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HomeMy WebLinkAbout1999 10 25 Regular Item D REQUEST: COMMISSION AGENDA ITEM D Consent Informational Public Hearings Regular X October 25, 1999 Meeting Ih./' Mgr. I Dept. Authorization Commissioner Blake, in his capacity as Vice Chairman of the Florida League of Cities Municipal Finance and Tax Committee requests the CI:>mmission to approve Resolution No. 900 requesting the Legislature to reform the State Municipal Revenue Sharing Program and to authorize the City Manager to forward copies of the resolution to the Legislative Delegation PURPOSE: The purpose of this agenda item is to advise the Legislative Delegation of the City Commissions desire to reform the Municipal Revenue Sharing Program to provide for a more reliable source of funds. CONSIDERATIONS: FUNDING: See attached Legislative Issue Brief No Request RECOMMENDATION: It is recommended that the Commission approve Resolution No. 900 requesting the legislature to reform the Municipal Revenue Sharing Program and to authorize the City Manager to provide copies of the reso~ution to the local Legislative Delegation. ATTACHMENTS: CITY OF WINTER SPRINGS REGULAR AGENDA - OCTOBER 25, 1999 REGULAR AGENDA ITEM "D" PAGE20F2 a. Resolution No. 900 b. Legislative Issue Brief COMMISSION ACTION: RESOLUTION NO. 900 A RESOLUTION OF THE CITY OF WINTER SPRINGS SUPPORTING A LEGISLATIVE INITIATIVE TO REFORM THE MUNICIPAL REVENUE SHARING PROGRAM AND THIE MUNICIPAL FINANCIAL TRUST FUND. WHEREAS, the Municipal Financial Assistance Trust Fund and the Municipal Revenue Sharing Program were created in 1971 and 1972, respectively, for the purpose of providing a minimum level of revenue parity, a reliable and bondable revenue source, and to reduce the need for increasing revenues at the local level; and WHEREAS, the aforementioned municipal revenue sharing programs have suffered from a substantial decline in revenues; and WHEREAS, the aforementioned municipal revenue sharing programs rely heavily on net cigarette tax collections which account for approximately seventy (70,5%) or 157.4 million of municipal revenue sharing dollars; and WHEREAS, net cigarette tax collections for the City have declined by 1,95%; and WHEREAS, the state government of Florida and the federal government of the United States of America are implementing policies to reduce the use of tobacco related products; and WHEREAS, the decline in use of tobacco related products would improve the health of many Florida and U,S, citizens; and WHEREAS, the decline in the sale of tobacco related products will result in the continuing decline in revenues for Florida's 401 municipalities; and WHEREAS, the Florida Legislature is the only entity authorized by the Constitution of the State of Florida to replace such revenues. NOW THEREFORE, BE IT RESOLVED BY THE CITY OF WINTER SPRINGS: Section 1, That the City of Winter Springs does hereby encourage the Florida Legislature to approve the following changes to the financial structure of the Municipal Financial Assistance Trust Fund and the Municipal Revenue Sharing Program. Replace the cigarette tax as a primary dedicated funding source with a reliable and stable revenue source providing adequate growth to enhance our municipal governments' ability to meet the needs of our community. Provide a financial commitment to the Municipal Financial Trust Fund and the Municipal Revenue Sharing Program equivalent to the per capita funding level established in fiscal year 1989-90, Section 2, That a copy of this resolution shall be made available to the Florida League of Cities, the Florida Legislature and interested parties, Resolved and adopted this 25th day of October , 1999. Date The Honorable Address Address RE: Municipal Revenue Sharing Programs Dear LegislatDr: In the early 1970's, the FIDrida Legislature created two programs, the Municipal Financial Assistance Trust Fund and the Municipal Revenue Sharing Program, to assist municipalities in financing their communities needs and expenditures, These programs were intended to reduce the need for increasing property taxes at the local level and to provide minimum levels of funding parity fDr municipalities. Since their existence both of these programs have relied significantly on cigarette tax collections for funding, Over the past 15 years, municipalities have experienced a gradual decline in the revenues derived frDm these revenue sharing programs, In part, due to a more educated and healthier citizenry that purchase fewer tDbacco related products, In additiDn, the state and federal governments have more recently pursued policies to further reduce the use of tobaccD related products; both to eliminate the prospect of future health problems and to reduce the fiscal impact on their respective budgets, It is clearly apparent that such trends create a significant financial burden on municipalities, which are dependent on revenues derived from the sale and use of such an unpopular product. In light of these changes we think it is equally impDrtant tD ask the Florida Legislature to change the financial structure of the municipal revenue sharing programs, It no longer makes "good sense" to fund these programs from tax revenues on products the state and federal governments are trying tD eliminate, During the upcoming SessiDn, we would simply ask that the Legislature replace revenues from net cigarette tax collectiDns with a revenue source that is mDre stable and reliable and would provide adequate growth for municipalities to meet the needs' of their communities, Attached is a brief position paper outlining the history and background of these two municipal revenue sharing programs. In additiDn, we have attached a resolutiDn approved by our City Council on , 1999, Please review these materials at your earliest convenience, If you have any questions or need additional information, please contact myself or John Wayne Smith at the Florida League of Cities, Your attention to this matter is greatly appreciated, Sincerely, The Honorable MaYDr of ISSUE BRIEF Municipal Revenue Sharing Reform Position: SUPPORT legislatiDn that restructures the funding sources of the municipal portion of the state's revenue sharing program, and which ties municipal shared revenues to the growth of the state's general revenue fund, Key Points: 1, The Florida Revenue Sharing Act Df 1972 was enacted to reduce increases in local taxes; provide local governments with a bondable revenue source; and to provide a minimum level Df revenue parity amongst local governments, In 1971, the Legislature created the Municipal Financial Technical Assistance Trust Fund and financed it with a 2 cents per pack cigarette tax, The following year, the Municipal Revenue Sharing Program was enacted as part of the Florida Revenue Sharing Act. In FY 1998-99, it is estimated that the total distributiDns to municipalities through these programs will be $23,9 million and $199.3 million, respectively, r, 2, Both of the municipal revenue sharing programs rely significantly Dn cigarette taxes fDr funding, Presently, the Municipal Financial Assistance Trust Fund receives 5,8 percent of net cigarette tax collections fDr a total Df $23.9 million. The Municipal Revenue Sharing Program is funded by 32.4 percent Df net cigarette tax collectiDns which represents $133,5 milliDn, (The Municipal Revenue Sharing Program alsD receives 12.5 percent of the state alternative fuel decal users fee and net cDllections from the one-cent municipal fuel tax,) In FY 1999-00, net cigarette tax proceeds represent $157.4 milliDn or 70,5 percent of the tDtal revenue sharing programs, I: 3, The level of funding for municipal revenue sharing programs is gradually declining, Specifically, since FY 1985-86 distributiDns from the Municipal Financial Assistance Program have decreased in aggregate dollars by $3,0 million, Likewise, distributions from the Municipal Revenue Sharing Program have decreased by $21,3 million during this same period, When comparing real dollars, an examination of the historical pattern of these cigarette tax based revenue sharing distributions, adjusted for inflation and population growth, indicates that between fiscal years 1972-73 and 1996-97, municipal revenue sharing distributions decreased by a total of 76 percent or 3.2 percent annually, 4, In cDntrast, from 1970 to 1997 the pDpulatiDn of the state of FlDrida has increased from 6,8 million to 14,7 million, or 116 percent, More specifically, from 1972 to 1997, the municipal population has increased from 4,6 million to 7,3 million, 5, The federal and state governments have aggressively pursued policies to reduce the use of tobacco related products, In 1997, the courts awarded the state of Florida approximately $11.3 billion as compensation for fiscal impacts to the state's health expenditures due to the use of tobacco related products, 6, The financial structure of municipal revenue sharing needs to be refDrmed, taking into account both economic and social changes, During the next Session, the Legislature should replace cigarette taxes as a dedicated funding SDurce for municipal revenue sharing with a revenue sDurce that is more stable and reliable tD meet bonded Db ligations and that provides adequate growth in order for municipalities to meet the needs of their communities, -Jrr -- .~