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HomeMy WebLinkAboutsubmittal!Iitg of 4*tiami LARRY M. SPRING, JR. Chief of Strategic Planning, Budgeting and Performance September 27, 2004 The Honorable Mayor, Members of the City Commission and Chief Administrator 3500 Pan American Drive Miami, FL 33133 JOE ARRIOLA City Manager RE: Budget 2005 Estimating Conference Recommendation In compliance with the City's financial integrity ordinance, the City convened a Budget Estimating Conference on September 15, 2004 to review the assumptions used to develop the City's 2005 fiscal year budget. Per the ordinance, the committee is required to be composed of one principal from the Finance Department, one principal from the Budget Office and at least two outside principals with public finance experience. The members of this year's conference included the following: Richard Berkowitz, J.D., CPA - Berkowitz, Dick, Pollack & Brant, Certified Public Accountants & Consultants, LLP Maggie Manrara - Miami -Dade Community College Scott Simpson - Finance Director, City of Miami Larry Spring - Chief of Strategic Planning, Budgeting, and Performance, City of Miami Below please find a summary of the comments and recommendations made by the Committee. Committee Comments and Recommendations ➢ The Committee is seriously concerned with the amount of reserves being used to balance the budget. Based on the rate at which reserves are being utili7Pd, the City —ID (n could deplete its reserves in a few years and potentially violate the Financial M C C Integrity Ordinance Section 5b (General Fund Undesignated Reserve) and 5c 00 00 (General Fund Designated Reserve). The Committee strongly recommends that r revenue enhancing and cost savings initiatives be pursued immediately. The Committee is concerned with pension cost. The pension obligation has increased from the previous fiscal year and is a significant portion of the 2005 budget. The City needs to focus significant attention in this area including but not limited to how it will continue to fund this liability and the overall pension plan structures. It is also recommended that for the purpose of the budget presentation that the entire pension contribution be considered recurring (i.e., no distinction STRATEGIC PLANNING, BUDGETING AND PERFORMANCE 444 S.W. 2nd Avenue, 5th Floor Miami, FL 33130 (305) 416-1011 Fax: (305) 416-2150 Mailing Address: P.O. Box 330708 Miami, FL 33233-0708 0 -bo983a,-44viv 2t The Honorable Mayor, City Commissioners and Chief Administrator Page 2 should be made between the normal cost portion and the increase associated with market fluctuations.) Consequently, the recommended approach could violate the structurally balanced budget prevision of the Financial Integrity Ordinance. > The Committee is concerned that recurring expenses are growing at a rate faster than recurring revenues. The Committee strongly recommends that the City immediately pursue initiatives that will stabilize expense growth particularly given the concern that the significant increases currently being experienced in ad valorem taxes will not be sustainable at this rate long term It should be noted that this is a repeat comment from last years estimating conference. > The Committee recognizes that additional positions are needed to fulfill some of the City's strategic priorities particularly the ERP project and parks initiative, however recommends that temporary staffing solutions and re -programming of existing vacancies be used whenever possible. The Committee recommends a study be performed to determine whether existing personnel can be trained to fulfill the City's strategic priorities. > The City needs to focus more attention on boosting revenues, and reducing expenses generated from the City's relationship with the County, particularly the bed tax income, property appraiser's administrative fees, local government payment in lieu of taxes, and tax and fee exemptions provided to public and subsidized housing. Other non -taxed entities that utilize City services must bear their fair must bear their fair burden and a proactive effort must be initiated by the City to accomplish this objective. > The Committee recommends that the City develop the appropriate models necessary to forecast the additional personnel and infrastructure needs associated with the population growth and increased residential density. The 'resulting data should be utilized to develop a five year forecast. The Committee appreciates the opportunity to participate in this very important process. We hope our comments and recommendations help the City of Miami achieve and maintain its financial and strategic goals. We want to commend staff and particularly the Director for their sound budget assumptions and the steps taken to take a strategic approach in their budget development process.