Unaudited figures show county received about $52 million more than budgeted from major revenue sources in 2022 fiscal year

Reserves required by county policy and commission direction exceed $222 million

During the Sarasota County commissioners’ first budget workshop this week, looking back at the 2022 fiscal year and ahead to the 2024 fiscal year, Chair Ron Cutsinger noted one major factor regarding the revenue that the county received in the 2022 fiscal year.

The county’s major revenue sources ended up with approximately $52 million more than staff had expected, Cutsinger pointed out on March 22.

Kim Radtke, director of the county’s Office of Financial Management, had been discussing a chart that showed the expected revenue from the half-cent sales tax, state revenue sharing, the Communications Services Tax, Florida Power & Light Co. franchise fees, the penny sales tax — or “Surtax” — program, and the Tourist Development Tax, which is a 6% fee on accommodations rented for six months or less time in the county.

The unaudited figures showed the Surtax III revenue was up 32% over county staff’s expectation, Radtke noted — from $43,890,000 in the 2022 fiscal year to $57,984,247.

Yet, the Tourist Development Tax (TDT) increase exceeded that level of uptick, she pointed out. The revenue turned over to the Sarasota County Tax Collector’s Office ended up totaling $40,371,339, the chart showed; county staff had budgeted for $22,500,000. Thus, Radtke said, the TDT funds were up 79%, compared to staff’s projection.

“We did very well,” Radtke told the commissioners, referring to all the revenue sources on the chart.

Referring to the gas tax revenue — which was up only $1,68,246, compared to the amount staff had budgeted for FY 2022, Commissioner Nancy Detert noted, “We’ve been talking about [that money] declining,” because more people have claimed they are buying electric cars.

“Are you seeing a trend,” she asked Radtke, “or did COVID factor into this, too?”

“We budgeted fairly conservatively last year,” for the revenue the gas tax would yield to the county, Radtke responded. With the height of the pandemic over, she added, staff is seeing more of an increase in the gas tax revenue.

Detert also inquired about whether she remembered correctly that Gov. Ron DeSantis implemented a gas tax holiday last year.

Radtke indicated she was uncertain about whether the gas tax holiday was a state or federal action.

On its website, the Florida Department of Revenue pointed out, “The Florida Motor Fuel Tax Relief Act of 2022 [reduced] the tax rate on motor fuel by 25.3 cents per gallon. Passed by the Florida Legislature and signed into law by Governor Ron DeSantis,” the tax rate reduction began on Saturday, Oct. 1, and extended through Monday, Oct. 31. “The tax rate reduction [applied] to all gasoline products, any product blended with gasoline and any fuel placed in the storage supply tank of a gasoline-powered motor vehicle,” the department explained.

During the March 22 commission discussion, County Administrator Jonathan Lewis also noted the continuing decline in the Communications Service Tax revenue. The amount has been falling “for the past seven or eight years.” Therefore, he added, to see the total come in $413,432 higher than staff’s projection for FY 2022 “is definitely an anomaly.”

Staff had budgeted $8.3 million for that revenue in FY 2022; the total ended up being $8,713,432, Radtke’s chart showed.

When Detert asked why that revenue has been declining, he explained that fewer people these days pay an actual phone bill. Many individuals, Lewis said, are buying smartphones with a certain number of minutes provided through the sales packages.

Thus, he told Detert, staff expects that revenue to continue to decline.

Referencing two more charts in the presentation that morning, Radtke noted that the county had maintained its designated reserve levels for all of its accounts except two associated with Emergency Services. (A staff proposal for higher Fire Assessments will be addressed later this year as the board members work on the 2024 fiscal year budget, Lewis said.)

During that part of the workshop discussion, Lewis did point out that commissioners years ago agreed to spend down some of the Emergency Services reserves because of the strong revenue situation at the time. “It probably made sense,” he added of the decision.

However, Lewis continued, “We probably didn’t correct [that position] quickly enough,” after the specific reserve funds began to fall. Although staff has been working to build those reserves back up, he said, staff had not anticipated needing to account for inflationary effects on the prices of supplies over the past year.

Altogether, Radtke continued, the county had $222,623,803 in its reserve accounts at the end of the 2022 fiscal year. That includes $58,578,946 in the Emergency/Disaster Relief Reserve, which would enable the county to operate for 75 days if it received no income as a result of some type of disaster.

Further, the Budget Stabilization & Economic Uncertainty Fund had $34,334,284 by the Sept. 30 end of the 2022 fiscal year, the chart said. That represented 44 days of funding.

By the 2027 fiscal year, Radtke said, staff believes that the county will have enough money in that fund for 60 days of operations, which is the commission’s goal.

Commissioner Michael Moran referred to the continuing effort to replenish that Budget Stabilization Fund as a “self-inflicted” action of the board members. He reminded everyone that, during the Great Recession, the commissioners were able to use money their predecessors had allocated to that reserve to maintain county services that otherwise would have had to have been cut because of the county’s drop in revenue.

The fund, he added, “is a piggy bank for — not if, but when — a downturn comes about.”

“I’m positioning for a recession, frankly,” Detert told the staff during the reserves review. She added that she feels the board needs to “be as conservative as we possibly can, going forward.”

Further, she expressed dismay over the fact that the commissioners have raised fees to plug gaps in reserves. “We like to brag we haven’t raised taxes in 21 years,” Detert continued, noting that the appreciation in the value of county property had enabled the board to hold the millage rate level. Nonetheless, she added, “We are pushing the limit, in my opinion, on fees.”

Chair Cutsinger did point to one other positive factor in the county’s overall financial situation: We have a triple A rating for our [government] bonds, which is astonishing.” That is the highest rating that the bond rating agencies provide.

He also remarked on the fact that county staff has saved “about $50 million in interest over the past 10 years,” thanks to staff efforts to refinance bond debt.

Looking ahead to FY 2024

During her presentation, Radtke of the Office of Financial Management also reminded the commissioners that staff each year plans the budget with an estimated under-spending of 6%, compared to what is allocated to the various departments covered by the General Fund, and it assumes that total revenues will come in 3% above the level budgeted.

The General Fund comprises the revenue sources listed above — including the gas tax money — along with property tax revenue. It pays for department operations that do not generate revenue of their own, as well as for most of the work of the county’s constitutional officers — such as the sheriff and the supervisor of elections — whose departments also traditionally do not have means of producing income.

Among other details, Radtke showed the board members the state projections for property tax revenue increases for the next several fiscal years. However, she pointed out, the Florida Office of Economic and Demographic Research this month had conveyed estimates that included an 18% uptick in property values for this year.

Deputy County Administrator and Chief Financial Officer Steve Botelho reported that staff had talked with members of Property Appraiser Bill Furst’s staff to gain information about what they foresee in terms of the property value increase. As a result of those conversations, Radtke said, she and her staff had lowered the hike from 18% to 10% for budgeting purposes in the 2024 fiscal year.

Using even the lower figure “as a conservative estimate,” Chair Cutsinger pointed out, “is quite unique.” Yet, he continued, “We’ve been in a roaring, booming [real estate] market … I think we do kind of have to prepare for a little bit of a pullback.”

For the fiscal years from 2025 through 2027, state staff has projected increases of 9.4%, 7.7% and 7.1%, Radtke’s slide showed.