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Indian River County, Florida Management's Discussion and Analysis For the Year Ended September 30, 2011 ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES In order to address an expected decrease in property values and other County revenues, Board of County Commissioners' Departments, Constitutional Officers and outside agencies were asked to trim their budgets by 5% from the previous year. Many cost saving measures have been taken to adjust for declining revenues. For example, mid -year privatization of SWDD's convenience center and related operations resulted in the elimination of 34 full-time positions and an annual savings of $366,834. Additional decreases of 9 full-time positions have been proposed for next fiscal year, with the Constitutional Officers' budgets showing a decrease of 47 full-time positions. The largest cost reduction for FY 11/12 is due to lower retirement costs. Senate Bill 2100 requires employees to contribute 3% of their salary toward the pension fund. Passage of this bill results in a savings of about $4.1 million for the County. The tax roll in the General Fund decreased by 6.4% due to continued falling real estate values. The total proposed budget is a decrease of $60,359,981 or 18.9%. Indian River County, like the nation overall, has been experiencing a continuation of the economic slowdown this year. New construction activity has remained slow. Some revenues have leveled off and are even showing signs of a slight increase. Therefore, the revenue projections for next year are mixed. For example, Half -Cent Sales Tax is increasing $347,766 or 5%, while interest earnings are expected to drop $1,732,155 or 56.5%. State Shared Revenues are expected to increase $134,829 or 4%. Due to various revenue decreases in SWDD, both the assessment rates for commercial and residential rates will have a slight increase. Residential rates will increase 5% and commercial rates 4.6%. It should be noted that these rate increases follow years of continuing decreases. The proposed rates are still substantially lower than the 1995/1996 rates. Street lighting and M.S.B.U. Districts along with all other rates and other fees remain unchanged from FY 2010/2011. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the County's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to: Clerk of the Circuit Court and Comptroller Attention: Finance Department 180127 th Street Vero Beach, FL 32960 13