November 1, 2001

Members of the Board of County Commissioners:

This document reflects the biennial, or two-year Adopted Budget for Fiscal Year 2002 (FY02) - which began October 1, 2001 - and a Planned Budget for Fiscal Year 2003 (FY03) - which will begin October 1, 2002. It follows an intensive examination of the budget that began in January with a series of workshops, during which you provided guidance to staff in regard to priorities. This reflects the fourth time the Board of County Commissioners (BOCC) has adopted a biennial budget covering two separate fiscal years. That process has served us well over the past six years and it is a process being replicated by several other Florida governments that have followed your lead.

Consistent with BOCC policy, you adopted a six year capital improvement program (CIP) in which the first two years reflects the capital component of this biennial budget. The CIP recognizes a longer planning horizon needed for capital projects which may be funded over a period of years and which may take up to several years to complete, depending on the nature of the project.

The third component used to put current budget decisions into a longer term context is an annual Pro Forma document prepared in accordance with BOCC policy. The Pro Forma provides a five-year projection of revenues and expenditures for major operating funds. It is particularly useful in showing how capital projects funded in this biennial budget or planned over the next several years will impact future operating budgets in terms of maintenance and utility costs as well as staffing costs. For example, that means we identify up front, in accordance with BOCC policy, what it will cost to operate a new fire station when it is completed, or to operate a new park or library. The Pro Forma is prepared in January as a tool to evaluate the impacts of the adopted budget prior to developing or, in the case of the second year of a biennial budget, updating the next year’s budget. These three documents ensure that members of our community and other “stakeholders” in our budget have an opportunity to see how current decisions tie to longer term infrastructure funding and how those future projects will impact future operating budgets.

The Results of a Process That Included A Working Document for
Board Review and Public Scrutiny

In my role as your designated budget officer, I was required to present to you a balanced budget. The County Administrator’s Recommended Budget presented on June 6th, however, was a working document intended as a starting point for public scrutiny and further refinement by the BOCC, but reflecting my best understanding of your priorities. Through a series of workshops and four public hearings the Recommended Budget was refined to meet your priorities and to allow the public an opportunity to address their concerns and priorities before final decisions were made. Two of those public hearings are specifically scheduled to allow public input prior to any tentative decision on maximum tax rates. That part of the public participation process was not required by State Statutes, but you have instituted those added public hearings as a unique component of our process.

This summary of the budget is intended to explain how the budget that emerged from that public process reflects changes from prior years’ budgets. It does not recite the various changes that may have occurred during the process. That is an important distinction. The most critical information for stakeholders is what will change from the adopted budget for FY01 to the budgets adopted for FY02 and planned for FY03.

The Budget for FY02 and FY03

The budget totals $2.5 billion in FY02 and $2.6 billion in FY03. The budget increases by $154.6 million (6.5 percent) from FY01 to FY02, and by $76.7 million (3.0 percent) from FY02 to FY03. The operating budget, which generally pays for day-to-day services, is $1.1 billion in FY02 and $1.2 billion in FY03. That reflects an $81.9 million (7.7 percent) increase from FY01 to FY02, and a $47.8 million (4.2 percent) increase from FY02 to FY03. While the budget goes up in order to fund high priority programs such as law enforcement and fire rescue, the two-year budget reflects a large Countywide property tax millage reduction (0.37 mills) and several million dollars worth of savings through the adoption of efficiencies identified by management in this process in response to a challenge by the BOCC.

The Process

Earlier this year, the BOCC instituted dramatic changes in the budget process. You scheduled monthly workshops beginning as early as January and you subsequently added supplemental workshops to have more time to spend on budget issues. You initiated a much more public review process and we formalized our meetings with departments and agencies on their budgets to allow the BOCC and the public to participate in that process. All of those meetings were publicly noticed so that Commissioners and members of the public could attend, and they were videotaped so that tapes could be available to anyone interested in reviewing those discussions.

“The BOCC should focus on major policy issues.” Florida TaxWatch

Board of County Commissioners Direction - A Setting of Priorities

This budget can be best characterized as a setting of priorities. During the preparation process for this biennial budget, the BOCC reviewed key programs and provided policy direction in several areas:

• Law Enforcement - The Board committed to law enforcement through the retention of a standard of 1.7 sworn law enforcement officers for each 1,000 residents. As our unincorporated population continues to grow, this standard will authorize a steady stream of additional Sheriff’s deputies. Some new deputies will serve as school resource officers and will be partly funded by the School Board. At the same time, federal funding will phase out for deputies hired under the federal Universal Hire program. As expected, the County will pick up the cost for those existing deputies.

• Fire Protection - The BOCC committed to fire protection through the addition of four new Fire Rescue stations in addition to two stations previously approved. At the same time, the BOCC avoided the necessity to build an additional planned station by securing a long-term agreement with the City of Tampa to continue providing service to the Pebble Creek and Cross Creek communities. Other previously approved stations include a Providence Road station in Brandon scheduled to be completed in December 2003 - the first quarter of FY04 - and a Northdale station in the northwest area. The four additional stations are a River Oaks station, a Tampa Shores station, a Country Place station, and a Chapman Road station. The additional stations reflect a BOCC commitment to improving our response time to emergencies. You also indicated an interest in further exploring how to improve emergency response and that could lead to additional future expansion of this service.
  
  Separately, you indicated your support for the acquisition of self-contained breathing apparatus that meets new, higher safety standards. When you provided that direction, we began the process of selecting equipment to test and we indicated funds would not be needed until FY02. This budget reflects $2 million in funding in FY02 for that equipment. The equipment will be purchased using sales tax revenue from the Community Investment Tax (CIT), as approved at a public hearing on the CIT in September. That funding is reflected in the FY02 capital budget and the six-year Capital Improvement Program for FY02 - FY07.

• Code Enforcement - The BOCC committed to adding code enforcement officers in order to regain a staffing ratio of no less than 1 officer for each 28,000 unincorporated residents within two years. This is a programmatic policy decision that will be reflected in future operating budgets.

• Recreation Facilities - The BOCC committed to developing top quality youth sports complexes for specific sports by committing funds to establish higher maintenance standards. The BOCC directed Parks and Recreation staff to work with its advisory board to develop a plan for future improvements as well. The three parks to receive higher maintenance standards are Skyway Park, Ed Radice Park, and Vance Vogel Park. Funding is phased into the Parks and Recreation Department’s operating budget over the next two years.

• Property Tax Rate Cuts - The BOCC recognized the opportunity, given strong growth in our tax base, to reduce our tax rate for what will be the seventh and eighth consecutive years. The BOCC reduced Countywide property tax rates (millage rates) by 0.12 mills in FY02 and by an added 0.25 mills in FY03. These millage reductions, which total 0.37 mills, will put roughly $22.1 million back into the pockets of County taxpayers. For a house with a taxable value of $100,000, the Countywide millage rate reduction will amount to a tax savings of $49 over the two years. Put in a different context, business owners will save $490 in taxes over the next two years for each $1 million of taxable value. No other taxing authority in our community has made such a commitment to managing the tax burden of our citizens. In addition, the Senior Homestead Exemption that the BOCC previously approved will increase from $15,000 in FY01 to $20,000 in FY02 and then increase to the maximum $25,000 in FY03. Hillsborough County is one of only a few cities or counties to have provided this benefit to low income elderly homeowners.

• Monitoring Tampa Bay Water Projects - The BOCC continued its commitment to closely monitor new water supply projects in our community through the continued funding of a Water Resources Team. This interorganizational group had been originally intended to sunset at the end of FY01, but funding previously set aside for this important operation is available to continue activities through FY 03. The Water Resources Team will continue to address our ongoing concern over the projects Tampa Bay Water intends to build in our community, including the largest desalinization plant in the United States and an above-ground reservoir. These new sources will not only meet increasing demand for water, but they will also allow reduced pumping from existing wellfields that caused concerns during our recent drought.

“Essential County services should be funded and delivered in the most efficient and cost-effective manner possible.” Florida TaxWatch

Seeking Efficiencies in the Provision of Public Services

Earlier this year, the BOCC challenged the departments and agencies it funds to seek efficiencies in order to trim the cost of providing services to our community. You saw that as an alternative to initiating a long and staffintensive process known as “managed competition,” potentially leading to privatization of some services. In my instructions to departments and agencies, I asked each organization to look for efficiencies amounting to 5 percent of their budgets. Many departments responded to that challenge with options for cutting costs without noticeable service implications. For some departments, the cuts followed cost savings instituted through prior processes that included external review of opportunities for efficiencies.

No program or funding source was excluded from consideration. Citizens expect that no government revenue will be wasted regardless of whether it is a locally collected tax dollar or fee, or a grant or contract funded with State or federal dollars. In essence, citizens expect us to be careful in how we spend any dollar that flows through this budget. During the budget preparation and review processes, we scrutinized these opportunities for savings and we also scrutinized the line item detail that underlies each organization’s budget in order to ensure that budgets are not simply built on what had been requested in prior years, regardless of what was ultimately needed. We examined not just what public service is provided but also how it is provided in order to obtain efficiencies. These clarifications are important because they shape many of the changes reflected in this budget.

Cost-saving changes will:

• Improve the efficiency of our building inspection program by having inspectors receive their daily assignments by telephone. This allowed three positions to be cut with annual savings of $177,000.

• Reduce the cost of employee orientation in Fire Rescue by placing new staff in service quicker - saving $83,000.

• Use professional staff in Human Resources with support from in-house legal counsel in the County Attorney’s Office for collective bargaining negotiations in place of the past practice of using a consultant and external legal counsel - saving $130,000.

• Consolidate management responsibilities in two senior centers. This allowed two vacant positions to be cut with annual savings of $66,000.

• Eliminate security fencing at certain Environmental Land Acquisition and Protection Program (ELAPP) sites - saving $100,000.

• Trim operating costs and improve efficiencies in Solid Waste Management programs - saving $418,000.

• Install energy-conserving equipment - for example, cutting up to $6,000 in energy costs by FY03 at our Cooperative Extension facilities. This continues an extensive review of opportunities for energy conservation.

• Cut inventory maintenance costs at Public Works - saving $195,000. Additional savings including cuts in overtime and chemicals will trim $427,000.

• Cut fleet replacement and fleet maintenance costs at Parks and Recreation - saving $54,000.

• Trim administrative costs at Public Safety, Management and Budget, and Human Resources - saving $109,000 through the elimination of three positions.

• Cut the use of temporary employees to supplement permanent staffing - saving $209,000 in Planning and Growth Management and $110,000 in Information and Technology Services.

• Reduce the frequency of cash collections from daily to every other day at Planning and Growth Management offices - saving $11,000.

• Reduce the overhead for the Indigent Health Care Program through a 5 percent administrative staffing reduction in FY02 and a 3 percent network administration staffing reduction in FY03 - resulting in savings of $244,000 in FY02 and $448,000 in FY03.

• Reduce operating expenses in the Communications Department, Public Affairs, and Aging Services - saving $35,000.

• Trim hardware repair costs in Information and Technology Services by $86,000.

These savings add to those enacted previously in response to past reviews of the budget process by your Blue Ribbon Committee on County Finances and by Florida TaxWatch. For example, we have already saved more than $1.5 million by rightsizing our fleet of vehicles.

As these examples illustrate, the proposed reductions reflect widespread participation by BOCC departments to cut existing costs. Some of the constituencies of the departments and offices that are impacted by the reductions will ask why we are cutting the budget when the tax base on which we heavily rely to pay for services is continuing to grow strongly. To those comments I would reply that it is our obligation to constantly strive to provide services at the lowest reasonable cost and to focus on funding the highest priorities.

“[Hillsborough County should] make greater use of an existing County budget process to redirect resources.” Florida TaxWatch

Priorities in the FY02 and FY03 Budget

This biennial budget reflects a focus on providing increased funding to address high priorities for this community while assessing opportunities to make selective cuts in other programs. Many of the changes are listed here and additional changes may be found detailed in the budget by organization section of this document.

• In terms of positions, the total number of funded positions will increase from 9,553 in FY01 to 9,712 in FY02, and to 9,891 in FY03. That reflects a net increase of 353 positions over the next two years. Major increases are reflected in the Sheriff’s Office (160 new positions), the Children’s Services Department, primarily federally supported Head Start (115 new positions), the Fire Rescue Department (39 new positions), and Parks and Recreation (35 new positions). The positions are phased over the two years as reflected in this budget. Position reductions reflected in this budget are phased to allow us the opportunity to place employees whose jobs are cut in other vacant funded positions. In FY02, adopted efficiencies resulted in 32 positions being eliminated. Eighteen of those positions were vacant and the employees in the other 14 positions were successfully placed in other jobs for which they were eligible. We were therefore successful in cutting costs without a single layoff. The budget relies more heavily on targeting services to our lower income residents. For example, as part of the Board’s commitment of $10 million per year to transportation, we increased specialized transportation services by $250,000. That adds to a similar increase in FY01. We invested in a welfare-to-work transportation demonstration project with funding of $100,000 per year. Lack of transportation is frequently cited as a barrier to getting citizens into jobs.

• Our general assistance program, on the other hand, is scaled back in FY02 and again in FY03 by a total of one-quarter of the FY01 level. That results in savings of $750,000 in FY02 and $1.1 million in FY03. We invested a portion of the general assistance savings to assist the health care program by picking up the cost of a new Florida Legislature mandated $640,000 annual Medicaid match.

• During budget discussions, we identified a potential long-term funding deficit for the health care program by comparing updated revenue assumptions against new actuarial information on expenditures. This budget anticipates a $2.0 million annual reduction in program expenditures on catastrophic care, but defers that reduction until February 1, 2002. You directed staff to work with the Health Care Advisory Board to identify measures to solve the funding gap and bring back recommendations in January. That process is under way and all options are being explored. Any funding solution will be built on the most updated revenue projections available for the indigent care sales tax. Interim actions that slowed the drawdown of reserves for this program included using Countywide general revenue to: Fund one-half - $399,000 - of the match for the Kid Care program in FY02; fund all of the cost - $501,000 - of the jail offender program in FY02 and FY03; and fund all of the cost of Baker Act patients - $1.7 million - in FY02 and FY03.

• The budget also improves our commitment to career and volunteer firefighters. The budget recommends doubling the annual commitment to each volunteer company from $12,500 to $25,000. This change would, for example, allow any volunteer company to purchase thermal imaging equipment that some volunteers have requested. Other improvements include acquiring special protective clothing for fighting wildfires, providing immunizations against infectious disease, and providing hearing protection for use in emergency vehicles. These commitments require FY02 funding of $340,000 and FY03 funding of $160,000. We are funding a $2 million upgrade in self contained breathing apparatus through the FY02 capital budget. The budget commits staffing increases to fire training, arson investigation, and inspection of commercial structures. In accordance with BOCC policy, you adopted revised fire inspection fees to allow recovery of all direct costs and authorized annual revision in fees to maintain that cost recovery.

• The budget reflects a commitment to take advantage of all available federal Head Start and Early Head Start grants. These grants continue to provide the BOCC the opportunity to expand these critical services targeted to serve some of the youngest and most needy in our community. These changes are reflected in the Children’s Services Department budget. While these programs have modest matching requirements, we have been able to use School Board in-kind contributions to meet a portion of the match and stretch County dollars even further.

• During FY01, the BOCC approved construction of two new branch libraries (Upper Tampa Bay and South Brandon) and accelerated several other projects using, in part, $5 million in Countywide tax dollars. Our analysis indicated that the County would likely have to use $6 million in long term financing through certificates of participation (COPs) in combination with existing revenues to both complete an aggressive construction program and cover the increased operating costs (about $750,000 per year per branch library). Stronger than anticipated growth in the tax base for FY02 may allow us to reduce or eliminate the need for COPs.

• The long awaited Florida Supreme Court ruling in a case involving the Sebring Raceway cleared the way for resolution of an outstanding lawsuit regarding taxes to be paid on Raymond James Stadium and other Tampa Sports Authority (TSA) property. Under terms of an existing interlocal agreement between the BOCC, TSA, and City of Tampa, we anticipate a requirement to provide financial assistance to the TSA once it has used available reserves to pay back taxes on the Stadium. We have assumed that the Stadium remains taxable as an asset of the TSA and that the BOCC and Tampa will financially support the TSA and that such a situation represents a net loss to Hillsborough County government. The budget anticipates a $3.5 million payment to the TSA in FY02 and in FY03. The net cost to the County’s Countywide General Fund after considering the revenue we will receive from taxes on the Stadium, is $1.6 million.

• In accordance with law, this budget fully funds the requested FY02 budgets for the Sheriff and the Supervisor of Elections. The BOCC could not alter those budgets prior to public hearings in September. FY03 requests are also reflected in full. The amounts shown in the budget for the Tax Collector reflect commissions to be paid on the taxes collected by that Office. Because the FY02 tax base is much larger than FY01, we assume that a greater portion of the commissions paid to the Tax Collector will be returned to the BOCC at yearend. The amounts reflected for the Property Appraiser reflect that portion of the Property Appraiser’s budget for which the BOCC is responsible—more than 92 percent of the total budget. The Property Appraiser did not submit a budget for FY03 but a budget was constructed for the Property Appraiser by increasing the FY02 budget by 3 percent. The Property Appraiser’s budget is subject to an appeal process by the BOCC after it is submitted to the Florida Department of Revenue for approval. The Clerk’s budget submittal was fully funded in both FY02 and FY03 and the BOCC has authority to adjust the budget at any time. The Supervisor of Elections requested the County consider replacing obsolete voting equipment. The Florida Legislature designated $600,000 in FY01 and an additional $600,000 in FY02 towards the cost of replacing voting equipment. In this budget, we have anticipated receiving both payments and have set aside total funding of $12 million in FY02 to acquire new equipment. The touch screen system will result in significant future savings in the Supervisor’s operating budget by avoiding the need for paper ballots.

• You dedicated an additional $10 million per year in ad valorem taxes to meeting the community’s transportation needs. As indicated earlier, $250,000 of that amount has been directed to expanding our Transportation Disadvantaged Program. Another $2 million per year will fund transportation projects that will add capacity (Gunn Highway, Bruce B. Downs and Boyette Road). The balance has been directed to maintenance, intersection improvements, and safety programs to ensure that we maintain our existing assets to an acceptable standard and seek the lowest cost measures to improve traffic flow and prevent accidents. This funding is anticipated to be an on-going commitment to transportation.
  
  Hillsborough Area Regional Transit Authority (HART or HARTline) has historically relied on County funding to maintain certain services. More recently, HARTline entered into a tri-party funding agreement to obtain additional funds from the City of Tampa, the Florida Department of Transportation, and the BOCC. That supplemental commitment has ended. Your share of that additional funding was provided from a completed road project—Hoover Road. The budget allocates the remaining funds from the Hoover Road project to BOCC priority capacity projects.
  
  This budget continues specific operational subsidies for HARTline Sunday service and circulator service. These commitments require $535,000 in funding from gasoline taxes in both FY02 and FY03 and are not anticipated to be continued in future budgets since HARTline has the ability to seek voter support of a higher ad valorem tax rate. HARTline should schedule a referendum to increase HARTline’s maximum tax rate in November 2002.

• Substantial growth in property tax revenue in FY02, despite a reduction in the Countywide millage rate, provided an opportunity to direct additional funds, in the short term, to priority transportation needs. The FY02 budget provides an added $18.3 million in funding for projects and the FY03 budget provides an added $6.0 million. Over the next two years, this budget commits $10 million of new revenue to Gunn Highway which will allow its completion, $25.2 million to Bruce B. Downs and $5.6 million to Boyette Road which will allow a significant beginning on both of these projects. Committing recurring revenue and savings to non-recurring transportation projects provides an excellent means of addressing current transportation needs while maintaining future capacity to hire Sheriff’s deputies, open new fire stations, improve code enforcement and recreation facilities. It is with those future commitments in mind that this budget commits available funds to these road projects. Additional funding of transportation projects will be considered during FY02 as we assess an opportunity to finance more transportation needs through the use of Community Investment Tax revenue.

• In accordance with BOCC policy, we identify operating impacts of capital projects at the time they are funded. Ten improved recreation facilities will impact the operating budget requirements of the Parks and Recreation Department over the next two years. In addition, we are required to pay one-half of the cost of operating the Friendship Trail Bridge beginning in FY03. The cost of these expansions is $557,000 in FY02 and $1,596,000 in FY03.

• Two County programs provide support to the State Attorney in criminal prosecution. The Consumer Protection Agency, which was separated from Health and Social Services in FY01 and doubled in size, can meet our mission of providing proactive services to citizens while providing support for the prosecution of criminal fraud with fewer resources than we committed in FY01. A reduction of two vacant positions will largely offset the cost of resources needed to maintain the workload of the Medical Examiner’s Office, which provides evidence critical to other types of criminal prosecution including capital offenses. To hold down the increase in the Medical Examiner’s costs, we will expand our partnership with USF in the use of fellowships.

• A realignment of resources will allow the establishment of a land use ombudsman in Planning and Growth Management through the reduction of two positions in Neighborhood Relations, one professional and one clerical.

• The Civil Service Board is funded at its statutory level, a 3.9% increase over FY01, which is based on the payrolls of the government authorities that it serves. Recognizing that Civil Service serves authorities that do not currently receive BOCC funding we are pursuing funding from other local authorities.

• A commitment to maintaining existing infrastructure as well as inspecting new is a priority as we look towards mandatory implementation of a new governmental accounting standard. The FY02 and FY03 budgets meet BOCC policy of committing one percent of ad valorem revenue to physical plant maintenance projects. Following up on a recent BOCC discussion on maintenance needs for Parks and Recreation, the FY02 budget includes an additional $1 million in Countywide revenue and $1 million in Unincorporated area revenue to allow us to better address a backlog of maintenance deficiencies. We believe we are in excellent shape to meet our maintenance requirements and the Clerk of Circuit Court, as the County’s Chief Financial Officer, will be implementing the new accounting standard known as GASB 34 a year early.

• The Real Estate Department has identified $302,000 in potential savings in FY02 and $158,000 in FY03. Those savings offset a portion of recommended maintenance enhancements. One position will be added in FY02 to address general maintenance needs for our expanding library system, and four inspectors will be added to improve our ability to detect deficiencies in construction projects during the time that contractors can be held accountable. The cost associated with these inspectors will be charged to projects and the added inspectors will provide a higher quality of inspection than we have obtained through contracted inspections. Six positions are added to handle maintenance of expanded Court facilities in FY03.

• We continue to follow BOCC policy on maintaining pay comparability with public and private employers at the 50th percentile. The FY02 budget provides compensation adjustments consistent with Civil Service recommendations and subject to a maximum market adjustment of 3.5 percent for any job class. Comparable adjustments will be made for unclassified employees. Cost increases have been partly offset through lower retirement contribution rates to the Florida Retirement System. These savings may not be permanent, but they have allowed us to hold down costs at least through FY02. While Civil Service recommendations are not available for FY03, the budget assumes similar budget impacts in FY03. We anticipate that retirement rates cannot be sustained at current levels however, and have anticipated higher rates in FY03.

• We completed an actuarial study of our self-insured employee heath plan and fine-tuned benefits, copayments, and premiums. No employee premium increase is planned until FY03, when we anticipate we will need to raise employees’ contributions. To reduce the impact, the FY03 budget reflects a $20 per month increase in the cafeteria benefit we provide employees. The actual premium changes will most likely vary by plan, allowing employees an opportunity to control cost increases but also allow them to choose the plan that best meets their needs. We do anticipate increases in retirees’ contributions for participation in our health care program until their contributions are consistent with the average cost of the plans in which they participate, but our intent is to phase those in over a multi-year period to make the increases more affordable.

• We completed the biennial review of public service agency applications—both applications for Community Development Block Grant funding and applications for general revenue. The BOCC increased funding slightly from FY01 levels. Due to the competitive process, the amount received by some organizations has changed and some new organizations were funded while others that have provided services previously were not funded. The evaluation of applications was conducted by committee process utilizing two members of the BOCC Citizens Advisory Committee on each committee.
  
  Non-competitive agencies were generally funded at FY01 levels. Specific detail on funding appears in the main section of Volume I under the Non-Departmental section.

• Due to increasing demand on emergency 9-1-1 dispatch, this budget provides funding to add four dispatchers in FY02, and uses an increase in the telephone line charge for the 9-1-1 program from 39 cents per month to 50 cents per month to fund a portion of those costs.

• The County’s water/wastewater enterprise program continues to grow and recent credit upgrades have encouraged us to remain on course to improve our system, add customers, and maintain service. Almost $3.3 million in system improvements are reflected in the FY02 budget and an added $2.1 million is reflected in the FY03 budget. Improvements include staffing to manage capital improvement projects, software improvements, and expanded customer service/assistance. As you know, this program is self-funded using user fees and charges.

• The County’s solid waste enterprise program is also self-funded and the recommended budget reflects two enhancements: additional expenditures on litter control ($274,000) and costs associated with a newly closed landfill in Ruskin ($125,000 in FY02 and $25,000 in FY03). The Department will coordinate with the Parks and Recreation Department on a joint-funded pilot project in FY02 to clean up litter within a target area within the unincorporated area.

Key Revenue Assumptions

Hillsborough County continues to rely on a variety of revenues and other funding sources. The largest sources include fund balance (funds carried forward from the prior year), ad valorem (property) taxes, other locally approved taxes (e.g., local option sales taxes and gasoline taxes), charges for services (user fees), and intergovernmental revenue (largely state and federal grants).

Ad valorem (property) taxes account for 24 percent of all County funding sources in FY02. The increase in taxable values that serve as the basis for FY02 ad valorem tax revenue surpassed the January 2001 estimates used to generate a five-year Pro Forma forecast for each tax fund. The Countywide tax estimate used to adopt the budget was up 13.7 percent from that used to adopt the FY01 budget. The increase reflected new construction initiated before the economy began to slow and significant increases in the assessment of existing property. Almost 70 percent of the increase was due to the annual reassessment process, which includes consideration of the value of non-residential tangible property. The unincorporated area tax base that is used to generate revenue for typical municipal services that the County provides outside municipal boundaries rose 13.8 percent. New construction accounted for 66.1 percent of the increase.

The assessment increases did not uniformly affect all property owners: Homestead residential property is protected from assessment increases in excess of the lesser of 3 percent or the annual change in the Consumer Price Index. After applying the countywide millage reduction you approved, total property tax revenue increased 12.5 percent.

No specific information is available for FY03, but we do expect a delayed economic impact on ad valorem tax revenue resulting from a slowdown in new construction and reassessments more in line with historical levels. In FY03, this budget is based on an assumed 7.25 percent increase in the Countywide tax base, less the impact of an added quarter-mill tax reduction, for a net increase of 3.6 percent. We anticipate a similar slowdown for the MSTU tax base as well - an 8.25 percent increase is anticipated for FY03.

Some programs are self-sufficient on charges for services (i.e., user fees). These programs may expand or contract based on the availability of revenue resulting from the demand for those services. Three self-funded programs reflect required changes:

• First, Fleet Management cut twelve positions due to our investment in a newer fleet that requires less maintenance. The cuts also reflect the impacts of a downsized fleet resulting from the adoption of fleet utilization standards. Two additional positions no longer required for maintenance of Fire Rescue equipment were transferred to Fire Rescue during FY01 to provide expanded inventory services.

• The Planning and Growth Management Department will update building inspection fees, some of which have been unchanged since the 1980’s in order to avoid service cuts in FY03. The BOCC approved using the fee increase as an assumption in balancing the FY03 budget.

An economic slowdown is evident in some revenues - particularly those based on sales activity. Projected growth rates are substantially slower than that experienced as recently as FY00, but are consistent with sharp slowing evident in FY01 receipts. We reassessed these revenues in November 2001 as the State of Florida reconsidered its own revenue projections for the current year. Adequate reserves exist to address any potential revenue shortfall during FY02 and the FY03 estimates will be updated during the abbreviated update process used for the second year of this biennial budget. T he maximum estimated potential revenue reduction for FY02 is $10.6 million and the current estimate for FY03 is an $11.0 million reduction. These revenues will be monitored monthly throughout the year and we will keep you advised of any further change in our projections.

Finally, the cable franchise fee that the County has collected from two unincorporated area franchises was replaced on October 1, 2001 by a unified state-local communications tax. The Florida Legislature replaced several state and local taxes and fees with a two-part tax that will be consistently applied on a broader range of communications services. The 5 percent franchise fee will be replaced with a 2.2 percent local component to the unified tax for the 11 months that will accrue to FY02. The rate will drop to 2.1 percent in FY03 when local governments will receive 12 monthly payments. Because cable franchise fees are remitted only once per year to the County and the new tax will take effect 9 months into that calendar year, we anticipate receiving essentially a 9-month distribution of cable franchise fees in FY02 as well as a full year of communications tax revenue.

Conclusion

This budget reflects BOCC direction on priorities, funding strategies and tax relief. The budget also reflects changes in a variety of programs that are intended to trim costs wherever possible without reducing services and to selectively identify areas where services should be expanded or reduced. Efficiencies alone will allow the BOCC to cut several million dollars in costs to County taxpayers while better targeting how we spend remaining dollars. The growth in the tax base facilitated continuing reduction in our Countywide tax rate and the continued phase-in of an exemption for low income senior citizens.

Additionally, the budget expands funding for both maintenance of County roads and an investment in constructing new roads within existing revenues. The non-recurring investment in new roads not only allows us to jumpstart three priority projects, but also allows the BOCC flexibility in having the funds we will need in our next budget cycle to open fire stations, continue our commitment to Sheriff’s staffing and code enforcement, and consider additional enhancements to our recreation facilities and programs.
COUNTY ADMINISTRATOR’S BUDGET MESSAGE
We continue to pursue a fiscally conservative reserve policy, meeting all reserve requirements, but we have not expanded those reserves at the expense of taxpayer relief.

Respectfully Submitted,

Daniel A. Kleman
County Administrator

December 1, 2001

Members of the Board of County Commissioners:

The acts of terrorism in New York and Virginia on September 11th have had a profound emotional impact on all Americans. In the aftermath of those attacks, we have seen a sharp terrorism-induced drop in tourism that enhances the impacts of the first recession in a decade. Impacts have been both direct and indirect. In a report issued last month, we outlined financial impacts on this budget for FY02 and FY03 resulting from this combination of factors. Those impacts are summarized here:

• We reassessed projections for revenues reliant on a sales taxes and updated our estimates consistent with new State of Florida consensus forecasts issued October 15th. Because our community is less reliant on tourism than the State as a whole, our impact is less significant. We also benefit from a substantially different mix of revenues that is less sensitive to sharp economic swings. (The State receives 73 percent of general revenue from sales taxes while Hillsborough County receives 69 percent of its General Fund revenue from property taxes.)

• Overall, we anticipate a potential $10.6 million reduction in budgeted FY02 revenue and a potential $11.0 million reduction in planned FY03 revenue. Those reductions reflect less than 5 percent of budgeted revenue from those sources each year. Adequate reserves can address FY02 impacts and we will have more precise information with which to update FY03 projections when the FY03 budget is updated before final adoption in September 2002. Reserves could cover FY03 impacts as well, with the exception of the Health Care Program. You had already directed us to seek a funding solution to a divergence of Indigent Care Sales Tax revenue and the cost of the Health Care Program and that discussion will occur in January 2002.

• We also expect some impacts of an emergency legislative session held to rebalance the State of Florida’s budget for the State fiscal year ending June 30, 2002. In large part, we act as a contractor for the State of Florida and may be required to scale back services based on funding reductions. There is no presumption we would assume financial responsibility for cuts in State programs.

• Over 120 County employees are reservists and, to date, over 40 have been called to active duty. County policy is to make up any pay differential to ensure reservists do not suffer financially. At the same time, we anticipate the need to cover many of these vacancies since the largest concentration of reservists are in public safety (law enforcement and fire protection) positions. Any impacts can be addressed through contingency reserves.

The financial challenges facing the County as a result of world and economic events do not require significant change in the FY02 and FY03 budgets. We will continue to monitor impacts and seek any corrective action needed to ensure delivery of service while maintaining our financial integrity.

Respectfully Submitted,

Daniel A. Kleman
County Administrator