FY18 Pre-Budget WorkshopBoard of County Commissioners

March 7, 2017

1

BOND RATING AS AN INDICATOR OF THE COUNTY’S

FINANCIAL HEALTH

2

RATINGS COMPARISON BY CREDIT

2005 2010 2016 2005 2010 2016 2005 2010 2016

General Government

GO AA+ AA+ AAA Aa1 Aaa Aaa AA+ AAA AAA

COPS AA AA Aa2 Aa1 AA AA+

Arena A+ A+ AA- A1 Aa3 Aa3 AA- AA AA+

Courthouse AA+ AA+ Aa2 Aa2 AA+ AA+

TDT/Convention Center A+ A+ A1 Aa3 AA- AA+

Airport

ASR A+ A+ A+ Aa3 A1 A1 A+ A+ A

PFC A A A A1 A2 A2 A A A

Port

Port Facilities A- A- A- A2 A2 A1 A A A

Subordinated Port Facilities AA- AA- AA- A2 AA AA- AA

W&S AA- AA AA+ Aa3 Aa2 Aa1 AA AA+ AA+

Upgrade DowngradeNew Rating

Credit Risk Indication Ratings Scale

Minimal AAA Aaa AAA

Very low AA+ AA AA- Aa1 Aa2 Aa3 AA+ AA AA-

Low A+ A A- A1 A2 A3 A+ A A-

Moderate BBB+ BBB BBB- Baa1 Baa2 Baa3 BBB+ BBB BBB-

Substantial* BB+ BB BB- Ba1 Ba2 Ba3 BB+ BB BB-

High* B+ B B- B1 B2 B3 B+ B B-

Very High* CCC+ CCC CCC- Caa1 Caa2 Caa3 CCC+ CCC CCC-

Near Default* CC C Ca CC C

In Default* D C DDD DD D

*"Junk" Level Ratings

S&P Moodys Fitch

Change from previous period:

Credit

Note: This chart shows a total of 17 upgrades and three downgrades by the top three credit rating agencies.

3

GENERAL OBLIGATION BONDS – WHAT IS

MEASURED?

Economy30%

Financial Characteristics

30%

Management & Institutional Framework

20%

Debt and Pensions20%

Moody's factors and weights

Economy30%

Financial Characteristics

30%

Management & Institutional Framework

30%

Debt and Pensions10%

S&P's factors and weights

4

GENERAL OBLIGATION BONDS - WHAT IS

MEASURED? (cont’d)• Criteria are consistent among agencies:

Economy

Size, diversity, employment, strength of the tax base

Entity’s financial characteristics

Flexibility and performance of the budget, cash reserves,

liquidity

Management and institutional framework

Managerial decisions and policies, vision, legal and practical

environment in which the local government operates

Debt and pensions

Financial leverage, debt/pension obligations relative to

resources and operations5

HIGH CREDIT RATING = LOWER BORROWING COSTS$400 Million Bond Issue – 20 year Term

100,000

115,000

130,000

145,000

160,000

175,000

190,000

AAA AA A BBB

(In Thousands of $)

RatingTotal Interest Paid

(as of Feb 2017)

Incremental Interest

Paid vs AAA

AAA 138,452,802 -$

AA 150,244,179 $11,791,377

A 169,456,987 $31,004,185

BBB 188,052,051 $49,599,249

6

RATINGS COMPARISON BY COUNTY

Broward County has had an outstanding credit rating history. The table below illustrates the County’s GO rating in comparison to five large Florida counties:

*Broward County’s outstanding GO debt will be retired in FY2021 and FY2025.

S&P Moody's Fitch

Broward* AAA Aaa AAA

Hillsborough AAA Aaa AAA

Miami-Dade AA Aa2 AA

Orange No outstanding GO debt

Palm Beach AAA Aaa AAA

Sarasota No outstanding GO debt

7

BUDGET BACKGROUND INFORMATION

8

DISTRIBUTION OF FY2017 BUDGET BY FUND TYPE

Enterprise Funds $1.9 Billion 41%

Other Funds $1.6 Billion 34%

General Fund $1.2 Billion 25%

Totals $4.7 Billion (Gross) 100%

9

FY17 ENTERPRISE FUND BUDGETS

Aviation $1,117.8 Million

Port Everglades $393.3 Million

Water and Wastewater $358.5 Million

Solid Waste $52.4 Million

TOTAL $1.922 Billion

10

FY17 BUDGETS FOR OTHER FUNDSSheriff Contract Funds (Fire Rescue, Law Enforcement, Dispatch)

$364.0 Million

Capital Outlay Funds (e.g. Roads, Unincorporated, General Capital)

$297.6 Million

Internal Service Funds(e.g. Benefits, Fleet, Worker’s Comp)

$224.0 Million

Transit Operations & Capital $167.9 Million

County Transportation Trust Funds $131.0 Million

Debt Service Funds $96.7 Million

Miscellaneous Funds (e.g. Tourist Tax Funds, Grants, Homeless)

$304.8 Million

TOTAL $1.586 Billion11

GENERAL FUND

12

FY17 GENERAL FUND RECURRING REVENUES

Ad Valorem Taxes80%

Sales Tax and State Revenue Sharing

9%

Fees, Fines and Misc. Revenues

11%

13

FY17 GENERAL FUND BUDGET ($1.196 B)

Property Appraiser & SOE

$38.23%

County Agencies 398.8**

33%

BSO$460.8

38%

Dispatch$45.9****

4%

Mandated Payments

$55.35%

Reserves$142.6*

12%

Debt Payments$13.9***

1%

Judicial, Planning Council, Charter Rev,IG & Leg Delegation, Pay Telephone Trust

$8.6 1%

Transfer to Capital$31.4

3%

14

* Includes $139.1 in non-recurring reserves and $3.5M in recurring reserves

** Includes $2.5M reserve for future costs, such as the Wave operations, opening BARC facility, Sr. homestead

exemption and FPL

*** Includes $4.1M for public safety radio replacement system debt service

****Includes $2.96M for future costs

FY17 GENERAL FUND AGENCY BUDGETS*($ in Millions)

Property Appraiser and SOE

$25.33%

County Agencies $398.9

45%

BSO$460.8

51%

IG, Planning Council, Legislative

Delegation, $4.01%

15*Excludes State and local mandated expenses, reserves and other budgets not associated

with County agencies.

SUMMARY OF KEY GENERAL FUND BUDGET CHANGES ($ in Millions)

FY07Adopted Budget

FY17Adopted Budget

% CHANGE

BSO$425.8* $460.8 8.2%

CountyCommission Agencies

$441.8** $398.9 -9.8%

Property Appraiser Operations

$17.8 $18.8 5.6%

SOE Operations $7.8 $6.5 -16.7%***

16

*

**

***

Excludes Communications Technology Program ($5.5M) since it was transferred to the County in FY13 and

Dispatch ($19.5M) since it was transferred to the County in FY14

Includes Communications Technology Program ($5.5M) since it was transferred to the County in FY13

Includes reallocations to election budgets

PROPERTY TAXES

17

KEY TAX ROLL INFORMATIONFY16

CERTIFIED TAX ROLL

(in billions)

FY17CERTIFIED TAX ROLL

(in billions)

% CHANGE in VALUEFY16 to

FY17

% OF TAX ROLL

% of PARCELS

Homestead

Residential*$50.2 $53.2 6% 33% 51%

Non-Homestead

Residential**$56.1 $61.9 10% 38% 41%

All Other

Properties***$44.4 $47.9 8% 29% 8%

Total $150.7 $163.0 8% 100% 100%

18

*Homestead Property – Assessed value increase for individual properties cannot exceed 3% or the % change in CPI index for

all urban consumers for the preceding calendar year, whichever is less

**Non Homestead Property – Assessed value increase for individual properties cannot exceed 10% of the assessed value of

the property for the prior year

***Includes non-residential and all other types of property

DISTRIBUTION OF FY17PROPERTY TAXES

General Fund $862.1M

General Capital Outlay $25.6M

Voted Debt Service• Libraries – to retire in FY21

($12.4M)• Parks and Land

Preservation – to retire in FY25 ($23.7 M)

$36.1M

Total $923.8M

19

MILLAGE RATE HISTORY FY07 – FY17

0

1

2

3

4

5

6

7

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

5.6434.8889 4.8889 4.8889 5.1021 5.186 5.2576 5.44 5.4584 5.4741 5.4474

0.4228

0.3979 0.4256 0.50.4509 0.367 0.2954 0.283 0.2646 0.2489 0.2216

Mill

age

Rat

e

Fiscal Year

Non-Voted Taxes Voted Debt Taxes

6.066

5.286 5.314 5.38895.553 5.669

-7%

From FY 2007

5.5535.553 5.723

*Increase related to municipal dispatch 20

5.723 5.723

PROPERTY TAXES HISTORY FY07 – FY17

($ In Millions)

0

100

200

300

400

500

600

700

800

900

1000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

891.7 862.2819.0

727.5663.1 655.6 668.2

718.6769.6

824.8887.7

66.870.2

71.3

74.4

58.6 46.4 37.5

37.4

37.3

37.5

36.1

Do

llars

(in

Mill

ion

s)

Fiscal Year

Non-Voted Taxes Voted Debt Taxes

$702.0 $705.7$721.7

$801.9

$890.3$932.4

$958.5-4%

From FY 2007

$756.0

$862.3$923.8

21

$806.9

FY18 PROPERTY TAX-SUPPORTED FUNDS OUTLOOK

22

CONTINUATION OF CURRENT APPROACH

• County Agencies and Constitutional Officers (excluding Property Appraiser) equally share in net additional funding available for FY18

– Additional funding available is based on:

• continuation of same general fund millage rate plus net growth in other revenues

• less increases in mandated and other expenses not associated with County agencies, such as tax increment payments, mandated health, DJJ payments and judicial expenses

23

• Projected 4.9% net increase in funding available to address the needs of all general fund agencies after increases in mandated and other costs are funded

Net Revenue Growth $51M

Deduct Mandated and Non-Departmental Cost Increases

<$9M>

Net New Funding Available $42M

Percent Increase Available for County

Agency and Constitutional Officer

Budgets

4.9%

24

CONTINUATION OF CURRENT APPROACH (cont’d)

FY17 GENERAL FUND AGENCY BUDGETS*($ in Millions)

Property Appraiser and SOE

$25.33%

County Agencies $398.9

45%

BSO$460.8

51%

IG, Planning Council, Legislative

Delegation, $4.01%

25*Excludes State and local mandated expenses, reserves and other budgets not associated

with County agencies.

FY18 GENERAL FUND REVENUE ASSUMPTIONS

• Overall projection of $51m net increase in General Fund Revenues (excluding fund balance), prior to any state or federal legislative impacts

– Assumes no change in general fund millage rate

– Ad valorem tax roll growth is projected at 6% above the FY17 budgeted roll

• Growth in homestead properties is limited by the 2.1% “Save our Homes” cap for FY18

• Implementation of the additional $25,000 low income senior homestead exemption

– Recurring revenues other than property taxes (such as sales tax and fees/charges) are projected to increase less than 2%

26

FY18 GENERAL FUND APPROPRIATIONS

27

KEY FY18 BUDGET ISSUES –COUNTY AGENCIES

• Personnel Costs

• Compensation

• All union contracts expire on September 30, 2017

• Regular Florida Retirement System (FRS) rate is expected to change from 7.52% to 7.91%, a 5.2% increase

28

KEY FY18 BUDGET ISSUES -COUNTY AGENCIES (cont’d)

• Increase in Tax Increment Payments ($3.4m)

• Reduction in Transit Ridership and Revenues ($3.4m)

• Reduction in Jail Pay Telephone Commissions and Court Facility Traffic Ticket Surcharges ($1.8m)

• FPL Rate Increases ($1.7m)

• Increase in Paratransit Ridership ($1.6m)

• Additional Senior Homestead Exemption ($1.1m)

• Phase-in of WAVE Expenses and opening of new BARC Facility (<$1m)

29

KEY FY18 BUDGET ISSUES –CONSTITUTIONAL OFFICERS

• Personnel Costs

– Compensation

– Florida Retirement System (FRS) Rates

• Regular rate expected to increase 5.2%, from 7.52% to 7.91%

• Special risk rate expected to increase 5%, from 21.99% to 23.1%

• Courthouse Security

– Shade meeting will be scheduled for March 17th

– $.6m is included in FY17 BSO budget for courthouse security and $2.3m is remaining to be appropriated pending approval of MOU

• Consolidated Dispatch

– Consultant proposed opportunities for net reduction in total costs

– Meetings with BSO are ongoing

30

31

Department of Administration

16%

Regional Law Enforcement

22%

Court Deputies/Bailiffs

2%

Department of Detention

49%

Department of Community Programs

5%

Regional Fire Rescue6%

Broward Sheriff's Office FY17 General Fund Budget - $460.8m

ADDITIONAL INFORMATION ON KEY BUDGET ISSUES

32

PAY TELEPHONE TRUST FUND• Currently budget $1.6m in pay telephone commission

revenue

• FCC issued an order to lower the caps on inmates’ telephone rates resulting in a 50% decline in revenue, which translates to an annual loss of $.8m

• Current recipients of the funding are Boys and Girls Club ($2.03m), and BSO ($.28m) for Fire Setter Program, Truancy Program and Victim/Witness Relief Programs

• A decision on whether to absorb some or all of these costs is needed for FY18

• Current general fund subsidy of these programs is $.7m, which would increase to $1.5m if entire revenue loss is absorbed by the general fund

33

COURT FACILITIES FEES

34

• Currently budget $4.9m in revenue generated by $30

surcharge on Non-Criminal (Moving) Traffic Violations

• Funds are used for maintenance and operation of court

facilities and debt service for Courthouse Bonds

• Since FY13, revenue has declined by approximately

$1m each year, directly linked to the decline in traffic

tickets, including those issued by red light cameras

• Davie, Tamarac and Sunrise still use red light

cameras

• Projected revenue loss of $1m must be absorbed by

general fund

TRANSIT BUDGET ISSUES• Fixed Route ridership has declined 14% since

FY14 as a result of improved economic conditions, low gas prices and impact of TNCs, resulting in lower fare collections

• Initial fixed route ridership projections include an additional 8% decline in FY17 and stabilizing in FY18

• Paratransit ridership has increased 12% since FY14 and is expected to increase 8% in FY17 and 8% in FY18

• Transit staff will continue to study data in order to refine forecasts

35

BACKGROUND ON PRIMARY HEALTH CARE CONTRACTS WITH HOSPITAL DISTRICTS

• Contracts

– North: $8.5m

– South: $5.1m

• FY17 Millage Rates

– North: 1.3462

– South: 0.1615

• FY17 Tax Capacity (based on cap of 2.5 mills)

– North: $130m

– South: $118m36

FY17 – FY21 GENERAL CAPITAL PROGRAM

37

FY17-21 GENERAL CAPITAL PROGRAM PROPERTY TAX ASSUMPTIONS

FY17 $25.6M

FY18 $27.5M

FY19 $30.1M

FY20 $32.8M

FY21 $35.0M

38

GENERAL CAPITAL PROGRAM(PROPERTY TAX-SUPPORTED PROJECTS)• Program primarily funds the maintenance of

facilities, with very few new construction projects

• Must maintain over $2 Billion investment in detention, parks, libraries, judicial and general government facilities

• A Federal Construction Council report suggests that annual facility maintenance and repair funding should be 2% to 4% of the replacement value of the assets

39

GENERAL CAPITAL PROGRAM Cont’d• Average appropriation for facility maintenance and

repairs is approximately $27 over the current five year program, and should be in the range of $40-80M

• Continued effort needs to be made to increase funding levels over a period of years to ensure proper maintenance and replacement of the County’s facilities and infrastructure investments

• Recommend shifting debt service millage savings, generated from tax roll growth, to General Capital Program to assist with stepping up tax allocation

• This approach has been used every year since FY14

40

WRAP UP

QUESTIONS/POLICY DIRECTION

41