Commission wants full explanations this year from constitutional officers proposing budget increases above 3%
In the 2018 fiscal year, Sarasota County did not need any of its Economic Uncertainty Reserve Fund revenue to balance the budget, County Administrator Jonathan Lewis told the commissioners during their first budget workshop of the year.
That was only the second time since the Great Recession began, he pointed out on March 29, that no such “rainy day” money was necessary to plug a gap. The first occasion was in 2015, in preparation of the FY16 budget, Lewis added. The county had received $11.4 million from BP as a result of the settlement over the Deepwater Horizon oil spill in the Gulf of Mexico in 2010, administrative staff explained at that time.
Additionally, this fiscal year — which began on Oct. 1, 2018 — marks the first time since the start of the Great Recession that staff has been able to add more money to that “rainy day” reserve fund, Lewis noted on March 29.
At the end of FY18, the county had $17,301,188 in that Economic Uncertainty Fund, according to a slide staff showed the board. That would pay for 26 days of county operations, the slide said.
Conversely, the county’s Contingency/Emergency/Disaster Relief Reserve Fund — which, under county policy, must be able to pay for 75 days of operations — had $50,146,226 at the end of FY18, the slide showed.
After reviewing the FY18 reserves, Lewis said, “Those numbers are looking good.” The total is close to $170 million.
As Commissioner Michael Moran pointed out, the Economic Uncertainty Reserve is a “self-imposed, budget stabilization reserve …” The Disaster Relief Fund is not.
Before the downturn started, Deputy County Administrator Steve Botelho said, previous commissions had set aside close to $45 million in the Economic Uncertainty Reserve Fund; boards in recent years have drawn upon that to balance budgets without having to raise the property tax rate.
The county lost 38% of its property value as a result of the Great Recession, a June 2018 staff graphic showed. The property value for the current fiscal year — $58.4 million — still is not back to that pre-downturn level, Chair Charles Hines added.
The highest mark for county property value was in the 2008 fiscal year: approximately $62.7 million, the June 2018 graphic noted.
Commissioner Alan Maio also pointed out during the March 29 discussion that the County Commission has not raised the ad valorem tax rate since the 2000 fiscal year.
No tax increase is proposed for the 2020 fiscal year, either, Maio added. If the board had kept the property tax rate at the 2000 level, he said, “We would have generated an extra $730 million or so.”
In response to a question from Commissioner Christian Ziegler, County Administrator Lewis noted that the county has the second-lowest millage rate in the state. Sarasota County’s overall rate is 3.3912.
Thanks to an additional homestead exemption having failed to win voter approval on the Nov. 6, 2018 General Election ballot — and a series of commission financial decisions in 2017 — no budget shortfalls are foreseen through the 2024 fiscal year, according to slides staff showed the board.
Yet another factor that has had a positive impact on the county’s financial future, Botelho said, is the fact that since 2010, refinancing of county debt has saved about $60 million in interest payments, approximately $23 million of which would have come out of the General Fund.
Staff characterizes the latter account as the most constrained in the county, as it is made up largely of property tax revenue, and it funds the operations of many departments, including the Sarasota County Sheriff’s Office.
“Two years ago, we were nervous,” Chair Hines said, referring to the budget forecast at that time.
After the board members elected not to pursue implementation of a 5% Public Service Tax, they were faced with making about $5.4 million in cuts of recurring expenses to balance the budget for the 2019 fiscal year.
Additionally, Hines noted, the commissioners had heard from a well-regarded economist in the state that another recession could occur in 2019 or 2020, and they all had figured the extra homestead exemption would win voter approval.
“I want to give a lot of credit to staff,” Commissioner Moran said of the actions the board approved to create ongoing budget savings. “I know it wasn’t easy,” he added, for those cuts to be implemented.
As for FY20: Kim Radtke, director of the Office of Financial Management, explained that in building the annual budget, staff assumes expenditures will come in 6% less than projected and that revenue overall will be 3% higher, based on historical averages. The latest state prediction for growth in property values this year is 6%, she added.
The General Fund expenditures controlled by the County Commission are projected to rise 2.5% this year, according to another slide staff showed the commissioners. However, spending out of the General Fund for the county’s constitutional officers — such as the sheriff and the supervisor of elections — is expected to be up 3.9%. County staff had proposed a 3% limit for FY19, Hines noted.
As the longest-serving commissioner, Hines pointed out that he has sat through many budget workshops with little debate about the constitutional officers’ budgets. However, he continued, over the past couple of years, significant increases in spending have been proposed for some of the offices.
For example, the budget Public Defender Larry Eger of the 12th Judicial Circuit Court submitted to the county for FY19 was 25.9% higher than in FY18. The Court Administration budget was up 15.9% from FY18 to FY19.
“They’re not huge budgets,” Hines pointed out, in comparison to the overall county budget. Nonetheless, he added, “It may be time to have a little more [discussion about reasons for the increases].”
On some occasions in the past, he said, some of the elected constitutional officers have sent their deputies to present their budgets to the County Commission.
If his colleagues agreed, he continued, perhaps the commission should request that each constitutional officer appear before the board in June to explain facets of his or her budget, especially if a budget increase will exceed the 3% mark.
Sheriff Tom Knight was able to keep the uptick in his budget from FY18 to FY19 to 3.1% Hines pointed out. Likewise, Knight annually appears before the commissioners to explain reasons for spending changes, Hines said.
“I think that’s a great idea,” Commissioner Moran responded, referring to the proposal for each constitutional officer to appear before the commission.
“I agree, as well,” Commissioner Ziegler said.
“If we’re holding our feet and our staff to the fire to keep [any budget increase] at 3%,” Hines added, “it’s just really an explanation [the commission wants from the constitutional officers] so we fully understand the need.”
Last year, in preparing the FY19 budget, the commission asked all the constitutional officers to cut their budgets by 5%, Commissioner Nancy Detert pointed out. Along with Eger and Court Administration, the State Attorney’s Office budget was up quite a bit, she added. (State Attorney Ed Brodsky’s office budget request rose 9.2% from the figure in FY18.)
Although Supervisor of Elections Ron Turner’s budget also rose significantly, Hines and Moran noted, Turner has had to contend with extra expenses for elections and new security measures.
Detert and Hines also pointed out that the commission agreed to extra funding this fiscal year for new jail diversion programs, including specialty courts. In her experience, Detert continued, such initiatives seem to grow more expensive in their second year of operation. “So I’d just like to see how [those programs are] going before we get to Step 2.”
Hines then suggested the constitutional officers could meet one-on-one with each commissioner after they submit their budgets, as Knight does, so each board member will have an opportunity to ask any questions before the June budget workshops begin.