Summary
To: Gay Lancaster
From: Tina Porter, Finance Director
Date: 4/30/2024
______________________________________________________________________
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, nor have we received updates to the Town’s insurance rates, 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.
End
Body
Previous Commission Action: The Town Commissioner’s budget priorities were submitted at the March 12, 2024 meeting.
Background/Problem Discussion: Preliminary values are anticipated to be received from the Property Appraiser's office on June 1, 2024. Currently, Staff has estimated a modest 6% increase in the Ad Valorem tax roll, which is the largest source of revenue for the Town. This estimate translates to an increase of approximately $490,000. The Water Enterprise Fund revenues will increase through a rate increase to cover the 5% increase in Pinellas County wholesale rate. 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 employees’ anniversary dates and does not include cost-of-living increases.
Staff have compiled a comprehensive list of all capital assets and developed 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 must be reduced 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