Summary
To: Finance Advisory Board
From: Tina Porter, Finance Director
Date: 5/14/2024
______________________________________________________________________
Subject:
Title
Preliminary 2024-2025 Budget Discussion
Summary:
Preliminary budgets have been prepared for all funds, General, Special Revenue, Debt Service, Capital Outlay, and Enterprise Funds. These budgets are subject to change as taxable property values have not been received from the Property Appraiser and Staff have not received updates to the Town’s insurance policy rates or the City of Largo Fire Service or Pinellas County Sheriff’s Office contracts. The goal is to provide ample time for the Commission to assess the overall budget and provide direction for any budget changes.
Body
Previous Commission Action: : The Town Commissioner’s budget priorities were submitted at the last meeting.
Background/Problem Discussion: Preliminary values are anticipated to be received from the Property Appraiser's office on June 1, 2024. At this time, Staff has estimated a modest increase in the tax roll of 6% to project the Ad Valorem tax revenue, the largest source of revenue for the Town. This estimate translates to an increase of approximately $490,000. The Water Fund revenues are projected to increase as the increase in Pinellas County water rates are scheduled to increase by 5%. This rate increase will be passed to residents as of 10-01-24. No other significant increases in revenue were projected in the other funds.
Overall, the 2024-2025 budget includes salary modifiers of 4% for merit prorated to the employee’s anniversary date and no cost-of-living increase.
Staff have compiled a comprehensive list of all capital assets and a schedule for their replacement. To adequately fund the equipment replacement scheduled for FY2024-2025, approximately $1.4M is included as transfers out of the General Fund.
The Capital Improvement Plan has been updated to reflect the changes in planned, on-going and completion of projects. The budget reflects approximately $1M in capital improvements and another $1M in mandatory transfers to the Debt Services Fund.
Expenditure Challenges Based on preliminary projections of general fund revenue, the fund will fall short of covering all expenditures and transfers out by approximately $1.9M. The Water Fund’s projected revenue will not cover the anticipated expenditures by approximately $1.2M. Almost half of this deficit is due to the Town’s portion of loans payable to the State Revolving Fund Loan Programs associated with the Lead Service Line replacement project and the Reverse Osmosis Water Treatment Plant. The Solid Waste Fund’s revenues are expected to fall short by $230K as no rate increases are included in this budget at this time.
Financial Implications: If expenditures cannot be reduced to equal or be less than projected revenues, fund balance reserves will be reduced in order to cover the deficits in these funds. At this time, it appears that the affected funds have sufficient fund balance to cover the deficits, but this choice should be a short-term solution for this fiscal year only. Other sources of revenue or increases in rates (enterprise funds) will be required to ensure that future budgets are balanced, where revenues equal or are above expected expenditures.
Recommendation: NA - Discussion purposes only
Proposed Motion: NA - Discussion purposes only