Town of Palm Beach Executive Summary

PROPOSED BUDGET FOR FISCAL YEAR 2021‐2022

Town of Palm Beach

PRESENTATION FOR JULY 15, 2021, SPECIAL TOWN COUNCIL MEETING

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FY2022

Executive Summary Town of Palm Beach

Town of Palm Beach, Florida

July 15, 2021

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

Members of the staff and I start the budget process each year by conducting a thorough review of Town operations and available resources, while looking for improved ways to meet the needs and expectations of the community.

The proposed FY2022 budget is the result of the fourth year of hard work to find efficiencies and apply lean government principles on a Town‐wide basis. After the new budget is adopted, members of staff continue to closely examine each expenditure before they are made, to ensure the following; is the resource still needed, can the expense be deferred, can the operational needs be met in a more efficient and/or effective manner (reorganization, technology, etc.) and, is the Town procuring and purchasing its budget allotments in the most cost effective manner.

The Town Team found efficiencies where possible and have produced a $3 million surplus in FY20, and we expect to have another large surplus for FY21. It is because of the hard work, in the past few years, and the current values of real estate that we are able to propose a budget that provides a surplus and allows the Town Council to decide whether to provide funding for future resiliency efforts, additional pension funding, increased CIP funding, or other potential initiatives.

General Fund

FY22 Budget Presentation

There are two sets of documents that have been provided to the Town Council and the public. One document contains the program‐by‐program detail of the General fund and other fund budgets. The other document, which can be found online, contains the budget “flex sheets” which show the budget detail by line item.

In addition, the Departments prepared memorandums that are included in each department section of this document that describes in detail the major changes for each program.

To ensure full transparency, relative to the methodology for apportioning health insurance and retirement costs, please note the following:

• Health Insurance costs are calculated and then allocated throughout the budget on a per Full‐Time Equivalent (FTE) basis. The Health costs per FTE for FY22 are $10,788.

  

  
  

  Executive Summary Town of Palm Beach

• Retirement costs are actuarially determined and then allocated throughout the budget per FTE for current and legacy plan costs. The Town’s actuarially determined contribution is $11,746,005. Legacy plan costs represent $8,838,582 of the total and the costs for the ongoing plan are $2,907,423. The breakdown by active full‐time employee group as of the most recent actuarial report dated September 30, 2020, is shown below.

  Participants	FTE	Legacy Plan	Ongoing plan	Total Contribution
  General	149	2,561,805	1,074,933	3,636,738
  Lifeguard	-	187,586	7,793	195,379
  Police	55	2,711,577	809,785	3,521,362
  Fire-Rescue	64	3,377,614	1,014,912	4,392,526
  Total	268	8,838,582	2,907,423	11,746,005
  Percent of Total		75.2%	24.8%	100.0%

  
  

  FY22 General Fund Revenues Property Taxes

  FY21 Final Property Taxes

  The General Fund is the only fund to directly use property taxes as a revenue source. Property taxes (ad valorem taxes) represent the largest revenue source. The Town’s portion of the total millage rate in FY21 was 18.17%. This means for every $100 paid in taxes only $18.17 stays in the Town.

  Below are the taxing districts and the adopted millage rates for FY21 with the total amount of taxes paid to each of the districts by Palm Beach Property owners. The biggest beneficiaries of Town of Palm Beach property owners’ taxes are Palm Beach County and Palm Beach County School District collecting 71.68% of all taxes paid in the Town followed by the Town of Palm Beach at 18.17% with the other taxing districts making up the balance of 10.15%.

  
  

  

  

  Adopted Taxes Per $1 % of Total Paid by Palm Taxing Authority Millage Rate Million Value Tax Bill Owners

  FY2022

  
  

  Palm Beach County School District	7.0100	$7,010	42.50%	$133,672,568
  Palm Beach County	4.8124	$4,812	29.18%	$91,766,886
  Palm Beach	2.9962	$2,996	18.17%	$57,134,058
  Health Care District	0.7261	$726	4.40%	$13,845,885
  Children Services	0.6497	$650	3.94%	$12,389,025
  South Florida Water Mgmt	0.2295	$230	1.39%	$4,376,299
  Everglades Construction	0.0380	$38	0.23%	$724,616
  Florida Inland Navigation	0.0320	$32	0.19%	$610,203
  Grand Total	16.4939	$16,494	100.00%	$314,519,540

  
  

  

  Executive Summary Town of Palm Beach

  FY2022

  
  

  The total taxes paid per million of taxable value in the Town in FY21 was $16,494 a decrease of

  $283.50 from FY20. Of that amount, $2,996 stayed in the Town to pay for services and the remaining $13,498 went to other taxing districts. A breakdown by taxing district for a $1 million homesteaded property using the FY21 tax rates is shown below.

  
  

  

  FY22 Millage Rate

  Appearing on the following page is a millage rate table that provides the FY22 millage rate options versus the FY21 millage. An FY22 millage rate of 2.9520 represents a 1.48% reduction from FY21 and a $0 change for homesteaded properties. This millage rate provides a surplus of $2,022,019. We have also included two other options for Town Council consideration. The first option is to use a portion of the surplus to start to fund resiliency efforts, add funding to our CIP program, address code reform, or add to the funding for the Retirement fund to reduce the UAAL. In order to fund the above options we have calculated the millage to add $1 million to the budget. The second option shown is to reduce the surplus to $0. If there are other options or a combination of options the Town Council would like to consider, we can make the calculations at the Town Council meeting.

  The State of Florida requires the Town to calculate a rolled‐back millage rate. The rolled‐back rate is defined as the millage rate which provides the same property tax revenue for each taxing authority as was levied during the previous year (exclusive of new construction, additions, rehabilitative improvements increasing assessed value by at least 100%, annexations, deletions). The rolled‐back millage rate currently is 2.8390 would represent a 5.25% decrease from the FY21

  
  

  

  Executive Summary Town of Palm Beach

  FY2022

  
  

  millage and would provide the homestead property owner a $109 per million reduction in taxes. This rate will change based on the updated taxable value amount released on July 1st. The rolled‐ back rate is required to be announced at the public hearings in September.

  
  

  	FY21 Millage Rate	FY22 Millage Rate $0 Increase for Homestead	FY22 Millage Rate - using $1 million of Surplus for Resiliency, CIP, Code Reform, or UAAL	FY22 Millage Rate Reducing Surplus to $0
  Millage Rate	2.9962	2.9520	2.9018	2.8527
  Tax Revenue	$57,074,145	$60,095,719	$59,073,699	$58,073,699
  Revenue Increase over FY21	n/a	$3,021,574	$1,999,554	$999,554
  Millage % Increase/Decrease vs. FY21	n/a	(1.48%)	(3.15%)	(4.79%)
  Homestead Value Increased by 1.4%	$1,000,000	$1,014,000	$1,014,000	$1,014,000
  Town Taxes	$2,846	$2,846	$2,797	$2,750
  Increase/(Decrease) over FY21	n/a	($0)	($49)	($96)
  Non Homestead Tax Increase Ave 6.87%	n/a	$159	$105	$53

  In FY21, we prepared a very conservative revenue budget estimate due to the uncertainty surrounding the pandemic related recession. For FY21 to date, many of our revenue sources have exceeded budget expectations. The FY22 proposed revenues represent a conservative increase over FY21. The revenue budget by type for the General Fund for FY22 compared to FY21 is shown on the table below:

  Revenue	FY2021	FY2022	FY21 vs. FY22 Difference	% Change
  Ad Valorem Taxes	$57,134,000	$60,095,719	$ 2,961,719	5.18%
  Non Ad Valorem Taxes	6,351,000	6,710,500	359,500	5.66%
  Licenses & Permits	4,245,100	4,419,233	174,133	4.10%
  Intergovernmental	956,000	1,121,700	165,700	17.33%
  Charges for Services	5,384,700	5,858,210	473,510	8.79%
  Fines and Forfeitures	916,000	1,025,500	109,500	11.95%
  Investment Earnings	904,773	360,000	(544,773)	‐60.21%
  Miscellaneous	494,500	499,500	5,000	1.01%
  Transfers from the Enterprise Funds	3,225,000	3,736,665	511,665	15.87%
  Transfers from unassigned fund balance for Contingency and Compensated Absences	1,304,500	1,431,463	126,963	9.73%
  Total Revenues	$80,915,573	$85,258,490	$ 4,342,917	5.37%

  
  

  

  FY2022

  Executive Summary Town of Palm Beach

  
  

  Significant highlights for General Fund FY22 revenues include:

  • Based upon the Property Appraiser's Preliminary Certification issued May 28, 2021, existing property taxable values in the Town have risen 6.87% over the prior year. The total taxable value is $21,429,082,342.

  • The amount included for property tax represents the taxes generated from millage rate that equals a $0 increase for homestead property owners.

  • The Non Ad Valorem tax revenue is increased based on current trends.

  • The increase in Licenses and Permits is due to the high volume of current activity expected to continue into FY22.

  • The Intergovernmental revenue increase is due to improvements in State revenue sharing and sales tax receipts.

  • Charges for services increased mostly due to proposed increases for parking meter fees and usage. In addition, Recreation fees also increased due to the expectations that usage will continue to improve during the FY22 season and some fee increases. A Resolution approving these fee increases are included later in the document.

  • Fines and forfeiture revenue increased based on the additional metered spaces.

  • Investment earnings have decreased based on lower expected interest rates.

  • The transfers from the Enterprise Funds represent a transfer of $25,000 from the Par 3 Golf Course enterprise fund, a transfer of $511,665 from the Marina Fund which represents General Fund allocated costs of services such as Finance, Human Resources, Town Manager and a small portion of Public Works and the transfer from the Building Enterprise Fund of $3,200,000 represents allocated costs of General Fund services provided for the Building permit process.

  • Transfers from fund balance represent transfers for Contingency and the compensated absence payouts for the year. It increased due to a large amount of expected retirements in FY22.

    
    

    General Fund Expenditures

    General Fund expenditures have increased by 2.87% from FY21. The details by expenditure category are shown in the table on the following page.

    
    

    Expenditure Category	FY2021	FY2022	FY21 vs. FY22 Difference	% Change
    Salary and Wages	$26,512,380	$27,796,442	$ 1,284,062	4.84%
    Pension Benefits	11,590,985	11,620,081	$ 29,096	0.25%
    Other Employee Benefits	6,695,585	6,651,277	$ (44,308)	‐0.66%
    Contractual	10,407,395	10,937,512	$ 530,117	5.09%
    Commodities	1,712,155	1,693,282	$ (18,873)	‐1.10%
    Depreciation/Capital Outlay	2,318,836	2,279,381	$ (39,455)	‐1.70%
    Subtotal Operating Expenditures	59,237,336	60,977,975	$ 1,740,639	2.94%
    Library	352,650	363,230	$ 10,580	3.00%
    Transfer to the Risk Insurance Fund	2,010,439	2,173,487	$ 163,048	8.11%
    Transfer to Capital Improvement Program	2,662,000	2,928,200	$ 266,200	10.00%
    Transfer to Underground Utility Fund	165,000	176,550	$ 11,550	7.00%
    Transfer to the Debt Service Fund	5,691,148	5,676,719	$ (14,429)	‐0.25%
    Transfer to Coastal Management Fund	4,777,000	4,920,310	$ 143,310	3.00%
    Extraordinary Transfer to Retirement Fund	5,420,000	5,420,000	$ ‐	0.00%
    Contingency	600,000	600,000	$ ‐	0.00%
    Subtotal Transfers and Contingency	21,678,237	22,258,496	$ 580,259	2.68%
    Total General Fund	$ 80,915,573	$ 83,236,471	$ 2,320,898	2.87%

    
    

    

    Executive Summary Town of Palm Beach

    FY2022

    Highlights for General Fund expenditures are as follows:

    Total operating expenditures increased $1,740,639 or 2.94% from FY21. Total transfers and other expenses increased $580,259 or 2.68%. Details of the changes are as follows:

    
    

    Operating Expenditures:

  • Salary and wages increased $1,284,062 due to the increase in FTEs in the General Fund of

    1.18 (see full description later in the document). The increase also includes merit and step increases totaling $427,661. As a reminder, the Town Council approved during the Compensation study, lowering merit increases to 1.5% ‐ 6%, from 3% ‐ 7.5% in FY21. During budget preparation, in past years, staff and the Town Council used a specific month in the new calendar year‐over‐year comparison to approve of COLA increases. This methodology was controversial and has created some distrust amongst the stakeholders. I believe this approach is flawed because of the potential wide fluctuations from month to month. Staff researched compensation models used by municipalities in the local job market. Overall, the analysis of the methods used appear to be subjective. We have decided to adopt the Social Security COLA calculation as the method to determine the annual COLA rather than focusing on a one‐month snapshot. The Social Security calculation uses a three‐month average of the CPI‐W in order to calculate the annual COLA increase for social security recipients. We have taken the average of the CPI index for the Miami‐Ft. Lauderdale‐West Palm Beach area for the last three reporting periods. (This CPI index is reported every other month). We have included a COLA increase of 2.2% based on this calculation at a cost of $544,659 in the budget. We are also including market adjustments for Police Officers and Fire‐Rescue personnel to ensure they remain at the 75th percentile and a 1.1% market adjustment for General Employee ranges to maintain

    
    

    

    Executive Summary Town of Palm Beach

    FY2022

    
    

    competitiveness. Additional information regarding compensation changes can be found later in this message under “Compensation Update”.

  • The total annual required contribution for the defined benefit plan (DB) and defined contribution (DC) pension benefits increased in the general fund by a total of $29,096 due to FTE allocations between funds and the new positions. In addition, in FY21, the Town used prepaid contributions of $126,945 to offset the Town Contribution, in FY22 we are proposing to apply the remaining $484,000 in prepaid contributions directly to reduce the UAAL. Defined Contribution costs increased by $7,425.

  • Other employee benefit costs decreased by $44,308 or .66%. Health insurance costs were lower by $23,727. FICA tax increased by $40,713 due to the increase in the salary budget. The Longevity/Bonus program increased by $20,362.

  • Included in Other Employee Benefits is the Transfer to the OPEB trust. The transfer to the OPEB trust fund decreased by $95,643. In the most recent actuarial report, the Town’s funding level was 133.9% funded using a 5% return assumption. The Investment Advisory Committee is recommending that the return assumption be lowered from 6% to 5%.

  • The increase in contractual costs ($530,117) is due to increases for code review of

    $50,000, increases in sewage treatment and disposal costs of $47,931, landscaping contracting $110,937, additional compacted garbage pickup $44,210, janitorial costs

    $15,300, contractual hiring in recreation $85,900 and IT $40,000, IT Maintenance costs

    $34,845, a contractual vehicle technician in the Police Department $30,900, and electricity costs $16,700. Also, employee events $20,000, as well as education and conference travel, $33,100 were added back into the budget after cuts in FY21 due to the pandemic.

  • The decrease in commodities of ($18,873) is related to numerous small decreases throughout these accounts.

  • Depreciation/Capital outlay costs decreased $39,455, due reduction in the purchase of equipment versus prior years.

  • The funding for the Four Arts Library will increase by $10,580. This funding is now tied to CPI with a cap of 3%. The CPI 12‐month change through April for the Miami‐Fort Lauderdale‐West Palm Beach was 4.1%.

    
    

    Transfers and Other:

  • The transfer to the Risk Fund increased by $163,048 due to anticipated increases in the insurance market.

  • The transfer to the Capital Improvement Fund increased by ($266,200) or 10% over FY21 to improve funding levels.

  • The transfer to the Underground Utility Fund represents the transfer of funds to pay for the Project Manager’s salary and benefits.

  • The transfer to the debt service fund decreased by $14,429.

  • Coastal funding includes a 3% increase of $143,310. Please see the Coastal Budget section for more information about the budget and forecasted expenditures.

    

    
    

    Executive Summary Town of Palm Beach

  • The extraordinary transfer to the retirement fund to accelerate improvements to the UAAL remained at $5,420,000.

  • Contingency is funded at 1% of operating expenditures. Absent extraordinary unforeseen circumstances, this amount should be enough to cover unexpected expenditures.

  
  

  Funding By Department

  Departmental Expenditures

  The three largest departments, Police, Fire‐Rescue and Public Works, account for over 58.3% of the Town budget. The transfers mentioned above account for another 26% for a total of 84.3% of the total Town budget. All other general government and administrative departments make up the balance of 15.7%. The charts below and on the following page provide a graphic example of expenditures by each department and transfer.

  FY2022

  
  

  

  

  Executive Summary Town of Palm Beach

  FY2022

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

  Fund Balance

  
  

  The General Fund Unassigned Fund Balance as of September 30, 2020 was $29,628,725. This amount was $12,614,582 above the policy‐required minimum. The FY22 budget includes a transfer of $600,000 from fund balance to fund the contingency reserve and $698,500 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 $11,316,082.

  
  

  Total excess reserves in all Town funds as of September 30, 2020, were $28,247,248.

  
  

  For FY21, revenues are exceeding the budget estimates and are at 91.1% through May, and expenditures are close to budget estimates at 67.5% to date. Based on these factors, we are currently estimating a surplus of between $1.5‐2 million at FY21 year‐end. If we experience a storm or other unexpected event this amount will decrease.

  
  

  Compensation Update

  Human Resources staff conducted an annual market assessment to ensure the Town’s pay ranges remain competitive within the Palm Beach County market and at the 75th percentile for public safety. Twenty (20) percent of all general positions and all sworn and certified positions were studied. The analysis of public safety market pay ranges resulted in increases to the minimum and maximum for all positions on the Fire Rescue step plan in order to bring the minimum and maximum to the 75th percentile. The maximum of the Police step plan will be increased for the Police Officer and the Police Sergeant position. The General employees that were studied this year remain competitive and within policy with two exceptions. Two positions were found to be below the 65th percentile of the market and will be re‐graded so that the maximum is between the 65th and 75th percentile. In order to remaining competitive for the rest of the positions, we

  
  

  

  Executive Summary Town of Palm Beach

  FY2022

  
  

  have increased the ranges by 1.1% for all other positions (unless they are at or above the 75th percentile).

  Personnel Complement

  The total FTE includes full time employees and part time no benefits employees (PTNB). The total personnel complement (for all funds Townwide) for FY22 is 348.68 full‐time equivalent personnel (FTE), which is a net increase of 3.11 FTE from the adopted FY21 budget. A chart of the FTE by department is shown below for FY21 and FY22. The chart shows full‐time employees which increased by 3.0 FTE and PTNB staffing which increased by .11 FTE. The changes in the FTE for both full‐time and part‐time staffing are described in detail after the table.

  
  

  Department/Fund FY21 FY22
  Full Time Staffing
  Town Manager	7.00	7.70
  Information Systems	8.00	8.00
  Human Resources	3.77	4.00
  Finance	13.69	13.69
  Planning & Zoning	9.10	9.10
  Fire‐Rescue	78.40	78.40
  Police	96.85	96.85
  Public Works	79.88	81.00
  Recreation	7.90	8.40
  Town Docks	1.57	4.55
  Par 3 Golf Course	6.65	6.55
  Building Fund	17.65	16.65
  Underground Utility Fund	1.00	1.00
  Coastal Management Fund	1.00	1.00
  Risk Fund	1.78	1.20
  Health Fund	1.12	0.55
  OPEB Trust	0.98	0.50
  Retirement Fund	0.66	0.86
  Total Full Time Staffing	337.00	340.00
  Part Time No Benefit Staffing
  Fire‐ Rescue (Ocean Rescue)	3.00	3.00
  Police	1.35	0.00
  Recreation Center	1.78	1.34
  Tennis	1.38	1.03
  Town Wide Undergrounding	0.00	0.75

  
  

  

  FY2022

  Executive Summary Town of Palm Beach

  
  

  Fire Prevention	0.00	0.38
  Building Fund	0.00	0.38
  Human Resources	0.00	0.40
  Risk Management	0.00	0.20
  Health	0.00	0.10
  OPEB	0.00	0.05
  Par 3 Golf Course	1.06	1.06
  Total Part Time No Benefits Staffing	8.57	8.68
  Total Town Staffing	345.57	348.68

  
  

  The increase of 3.11 FTEs in FY22 is made up of the following additions and reductions in part time and full time positions:

  Position changes:

  
  

• 1 FTE reduction of the Human Resource Director.

• 1 FTE addition of Assistant Town Manager.

• 1 FTE addition of Communications Specialist (TMO/HR)

• 1 FTE addition of Administrative Assistant in Planning Zoning and Building.

• 1 FTE reduction of Electronic Documents Manager (PZB/IT)

• 1 FTE reduction in Police with the elimination of Training Coordinator.

• 1 FTE addition of Project Engineer Public Works

• 3 FTE increase at Marina.

• .75 FTE addition of Administrative Assistant for the Town wide underground program.

• .25 FTE reduction of full time administrative position to part time in HR

• .25 FTE reduction of full time administrative position to part time in PZB

• .35 FTE reduction in Police of part time vehicle technician

• 0.79 FTE reduction in Recreation part time no benefit positions.

  
  

  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 (Marina, Par 3 Golf Course and Building Enterprise Fund), Internal Service Funds (Health, Risk, Equipment Replacement), and Trust Funds (Pension and OPEB Trust).

  
  

  

  FY2022

  Executive Summary Town of Palm Beach

  
  

  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 FY22, we expect to complete Phase 2 South and Phase 3 South, and continue construction of Phase 4 North and South and begin construction of Phase 5.

  In addition to the FY22 budget, a cash flow projection through 2026 using the updated opinion of costs is included in the Townwide Underground Utility section. During 2021, property owners were provided a final opportunity to prepay their assessments. The Town received over $6.5 million in prepaid assessments reducing the amount available to pay future debt service. The Town issued the final GO bond in the amount of $8,575,000. The prior forecast had a higher amount estimated for debt service than the amount actually issued. After the issuance of the 2021 General Obligation Bond, the forecast currently shows a projected ending deficit of

  $12,657,846 in FY2026. Staff is presenting an option to fund this deficit by using Marina surplus funds. More details can be found later in this document in the Marina section under the Enterprise Fund tab.

  Debt Service Funds (205, 206)

  The Debt Service Funds provide for the payment of principal and interest on the Town’s outstanding bonds.

  The 2016A, 2013, 2019 Series Revenue Bond debt service is funded from non‐ad valorem revenues. A portion of the debt service payment is funded through the Par 3 Enterprise Fund for the Town’s portion of the golf course and clubhouse renovation ($191,100), and a portion is funded through the Coastal Management Fund ($508,958). The non‐ad valorem revenue transfer from the General Fund for FY22 is $5,676,719.

  The 2016B Series Revenue Bonds debt service appropriation of $722,113 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 FY22 on these bonds will be $3,847,805.

  
  

  

  Executive Summary Town of Palm Beach

  FY2022

  
  

  In 2020, the Town issued non ad valorem debt totaling $31,000,000 through a bank loan for the Marina construction project at an interest rate of 2.25%. The debt service for FY22 will be

  $1,992,763 and paid through the Marina fund. This loan is structured to include a 1% prepayment premium during the first four years and no prepayment premium thereafter.

  The Town’s outstanding Revenue Bond debt as of September 30, 2021, is shown on the table below:

  
  

  Year Issued	Outstanding Principal Balance September 30, 2021	Purpose
  2016A	$38,125,000	First Phase of the ACIP and Refund Outstanding Debt
  2016B	$9,900,000	Worth Avenue Commercial District Project
  2013	$5,470,000	Remaining Balance on Second Phase of ACIP
  2018	$53,320,000	General Obligation Bonds for Townwide Undergrounding Project
  2019	$48,285,000	Taxable Refunding Revenue Bonds for Second Phase of the ACIP
  2019	$4,475,000	Refunding of Remaining Balance of First Phase of ACIP Debt
  2020	31,000,000	Marina Loan
  2021	8,575,000	General Obligation Bonds for Townwide Undergrounding Project
  Total	$199,150,000

  As of September 30, 2021, the Town’s net bonded debt will amount to 18.6% of the legal limit of

  $1,071,454,117 (5% of preliminary FY22 taxable value of $21,429,082,342).

  
  

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

  For FY22, the following items totaling $5,540,000 are included in the Capital Improvement Fund (307):

  • Pavement Management ‐ $1,000,000

  • Drainage Improvements ‐ $1,075,000

  • Sanitary Sewage System Improvements ‐ $1,770,000

  • Town Building Improvements ‐ $595,000

  • Water main improvements (WPB) ‐ $1,000,000 (Funded by West Palm Beach)

    
    

    

    FY2022

    Executive Summary Town of Palm Beach

  • General Engineering Services ‐ $100,000

    
    

    The transfer to the Capital Improvement Fund has increased by $266,200.

    
    

    The American Rescue Plan (ARP) will provide the Town funding for sewer and drainage projects. We currently expect to receive $3,400,000 from this source. The updated 5‐year Capital Improvement plan delayed plans to rehabilitate the North Fire‐Rescue Station from 2023‐2024 to FY2025 ‐ 2026. This project is expected to cost $5,500,000. Due to the ARP funding, for sewer projects, we were able to divert funds to mostly fund the North Fire‐Rescue Station project. The ending reserve balance drops to less than $1,000,000, which may not cover any potential overages on other projects or the North Fire‐Rescue station. The Town Council may consider additional funding this year or in future years for Capital Improvement Projects.

    
    

    Coastal Management

    The Coastal Management Fund (309) is used to fund the construction costs of the coastal projects. The details of the FY22 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. The plan includes resiliency projects such as the Mid‐Town seawall funded at $2.5 million per year for the next five years and annual funding of $1,000,000 per year for the next ten years for seawall or bulkhead repair or replacement.

    Enterprise Funds (401, 402, 405)

    
    

    Town Marina

    
    

    Town Marina were closed for construction through most of FY22. The marina is expected to be operational as of September 1, 2021. Included in the budget document, is a 10‐year financial forecast for the marina. Staff is proposing to use $2,600,000 per year of the annual surplus for the next 5 years from the Marina Fund to fund the deficit in the Townwide Underground Project Fund.

    
    

    In addition, we have included 3 financial policies for Town Council consideration. The policies include a Dock Maintenance and Improvement Reserve, Marina Depreciation Reserve, and the Unrestricted Net Position Policy. If the policies are approved, we will bring a Resolution back to the Town Council for approval of the policies.

    
    

    There will be a separate presentation later in the document to discuss these items in more detail.

    
    

    A Resolution to approve transient fees is included later in this document. The annual and seasonal fees were already approved earlier this year.

    
    

    

    FY2022

    Executive Summary Town of Palm Beach

    
    

    Par 3 Golf Course

    
    

    Pending the Town Council approval of the recommended fees, Par 3 revenues are projected to increase over end of year estimates during FY22. The various FY22 fee adjustments include strategic increases to green fees and passes which will capitalize on player demand for our unique facility. The Par 3 Golf Course anticipates an operating gross profit of $683,500 prior to depreciation and other below the line expenses. The transfer to the reserves for the Golf Course and Clubhouse and the Equipment Replacement Fund total $263,924. Additional deductions from the operating profit include transfers for debt service ($194,813), contingency ($92,950) and the general fund ($25,000).

    
    

    FY20 ended the year with a small deficit due to the closures related to the pandemic. To date, for FY21, the Par 3 revenues are on track to end the year well over the budget estimates. The Par 3 should end the year with a healthy surplus. The LTFP forecast shows improvement to the net assets of the fund. We will closely monitor this fund to ensure that there is improvement in the reserves.

    
    

    Resolutions are included in the backup for the proposed fee increases.

    
    

    Building Enterprise Fund

    
    

    The Building Enterprise Fund was created last year to account for all building permit revenue and expenses and allow for greater transparency as required by the State of Florida. During FY21, a cost allocation study was performed to confirm the appropriate permit fee multiplier to stay consistent with Florida Statutes and to provide the basis for implementing reduced permit fees for owners and contractors that choose to use private providers on their construction projects. FY21 revenues are expected to be higher than budget and will provide for a higher surplus than anticipated. Total revenues for FY22 are conservatively estimated to be $6,683,919 and total operating expenses are $6,295,795 which includes a transfer to the General Fund of $3,200,000, which is for the allocated costs that the General Fund provides to the building permit process. Building permit related revenues have increased by $421,914 due to the recent increase in building activity. After depreciation of $93,363 and a 5% operating expense contingency of

    $154,790 there is a projected balance of $139,971, which will add to the reserves of this fund for a potential downturn.

    
    

    Internal Service Funds (501, 502, 320)

    The transfer to the Risk Fund (501) has increased by $163,048 due to expected increases in the insurance market.

    
    

    The Health Insurance Fund (502) transfer from all funds has decreased due to past favorable claims experience.

    
    

    Executive Summary Town of Palm Beach

    FY2022

    
    

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

    
    

    Trust Funds (600 & 610)

    
    

    Retirement (600)

    The FY22 actuarially determined contribution to the DB plan totals $11,746,005. The contribution decreased $46,487 due to the updated mortality tables used by FRS, offset by assumption changes, including the investment return which was lowered in FY20 from 7.1% to 6.8% and has decreased to 6.6% in FY21. In FY21 the Town used $126,945 in prepaid contributions to offset the Town’s contribution. The Town has $484,000 remaining in prepaid contributions that we are proposing to be used to directly lower the UAAL and not use the funds to offset Town Contributions.

    The Town contribution amounts by employee group are shown below versus the FY21 contribution. Legacy plan costs represent $8,838,582 (75.25%) of the total and the costs for the ongoing plan are $2,907,423 (24.75%).

    
    

    

    Town DB and DC Retirement Contributions

    
    

    Town Retirement Contributions	FY2021	FY2022	$ Change	% Change
    General Employee DB	$3,560,240	$3,636,738	$76,498	2.15%
    Lifeguards DB	215,911	195,379	($20,532)	‐9.51%
    Police DB	3,653,689	3,521,362	($132,327)	‐3.62%
    Fire‐Rescue DB	4,362,652	4,392,526	$29,874	0.68%
    Total DB Contribution	$11,792,492	$11,746,005	($46.487)	‐0.39%
    Total DC Contribution	$626,921	$638,746	$11,825	1.89%
    Total Town DB and DC Contribution	$12,419,413	$12,384,751	($34,662)	‐0.28%

    
    

    

    Executive Summary Town of Palm Beach

    FY2022

    
    

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

    

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

    

    
    

    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:

    
    

    

    FY2022

    Executive Summary Town of Palm Beach

    
    

    Employer Defined Contribution Funding

    
    

    DC Contributions	FY2018 Actual	FY2019 Actual	FY2020 Actual	FY2021 Budget	FY2022 Budget
    General	$467,062	$445,592	$450,148	$620,455	$631,738
    Lifeguards	5,844	5,155	2,356	6,386	7,008
    Total	$472,906	$450,747	$452,504	$626,841	$638,746

    Health Insurance (OPEB) Trust (610)

    The actuarially determined transfer to the OPEB trust from the General Fund in the FY22 budget is $334,215. This amount is $95,643 less than FY21. The Investment Advisory Committee is recommending investment return assumption be lowered from 6% to 5%. The funded ratio in the September 30, 2020, actuarial report was 133.9% at the 5% rate.

    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.

    
    

    Tentative Millage Rate

    
    

    Resolution No. 063‐2021 adopts a tentative millage rate of 2.9962. This rate is set at the same rate as last year in case changed circumstances and/or Town Council decision later this summer require the final millage rate to be set higher than the proposed rates under consideration. Florida law requires a first class mailing to all taxpayers if the millage rate is increased above the tentative millage rate adopted by the Town Council prior to the September public hearings. The final millage rate will be set at the public hearings in September.

    
    

    Long‐Term Financial Plan

    
    

    The Long‐Term Financial Plan (LTFP) has been updated with the FY21 adopted budget and will be updated once the FY22 proposed budget is finalized.

    
    

    Upcoming Meeting Schedule

    
    

    The State mandated schedule requires that two public hearings be held in September to provide for the final adoption of the Town’s FY22 budget and millage rate. The proposed public hearing

    
    

    

    Executive Summary Town of Palm Beach

    FY2022

    
    

    meeting dates are as follows: These dates are presented in the Millage Rate Resolution and provided to the Property Appraiser. – NOTE NEW DATES

• First Public Hearing – September 13, 2021 at 5:01pm

• Second Public Hearing – September 23, 2021 at 5:01pm

Conclusion

This concludes the executive summary portion of the FY22 proposed budget. Please see the documents that follow this summary for detailed information about the FY22 budget. Staff will be prepared to answer any questions you may have.

Respectfully Submitted,

Kirk Blouin Town Manager

cc: Department Directors

FY2022

E

Budget Summary by Fund Type Town of Palm Beach

BUDGET SUMMARY BY FUND TYP

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GENERAL FUND REVENUES AND EXPENDITURES

Budget Comparison - Fiscal Years 2021 - 2022

FY2022

General Fund Revenues and Expenditures Town of Palm Beach

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FY2022

E

General Fund Revenues Town of Palm Beach

REVENUES BY TYP

Ad Valorem Taxes

$60,095,719 73.7%

Interfund Transfers 1,431,463

1.8%

Miscellaneous

General Use Tax 6,710,500

8.2%

Licenses/Permits

454,500

0.6%

Interest 360,000

0.4%

Charges for Services 5,858,210

Intergovernmental 1,089,000

1.3%

4,464,233

5.5%

Fines and Forfeitures 1,025,500

1.3%

7.2%

Grants 32,700

0.0%

General Fund Revenues Town of Palm Beach

FY2022

Title

Ad Valorem Taxes

2019

Actual

2020

Actual

2021

Budget

2021

Projected

2022

Budget

%

Variance

% of Total Budget

Current Ad Valorem Taxes 54,847,083 56,740,735 57,134,058 57,134,058 60,095,719 5.18% 70.49%

Back Taxes 36,664 76,962 ‐ ‐ ‐ 0.00% 0.00%

54,883,747 56,817,697 57,134,058 57,134,058 60,095,719 5.18% 70.49%

Sales, Use and Fuel Taxes

1‐6 Cents Local Opt Fuel Tax 241,392 215,880 235,000 209,910 220,000 ‐6.38% 0.26%

1‐5 Cents Local Opt Fuel Tax 111,983 99,266 110,000 96,712 105,000 ‐4.55% 0.12%

353,375 315,146 345,000 306,622 325,000 ‐5.80% 0.38%

Utility Services Taxes

Electricity Utility 2,652,524 2,699,268 2,666,000 2,700,000 3,037,500 13.93% 3.56%

Simplified Telecom Tax 1,041,475 1,053,108 1,070,000 1,020,000 1,025,000 ‐4.21% 1.20%

Water Utility 1,956,020 1,954,802 1,950,000 1,950,000 1,950,000 0.00% 2.29%

Gas Utility 277,509 323,903 300,000 345,000 350,000 16.67% 0.41%

Propane Utility 18,458 21,099 20,000 23,500 23,000 15.00% 0.03%

5,945,986 6,052,179 6,006,000 6,038,500 6,385,500 6.32% 7.49%

Business Tax Receipts

Business Tax Receipts 744,976 781,754 740,000 739,658 777,000 5.00% 0.91%

Business Tax Receipt Penalties 28,063 32,149 30,000 30,000 30,000 0.00% 0.04%

773,039 813,903 770,000 769,658 807,000 4.81% 0.95%

Building Permits

Building 8,115,868 6,606,842 ‐ ‐ ‐ 0.00% 0.00%

Electrical 369,503 138,809 ‐ ‐ ‐ 0.00% 0.00%

Plumbing 195,696 61,266 ‐ ‐ ‐ 0.00% 0.00%

Permit Processing 24,270 21,190 ‐ ‐ ‐ 0.00% 0.00%

Permit Penalty 41,276 25,888 ‐ ‐ ‐ 0.00% 0.00%

Except/Var. App. 247,878 265,707 235,000 314,901 275,000 17.02% 0.32%

Reinspection Fees 3,240 1,510 ‐ 100 ‐ 0.00% 0.00%

Abandonments 370 (205) ‐ (194) ‐ 0.00% 0.00%

Architectural Fees 282,370 253,542 250,000 416,520 280,000 12.00% 0.33%

Landmarks Submittal 44,950 45,405 37,000 73,543 45,000 21.62% 0.05%

Mechanical Permits 301,404 158,119 ‐ ‐ ‐ 0.00% 0.00%

Contractor Registration Fee 9,750 6,725 ‐ ‐ ‐ 0.00% 0.00%

Landscape Permit 3,952 ‐ ‐ ‐ ‐ 0.00% 0.00%

Miscellaneous Permit Fees 360 7,500 ‐ ‐ ‐ 0.00% 0.00%

Building Permit Search Fee 53,650 55,650 ‐ ‐ ‐ 0.00% 0.00%

Permit Revision Fee 197,575 178,600 ‐ ‐ ‐ 0.00% 0.00%

9,892,112 7,826,548 522,000 804,870 600,000 14.94% 0.70%

Franchise Fees

Electricity Franchise 1,956,232 1,895,038 1,950,000 1,787,318 2,010,733 3.11% 2.36%

Gas Franchise 270,709 281,490 300,000 300,000 300,000 0.00% 0.35%

2,226,940 2,176,527 2,250,000 2,087,318 2,310,733 2.70% 2.71%

Other Licenses, Fees & Permits

Right Of Way Permits 1,079,411 1,026,273 606,600 565,791 600,000 ‐1.09% 0.70%

Residential Parking Plans 96,200 113,475 95,000 110,000 100,000 5.26% 0.12%

Taxi Permits 675 1,125 900 900 900 0.00% 0.00%

Flood Plain Mgmt Permit Fee 10,958 11,250 ‐ 771 ‐ 0.00% 0.00%

FY2022

General Fund Revenues Town of Palm Beach

FY2022

General Fund Revenues Town of Palm Beach

FY2022

General Fund Revenues Town of Palm Beach

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FY2022

GENERAL FUND EXPENDITURES BY TYPE

General Fund Expenditures Town of Palm Beach

Extraordinary Transfer to Retirement Fund 5,420,000

6.5%

Other 363,230

0.4%

Salaries and Wages

$27,796,442 33.4%

Transfers 16,209,481

19.5%

Depreciation 2,207,957

2.7%

Contingency

Commodities

Contractual

Employee Benefits 17,937,143

21.5%

600,000

0.7%

Capital Outlay 71,424

0.1%

1,693,282

2.0%

10,937,512

13.1%

FY2022

GENERAL FUND EXPENDITURES BY FUNCTION

General Fund Expenditures Town of Palm Beach

Public Safety 32,464,990

39.0%

General Government

$9,864,640 11.9%

Interfund Transfers 21,629,481

26.0%

Culture and Recreation 4,289,868

5.2%

Physical

Environment 13,723,617

16.5%

Transportation 1,263,875

1.5%

FY2022

GENERAL FUND EXPENDITURES BY DEPARTMENT

General Fund Expenditures Town of Palm Beach

General Government 1,004,050

1.2%

Public Works 16,664,874

20.0%

Advice and Litigation 365,000

0.4%

Legislative 152,500

0.2%

Records Management 356,062

0.4%

Information Systems 3,066,945

3.7%

Fire-Rescue 15,053,955

18.1%

Human Resources 727,430

0.9%

Town Manager 942,991

1.1%

Planning and Zoning 1,574,310

1.9%

Recreation 2,045,594

2.5%

Finance 1,857,947

2.2%

Other 363,230

0.4%

Contingency

Police

$16,832,102 20.2%

Extraordinary Transfer to Retirement 5,420,000

6.5%

Transfers 16,209,481

19.5%

600,000

0.7%

FY2022

FY2022

*FY21 Adjusted includes FY21 adopted budget plus purchase orders written against the FY20 budget but spent against the FY21 budget.

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TOWN OF PALM BEACH

Town Manager’s Office

MEMORANDUM

TO: Kirk W. Blouin, Town Manager

FROM: Jay Boodheshwar, Deputy Town Manager CC: Carolyn Stone, Assistant Town Manager

Queenester Nieves, Town Clerk

Nina Toscano, Administrative Manager

SUBJECT: Town Manager and Town Clerk Budget Highlights for FY2022 DATE: June 15, 2021

Overall Budget for all Town Manager and Town Clerk Programs FY2022 Request $2,820,603.00

FY2021 Adopted $2,526,649.00

This represents an overall increase of 11.63% ($293,954)

Program 111 – Legislative FY2022 Request $152,500.00 FY2021 Adopted $154,400.00

This represents an overall decrease of 1.23% (-$1,900)

Contractual

No change in budget

Commodities

-13.19% decrease (-$1,900)

Decrease attributed primarily to reduced membership dues.

Program 113 – General Government FY2022 Request $1,004,050

FY2021 Adopted $863,542.00

This represents an overall increase of 16.27% ($140,508)

Salaries

14.05% increase ($102,500) in compensated absences 100% decrease (-$25,000) in POTUS overtime

Benefits