Title
COMMISSIONER JAY D. SCHWARTZ ITEM #1: DISCUSSION AND POSSIBLE ACTION TO CREATE A PEMBROKE PINES TAXPAYER BILL OF RIGHTS AND FISCAL RESPONSIBILITY ORDINANCE LIMITING GROWTH IN CITY OPERATING EXPENDITURES.
Summary Explanation and Background
SUMMARY EXPLANATION AND BACKGROUND:
PURPOSE
1. To request that the City Commission direct the City Attorney, in consultation with the City Manager and appropriate staff, to review and prepare for Commission consideration a proposed Taxpayer Bill of Rights and Fiscal Responsibility Ordinance establishing an annual limitation on the growth of covered City operating expenditures based upon inflation and population growth.
2. The proposed ordinance would be modeled conceptually upon the fiscal-growth limitations contained in Article X, Section 20 of the Colorado Constitution, commonly referred to as the Colorado Taxpayer's Bill of Rights ("TABOR"), but would be specifically drafted to comply with the Florida Constitution, Florida Statutes, and the Charter of the City of Pembroke Pines.
BACKGROUND
3. The Colorado Taxpayer's Bill of Rights establishes limitations on the annual growth of government and uses objective economic and growth measurements to determine allowable increases.
4. This item does not propose that Pembroke Pines adopt Colorado law verbatim.
5. Instead, it requests consideration of a Pembroke Pines-specific fiscal policy under which the ordinary operating expenditures of City government would generally be permitted to increase annually by no more than the combined percentage increase in:
a. The applicable Consumer Price Index ("CPI"); and
b. The population of the City of Pembroke Pines.
6. The intent is to establish an objective and transparent benchmark connecting the growth of ordinary municipal operating expenditures to inflation and the growth of the population served by the City.
PROPOSED FISCAL PRINCIPLE
7. Subject to legal review and appropriate exclusions, the proposed ordinance should utilize the following general formula:
Maximum Annual Growth in Covered Operating Expenditures = CPI Growth + Pembroke Pines Population Growth
For example, if the applicable annual CPI increase were 2.8% and the City's population increased by 0.7%, covered operating expenditures ordinarily could increase by up to 3.5% over the applicable base-year amount.
8. The City Attorney and City Manager should recommend the appropriate CPI index, measurement dates, population source, base year, calculation methodology, and treatment of negative CPI or population changes.
FLORIDA LAW
9. The proposed ordinance should be structured as an operating-expenditure limitation and fiscal policy, rather than as a limitation upon the City Commission's authority to levy ad valorem taxes.
10. Nothing in the proposed ordinance should prohibit or limit the City Commission from exercising taxing authority granted by the Florida Constitution or general law.
11. The City Attorney should specifically analyze the proposal under all applicable provisions of Florida law, including, but not limited to:
• Article VIII, Section 2(b), Florida Constitution;
• Sections 166.021 and 166.241, Florida Statutes, governing municipal home-rule and municipal budgets;
• Section 195.207, Florida Statutes, concerning limitations upon municipal ad valorem taxing authority;
• Chapter 200, Florida Statutes;
• Article V of the Charter of the City of Pembroke Pines; and
• Florida Attorney General Opinion 2010-02 concerning municipal operating-expenditure limitations.
12. The City Attorney should determine whether the proposed limitation may lawfully be adopted by ordinance and identify any modifications necessary to ensure consistency with state law and the City Charter.
EXPENDITURES TO BE EVALUATED FOR EXCLUSION
13. In developing the proposed ordinance, the City Attorney and City Manager should evaluate whether the following categories should be excluded, in whole or in part, from the annual expenditure limitation:
• Debt service and legally required debt obligations;
• Voter-approved debt or expenditures;
• Federal, state, county, or other intergovernmental grants and pass-through funding;
• Enterprise and utility funds;
• Capital improvement expenditures;
• Expenditures funded from previously accumulated reserves;
• Disaster response and recovery expenditures;
• Emergency expenditures;
• Insurance proceeds and related expenditures;
• Pension and other legally mandated obligations;
• Court-ordered or otherwise legally mandated expenditures;
• Expenditures associated with newly assumed governmental responsibilities or services;
• Extraordinary public-safety expenditures; and
• Other expenditures that the City Attorney determines should be excluded to comply with Florida law or avoid unintended consequences.
OVERRIDE / EXTRAORDINARY CIRCUMSTANCES
14. The proposed ordinance should include a mechanism permitting the City Commission to exceed the annual limitation when extraordinary circumstances warrant additional expenditures.
15. The City Attorney should evaluate an override requiring an affirmative four-fifths vote of the City Commission, accompanied by specific findings identifying:
a. The extraordinary or emergency circumstances necessitating the expenditure;
b. The amount by which the expenditure limitation will be exceeded;
c. The source of funding for the additional expenditure; and
d. Whether the additional expenditure is recurring or nonrecurring.
16. The City Attorney should advise whether another voting threshold or procedure is required or preferable under Florida law or the City Charter.
ANNUAL TRANSPARENCY REQUIREMENT
17. The proposed ordinance should also establish an annual calculation presented as part of the City's budget process showing:
• Prior-year covered operating expenditures;
• Applicable CPI percentage change;
• Applicable Pembroke Pines population percentage change;
• Combined allowable growth percentage;
• Maximum covered operating expenditures under the ordinance;
• Proposed covered operating expenditures;
• Dollar and percentage difference between the limitation and proposed budget;
• Excluded expenditures by category; and
• Any proposed use of the extraordinary-circumstances provision.
18. The calculation should be made available to the City Commission and the public sufficiently in advance of adoption of the annual budget to permit meaningful review.
EFFECT ON TAXING AUTHORITY
19. The proposed ordinance should expressly provide substantially as follows:
Nothing contained in this ordinance shall be interpreted or applied to prohibit, restrict, impair, or otherwise limit the authority of the City Commission to levy ad valorem taxes or exercise any other taxing authority granted to the City by the Florida Constitution or general law. The limitations established by this ordinance are intended to regulate covered municipal operating expenditures and shall not be construed as establishing a limitation upon the City's lawful taxing authority.
FUTURE COMMISSIONS
20. Because the proposed fiscal limitation would be established by ordinance, the City Attorney should ensure that the ordinance does not unlawfully restrict the legislative authority of a future City Commission.
21. Nothing in this item is intended to prevent a future City Commission from amending or repealing an ordinance in the manner provided by Florida law and the City Charter.
PROPOSED MOTION
22. Motion to direct the City Attorney, in consultation with the City Manager and appropriate staff, to review the legality and fiscal implications of establishing a City of Pembroke Pines Taxpayer Bill of Rights and Fiscal Responsibility Ordinance that would generally limit annual growth in covered City operating expenditures to the combined annual percentage increase in the Consumer Price Index and the population of the City of Pembroke Pines; to identify appropriate exclusions and an extraordinary-circumstances procedure; and, if determined to be legally permissible, to prepare an ordinance for consideration by the City Commission.