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HomeMy WebLinkAboutAgenda BOC 082709AGENDA CITY OF PALM BEACH GARDENS BUDGET OVERSIGHT COMMITTEE Thursday August 27, 2009 8:30 AM CITY COUNCIL CHAMBERS I. CALL TO ORDER II. PLEDGE OF ALLEGIANCE III. ROLL CALL Regular Members L. Marc Cohn Chair VACANT Vice Chair Bernard Pettingill Regular Member Kenneth Menard Regular Member Phillip Woodall Regular Member IV. ADDITIONS, DELE TIONS, MODIFICATIONS V. APPROVAL OF MINUTES VI. ITEMS BY COUNCIL LIAISON VII. ITEMS BY STAFF LIAISON 1. Review and approval of Budget Committee Report VIII. OLD BUSINESS IX. NEW BUSINESS X. COMMENTS BY PUBLIC XI. COMMENTS BY THE BOARD XII. ADJORNMENT Budget Advisory Committee Report to the City Council The Budget Advisory Committee is continuing the precedent set last year in presenting to the City Council a summary of comments and s uggestions from the several meetings the committee has had leading up to the Council’s consideration of the 2010 Budget. The committee continues to be impressed with the knowledge and thoroughness of staff in preparation of the annual budget that have been presented to Council and for review of the committee. The methods used to make the projections of revenue, expenses and capital expenditures are logical, prudent and in keeping with the guidance set by Council. Once again this year we believe that staff has built on skills of the past which are needed to cope with an ever changi ng financial environment. The committee is cautious in its optimism that the real estate values that are the foundation for revenue projections has begun to st abilize but realize that this is in no way assured. The boom times of the prior year are now confirmed as being over and unlikely to return any time soon which is resulting in less ad valorem taxes for the City of Palm Beach Gardens which must continue its cont rol of expenditures while maintaining the high standards of living that the re sidents have come to expect. The committee has some suggestions and co mments dealing with financial strategy, policy and governance which are respectfully submitted for consideration of staff and the elected Council: 1. The millage rate targeted by Council at the most recent meeting of 5.39 is in the opinion of the committee the minimum rate that should be approved and the committee would suggest to C ouncil a slightly hi gher rate. The rationale for that recommendation is the legislation passed by the State legislature creates formulae that build subsequent millage rates on what is determined in the current year. By setting too low a rate which may be politica lly prudent in the current year subjects future Councils to extremely difficult decisions in future years. The council must be forward looking when it does set the millage rate. 2. The committee supports the idea of havi ng resident budget meetings throughout the city in addition to thos e held at council chambers to insure that the Council receives a significant number of comments from the residents about the direction the budget process is taking. 3. The committee recommends to the Counc il that a more detailed policy be developed for the use of the monies in the reserve fund and not limit the guidance to the amount in the fund as a percentage of expenditures. The committee is in agreement that the fund must stay at or above the 15% le vel to due to the continued uncertainty of the economy and th e need for “rainy day” expenditures. The guidance should be general enough so as to not hinder future councils but that there be enough understanding of what the possibilities could be. Some examples are to use the fund for non-re occurring expenditures such as capital expenditures, catch up payments to a pension fund, special projects. This would allow the operating budget to focus on the required e xpense to operate the city at the level of service the citizens expect. 4. The committee suggests that the con tinued reliance on ad valorem taxes to provide the revenue necessary may no l onger be prudent. There must begin a discussion of alternative re venue sources looking to fees for waste collection, utility tax, increasing community service tax all of which are now additional components of the revenue side of budge ts of most all of our neighboring communities. By adding such fees, Palm Beach Gardens would still be among the least taxed jurisdictions in the county. With the prospect of real estate values not increasing but expenditures continuing to rise, even just at the rate of inflation, this will put an excessive burden on the ad valorem tax which the committee recommends should be shared by other usage fees. 5. The committee began a discussion on altern atives to taxes. The one option that the committee felt held the greatest promis e was to consider tax exempt bonds to pay for no-reoccurring expenditures of the city. The city enjoys a stellar bond rating and would therefore rece ive the best interest market rate for bonds issued. The use of tax-exempt bonds would have to be done on a selective basis but should be seriously considered. 6. The committee suggests that city is in a very favorable location having two major bio-medical research organizations at our door-step. These organizations will be the magnet in the future for new firms to come to the area as spin-offs occur. This will enhance the value of th e City of Palm Beach Gardens in countless ways. To ensure that there is continued economic growth, the committee suggests that the budget continue to include economic deve lopment funds that can be used to attract or retain companies which have a substantial cascading effect on both jobs and tax revenue possibilities. 7. Prior committees have been involved in discussion regarding the pension plan underfunding and the high cost of administ ering these plans. Recommendations have been made due to the concern over the future liability that has become a significant factor in the City’s finances . The committee suppor ts the comments of prior committees to keep the pension i ssue as an ongoing con cern and it will be revisited at future committee meetings. The committee appreciates the opportunity to pr ovide this report to the City Council and welcomes that opportunity to discuss in more detail any of the suggestions and comments listed above. _______________________ L. Marc Cohn Chair _____________________________ Bernard Pettingill Regular Member _____________________________ Kenneth Menard Regular Member _____________________________ Phillip Woodall Regular Member