On Monday morning, Pensacola Mayor Ashton Hayward delivered his “State of the City” address in council chambers at City Hall. All Pensacola City Council members were in attendance except Maren DeWeese.

Below are Mayor Hayward’s full remarks. The proposed FY13 budget is now available online. I’ll try to get a roundup of reactions and some cursory analysis soon, but feel free to leave your own thoughts in the comments.

Good morning.

Thank you, President Hall, members of the City Council, employees of the City, taxpayers, and residents.

Seventeen months ago, I took office with a set of twenty solutions to our City’s most pressing issues. My primary goal was to restore trust and confidence in our City government. I’m proud of the results we have achieved, but we didn’t do it alone. The successes of this last year and a half are the result of the hard work and support of our citizens, employees, and this City Council. Today, the State of our City is improved, but there is more work to be done.

The budget I present to you today is a blueprint for our future. In order to promote growth and provide value to our citizens, we must do business more efficiently. We must deliver services more responsively. We must tell Pensacola’s story to the world, because America’s first City should be America’s first choice.

Jobs and economic growth remain my primary focus. Working with the Chamber, Escambia County, and others, we have successfully pursued companies like UPS and Majestic Candies.

We’re seeing exciting growth downtown, where occupancy is up to 87 percent, and new businesses are opening almost monthly. There are now nearly 10,000 people working downtown, and we’re working hard to increase that number. Last year, we leased the third floor of City Hall to H2 Performance Consulting, generating over $500,000 dollars in revenue over three years. Earlier this year, First Navy Bank and Pen Air Federal Credit Union both announced plans to move operations downtown.

As we pursue economic opportunities for our City, we need the right tools to be truly successful. This year, I will propose to Council the establishment of a $1 million dollar economic development incentive fund. This fund would be used to market surplus properties, provide incentives to growing businesses or new ventures, and to provide seed money to assist with site development.

To physically grow our City and increase our tax base, we must add population through annexation. Between 2000 and 2010, the City of Pensacola lost more than 4,000 residents. We must increase the City’s population by at least that number before the next census. To that end, we have developed a program of voluntary annexation in order to expand our City and clean up our confusing boundaries. This week, I will ask Council to approve the voluntary annexation of more than thirty parcels currently split between the City and County.

Earlier this year, I established an Urban Redevelopment Advisory Committee, whose findings the City will use to develop a clear redevelopment strategy for our downtown urban area. To aid redevelopment and promote continued job growth, the City needs to attract $100 million dollars in private and public investment over the next ten years.

Central to that effort is the future of the 18 acres formerly occupied by ECUA’s Main Street Wastewater Treatment Plant. Given its size, and proximity to the Community Maritime Park and waterfront, its successful redevelopment is critical.  As such, we are currently exploring options for the purchase of the property. Ownership of this key site will provide the City with the opportunity to incentivize high-quality future redevelopment.

With an estimated annual impact of more than $560 million dollars, Pensacola International Airport continues to be an economic engine for our City, and a gateway to Pensacola and the Gulf Coast. This year, we will update the Airport Master Plan to anticipate and accommodate future activity. We must also expedite the development of the Airport Commerce Park, by accelerating the Airport’s land acquisition program.

In January, I outlined a plan for the Port of Pensacola that includes focusing on the expansion of the offshore services industry. This plan makes the Port a better neighbor to our downtown and historic districts, and positions it to better compete, but executing that vision requires investment. This year, working with the Governor, the Florida Chamber, and our local Chamber, we were able to secure $3.6 million dollars in State funding for improvements at the Port.

Soon, we will install infrastructure allowing vessels to run on shore power rather than their own diesel engines, providing an attractive amenity and improving air quality. Later this year, we will restore Berth 6 to operational condition, and retrofit Warehouse 9 to handle the fabrication and repair of high-tech subsea equipment.

In order to elevate our economic development efforts and be truly competitive, we must do a better job of telling Pensacola’s story. To do so, we must first unify the different brands used by the City, its enterprises, and agencies into a single, strong brand identity. We’ll use this new brand to tell our story in a fresh and exciting way, with the goal of raising Pensacola’s profile regionally and nationally.

To encourage investment in our City, we must strengthen and improve our neighborhoods. Today, talented professionals can work from anywhere, and companies have a multitude of options. The cities that succeed will be those who invest in their downtowns and neighborhoods, thereby creating a safe, attractive and inviting city for people to live, work, and play.

Over the past year, we have made those investments as we work to beautify our City. We have transformed the gateways to Downtown Pensacola with the reconstruction of Main Street, the completion of the new Admiral Mason Park, and upcoming landscape improvements along Bayfront Parkway.

This year, we’ll invest more than a million dollars to resurface City streets and another $350,000 to add new sidewalks in our neighborhoods. Construction of the Woodland Heights and Legion Field neighborhood resource centers, a $6 million dollar investment, will provide two neighborhoods with amenities they have wanted and deserved for years.

We’re also working hard to keep our neighborhoods attractive and clean. With the support of the City Council, we have strengthened our code enforcement ordinances and reformed the way we process cases. We are no longer allowing owners of delinquent properties to delay action for months or years. Our monthly Mayor’s Neighborhood Cleanups have also been extremely successful, collecting hundreds of tons of bulk waste.

We are also taking action to demolish structures that are eyesores, safety hazards, or havens for criminal activity. Currently, we are in the process of demolishing the dilapidated former Blount School, but it’s only one of nearly 90 such structures currently located throughout our City. We believe that all residents deserve clean, safe neighborhoods of which they can be proud.

Accordingly, we have allocated $40,000 dollars in this budget to provide rebates to owners of abandoned and condemned structures who voluntarily pursue demolition. This plan benefits everyone – the owner saves on the cost of demolition, the City pays less than our normal in-house cost, and neighbors no longer have to contend with an eyesore. To encourage redevelopment, we will work to establish incentives promoting the development of mixed-income housing opportunities.

We’ll continue to green our City – not only because it’s good for the environment, but also because it saves taxpayer dollars. Soon, we will commission an energy audit of all City facilities. By using energy more efficiently, the City will save money on utility and fuel costs.

As the City government embraces greener, more sustainable practices, it’s important to encourage the private sector to do the same. This year, we will ask the City Council to adopt a Green Building Code. This code will include optional green building standards and provide incentives for both commercial and residential projects, such as expedited permitting and rebates.

We can save money and create new revenue sources with Energy Services of Pensacola, the City’s natural gas utility. We recently undertook a $4.8 million dollar project to build three compressed natural gas fueling stations, which will be used to fuel a new generation of natural gas fleet vehicles for the City and ECUA. By September, the City will be operating 17 natural gas vehicles, and we will transition an additional 16 fleet vehicles to natural gas over the next five years.

The move to CNG will save the City and ECUA tens of thousands of dollars in fuel and maintenance costs, and improve air quality by reducing emissions. Going forward, we’ll open these fueling stations to corporate fleets, and eventually, private vehicles – opening a new business opportunity for ESP.

When I spoke to you last year, I said that our most sacred duty to citizens is the stewardship of the resources they entrust to us. Across our City, businesses and families have learned to do more with less, and our City government must do the same. Including the changes proposed in this budget, we have reduced the number of budgeted full time positions from 860 to 830. We have reduced the number of department heads from 17 to 11. These changes are the result of carefully and thoughtfully restructuring this organization, and as a result, we have a more efficient, more responsive City government.

The City of Pensacola has outstanding police and fire departments, but we’re always looking for ways to improve. With this budget, we have reorganized the staffing structure of the fire department to put twelve additional firefighters on duty. These changes will allow us to increase coverage and better staff our three rescue trucks – and will still result in an overall cost savings.

As we continue to seek innovative solutions to improve operations, we may find that the private sector can provide a service more efficiently or cost-effectively than we can internally. We have begun to recognize those situations by executing performance contracts with outside vendors for certain services. These organizational reforms make fiscal sense, and they will allow us to continue providing quality services to our citizens.

We have also begun to address one of the most critical issues facing the City – our unfunded pension liability and annual pension costs. The City’s current unfunded liability tops $116 million dollars, and annual pension costs have jumped from $3 million in Fiscal Year 2003 to $13.7 million in Fiscal Year 2013. That’s more than we’re collecting in ad valorem taxes, and that’s simply not sustainable. If we do not reduce these costs, we risk compromising the level of service and fiscal stability our citizens expect and deserve. Solving this problem means making difficult decisions, but our circumstances demand action.

Our employees are dedicated, hardworking, and professional, and despite budget constraints we have made every effort to provide employees with additional amenities. As we ask our employees to accept changes to their retirement benefits, it is only fair that we explore opportunities to restructure current compensation packages for those affected.

For years, we’ve talked about Pensacola’s potential. Now is the time to take action.

I believe we can be a leader in innovation and technology, where big ideas and businesses can grow and thrive. I believe we can be a leader in education, where every child in every neighborhood has access to great schools and a college education. I believe Pensacola can be a leader in clean energy, and a model for cities around the country.

As your Mayor, I am committed to these beliefs, and to the goals outlined in this budget. I will work tirelessly with you to move Pensacola forward. Together, we can continue to create economic opportunities. We can continue to stabilize and reinvest in our neighborhoods. We can continue to promote a healthy environment, and we can continue to restore trust by taking action. Together, we will meet and exceed the expectations of our shareholders, the citizens and taxpayers of our great City.

Thank you, and God bless the City of Pensacola.