Budget public hearings set for September
It took two votes, but the majority of the Sarasota City Commission decided this week not to raise the millage rate to help balance the budget for the 2018 fiscal year.
Instead, the motion that won approval of four of the board members will utilize a $1,113,979 payment from the Utilities Department and a reduction in the proposed new Economic Development Fund to cover the projected gap of $881,990 for the fiscal year that will begin on Oct. 1. The millage rate will remain at 3.1728.
The Economic Development Fund — proposed by staff to take the place of the Downtown Sarasota Community Redevelopment Area (CRA) Trust Fund — still will have $1,444,713 for FY18, Finance Director Kelly Strickland explained.
Mayor Shelli Freeland Eddie said during the meeting that she would support spending from that fund only for specific projects, especially to address blight, as the Downtown CRA was designed to do. (See the related story in this issue.)
The overall proposed budget for the next fiscal year is $202,665,357, down 1.79% from this year’s figure of $206,369,287, primarily because of a 42% debt service drop, Strickland noted.
Thanks to a slight increase between the preliminary taxable property value released before June 1 and the figure provided by the Sarasota County Property Appraiser’s Office before July 1, she also pointed out that the city is expected to receive an extra $28,189 for the 2018 fiscal year in ad valorem tax revenue. The June taxable value figure was 9.67%, while the July number was 9.77%.
The first vote near the end of the budget discussion called for a millage rate increase of .948 mills, which Strickland said would mean $10.35 more in the property tax bill for a person who owns a $200,000 house and has a homestead exemption.
The motion — made by Commissioner Willie Shaw and seconded by Vice Mayor Liz Alpert — would have kept the Economic Development Fund intact and still utilized the payment in lieu of franchise fees (PILOFF) from the Utilities Department. However, it failed on a 2-3 vote.
Then Commissioner Jen Ahearn-Koch made the motion that ultimately won approval. It will leave the city with an emergency operating fund balance representing 23.11% of expenditures — within the city’s range, by policy, of 17% to 25%, Strickland said.
Commissioner Hagen Brody stressed his distaste for both the PILOFF and any move to raise the millage rate. Of the former, he said, “I think [it] is being presented disingenuously to the people of Sarasota.” He cast the “No” vote.
A franchise fee is charged of private companies such as Florida Power & Light and TECO for use of city rights of way for utility lines, as Utility Director Mitt Tidwell explained it. The city Utilities Department is operated like a private business, Tidwell added, because its revenue from water and wastewater user fees covers its expenses.
“We’re talking about charging ourselves … that [franchise] fee to raise this revenue [to help close the budget gap]?” Brody asked.
“That’s correct,” Tidwell replied, “but, again … we’re supposed to act like private business, and private business would be paying the franchise fee.”
As the board members debated options Strickland had provided for balancing the FY18 budget, Brody said he preferred cuts to raising the millage rate or utilizing the PILOFF. “I would like to see a reduction in the amount of personnel that we are adding …”
The 19 proposed employees would bring the total to 680, which, City Manager Tom Barwin pointed out, is still almost 100 below the 777 the city had before the Great Recession. The impact to the General Fund — which primarily is composed of the ad valorem tax revenue the city receives — will be $831,732, according to a graphic Strickland showed the board.
Four of the new positions are planned for the Sarasota Police Department: two downtown foot patrol officers; a street crimes officer; and a patrol officer.
Yet another staff member would be a coordinator of services for the homeless, at an expense of $92,547. However, Stickland pointed out, money set aside for that position in the current fiscal year remains unspent, so it will roll over into the FY18 budget. Still, she said, the city will have to plan on that recurring cost in future budget years.
“This is a city dealing with growth,” Barwin told the commission. “We are going to have new residents in town, probably 3,000 to 4,000 of them.”
“There are a lot of services that residents are asking for … in the coming years,” Vice Mayor Alpert added. “It’s going to be extremely important to do things right.”
Moreover, Alpert said, “My experience has been with the city staff that they work really, really hard,” and without sufficient help. The commission, she added, should “give them what they need to do their jobs.”
“I agree,” Ahearn-Koch replied. “I don’t think any of those are frivolous proposals.”
When she was campaigning for office, Ahearn-Koch noted, she heard a lot of discussion about traffic, transportation, city planning and parks.
Among the other new positions are four sought by the Planning Department, including a chief planner in the Transportation Planning Division.
“This city worked at a 26% reduction in staff during a period of recession,” Shaw stressed, adding that he also supported the requested personnel.
Given the increases in taxable property value in recent years, Brody pointed out, he felt it would be prudent for the City Commission to wait a couple of years to add more positions. “To me, this budget is two to three years ahead of its time.”
The City Commission, by law, will have to set its not-to-exceed millage rate on July 17, staff pointed out. That item will be on the afternoon agenda, the board members agreed by consensus at the end of the July 10 session.
The last time the millage rate was raised was 2014, Strickland said.
Debating the PILOFF
The utilities franchise fee, or PILOFF, was a measure staff began to consider early on during the development of the budget for the 2018 fiscal year, Utility Director Tidwell explained to the City Commission on July 10. It would reflect 6% of the department’s revenue, he added, and — over the past few months — the department has realized about 2% growth in revenue.
When Brody asked about the potential of a rate increase for water and wastewater service users, Tidwell responded that if one were proposed in a future year, it would be driven by the need for new infrastructure. “It could be very minor.”
Referring to the PILOFF, Tidwell added, “A resident will not see this on their bill.”
Because of completed new construction in the city, the Utilities Department is “only going to see more [growth in revenue],” Mark Nicholas, administration and finance manager of the city’s Public Works Department, told Brody.
Following the PILOFF discussion, Strickland presented the various options staff proposed for balancing the budget. The scenarios were split according to use of the PILOFF and elimination of that funding source, as well as in regard to keeping the millage rate the same, compared to raising it. One option called for using reserves, but Strickland pointed out that if the board chose that course without the PILOFF, the city’s fund balance would drop to 20.10%. She cautioned the commissioners to keep in mind that Sarasota is a coastal city that could have to deal with catastrophic weather events.
Barwin also pointed out that the proposed budget includes no funding to cover labor negotiations that are underway.
Strickland added that the city had to use reserves to pay for the 3% increases the city agreed to for police officers in the 2015 and 2016 fiscal years. Personnel costs, she noted, make up 76% of the General Fund expenditures.
Staff also is projecting a hike in the medical expense per full-time employee — from $8,190 in the current fiscal year to $10,062 in FY18, she said.
“I find it astonishing that we go through three days of budget workshops [without a thorough discussion of the proposals for spending in FY18], Brody told his colleagues, referring to the June sessions the board held. “And there’s 700 pages of text [in the budget document], and there’s a motion on the table within 5 seconds [of the conclusion of the staff presentations]. I think we have so much to talk about.”
Barwin reminded Brody that the commission will have two public hearings in September before it adopts the budget. Therefore, Barwin pointed out, Brody has time to make cuts to the budget, if he can find two other board members to agree with him.
The hearings are scheduled for Sept. 5 and Sept. 18. To view a copy of the proposed budget for the 2018 fiscal year, visit the city website.