C7I - Refer Finance Policies to Committee

Resolutions - C7 I

COMMISSION MEMORANDUM

RECOMMENDATION

The City Administration (“Administration”) recommends that the Commission accepts the Finance and Economic Resiliency Committee’s (“FERC” or “Committee”) recommendation to a request of a referral of the Miami Beach Comprehensive Financial Policies to the Budget Advisory Committee along with an analysis of total compensation as a percentage of the General Fund budget and to return to FERC for further discussion.

BACKGROUND/HISTORY

On October 30, 2024, the Mayor and City Commission (“City Commission”) referred Item C4O to the FERC, to discuss the creation of a Comprehensive Financial Policy for the City of Miami Beach.

On June 4, 2025, the FERC recommended the item return to Commission to consider a request of a referral of the Miami Beach Comprehensive Financial Policies to the Budget Advisory Committee along with an analysis of total compensation as a percentage of the General Fund budget and to return to FERC for further discussion. As part of the discussion at FERC, it was recommended that a policy be added to have all impact fees periodically reviewed by the Administration. That recommendation is included in the attached version of the policies.

ANALYSIS

The Government Finance Officers Association (GFOA) strongly advocates for the adoption of formalized financial policies, recognizing their critical role in supporting strategic and sustainable financial management. By implementing comprehensive written policies, governments can enhance fiscal discipline, ensure consistency in decision-making, and position themselves for long-term success. These policies serve as a robust framework to guide financial practices providing a clear roadmap that empower governments to:

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Institutionalize good financial management practices - Formal policies usually outlive their creators, and, thus, promote stability and continuity. They also prevent the need to re-invent responses to recurring issues. Clarify and crystallize strategic intent for financial management - Financial policies define a shared understanding of how the organization will develop its financial practices and manage its resources to provide the best value to the community.

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Define boundaries - Financial policies define limits on the actions staff may take. The policy framework provides the boundaries within which staff can innovate in order to realize the organization's strategic intent. Support good bond ratings and thereby reduce the cost of borrowing. Promote long-term and strategic thinking - The strategic intent articulated by many financial policies necessarily demands a long-term perspective from the organization. Manage risks to financial condition - A key component of governance accountability is not to incur excessive risk in the pursuit of public goals. Financial policies identify important risks to financial condition. Comply with established public management best practices - The Government Finance Officers Association (GFOA), through its officially adopted Best Practices endorsement of National Advisory Council on State and Local Budgeting (NACSLB) budget practices and the GFOA Distinguished Budget Presentation Award Program, has recognized financial policies as an essential part of public financial management.

Over time, the City Commission has adopted numerous resolutions to establish guidance on critical financial policies, addressing areas such as capital reserves, fund balance management, allocation of nonrecurring revenues, utilization of annual surpluses, and funding strategies for capital projects. Certain policies, such as the application of General Fund interest earnings toward capital projects, have been embedded within annual budget resolutions. Recognizing the need for a more cohesive and efficient approach, the Administration recommends consolidating all previously issued Commission directives on financial policies into a single, comprehensive framework. This consolidation will streamline policy implementation, enhance transparency, and ensure alignment with the City’s long-term financial goals.

The following is a list of Commission resolutions that were used as the framework for the recommended set of Financial Policies:

1. Resolution #94-21258 – Conforming Actual Budget Expenditures to the Adopted Budget 2. Resolution #96-22014 – Establishing of a Permanent Reserve for Contingencies in the General Fund 3. Resolution #98-22661 – Establishing of Permanent Reserve for Contingencies in the General Fund (Amended) 4. Resolution #2002-24764 – Capital Reserve Policy 5. Resolution #2004-25697 – Establishing a Capital Renewal and Replacement Fund 6. Resolution #2005-25832 – Establishing a Capital Renewal and Replacement Fund (Amended) 7. Resolution #2006-26341 – Stabilization Funds, Fund Balance, Contingency Planning and Cash Reserves, Use of Non-Recurring Revenues, and Capital Asset Acquisition, Maintenance, and Replacement 8. Resolution #2014-28543 – Establishing of a Reserve in the Resort Tax Fund 9. Resolution #2016-29500 – Use of lump sum payments 10. Resolution #2018-30429 – Establishing a Capital Pay-As-You-Go (PAYGO) Fund 11. Resolution #2019-30664 – Establishing of a Reserve in the Resort Tax Fund (Amended) 12. Resolution #2019-30954 – Updated General Fund Reserve Policy 13. Resolution #2023-32647 – Recommendation to Commission on Recurring Grants every 3 years 14. Resolution #2024-33340 – Updated General Fund Reserve Emergency Policy

Fiscal Responsibility Measures On March 19, 2025, the City Commission approved a resolution, agenda item C7 AH, which directs the City Manager to work with the Chief Financial Officer to identify areas for possible implementation of fiscal responsibility measures that would allow for a more sustainable financial expenditure trajectory for the City without impacting the critical services provided to the community and to present at FERC as part of the City of Miami Beach Comprehensive Financial Policies.

Regarding fiscal responsibility and strategic budgeting, a pragmatic approach could involve a combination of strategic expenditure reductions, revenue optimizations, and cost-containment measures. Noting that recurring items impact the FY 2026 budget and one-time items reduce how much the City can transfer to support capital projects at year end.

The Commission could consider options such as:

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Transferring all or a percentage of projected surplus dollars (during the budget development process) over and above the Current Service Level (“CSL”) budget to support capital projects until the City can meet the 5% annual funding for capital needs goal and/or budgeting for addition to reserves based on increase in the General Fund budget Enact legislation regarding adding expenditures that will have a fiscal impact outside of the annual budget process, with a requirement for a strategic discussion of what program(s) could be eliminated/reduced, or new revenues generated to support anything approved mid-year, unless the City meets the 5% annual funding for capital needs goal, requires FERC review, and/or requires a super-majority vote Require special event fee waivers and certain sponsorships to be for no more than three (3) years, unless the event is scheduled during off-peak season Prioritize core services and programs and assess which programs or expenditures could be eliminated or scaled back

FISCAL IMPACT STATEMENT

N/A

Does this Ordinance require a Business Impact Estimate? (FOR ORDINANCES ONLY)

If applicable, the Business Impact Estimate (BIE) was published on: See BIE at: https://www.miamibeachfl.gov/city-hall/city-clerk/meeting-notices/

FINANCIAL INFORMATION

CONCLUSION

The City Administration (“Administration”) recommends that the Commission accepts the Finance and Economic Resiliency Committee’s (“FERC” or “Committee”) recommendation to a request of a referral of the Miami Beach Comprehensive Financial Policies to the Budget Advisory Committee along with an analysis of total compensation as a percentage of the General Fund budget and to return to FERC for further discussion.

Applicable Area

Citywide

Was this Agenda Item initially requested by a lobbyist which, as defined in Code Sec. 2-481, includes a principal engaged in lobbying? No

If so, specify the name of lobbyist(s) and principal(s):

Department

Finance

Sponsor(s)

Commissioner Joseph Magazine

Co-sponsor(s)

Condensed Title

Accept Recom/Refer to BAC - Miami Beach Comprehensive Financial Policies. (Magazine) FN

Previous Action (For City Clerk Use Only)