Latest state projections for property tax increases push out need for more ‘rainy day’ fund revenue to the 2019 fiscal year
On Feb. 20, 2015, the Sarasota County Commission was looking at a potential shortfall of $8,066,135 in its 2017 fiscal year budget. Jump to Feb. 29, 2016: Based on projected revenues and expenditures, the board should not need to take any money from its “rainy day” fund to balance its FY 2017 budget. Instead, a shortfall has been pushed out to FY 2019, and it is lower than the one originally projected for FY 2017: $2,887,247.
That was the news County Administrator Tom Harmer presented to the board during its first budget workshop this year, which was held in Sarasota.
Further, because of the county’s receipt of $11.4 million in funds from BP as a result of the settlement over the Deepwater Horizon oil spill in the Gulf of Mexico in 2010, county finance staff projects only $141,507 will be needed in economic stabilization funds for the current fiscal year, Harmer told the board. Staff originally figured on $23,264,715 coming from that rainy day fund, he said.
The assumptions behind the figures Harmer provided on Feb. 29 are for property taxes to rise 7.1 percent in FY 2017 and 7.2 percent in FY 2018, with 3-percent growth in most other major revenue sources, and expenses rising 3 percent, as well, during each of the next two fiscal years.
State estimates of increases in taxable property values for the next three fiscal years rose between July 29, 2015 and Dec. 23, 2015, Harmer noted. Previously, the anticipated hike for FY 2017 was 5.2 percent; for FY 2018, it was 5.9 percent.
However, projected increases for FY 2020 and FY 2021 have declined slightly between July and December 2015, according to a chart provided to the board: from 9.2 percent in FY 2020 to 9 percent, and from 5.9 percent in FY 2021 to 5.7 percent.
Harmer also pointed out that the numbers in the budgets do not reflect the $8.1 million the board freed up with a policy vote in 2013 to reduce its Disaster Reserve so that account reflects 75 days of operating revenue instead of 90. “That funding is still set aside,” Harmer said.
Prior to the increase in ad valorem tax projections, the anticipated deficit for the county in FY 2018 was $6,152,107; for FY 2019, $10,786,179.
Still, Harmer noted, the commissioners and staff agreed during previous workshops to maintain a gap of $10 million or less in between anticipated revenues and expenses future fiscal years. “We feel like that’s manageable.”
In spite of the good early news, Harmer cautioned that pressure on the budgets of the state’s constitutional officers could change the models. For example, he said, the Sheriff’s Office might need to hire more deputies.
At the same time, he continued, the county’s efforts to provide solutions to homelessness might entail new expenses.
Furthermore, Harmer told the board, the county will have to handle new operating costs for the community library planned on the Suncoast Technical College campus in North Port, which is set to open in August 2017. Among other planned expenses not reflected by the budget projections are those relating to replacement of batteries in hybrid buses that Sarasota County Area Transit (SCAT) operates; ongoing funding for the SHIFTS program, which places chronically homeless people in housing; extension of The Legacy Trail to the north and south; and a temporary location for the Venice Public Library.
Harmer also presented the board alternative budget projections pegged to property tax values increasing only 4 percent in FY 2017 and FY 2018. The resulting numbers indicated a deficit of $10,331,307 in FY 2018 and $14,578,876 in FY 2019.
“We don’t know if there’s a recession in the future,” Chair Al Maio also pointed out.
World Rowing Championships expenses
In a related discussion, Assistant County Administrator Steve Botelho told the board that projections call for a fund balance of $1,588,0349 in Tourist Development Tax (TDT) revenue in FY 2017 in the account for capital projects and events. Because Sarasota and Manatee counties will host the World Rowing Championships that year, he continued, “we don’t want to be in the situation where something comes up,” and Sarasota County has to pay for it out of general fund revenue.
Already, he noted, Sarasota County has guaranteed payments totaling $1,430,099 for the international event. Along with promotional expenses that will come out of a specific TDT account, the county expects to spend $2,781,160 on the World Championships, a chart shows.
Botelho recommended that the board hold off on any allocations of money from that capital projects/events TDT fund balance until after the international competition.
That TDT revenue source also might be needed for amenities recommended through the county’s Parks Master Plan, which is scheduled to be completed later this year, Commissioner Christine Robinson pointed out. Additionally, she said, several years ago, the commissioners discussed the potential of helping the City of North Port pay for a 50-meter public pool. Although the YMCA in that city has a pool, whose expenses the county helps cover, that facility is “very, very aged,” she added, and a considerable amount of money appears to have been going toward its maintenance.
“That’s a great point,” Botelho responded, noting that staff should have more clarity about funding needs for the World Championships over the next 12 months.
The TDT allocation chart Botelho showed the board also pointed out that 25 percent of the first two pennies of the 5-cent tax goes to the Aquatic Nature Center at Nathan Benderson Park, which will host the World Rowing Championships.
The TDT revenue is allocated according to a formula pegged to each of the five pennies.
Altogether, the chart says, 10 percent of total TDT revenue goes to the Aquatic Nature Center. For the current fiscal year, the amount will be $2,013,868, which encompasses debt service on facilities at the park and the operating agreement the county forged with the Suncoast Aquatic Nature Center Associates (SANCA), which manages events at the park.