During first budget workshop of year, board members talk again of need to rein in recurring expenses for coming years
On March 20, during the Sarasota County Commission’s first workshop regarding the budget for the 2025 fiscal year — which will begin on Oct. 1 — Commissioner Neil Rainford raised the prospect that the board members could reduce the property tax millage.
At the outset of his presentation that day, County Administrator Jonathan Lewis noted that staff was preparing the next county budget with the assumption that the millage rate would remain unchanged, except for the amount of millage dedicated to paying back bonds that voters authorized in 2018 for the expansion of The Legacy Trail.
Each year, during the June budget workshops involving both county department leaders and the county’s constitutional officers — including the sheriff and the clerk of the Circuit Court and county comptroller — county staff provides a slide depicting the fact that the millage rate has remained flat since the 2007 fiscal year.
The June 2023 slide noted that if the millage rate had remained unchanged from its level for the 2000 fiscal year, the county would have taken in about $1.26 billion more in property tax revenue. If the rate had remained the same as it was in the 2007 fiscal year, the slide further showed, the county would have collected approximately $268 million more.
During his March 20 remarks about the millage rate, Rainford pointed to the increases in the county’s overall property value over the past several years.
Prior to June 1 of every year, the Sarasota County Property Appraiser’s Office must release a preliminary report on the change in value for the county and all of the municipalities, as well as the Sarasota County School Board. Then, by July 1, another report is released; the increases or decreases in property values in that document are the figures that the local government bodies use in determining the millage rates that will be advertised in the Truth in Millage notices that the Property Appraiser’s Officer mails out to property owners each August.
Last year, the July 1 report for the county noted a 14.27% increase in property value. In 2022, it was 17.76%.
The latest projection from the state is for the county’s property value to rise 8.6% this year, as shown in a slide that Deputy County Administrator and Chief Financial Management Officer Steve Botelho noted during his March 20 remarks. That number is down from the 8.7% projection in August 2023.
“I think we should look at where the opportunities are for us to potentially find reductions [in the budget] to see if there’s opportunities to lower [the FY 2025 millage rate],” Rainford told County Administrator Lewis. “I know we’re the second lowest in the state.”
In talking with constituents, Rainford continued, he hears often about “the cost of living here in Sarasota. … I would encourage us as a board not just to accept it as a flat millage rate but to look for areas of improvement …”
“Certainly, on the staff side,” Lewis responded, “we’re always looking for those opportunities.”
Chair Michael Moran concurred with Rainford’s comments. As he understands the process, Moran continued, staff does look at the potential each year for lowering the millage rate.
“That’s correct,” said.
Rainford indicated that many of the types of expenses that the county has to shoulder have been declining, though he also noted that inflation has remained high.
Keeping a rein on expenses
Yet another focus of the discussion this week was encouragement for the county’s constitutional officers to try to keep recurring expenses down for the General Fund over the next five years.
The General Fund is made up largely of the property tax revenue that the county receives each year. That fund also is the most flexible, county staff has explained, in being able to provide money that becomes necessary for a variety of purposes after the annual budget has been approved.
Last year, stressing a desire to try to keep building back up the county’s Economic Uncertainty Reserve Fund to handle special situations, such as another recession, the commissioners directed county administrative staff to try to reduce recurring General Fund expenses by $4.5 million.
The board members asked to convey that goal to the constitutional officers, as well, even though Lewis has stressed that those officers are independently elected and have certain requirements they have to meet in their budgets.
In recent years, commissioners have provided plenty of plaudits for the wisdom of their predecessors in setting aside money during the “boom times” before the Great Recession began. The “rainy day reserve” enabled Sarasota County to continue a number of services that leaders in other counties had to cut because of the economic downturn.
Ultimately, the staff of the county’s own departments that operate with General Fund money ended up achieving the highest percentage of the reduction the commissioners had sought last year. That total was $2,052,669. The next highest amount came from the Sarasota County Sheriff’s Office: $670,000.
Additionally, Karen Rushing, clerk of the Circuit Court and county comptroller; Property Appraiser Bill Furst; Court Administration; Dr. Russell Vega, the District 12 medical examiner; and State Attorney Ed Brodsky all submitted revised budget totals that included their proportionate shares of the $4.5 million.
Public Defender Larry Eger and his staff actually exceeded their target amount by $286.
As a result of those efforts, no shortfalls in the General Fund are predicted through the 2028 fiscal year, as shown in a March 20 workshop slide.
As Lewis pointed out on March 20, the commissioners will not approve the 2025 fiscal year budget until September, following two public hearings. In June, the board members will listen to the constitutional officers’ presentations of their proposed 2025 fiscal year budgets.
Accounting for actual revenue and expenditures that the county incurred in the 2023 fiscal year, according to a slide presented to the board members, only $21 million would be in the Economic Uncertainty Reserve by the 2028 fiscal year. However, instead of the $9 million projected in August 2023 to be in that reserve at the end of that fiscal year, the total was $49,874,923, which represented 58 days of operations, a chart noted.
The Economic Uncertainty Fund has been planned to cover 30 to 60 days of operations.
Further, with the $3.3-million decrease in recurring expenses for the General Fund approved last year, Office of Financial Management staff projected that the county would have $70 million in the Economic Uncertainty Reserve Fund by the 2028 fiscal year, plus an extra $5 million tagged as “Additional Available.”
Yet, the projections presented on March 20 show the Economic Uncertainty Reserve with only $21 million in FY 2028, and no “Additional Available” money.
The county also maintains a Disaster Reserve Fund that has enough money for 75 days of operations, if the county were unable to receive any revenue. (The standard for local governments is 60 days, Deputy County Administrator Botelho pointed out again this week.)
Commissioners talked this week of the critical value of the Disaster Value in the county’s being able to maintain AAA bond ratings. Chair Moran likened that fund to having a high personal credit score.
Moreover, Botelho noted, the county has been able to save approximately $70 million since 2012 as a result of the refinancing of bonds. He cited the Disaster Reserve Fund as the reason the refinancing initiatives can be pursued so readily.
Commissioner Ron Cutsinger, who has worked for decades as a financial advisor and who is the owner and managing director of Waypoint Wealth Management, called the $70 million in those savings “astonishingly strong.”
A review of 2023 revenue sources and other reserves
During the workshop, Kim Radtke, director of the Office of Financial Management, took the opportunity to review the General Fund’s other sources of revenue, besides the property tax payments, for the 2023 fiscal year. She compared the actual figures to those staff had projected before that fiscal year began.
Overall, she reported, the revenue ended up being about 26% higher than anticipated: $99,991,854, compared to the budgeted amount of $79,410,000.
The Tourist Development Tax — or, “bed tax” — revenue came in $18,094,023 higher than projected, a 57% hike, Radtke noted.
Staff believes that some of that record-breaking 2023 fiscal year total of $50,014,023 resulted from people staying in accommodations in Sarasota County because of damage their homes suffered as a result of Hurricane Ian’s impacts in Southwest Florida in late September 2022, she said.
(Downs & St. Germain Research in Tallahassee, the firm that works with the county’s tourism office, Visit Sarasota County, has stated the same finding that Radtke reported.)
Among other revenue sources, the county’s half-cent sales tax brought in $9,143,178 more than the budgeted amount, for a total of $48,803,178 in FY 2023, a chart showed.
In a review of the county’s reserve funds, Radtke pointed out that four did not meet the required levels. All of those were related to Emergency Services. She said that their reserves should have enough funds for 60 days of operations.
Two of them had no reserves: both were budget stabilization and economic uncertainty reserves.
Altogether, a slide showed, the county’s reserve funds add up to $247,550,143.