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HomeMy WebLinkAboutItem #01 - Discussion Item°' Jude 12, 1978 uo lEGT: Mid Year Budget Review F:LE CITY OF MIAMI. FLORIDA INTER-OFFICt MEMORANDUM To: Joseph R. Crassie City Manager fnOM: Howard V. Cary► Director Management and Budget The Department of Management_. and Budget, has` �etei. the, Mear Budget Review for fiscal year 1977-78. This' reviewentails •(an)analysis of revenues and expen- ditures in an attempt to project the status of the current budget at year end as well as to determine the variances in the budget and the reasons for these vari- ances. The projections reveal that the City of Miami will receive $97,477,409 in revenues and expend $97,947,291 in operational costs for a net projected fund balance deficit of $469,882. A summary of these projections by major category is as follows: A. Revenues 1. Ad Valorem Taxes 2. Sources Other Than Ad Valorem 3. Fund Balance - FY '76-77 4. Salary Savings TOTAL Revenues B. Expenditures 1. Salaries & Wages Without Salary Reserve 2. Other Expenses 3. Salary Savings TOTAL Expenditures Projected Fund Balance Adopted Budget 1977-78 $36,872,992 58,497,614 1,000,000 1,500,000 $97,870,606 $53,789,942 44,080,664 -0- $97,870,606 for FY "77-78 Nbdified Budget $36,872,992 58,374,254 1,000,000 1,500,000 $97,747,246 $53,289,873 44,457,373 -0- $97,747,246 Projected Budget 1977-78 $38,281,830 57,744,910 -0- 1,450,669 $97,477,409 Projected Balance 1977-78 $1,408,838 (629,344) (1,000,000 (49,331) $ (269,837) $51,839,204 (1,450,669) 44,657,418 200,045 1,450,669 1,450,669 $97,947,291 $ 200,045 $ (469,882) $ (469,882) 0j,a!z,e11*--4- -2- Overall, it is projected that the City will receive $269,837 less th revenues than budgeted and will expend $200,045 more in operational costs than is budgeted, The net result is a projected fund balance deficit of $469,882, With regard to the projected revenues, the $97,447,409 represents a net decrease of $269,837 over the budgeted amount of $97,747,246. The major factors contributing to this net decrease are as follows. Firstly the $1,000,000 anticipated in carry- over fund balance will not be realized because the City auditors, Peat,Marwick, Mitchell & Company, have concluded that Metropolitan Dade County overstated the City's tax delinquencies in prior years and therefore, the anticipated fund balance will have to be used to offset this error. Furthermore, this error will cause a deficit inlast.fiscal year's budget in the amount of $95,736. Secondly, receipts from Metropolitan Dade County Court fines are expected to fall below the budgeted level by approximately $1,201,000. The reason for this projected reduction is that the Supreme Court overruled the increased fines imposed by Dade County. Another reduction in revenues is anticipated in State Revenue Sharing. The State Departlurnt of Revenue has reported that the City's receipts for this item will fall short of the anticipated level by $495,808. This reduction is mainly attri- butable to the reduction in cigarette sales tax. Other reductions are anticipated in Countercyclical Revenue Sharing and Cigarette Tax. These reductions are approximately $770,000 and $540,000 respectively. The anticipated reduction in Countercyclical Revenue Sharing is due to the fluctuation in the allocation formula and available revenues. The reduction in the Cigarette Tax is due to the reduction in cigarette sales. On the brighter side, it is anticipated that the City will receive approximately $2.8 million more in Utility Service Taxes. This increase is attributable to the rate increases granted the utility companies. With regard to expenditures, it is anticipated that the Salary and Wage accounts will produce a surplus of approximately $1,451,000. This is primarily attributable to temporary vacancies. It should be noted that this salary savings will be used to offset the $1.5 million revenues anticipated from salary savings. Non -payroll expenditures are projected to exceed the budgeted amount by approximately $200,000. The projected overruns are due mainly to increased services not forseen during the development of the FY '77-78 budget. An example of such overrun occurred in the Parks and Recreation Department where electricity and water charges exceeded budgeted amounts due to the opening of new parks. In summary it is projected that the City of Miami will experience a deficit in the amount of $469,882. This deficit is attributable to a projected $269,837 decrease in revenues and a $200,045 expenditure overrun. The City's first priority should be to identify alternatives to eliminating this deficit. One alternative would be to use part of the prior years' fund balances in the Street Lighting and Tourism Promotion FUnds. These balances are $953,934 and $9,496 respectively for a atotal of $963,430. If this decision is made, the remaining balances in these funds would be $493,548. We are in the final stages of finning up our first estimate of next year's budget, Our preliminary finding is that the City's expenditures will exceed its revenues by approximately $2.3 million. This budget gap will require departments to reduce their projected budgets. In addition to next year's budget problern4 there are a number of outstanding budget problems facing the City this fiscal year. Those problems are as follows: 1. FY '76-77 Budget Deficit 2. University of Chicago FY '77-78 Contract 3. 24 Summer Lifeguards 4. Fire Medical Exams 5. Blind Elderly Program 6. ACTION 7. Increased Benefits -Retirees 8. Additional Retirees Group Insurance $ 95,736 98,000 46;000 46,425 16,600 30,000 51,962 58,752 $444,475 It should be noted that any action the City takes to utilize available resources this fiscal year will affect the amount of resources available to solve next fiscal year's budget problem.