Members of the Board of County Commissioners:

I am pleased to present to you the Adopted Budget for Fiscal Year 2000- 2001, referred to as FY01, which will begin October 1, 2000, the second year of the Board’s two-year budget.

The adopted budget is $2.3 billion for FY01. More importantly, the operating budget, which pays for dayto- day services to our community, is $1.0 billion for FY01. Debt service for existing debt will be $0.1 billion. The capital budget, which reflects the first year of our five-year capital improvement program, is $0.2 billion for FY01.

The remainder of the budget is accounted for by reserves and the transfers that are necessary for accounting purposes, but do not reflect revenues or expenditures.

Compared with the Planned FY01 budget, the second year of the two-year budget you approved in September 1999, this updated budget is slightly larger - up $80.3 million.

The total budget is up approximately five percent from FY00. The most significant change is in the operating budget, which is up 8.2% from the Adopted FY00 Budget and also higher than we anticipated in the Planned FY01 Budget. It reflects, several large existing and new commitments:

First, our cost of bulk water purchases will rise, reflecting higher prices and volume.

Second, our use of transportation impact fees to reimburse a portion of the cost of privately constructed County road improvements will double. The increase reflects higher construction activity than previously anticipated and it means we will pay off our share of the cost of those road improvements earlier - freeing up our impact fees for other future projects.

Third, our commitment to maintaining existing buildings in accordance with Board policy will increasingly fall under our minor maintenance program in the operating budget, rather than as capital projects.

Fourth, and most significant, was the fact that the tax base is more than 2% higher than originally anticipated in the Planned FY01 Budget. The $10 million in revenue generated from this higher assessment was allocated to transportation and library expansion.

Reflecting our continued strong economy, this budget includes a property tax rate reduction for the sixth year in a row. You took advantage of a 9% increase in our property tax base by lowering the Countywide operating millage levy by an additional one-tenth mill in FY01. Over each of the past six years, the Board of County Commissioners adopted a reduction in the countywide millage rate. The total reduction, over this six-year period, is approximately one-half mill, reflecting a 6% reduction in the countywide tax rate. This is a permanent and meaningful tax savings for all county taxpayers by their Board of County Commissioners. Even with no further reduction in the millage rate, savings that have accumulated over the past six years will continue to build over the next decade - saving County taxpayers over $295 million. For the owner of a $100,000 house, this means total savings of over $622.

The Biennial Budget Cycle

This budget reflects the “off year” for the third biennial budget prepared for Hillsborough County - an innovative approach to budgeting that is increasingly being used by local governments throughout the United States.

The biennial budget process required that we conduct a full-blown budget process last year for two separate fiscal years - FY00 and FY01. The timing of the biennial process provides for a comprehensive budget process in the year following the seating of a Board of County Commissioners. This cycle allows a newly organized Board an early opportunity to understand and impact the budget while maintaining the efficiency of only conducting the time-consuming preparation process every other year. You have the opportunity to update your planned second year’s budget through an abbreviated process and set the millage rates each year.

Consistent with our discussions with your Blue Ribbon Committee on County Finances and our recent reports to you, we used this “off year” to continue modifying the budget process to better incorporate performance measurement concepts, and improve reporting and identification of key issues and statistics. A pilot project is currently in progress to improve your ability to set priorities by program and minimize the volume of material you will need to review.

Consistent with Blue Ribbon Committee recommendations and your direction, we now are tracking over 100 community indicators to monitor how Hillsborough County is doing in relation to Florida and the nation.

Earlier this year you requested that we provide graphical information on program priorities as reflected in the budget. You indicated that we should focus on the allocation percentages, not simply dollar levels. In response to that request, you will find five new pie charts in the Executive Summary of the budget document that graphically portray the allocation of funds between major programs. These charts start with a summary across all funds and all funding sources and then break that down into discrete areas of the budget where funding is largely unrestricted and where you have the most flexibility to shift program priorities.

Key Elements of the Budget

Tax Rate Reduction - As I indicated, the budget reduces the property tax rate in FY01 for the sixth consecutive year. Based on continued strong growth in our property tax base, the millage reduction can be achieved in addition to implementing a $15,000 senior homestead exemption, which the Board approved last November and which was not, therefore, reflected in the Planned FY01 Budget. This exemption provides added tax relief for senior homeowners who have family incomes no greater than $20,000, based on adjusted gross income. Actual registrations were below our initial estimates. According to the Hillsborough County Property Appraiser, approximately 5,200 homes were granted the exemption in its first year, resulting in a $78 million drop in taxable value. Total revenue reduction is about $700,000. The exemption is scheduled to phase up to $20,000 in FY02 and reach the statutory cap of $25,000 in FY03. Hillsborough County is one of the few jurisdictions in the State to provide this relief to low income taxpayers.

While all property taxpayers will benefit from reducing the countywide millage rate, there is no change in the millage rates for day-to-day services to unincorporated residents or for the library system. Continued population growth will drive demand for additional resources— particularly given the Board’s support two years ago for a staffing ratio for Sheriff’s deputies of 1.7 deputies per 1,000 population and reports of needs in the areas of fire protection, transportation, and parks and recreation. The revenue from tax base growth will also be needed in the Library Tax District Fund to operate new facilities.

One other tax-related issue requires disclosure: The budget continues to assume that the County does not assume title to Raymond James Stadium from the Tampa Sports Authority in order to grant the County’s immunity from taxation to the Stadium. If the Florida Supreme Court determines that facilities such as the Stadium are not tax exempt, the Tampa Sports Authority will deplete reserves to meet the $5 million annual property tax bill for both FY00 and FY01. The County would presumably then begin providing financial support in FY01 under the terms of an interlocal agreement between the Sports Authority, the City of Tampa, and Hillsborough County.

The FY00 budget reserved the $1.5 million in estimated FY00 tax revenue from the Stadium to carry forward to FY01. If those taxes are received, the FY00 and FY01 revenues from the Countywide levy - a total of $3 million - will be available in FY01 to meet the County’s backstop pledge to the Sports Authority. If the facility is found to be tax exempt, the County has not counted on the revenue for any other use, so the loss will not impact any program.

Recapping Our Community Priorities in the Biennial Budget Adopted in September 1999 - In addition to cutting property tax rates, it is critical that we continue to invest resources to address our growing community’s highest priorities.

Since the bulk of the budget reflects decisions made by the Board last year during a more intensive process, it is worth documenting the most significant changes. Your Planned FY01 Budget reflected the following changes from the Adopted FY00 Budget:

Public Safety as a County Priority

• Added 41 Sheriff’s positions in FY01. The increase included 22 patrol deputies to maintain staffing ratios as our population grows, 4 bailiffs to serve new judges, 6 school resource officers, 3 detention deputies, and 6 support positions.
• Added 6 Fire Medics in FY01. The new positions are dual certified (certified as both firefighters and as paramedics) and provide Fire Rescue flexibility in meeting staffing requirements for both ambulances and fire apparatus.

The Environment as a County Priority

• Provided the third of 3 years’ funding to monitor Tampa Bay Water projects within Hillsborough County and take appropriate action. The Board approved a 3-year plan in FY99 totaling $12.1 million.
• Maintained a total ELAPP (environmental lands acquisition and protection program) millage levy of one-quarter mill to maximize the revenue available to that program within the 20-year timeframe authorized by county voters. As the Countywide tax base grows, the debt service millage required to cover our debt declines and we adjust upward an operating millage levy by an offsetting amount. The operating millage provides cash for additional ELAPP projects.

Management of Resources as a County Priority

• Completes funding to implement resource management technology that will take the organization to the 21st century by maximizing how we use human capital - personnel - and by improving the accountability we incorporate into our capital planning and management process. These projects primarily require one-time funding to license software, install necessary hardware, convert existing data, implement new procedures, and train staff.

Redirection of Resources to Priorities

• Phased out the Children’s Services foster care group home. Foster care programs are a state responsibility and our cost per client was very high - over $100 per day - while the number of clients served was low - 6 per day. We redirected our funds and focused on primary responsibilities rather than continuing to subsidize this state program. The phase out of this program is complete and funding is not included in the FY01 budget.

Impacts of State Legislative Actions - Actions by the 2000 Florida Legislature have substantial financial implications for this budget.

County governments are required to participate in the Florida Retirement System (FRS). In July 1999, the County’s cost dropped as a result of improved FRS finances. In July 2000, rates again declined, although by a much more modest amount. At the same time, the Legislature improved benefits for special risk employees, which will offset some of the savings.

The Legislature continued to reduce the intangibles tax - a tax on the holdings of securities and other assets. This has been the major source of State Revenue Sharing to counties and last year’s reduction cost Hillsborough County a permanent $6 million loss in revenue. Legislative action this year replaced the intangibles tax with a direct allocation of the State’s portion of the sales tax. The impact of this change could result in a continuing loss to the County of $1 million per year. Both sources - the intangibles tax and the sales tax - have historically shown significant growth during economic expansions.

The Legislature took a tentative step towards tax simplification by approving the first phase of a communications tax that will replace the County’s current cable franchise fees and by establishing a special committee to examine sales tax simplification. As we indicated in a recent staff report, both the State and Hillsborough County have significant exposure to the impact of the Internet on sales tax revenues. Without state action, Hillsborough County could lose up to 15 percent of its sales tax revenue over the next 5 to 10 years - an annual loss in today’s dollars of $28 million per year.

Florida voters approved Revision 7 to the Florida Constitution in November 1998. The State is to assume from counties additional funding of State court costs by July 2004. FY01 budget does not reflect any significant shift of court costs to the State of Florida.

Cross-Organizational Updates to the FY01 Budget

Some of the major updates to the FY01 budget affecting all organizations include:

• Minimal inflation in operating expenditures. Increased fuel and postage costs are largely absorbed.

• The continued implementation of the Civil Service Board program approved by the Board of County Commissioners in May 1999 with specific market equity adjustments based on each pay classification for classified employees not represented by unions. These adjustments are capped at 3.5%. A comparable adjustment is made for unclassified employees.

• Employee’s cafeteria benefits are increased to offset increases in employee health program costs.

• Provides a new employee health insurance subsidy for general retirees age 62 and over and for special risk retirees age 55 and over. The benefit will be provided to future retirees until they reach the age of Medicare eligibility - currently at age 65. The cost of health insurance has been identified as a key concern of employees facing retirement. While the cost of this benefit will rise over time, we anticipate the cost will at least be partly offset by compensation savings as employees who have reached the high end of pay ranges are replaced with less senior employees. The benefit to be provided is up to $150 per month, depending on years of service and it reflects a similar benefit currently provided by the Tax Collector and the Aviation Authority.

• Last year, you approved a policy authorizing a portion of personnel costs be subtracted from budgets and set aside in reserves. This adjustment for turnover savings was only applied to departments under the Board of County Commissioners in our two major tax-supported funds. The adopted FY01 budget expands this 2% attrition factor to all boards and agencies funded by the BOCC including appropriate Constitutional Officers and elected officials funded directly or indirectly by the General Funds.

Technology - We continue to upgrade our hardware and software to be able to interact with other organizations and our clients. I identified two major continuing automation projects earlier - one for personnel management and a second for tracking capital projects. Other projects include our continued transition to a common GIS format.

Constitutional Officer Requests - The budget reflects the requested budget of each Constitutional Officer, including those of the Sheriff and Supervisor of Elections.

Funding of Repair and Renovation of County Buildings - In keeping with your direction, the budget reflects a contribution of one percent of General Fund revenues and one percent of Unincorporated Area General Fund revenues to repair and renovate County buildings.

Departmental / Program Updates to the FY01 Budget

While the intent of the second year of the biennial budget process is to focus on other issues and opportunities rather than repeat a full-blown budget preparation and review process, there were several areas that received considerable attention during this update year.

The significant updates to the FY01 Budget include:

Transportation

In the area of transportation, you directed me to identify $10 million per year for four years starting in FY02 that can be shifted to transportation. A total of $40 million would be shifted to transportation by FY05 to meet some of the needs identified by the Committee of 99.

As a part of the adopted FY01 budget, (a year earlier than requested), funding for new and expanded transportation programs has increased by $7 million.

• Redirects $250 thousand from general assistance programs in the Health and Social Services Department to specialized transportation services. In a recent survey, we found that Hillsborough County spends considerably more of its local revenue on public assistance programs than other urban Florida counties. An expansion of specialized transportation is a countywide program and I see this as the County's highest transportation need. Expanded funding for this priority is consistent with recommendations of the Committee of 99. This expands on a $500 thousand FY00 redirection of resources from general assistance to specialized transportation services.
 
• Commits an additional $1.75 million in unincorporated property taxes to transportation maintenance and repair functions in the Public Works Department. Of that amount, $650 thousand is directed to resurfacing to aid us in catching up on meeting professional maintenance standards. The remaining $1.1 million will be spent on safety improvements, including sidewalk and shoulder repair, striping and markings, traffic sign replacements and school flashers. These improvements are consistent with Committee of 99 recommendations. These uses reflect additional high priorities where the return on our investment can be substantial.
 
• An additional $5 million, generated from a higher than expected increase in the tax base, further enhances transportation funding in both operating and capital areas. Approximately $1.5 million will go toward expanding operational programs including intersection lighting, lighted street name signs at intersections, and improvements to signage, markings, and signal detector loops. The remaining $3.5 million is allocated to recurring capital programs such as new median barriers, improvements to shoulders including new bicycle lanes, resurfacing, intersection improvements, and sidewalks.
 
• Continues funding for HARTline downtown circulator service, Sunday transit service, and County circulator service at a total cost of $356,667.

Public Safety

• Adds seven additional Fire Medics based on collective bargaining agreement changes approved during FY00 that reduce the average workweek and provide funding for mandatory drug testing. Combined with the six Fire Medics previously approved for FY01, the Fire Rescue Department will receive a total of thirteen new dual certified (firefighter and paramedic) positions.

Culture and Recreation

• Provides expanded Sunday hours at the John F. Germany and North Tampa Libraries. Five new positions were added to the John F. Germany Main Library in order to increase open hours by 7.5 on Sunday. Six positions were added to the North Tampa Branch Library to allow for 4.5 hours of access on Sunday afternoons.
 
• Allocates an additional $5 million, the balance of revenues generated from a higher than expected increase in the tax base, to the expansion of libraries. While decisions regarding what improvements will be funded with the $5 million have not been finalized, the projects under consideration include an expanded Westgate Regional Library and new libraries in the Upper Tampa Bay (Westchase) and South Brandon areas.
 
• Provides the Parks and Recreation Department a position to maintain the new Suncoast Parkway trail and continues the temporary employees at William Own Pass Trail as approved during FY00.
 
• Provides for expansion of the Parks and Recreation Department's therapeutics program by funding the Turkey Creek and Burns Disabled Youth program.

Human Services

• Updates grant awards and interlocal agreements for the distribution of state-shared revenues. Included is a Children’s Services Department grant-funded inspector for childcare licensing services.
 
• Provides funding for physical exams of abused children. This cost will be partly offset by fees recovered in selected cases.
 
• Doubles staffing of the Consumer Affairs function from 5 to 10 positions in order to accommodate new directions for the office by providing mediation services and prosecuting fraudulent activities as well as meeting increased workload.

Physical Environment

• Provides funding for a Water Department unidirectional flushing program, a grease trap control program, improved customer service and field service improvements, and expanded capital projects management using existing approved positions. This results in expansion with no net increase in authorized personnel. Also, increases the budget to reflect higher costs for bulk water purchases, electricity, chemicals and other operating requirements.

Other Changes Reflected in the Update

• Provides rent funding to the Law Library due to the relocation of the library as a result of the courthouse project.
 
• Provides funding to advertise County classified and non-classified vacancies in order to improve the pool of applicants for County positions. Provides funding for training programs targeted for both classified and management employees.
 
• Provides two Real Estate Department staff funded with water/wastewater revenues to maintain office facilities for the Water Department.
 
• Provides a Purchasing Department position and two Human Resources Department positions to strengthen accounting and benefits administration. The positions will be funded by the Self-Insurance Fund.
 
• Adds two positions to provide zoning postings and notices. The adopted budget includes fees for this service that should cover the recurring cost of these positions.
 
• Funds a $50,000 County Commission district reapportionment study required as a follow-up to the 2000 Census.
 
• Adds five positions funded with building permit fees to improve customer service, plans review and inspections, and to facilitate a reduction in flood insurance ratings. This self-sufficient program for the building community will also continue to upgrade technology needed to improve customer service.
 
• Adds six positions in the Information and Technology Services Department to support major systems that impact multiple departments and to expand web services support for the County’s Internet and Intranet sites.
 
• Cuts two positions in the Fleet Services Department that are no longer needed to perform work for the School Board.
 
• Adds two positions in the Communications Department to support the 24/7 programming for the County's cable television channel (HTV22). Provides one-time funding for an automatic playback system.
 
• Under the management agreement between the Museum of Science and Industry (MOSI) and the Board of County Commissioners dated June 21, 1995, the County’s operational support funding was to stop at the end of FY00. The FY01 adopted budget continues this funding at $300,000.
 
• Provides for a contribution of up to $1 million to a community effort to bring the Florida A&M University Law School to Tampa.
 
• Provides $50,000 in matching funds for the Hillsborough Community 2000 Millennium Committee's Families First Fireworks 2001 celebration.
 
• Provides an additional contribution of $50,000 to the Temple Terrace Community Center contingent on a $1 million appropriation by the State Legislature.

Summary

The adopted budget for FY01 represents the continuation of steps we are taking to address the BOCC priorities for service delivery while operating within the resources available

Once again, I appreciate the Board's direction as we worked through the second year of our two-year budget process. I look forward to our continuing service to the citizens of Hillsborough County.

Respectfully Submitted,

Daniel A. Kleman
County Administrator