FINANCE DEPARTMENT
M E M O R A N D U M
To: Honorable Mayor and City Commission
From: Richard D. Sala, City Manager
By: Brian K. Raducci, Finance Director
Date: May 29, 2007
Subject: Mid-Year Budget
Review (3/31/07) and Year-End Financial Forecast
Attached, you will find FY 2007 financial summaries
of the following City funds – General Fund, Fire/Rescue Special Revenue Fund, Utilities
Fund, Firehouse Station 34 Construction Fund, Scholarship Trust Fund and the
North Lauderdale Academy High School Agency Fund.
These budget summaries reflect the City’s financial
operations and are intended to provide the current status of each fund as of
March 31, 2007 – as well as our year-end projections.
The Finance Department’s preparation and review of
our financial summaries indicate that the City’s current budget plan is
generally being achieved and that year-to-date operations are in reasonable
financial condition. However, we
anticipate a need for the following budget amendments:
- General Fund – $813,334
(inclusive of the transfer from the Scholarship Trust Fund and the North
Lauderdale Academy High School Agency Fund)
- Firehouse Station 34
Construction Fund – $3,150,000 (as discussed during the November 15, 2006
Workshop)
The details that necessitate these budget amendments
are explained in each Fund’s respective Financial Summary.
General
Fund Financial Summary (Fund #001)
After considering the City’s position at March 31, 2007
and our year-end projections, the Administration is projecting a conservative $1,115,500
carryover surplus from current year operations.
This surplus comes from a combination of our projected net revenue and
expenditure projections. This projected
surplus is conservative – and will be considered in the preparation of the
proposed FY 2008 Budget. Although the
net effect of changes in anticipated revenues and expenditures results in a $1,115,500
carryover surplus, we will need to complete a net budget amendment in the City
Attorney, City Clerk, Human Resources, Public Works and Community Development Departments
as follows:
ü
City Attorney – $35,000
ü
City Clerk – $60,000
ü
Human Resources – $35,000
ü
Public Works – $35,000
ü
Community Development – $175,000
Please see details below in the expenditures
analysis.
Revenue Analysis: The City is projecting a favorable revenue variance of approximately $1,219,000.
The majority of this amount is due to the following:
(A) – Locally
Levied Taxes – $210,000 Favorable Variance
These revenue sources are
anticipated to yield a net favorable variance due to the following reasons:
1. A ($150,000)
unfavorable variance in ad valorem taxes due to potential value
adjustments.
2. A $150,000
favorable variance in FPL Franchise Fees due to an increase in
electricity rates that took place during FY 2006.
3. A $75,000
favorable variance in Garbage Franchise Fees due to increased garbage rates.
4. A $100,000
favorable variance in Communication Services Tax received from the State.
Prior to FY 2006, the City had been
experiencing a reduction in Communication Services Tax and as such, this
revenue source was conservatively budgeted.
The remaining $35,000 favorable variance is due to minor favorable
variances in other locally levied tax categories.
(B) – Licenses
and Permits – $235,500 Favorable Variance
1. A $250,000
favorable variance in building permits for fencing and roof repairs
(among other minor repairs) due to damages caused by Hurricane Wilma. In addition, new permits have been issued for
the Mediterranean,
The remaining ($14,500) unfavorable variance is due to minor
favorable/unfavorable variances in other licenses and permits categories.
(C) – Intergovernmental
Revenue – $285,000 Favorable Variance
These revenue sources are
anticipated to yield a net favorable variance due to the following reasons:
1. A $145,000
favorable variance in State Shared Revenues. This revenue source is based on funding
received at the State level which is then allocated to the various cities
according to their respective population figures.
2.
A $150,000 favorable variance in Half Cent Sales Tax due to increased purchases made state-wide
during FY 2007. This revenue source is
based on an allocation received by the State on the amount of sales tax
collected during the fiscal year.
The remaining ($10,000) unfavorable variance is due to minor
favorable/unfavorable variances in other intergovernmental categories.
(D) – Miscellaneous
Revenue – $413,000 Favorable Variance
1.
A $165,000 favorable variance in interest income on the City’s investment portfolio due
to an increase in interest rates in comparison to that of the prior year.
2.
A $200,000 favorable variance in impact fees from
The remaining net $48,000 favorable variance is due to minor favorable
variances in other miscellaneous revenue categories.
The remaining aggregate $75,500
net favorable variance is a combination of small favorable variances in
the charges for services and fines and forfeitures categories.
Expenditures Analysis: The City is projecting a net unfavorable
expenditure variance of approximately ($103,500). The majority of this amount results from the
net effect of the following:
(E) – City Commission
– $21,000 Favorable Variance
A $21,000 favorable variance is anticipated due mainly to anticipated savings in lobbying costs.
(F) – City Attorney
– ($35,000) Unfavorable Variance
A ($35,000) unfavorable variance is anticipated due mainly to costs associated with collective bargaining negotiations and legal fees associated with the sale or lease of the former School Facility.
(G) – City
Clerk – ($60,000) Unfavorable Variance
A ($60,000) unfavorable variance due mainly to payouts related to a retiring employee.
(H) – Human
Resources – ($35,000) Unfavorable Variance
A ($35,000) unfavorable variance is anticipated due mainly to costs associated with hiring temporary assistance due to the Munis Computer Conversion and higher-than-anticipated unemployment compensation payments.
(I) – Finance
– $69,500 Favorable Variance
A $69,500 favorable variance is anticipated due to savings created by temporary vacancies that the Department experienced in FY 2007.
(J) – Public
Works – ($35,000) Unfavorable Variance
A ($35,000) unfavorable variance is anticipated due mainly to costs incurred with maintaining the former School Facility (e.g., utilities). These costs are eventually expected to cease and be recouped through the anticipated sale or lease of the facility.
(K) – Parks
and Recreations – $75,000 Favorable Variance
A $75,000 favorable
variance is anticipated due mainly to personnel
vacancies in various Parks and Recreation Divisions throughout FY 2007.
(L) –
Community Development – ($175,000) Unfavorable Variance
A ($175,000) unfavorable variance is anticipated due mainly to:
1. A 30% increase in the Broward County Inspector contract which was not anticipated or budgeted in the FY 2007 Budget.
2. Higher-than-expected fees for additional inspection services (CSA). This is due mainly to more than expected required inspections for FY 2007. This increase is consistent with the increase in building permits issued in FY 2007.
(M) – Police
Department – $17,000 Favorable Variance
A $17,000
favorable variance is anticipated due mainly to projected year-end vacancy
credits for FY 2007.
(N) – Non-Departmental
– $52,000 Favorable Variance
A $52,000
favorable variance is anticipated due mainly to savings in various
contingency accounts for FY 2007.
The remaining aggregate $2,000
net favorable variance is a combination of small favorable variances in
the City Manager’s budget.
Fire/Rescue
Special Revenue Fund Financial Summary (Fund #115)
The City had budgeted use of fund balance in
the Fire/Rescue Fund of $150,000. By
year-end, revenues and expenditures are projected to result in a net use of
fund balance of only $135,000, resulting in a net $15,000
favorable variance.
(O) – Revenue Analysis: The City is
projecting a net ($55,000) unfavorable variance in total revenues mainly due to the following: The City anticipates
receiving approximately $20,000 more than what was budgeted in interim special
assessments. This is due mainly to the
fact that the City issued more than what was anticipated for Certificate of
Occupancies (CO’s) during FY 2007.
However, this increase is offset by a lower than expected EMS transportation
revenue of $75,000 due to a decrease
(P) – Expenditure
Analysis: The City is projecting a net $70,000 favorable variance in total expenditures
mainly due to vacancies that the Department has experienced throughout FY 2007.
Utilities
The City had budgeted use of fund balance in the Utilities
Fund of $501,153. By year-end, revenues
and expenditures are projected to result in a net use of fund balance of only $243,153,
thus leading to a $258,000 favorable variance.
Revenue Analysis: The
City is projecting a net $225,500 favorable variance in total revenues mainly due to the following:
(Q) A $54,000 favorable variance in
water and sewer impact fees received for new developments (e.g., Mediterania).
(R) A $31,500
favorable variance in charges for services resulting from miscellaneous
charges (e.g., turn-off’s, late fees, etc.) that are all anticipated to exceed
the budget by year-end.
(S) A $140,000
favorable variance in interest income due to higher-than-anticipated
interest rates for the City’s cash and investment portfolio.
Expense Analysis: The City is projecting a net $32,500 favorable variance in total expenditures due to the
following:
(T) Water Plant: Effective
February 2007, the City outsourced the Water Plant to US Water Works. The contract amount was not factored into the
original budget. Additionally, the City
had incurred some up front costs from October-December that were not covered under
the contract. As such, this division is
anticipated to have a ($49,500) unfavorable variance. In future years, the City will recognize a
savings in this Division.
(U) Water Distribution: The City anticipates a $96,000
favorable variance
in this Division due mainly to vacancies for
FY 2007, lower vehicle usage and fuel costs.
(V)
Sewer Operations: The City anticipates a $41,000
favorable variance
in this Division due mainly to
lower-than-anticipated fees from
(W) Non-Departmental: The Non-Departmental Division anticipates a ($55,000) unfavorable variance due mainly to unexpected costs associated with Hurricane Wilma for repairs to Lift Station 18.
Firehouse Station
34 Construction Fund Financial Summary (Fund #304)
Due to circumstances beyond the control of the City,
mainly construction delays caused primarily by Hurricane Wilma in FY 2006 and
the relocation of the project site, additional design and construction plans
are needed and higher than budgeted costs are expected to complete the project
in a timely manner. As discussed during
the November 15, 2006 Workshop, the City will need to obtain additional funding
sources of $3,150,000 in order to complete the construction of Firehouse
Station 34.
In order to accomplish this, the City
Administration, in collaboration with the City Attorney, Finance Director and
Financial Advisor are recommending that the Commission authorize them to pursue
funding options (but not limited to) the following sources (e.g., debt proceeds,
internal loans and or transfers, interest income, use of fund balance etc.)
that best meets the City’s fiscal needs and is most financially prudent in the
opinion of the City Administration, in collaboration with the City Attorney,
Finance Director and Financial Advisor.
Scholarship
Trust Fund (Fund #182)
Financial
Summary
The Scholarship Trust Fund was established in FY 2002
in order to provide scholarships for the
As of September 30, 2006, the Scholarship Trust Fund
had total cash and investments of $471,043.
The City Administration recommends dissolving the Trust and transferring
these funds to the General Fund where they will be utilized towards potential future
debt service costs associated with the former School Facility.
Please note that any previously approved
Scholarships that have not been completely disbursed (approximately $10,000)
will continue to be paid for from these funds.
In addition, the annual recycling fees of
approximately $75,000 that previously went into the Scholarship Trust Fund will
now be deposited directly into the General Fund with an effective date of
October 1, 2006.
North
Lauderdale Academy High School Agency Fund (Fund #605)
Financial
Summary
The North Lauderdale High School Agency Fund was established
in order to account for fundraising funds for school activities. As of September 30, 2006, this fund had total
cash and investments of $2,291. The City
Administration recommends transferring these funds to the General Fund where
they will be utilized towards potential future debt service costs associated
with the former School Facility.
Other Funds Financial Summary
We have also reviewed and analyzed the current
activities for the City’s other smaller funds.
At this time, they are all currently performing at or exceeding the budget
(favorably) and require no further action.
We will continue to monitor the expenditures of
these funds along with the City’s other operating funds and we will come back
to the Commissioner with any future changes.
Recommendation
The Administration recommends Commission consideration
and approval of the attached ordinance amending ordinance no. 06-09-1176 by
which the City Commission did adopt the budget of the City of North Lauderdale
for the 2006/2007 fiscal year, to provide for the recognition of the receipt of
increased revenues in the total amount of $3,963,334; designating the sources
of the increased revenues; designating the authorized expenditure for the
increased revenues as provided herein.
ORDINANCE NO.
______________
AN ORDINANCE OF THE CITY COMMISSION OF
THE CITY OF
WHEREAS,
the City Commission for the City of North Lauderdale adopted the 2006/2007
Fiscal Year Budget for the City of North Lauderdale through the adoption of
Ordinance 06-09-1176 on September 21, 2006; and,
WHEREAS,
the City Commission desires to amend Ordinance 06-09-1176
to reflect the receipt of additional revenues for the 2006/2007 Fiscal Year
Budget; and,
WHEREAS,
the City Commission desires to amend Ordinance 06-09-1176
to reflect the designation of the expenditure of the additional revenues for
the 2006/2007 Fiscal Year Budget; and,
WHEREAS,
the City Commission finds it to be in the best interest of the residents and
citizens of the City of
NOW, THEREFORE, BE
IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF
Section
1: That
the foregoing “Whereas” clauses are adopted as if fully set forth herein.
Section
2: That
Ordinance, 06-09-1176 as amended, which Ordinance did adopt the General
Fund and Operating Budget of the City of North Lauderdale for the 2006/2007
fiscal year budget, and the budget adopted thereby be and the same is hereby
amended to cause and reflect the increase of a net total of $3,963,334 of
revenues and appropriations to said Operating Budget as set forth as follows.
Section
3: That
the City Administration, in collaboration with the City Attorney, Finance
Director and Financial Advisor reserve the right and option to pursue funding
options (but not limited to) the following sources (e.g., debt proceeds,
internal loans and or transfers, interest income, use of fund balance from any
fund etc.) that best meets the City’s fiscal needs and is most financially
prudent in the opinion of the City Administration, in collaboration with the
City Attorney, Finance Director and Financial Advisor.
Section 4: That all
Ordinances or parts of Ordinances, Resolutions or parts of Resolutions in
conflict herewith be and the same are hereby repealed to the extent of such
conflict.
Section
5: Should
any section or any provision of this Ordinance or portion hereof, any
paragraph, sentence, or work be declared by a court of competent jurisdiction
to be invalid, such decision shall not affect the remainder of this Ordinance.
Section
6: That
this Ordinance shall take effect immediately upon adoption.
PASSED
on first reading by the City Commission of the City of
PASSED
and ADOPTED on second reading by the City Commission of the City of
APPROVED AS
TO FORM:
CITY
ATTORNEY SAMUEL GOREN
MAYOR
JACK BRADY
VICE
MAYOR RICH MOYLE
ATTEST:
DEPUTY CITY CLERK