Staff asked to start making progress reports on options before the end of the year
In accord with the direction the Sarasota County Commission gave staff during its public hearings on the 2018 fiscal year budget, work has begun on ways to replace the approximately $10.8 million a year that a proposed Public Service Tax on utility usage was expected to bring the county.
The ultimate goal not only is to plug future budget gaps without that revenue but to start building back up the Economic Uncertainty Reserve Fund that prior boards created to help with budgets during a recessions.
Nothing is off the table, commissioners indicated in their first discussion of county finances since the new fiscal year began on Oct. 1. Chair Paul Caragiulo emphasized that his preference is to see department cuts addressed thoroughly.
On a unanimous motion, the board members asked staff to begin an expansive review of all financial options and report back on their progress before January 2018.
On Oct. 10, Assistant County Administrator Jonathan Lewis told the board that staff was working on three basic assumptions:
- The board’s near-term objective is to have no projected shortfall within the current fiscal year or FY19.
- Staff should propose ways the board can replace $5.4 million from its Economic Uncertainty Reserve during the current fiscal year. In the motion Commissioner Alan Maio made during the Sept. 18 budget hearing, that extra amount was to come from the “rainy day” reserve fund to ensure the budget would be balanced. However, that was just a temporary means of plugging the gap created by the board members’ decision not to impose the Public Service Tax. The $5.4 million represented the amount of revenue staff expected the tax to generate this fiscal year. Assistant County Administrator Steve Botelho, who also serves as the county’s chief financial management officer, had explained that because of state guidelines, the earliest the tax could have gone into effect would have been April 2018; therefore, the tax would have been effect for only six months of this fiscal year.
- The board will need to find recurring means of adding $10.8 million a year to the future budgets.
Lewis explained that staff has been searching for recurring savings and for one-time revenue options. However, he pointed out, staff will look at potential spending reductions only in the budgets of departments over which the County Commission has control; their spending represents 44% of the General Fund.
Those budgets could be adjusted by April 2018, he said.
The goal would be to reduce department expenditures about 10% overall, Botelho noted; some departments might see no cuts, while others would see more significant reductions.
The rest of the General Fund, Lewis reminded the board, is divvied up among the budgets of the county’s constitutional officers — such as the sheriff and the clerk of the circuit court and county comptroller — and departments whose funding is generated by fees, such as the Public Utilities Department.
Among the other recurring funding options are a shift in the use of revenue from the voter-approved tax for the county’s Environmentally Sensitive Lands Protection Program (ESLPP) and the delay of capital projects, Lewis noted.
During the second hearing on the FY18 budget — conducted on Sept. 26 — Botelho emphasized that the voter-approved millage rate for the ESLPP is up to 0.25 mills. Therefore, after debt service and maintenance of lands purchased through the program are paid for, Botelho said, approximately $4.1 million would be left for acquisition of more property; that could be moved into the General Fund.
“Before you start hurtling down a path,” Maio told Botelho on Oct. 10, was it not correct that the board would have to wait until the next fiscal year to shift the use of the ESLPP revenue?
That is correct, Botelho replied.
As for one-time options: The board could take the approximately $5.6 million money from the county’s fund for economic development incentives, Lewis noted on Oct. 10, and it could transfer the $1.4 million from the county’s Community Reinvestment Program into the General Fund. A third source of potential revenue would come from the sale of surplus lands, he added.
“Picking from my menu of options here,” Commissioner Nancy Detert began, “I would just say I prefer to delay some of the capital projects. … I think we overspent. … I don’t see where we can find $11 million of budget reductions.”
Detert expressed hesitation about using the ESLPP option.
Maio concurred with the proposal for delaying capital projects, and he voiced “an absolute emphasis on surplus lands sales.”
None of the one-time options was off the table, he said.
Maio also proposed that administrative staff set aside time for the commissioners during one regular meeting in November and one in December, so they could start making decisions on specific proposals.
“I agree with Commissioner Maio,” Commissioner Michael Moran said. “There’s nothing off the table for discussion.”
Department spending, first
Chair Paul Caragiulo zeroed in on the department spending as his priority. Budget reductions “should always start from the operational point,” he said. Picking some of the other options over that step, he added, is not going to create the best motivation for achieving efficiencies. “You don’t work as hard when you realize you’ve got some powder that you have to burn over here.”
“I agree with Commissioner Caragiulo perfectly,” Moran said. However, he continued, the most important step for the board is to plug the immediate $5.4-million hole this fiscal year.
“I completely understand what you are saying,” Lewis responded. Even if the board members chose to implement some of the one-time options, Lewis continued, it still would need to decide on measures adding up to close to $11 million in recurring funds to keep from running into budget gaps in the years ahead.
“Things need to go through a stress test every now and then to see the integrity of the entity,” Caragiulo added.
Yet, Commissioner Charles Hines pointed out, “I think we went through that a few years back when a recession hit.” With county property values declining about 42% and the commissions holding steady on the millage rate, he said, the board members had no choice but to cut services. “And we’ve brought them back to where they were before.”
In response to a question from Maio, Botelho noted that property values still are about 20% less than they were before the economic downturn began.
If the commissioners cannot replenish the Economic Uncertainty Reserve, Hines continued, when the next recession arrives, the board will have “nothing to rely on,” so it will be forced to raise the millage rate and/or “drastically reduce services.”
That effort to put money aside has been delayed, Hines continued, as the commission has maintained a potentially “artificially low … millage rate the last two or three years.”
Public views sought
If the board is going to cut 10% of its overall department spending, Hines said, “we need to be reminded of what our community will not tolerate at that low level of service.”
Even though the most recent county Citizen Opinion Survey showed that the public does not want to see taxes raised, Hines added, the public needs to keep in mind that continuing to hold the millage rate steady might mean a lower level of maintenance for baseball or soccer fields, for example. The commissioners need to have that “honest conversation” with the public about what it will accept, he told his colleagues.
“I think we’re talking like it’s still the recession,” Commissioner Detert said. “These are good economic times.” The general public sees all the growth in the county, she continued, “and what we’re hearing is growth really has not paid for itself. … The reason we put up with all the growth and more people on the roads is it keeps our taxes lower, is the public perception.”
However, she did acknowledge that Botelho showed the board a slide during one of its budget workshops that made it clear that $100 million in new growth translates only into about $350,000 in new property tax revenue for the county.
Botelho also had pointed out that it typically takes two to three years from the time construction starts on a new building before the completed project ends up on the county tax rolls, Maio noted.
It is an interesting exercise, Caragiulo noted, to look at the data on the approximately 250,000 county parcels and see the years they did come on the tax rolls. He said that he would caution anyone about making the comment that growth is not paying for itself, “because the data shows a very different story. … I don’t normally chime in to respond, but I felt like I had to say that.”
“That’s a good point to make,” Detert replied, adding. “I’m not an anti-growth person.”
Moran said he would like to see a comprehensive staff report about options for cuts and hear “plenty of public input.”