December 5, 2003

Members of the Board of County Commissioners:

It is my pleasure as your County Administrator to present to you the biennial or two-year budget of $3.0 billion for FY04 and $3.0 billion for FY05. This budget includes property tax millage rate reductions for the ninth and tenth years in a row.

The budget reflects the results of a budget process that began in January with a series of budget workshops that culminated in two public hearings in September. On September 18th you adopted a budget for the fiscal year beginning October 1, 2003 and ending September 30, 2004 - FY04. At that time, the biennial process included approval of a planned budget for the period October 1, 2004 through September 30, 2005 - FY05. This reflects the fifth time the Board of County Commissioners (BOCC) adopted a biennial budget covering two separate fiscal years. The biennial budget process is an innovative means of providing important and consistent policy direction, minimizing the annual replication of a labor intensive budget preparation process, while allowing critical issues to be readdressed as necessary in the “off year” of the process.

At the same time, we integrate the biennial budget process with a six-year capital improvement program (CIP) of which the first two years reflect the capital budget component of this biennial budget. The combination of a two-year budget and a six-year capital plan allows members of our community to look at a broad picture of how resources will be allocated to meet community needs.

The Budget for FY04 and FY05

The Budget totals $3.0 billion for FY04 and $3.0 billion for FY05. The total budget amount can be somewhat deceiving since nearly a quarter of the budget each year reflects counting the movement of funds between accounts (i.e., “transfers”). The budget increases by $189.3 million or 6.8 percent for FY04 and by only $12.7 million or less than one-half of one percent for FY05. The operating budget, which generally reflects the day-to-day cost of providing services, reflects a $117.4 million increase for FY04, and a $34.5 million increase for FY05.

A more appropriate year-to-year comparison may be made at an organizational level where underlying factors are more readily apparent. The Sheriff’s budget, for example, will increase $23.7 million in FY04 or 9.9 percent due to a combination of cost increases, a BOCC commitment to a staffing standard for law enforcement officers and the planned opening of new correctional facilities. In FY05, the growth is slower: a $17.9 million or 6.8 percent increase.

The Process

Earlier this year, the BOCC held four monthly budget workshops, beginning in January. Those workshops allowed an opportunity to consider the upcoming biennial budget process within the context of our five-year Pro Forma projections for major operating funds, with consideration of State of Florida legislative proposals that could shift costs to county governments or reduce revenues, and with an understanding of the nature and scope of unfunded capital requests.

Starting the budget process within the context of budget projections allows us to recognize the challenges we will face - not only in preparing a balanced budget for the next one-to-two years, but with an understanding of how existing commitments in the CIP will impact future operating budgets. For example, a fire station may have been fully funded in a prior budget cycle and have no financial impact on the current budget, but require $1.5 million in new resources in a future year for annual operation.

A Balanced Budget - As your designated budget officer, the County Administrator presents you a balanced budget. The budget prepared for your review and delivered in June was balanced in each of the numerous funds that constitute this budget and for each of the two years. That Recommended Budget was prepared consistent with BOCC policies, priorities and direction. The Recommended Budget however, is a working document and you scheduled a series of workshops and four public hearings to allow the budget to be further refined to meet your priorities and to allow the public opportunities to address their concerns and priorities before final decisions were made. Two of those public hearings were specifically scheduled to allow public input prior to any tentative decision on maximum tax rates, which you set at a workshop on July 31st.

Developing a Budget Within the Context of Multiyear Forecasts - Our five-year “Pro Forma” projections reflected some slowing of revenue growth to reflect uncertainty in the economy mixed with continued strong residential construction activity. Expenditures reflected BOCC commitments to staffing standards in certain areas, an expectation that compensation costs will continue to grow based on comparisons with public and private employers and based on State retirement contribution rates rising to reflect actuarial sound funding, and recognition that certain funded capital projects will have significant operating costs when they are completed. Our forecasts did not account for potential shifting of costs by - or reduction in revenues from - the State of Florida. Overall, our Countywide General Fund appeared to be in balance for the next five years but the Unincorporated Area General Fund (which provides municipaltype services to unincorporated area residents and businesses) appeared to have a small but measurable deficit based on the cost of staffing new parks, fire stations, and our staffing standard for law enforcement. It is important to note that the Pro Forma, with limited exceptions, provides a projection of what we refer to as a “continuation level” budget. That is defined to update costs for existing staffing levels and existing contracts, services and commodities, but not to add staff to maintain service delivery ratios or to serve additional clients. A growing population and slow growth in grant revenues may strain our ability to function at such a level. The Pro Forma provides useful context upon which we can build a budget for the upcoming biennial period.

Budget Development - As we collected information to prepare a balanced budget for BOCC consideration, we monitored the State budget process, obtained early estimates of tax base growth from the Property Appraiser’s Office, and projected the budgets for Constitutional Officers who deliver official budget requests much later in the process than other organizations. As we would later find out, each of these factors led us to believe our financial situation was graver than it turned out to be. The State inflicted measurable, but limited impacts on our budget. The early suggestions that our ad valorem (property) tax base would grow by only 4 to 5 percent turned out to be far below the official estimates provided at the end of June. Both the Sheriff and the Clerk requested funding slightly below our projections. While the Supervisor of Elections request exceeded our projections in FY04, the largest impact is a one time expenditure for additional voting equipment that can be funded with one time revenue.

In the final analysis, we weathered both the impacts of what, until very recently, appeared to be a slow economic recovery as well as the shifting of a portion of the State’s financial burden much better than we feared. As a result, we are in a much stronger financial position than the majority of local governments across the country.

There were certain opportunities that facilitated funding decisions reflected in this budget. One was the opportunity to address some of our greatest nonrecurring needs. The key to doing so was by ensuring that we used non-recurring (i.e., one time) funds to fund non-recurring needs.

Prior to the economic downturn we accumulated reserves in two State shared revenues as actual annual collections exceeded budget. As these revenues grew, we increased subsequent budgets, but the excess revenue collections that had been received accumulated in reserves. One revenue is referred to as State Revenue Sharing. While it historically was based largely on intangibles tax revenue, it is now primarily based on State sales taxes. The second revenue is referred to as the Half Cent Sales Tax. That source, shared by the State of Florida with both cities and counties, is based on a percentage of State sales taxes collected within each county. We previously tapped State Revenue Sharing to provide the $12 million “war chest” for our Water Resources Team as a means of ensuring that we could afford careful examination as Tampa Bay Water - the provider of our community’s potable water - located new sources within Hillsborough County. The Half Cent Sales Tax has been committed, in part, to debt service on County bonds.

As we entered the downturn, funds were retained as “revenue stabilization” reserves because we recognized that State shared revenues could be impacted dramatically by either of two events:

• First, a sharp slowdown in consumer activity that would shrink revenues tied so directly to consumer purchases. In the aftermath of the September 11th terrorist attacks, one of the first things we did was step up the detailed level at which we monitored both of these revenues.
• Second, the potential for the State to change the allocation formula in response to the State’s own budgetary crisis. North Carolina is an example of a State that did exactly that to local governments in order to solve a State crisis by taking back revenue previously distributed to local governments. Article V implementation, which I discuss later, may still impact one or both of these revenues as the mechanism by which the State adjusts revenues to offset the costs absorbed by the State in response to Florida voters’ approval of Constitutional Revision 7.

Now that the economy has entered a growing recovery, we are in a position to define a less conservative reserve level for each of these sources and release the balance to address high priorities for non-recurring funding. We targeted drawing down reserves in each case to a level equal to about 10 percent of annual projected collections. That is twice the offset typically required by Florida Statutes, but it recognizes the greater potential volatility of these revenues.

A Commitment to Meeting Board of County Commissioners Policies and Priorities

In several areas, this budget supports key policies and priorities previously identified by the BOCC:

Law Enforcement - The Board is committed to law enforcement through the retention of a standard of 1.7 sworn law enforcement officers for each 1,000 unincorporated area residents. As our unincorporated population continues to grow, this standard justifies a steady stream of additional Sheriff’s deputies. Over the next two years, the Sheriff will add a total of 50 deputies including 5 school resource officers.

Fire Protection - A Tampa Shores Station will open in February 2005. This continues a BOCC commitment to the opening of additional fire stations to address unincorporated population growth and to prevent a deterioration of response times. The budget also adds a rescue unit to the River Oaks Station and takes over staffing for a water tanker that volunteers are unable to continue staffing. In addition, we are implementing technology that should improve our ability to dispatch units through global positioning system (GPS) equipment that tracks the location of our vehicles. The latter is largely a non-recurring cost. The staffing increases present recurring costs.

The BOCC also took a bold move towards funding future needs by raising the Communications Services Tax rate from 2 percent on communications services to 4 percent. The revenue from one percent of the tax was set aside in reserves in FY04 and FY05 for future expansion of fire protection. The higher tax rate will be levied in unincorporated Hillsborough County beginning January 1, 2004. Even at the higher rate, the County will levy a lower rate than all three municipalities within the County, and a rate lower than other charter counties.

Sign Enforcement - The budget takes a significant step towards enforcing land use regulations related to signs in the unincorporated area. This has been a community concern and involves both permitted signs that may not meet regulations and unpermitted signs. To initiate adequate resources to have a noticeable impact, we added staffing in the Planning and Growth Management Department to provide follow-up on permitted signs to ensure regulations are met. We also added staffing in the Housing and Community Code Enforcement Department to address illegal signs posted in public right-of-way.

Implementing the Town ‘N Country Plan - A notable proposal that came out of our community-based planning activities was the prospect of replacing the Westgate Library rather than continue our plans to expand the existing facility. When we examined the long-term financial viability of our library system earlier this year, we determined that the library system, with its separate millage rate and other revenues could absorb additional one time costs but was approaching the limit in regard to an ability to absorb recurring costs. That worked well with the proposal to replace the Westgate Library since we already had planned to operate a 25,000 square foot facility with the associated recurring costs. This budget funds the replacement of the existing facility with a new facility. The added cost of $3.2 million is affordable and future operating costs may actually be slightly less due to the efficiency of a new facility over the expansion of an existing facility.

Other aspects of the Plan are also addressed: Transportation funding of $3.8 million was included in transportation projects funding approved by the BOCC in FY02, and a $2.0 million Senior Center was also previously funded. To address needed parks improvements, $0.5 million is budgeted in FY04 and an additional $0.5 million is budgeted in FY05 for Westgate Park improvements.

Parks and Recreation, Facilities Maintenance, Development and Operation - Several commitments are reflected in the budget to address BOCC policies and priorities. First, BOCC policy is to maintain existing assets as a priority over new construction. The BOCC has committed one percent of revenues in the Countywide General Fund and in the Unincorporated Area General Fund to fund repair and maintenance projects. A backlog in needed maintenance of parks and recreation facilities requires a higher level of commitment in the near term to bring these facilities to a condition that can be maintained by the ongoing commitment of operating revenues. To address this backlog, the budget uses excess State shared revenues that accumulated prior to the economic slowdown. We adjusted reserves for revenue stabilization (to reserve 10 percent of projected annual revenue) to provide reasonable safeguards against future revenue fluctuations and, as a result, freed up excess reserves to fund these nonrecurring maintenance needs. This approach to stepping up maintenance efforts is not new: We used a similar approach over a several year period to upgrade the condition of our motor vehicle and heavy equipment fleet. The result of our investment in our fleet was a reduction in downtime and lower ongoing maintenance costs - opening up opportunities for County departments to operate more efficiently and effectively. Our investment in improving the average condition of our parks and recreational facilities should be similar; improved availability of facilities and lower ongoing maintenance costs. Included in these investments is a specific investment to upgrade the condition of lighting systems at athletic facilities.

In addition, we are using the same one time source (excess State shared funds) to fund one time needs for two trails projects: Upper Tampa Bay Trail Phase IV and the Northdale/Lake Park Greenway Trail. The Upper Tampa Bay Trail needed $2.8 million for land acquisition by FY05 to be eligible for federal TEA-21 (transportation) funding for design and construction. The Trail will be qualified for up to $6.5 million in federal funding. The Northdale / Lake Park Greenway Trail needed about $0.3 million for construction.

Plant City requested the County continue to contribute funding for Phase I of the Ellis Methvin Park. The City bases its request on usage by unincorporated area residents. The County previously assisted with the cost of land for the Park. The County will provide $0.7 million - split between FY04 and FY05.

The budget provides ongoing staffing for new County facilities funded from our Countywide and Unincorporated Area General Funds, as appropriate. In FY04, funding is provided to staff the Gardenville Community Center and for maintenance staff for several newly opened parks. In FY05, funding is provided to staff the gymnasium at the All Peoples Life Center, as well as the Westchase Park, the Carrollwood Meadows Park, and an addition to the Northdale Park.

The budget also adds staff at four athletic complexes: two existing facilities and two new facilities. This continues the BOCC’s commitment to developing higher maintenance standards for selected athletic facilities.

Monitoring Tampa Bay Water Projects - The BOCC committed to closely monitor new water supply projects in our community through the funding of a Water Resources Team. This interorganizational group had been originally intended to sunset at the end of FY01, but funding was continued through FY03 to address our ongoing concern over the projects Tampa Bay Water intends to build in our community. The number of outstanding issues to be resolved including new proposals for projects requires us to continue this essential program. Sufficient funds will be carried forward to meet staffing costs but an added $2.8 million was infused into this program to provide sufficient funding for the use of consultants at an estimated cost of $1.4 million per year.

Consumer Protection - Recognizing the value of protecting County residents against consumer fraud, we will double our consumer protection staff over the next two years. That amounts to eight new staff in this public safety function.

Expanded Transportation Capital Program - The BOCC increased its annual commitment to transportation during the last biennial budget period by $10 million per year and authorized an added $132 million in projects financed with the Community Investment Tax, a local option sales tax for infrastructure. To address the expanded commitment, this budget shifts staff previously committed to the accelerated stormwater capital program to transportation projects. The stormwater program is winding down so five staff in the County Attorney’s Office, seven staff in the Public Works Department, and four staff in the Real Estate Department will make the transition to transportation. The ongoing funding of these positions is contingent on recovering the full direct cost of each position through monthly reimbursements from the transportation projects on which they work. Should there be inadequate work to justify the continued need for any of these positions or should the appropriate department not manage the reimbursement process adequately, we will not be able to retain these positions.

We adjusted our existing transportation program through a plan to split the funding with the City of Tampa for the widening of a 1.33-mile segment of Cross Creek Boulevard. Each government will contribute $1.8 million. We also initiated funding over the next five years (FY04 through FY08) for project development and environmental study of the extension of Citrus Park Drive.

Grant Funding - In Children’s Services, funding from a transitional living grant will allow us to open two shelter group homes for homeless teenage girls.

Slower growth in grant revenues has made it more difficult to maintain services where the County provides limited matching funds. Much as the HealthCare program has undergone a streamlining of administrative costs, we intend to phase down administrative costs in the Head Start and Early Head Start programs, cutting 50 positions. Existing vacancies were cut and employees in other positions targeted for elimination are being placed in other County positions as they become vacant. Hillsborough County has been highly successful in avoiding layoffs during past periods of slow revenue growth. As long as the number of positions being cut is small, we should be able to avoid layoffs.

The BOCC approved a pilot program intended to stabilize service delivery in a grant-funded program over the course of a fiscal year. The innovative program created an “overdraft” reserve for Aging Services grant-funded programs. The reserve is intended to allow services to the elderly to remain in place for the balance of a year even if grant revenues fall short of budget - as long as the shortfall fits within a predetermined limit of $0.5 million. In the absence of such protection, the County could be forced to adjust services during a grant year simply on the suggestion that funding might be less than anticipated. This pilot program will be assessed in the next budget cycle to determine if it has been successful and should be continued and, if successful, whether it should be expanded to cover other grant-funded programs.

Commitment to Our Seniors - Due to insufficient grant funding to absorb cost increases, the Countywide General Fund picked up added costs in order to avoid reducing clients in Aging Services’ Community Care for the Elderly (CCE) program. Funding was also added to serve Adult Protective Service clients, for which the County serves as the Lead Agency.

In an effort to expand in-home services to 200 of the highest priority individuals on a waiting list of over 1,200 seniors, the BOCC committed $1.2 million per year to expand services. At an annual average cost of nearly $5,800 per client, the program compares favorably with nursing home care these clients would likely need that can cost in excess of $40,000 per year.

Commitment to Our Children - Our commitment to children is also a priority in the changes reflected in this budget. The budget implements a new program to provide services to families of developmentally disabled children, including County provided respite care. The budget also provides matching funding for the Healthy Start Coalition, contingent on funding from the Children’s Board.

To keep pace with growth, we added a child care licensing inspector in FY04 and a second inspector in FY05. The budget also provides County vehicles for use by child care inspectors. It was inequitable that other programs have historically provided County vehicles to inspectors while this program required employees to regularly drive their own vehicles. This is largely a one time cost. On-going costs for maintenance and vehicle replacement charges will be partly offset by reduced mileage reimbursements.

Commitment to Our Employees Through Proactive Human Resources Services - During the past year we found that we need to step up our training programs for County employees, improve our employee communications, and provide an avenue for proper investigation into complaints of inappropriate treatment. In response to a review by the Craig Group and its subsequent recommendations, we have enhanced our funding commitment to each of these areas in the budgets for FY04 and FY05. Combined with new leadership in the area of Human Resources, we intend to ensure that Hillsborough County is a preferred employer with a reputation for valuing the diversity of its employees and the diversity of the community we serve.

Library Expansion Program - The FY04 and FY05 budgets reflect the BOCC’s commitment to library expansions and renovations. The West Tampa Library expansion and the Lutz Library expansion will both be completed in FY04, with extension of service hours and staffing. In FY05, both the South Brandon Library and the Upper Tampa Bay Library will open. The BOCC approved enlarging these new facilities earlier this year from 10,000 square feet to 15,000 square feet.

Security of New Facilities - The FY04 budget provides security services and maintenance and custodial services to the new Edgecomb Building and security services for the Floriland Mall court facility.

Funding of Constitutional Officers - In accordance with law, this budget fully funds the requested FY04 and FY05 budgets for the Sheriff, the Clerk, and the Supervisor of Elections. The amounts shown in the budget for the Tax Collector reflect commissions to be paid on the taxes collected by that Office. For FY05, those commissions are projected based on projected tax rates and growth in tax bases. 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. With the exception of the Supervisor of Elections, the Constitutional Officers maintain their own accounting systems and provide more summarized information than that requested through the BOCC budget process.

Other Agencies - Civil Service Board funding has been provided that is slightly above the statutory minimum, 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 send an invoice to the Port Authority, the Aviation Authority, the Children’s Board, Expressway Authority and the Tampa Sports Authority for their proportionate shares of the Civil Service budget. The BOCC approved a pay and classification study covering both classified positions under the Civil Service system and unclassified (management) positions within County Administration. The study is intended to provide a basis for compensation adjustments in the next biennial budget process (FY06 and FY07).

The Planning Commission has been funded at a higher level than the adopted FY03 budget: funding includes a position added during FY03 that will be fully reimbursed by MPO grants. The Law Library will receive continued County funding to make up for inadequate court fees. Legislative action to increase these fees was unsuccessful.

The Environmental Protection Commission received an expanded commitment to three programs - open burning regulation, wetlands, and GIS services - funded through user fees approved by the BOCC.

Other Organizations - The BOCC committed funding to several other organizations - both public and nonprofit:

* A commitment of $0.5 million split between FY04 and FY05 for the Children’s Museum, contingent on matching funds and other provisions.
* A commitment of $1.0 million for the Performing Arts Center School of Performing Arts: $0.5 million in FY04 and the balance split between FY05 and FY06.
* A commitment to a University of South Florida high technology incubator program of $0.5 million split between FY04 and FY05.
* A commitment to partner with the Tampa Port Authority and the City of Tampa on funding a protocol officer.
* A commitment to youth sports development programs through the Tampa Sports Commission in an amount of $0.1 million in FY04 and $0.15 million in FY05.
* Expanded support to Hillsborough Area Regional Transit (HART) for circulator service and weekend service.

Compensation - This budget follows BOCC policy on maintaining pay comparability with public and private employers at the 50th percentile. The FY04 budget provides compensation adjustments consistent with a Civil Service labor market survey and subject to a maximum annual market adjustment of 3.5 percent for any job class. A similar assumption is made for FY05 and will be adjusted during the budget update for FY05 to reflect a survey conducted in early FY04. We continue to provide employees not subject to collective bargaining the ability to progress through their pay ranges based on merit increases as well. While the adjustments reflected in the biennial budget are consistent with BOCC policy, the previously described pay and classification study should provide an opportunity for a current and comprehensive assessment of pay rates.

The budget is built on the assumption that employees covered through collective bargaining agreements will have pay increases comparable to rank and file employees.

Benefits - The State retained Florida Retirement System contribution rates below those that would be consistent with actuarial levels for a second year. Because of differences in the fiscal years of the State and local governments, we assume rates will rise to actuarial sound levels on July 1, 2004 - nine months into FY04. The higher rates have been factored into both the FY04 budget (prorated for three months) and the FY05 budget. Balancing the budget to these higher rates is sound financial planning. It is particularly important as the BOCC looks at the affordability of future program costs such as those associated with operation of new parks, libraries, and fire stations that are staff intensive.

The budget was built on new employee health insurance costs for our self-funded program. In FY04, that resulted in a $35 per month increase in the County’s share of the employee health insurance for those employees with County provided health insurance, combined with a $10 per month increase in the cafeteria benefit for all employees. Employees who participate in the County provided health care program would pay $10 more per month. In FY05, we assumed the County and employees would split any increase in health insurance cost.

Modification of Policy on Budget Adjustment for Turnover Savings (BOCC Policy 03.02.02.25) - Since adoption in 1998, this BOCC Policy has allowed us to set aside a portion (previously, 2 percent) of budgeted personnel costs in our major operating funds. On the recommendation of the Clerk of the Circuit Court, these turnover (attrition) savings are reserved in the event departments are unable to operate within the remaining amount. Based on an examination earlier this year of our experience, only a modest amount of this reserve has been used. Beginning with the FY04 budget, the BOCC approved a recommendation that we tighten the budget by continuing to adjust departments’ budgets for turnover savings as has been the policy, but reserve only a portion of the adjustment based on experience. Specifically, that we adjust personnel budgets in our General Funds down by 2 percent and reserve an amount equal to one quarter of that adjustment. That should be sufficient to meet the needs of departments that do not always experience turnover savings. As a result we were able to achieve a one time budget savings that could be used for non-recurring needs of about $2.5 million.

Article V Implementation - Probably the most significant budgetary change for this biennial period will be the implementation of Revision 7 to the Florida Constitution, which requires the State to assume costs for Article V that had been passed to county governments. The implementation is still not clear. Initially, counties regarded the shift of responsibility for Article V as an opportunity for savings that could be used for tax relief and / or meeting local priorities. Since the passage of Revision 7, there have been suggestions that counties would be penalized through the implementation process. Our implementation of the changes will occur on July 1, 2004 - nine months into the first year of our biennial cycle. In this biennial budget, we took steps towards that transition. First, in the various funds that pay for court related programs, we budgeted court related revenues for both years. On the uses side, we appropriated funds for nine months of FY04 and created reserves for the remaining three months of FY04 and for all of FY05. That ensures that any revenues that we retain can be allocated to court programs while preventing any potential for excessive spending in programs that might shift to the State on July 1, 2004. If we lose the revenues with implementation, then we can proportionately cut reserves as we lower budgeted revenues. If we retain revenues, we can appropriate the reserves to the relevant programs and continue local funding.

The BOCC took an added step, recognizing that some court related programs exist because they reflect local priorities and values - e.g., a drug court created to reduce the need to incarcerate people who could be diverted to drug treatment programs at much lower cost to the public. The BOCC set aside more than $3 million by FY05 in Countywide General Fund dollars to sustain programs unlikely to be funded with State dollars even though they are currently funded with restricted court revenues and those sources are likely to be assumed by the State. The implication of the BOCC action is that continuation of several programs is certain because adequate local funds have been set aside.

One of the values of biennial budgeting is that the State will finalize its implementation during FY04 and that will allow us to address Article V issues during the “off year” of our biennial cycle. Most other Florida counties will have Article V implementation issues impinging on other budget issues while we will largely have the FY05 budget out of the way and be able to focus our attention on this issue.

Outside Agencies - We completed the biennial review of public service agency applications — both applications for Community Development Block Grant (CDBG) funding and applications for general revenue. This has been a challenging period because other funding sources have cut back funding to some agencies we fund. For those non-profits that participated in the competitive process, we recommended additional funding for the highest ranked agencies of up to ten percent. The overall increase in spending is not great, but rewarding the high performers sends a message that we do, in fact, have pay-for-performance contracts. As in the past, the evaluation of applications was conducted by committee process using members of the BOCC appointed Citizens Advisory Committee on both the committee that reviews CDBG funding and the committee that reviews Countywide General Fund funding.

The application process was adopted by the BOCC with the intent of channeling nonprofit agency requests to a defined process. At the same time, we recognize that some agencies will appear during the public hearings on the budget to solicit higher funding levels or to make their case for funding directly to the BOCC. A limited number of supplemental funding requests were approved by the BOCC as we considered public comment on the budget.

Museum of Science and Industry (MOSI) - While independently operated, MOSI remains a County asset and responsibility. As the existing structures age, a commitment is needed to maintain our past investments. The budget includes $1.75 million in excess reserves from Phase I of the Community Investment Tax (CIT) to address needs at MOSI: $0.75 million for maintenance of the roof over the original structure and $1 million for repairs, resealing, and recaulking of the newer structure. Despite cost cutting measures, MOSI required supplemental funding in FY04. We doubled our operational support from $0.3 million to $0.6 million in FY04. Our funding support drops back to $0.3 million in FY05.

Jail Construction - One of the signs of a growing population is the unfortunate need to construct additional jail facilities. Even as Phase V facilities are being completed at the Falkenburg Road Jail with the addition of 27 detention personnel in FY04, the demand for additional facilities is driving the need to fund Phase VI. Total projected cost for Phase VI including significant administrative facilities currently inadequate at that site, is $50.5 million. In FY04, we will use $4 million in State sales tax reserves to begin design of the new facilities. The balance of the funding, $44.5 million in FY06 for construction and $2 million in FY07 for equipment will require us to finance the project through an allocation of the Community Investment Tax (CIT). This project will use our remaining capacity within Phase II of the CIT, which commits funds through January 2008. To address this project on top of our prior commitments, the Debt Management Department will manage a program of short term commercial paper to meet our cash requirements for capital projects including the jail and then replace the short term financing as CIT revenue grows to a level that can support long term debt.

Mosquito Control Facility Relocation - The Aviation Authority has advised us that the County’s lease for mosquito control facilities at Tampa International Airport will not be extended past FY07. We have identified Vandenburg Airport as a relocation site and have committed $2.5 million for land and construction of a secure site.

Property Tax Rate Cuts - This budget provides modest millage rate reductions for all County taxpayers in both FY04 and FY05 - the ninth and tenth consecutive tax rate reductions. We continue to recognize the importance of controlling our reliance in the Countywide General Fund on property tax revenues through a series of annual reductions in the tax rate and the message it sends taxpayers that we don’t simply allow revenues to rise with assessments without consideration of the tax rates applied to those assessed values. By FY05, we will have a decade of property tax savings amounting to nearly a one mill reduction. More importantly, even if there is no further reduction in the millage rate after FY05, savings that will have accumulated from the reductions will continue to build over the next decade - for a total savings between FY96 and FY15 of over $815 million. For the owner of a $100,000 home, the comparable savings over the same period will be $1,432. For the owner of a $200,000 home, the savings will amount to more than twice as much - $3,209 - because the $25,000 homestead exemption is the same regardless of the assessed value of a home.

A Stake in the Future of Our Community

A Commitment to Revenue Diversity in Funding Future Needs - The BOCC addressed two issues in setting the Communications Services Tax rate at a comparatively modest 4 percent rate from an unusually low 2 percent level that previously existed.

First, the use of the additional revenue addresses revenue diversification by reducing our relative reliance on ad valorem (property) tax revenue to pay for Unincorporated Area services. Revenue diversification insulates County programs against the potential volatility of funding if we relied too heavily on one source. This diversification was one of 59 recommended budget practices identified by the National Council on State and Local Budgeting - many of which we previously adopted in order to strengthen our budgeting process.

Second, the BOCC has facilitated an opportunity to address funding needs for the services the County provides to Unincorporated Area residents. As indicated earlier, the County’s Pro Forma forecasts a deficit of revenue to meet future funding needs - particularly as we address the cost of operating new fire stations and parks. The BOCC split the additional revenue from the higher tax rate into two shares: one was “earmarked” for future consideration in expanding fire protection while the second share was made available for any Unincorporated Area service. By FY05, when we will have a full year’s receipts from the higher rate, each share will amount to about $6 million per year. All of the FY04 and FY05 shares for fire protection ($3.8 million and $6.0 million, respectively) are reserved for future allocation. The majority of the second share has also been reserved for future allocation: more than $2.1 million in FY04 and more than $5.0 million in FY05. The second share presents an opportunity to address the future deficits foretold by the Pro Forma forecast.

A Strategy of Planning for the Future - We took an important step earlier this year with the adoption of a strategic plan for Hillsborough County. That initial plan was completed too late to be incorporated into the biennial budget process for FY04 and FY05. That plan does, however, become a foundation on which we will refine our strategic planning processes. Departments are using that framework to develop their own plans - linked to the Countywide plan where appropriate but providing supplemental measurable strategies and objectives that can reflect the broad spectrum of services and clients we serve. As we continue our development of strategic plans, we will have the opportunity to effectively link those plans to the biennial budget development process for FY06 and FY07. They will also lead to further refinement of existing performance measures and identification of opportunities for process improvement. Ultimately, we will be armed with objectives and measures that will allow us to more concretely assess our workload, efficiencies, and effectiveness in serving our community - leading to better decisions on how scarce resources should be allocated to our highest needs.

Conclusion

This budget reflects strategies consistent with BOCC direction on priorities and policies. Strong fiscal policy adopted by the BOCC accounts for how well we weathered the economic slowdown.

We are positioned to control our own destiny -- retaining or expanding services at a time when many governments at both the State and local level have faced financial crises. At the same time, we are sensitive to our impact on taxpayers in the revenues that we collect and mindful that many in our community are still waiting to be aided by the economic recovery. The strategies we have used avoid budget gimmicks that defer obligations to future periods. To the contrary, we have carefully compared recurring revenues with recurring expenditures and set aside funds to address future needs. We recognize the impact new facilities will have on operating budgets so that we can assure our ability to meet those funding obligations - for jails, parks, fire stations, and libraries - as new facilities are completed. Our capital budget commits heavily to maintenance of existing assets as a priority and our reserve policies are conservative - recognizing the importance of being prepared for unexpected events where our community will expect the County to assume a leadership role in serving our residents and businesses.

I look forward to continuing our service to the citizens of Hillsborough County with the commitments reflected in this biennial budget.

Respectfully Submitted,

Patricia G. Bean
County Administrator