With current penny sales tax program ending in 2024, Sarasota County staff broaching plans for ‘Surtax 4’ to help pay for wide variety of projects

Great Recession reduced amount of revenue county leaders expected from Surtax 3

A graphic explains facets of the county’s penny sales tax program. Image courtesy Sarasota County

In November 2007, Sarasota County voters approved the third imposition of a penny sales tax program to pay for a multitude of projects proposed countywide.

Called Surtax 3, its collections began on Sept. 1, 2009. Not only does the county receive proceeds from the tax, which is applied to the first $5,000 of any taxable item, but the Sarasota County School Board and the municipalities do, as well, Deputy County Administrator Steve Botelho explained to the County Commission during a May 17 budget workshop.

Surtax 3, he said, is “a big funding piece of our CIP [Capital Improvement Program].”

“It’s going to be important for the next referendum,” he added, “to show the community” that the funding was allocated to projects county leaders had touted.

The county’s share of the Surtax 3 revenue for the 2018 fiscal year, which ended on Sept. 30, 2018, was 47.62% of the total — $41,427,363.

Since the tax went into effect, Botelho said, the county has used about $150 million of the collections for its CIP program.

The revenue that goes to the municipalities is distributed on the basis of their population figures, Botelho noted. In the 2018 fiscal year, North Port had the largest share — 12.38%.

A graphic shows the distribution of Surtax 3 revenue in the 2018 fiscal year, which ended on Sept. 30, 2018. Image courtesy Sarasota County

Surtax 3 will expire on Dec. 31, 2024, he added. If the County Commission wishes to continue with the revenue program, Botelho pointed out, it will need to authorize staff to plan another referendum. That likely would be scheduled for the November 2022 General Election, he said, so the county would not incur the expense of a special election.

Surtax 3 never has lived up to its billing, so to speak, as Botelho made clear during the May 17 workshop. The Great Recession had a significant impact on collections, he pointed out.

The original forecast called for Surtax 3 to provide $41.2 million in the 2009 fiscal year, according to a graph Botelho showed the board. In its final year, 2024, the revenue was predicted to climb just above $50 million.

Instead, he continued, the total in the 2010 fiscal year was about $25 million. Gradually, the amount has climbed, according to another graph. The revised forecast calls for $44.3 million to be collected in the 2024 fiscal year, Botelho said.

A graphic shows collections for Surtax 1, 2 and 3, along with original projections for Surtax 3. Image courtesy Sarasota County

“Economies go up and down,” Chair Charles Hines responded. “Why do we project [the total surtax revenue] keeps going up?”

Botelho responded that staff is comfortable with the forecast through 2024. The difficulty, he explained, is that the further out the forecast goes, the more potential for factors to affect it.

Botelho did note, “Approximately 40% of the revenue stream is paid by non-residents,” people who come from other areas of Florida and from out of state.

“That has to be emphasized,” Hines told him. “They’re using our roads; they’re using our parks.”

Earlier during the workshop, Carolyn Eastwood, director of the county’s Capital Projects Program, pointed out that for the next five years of the county’s CIP, staff estimates total project costs will be $499,115,014; surtax revenue is expected to cover about 19% of that, or $93,328,341.

A multitude of other revenue sources will make up the difference, according to a pie chart she showed the board. For example, utility fees that county water, wastewater and solid waste customers pay are projected to add up to about $212,900,000 from Fiscal Year 2020 through Fiscal Year 2024. Impact and mobility fees are expected to account for another 9% of the total, or $42,378,851.

By department, according to another slide, 28% of the CIP allocations will go to the Wastewater Division; 16%, to the Water Division; 18% to Transportation; and 15% to Parks, Recreation and Natural Resources Department.

A graphic shows projected funding sources for the Capital Improvement Program for Fiscal Years 2020 through 2024. Image courtesy Sarasota County

For just the 2020 fiscal year, Eastwood noted, $189,739,795 is the estimate for CIP project funding.

Staff has explained that even though the County Commission annually approves an updated, five-year CIP, as part of its budget process, priorities often change in the subsequent four years of the program.

In early May, for example, commissioners indicated a willingness to prioritize projects this year that will improve water quality.