Tuesday, October 8, 2013

A New Era of Local Government Fiscal Health Case Study: New Smyrna Beach, Florida

ICMA Member Spotlight: City Manager Pam Brangaccio

ICMA member Pam Brangaccio serves the city of New Smyrna Beach, Florida, where she has been city manager since 2009. An eclectic Atlantic Ocean community of 24,000 located in the northeastern region of the state, New Smyrna Beach (NSB) has been named as a best beach town, top surfing town, and top arts town. The city was, at one time, two separate towns, Coronado Beach and New Smyrna. The city celebrated its 125th Anniversary in 2012.

Like many local governments across Florida and the United States, NSB has seen its tax base shrink with the economic recession, decreasing 41% from 2009 to 2012 as real estate values fell. “My first budget year in NSB, we had to cut the operational budget by 25%. It was necessary to reduce the workforce by 20%, primarily through our early retirement incentives program and leaving vacant positions unfilled. This in turn caused service level reductions in maintenance operations, police, and fire services. All three of the local government unions in the city worked with my office and the city commission and agreed to ‘stay’ wage increases, roll back other employee benefits, and increase employee pension contributions for police and fire. The city got through the fiscal crisis by working with its employees, unions, and community using priority budgeting methods.”
In the 2013 and 2014 budget years, NSB has seen small increases in taxable values. The citywide emphases have been economic development, both in the Community Redevelopment Agency (CRA) and airport industrial park, and a major annexation campaign; working with Volusia County through a Joint Planning Area Agreement, 100 properties have annexed over the last four months. The city currently has the second lowest taxable millage of 16 cities within the county.

Brangaccio enthusiastically describes the CRA, which was reenergized in 2010 with the adoption of an updated redevelopment plan. Early projects included parks, streetscape improvements, boat ramps, sidewalks, boardwalk, south Atlantic roundabouts, median improvements, city marina, and parking. Incentive projects now focus directly on eliminating blight by providing grants for property improvements ($1.9 million in the last three years), the impact of which has been multiplied 1.5 times through private property investments ($2.9 million). The largest fiscal success of the new program is the new Hampton Inn and Suites on Flagler Avenue. The CRA budgeted $656,607 in incentive dollars that has resulted in a total private investment for a $16 million hotel.

The current CRA area expires in 2015, so the city is working on a blight study for a new CRA to revitalize Highway US 1, and hopes to partner with Volusia County to implement the program.

Brangaccio stated, “NSB is working with the Center for Priority Based Budgeting to provide a long-range fiscal sustainability model for our city commission, as our commissioners want to do more than set unfunded goals for the community. We have strived to link the annual budget to the commission’s strategic planning sessions, as community expectations did not end with our 20 percent budget reduction. We find the December beginning of the year/end of the year annual planning session to be one of the best things we do, as the commission comes off the dais and sets its priorities.”

Read the rest of the ICMA Member Spotlight here.

Strategic planning and fiscal scenario planning has been at the core of our work in ICMA's Leading Practice of "Fiscal Health." That is, scenario planning local governments financial forecast(s) for worst-case (and best-case) scenarios.

In “Excelling in Times of Fiscal Distress,” an article Bob O'Neill wrote for Governing, in October 2008, he wrote “Most of us can articulate the early-warning signs that preceded the current economic downturn: Global forces that dramatically changed the local, state, and federal playing fields. Skyrocketing fuel costs. A failing housing market…property tax limitations. Yet, many of us failed to correctly interpret these early-warning signs in relation to their impact on our government organizations.”

Interpretation is the key. For example, interpreting the impact of a major employer closing down and what the true impact would be on your organization and community.

The major "tool" the Center for Priority Based Budgeting has been working on is a data-visualization tool that depicts real-time impacts of various scenarios with a financial impact. So if the major employer closes down, what impact would it have on your "ongoing" revenues and expenses, and what impacts would it have on your "one-time" sources and uses of funds. Furthermore, what actions or initiatives are being considered to deal with this situation that would also have an impact (for instance, if there are any incentives on the table that could serve as an economic development strategy; tax abatement; TIF, etc, or re-investing in development, urban renewal, or recruitment to address attracting new businesses).

For all of these related activities, you want to be able to model the situation, demonstrate the impacts, and appropriately weigh the impacts of various decisions. That's what Fiscal Health modeling is all about.

Fiscal Health modeling is a powerful scenario-planning tool, providing easy to understand visualization of data.
  • Elected officials have adopted Fiscal Health as their preferred means of communicating with staff regarding any decisions brought before them that potentially might have a fiscal impact – asking staff to “show us” those impacts using the principles of Fiscal Health as the primary communication device.
  • Organizations have entered into labor negotiations with their bargaining units using Fiscal Health as a way to quickly agree on the assumptions behind the City’s fiscal forecasts, therefore establishing a basis of trust in the discussion – then modeling the bargaining units’ requests to demonstrate impacts to the City’s fiscal position.
  • It has even been used to help a Water and Sewer District prioritize capital projects, understand the ongoing impacts of those projects, and effectively develop rate increases by better understanding their ongoing and one-time sources and uses of funding in their operation.
At CPBB we're motivated by the exact type of objectives the majority of communities often have in  strategic planning (and how to bring the financial picture into the discussion), and look forward to sharing experiences.

Contact us to schedule a free webinar and identify the best CPBB service option(s) to meet your organization's particular needs.

Keep an eye on the CPBB blog for further updates. Sign-up for our social media pages so you stay connected with TEAM CPBB!

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If you're thinking of jumping into the world of Fiscal Health and Wellness through Priority Based Budgeting we would certainly like to be part of your efforts! Contact us to schedule a free webinar and identify the best CPBB service option(s) to meet your organization's particular needs.

"DATA VISUALIZATION" for Local Government

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