, Special Revenue Funds, Debt Service, Capital, Enterprise, Internal Service Activity and Trust & Agency. The introductory section includes a budget message, Town-wide goals, demographic information, assessed value and millage rate information, Town history, a discussion of the Town of Palm Beach accounting structure and financial policies, a description of the budget preparation process and the financial structure. The budget summary section details the approved budget as well as a comparison of financial activity over a multi-year period with an analysis of the Town reserves.


THE BUDGET AS A COMMUNICATIONS DEVICE

The Budget is designed to be user friendly with summary information in text, charts, tables and graphs. A glossary of financial budget terms is included for your reference. In addition to the reader’s guide, the table of contents provides a listing of sections in the order in which they appear in this document. The statistical section includes miscellaneous information relevant to the Town of Palm Beach. Should you have a question about the Town of Palm Beach that this document does not answer, please feel free to call The Finance Department at (561) 838-5444. This Budget Document is available on the Town’s web site, www.townofpalmbeach.com.


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A STEP BY STEP GUIDE

Given its size and the variety of information it contains, the budget document can be an overwhelming undertaking to review. The purpose of this section is to provide the reader with a guide to the document’s contents: where and how to find the information and how to understand or use the information.


The budget document has been prepared in a summary format intended to be easily understood by the general public. The following describes each of its major sections:


  1. Introduction

    The budget message or transmittal letter is the best place to start. It is most important in understanding where we have been and where we are going in the upcoming year. The letter provides a broad perspective of services provided and discusses taxes and millage rates, changes in operations, significant differences in revenues and expenditures, and the focus and direction of the budget year.


    The introduction section also includes general information about the Town, its budget philosophy and process, financial policies (which form the foundation of the Town’s budget development and financial management processes), and other general information.


  2. Budget Summary, General Fund, Revenues, Expenditures, Departmental Tabs and Other

    The Budget Summary, General Fund, Revenues, Expenditures including Departmental and Other tabs include various presentations of the general fund budget. The Budget Summary section includes summary budget information for all funds and an analysis of Town reserves. The General Fund section includes a financial trend analysis of Revenues and Expenditures. The Revenues tab includes a detailed five-year general fund revenue history, as well as narrative and charts regarding major general fund revenue history. The Expenditures tab includes an exhibit containing four years of expenditure history by program, as well as summary budget charts.


    An overview of each department/program, the largest portion of the General Fund budget, is included in this section. Each department’s section may include the following: A revenue and expenditure summary, personnel complements, an organizational chart, mission statement, goals and objectives, performance measures and workload indicators.


  3. Special Revenue, Debt Service, Capital, Enterprise, Internal Service and Trust & Agency Funds These sections include budget summaries, program descriptions, trend analyses and income statement analyses for the Town’s governmental (other than general), enterprise, internal service and trust & agency funds.


  4. Appendix

    The appendix includes historical staffing levels, donation reserve account detail, financial policies and other exhibits that may be helpful to the reader.


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    We sincerely hope this “how-to” has aided in finding and understanding information contained in the Town’s budget. If any point is unclear, or if additional information is necessary, please call the Finance Department at (561)838-5444. Should the same requests repeatedly occur, we will make an effort to incorporate clarifications in next year’s budget document.


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    GOVERNMENT FINANCE OFFICERS ASSOCIATION

    Distin guished

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    PRESENTED TO


    Town of Palm Beach

    Florida

    For the Fiscal Year Beginning


    October 1, 2018


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    Executive Director



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    TABLE OF CONTENTS

    Introduction

    *This table of contents includes hyperlinks to help navigate the document better. To use, click the mouse on the section you would to jump to. You can also click on the image of the palm tree in the top right corner of the pages beginning on page 2 to navigate back to this page.

    Budget Message 1

    Strategic Planning and Key Results Measurement 27

    Introductory Information

    Map 35

    Town Overview/Demographics 36

    Taxable Value and Millage Rate 37

    Town History 41

    Financial Policies 43

    Budget Preparation Process. 48

    Budget Calendar. 53

    Financial Structure 54

    Long‐Term Financial Plan Forecast 59

    Budget Summary

    Fund Budget Overview 71

    Budget Summary by Fund Type, Revenues and Expenditures 73

    Summary of Major Revenues by Fund Type 75

    Summary of Expenditure Classifications by Fund Type 77

    Reserve Analysis 79

    Capital Expenditures 89

    General Fund

    General Fund Revenues and Expenditures Budget Comparison 91

    Revenues

    General Fund Revenues 93

    Major Revenue Sources 97

    Expenditures

    General Fund Expenditures 107

    Legislative

    Legislative (111) 113

    General Government

    General Government (113) 115

    Town Manager

    Town Manager’s Office Organizational Chart 118

    Administrative Management (121) 120

    Town Clerk

    Town Clerk (131) 123

    Advice and Litigation

    Advice and Litigation (122) 131

    Information Technology

    Information Technology Organizational Chart 134

    Information Technology (125) 134

    Human Resources

    Human Resources Organizational Chart 140

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    Human Resources (123) 142

    Finance

    Finance Organizational Chart 150

    Finance Department Revenue and Expenditure Summary 152

    Financial Management (141) 154

    Purchasing (144) 158

    Planning, Zoning and Building

    Planning, Zoning and Building Organizational Chart 162

    Planning, Zoning and Building Department Revenue and Expenditure Summary 164

    Planning and Zoning (211) 166

    Permit Issuance (212) 169

    Inspection and Compliance (213) 172

    Landmarks Preservation (214) 174

    Fire Prevention (215) 176

    Code Enforcement (216) 179

    Recreation

    Recreation Organizational Chart 182

    Recreation Department Revenue and Expenditure Summary 184

    Recreation Administration (311) 186

    Tennis (312) 188

    Recreation Center (313) 191

    Fire‐Rescue

    Fire‐Rescue Department Organizational Chart 196

    Fire‐Rescue Department Revenue and Expenditure Summary 199

    Fire Administration (411) 201

    Operations (417) 204

    Training (418) 207

    Ocean Rescue (419) 210

    Police

    Police Department Organizational Chart 214

    Police Department Revenue and Expenditure Summary 217

    Administrative Management (421) 219

    Organized Crime Vice and Narcotics – OCVAN (422) 223

    Records Information System Unit (423) 226

    Training and Community Relations Unit – TCR (424) 228

    Communications Unit (425) 232

    Crime Scene/Evidence Unit (426) 234

    Patrol (428) 236

    Criminal Investigation Unit (429) 240

    Parking Control Unit (430) 242

    Public Works

    Public Works Department Organizational Chart 246

    Public Works Department Revenue and Expenditure Summary 250

    Administrative Management (511) 252

    Street Repair and Maintenance (521) 254

    Traffic Control (523) 256

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    Street Lighting (524). 258

    Storm Sewer Maintenance (531) 260

    Sanitary Sewer Maintenance (532) 263

    Sanitary Sewage Treatment (533) 265

    Residential Collection (541) 266

    Commercial Collection (542) 268

    Refuse Disposal (543) 270

    Yard Trash Collection (544) 271

    Recycling (545) 273

    Beach Cleaning (546) 275

    Landscape Maintenance (551) 276

    Facility Maintenance (554) 278

    General Engineering Services (561) 280

    Right of Way Inspections (565) 283

    Equipment Operation and Maintenance (571) 285

    Other

    Library Services (321) 288

    Transfers to Other Funds (611 to 625) 289

    Emergency Management (710) 290

    Contingent Appropriations (711) 291

    Special Revenue Fund

    Town‐wide Underground Utilities Fund (Fund 122) 293

    Debt Service

    Debt Administration 295

    2016A and 2013 Revenue Bonds (Fund 205) 301

    2016B Worth Avenue Revenue Bond (Fund 206) 302

    Capital Funds

    Capital Funds 303

    Impact of Capital Investments on Operating Budget 304

    Capital Projects by Project Type and Fund 305

    Capital Improvement Fund (Fund 307)

    Pay‐as‐you‐go Capital Improvement Fund 307

    Five Year Capital Improvement Pay‐as‐you‐go/Facilities Program. 309

    Project Fact Sheets

Comprehensive Coastal Management Plan Bond Proceeds Construction Fund (Fund 309)

CCMP FY19 Accomplishments and FY20 Action Plan 327

Comprehensive Coastal Management Project Fund 336

Coastal Management Program Budget 339

Worth Avenue Assessment District (Fund 311)

Worth Avenue Maintenance 341

Accelerated Capital Fund (Fund 314)

2013 Accelerated Capital Projects Fund 343

Marina Enterprise Fund (Fund 401)

Marina Enterprise Fund Organization Chart 346

Marina Revenue and Expense Summary 348

Par 3 Enterprise Fund (Fund 402)

Par 3 Enterprise Fund Organization Chart 356

Par 3 Revenue and Expense Summary 359

Par 3 Golf Course 5‐year Capital Improvement Plan 365

Internal Service Funds

Self Insurance Fund – Risk Management (Fund 501) 367

Self Insurance Fund – Health Benefit (Fund 502) 371

Equipment Replacement Fund (Fund 320) 373

Trust and Agency Funds

Retirement Fund (Fund 600) 377

Retirement Fund Revenue and Expense Summary 388

Health Insurance Trust (Fund 610) 391

Health Insurance Trust Revenue and Expense Summary 393

Retiree Sliding Scale Insurance Premium Rates 2020 395

Appendix

Authorized Positions 399

Donation Reserve Account Summary 405

Financial Policies

Fund Balance 407

Budgetary Control 413

Designation of General Fund Balance ‐ Liability Related to Compensated Absences Leave Balances 414

Contingency Reserve – General Fund 415

Reserve for Encumbrances, Continuing Appropriations, and Prepaid Expenses 416

Revenue Shortfall Plan 417

Debt Management Policy 419

Contingency Reserve – Capital Fund 420

Contingency Reserve – Equipment Replacement Fund 421

Equipment Replacement Reserve 422

Contingency Reserve – Enterprise Fund 423

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Index

Repair and Replacement Reserve – Town Marina Enterprise Fund 424

Town Marina Enterprise Fund Unrestricted Net Position 425

Repair and Replacement Reserve – Golf Course Enterprise Fund 426

Equipment Replacement Reserve – Golf Course Enterprise Fund 427

Contingency Reserve – Risk Fund 428

Reserve for Catastrophic Exposures/Emergencies – Risk Fund 429

Contingency Reserve – Health Insurance Fund 430

Funding Policy for the Town of Palm Beach Retirement System 431

Index 433

Glossary

Glossary 437


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Town of Palm Beach Executive Summary‌‌

BUDGET FOR FISCAL YEAR 2019-2020


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Executive Summary

Town of Palm Beach

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Town of Palm Beach, Florida


October 1, 2019


Honorable Mayor, Town Council and Residents of the Town of Palm Beach;


The FY2020 adopted budget, represents staff’s continuing efforts to reduce expenditures and reorganize Town operations to ensure the most efficient and effective delivery of high quality public services. A thorough review of each departments’ budget and their operations was completed.

This budget is the result of the second year of hard work to find efficiencies and apply lean government principles on a Town-wide basis, but this is a continuous process and will be an ongoing effort each year. We expect to see further reductions in expenditures and increased revenues in FY21 and beyond. Through attrition, each position and its related responsibilities will be examined to determine if the position is still needed or can be restructured before automatically backfilling to accomplish this goal.


The Purchasing Division has continued to contribute quantitatively and qualitatively to the strategic goals of the Town of Palm Beach by continuing to engage best business practices to achieve efficiencies, transparency, and maximize the value of public funds with the goal of promoting cost savings to the Town’s purchasing efforts while achieving best value for goods, services, and construction. During FY19, the Purchasing Division implemented E-Bidding with the goal of increasing the number of proposers/bidders. Increased competition historically promotes better pricing. Of the five construction projects issued for solicitation under the new E-Bidding Platform, all submittals came in under the Opinion of Cost Estimates, which was a first. This platform will enable the Town to garner more competition, better value and new pools of proposers/vendors. The Purchasing Division sponsored two vendor workshops with the goal of increased participation by new firms. Additional vendor workshops are being planned. Purchasing now issues solicitations on three known websites, with the average number of 300 plus notifications being sent for each solicitation.

In a continuation from FY18 best practice initiatives, the Purchasing Division has utilized an online site for sale of surplus items where the Town pays no fees and has garnered for the FY19 budget cycle $191,313 during the first eleven months of the fiscal year. For solicitations issued, the Town has continued to drive negotiations before any recommendation is made to Town Council. For items being purchased for installation such as the new playground, the Town has continued the process of Direct Owner Purchases where the purchase order is issued directly to the equipment


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Executive Summary

Town of Palm Beach

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supplier, with the contractor assuming responsibility for receipt and installation, thus the Town pays no sales tax for the commodity. Cost savings for Direct Owner Purchases and Negotiations reflect a savings in the first eleven months of FY19 of $155,425.

General Fund


Historical Trends – Expenditures


For purposes of the General Fund discussion, we have provided the spreadsheet following this section to illustrate the trend in expenditures by category since 2009 to enable the reader to understand where the growth has come from and to better understand how the FY20 budget compares to previous fiscal years. We compare the FY20 budget first to FY12 because it was the lowest total budget year in the past decade. We also describe the change since FY09 because that was the highest budget year to date and the catalyst for future budget reforms. In addition, another table is shown that contains the FTE history for all departments back to 2009.


The years FY2009 through FY2018 represent actual costs, FY2019 and FY2020 numbers are the adopted budgets.


The overall General Fund expenditures have increased since FY09 by a total of 28.17% or 2.56% per year for the last 11 years. Since FY12, expenditures have increased by 50.13% or 6.27% per year for the past 8 years. We highlight operating expenditures on the spreadsheet to differentiate the costs of the day-to-day operations versus other expenditures of the Town, such as capital improvements, coastal projects, and large transfers to various funds. Since FY09, operating expenditures have increased $4,142,843 or 7.46%, for an average annual change of 0.68%, and since FY12, operating expenditures have increased by $14,745,411 or 32.81%, for an average annual change of 4.10%. Transfers and other expenses since FY09 have increased by 139.53% or $14,418,261, representing an average annual change of 12.68%, and since FY12, these expenses have increased $13,451,254 or 119.03% for an average annual change of 14.88%.

FY12 to FY20

Highlights of the major increases since FY12 are described below:


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Executive Summary

Town of Palm Beach

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Funding By Department


The three largest departments, Police, Fire-Rescue and Public Works, account for over 55% of the Town budget. The transfers mentioned above account for another 28% for a total of 83% of the total Town budget. All other general government and administrative departments make up the balance of 17%. The chart below provides a graphic example of expenditures by each department and transfer.

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Executive Summary

Town of Palm Beach

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How each $1,000 of Town Property Tax Revenue is spent

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Fund Balance


The General Fund Unassigned Fund Balance as of September 30, 2018 was $23,063,128. This amount was $6,548,855 above the policy required minimum. The FY20 budget includes a transfer of $610,000 from fund balance to fund the contingency reserve and $473,000 from the reserve for compensated absences to fund the compensated absence payouts. After the contingency transfer, the remaining balance in the unassigned fund balances will be $5,938,855. Staff recommended and the Town Council approved a transfer of $2,641,699 from this reserve to fund the increase to the UAAL as a result of the compensation increases for all town employees and the pension changes for police and firefighters.


Based on unaudited results for FY19, we expect to add an estimated surplus of approximately $5 million to the unassigned fund balance at FY19 year end. This surplus is the result of many vacant positions that have not been filled and higher than anticipated revenues for building and other permits.


Personnel Complement

The Total FTE includes full time employees and part time no benefits employees (PTNB). The total personnel complement (for all funds Town-wide) for FY20 is 362.24 full-time equivalent personnel (FTE), which is a net increase of 6.48 FTE from the adopted FY19 budget. Currently, 18 positions have been frozen to be further studied, reclassified or eliminated, of these 18, 2 have been eliminated in the FY20 budget in addition to other reductions that have been made throughout the year. A chart of the FTE by department is shown on the following page for FY19 and FY20. The chart shows full time employees which decreased by 1.0 FTE and PTNB staffing


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Executive Summary

Town of Palm Beach

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which increased by 7.48 FTE (mostly due to increased staffing at the Recreation Center which was closed for FY19). The FTE history going back to FY09 can be found earlier in this summary. The changes in the FTE for both full time and part time staffing are described in detail after the table.


Department/Fund

FY19

FY20

Full Time Staffing

Town Manager

7.00

7.00

Information Systems

8.00

8.00

Human Resources

4.59

3.77

Finance

14.74

14.69

Planning, Building & Zoning

27.25

25.75

Fire-Rescue

75.40

78.40

Police

100.35

100.85

Public Works

83.64

80.85

Recreation

7.54

7.50

Town Docks

3.38

3.32

Par 3 Golf Course

7.69

7.58

Underground Utility Fund

1.00

1.00

Coastal Management Fund

1.00

1.00

Risk Fund

1.16

1.63

Health Fund

0.92

0.92

OPEB Trust

0.98

0.83

Retirement Fund

0.61

1.16

Total Full Time Staffing

345.25

344.25

Part Time No Benefit Staffing

Fire- Rescue (Ocean Rescue)

3.00

3.00

Police

1.00

1.35

Recreation Center

2.97

11.17

Tennis

1.23

1.37

Town Docks

0.81

0.00

Par 3 Golf Course

1.50

1.10

Total Part Time No Benefits Staffing

10.51

17.99

Total Town Staffing

355.76

362.24


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Executive Summary

Town of Palm Beach

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The increase of 6.48 FTEs in FY20 made up of the following additions and reductions and other small reallocations across programs:

Position changes:

Other Funds

Below are highlights from the budgets for other Town funds. Additional information can be found at the tabs in the back of the Budget Document behind the General Fund information. The Town’s other funds include: Special Revenue, Debt Service, Capital Improvement Funds, Enterprise Funds (Town Docks and Par 3 Golf Course), Internal Service Funds (Health, Risk, Equipment Replacement), and Trust Funds (Pension and OPEB Trust).

Special Revenue Fund (122) Townwide Underground Utility Project

The Townwide Underground Utility Project fund accounts for the project costs and associated assessments and borrowings for the project. During FY20, we expect to complete Phase 2 North, continue construction of Phases 2 South and 3 North and begin construction of Phase 3 South of the project. Engineering design is underway for Phases 4 and 5 of the project.


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Executive Summary

Town of Palm Beach

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Debt Service Funds (205, 206)

The Debt Service Funds provide for the payment of principal and interest on the Town’s outstanding bonds. During FY10, the Town authorized the issuance of $57,035,000 for a portion of the Town’s Accelerated Capital Improvement Program (ACIP) and refunding all of the Town’s existing debt. In addition, bonds totaling $14,770,000 were issued for the Worth Avenue Commercial District Project. On August 25, 2016, the Town issued bonds to refund the 2010A & 2010B bonds. This transaction produced gross savings of $8,900,539 over 23 years. The net present value savings was $6,895,965 or 13.35%.

In 2013, the Town issued $55,590,000 for the second phase of the ACIP, “bondable” coastal projects, and the Town’s portion of the Par 3 clubhouse project.


In the fall of 2018, the Town issued $56,040,000 in General Obligation bonds for the Town-wide Undergrounding project.


The Town’s outstanding debt as of September 30, 2019 is shown on the table below:



Year Issued

Outstanding Principal Balance September 30, 2019


Purpose

2010A

$5,870,000

Remaining Balance on First Phase of ACIP Debt

2010B

$330,000

Remaining Balance on Original Worth Ave Debt

2016A

$39,320,000

First Phase of the ACIP and Refund Outstanding Debt

2016B

$10,255,000

Worth Avenue Commercial District Project

2013

$50,640,000

Second Phase of ACIP, Bondable Coastal, and Par 3 Clubhouse

2018

$55,350,000

General Obligation Bonds for Town-wide Undergrounding Project

Total

$161,765,000


As of September 30, 2019, the Town’s net bonded debt will amount to 16.8% of the legal limit of

$960,296,679 (5% of preliminary FY20 taxable value of $19,205,933,588).

The 2016A and 2013 Series Revenue Bonds debt service is funded from non-ad valorem revenues. A portion of each ($199,813) is funded from the Par 3 Golf Course for the Town’s portion of the Par 3 golf course and clubhouse renovation, and a portion is funded through the Coastal



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Executive Summary

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Management Fund ($544,107). The non-ad valorem revenue transfer from the General Fund for FY19 is $5,983,913.

The 2016B Series Revenue Bonds debt service appropriation of $708,600 is funded through non ad valorem assessments on the property owners within the Worth Avenue Assessment District.

The Town has issued General Obligation bonds for the Underground Utility Project. These bonds shall be payable first from the Underground Utility Project special assessments and, to the extent the assessments are insufficient to pay debt service or not assessed, ad valorem taxes will be levied and collected on all taxable property in the Town to pay principal and interest on the bonds as they become due and payable. Total debt service for FY20 on these bonds will be $3,398,350.

Capital Improvement Funds (307, 309, 311, 314)

For FY20, the following items totaling $6,435,000 are included in the Capital Improvement Fund

  1. budget:


The transfer to the Capital Improvement Fund has increased by $220,000.


Bonds funds in the ACIP II fund are projected to be fully used before the end of the current year.

Coastal Management

The Coastal Management Fund (309) is used in part to fund the construction costs of the coastal projects. The details of the FY20 budget for Coastal Management can be found in the Annual Budget Document. This plan has been updated by Public Works to include estimates for future projects based upon current costs and to include the Mid-town seawall and groins in the Mid- town beach area. The transfer to the Coastal Management Fund decreased $828,913 to

$6,520,211.

Enterprise Funds (401, 402)


Marina


Marina revenues are expected to decrease in FY20, as renovation of the marina is scheduled to begin in May of 2020. However, for the upcoming season, it was decided to strategically adopt


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Executive Summary

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increases for several fees. A modified annual lease (December 1, 2019, to April 30, 2020) is approximately 55% of the former annual rate; with winter daily and winter monthly single-phase slip fees all increased by 5%. For three-phase slips, a modified annual (December 1, 2019, to April 30, 2020) is also approximately 55% of the former annual rate; winter daily and winter monthly rates increased for these slips to be competitive with Palm Harbor (generally the highest market in the immediate area). The budget for FY20 anticipates that the Marina will realize a gross operating profit of $1,249,024, and a net profit of $134,815 after depreciation and contingency.


We are annually accruing funds in the Dock Replacement Reserve, which, at the end of FY18 totaled $2,587,882. In FY18, $1,700,000 was expended from this reserve to fund the engineering and permitting costs of the project. We expect the FY2019 ending balance to be approximately

$3,647,882. We have also been approved for a FIND grant for up to $325,000 for the Town Docks project. These funds will be added to the reserve balance once they are received. We are applying for additional grants from FIND for this project which will further add to funding available for the project.


Par 3 Golf Course


Golf Course revenues are projected to increase during FY20 due to fee increases. The fee changes for FY20 include increases to multiple green fees and passes to strategically capitalize on participation at our unique facility, create peak usage and maximum revenue. It is expected that these fee adjustments would generate over $35,000 in additional revenue. The Par 3 Golf Course anticipates a gross profit of $681,207 in FY20 before depreciation, equipment replacement purchases, depreciation on the clubhouse and golf course ($306,613), capital expenses, debt service, contingency and the transfer to the general fund. After these expenses the Par 3 Golf course will reflect a net loss of $46,134. The loss is due to the depreciation on recent asset acquisitions including additional golf carts which may result in additional income that could offset a portion of the anticipated loss.


Internal Service Funds (501, 502, 320)


The transfer to the Risk Fund (501) has remained flat from FY19 to FY20.


The Health Insurance Fund (502) transfer has also remained flat due to favorable claims experience and fewer employees in the plan.


The Equipment Replacement Fund (320) contains the accumulated depreciation of all fixed assets over the established thresholds of $5,000 for capital equipment and $3,000 for computer



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Executive Summary

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equipment. A detailed listing of planned equipment purchases is located in the Internal Service Funds section of the Annual Budget Document.


During the year, staff completed a thorough review of Town assets. The Town Manager also approved an increase in the capital asset thresholds from $2,500 to $5,000 for capital equipment and $1,500 to $3,000 for computer equipment. The review and threshold increase created excess reserves in this fund of $105,264 and improved efficiency by reducing the number of small assets that are tracked. Staff may propose to use these funds to improve technology in the Planning, Zoning and Building Department.


Trust Funds (600 & 610)


Retirement (600)

The FY20 actuarially determined contribution to the DB plan totals $10,542,818. The total contribution for FY20 includes an additional $197,600 for the improvements made to the police and firefighter pension plans as a result of the compensation study. The amounts by employee group are shown on the following page versus the FY19 contribution.

Town DB and DC Retirement Contributions


Town Retirement Contributions

FY2019

FY2020

$ Change

% Change

General Employee DB

$3,093,941

$3,276,537

$182,596

5.90%

Lifeguards DB

204,527

210,518

5,991

2.93%

Police DB

3,206,438

3,280,844

74,406

2.32%

Fire-Rescue DB

3,676,531

3,972,519

295,988

8.05%

Total DB Contribution

$10,181,437

$10,740,418

$558,981

5.49%

Total DC Contribution

$548,677

$559,296

$10,619

1.94%

Total Town DB and DC Contribution

$10,730,114

$11,299,714

$569,600

5.31%


The historical 10 year trend in Town actuarially determined employer contributions (ADEC) for the defined benefit pensions are shown on the chart on the following page.


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Executive Summary

Town of Palm Beach

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The 10-year trend for employee contributions is shown below:



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Based on pension changes, the Town no longer provides a DC plan for public safety employees. For General Employees and Lifeguards, the Town contributes a mandatory match of 3% and an optional match of 2% to the Defined Contribution (DC) plan. Total employer contributions to the DC plan are shown in the table on the following page:


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Executive Summary

Town of Palm Beach

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Employer Defined Contribution Funding


DC Contributions

FY2016

Actual

FY2017

Actual

FY2018

Actual

FY2019

Budget

FY2020

Budget

General

$817,696

$684,688

$621,996

$539,940

$550,735

Lifeguards

14,850

10,357

8,778

8,737

8,561

Police

287,545

0

0

0

0

Fire-Rescue

153,963

69,824

0

0

0

Total

$1,274,054

$764,869

$630,774

$548,677

$559,296


The Employer Defined Contribution trend since inception in 2012 is shown below. Police and firefighters no longer contribute to the DC plan and are in a DB plan only.


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Health Insurance (OPEB) Trust (610)

The actuarially determined transfer to the OPEB trust from the General Fund in the FY20 budget is $423,916. This amount is $12,369 less than FY19. The Investment Advisory Committee recommended lowering the investment return assumption from 6.5% to 6.0%. The amount included in the budget represents the calculation at the 6% return assumption. The funded ratio in the actuarial report was 107.4% for the 6% assumption. The actuary for this plan prepared estimates at 6.5%, 6% and 5.75%. The actuary also reviewed the amortization period used in the prior report. The actuary recommended that we reduce the amortization period from 15 years to 5 years. Typically longer amortization periods are chosen for underfunded plans, since the OPEB Trust is over funded, a shorter amortization period is preferred. As you will recall, the Investment Advisory Committee recommended lowering the investment return assumption from 7% to 6.5% in FY19. Since the updated actuarial results show the plan overfunded, the Investment Advisory Committee is recommended an additional decrease in the return


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Executive Summary

Town of Palm Beach

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assumption to 6%. They also considered lowering it to 5.75% but it would have added $302,811 to the annual cost and reduced the funded ratio to 103.5%. They plan to review the assumption each year to determine if lowering the rate is in the best interest of the town.

The Town’s balance in the OPEB trust fund continues to be well ahead of other government agencies across the country.


Worth Avenue Special Assessment District


The budget for the Worth Avenue Special Assessment District is included in the Capital Funds and the Debt Service section of the budget document. The budget includes funding for maintenance and debt service. These costs are fully offset by the assessments charged to property owners within the district.


Long-Term Financial Plan


The Long-Term Financial Plan (LTFP) has been updated with the FY20 adopted budget. The entire document including the trend analysis, forecast and other funds trends and forecast can be found on the Town’s website.


The forecast is summarized below. We prepared a forecast calculation for property tax revenue for two separate scenarios.

  1. Property tax revenue was increased by 3.25% per year as has been done in the past. The results are shown in the first table. This forecast produces deficits for each year but the final three years of the forecast. In FY21, due to construction on the new marina, we eliminated the revenue transferred to the General Fund. In addition, pension costs will include the last year of the 2015 losses and the additional costs from the increases related to the compensation study. The forecast below has improved due to the additional revenue related to the adopted parking meter and placard fees and the additional reduction in the transfer from the coastal fund.


    FY21

    FY22

    FY23

    FY24

    FY25

    FY26

    FY27

    FY28

    FY29

    Revenues

    86,917,539

    89,968,008

    92,382,251

    94,884,059

    97,436,667

    100,124,501

    102,892,108

    105,832,848

    108,710,513

    Expenditures

    88,242,068

    90,952,565

    92,537,265

    94,925,415

    97,924,391

    100,492,373

    102,578,507

    104,290,029

    106,818,006

    Surplus/(Deficit)

    (1,324,529)

    (984,557)

    (155,015)

    (41,357)

    (487,724)

    (367,872)

    313,601

    1,542,819

    1,892,507


  2. The second chart on the next page uses property tax to balance the forecast. If this option were used, the FY21 budget would contain a property tax revenue increase of 5.62%. Using the FY20 taxable value increase (5.63%) applied in FY21, the corresponding millage rate would decrease by .01% and would result in a $58 increase per million of taxable value. It is far too early in the process to predict what the property tax increase will be for FY21. In addition, since the loss of Marina revenue is a one-time occurrence, General Fund reserves or coastal


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Executive Summary

Town of Palm Beach

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reserves could be used to offset the loss and make up part of the deficit and thus bridge the gap until Marina and ground lease revenues are available.


FY21

FY22

FY23

FY24

FY25

FY26

FY27

FY28

FY29

Revenues

88,242,068

90,952,565

92,537,265

94,925,416

97,924,391

100,492,373

102,578,507

104,290,028

106,818,005

Expenditures

88,242,068

90,952,565

92,537,265

94,925,415

97,924,391

100,492,373

102,578,507

104,290,028

106,818,005

% Tax Increase

5.62%

2.60%

1.83%

3.06%

3.95%

3.04%

2.23%

1.50%

2.83%


Inventory of Assets


The inventory of parts, supplies, and materials on hand as of October 1, 2019 was $346,835 and the total fixed asset inventory (which includes machinery, equipment and vehicles with a value of over $5,000 and computer equipment with a value over $2,500) was $21,716,182.


Financial Policies


The Town has 19 formally adopted financial policies. The establishment of specific reserve policies is an important part of prudent financial management and the practice is strongly recommended by the Government Finance Officers Association (GFOA) and the National Advisory Committee on State and Local Budgeting (NACSLB). The financial policies can be found in the appendix of this document.


Conclusion


I wish to acknowledge the efforts of all of the Department Directors for their valuable input and work of their respective staff. I also wish to acknowledge the work of Jane Le Clainche, Finance Director, Amy Wood, Assistant Finance Director, Melissa Ladd, Budget Analyst and Jay Boodheshwar, Deputy Town Manager for their efforts throughout the budget process.

Respectfully Submitted,


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Kirk Blouin Town Manager

cc: Jay Boodheshwar, Deputy Town Manager Department Directors


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STRATEGIC PLANNING AND PERFORMANCE MEASUREMENT‌

In 2003, the Town of Palm Beach developed and adopted a strategic plan. The development of the strategic plan involved input from elected officials, citizens, the business community, and staff. In conjunction with the Town’s strategic plan, staff developed an organizational vision statement, which included input from all employees. Both the strategic plan and the vision statement, in addition to annually adopted Town‐wide goals, help us to form our department and program goals. Outlined in the following pages is a summary of our strategic plan, organizational vision, and departmental goals for FY20.

STRATEGIC PLANNING

In 2001, the Town Council formed a Strategic Planning Board comprised of then Mayor Lesly Smith and four other Town residents. The board held a series of meetings and community forums to receive input from citizens, the business community, staff and others. The strategic plan was formally approved by the Town Council in 2003. The strategic plan is summarized below:

A LEGACY WORTH KEEPING

Palm Beach is a fully developed community, world renowned for its extraordinary beauty, quality of life, and small‐town character. Our permanent and seasonal residents love our barrier island community and are determined to preserve our legacy. We do not seek to change Palm Beach, but rather to protect our community’s assets, correct any deficiencies, and to manage inevitable change so as to maintain our tradition of excellence.

As we envision our future ten years from now, we see Palm Beach remaining true to the inspired legacy of our founders, a Mediterranean‐style mecca of stunning architecture and natural beauty, acclaimed shopping, restaurants and hotels, a cosmopolitan culture, and an involved citizenry committed to civic and philanthropic causes and excellence in Town Government.

QUALITY AND RESPONSIVE TOWN GOVERNMENT

Town government is supported by a respected Mayor and Town Council, a skilled and dedicated staff, and by the active volunteer participation of many citizens. Palm Beach provides residents with the highest level of safety and security through its vigilance and commitment to high quality training and state‐of‐the‐art equipment. The Town has maintained its fiscal strengths with resourceful budgeting and prudent management.

In the future, we envision...

Continued high quality services and facilities provided in a responsive, resourceful manner. A structure of government guided by clear mandates and performance goals for Town administration and for appointed boards and commissions, continued technological innovation, and excellent internal and external communication.


Pro‐active initiatives and continuous vigilance to anticipate and avert threats to public safety, enabling Palm Beachers to live secure in safe neighborhoods.


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Solid fiscal strength and strong alliances with state and federal partners. Actions will be taken and communicated to residents to instill confidence that optimum services are provided for taxes paid.

PUBLIC FACILITIES AND INFRASTRUCTURE

While completely developed, the Town of Palm Beach recognizes a number of redevelopment challenges and functional deficiencies among its current capital facilities. Traffic has increased and parking is at a premium. Beach erosion has become severe, threatening oceanfront property and diminishing a key scenic and recreational asset. Drainage deficiencies and occasional water shortages continue to pose a threat.

In the future we envision...

Beaches fully restored and maintained for the protection of oceanfront property, enjoyment of residents, and scenic enhancement.

Modernized, reliable infrastructure systems, including improved facilities for water distribution and storm drainage. Capital projects will be completed expeditiously and with an effort to limit the disruption they inevitably will cause to adjacent property owners.

Convenient network of roads and parking, less hampered by congestion and sufficient to meet local needs without encouraging additional traffic or visitation.

CHARACTER AND QUALITY OF LIFE

While Palm Beach is built out, growth continues in the form of redevelopment and changes in use raising questions and concerns about over‐development, scale and our historic legacy. The Town is proud of its lush landscaped setting, its historic architecture, and its array of shopping and other amenities, but concerns are expressed about expanded tourism, visitation and traffic, straining our limited service capacity. The Town recognizes that among our greatest resources are our people and their involvement in civic groups, charities, cultural activities, and faith‐based organizations.

In the future we envision...

A community that has guarded against over‐development, encouraging redevelopment consistent in scale with existing neighborhoods, reflective of our heritage.

A town with a rich menu of cultural choices, enabling Palm Beach to continue to combine the intimacy and convenience of small town life with the cultural sophistication and variety of a city.

Palm Beach will remain a friendly community which embraces its diversifying population, nurtures young families and children, and welcomes new residents and visitors. Palm Beachers will continue their heritage of support to worthy causes and their involvement in civic affairs creating new opportunities for all to participate fully in the life of the community.


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TOWN STAFF VISION

In 2005, Town staff developed and implemented an organizational vision and values statement. A Visioning Committee of 20 employees representing each department and every level of authority developed the draft vision and values statement that was reviewed by all Town employees. The final vision and values statement is shown below:

OUR VISION

The Town of Palm Beach delivers the highest quality service by continuously improving and always striving to be the standard by which others are measured.

Our Town Rich in history… Rich in service…

Always exceptional!

OUR VALUES

The employees of the Town of Palm Beach commit to and are guided by the following values: Respect for everyone

Highest ethical standards Cooperation and teamwork Commitment to quality Spirit of innovation

Open, timely communication Personal responsibility and accountability

This is a commitment by the employees of the Town of Palm Beach. Our success as a team is dependent upon our actions being consistent with the vision & values we profess.


THE VISION/STRATEGIC PLAN/PERFORMANCE MEASUREMENT PROCESS

The Town‐wide vision and strategic plan developed by the Strategic Planning Board and the organizational vision developed by Town staff complement each other. The Staff recognizes the Town’s rich history and commitment to excellence that has made the Town an exceptional place to live and work.

The strategic plan and organizational vision guide the decision making process as the elected officials and staff develop annual Town‐wide, department and program goals, and the annual budget. We then use performance measures to track our progress in achieving the goals that have been set.


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The process is depicted in a flowchart below and elements of the process are described in greater detail in this section. The department and program performance measurement methodology are described in greater detail in the department sections of this document.

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THE VISION/STRATEGIC PLAN/GOALS AND PERFORMANCE MEASUREMENT PROCESS



Vision



Strategic Plan



Department Goals


REVENUE MANAGEMENT POLICIES

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BUDGET PREPARATION PROCESS‌

The accounting policies and reporting practices of the Town conform to generally accepted accounting principles as applicable to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The following is a summary of significant policies and practices.


FINANCIAL REPORTING ENTITY

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For financial reporting purposes, management has defined the reporting entity in accordance with criteria set forth in generally accepted accounting principles. The basic criterion for including a potential component unit within the reporting entity is the governing body's ability to exercise oversight responsibility. The most significant manifestation of this ability is financial interdependency. Other manifestations of the ability to exercise oversight responsibility include, but are not limited to, the selection of governing authority, the designation of management, the ability to significantly influence operations, and accountability for fiscal matters. A second criterion used in evaluating potential component units is the scope of public service. Application of this criterion involves considering whether the activity benefits the government and/or its citizens, or whether the activity is conducted within the geographic boundaries of the government and is generally available to its citizens. A third criterion used to evaluate potential component units for inclusion or exclusion from the reporting entity is the existence of special financing relationships, regardless of whether the government is able to exercise oversight responsibilities. Based upon the application of these criteria, the following is a brief review of each potential component unit addressed in defining the Town's reporting entity.


Included within the reporting entity:

The Town of Palm Beach Employees' Retirement System

The Town and the Systems’ participants are obligated to fund the costs based upon actuarial valuations. The Employee’s Retirement Board recommends and the Town Council is authorized to establish benefit levels and to approve the actuarial assumptions used in the determination of contribution levels.


Excluded from the reporting entity:

East Central Regional Wastewater Treatment Facility ("Facility")

The Town participates in an interlocal agreement with Palm Beach County and the Cities of West Palm Beach, Riviera Beach and Lake Worth to provide wastewater treatment. The facility is governed by a Board of Directors comprised of one member from each participating entity. The Board of Directors has the authority to accept and disburse funds, approve an annual budget, transact business, enter into contracts and decide all other matters related to the Facility. The Town reimburses the Facility based upon usage and also provides funds for renewal and replacement costs. The Town does not exercise significant oversight responsibility nor can the Town significantly influence the Facility's operations and, therefore, the Facility has not been included as part of the reporting entity.


BASIS OF ACCOUNTING

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Basis of accounting refers to when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. Basis of accounting relates to the timing of the measurements made, regardless of the measurement focus applied.


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All Governmental Funds are accounted for using the modified accrual basis of accounting. Their revenues are recognized in the period in which they become susceptible to accrual that is when they become measurable and available to pay liabilities of the current period.


Property taxes, utility and franchise taxes, intergovernmental revenues and charges for services are susceptible to accrual when collected in the current year or within sixty days subsequent to September 30th, provided that amounts received pertained to billings through the fiscal year just ended. Further, property taxes are recognized as revenue in the fiscal year for which they are levied. Investment earnings are recorded as earned since they are measurable and available. Permits, fines, forfeitures and contributions are not susceptible to accrual because, generally, they are not measurable until received in cash. Revenues collected in advance of the year to which they apply are recorded as deferred revenues.


Expenditures under the modified accrual basis of accounting are generally recognized when the related fund liability is incurred and expected to be liquidated with available resources. Exceptions to this general rule include principal and interest on general long-term debt which are recognized when due.


All Proprietary Fund types and the Pension and Nonexpendable Trust Funds are accounted for using the accrual basis of accounting. Revenue is recognized when earned, and expenses are recognized when they are incurred.


The Agency Funds are custodial in nature and do not involve measurement of results of operations. They are accounted for under the modified accrual basis of accounting. Assets and liabilities are recognized on the modified accrual basis.


BUDGET BASIS

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The budgets of general government type funds are prepared on a modified accrual basis. Briefly, this means that obligations of the Town are budgeted as expenses, but revenues are recognized only when they are actually received. Unencumbered appropriations lapse at fiscal yearend.


The enterprise funds, on the other hand, are budgeted on a full accrual basis. Not only are expenditures recognized when a commitment is made, but revenues are also recognized when they are obligated to the town.


The Comprehensive Annual Financial Report (CAFR) shows the status of the Town’s finances on the basis of “generally accepted accounting principles” (GAAP) and fund expenditures/revenues on both a GAAP basis and budget basis for comparison purposes.


BUDGETS AND BUDGETARY REQUIREMENTS

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The Town follows these procedures in establishing the budgetary data reflected in the financial statements:


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The budget of the Town Manager includes expenditures for administrative expenses relating to the Town Manager’s Office, Advice and Litigation expenses for the Town Attorney and outside counsel, Information Technology and the Town Clerk’s Office.


In FY17, the Town Clerk’s Office became a division of the Town Manager’s Office. The Town Clerk’s Office is responsible for the records of the Town as well as conducting elections held within the Town. The Department also processes permits for charitable solicitations, special events, commercial motion picture-making, going-out-of-business sales, and door-to-door solicitations.


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NON-EXPENDABLE AND EXPENDABLE TRUST FUNDS

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These consist of resources received from non-Town sources and held by the Town as trustee to be expended or invested in accordance with the conditions of the trust. In a non-expendable trust, the government typically is only permitted to spend the investment earnings and not the assets. The Town does not have non-expendable and expendable trust funds at the present time.


AGENCY FUNDS

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Trust funds typically involve some degree of financial management. Agency funds are used when the government plays a more limited role by just collecting funds on behalf of a third party. The Town does not have an Agency Fund at the present time.


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General Fund Long Term Financial Plan Forecast‌

Financial forecasts are the foundation of a long term financial plan. These forecasts provide the Mayor, Town Council and staff with information they need to more effectively determine future levels of service and methods of funding. We typically use the current year budget to prepare the forecast but due to the delay caused by the review of the compensation and benefits study, we prepared this forecast of General Fund revenues and expenditures to include the FY20 proposed budget and an 8-year forecast through FY28.


Assumptions

The forecast for the first 2 - 4 years is based upon recent trends and specific expectations. The forecast for the remaining years is less tactical and more mathematical, and is based primarily upon estimates by actuaries and long term inflation expectations.


The major assumptions that were used to prepare the forecast are as follows:


FY21

FY22

FY23

FY24

FY25

FY26

FY27

FY28

Ad Valorem Tax Increase

6.52%

2.56%

1.84%

3.06%

3.94%

3.04%

2.24%

1.51%

General Inflation

2.00%

2.00%

2.10%

2.15%

2.20%

2.26%

2.26%

2.26%

Salaries & Wages

4.59%

4.80%

2.06%

3.97%

4.34%

4.28%

4.38%

4.36%

Health Insurance

6.5%

6.25%

6.12%

6.00%

5.87%

5.75%

5.62%

5.49%

Pension (ADEC)

12.4%

1.4%

-2.20

-1.92%

-2.67%

-3.54%

-5.10%

-11.44%

Other Employee Benefits

4.94%

3.97%

4.59%

4.72%

4.72%

4.71%

4.70%

4.70%

Property Insurance

5.0%

5.0%

5.0%

5.0%

5.0%

5.0%

5.0%

5.0%

Liability Insurance

2.0%

2.0%

2.0%

2.0%

2.0%

2.0%

2.0%

2.0%

W/C Insurance

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%


Revenue forecasts are based upon historical trends and recent activity. In the past, we would project a 3.25% increase in ad valorem taxes per year rather than estimate the increase in taxable value and show the surplus/deficit each year. This year, in addition, we used property tax to balance the budget. The percentage increases for ad valorem taxes are shown in the table above. This will not be the ultimate result in future years, in fact, in FY21, since the Marina will be offline and we will lose revenue for the year, the Town Council may choose to use reserves to balance the budget for this one time anomaly.

The forecast for all revenue categories are described in greater detail later in this section.


The assumption for inflation for FY21 and beyond is 2.0% for two years then increasing to 2.26% in later years which is based upon the forecast in the Livingston Survey issued by the Federal Reserve Bank of Philadelphia. The salary and wage assumption is based upon the most recent compensation and


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benefits study for FY20 and average annual increases for all employee groups and forecasted retirements from FY21 through FY28. The health insurance forecast assumption is based upon input from our health consultant’s actuary. The pension forecast assumptions were updated by the Town’s pension actuary to include the results of the compensation study results. The other employee benefit assumptions have been calculated based upon anticipated retirements and other inflation factors and does not include health insurance. Property, Liability and Workmen’s Compensation insurance assumptions are based upon information received from our brokers regarding potential increases.


2019 Forecast

The forecast charts shown on the following pages include actual results for 2015-2018 shown in dark blue, the FY19 budget, shown in medium blue and the proposed FY20 budget shown in violet, and then forecasts through FY28 shown in light blue. The updated forecast maintains service levels, funds the additional contribution of $5,420,000 for the retirement program, and the results of the compensation and benefits study.


GENERAL FUND REVENUE FORECAST

The forecast for revenues is conservative and should allow for minor fluctuations in various revenue sources. The forecast details for each major revenue category are included in this analysis. The forecast chart below contains the property tax increases based on the assumptions shown on the table at the beginning of the document.


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Property Tax Revenue

As mentioned earlier, this year we used ad valorem property taxes as the plug to balance the budget for the forecast years of FY21 through FY28. Over the past 5 years, taxable value has increased by 37.6% an average of 7.5% per year. The preliminary taxable value increase for FY20 was 5.63%. Over the past five years, the Town portion of the property tax bill for a $1,000,000 homesteaded property has decreased by $108. As of FY19, the total ad valorem tax bill including all taxing districts declined by $1,131 per million of taxable value over the same five year period.


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Non Ad Valorem Taxes

Non ad valorem taxes include local option gas taxes, franchise fees and utility service taxes. The forecast has increased because recent revenue collections have improved. The forecast and trend chart is shown below:


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License and Permit Revenue

License and permit revenue includes business licenses, building permit revenues and parking permits.


The chart on the following page shows record years for these revenues sources in FY15, FY16 and FY18. We budget conservatively for these revenues, so from FY19 –FY29 the revenues are relatively flat.



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Intergovernmental Revenue

Intergovernmental revenue includes revenue received from Federal, State, County and local government sources. Revenues from the State of Florida include State revenue sharing, local government sales tax and alcoholic beverage licenses. Local revenues include County occupational license revenue, and the 911 reimbursement from Palm Beach County. Federal and State grants are also included in this category.


The forecast for intergovernmental revenues has remained flat based on revenues received from the State of Florida for sales tax and revenue sharing. FY18 contained grant funds from FEMA and the Federal Government. The updated forecast anticipates a small inflationary increase per year in the State revenues.


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Charges for Services

Charges for services include public safety fees, solid waste fees, parking meter collections and other small fees such as copy charges and lien searches. The updated forecast reflects the increase in special assignment overtime for two new large contracts. This revenue source offsets increased expenditures in


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the salary and wage budget in the police department. If the contracts were not renewed and the revenue was lost, the expenditures would also decline by approximately the same amount. This category also includes the estimates for the revenue for the new Recreation Center beginning in FY20. The forecast for these revenue sources reflect small inflationary increases.


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Fines and Forfeitures

Fine and Forfeiture revenue includes traffic violation fines and penalties, parking fines and penalties and code enforcement violation fines.


Revenues from these sources have been variable and have declined in recent years. There have been several recent vacancies in parking enforcement and officers have been pulled from their duties to handle traffic duty during presidential visits. In addition, the new parking meter system allows a customer to update their meter time on their mobile device, so fewer tickets are being issued for parking meters. The downward forecast in these revenues from FY19 reflect the current status.


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Investment Income

We are forecasting investment returns will increase due to the rising interest rate environment. Recent increases in rates over the long term should have a positive impact on revenues. In the short term certain bond funds may experience market losses. The Investment Advisory Committee and our investment consultants are monitoring the situation closely and will adjust the duration of the portfolios as required to mitigate the losses.



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Miscellaneous and Transfers

Miscellaneous revenue includes rents and royalties, the sale of fixed assets and other revenue. The increase in the 2019 forecast is due to new revenue from the p-card rebate program, and higher than anticipated DC forfeiture funds.


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TOTAL GENERAL FUND EXPENDITURES

The 2019 forecast contains the results of the compensation and benefit study and additional funding of

$5,420,000 annually for the pension fund. In addition, the forecast reflects the expenditure increase assumptions outlined earlier in this section. The charts in this section include four years of actual data from 2015-2018 in dark blue, the FY19 budget in medium blue, the proposed FY20 budget in violet and the forecast through FY28 in light blue.


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Salary and Wages

The forecasted salary and wage increases are based upon the employee pay policies and replacements of retirees at lower salaries through the forecast period. The salary and wage assumption is based upon the compensation study results and the change to the merit system and new step program including COLA on October 1st of each year.


Reducing staffing has improved the salary forecast over recent years. The 2019 forecast contains the personnel cuts that have been made in FY19 and FY20 and the reductions planed through attrition in future years. The average increase throughout the forecast period is 4.4% for total salary and wages.


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Pension Benefits

The pension estimate is based upon the actuary’s forecast for pension costs for the annual required contribution and estimates for the General Employee DC contributions. The forecast for annual contributions has been updated to include the compensation study results and the benefit changes for police officers and firefighters.


The forecast reflects the Town’s Retirement Board recommended a change in the investment assumption from 7.5% to 7.0% over a 5-year period, the change in the payroll growth assumption, the increase in the wage growth assumption and the new mortality tables. The actuary forecasts the costs to decline over the 10-year period if all assumptions are met. The FY19 extraordinary contribution includes additional funds paid into the system for the new amortization


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Other Employee Benefits

Other Employee Benefits includes all other benefits including health insurance. Health insurance costs have remained flat for five years. To be conservative, the health insurance forecast reflects an increase of 6.5% for FY21, then 6.25% for FY22, and reductions through the forecast period to 5.49%. The Town’s actuary for the health plan provided the health insurance forecast. Other employee benefits (including FICA, longevity, incentives, and allowances) are expected to increase at a much lower rate.

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Contractual

The contractual costs have increased due to increases in software maintenance agreements, sanitary sewer treatment costs, landscape maintenance and the addition of Recreation Department expenses. Contractual expenditures are forecasted to increase by the rate of inflation.


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Commodities

The commodity forecast is based upon the assumed rate of inflation. Commodity budgets include fuel, supplies, dues, software, some computer hardware and vehicle maintenance and uniforms. The reduction in expenses represent an overall town effort to reduce expenses wherever possible.


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Equipment Replacement/Capital Outlay

This category includes depreciation on Town vehicles and equipment that is charged to the departments and transferred to the Equipment Replacement Fund. It also includes purchases of new equipment that is not replacement equipment. There were large capital purchases in FY17 in the Police and Fire-Rescue Departments that caused the spike in each year.


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Transfers

The Transfers category includes transfers to the Capital Improvement Program, Coastal Protection Fund, Debt Service Fund, Risk Insurance Fund and Retiree Health Insurance Trust. It also includes the annual contingency allocation.

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due to the reduction in scope of some projects. In FY20 the transfer was reduced by $369,413. The forecast for FY21 forward assumes a 3% increase per year in funding.