City's FY2018 fire and general fund budget outlook, not too rosy

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Wed, 07/12/2017 - 9:42am

City's FY2018 fire and general fund budget outlook, not too rosy

July 12, 2017 - 09:42

Interim Brooksville City Manager Lyndon Bonner was the bearer of difficult news relating to a possible $700,000 shortfall for the city’s FY 2018 general fund. This came shortly after city council members heard a presentation about the need to increase the city’s fire assessment rates and several scenarios in which to do so.

The fire assessment fee is a "non-ad valorem special assessment." There are two tiers. Tier 1 is assessed based on value of improved properties and tier 2 is assessed a flat rate ( for vacant parcels). The fire assessment fees have been increasing steadily since they were implemented in 2012. FY 2016 fire assessment for tier 1 properties was $.80 per $1000 of improvement value and $100 per parcel for tier 2 properties. FY 2017 approved fire assessments for tier 1 is $.85 per $1000 of improved value and $125 per parcel for Tier 2.

The tier system is based on the "readiness to serve" methodology in which there is always a potential to provide service and the department needs to be funded in order to provide that service. Even a vacant lot can catch fire, so the idea is that the owner of the vacant lot needs to contribute to funding the fire department.

In FY 2017, the revenue earned from the fire assessment was $714,302. An additional $903,581 was transferred in from the city’s general fund. Last year, Fire Chief David Freda explained that they are trying to move the fire department funding source away from the general fund.

If they keep everything the same in terms of the assessment and the general fund transfer, for FY 2018, Lyndon Bonner, Interim City Manager explained that there will be about an $85,000 shortfall for the fire department.

In order to eliminate the shortfall, several scenarios were proposed to council, two of which added various expenditures.

In Scenario 1:

Tier 1 would increase to $.97 per $1000 of improved value and Tier 2 would increase to $135 flat rate per parcel. The total fire assessment revenue is estimated at almost $804,000 and the General Fund transfer would stay at $903,581. The reserves in this option would be around $4500.

At the May 31st workshop, council mentioned that they were not interested in raising the general fund transfer in.
Mayor Battista questioned why Fire/Rescue has their own reserve if they are a general fund entity. Bonner explained that the reserves were set there in previous years, not for overages but for inside the department.

In Scenario 2:

Tier 1 would increase to $1.345 per $1000 of improved property. Tier 2 would remain at $125 flat rate per parcel. The general fund transfer in would stay at $903,581.

The assessments would garner a total of $884,737. This options leaves a reserve level of $382. It increases capital outlay expenses by $20,000 bringing the expenditure to $45,300. The department is looking at replacing firehouse equipment over the next 5 years and the additional $20,000 will go towards the 5 year capital outlay plan. Scenario 2 also increases personal services expenditures by $65,000 to provide for an additional firefighter/EMT so that the department can run 3 shifts of 6. The total budget increase for FY 2018 under scenario 2 would be $85,000.

In Scenario 3:

Tier 1 would increase to $1.49 per $1000 of improved property
Tier 2 would increase to $160.00 flat rate per parcel
The general fund transfer in would stay at $903,581.
Special fire assessment total would be $1,057,972.

Scenario 3 increases expenditures for personal services over Scenario 2 by $172,580 to bring it up to $1,522,349. The increase will be used to raise salaries in order to reduce personnel turnover. Costs associated with turnover include personal protective equipment, training costs, uniform costs and hiring process costs. The department has had 14 voluntary resignations since January 2013.

Council Member Natalie Kahler stated that the point of raising salaries was to lessen turnover so they should see some expense going down somewhere like in operating costs.

In response, it was stated that operating costs will not go down because they would use the savings to catch up on bunker gear requirements. The standard is for each firefighter to have two sets of bunker gear, but they only have one set apiece.

When fully staffed the department has two units in service everyday, but currently there are two captain vacancies posted since December, prior to that they were fully staffed except for one position.

Bonner cited reasons for high turnover in public safety. “It’s a highly mobile workforce and you get a lot of folks that get first and second careers,” he said. He agreed with council member Bernardini that it’s a blend of various reasons, not just salaries.

“We invest in folks and [when they leave] they take that with them… It’s a problem everywhere I’ve been,” said Bonner.

It was mentioned that turnover with the police department has been lower than other departments. Council Member Kahler stated that the Brooksville Police Department has a deal with the Hernando County Sheriff that “they don’t hire each other’s people.”

“Thirty five percent of our voluntary resignations went to an agency in the same county,” she said.

Mr. Bonner said he’d have to follow up on that hiring policy.

Council Member Kemerer was concerned with not increasing tier 2 in scenario 2, since the majority of cost increase would be to personal services and majority of revenue comes from tier 2. Not to see a change in tier 2 was worrisome to him.

Natalie Kahler mentioned that tier 2 properties took a “pretty big hit last year.” The FY 2017 tier 2 assessment rate was increased $25 from the previous fiscal year.

Mayor Battista mentioned that any empty parcel valued under $1000 is exempted from the assessment. He warned, “If you figured in things valued less than $1000, that doesn’t comport with our ordinance.”

Additionally, Mayor Battista said he’d like to see expenditure increases “squeezed out of the general fund” as much as possible.

“We do have a shortfall in the general fund and it’s going to be significant,” said Bonner. He stated that he’ll be able to say what that shortfall is exactly at the July 6th workshop.
“I think we’re looking in excess of $700,000.00,” he said.

“So we’re going to increase the ad valorem for the general fund. There’s no way we’re coming up with $700,000 without increasing the ad valorem. We didn’t make that much money in increase in valuations this year,” said Battista.

“We going to have to raise the millage rate and now we’re also looking at raising the fire assessment,” he stated.

Battista said he’d rather just raise the millage and leave the fire assessment the same because he’ll have to “take the heat” for the general fund millage rate increase anyway.

Kahler stated that she’d like to see the increases on the tier side as much as possible since it is less nebulous that way. With an increase to the general fund contribution, then taxpayers just see an increase in ad valorem for “city services” and don’t know what it is specifically for. She does believe the general fund will have to pick up some.

The fire assessment scenarios will be further adjusted and budget discussions continue on July 6, 2017.