No budget shortfalls anticipated for next fiscal year, with pandemic having had less effect on county finances than expected in early 2020
In spite of dire economic predictions after the COVID-19 pandemic began in the spring of 2020, Sarasota County’s finances ended up in much better shape than expected, the county commissioners and county administrative staff concurred during a March 24 budget workshop.
Looking ahead to the 2022 fiscal year, budget projections show no shortfalls, a fully funded Disaster Relief Reserve Fund, and continuing positive trends for the board’s self-imposed Economic Uncertainty Reserve, which is used to plug budget holes, County Administrator Jonathan Lewis pointed out.
Staff did not plan on any new revenue sources — such as a Public Service Tax that the commissioners entertained at staff’s suggestion in 2017, and ultimately decided not to impose, Lewis noted.
Further, Lewis said staff planned on no millage rate increase other than fluctuations in the voter-approved debt millage rate to fund The Legacy Trail’s North Extension to downtown Sarasota and the connector to North Port.
However, early on in the March 24 discussion, Commissioner Michael Moran proposed that staff go ahead and budget for an extra one-tenth of a mill in FY 2022, which would raise revenue that could be devoted to a Mental Health Care Special District. “I don’t think it hurts at all” to include that, Moran said, “knowing that this board has discretion to change it.”
Commissioner Nancy Detert concurred. “I’ve seen this over and over in the Legislature: The gold standard is a dedicated source of revenue,” so the entities handling the programs the money would be allocated to are assured of that revenue, she added.
During their regular meeting on March 23, the board members discussed the potential of proceeding with the creation of such a district.
“That’s a modest increase,” Chair Alan Maio added on March 24, referring to the one-tenth of a mill.
“We’ll take care of anything you guys need,” Lewis told the commissioners. “It’s easier to start planning for it now,” Lewis added, instead of having to adjust the budget later during the process before the commission formally adopts it in September.
Lewis reminded the commissioners that their budget schedule calls for them to approve the not-to-exceed millage rate during their meeting on July 14.
Proceeding on to a discussion of how the county’s finances ended up at the Sept. 30 conclusion of the 2020 fiscal year, Deputy County Administrator and Chief Financial Management Officer Steve Botelho noted that the Emergency/Disaster Relief Reserve was fully funded for 75 days of operations. That money is set aside for an event such as a natural disaster, he noted: “Something obviously pretty catastrophic.”
The funds would pay for continued operation of numerous county departments, he said, as well as the Sheriff’s Office and Sarasota County Area Transit (SCAT).
The Economic Uncertainty Fund had $34,234,599 in it, according to a slide Botelho showed the commissioners. That is enough to cover 48 days of operations.
As recently as the 2017 fiscal year, he pointed out, that budget stabilization fund had only $9 million in it, which would have covered 14 days of operations. “So the board’s done a great job of building that reserve back up.”
Altogether, Botelho said, the county’s reserve funds totaled $213,552,697 at the end of the 2020 fiscal year.
In response to a question from Commissioner Christian Ziegler, who is one of the newest members of the commission, Botelho noted that county policies lay out how all the reserve funds can be used. When a fund has more money than those county guidelines require, Botelho added, then staff puts the excess to use. For example, he said, the county has numerous building projects to which additional revenue could be allocated.
From early pandemic days to end of the 2020 fiscal year
Kim Radtke, director of the county’s Office of Financial Management, then showed the commissioners a number of slides that depicted projected downfalls in county revenue in May 2020, based on predictions about the pandemic’s effects on the economy.
For example, she said, the Tourist Development Tax — or “bed tax” — revenue was expected to drop 75% in April 2020. Sales tax revenue was projected to be down 50% in April and May 2020, for another example.
Radtke presented a slide that showed how those and other revenue sources ended up faring by the Sept. 30 end of the 2020 fiscal year. As it turned out, the penny sales tax revenue — Surtax 3 — declined only 1% from the original figure built into the 2020 budget before the pandemic began. The Surtax program pays for a wide variety of construction projects, based on a list presented to voters who most recently approved the penny tax during a 2007 referendum.
Radtke’s slide also showed that, at the end of FY 2020, the county’s half-cent sales tax revenue and revenue shared from the state both were down only 2%. Radtke and Botelho did remind the board members that the figures they were discussing on March 24 had not been audited.
Further, the county’s Tourist Development Tax revenue actually ended up $58,708 higher than the budgeted figure of $21 million at the beginning of the 2020 fiscal year.
“We are very fortunate that we did not get those drastic reductions,” Chair Maio said, referring to the May 2020 figures.
To contend with the financial downturn brought on by the pandemic, Radtke continued, department directors were asked to put on hold expenditures that they felt could be delayed. For examples, departments with employee vacancies left those unfilled, and painting and landscaping projects were delayed.
Altogether, she noted, department savings added up to $7,328,003.
Then, Radtke pointed out, $5 million in General Fund expenditures were paused in the first quarter of the 2021 fiscal year. (The General Fund contains all the property tax revenue, plus gas tax and other revenue. It is considered the county’s most constrained fund, Office of Financial Management staff says, because it pays for many county department operations, along with those of constitutional officers such as the sheriff and the supervisor of elections.)
Again, staff left vacant positions unfilled, it eliminated travel, put a hold on plans to buy new furniture and equipment, and saved on fuel expenses, Radtke noted among the measures that were taken.
Another slide showed the budget changes through the first quarter, based on the original FY 2021 figures. The Tourist Development Tax revenue was up 26% from October through December 2020, while the half-cent sales tax revenue ended up 1% higher than expected. Surtax revenue climbed 3%.
Showing the board members another slide, which reflected property tax revenue from the 2005 fiscal year through the 2021 fiscal year, Deputy County Administrator Botelho noted that staff has projected $179.4 million for this fiscal year, a figure pegged to the expectation that 95% of the taxes will be collected. That compares to $175.7 million in the 2008 fiscal year, which was the last one before the Great Recession had its impact on county finances.
Last year, property tax revenue added up to $173.1 million, the slide showed.
Starting in FY 2008 and continuing through the next couple of years, Chair Maio pointed out, county property tax revenue “plummeted 42%. … It did not return to the high water mark, if you will, until the July 1, 2020 gross assessed value roll that [county Property Appraiser] Bill Furst gave us.”
Maio also emphasized that if the commissioners had kept the county millage rate at the FY 2000 level, the county would have collected an extra $896 million from taxpayers through the last fiscal year.
Botelho and County Administrator Lewis told the commissioners that state officials have projected that property tax values will climb 3.8% this year. That compares to the 5.8% figure state officials gave the county in August 2020, Lewis said.
By the 2024 fiscal year, the number is projected to go up to 5.3%, Lewis noted.
Historically, Botelho said, the county collects 3% more revenue each year than it projects in the budget, and it spends 6% less than the expenditures included in the budget.