Money saved through a policy change has been set aside as a contingency fund for the 2017 World Rowing Championships and homeless initiatives, but debate ensues over using it to build a new ‘rainy day’ fund
In May 2013, the Sarasota County Commission split 3-2 on a change to its reserve policy, requiring that the county keep enough money to cover 75 days of operations in an emergency situation instead of 90. Then-Commissioner Joe Barbetta was joined by Commissioners Carolyn Mason and Charles Hines in supporting the modification. Then-Commissioner Nora Patterson and Commissioner Christine Robinson voted “No.”
Barbetta voiced an interest in using the money for unfunded capital projects that could bring in a return on the investment. Patterson expressed worry about how quickly the county’s fund for contingencies/emergencies/disaster relief could disappear if the board had to face a long wait for reimbursement from the Federal Emergency Management Agency for county spending in the aftermath of a hurricane strike.
Robinson added, “The time to decide whether you have adequate reserves is not when you are in need of money.”
Since then, the approximately $8,131,269 saved by that policy change has sat unused, and that pot became the focal point of debate once again this week, with County Administrator Tom Harmer indicating it might serve as seed money for rebuilding the county’s Economic Uncertainty Fund, which has been used over the past several years to plug budget holes resulting from the economic downturn. Estimates show that “rainy day” fund will not be fully replenished until the 2024 fiscal year, he pointed out.
Although no shortfall is foreseen in the county’s budgets for the 2017 and 2018 fiscal years, Harmer noted, about $3 million is projected to be needed from the Economic Uncertainty Fund to help cover expenses in the 2019 fiscal year.
Not what they decided
The last line of one slide Harmer showed the board during part of its March 30 workshop said, “County may not be prepared for the next recession.”
(Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida, had just completed an almost hour-long presentation during which he said he was anticipating another recession within the next few years. See the related story in this issue.)
“I really don’t like the last bullet point,” Robinson told Harmer, referring to the slide. “I disagree with it somewhat.”
Harmer concurred, saying he had not realized how negative it sounded until he reached that point of the workshop.
Still, he continued, while County Commissions have done a very good job of saving money, “now is the time for us to start to think strategically” about rebuilding the Economic Uncertainty Fund.
“If [another] recession hit tomorrow,” Robinson responded, “we still have reserves that we would be able to use.”
Nonetheless, Harmer continued, the county’s property tax valuation has not returned to the level it attained prior to the Great Recession.
Robinson countered that when she was appointed to the board in late 2010, the Florida Association of Counties was sending out news clippings showing major cutbacks in other counties — including park and library closings — because those local governments were struggling greatly during the economic downturn. Sarasota County did not suffer nearly as much, she said, but the County Commission has to continue to be careful “about how we spend what we have.”
Harmer noted that the county has approximately 17 different reserve funds, including its 75-day emergency operating account.
When Chair Al Maio asked whether it is correct that $150 million is the total the reserve funds represent, Assistant County Administrator Steve Botelho, who oversees the Office of Financial Management among his responsibilities, told Maio, “It’s in that ballpark ….”
The 75-day fund has about $46.7 million in it, Harmer pointed out. Then he mentioned the $8.1 million.
During the board members’ December 2015 retreat, he continued, discussion focused on how that money might be seen as a contingency fund for dealing with any unforeseen expenses related to the 2017 World Rowing Championships at the county’s Nathan Benderson Park, and perhaps to assist with initiatives — such as a shelter — to aid the county’s population of homeless residents.
He also noted that the money might be seen as a pot to start rebuilding the Economic Uncertainty Fund, though he said he was not seeking formal board action that day on the suggestion.
Maio replied, “I think we need to start adjusting the number, with the accumulated interest,” which, he said, adds up to about $100,000 per year. He pointed out that the interest can add up to a significant level.
“I’m a little disappointed that we’re having this conversation again,” Robinson interjected, referencing the December board retreat discussion. “Dual designations” for the $8.1 million pot, she added, are problematic. “I hope not to hear about this again … at least during my term,” which ends in November.
After the World Rowing Championships has concluded and the county is further along in discussions about handling the homelessness issues, Robinson said, the board can look again at the $8.1-million fund.
“I agree, Mr. Chairman,” Commissioner Mason told Maio. “Those two items are really, really important,” she continued, referring to the Championships and the homelessness initiatives, “and so I wouldn’t like to see a departure from what we decided to do back in December, until those two issues are resolved.”
“Another recession will be coming,” Commissioner Hines said, so it is a good idea to talk about how to rebuild the Economic Uncertainty Fund.
Harmer told the board that staff “would probably look to [Tourist Development Tax revenue] as the primary funding” for any cost overruns on the World Rowing Championships. However, no decisions have been made yet about how to pay for future initiatives regarding services to the homeless.
“This is a philosophy that’s sort of being taken in a different way,” Vice Chair Paul Caragiulo noted of the suggestion about using the $8.1 million as a means of replenishing the Economic Uncertainty Fund. “I do empathize with your concern,” he told Robinson. “It’s really not what we had decided significantly [in December].”
“Hopefully, that [$8.1 million] will remain untouched,” Robinson added. Still, she said, “I fear that just mentioning it opens up the can of worms on a decision that we have already made.”
“It reframes it, anyway,” Caragiulo pointed out.