Sarasota County General Fund expenditures expected to rise only 2.7% from 2018 fiscal year to FY 2019

Smaller gaps expected in later fiscal years if extra homestead exemption passes on Nov. 6 ballot

A chart shows the latest year-over-year budget changes for the county’s constitutional officers. Image courtesy Sarasota County

Thanks to a reduction of almost $473,000 in the proposed budget of the Sarasota County Sheriff’s Office — and other changes since June — the Sarasota County Commission this week was looking at an increase of only 2.7% in its General Fund spending for the 2019 fiscal year.

That figure was down from the 2.9% uptick staff anticipated during the board’s June budget workshops, Deputy County Administrator and Chief Financial Management Officer Steve Botelho reported during the commission’s Aug. 22 budget workshop.

The General Fund comprises largely the property tax revenue the county receives each year. It is the county’s most constrained fund, administrative staff has explained, because it pays for the operations of many county departments as well as those of the county’s constitutional officers, such as the sheriff.

The General Fund expenditures estimated for the 2019 fiscal year total $301,827,238, while the overall proposed budget for FY19 is $1,234,837,784. The budget reflects employment of 3,613 full-time employees, Kim Radtke, director of the county’s Office of Financial Management, told the board.

In response to a Sarasota News Leader question about the reduction in the Sheriff’s Office budget, Kaitlyn Perez, the department’s community affairs director, responded on behalf of Lisa Kiesel, the office’s chief financial officer, in an Aug. 23 email: “The reduction is based on the Sheriff seeking cost-saving opportunities for the county by bringing the agency onto independent healthcare and insurance plans …” Based on a preliminary consultation, the email continued, the savings would total more than $1 million.”

The email added, “[W]e will continue to utilize county benefits from October 1 through December 31, 2018 [and] we will still be charged internal service charges through the end of this calendar year,” which totals just more than $100,000. Internal service charges are expenses for work the county handles for the constitutional officers.

In June, a Sheriff’s Office chart provided details about the preliminary budget for the 2019 fiscal year. Image courtesy Sarasota County Sheriff’s Office

“Additionally, the county decided the sheriff’s office would maintain property and equipment insurance through [its] organization for the next fiscal year, which totals more than $500,000,” the email said.

“Combined, these charges total a little more than $600,000 ,” the email pointed out, “which leaves approximately $472,541 in cost savings to the county …”

“In addition,” the email noted, “we anticipate the sheriff’s office will — as in years past — return unused money to the county as we move through the upcoming fiscal year.”

Along with the decrease in the Sheriff’s Office budget since the board’s June budget workshops, Radtke reported to the commission this week, the Public Defender’s Office eliminated one proposed new employee from its budget, for savings of $34,302. However, Radtke said, the Supervisor of Elections Office’s budget is being increased by $50,575. That represents a grant from the federal government for security measures related to the elections, she added.

County Administrator Jonathan Lewis further noted organizational changes he has made since the commission hired him in January. He has moved the Stormwater Division into the Public Works Department, and the Office of Economic Development has become part of the new Department of Governmental Affairs, Lewis said.

Additionally, he eliminated the Real Estate Services office and created a new Property Maintenance Division that is part of the Planning and Development Services Department.

Yet another positive factor for the FY19 budget, Botelho noted, was the Sarasota County Property Appraiser’s state-mandated report for July 1 showing county property values up 7.36%. The state estimate for this year — released in January — was 6.7%, Botelho said.

The state updates its estimates quarterly for the next several fiscal years, he added. The latest figure for the property value increase next year, according to a slide he showed the board, is 9.7%, followed by 6.3% for the purpose of planning the 2021 fiscal year budget.

The largest unknown factor

This is the June model for the General Fund, factoring in passage of the referenda on the November ballot. Image courtesy Sarasota County
This is the Aug. 22 model showing the General Fund projections, factoring in the referenda passing. Image courtesy Sarasota County

The big “if” for budget planning, Lewis and Chair Nancy Detert pointed out on Aug. 22, is whether voters — as expected — will approve two state-proposed measures that will be on the Nov. 6 General Election ballot. The first would raise the homestead property tax exemption up to an additional $25,000 on a house with an assessed value greater than $100,000. However, that would not apply to school district property taxes.

The second measure — Amendment 2 — would make permanent the cap of 10% on annual non-homestead parcel assessment increases, which is set to expire on Jan. 1, 2019.

In June, county staff showed the commissioners projections indicating that if both referenda pass in November, a gap of $742,512 would be expected between revenue and expenditures in FY20, when the state measures would go into effect. That gap would grow to $7.9 million in FY21, the chart showed.

The model staff provided the board on Aug. 22 — with both referenda passing — has no budget gap for FY20; however, a deficit of $2,701,863 would be expected in FY21. “That is a number that is much more manageable,” Lewis pointed out, than the $7.9-million estimate for FY21 in the June model.

“I think our financial forecast model is about as good as it gets,” he told the board. The internationally recognized financial rating agencies — such as Fitch — seem to agree, he noted, as they have continued to give the county very high ratings for bonds.

Fitch’s website includes a reference to its April 18 report, when it gave the county an AAA general obligation rating, which, the firm said, “reflects the county’s low long-term liabilities and continued sound financial operations.”

Without the referenda passing, Lewis pointed out, the Office of Financial Management model showed the county would be able to add a total of about $11 million to its Economic Uncertainty Reserve Fund by FY22. The amount would be expected to climb to $27 million by FY23.

However, if the referenda are approved, the only new money going into the Economic Uncertainty Reserve would be the $2.5 million budgeted for the 2019 fiscal year, Lewis said.

The county does maintain a 75-day emergency operating reserve, which is separate from the “rainy day” fund. That is another reason, Lewis said, that the rating agencies continue to give county bond issues high ratings.

Altogether, Botelho noted, the county’s reserve funds — covering an array of operations and departments — total about $160 million.

Lewis did take time on Aug. 22 to show the commissioners three charts illustrating the impacts of the Florida homestead laws on local government finances.

For years, he said, an organization called American City & County, he explained, has been tracking what it calls a “Municipal Cost Index” (MCI). That involves research into expenditures specific to local governments, such as asphalt, he added.

Lewis showed the board a graph that indicated the county’s MCI total had grown to an estimated $182.5 million for 2018. In comparison, the total for homestead exemptions in the county this year is $165.2 million.

He noted that the figure for the 2018 MCI had been extrapolated from historical averages.

This is one MCI graph County Administrator Jonathan Lewis showed the commission on Aug. 22. Image courtesy Sarasota County