FY2022 – FY2032

Town of Palm Beach

Long Term Financial Plan

Prepared by the Finance Department 360 South County Road,

Palm Beach, FL 33480

Table of Contents

Long Term Financial Plan Overview and Executive Summary

The National Advisory Council on State and Local Budgeting (NACSLB) and the Government Finance Officers Association (GFOA) both recommend that governments establish a financial planning process that assesses the long-term financial implications of current and proposed policies, programs, and assumptions, and develops appropriate strategies to achieve its goals.

The Long Term Financial Plan (LTFP) is intended to serve as a tool, providing the Mayor, Town Council and staff with the insight required to address issues impacting the Town’s financial condition. This plan consists of the following sections:

• Executive Summary

• Current Financial Condition

• General Fund Revenue and Expense Trend Analysis

• Forecast Details

• Enterprise Funds Forecast Summary

• Coastal Fund Forecast Summary

• Townwide Underground Utility Fund Forecast Summary

• Other Funds Trend and Forecast Summary

• Reserve Analysis

  
  

  Financial planning expands a government’s awareness of potential challenges and opportunities, as well as options for addressing them. The long-term revenue, expenditure and service implications of continuing or ending existing programs or adding new programs, services and debt can be identified. The financial planning process helps shape decisions about corrective measures to proactively address forecasted financial challenges. Generally, long-term financial plans have a time horizon that extends between five and ten years from the current period, with a five-year horizon being most common. The Town of Palm Beach plan uses a ten-year plan.

  
  

  A financial plan does not state what is certain to happen. Rather, it highlights significant issues or problems that must be addressed if goals are to be achieved and provides forecasts of results expected if certain actions are taken.

  
  

  The General Fund trend section includes 9 years of actual expenditures including the FY22 budget. A summary table containing the revenue and expenditure information for the past 10 years can be found at the end of this section of the document. In addition, a summarized forecast is also included as part of the executive summary.

  
  

  The current financial status for FY22 has been provided in this document. In addition, a monthly financial report is provided to the Mayor and Town Council and posted on the Town’s website. General Fund revenues will exceed budget estimates in most categories and expenditures are on track to finish the year at or slightly under the budget target, unless we experience a hurricane or other unexpected event.

  
  

  The emphasis of this document is on the Town’s General Fund. Forecast and trend information on the Enterprise Funds, Coastal Protection Fund, Townwide Underground Utility Fund, Risk Insurance Fund, Health Insurance Fund, OPEB Trust Fund, Debt Service Funds and the Retirement Fund are also included in this document.

  
  

  
  

  General Fund Historical Trends

  General Fund

  The 10-year revenue and expenditure history shows the trend in revenues and expenditure categories and the ending surplus/deficits for FY13 – FY22. See page 5 for the ten-year revenue and expenditure history summary. Most of the deficits that were experienced over the 10-year period were the result of using unassigned fund balance for capital and coastal projects. Each surplus/deficit is described below:

  
  

• FY13 – The budget included a transfer of $843,000 from fund balance to fund the contingency reserve. The ending surplus of $2,196,059 was the result of higher than anticipated revenues and expenditure savings.

• FY14 – Budget included a transfer from fund balance of $4,860,000 to fund the annual contingency reserve and $4,000,000 for coastal protection. The actual transfer was $1,470,831 due to higher than anticipated revenue and expenditure savings.

• FY15 – The budget included a transfer to the coastal projection fund of $4,777,000 and during the year, the Town Council approved an additional transfer of $6,600,000 to the coastal protection fund from fund balance in order to increase the reserves of the Coastal fund. Due to higher than anticipated revenues, most of this transfer was made with the current surplus, and only $195,076 was funded from reserve balances.

• FY16 – The budget included a transfer of fund balance of $944,686 to fund the contingency reserve. The ending surplus of $1,918,445 was due to higher than anticipated revenues and expenditure savings.

• FY17 – The budget included a transfer of fund balance of $960,300 to fund the contingency reserve and a transfer of fund balance of $2,800,000 to fund an extraordinary transfer to the Retirement Fund to begin to lower the Unfunded Liability. The ending deficit of $2,824,289 was due to these transfers.

• FY18 – The budget included a transfer of fund balance of $655,877 to fund the contingency reserve and a transfer of fund balance of $3,832,893 to partially fund the additional transfer to the Retirement Fund to begin to lower the Unfunded Liability. The ending surplus of

  $1,104,772 was due to cost cutting measures implemented during the year.

• FY19 – The budget included a transfer of fund balance of $560,000 to fund the contingency reserve. The ending surplus of $3,235,251 was due to higher than anticipated revenues and further cost cutting expenditure measures implemented during the year.

• FY20 – The budget included a transfer of fund balance of $610,000 to fund the contingency reserve. The ending surplus of $2,968,598 was due to revenues slightly above the budget standard and much lower expenditures due to vacancies and the partial shutdown due to the pandemic.

  
  

• FY21 – The budget included a transfer of fund balance of $600,000 to fund the contingency reserve. The ending surplus of $2,320,713 was due to higher than anticipated revenues and personnel vacancies and other cost saving measures.

• FY22 – The budget included a transfer of fund balance of $4,600,000 of which, $4,000,000 is a transfer to the Capital Improvement Fund and $600,000 is to fund the contingency reserve.

More detail regarding revenue and expenditure trends can be found in the section titled General Fund Trends

General Fund Forecast

The forecast summary can be found on page 6. The General Fund forecast assumptions can be found under the section titled Forecast. On the expenditure side the proposed FY23 budget has been used as the baseline for the forecast. Because the proposed budget is 9.03% higher than the FY22 budget, the new forecasted expenditures have increased. We increased funding for the Capital Improvement Program to $9,371,020 in the proposed FY23 budget. An additional $2,000,000 is included for the reconstruction of the North Fire-Rescue Station, this is on top of the $5,500,000 included in the FY22 budget. The FY23 budget includes an additional $2.5 million tax increase that was allocated to the Capital Improvement Fund for crosswalk improvements and an interconnect traffic signal management system. Overall, the total General Fund expenditure forecast includes annual increases that peak at an increase of 3.88% in FY25 and average 2.79% during the 9-year forecast period.

Most revenue increases were based on historical trends. We prepared the forecast using property tax revenue to balance each year of the forecast. The FY23 budget contains a property tax revenue increase of 9.65%. Future potential property tax increases range from a decrease of 2.1% in FY32 to an increase of 4.31% in FY25 and average 3.28% through the 9-year forecast period. It is far too early in the process to predict what the property tax increase will be in the future. No additional funding from the Marina or the potential land lease revenue has been factored into this forecast. These funding sources have the potential to lower property taxes or fund one-time expenditures in the future.

Enterprise Funds

The Town Marina began operations on November 1, 2021. The initial year of operations has been a success with revenues exceeding budget expectations by 20% through July. Staff has updated the forecast with the FY23 proposed budget and extended the forecast through 2032.

The revenue forecast was originally based on dockage rate surveys that were conducted and assessed by W. F. Baird, USMC and Town Staff ultimately resulting in the initial annual and seasonal rate schedule. The forecast was updated with the FY23 budget, adopted rates, and positive expectations of continued success. The forecast is based on total occupancy expectancy of 72.5% in FY23 and grows in future years by a combination of increased slip rentals and rate adjustments to 95%. The forecast shows a steady revenue progression and increases 92% from FY23 to FY32. The forecast used the same assumptions for expenses as were used in the General Fund. The forecast also includes a transfer of $2,600,000 per year for the next four years to the Townwide Underground Utility Project

Fund to cover the deficit for that project. After all expenses and the above-mentioned transfer, the forecasted unrestricted net position grows to $113,799,134, assuming reserves are not used. In addition, the recently established Depreciation Reserve and Maintenance and Improvement Reserve have the potential to grow to $15,796,536, assuming that no funds are used for repairs. The unrestricted net position of this fund could be used for one-time expenditures upon Town Council approval.

The Par 3 Golf Course has enjoyed continued success. The revenue projections are based on strategic price increases, growth in play and increased merchandise sales. Once the course reopened after the pandemic shutdown, demand for use has been very high. We expect improved performance in future years. Expenses increase due to operating costs for the clubhouse and gradual increases for costs of goods, services, and salaries/benefits. The assumptions are the same as were used for the General Fund forecast.

The Building Enterprise Fund was established to account for all building permit revenue and expenses to allow for greater transparency as required by the State of Florida. The revenue and expenditure forecasts are based on the current level of operations and can be found later in this document.

Coastal Protection Fund

The Coastal Protection Fund section includes the Cash Flow projections for the next 10 years as well as actual results since 2013. Included are summaries of the current proposed budget and forecast, which includes $18.5 million for the Mid-town seawall and annual funding of $1,000,000 for bulkheads and seawalls for resiliency efforts.

Other Funds

Other Funds included in this document are the Risk Insurance Fund, the Health Insurance Fund, the OPEB Trust Fund, the Debt Service Funds, and the Retirement Fund. Trend and forecast information can be found later in this document under the section marked “Other Funds”.

The Risk Fund forecast contains a 8% per year increase for property insurance, a 2% per year increase for liability insurance and a 3% per year increase for Worker’s Compensation insurance. The Health Fund and OPEB Trust fund forecast the same increases in health insurance costs as outlined in the assumption table. The Debt Service fund identifies future debt service for all Revenue Bonds based on the updated debt service schedules after the recent refinancings and includes the 2018 and 2021 GO Bond debt service forecast and the Marina Loan. The General Obligation bonds are paid for by special assessments for the Town Wide Underground Project and the Marina Loan is paid for from Marina revenues. The Retirement fund reflects the actuaries forecast based on current actuarial assumptions with stress tests at 3% and 5% actual investment returns.

Reserve Status

The final section of this document contains an update of the status of Town Reserves as of September 30, 2021. The reserve balances exceed all of the policy minimums that have been established. A total of $25.1 million in excess reserves above the policy minimums has been identified.

Revenue and Expenditure History FY2013 - FY2022

Revenue and Expenditure Forecast LTFP FY2023 - FY2032

Status of the FY22 Budget

The adopted FY22 budget was 10.16% higher than the FY21 budget. Personnel count totaled 350.43 positions. A monthly financial report has been sent each month to the Mayor and Town Council detailing the status of revenues and expenditures in the General Fund, Enterprise Funds and summary information for other funds. The current estimates discussed below are based on actual results through July 31, 2022.

General Fund Revenues

Revenues for FY22 in total are expected to be above budget estimates and are currently at 92.6% of budget. The budgeted revenues for FY22 that are expected to be at or over budget include: Ad Valorem taxes, business tax receipts, permit fees, other licenses and fees, state shared revenue, public safety fees, physical environment fees, parking meter fees, code violations, fines, other charges for services and miscellaneous revenues. Property taxes are collected early in the fiscal year so we have received to-date 101.5% of the expected revenues and should finish the year at or above 102%. Other licenses, fees and permits include right of way permits and residential parking permits.

Investment income is expected to finish the year below budget estimates. Investment income is below expectations due to the losses incurred in the rising interest rate environment.

In total, the FY22 revenue budget should exceed the budget estimates excluding transfers from fund balance, by $5 million. A transfer from Fund Balance of $4 million was budgeted for the North Fire Rescue Station construction. The surplus revenues should offset this transfer so the transfer may not be necessary and can be returned to fund balance.

General Fund Expenditures

Through July, expenditures in total are just under the budget standard at 82.5%. General Government, and Advice and Litigation, Planning and Zoning, are above the budget standard. General Government is over budget due to payments made for the vacation buy-back program in November and costs for the strategic plan that were charged to this program. Advice and Litigation is over budget due to costs associated with labor matters. Planning and Zoning costs are above budget due to legal costs and legal advertising.

All other departments are at or below the budget standard to-date. The main reason for the reduction in expenditures for these departments is personnel costs. There are currently 31 vacant positions of which 8 have been frozen. Salaries at the current trend may finish the year approximately $1,400,000 below budget. Some of the reduction in salary cost will be offset by increases in contractual and commodity costs. Commodity costs are slightly over budget due to higher costs for fuel and other inflationary increases in general supplies. Based on current estimates, we expect to end the year below the expenditure budget.

Summary

Over the past two years, staff has be able to reduce expenditures and improve efficiencies. These actions have allowed departments to run more efficiently with less resources. The current inflationary environment may cause strains on our ability to keep costs below budget. The FY23 budget reflects higher costs due to these costs increases.

Unless the finances change dramatically, or if Palm Beach experiences a major storm event during the summer, we expect to end the year with a surplus of approximately $2 million.

Tables summarizing General Fund Revenues and Expenditures through July 31, 2022, can be found on the next two pages.

General Fund Revenues

General Fund Expenditures

Enterprise Funds

The Town currently has three enterprise funds accounting for the operations of the Town Marina, Par 3 Golf Course, and Building Enterprise Fund.

Town Marina

The Town Marina opened for operation in November 2021. First year revenues through July totaled

$11,468,114. Well over the $9,554,961 anticipated budget for the initial year. Annual and transient rentals have exceeded expectations.

Expenses are expected to finish the year at or slightly less than the budget estimates. An operating profit approximately $3,600,000 is expected.

Par 3 Golf Course

FY22 has seen record play at the course continue, with revenues currently at 118% of budget estimates. The revenues from the Course are expected to be well above budget estimates and end the year over

$4.1 million.

Expenses currently total 85.26% of budget. Expenses are estimated to finish the year at or slightly above budget by approximately $190,000. Salaries and Capital expenditures will be less than the budget standard, all other expenditures will be at or above. If these revenue and expenditure projections hold, the Par 3 golf course may end the year with a surplus of over $850,000.

Building Enterprise Fund

Fiscal Year 2021 was the initial year of the Building Enterprise Fund. This fund was established to track all building permit revenue and related expenses. In the second year for the fund, revenues are well over the budget estimates at 145%.

Expenditures are currently tracking below budget estimates and should finish slightly below estimates.

LTFP 2022

General Fund Trend Analysis

Town of Palm Beach

General Fund Trend Analysis

Financial trend analysis assists the Town in evaluating its financial condition. The trend analysis describes the fluctuations in the major categories of General Fund revenues and categories of expenditures. The financial trends present a picture of the Town’s financial strengths and weaknesses and allow staff to identify emerging issues before they become serious problems. The Town financial trends have been analyzed using the International City Management Association’s (ICMA) guidelines contained in “Evaluating Financial Condition”. This analysis is designed to present information on the fiscal health of the Town as part of the Long Term Financial Plan.

The City’s financial trends are analyzed annually in order to understand the financial condition of the Town. The factors include:

• The economic condition of the Town;

• Types and amounts of revenues and whether they are sufficient, and the right mix to support the Town;

• Expenditure levels and whether these expenditures are sufficient to provide the desired level of services the citizens expect;

• Fund balances and debt levels and their impact upon current Town financial resources.

  
  

  The amounts in this section represent actual expenditures for the years FY13 through FY21 and budgeted amounts for FY22. The projected results for the FY22 budget are discussed in greater detail in the Current Status section of the document.

  
  

  General Fund Revenues

  

  Total Historical Revenue

  $100,000,000

  Revenues determine the capacity of a municipality to provide services. Important issues to consider when reviewing revenue trends are growth, flexibility, diversity, reliability and administration. Revenues should grow at a rate equal to or greater than the combined effects of inflation and expenditures.

  
  

  $90,000,000
  $80,000,000
  $70,000,000
  $60,000,000
  $50,000,000
  $40,000,000
  $30,000,000
  $20,000,000
  $10,000,000
  $0
  	FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20	FY21	FY22
  Property Tax	$37,473,108	$39,110,926	$43,869,888	$47,882,187	$50,195,981	$52,282,254	$54,883,747	$56,817,697	$58,016,220	$59,663,700
  Non Ad Valorem Revenues	$22,644,832	$24,704,808	$26,569,496	$26,195,088	$23,177,389	$26,413,655	$31,309,321	$27,947,422	$25,177,698	$24,045,409

  
  

  General fund budgeted revenues are 48.3% higher in FY22 than they were in FY13. The major causes of the increases are taxable value increases and interfund transfers for coastal protection projects and

  LTFP 2022

  General Fund Trend Analysis

  Town of Palm Beach

  

  
  

  pension funding, along with increased revenue from utility taxes, special assignment, parking meter revenues. In FY21, building permit revenue was transferred to the newly established Building Enterprise Fund, which accounted for most of the non ad valorem revenue decline.

  
  

  Ad Valorem Revenue

  
  

  

  56.00%

  FY22 59,663,700

  66.93%

  0 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 Ad Valorem Revenue 37,473,108 39,110,926 43,869,888 47,882,187 50,195,981 52,282,254 54,883,747 56,817,697 58,016,220

  % of Total Revenue 62.33% 61.29% 62.28% 64.64% 68.41% 66.44% 63.68% 67.03% 69.74%

  58.00%

  10,000,000

  60.00%

  20,000,000

  62.00%

  30,000,000

  64.00%

  40,000,000

  66.00%

  50,000,000

  70.00%

  
  

  68.00%

  60,000,000

  72.00%

  70,000,000

  Ad Valorem Revenue

  Ad valorem taxes are the Town’s largest revenue source. Municipalities in Florida are not permitted to levy property taxes at a rate of more than 10 mills for the operating millage. In FY15, ad valorem revenue increased by 12%, with the entire increase of $4.7 million allocated to coastal protection funding, and in FY16 another increase of 9.17% was approved to increase funding for coastal protection. The FY22 ad valorem increase was 4.43% over the FY21 budgeted amount. Currently, ad valorem revenue accounts for 66.93% of total revenue.

  
  

  
  

  Taxable value has increased since 2012. The millage rate increased in 2015 to fund the coastal protection financing plan. Recent increases in taxable value have allowed the Town to reduce the millage rate to the lowest historical level.

  
  

  

  LTFP 2022

  General Fund Trend Analysis

  Town of Palm Beach

  

  
  

  State law limits millage rate increases to the rolled back rate (the rate that produces the same taxes as the prior year, exclusive of taxes from new construction) plus growth in personal income. Local governments are allowed to override the cap by extraordinary vote, either a 2/3 vote of the Council for up to a 10% increase over the rolled back rate, or a unanimous vote of the Council for an increase in excess of 10%. The total millage, for Palm Beach taxpayers, which includes all other applicable taxing districts, decreased 1.63% from 16.4939 to 16.2251 in FY22. The Town’s portion of the total millage is 17.85% of the total tax bill. The chart below identifies the taxing districts and the effect the changes in millage from FY21 to FY22 had on a taxpayer with a $1 million value (assumes no change in taxable value from year to year). The total change in FY22, was a decrease of $268.80 per million.

  
  

  FY21 FY22 FY22 Tax Per Change Per % of Total Taxing Authority Millage Rate Millage Rate $1 Million Value $1 million Value % Change Tax Bill
  Palm Beach County School District	7.0100	6.8750	$6,875	-$135.00	-1.93%	42.37%
  Palm Beach County	4.8124	4.8149	$4,815	$2.50	0.05%	29.68%
  Palm Beach	2.9962	2.8966	$2,897	-$99.60	-3.32%	17.85%
  Health Care District	0.7261	0.7261	$726	$0.00	0.00%	4.48%
  Children Services	0.6497	0.6233	$623	-$26.40	-4.06%	3.84%
  South Florida Water Mgmt	0.2295	0.2207	$221	-$8.80	-3.83%	1.36%
  Everglades Construction	0.0380	0.0365	$37	-$1.50	-3.95%	0.22%
  Florida Inland Navigation	0.0320	0.0320	$32	$0.00	0.00%	0.20%
  Grand Total	16.4939	16.2251	$16,225	-$268.80	-1.63%	100.00%

  
  

  The Town of Palm Beach’s total millage rate is the lowest in Palm Beach County. The owner of a home with a taxable value of $1 million pays $16,225 in total taxes in Palm Beach versus $18,057 in Boca Raton, $18,424 in Jupiter, $19,461 in Palm Beach Gardens and $21,747 in West Palm Beach.

  
  

  

  
  

  Many other municipalities in Palm Beach County have enterprise funds and charge separate fees for sewer, stormwater, sanitation, and other services over and above the funds collected from ad valorem taxes. The Town of Palm Beach does not charge separate fees for these services as all costs are included within the Town’s tax rate.

  LTFP 2022

  General Fund Trend Analysis

  Town of Palm Beach

  

  
  

  

  Non Ad Valorem Taxes

  10,000,000

  Non Ad Valorem Tax Revenue

  
  

  
  

  9,000,000
  8,000,000
  7,000,000
  6,000,000
  5,000,000
  4,000,000
  3,000,000
  2,000,000
  1,000,000
  0
  	FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20	FY21	FY22
  Local Option Gas Tax	299,081	310,290	329,481	338,120	352,282	347,820	353,375	315,146	326,858	325,000
  Franchise Fees	2,036,065	2,172,540	2,168,171	2,132,019	2,305,714	2,249,067	2,226,941	2,176,527	2,267,996	2,310,733
  Utility Service Taxes	5,098,714	5,463,267	5,558,660	5,591,219	5,695,690	5,795,377	5,945,986	6,052,179	6,125,995	6,385,500

  
  

  Non Ad Valorem tax revenue includes local option gas taxes, franchise fees and utility service taxes.

  
  

  Local Option Gas Tax had a 10% decrease in FY20, possibly due to the pandemic, and increased almost 4% in FY21, but still below the FY19 level. Franchise fee revenue has fluctuated throughout the 10-year period but has remained at fairly constant dollar amount of $2.2 million. Utility service taxes have increased throughout the 10-year period.

  
  

  License and Permit Revenue

  
  

  

  License and Permit Revenue

  14,000,000

  License and permit revenue includes, business licenses, building permit revenues and parking permits. The trend chart is shown below.

  
  

  12,000,000
  10,000,000
  8,000,000
  6,000,000
  4,000,000
  2,000,000
  0
  	FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20	FY21	FY22
  Other License Fees	393,322	420,185	449,598	569,000	477,999	542,186	1,177,106	1,141,573	811,097	701,500
  Business License	666,789	702,711	682,428	723,649	713,710	771,499	773,039	813,903	805,710	807,000
  Building Permit Fees	6,512,407	6,930,686	9,525,650	8,804,024	6,500,405	8,758,232	9,903,070	7,837,798	868,088	600,000

  
  

  Building permit revenue makes up the majority of these revenues. Since FY13, revenues have improved due to increases in building activity. FY15, FY16, FY18 and FY19 were record years for permit activity. In FY17, a decline in permit activity occurred due to a brief slowdown in construction.

  LTFP 2022

  General Fund Trend Analysis

  Town of Palm Beach

  

  
  

  The decrease in FY21 reflects the transfer of these revenues to the newly formed Building Enterprise Fund. The number of business licenses declined in FY15 due to a change in state law exempting real estate brokers from the business tax, but revenues have increased since that time. FY22 was budgeted conservatively. Other licenses and fees have increased since FY13 due to increases in right-of-way permit and parking permit revenues. FY19 shows a record amount of right-of-way permits due to stricter enforcement. In FY21, a portion of the right of way permits, relating to building construction were transferred to the Building Enterprise Fund. The FY22 budget contains conservative estimates for these revenues.

  
  

  Intergovernmental Revenue

  
  

  

  Intergovernmental Revenue

  2,500,000

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

  
  

  2,000,000
  1,500,000
  1,000,000
  500,000
  0
  	FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20	FY21	FY22
  Local Revenue	98,275	108,529	114,066	119,791	29,065	24,202	47,702	47,385	30,857	37,500
  Grant Revenue	3,861	14,911	28,454	15,698	24,962	379,572	195,380	940,693	921,542	32,700
  State Shared Revenue	888,579	947,973	960,169	986,976	973,078	1,002,841	1,038,983	960,529	1,080,804	1,051,500

  
  

  State revenues were anticipated to decline for FY21 due to the pandemic, however, collections were up 12.5% over FY20. FY20 and FY21 grant revenues contained funding from FEMA for prior storms. FY21 also contained CARES Act funding from the Federal Government.

  
  

  Charges for Services

  
  

  Charges for services include public safety fees, solid waste fees, parking meter collections, recreation fees and other small fees such as copy charges and lien searches.

  
  

  Public safety fees have increased in the past due to increases in revenues for police special detail. Revenues for police special detail have increased in FY19 through FY21 due to two new large contracts. The budget for FY22 was decreased due to the reduction of large contracts.

  
  

  Physical environment fees include solid waste fees. Solid waste fees are billed through the non-ad valorem assessment process on the property tax bill. Compacted garbage fees are billed quarterly by the Town. These fees increase annually based upon the cost of providing the service.

  LTFP 2022

  General Fund Trend Analysis

  Town of Palm Beach

  

  
  

  Parking meter revenue has increased in recent years due to the Park Mobile program and an increase in fees in FY20 from $2 - $3 per hour for all other metered spaces and new kiosks were installed on the 100 block of Sunrise, the 100, 200 and 300 blocks of North County. In FY21, parking meter fees were increased from $3 - $4 per hour and the 100 block streets and ocean front parking were increased from $5 - $6 per hour.

  
  

  

  In FY20, the new Mandel Recreation Center opened. In prior years, recreation activities were accounted for in the Recreation Enterprise Fund. These programs were moved back to the General Fund in FY19.

  
  

  	3,500,000				Charges for Services
  	3,000,000
  	2,500,000
  	2,000,000
  	1,500,000
  	1,000,000
  	500,000
  	0
  		FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20	FY21	FY22
  	General Government	41,413	39,656	39,053	37,228	38,618	42,094	79,001	76,466	136,153	82,500
  	Public Safety	1,440,533	1,516,863	1,711,090	1,837,296	1,324,118	1,416,643	2,301,068	2,807,689	3,039,469	1,852,000
  	Physical Environment	1,264,060	1,226,434	1,192,087	1,179,501	1,277,199	1,177,602	1,175,712	1,101,088	1,099,683	1,167,000
  	Parking Meter	830,151	958,231	1,015,373	1,077,732	1,041,991	1,127,251	1,219,460	1,194,084	2,004,501	2,131,000
  	Recreation	0	0	0	0	0	0	377,538	475,982	918,753	965,500

  
  

  

  Fines and Forfeitures

  
  

  

  Fines and Forfeitures

  2,500,000

  
  

  2,000,000

  
  

  1,500,000

  
  

  1,000,000

  
  

  500,000

  
  

  0

  Fine and forfeiture revenue includes traffic violation fines, parking fines and penalties, right of way fines, and code enforcement violation fines.

  
  

  	FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20	FY21	FY22
  Fines and Forfeitures	1,530,362	1,924,182	1,099,525	1,174,838	799,769	1,068,544	904,075	780,976	918,509	1,025,500

  
  

  In FY14, large code enforcement fines were collected causing spikes in revenues. In FY13, revenues from parking tickets increased due to an increase in parking fines. In recent years, parking fines have declined due to improved compliance. The FY22 budget is based on the recent trends.

  LTFP 2022

  General Fund Trend Analysis

  Town of Palm Beach

  

  
  

  Investment Income

  
  

  

  -3.50%

  FY22 359,811

  -2.87%

  0 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 Investment Income 32,425 383,726 597,585 490,102 421,515 702,261 969,178 696,608 109,289

  Investment Return -0.06% 0.70% 1.40% 1.56% 0.68% 0.72% 3.37% 3.20% 0.12%

  -2.50%

  200,000

  -1.50%

  400,000

  -0.50%

  600,000

  0.50%

  800,000

  1.50%

  1,000,000

  2.50%

  3.50%

  1,200,000

  Investment Income

  The Town’s Investment Advisory Committee oversees the investment of the Town’s surplus funds as well as the investments in the Town’s OPEB trust. The Town’s surplus funds are invested in fixed income securities, money market accounts, two bond funds with the Florida League of Cities Investment Trust and Certificate of Deposits.

  
  

  
  

  Investment revenue during the 10-year period has fluctuated due to the interest rate environment. The growth in FY18-FY19 was due to higher reserves and interest rates which provided more opportunities to invest in short-term securities. In FY20 and FY21, revenues declined due to the lower rates caused by the pandemic recession. The FY22 budget was based on conservative estimates at the time and larger reserve balances. The returns so far in FY22 are not meeting expectations.

  
  

  Miscellaneous and Transfers

  
  

  Miscellaneous revenue includes rents and royalties, sales of fixed assets and other revenue. Transfers include transfers from the Recreation Enterprise Fund, until FY19 when the fund was eliminated. The FY22 budget contains newly implemented transfers from the Marina and the Building Enterprise Fund.

  LTFP 2022

  General Fund Trend Analysis

  

  Miscellaneous and Transfers

  10,000,000

  
  

  8,000,000

  
  

  6,000,000

  
  

  4,000,000

  
  

  2,000,000

  -

  Town of Palm Beach

  

  
  

  	FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20	FY21	FY22
  Miscellaneous and Transfers	1,508,796	1,584,625	1,098,106	1,117,897	1,201,273	1,008,466	2,621,707	528,797	512,393	9,642,129

  
  

  Revenues in FY13 and FY14 include a transfer of $885,000 from the Recreation Enterprise Fund and the proceeds from the sale of property. In FY16, FY17, and FY18 the transfer from the Recreation Enterprise Fund was reduced by $100,000 in each year to add to the funding of the Dock Replacement Reserve. In FY19, the Recreation Enterprise Fund was eliminated and the recreation activities were returned to the General Fund. The Marina and Par 3 Golf Course are now accounted for in separate funds. In order to ease the burden on the General Fund in FY19, the transfer from the two enterprise funds was increased to $1,307,160 for the first year. In addition, surplus funds from the Equipment Replacement Fund were transferred to the General Fund in FY19 from funds that were set aside for the beach cleaning equipment that was not replaced and the savings on the purchase of the quint fire truck totaling $780,421. Due to the closure of the Marina for reconstruction, the transfer in FY20 was eliminated and only the Par 3 Golf Course transfer of $25,000 was included. In FY21, the Par 3 Golf Course transfer of $25,000 was made and in FY22 a transfer from the new Building Enterprise Fund of $3,200,000 was established based on a cost allocation model. Additionally, in FY22, there was a transfer from the Marina Fund of $536,665 and a one-time transfer of $2 million for the renovation of the North Fire Station. Based on the estimated surplus the transfer in FY22 from fund balance will be less than budgeted.

  
  

  General Fund Expenditures

  Expenditures are a measure of a municipality’s service output. Ideally, a municipality’s expenditure growth should not exceed its revenue growth rate and the government should have maximum flexibility to adjust spending.

  
  

  Since FY13, the General Fund budget has increased a total of 53.4%. A significant portion (48%) of the increase is due to increases in the transfers to the debt service fund, Capital Improvement Fund, and the extraordinary retirement contribution to reduce the UAAL (Unfunded Actuarial Accrued Liability). Operating costs have increased 36% during the 10-year period. The increases are described in greater detail later in this section. The total General Fund budget increased by 10.16% in FY22 from the FY21 budget, 70% of this increase was an increase in the transfer to the Capital improvement Fund.

  LTFP 2022

  General Fund Trend Analysis

  

  General Fund Expenditures

  100,000,000

  
  

  90,000,000

  
  

  80,000,000

  
  

  70,000,000

  
  

  60,000,000

  
  

  50,000,000

  
  

  40,000,000

  
  

  30,000,000

  
  

  20,000,000

  
  

  10,000,000

  
  

  0

  Town of Palm Beach

  

  
  

  	FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20	FY21	FY22
  GF Expenditures	58,107,525	65,286,565	70,634,460	72,000,082	76,169,808	77,591,093	82,957,817	81,796,523	80,873,205	89,140,573

  
  

  The major changes in the General Fund budget for FY13 – FY22 are detailed in the chart below and on the following pages by fiscal year. Large expenditures for capital and coastal projects and other non-recurring expenditures are noted in bold face type. Personnel cost changes are noted in italics.

  
  

  Year	Major Areas of Change to General Fund Revenues and Expenditures
  FY2013 Budget Increase 2.01%
  FY2014 Budget Increase 9.54%
  FY2015

  • Total General Fund Budget - $59,711,280

  • Maintained millage rate at 3.2512, taxable value increased by 2.69%

  • Increase in property tax revenue - $866,200

  • Elimination of 8.71 positions

  • Increased the pay ranges 3% for all non-union positions.

  • Increase in pension costs - $1,035,548

  • Increase in health insurance and OPEB costs- $556,727

  • Decrease in FICA tax - $115,019

  • Increase in sewage treatment and disposal costs - $303,634

  • Increase in risk insurance costs - $101,273

  • Transfer to Coastal Protection Fund - $2,765,099

  • Total General Fund Budget - $65,406,493

  • Reduced millage rate to 3.2468, taxable value increased by 5.16%

  • Increase in property tax revenue - $1,782,300

  • Elimination of 5.00 positions

  • Provided for merit pay raises for all non-union positions

  • Increase in DB pension costs - $1,939,921. Changed investment earnings and wage assumptions. Used $930,690 in prepaid Town contributions as a partial offset.

  • Provided for a discretionary 4% employer contribution to DC plan - $587,902

  • Modification to required employee contribution to pension plan - $152,515

  • Increase in debt service transfer for 2013 bond - $2,600,000

  • Transfer to Coastal Protection Fund - $4,200,000

  • Total General Fund Budget - $67,295,344

  • Increased millage rate to 3.4058, taxable value increased by 7.53%

  LTFP 2022

  General Fund Trend Analysis

  Town of Palm Beach

  
  

  

  
  

  
  

  Budget Increase 2.89%
  FY2016 Budget Increase 6.86%
  FY2017 Budget Increase 6.87%
  FY2018 Budget Increase 4.73%	$398,437

  • Increase in property tax revenue - $4,777,000

  • Addition of 2.58 positions

  • Provided for merit pay raises and an increase in the employee pay ranges.

  • Increase in DB pension costs - $509,600

  • Provided for a discretionary 4% employer contribution to the DC plan

  • Transfer to Coastal Protection Fund - $4,777,000

  • Total General Fund Budget - $71,914,331

  • Decreased millage rate to 3.3779, taxable value increased by 9.74%

  • Increase property tax revenue - $3,706,700

  • Addition of 4.91 positions

  • Provided for merit pay raises and a 2% increase in the employee pay ranges.

  • Increase in pension costs - $800,441

  • Provided for a discretionary 4% employer contribution to the DC plan

  • Transfer to Coastal Protection Fund - $8,015,220

  • Purchase of an Opticom System - $171,000

  • Purchase of StarChase Pursuit Management Systems - $16,800

  • Total General Fund Budget - $76,852,377

  • Decreased millage rate to 3.2706, taxable value increased 8.84%

  • Increased property tax revenue $2,363,500

  • Decrease of 2.22 positions

  • Provided for merit pay raises and a 2% increase in the employee pay ranges.

  • Increase in pension costs - $1,279,333

  • Provided for a discretionary 4% employer contribution to the DC plan

  • Transferred $2,500,000 from unassigned fund balance to the Retirement Fund

  • Increased the transfer to the OPEB trust due to the reduction in the investment assumption change from 8% to 7.5% - $159,000

  • Increased the transfer to Capital Improvement Fund by $1,260,200

  • Decreased transfer to the Coastal Protection Fund by $750,220

  • Total General Fund Budget $80,489,411

  • Decreased millage rate to 3.2037, taxable value increased 6.42%

  • Increased property tax revenue $1,976,000

  • Increase in overtime for visits by the President and dignitaries $204,000

  • Increase of 7 positions

  • Provided for merit pay raises ($434,799) and a 2.5% increase in the employee pay ranges. ($108,897)

  • Health Insurance cost increased $242,549 – Paid from Health Insurance Reserves

  • Increase in DB pension costs of $1,151,730 offset by a reduction in DC pension costs of

  • Included costs for the pension changes for firefighters and general employees.

  LTFP 2022

  General Fund Trend Analysis

  Town of Palm Beach

  
  

  

  
  

  
  

  	$4,759,016 as part of the $5,420,000 policy mandated transfer. The balance was transferred in FY17.
  FY2019 2.46% Budget Increase
  FY2020 2.4% Budget Increase
  FY2021 4.18% Budget Decrease

  • Provided for an extraordinary transfer to the Retirement Fund of

  • Decreased the transfer to the OPEB Trust fund due to favorable experience $379,000

  • Increased transfer to Coastal Protection fund by $145,300

  • Total General Fund Budget $82,466,218

  • Decreased millage rate to 3.1350, taxable value increased 7.75%

  • Increased property tax revenue $2,740,463

  • Decrease of 14.65 positions

  • Provided for merit pay raises ($377,030) and a 3% increase in the employee pay ranges. ($165,490)

  • Health Insurance cost decreased $249,372

  • Increase in DB pension costs of $311,212 offset by a reduction for the early payment interest savings for a net decrease of $17,853.

  • Decrease in DC contributions of $28,892.

  • Provided for an extraordinary transfer to the Retirement Fund of $5,420,000 for policy mandated transfer.

  • Provided funding of $1,440,000 to lower the amortization rate for the Retirement Fund from 25 years to 15 years. Ultimately the decision was made to use a amortization of 15 years for experience Gains/Losses and Plan Changes; 20-year for Assumption/Method Changes which cost $879,055 instead of $1,440,000 a difference of $558,298.

  • Decreased the transfer to the OPEB Trust fund due to favorable experience $524,617.

  • Decreased transfer to Coastal Protection fund by $61,176.

  • Increased the transfer to the Capital Improvement Fund by $211,976.

  • Total General Fund Budget $84,441,766

  • Decreased millage rate to 3.0681, taxable value increased 5.63%

  • Increased property tax revenue $1,768,476

  • Increase of 7.48 including 3 firefighter positions and positions for the new Recreation Center

  • Salaries increased by $804,246 due to the results of the compensation study.

  • Health Insurance cost were flat

  • Increase in DB pension costs of $558,981.

  • Decrease in DC contributions of $10,619.

  • Provided for an extraordinary transfer to the Retirement Fund of $5,420,000 for policy mandated transfer.

  • Decreased the transfer to the OPEB Trust fund due to favorable experience $12,369.

  • Decreased transfer to Coastal Protection fund by $828,913.

  • Increased the transfer to the Capital Improvement Fund by $220,000.

  • Total General Fund Budget $80,915,573.

  • Decreased millage rate to 2.9962, taxable value increased 4.68%.

  • Increased property tax revenue $1,154,619.

  LTFP 2022

  General Fund Trend Analysis

  Town of Palm Beach

  
  

  

  
  

  
  

  FY2022 10.16% Budget Increase

  • Moved all revenues and expenditures related to building permits to the Building Enterprise Fund.

  • Added a transfer from the Building Enterprise Fund of $3,200,000 representing allocated costs of General Fund services provided for the Building permit process.

  • Decreased 16.68 positions.

  • Salaries decreased by $1,492,221 due to the reduction in positions and the transfer of costs to the Building Enterprise Fund.

  • Provided for merit and step increases ($323,815) and a 2.5% increase in employee pay ranges ($91,071).

  • Health Insurance costs were lower due to fewer positions.

  • Increase in DB pension costs of $1,000,841.

  • Increase in DC costs of $9,604.

  • Provided for an extraordinary transfer to the Retirement Fund of $5,420,000 per policy.

  • Transfer to OPEB Trust increased by $6,844. The return assumption was lowered to 6%.

  • Transfer to Risk fund increased by $109,620.

  • Transfer to Capital Improvement Fund increased by $242,000.

  • Decreased transfer to Coastal Fund $1,743,211

  • Total General Fund Budget $89,140,573.

  • Decreased millage rate to 2.8966, taxable value increased 8.13%.

  • Increased property tax revenue $1,711,742.

  • An added transfer of $5.5 million to the Capital Improvement Fund for the reconstruction of the North Fire-Rescue Station.

  • Increase of 7.11 positions (1.18 in the General Fund).

  • Salaries and wages increased by $1,438,164 due to the increase in FTE’s, merit and step increases totaling $427,661, and a COLA increase of $734,565.

  • Health insurance costs were slightly lower.

  • Increase in the Defined Benefit and Defined Contribution costs of $55,786.

  • Provided for an extraordinary transfer to the Retirement Fund of $5,420,000 per policy.

  • Transfer to OPEB Trust decreased by $95,643. The return assumption was lowered to 5%.

  • Transfer to the Risk fund increased by $163,048.

  LTFP 2022

  General Fund Trend Analysis

  Town of Palm Beach

  

  
  

  General Fund Operating Expenditures

  
  

  

  The chart below shows the trend in General Fund expenditures broken out between operating expenditures and transfers since FY13.

  
  

  						Operating Expenditures and Transfers
  100,000,000 90,000,000 80,000,000 70,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 0 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
  Transfers		12,956,742	17,686,251	21,979,362	20,988,417	21,958,461	23,080,053	27,548,990	22,816,029	22,282,736	27,729,481
  	Operating Expenditures	45,150,783	47,600,314	48,655,098	51,011,666	54,211,347	54,511,039	55,408,827	58,980,494	58,590,470	61,411,092

  
  

  

  Since FY13, operating expenditures have increased a total of $16,260,309 or 36% over the 10-year period. Most of the increase coming from pension benefits, contractual expenditures and salary increases. The total budget increased $31,033,048 over the same time period with $14,772,739 or 47.6% of the total from the Town transfers, specifically capital improvement, coastal protection and debt service and the extraordinary transfer to the retirement fund. A more detailed analysis of the expenditures by category follows.

  
  

  
  

  Salaries and Wages

  Expenditure by Category Trend Analysis

  
  

  The salary and wage trend is shown on the graph on the following page. FY22 salaries are 21.8% more than they were in FY13. Merit and step increases have been included the budget and in FY13 through FY21, an increase in employee pay ranges was included in all years except FY14 and FY20. The FY22 budget increased 5.42% from the FY21 budget due to merit and step increases and an increase in FTE’s. FY21 costs were below budget due to vacancies. Costs in FY20 increased due to the results of the compensation and benefits study which included the addition of 3 firefighters in order to add a Kelly Day.

  
  

  The FY22 budget has 10.24 less positions than 2013. There are currently, as of August 8, 2022, 31 vacant positions of which 8 are frozen and 23 are vacant and not frozen. We expect the FY22 year- end salary amount to be much less than the budget amount due to these vacancies.

  LTFP 2022

  General Fund Trend Analysis

  

  Salary and Wages

  30,000,000

  375.00

  27,500,000

  370.00

  
  

  365.00

  25,000,000

  360.00

  22,500,000

  355.00

  20,000,000

  350.00

  17,500,000

  345.00

  15,000,000

  340.00

  12,500,000

  335.00

  10,000,000

  330.00

  Town of Palm Beach

  

  
  

  
  

  	FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20	FY21	FY22
  Salaries and Wages	22,943,974	23,152,224	23,478,697	23,581,853	24,128,637	23,764,069	24,909,207	26,378,166	26,301,194	27,950,544
  FTE	360.67	357.10	359.68	365.09	362.87	369.87	356.22	362.25	345.57	350.43

  
  

  Employee Benefits

  
  

  For purposes of this analysis, we have broken employee benefits into retirement benefit trends and other employee benefit trends. On May 1, 2012, pension reform measures to decrease the level of benefits and reduce the long-term cost were implemented. The first year savings was $5,369,248. The pension benefit at that time was a hybrid plan with a defined benefit and defined contribution component for all employees. Increases in FY13 and FY14 were due to modifications to the plan and more retirements than anticipated. The actuarial assumptions for investment returns and wage inflation were reduced and employee contribution rates were modified. In FY14, the Town Council approved a discretionary 4% employer contribution to the defined contribution plan. During FY16, the Town Council adopted changes to the police and non-union firefighters pension plan, and in FY17, changes were made to the union firefighters pension plan. These changes eliminated the DC portion of the benefit and improved the multiplier and age benefit for a pure DB plan for these two groups. Also in FY17, the Town Council adopted changes to the General Employees pension plan. The changes included modifications to both the DC and DB benefits and kept the hybrid DB/DC system. In FY18, costs increased due to the change in mortality table and the smoothing of the investment losses from FY15. In FY17, the Town began to transfer additional funding to the Retirement Fund to lower the UAAL. In 2018, the Town Council approved a policy to transfer additional funds to the retirement system to lower the unfunded liability. In FY17 the Town transferred $2,800,000, in FY18 the town transferred $4,759,016 for this funding and in FY19 and thereafter the Town transferred $5,420,000 annually. In addition in FY19, funding of $1,440,000 was added to the budget to pay for a reduction in the amortization of the UAAL from 25 years to 15 years. Also at the end of FY19, as a result of the compensation and benefits study, an additional $2,641,699 was contributed to pre-fund UAAL increase associated with the benefit and compenation changes.

  LTFP 2022

  General Fund Trend Analysis

  

  Retirement Benefits

  20,000,000

  Town of Palm Beach

  

  
  

  18,000,000
  16,000,000
  14,000,000
  12,000,000
  10,000,000
  8,000,000
  6,000,000
  4,000,000
  2,000,000
  0
  	FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20	FY21	FY22
  DC Pension	537,532	1,088,013	1,132,126	1,132,836	671,355	404,640	408,097	403,725	455,497	510,167
  Extraordinary Transfers	0	0	0	0	2,800,000	4,759,016	9,501,699	5,420,000	5,420,000	5,420,000
  DB Pension	3,831,588	4,977,617	5,454,327	6,180,062	7,819,957	8,971,687	9,099,192	10,544,447	10,998,538	11,109,914

  
  

  

  Other Employee Benefits

  6,900,000

  
  

  6,800,000

  
  

  6,700,000

  
  

  6,600,000

  
  

  6,500,000

  
  

  6,400,000

  
  

  6,300,000

  
  

  6,200,000

  
  

  6,100,000

  
  

  6,000,000

  Other employee benefits include health insurance, FICA, bonuses, allowances, incentives, and uniform maintenance. Since FY13, other employee benefits have decreased 6.23% over the 10-year period. Since FY13, health insurance costs have been maintained through changes in the program, cost shifting to employees, wellness programs, and having fewer employees in the plan due to the reduction in full-time staff positions. In FY18, health insurance costs increased but the increase was funded from the Health Insurance reserves. In FY19, the health insurance costs decreased due to improved claims performance and fewer employees. In FY20 and FY21, health insurance costs remained flat. Included in the other employees benefits category is the transfer to the OPEB Trust. The transfer has decreased by $1,434,785 since FY13, due to the improved funding level of the plan. The plan is 147.8% funded at the end of FY21. Also over the 10- year period, the longevity/bonus program costs decreased due to the phasing out of the longevity program accomplished through retirements and freezing the benefit at FY18 levels. The cell phone allowance also decreased due to the reductions in the stipend provided to the employee.

  
  

  	FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20	FY21	FY22
  Employee Benefits	6,736,760	6,741,912	6,680,817	6,627,932	6,763,691	6,742,200	6,549,843	6,566,323	6,267,504	6,317,062

  LTFP 2022

  General Fund Trend Analysis

  Town of Palm Beach

  

  
  

  Contractual Services

  
  

  

  Contractual

  12,000,000

  10,000,000

  8,000,000

  6,000,000

  4,000,000

  2,000,000

  0

  Contractual services include legal advice, lobbyists, consulting services, sewage treatment, solid waste disposal costs, building maintenance, landscape contracting and software maintenance.

  
  

  
  

  	FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20	FY21	FY22
  Contractual	7,224,092	7,602,595	8,191,690	8,876,307	9,649,474	10,021,787	9,870,999	10,668,321	9,966,778	11,187,512

  
  

  Contractual services have increased 54.9% since FY13. Much of the increase since FY13 is due to increased use of contractual services for duties that were once done in house like contracting with Palm Beach County for Fire-Rescue mechanic services and landscape contracting. Other contractual cost increases were due to increases in legal services, lobbying, landmark preservation consulting, credit card fees for payment of building permits, landfill maintenance, employee recruiting, and digital scanning. In FY17, costs increased due to the post-storm clean-up efforts for hurricanes Mathew and Irma. A significant portion of the increase since FY13 was caused by increased costs from West Palm Beach for sewer treatment and disposal. In FY22, funding was appropriated for increases for landscape maintenance, recreation contracts and software maintenance.

  
  

  Commodities

  
  

  Commodity costs include fuel, electric, water, office supplies and equipment, building and vehicle maintenance supplies, publications and subscriptions, membership dues, medical supplies, and uniform services.

  LTFP 2022

  General Fund Trend Analysis

  

  Commodities

  2,000,000

  
  

  1,800,000

  
  

  1,600,000

  
  

  1,400,000

  
  

  1,200,000

  
  

  1,000,000

  
  

  800,000

  
  

  600,000

  
  

  400,000

  
  

  200,000

  
  

  0

  Town of Palm Beach

  

  
  

  	FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20	FY21	FY22
  Commodities	1,554,104	1,642,397	1,517,617	1,438,222	1,774,332	1,733,077	1,692,833	1,605,334	1,771,227	1,693,282

  
  

  The total cost of commodities in FY22 is 9% higher than it was in FY13. The decreases in FY15 are due to decreases in fuel costs and supplies. FY16 actual amounts reflect lower fuel expenditures during the year. The FY17 costs increases were due to increased costs for fuel and other operational supplies. FY18 expenditures included additional uniforms for the new firefighter positions, telecommunication lockers and patrol equipment. In addition, travel and per diem costs were moved from the contractual category to commodities to provide a more accurate cost for training. In FY21 commodity costs increased due increases in supply and fuel costs, along with IT equipment. This category has remained relatively flat for the past few years.

  
  

  Capital Outlay/Equipment Replacement

  
  

  Capital Outlay expenses include depreciation on the Town’s fixed assets, purchases of new equipment that are not purchased through the Equipment Replacement Fund, and purchases of equipment through grant funding.

  
  

  The total cost of capital equipment in FY22 is 12.1% higher than it was in FY13. The Town utilizes an Equipment Replacement Fund (ERF). Transfers are made to the ERF based on the annual depreciation based on the replacement cost of each asset. The increases since FY13 were due to increases in depreciation on new equipment purchased. In FY16, an Opticom system was purchased and in FY16 and FY17 there was a specific increase in the estimated depreciation for 3 fire rescue pumpers due to the higher than anticipated increases in the cost of these vehicles. In FY20, costs decreased due to purchases that were made in FY19 versus FY20. In addition, Recreation and Tennis equipment was added to the General Fund and depreciation on this equipment is now included in this category. FY22 decreased due to equipment purchases made in FY21 and the extension of life for equipment in certain categories.

  LTFP 2022

  General Fund Trend Analysis

  

  Equipment Replacement

  3,500,000

  
  

  3,000,000

  
  

  2,500,000

  
  

  2,000,000

  
  

  1,500,000

  
  

  1,000,000

  
  

  500,000

  
  

  0

  Town of Palm Beach

  

  
  

  	FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20	FY21	FY22
  Equipment Replacement	2,033,744	2,097,896	1,893,244	2,858,676	3,053,651	2,538,572	2,533,598	2,461,528	2,477,082	2,279,381

  
  

  Transfer to the Capital Improvement Fund and Coastal Protection Fund

  
  

  

  Historically, the Town funded capital projects on a pay-as-you-go basis. If additional funding was necessary for larger projects, transfers from fund balance were used to supplement the funding. In FY10 and FY13 the Town issued bonds to fund the costs of the 20-year Accelerated Capital Improvement Program (ACIP). The trend in the transfer to the Capital Improvement Program and the Coastal Protection fund is shown on the chart below.

  
  

  	16,000,000	Transfers to the Capital Improvement Fund and Coastal Protection
  	14,000,000
  	12,000,000
  	10,000,000
  	8,000,000
  	6,000,000
  	4,000,000
  	2,000,000
  	0
  		FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20	FY21	FY22
  	Transfer to Coastal	4,765,099	7,200,000	11,377,000	8,015,220	7,265,000	7,410,300	7,349,124	6,520,211	4,777,000	4,920,310
  	Transfer to CIP	1,000,000	1,000,000	1,000,000	1,030,000	2,290,200	2,118,024	2,200,000	2,420,000	3,785,108	8,428,200

  
  

  

  The coastal transfer since FY13 has increased $155,211 after significant increases from FY14 – FY20. The decrease in FY21 is due to the award of Federal funding for the Mid-Town beach project. The CIP transfer has increased $7,428,200. In FY13, $4,765,099 was transferred to the Coastal Protection Fund and in FY14 an additional $7,200,000 was transferred to build reserves for the Mid-Town and Phipps beach renourishment projects. In FY15, $6,600,000 was transferred to the coastal fund from various town reserves, in addition, a property tax increase of $4,777,000 was established to begin to fund the coastal protection fund through property taxes. In FY16, the annual transfer to coastal was increased to $8,015,220 due to higher-than-expected costs of the Mid-Town and Phipps beach renourishment projects. In FY17, the coastal transfer was decreased due to the reduction in the

  LTFP 2022

  General Fund Trend Analysis

  Town of Palm Beach

  

  
  

  funding for the Reach 8 restoration project. Also in FY17, the transfer to the CIP fund was increased to begin to build up the reserves for capital projects once the ACIP bond funds were spent and to fund a portion of the underground utility project costs for the Lake Worth section and to hire a project coordinator. For FY18, the coastal transfer was increased by 3%, and the CIP transfer was decreased by $172,176 due to the transfer of projects to the ACIP fund. In FY21, the coastal transfer was decreased due to the receipt of Federal and State Funding for beach renourishment projects and the CIP transfer was increased by 10% plus an additional $1,123,108 for the Lake Park Drive Park Project. In FY22, the coastal transfer was increased 3% and the CIP fund transfer was increased by $5,766,200, which includes $5.5 million for the reconstruction of the North Fire Station.

  Transfers to the Debt Service Fund, OPEB Trust Fund and Risk Insurance Fund Debt Service

  Debt service costs have increased 62.2% since FY13. In 2010, the 2000 revenue bond for coastal projects was paid in full and the Town issued a bond for the 20-year accelerated capital improvement program and refinanced the 2006 bond and the 2008 revenue note. In 2013, the Town issued bonds for the second phase of the accelerated capital improvement program. The FY14 increase reflects the additional debt service for the new bonds. In FY16, the Town refunded the 2010 bonds, which lowered the debt service for the Town’s bonds reflected in the subsequent budgets. In FY19, the Town refinanced the 2013 bonds which lowered the debt service for FY20 and beyond.

  
  

  Retiree Health Benefits (OPEB Trust)

  For many years, the Town accumulated reserves in the Health Insurance Fund in anticipation of the implementation of GASB 43, which required governments to begin to fund their retiree health benefits in the same manner as retirement benefits. In FY07, the Town established the Health Insurance Trust with a transfer of $16 million from the health insurance fund. Prior to the implementation of GASB 43, the Town paid retiree health benefits on as pay-as-you-go basis. The new pronouncement required an actuarial study to determine the amount of the Town’s total liability and the amount of the annual contribution. The Town’s total OPEB Liability as of October 1, 2021 was calculated to be $27,343,375 and the net position in the trust waws $40,417,394. The resulting OPEB asset is $13,074,019. The funded ratio for the plan is 147.8% for FY21. The Investment Advisory Committee recommended decreasing the return assumption to 5% due to the favorable status. The above numbers were calculated at the 5% rate. The annual budgeted contribution for FY22 is $331,217, which was $98,641 less than FY21.

  
  

  Risk Insurance Fund

  The Town funds the Risk Insurance Program with a transfer from the General Fund. The Risk Insurance program includes insurance for property, liability and worker’s compensation insurance.

  
  

  Since FY13, the transfer to the Risk Fund has had an overall increase of 14.8% or $280,707 over the 10-year period. The Town’s risk insurance costs have been maintained over the past decade, due to the changes in carriers and other cost-saving measures in the overall insurance program and healthy reserves.

  

  Transfers to Debt Service, OPEB Trust and Risk Insurance Funds

  7,000,000

  LTFP 2022

  General Fund Trend Analysis

  Town of Palm Beach

  
  

  

  
  

  6,000,000
  5,000,000
  4,000,000
  3,000,000
  2,000,000
  1,000,000
  0
  	FY13	FY14	FY15	FY16	FY17	FY18	FY19	FY20	FY21	FY22
  Debt Service Fund	3,500,000	6,100,000	6,100,000	6,265,462	6,088,728	5,982,331	5,994,738	5,983,913	5,691,148	5,676,719
  Risk Fund	1,892,780	1,876,000	1,925,362	1,967,485	1,838,037	1,828,475	1,898,059	1,904,441	2,014,622	2,173,487
  OPEB Trust	1,769,000	1,506,000	1,577,000	1,180,000	1,339,000	960,000	435,383	423,014	429,858	334,215

  Town of Palm Beach Revenue Trend Analysis FY13 - FY22

  
  

  Analysis of Revenues by Category Revenue Sources	2013 Actual	2014 Actual	2015 Actual	2016 Actual	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Budget
  Ad Valorem Revenues	37,473,108	39,110,926	43,869,888	47,882,187	50,195,981	52,282,254	54,883,747	56,817,697	58,016,220	59,663,700
  % Increase	2.21%	4.37%	12.17%	9.15%	4.83%	4.16%	4.98%	3.52%	2.11%	2.84%
  $ Increase	810,191	1,637,818	4,758,962	4,012,299	2,313,794	2,086,273	2,601,493	1,933,950	1,198,522	2,846,003
  Non Ad Valorem Taxes	7,433,859	7,946,097	8,056,312	8,061,358	8,353,685	8,392,264	8,526,302	8,543,852	8,720,850	9,021,233
  % Increase	1.62%	6.89%	1.39%	0.06%	3.63%	0.46%	1.60%	0.21%	2.07%	3.44%
  $ Increase	118,543	512,238	110,215	5,046	292,328	38,578	134,038	17,550	176,997	477,381
  Licenses and Permits	7,572,518	8,053,581	10,657,676	10,096,673	7,692,114	10,071,916	11,853,215	9,793,274	2,484,894	2,108,500
  % Increase	16.53%	6.35%	32.33%	-5.26%	-23.82%	30.94%	17.69%	-17.38%	-74.63%	-15.15%
  $ Increase	1,074,311	481,064	2,604,095	-561,003	-2,404,558	2,379,802	1,781,299	-2,059,941	-7,308,379	-7,684,774
  Intergovernmental Revenue	990,715	1,071,413	1,102,689	1,122,465	1,027,105	1,406,615	1,282,065	1,948,606	2,033,204	1,121,700
  % Increase	-5.77%	8.15%	2.92%	1.79%	-8.50%	36.95%	-8.85%	51.99%	4.34%	-44.83%
  $ Increase	-60,716	80,697	31,276	19,776	-95,360	379,509	-124,550	666,541	84,598	-826,906
  Charges for Services	3,576,156	3,741,183	3,957,603	4,131,756	3,681,926	3,763,590	5,152,779	5,655,309	7,198,560	6,198,000
  % Increase	-12.38%	4.61%	5.78%	4.40%