Madeira Beach fund balance projected to decline

Madeira Beach fund balance projected to decline

By WAYNE AYERS  |  Article published on Wednesday, April 6, 2016  |  Beach Beacon / Tampaby Newspapers

MADEIRA BEACH – Managing the city of Madeira Beach’s reserve fund for general operating expenses over the coming years has become a major concern. Projections show this “contingency fund” declining significantly over the next five years.

Fund balance policy was a main topic of discussion at the March 29 commission workshop.

Finance Director Vince Tenaglia said a five-year projection shows the city’s unassigned fund balance decreasing from 80 percent of the budget in 2016 to 20 percent in 2021. That is getting close to the 17 percent the city has set as a minimum level. Tenaglia led an effort last year to establish formal financial policies, which included a fund balance policy that requires keeping two months of operating expenses, which is 17 percent, available for unexpected expenses. There is also an additional amount equal to one-third of the operating budget set aside in an emergency reserve fund, for floods, hurricanes and other disasters. “We are getting down toward the minimum fund balance required (by 2021),” Tenaglia said.

The major reason for an anticipated increase in expenses is “the breadth and quality of services the city offers,” said David Hart of Public Financial Management, Inc., the city’s financial adviser. “You deliver a high level of services,” Hart said. There has been a growth in various expenses related to all the new services the city is providing, said Tenaglia. These include additional fulltime employees as well as added contracted services for planning and zoning activity related to new development in the city.  Also, expenses from the Sheriff’s Office have increased to pay for two more police officers for code enforcement.

Responding to a question from Commissioner Terry Lister, Tenaglia said his estimates do not include the potential increase in tax revenues from two major developments planned for the entrance area of the city along the causeway. Tenaglia said income projections from those projects would be considered “if and when they move forward.” Also, Tenaglia’s budget assumptions “do not plan on a millage rate increase or parking rate increase.”

Despite the projection for a significantly reduced fund balance for operating reserves, there is “a lot of positive financial activity” in the city, Tenaglia said. In 2015, operating revenues exceeded expenses by over $1 million. All general fund departments were under budget by 3 percent, and revenues from parking meters were up significantly. There were also some one-time revenue boosts during the year. Parking revenue continues to grow, despite recent rate increases, to the point where it is the city’s second biggest revenue source (after property tax income), Tenaglia said. Income from parking fees increased from $660,000 in 2010 to $1.63 million in 2015.

Tenaglia admitted his revenue projections were “very conservative.” He said, if the major developments now planned actually occur “the revenue forecast would look much different.” The financial projections underscore the need for budget policies and planning, Tenaglia said. Financial adviser David Hart said, “The new policies you have established are working and we’re not advocating that you consider any changes to them at this time.”

Stormwater upgrade delayed

Bids to do the Boca Ciega phase of the stormwater drainage control project “all came in high” and were rejected, said Al Carrier of Deuel and Associates, the contractor that is doing the job. The reason for the high bids, he said, were “the cost of materials is up, the cost of doing business is up, and the contractors are busy” and not eager for new work. Carrier said he talked to a couple of the contractors for advice on how to reduce the cost of the project, and is planning to incorporate those ideas and rebid it. The city will advertise this week for bids from a new set of contractors, he said. With new bids, Carrier said the job will “hopefully come in under budget, but it is going to be delayed.”

“It is going to begin this year if the bids come in right,” he said, “but there is going to be a much later start on the project.” This phase of the ongoing stormwater control project will take about a year to complete, Carrier said.

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