Expected passage of two state amendments on Nov. 6 would have less of an impact on future fiscal years, staff says
In late March, Sarasota County administrative staff showed the County Commission budget projections that included an estimated shortfall of $8,970,406 in the General Fund for the 2020 fiscal year, if two state ballot measures pass on Nov. 6.
However, because county expenses have proven lower than expected and the preliminary property value for this year is higher than anticipated, that gap has dropped to $742,512 in FY20, the board members learned this week.
No shortfalls in county budgets through the 2023 fiscal year would be foreseen if the referenda fail, County Administrator Jonathan Lewis said during the board’s June 19 budget workshop. “But, of course, we also have to be realistic.”
The General Fund, which is made up largely of property tax revenue, covers the bulk of the spending by the county’s constitutional officers — such as Sheriff Tom Knight and Property Appraiser Bill Furst — as well as expenditures of many county departments.
Overall, the FY19 budget is expected to increase 8.1% over this year’s level, with a total of $1,222,880,603. However, the operating budget will rise only 3.2%, according to a staff graphic.
Over the past months, commissioners have expressed the view that voters will approve Florida Amendments 1 and 2, which will have a significant impact on the property tax collections for coming years. Amendment 1 calls for increasing the homestead exemption from $50,000 to $75,000, while Amendment 2 would make permanent the cap of 10% on annual non-homestead parcel assessments, which is set to expire on Jan. 1, 2019, according to Ballotpedia.
As a result, the software the county’s Office of Financial Management staff uses for budget projections shows a shortfall of $7,904,096 in the 2021 fiscal year, though the gap decreases to $1,990,196 by FY23.
Among the good news for FY19, Deputy County Administrator and Chief Financial Management Officer Steve Botelho noted, is that while staff projected a 3.6% increase in county expenses from FY18 to FY19, the latest data puts the number at 2.9%. Thus, instead of looking at $306.3 million in expenditures for FY19, the proposed General Fund budget includes a figure of $302.3 million. That change, plus the preliminary county property value uptick of 7.06% — compared to the state estimate of 6.7% — and a $1.7 million increase in other revenues have helped reduce the FY20 shortfall, Botelho added.
Among those other revenue sources, for example, are the franchise fee Florida Power & Light Co. pays the county. It is projected to rise from $17,039,044 in the current fiscal year to $17,546,500 in FY19. The state revenue sharing figure is anticipated to climb from $9,912,408 this year to $10,521,388 in the 2019 fiscal year.
Yet another factor that has had a positive effect on budget outlooks, Lewis reminded the board members, were their decisions during the Jan. 31 workshop to reduce recurring expenses by $5.3 million. Some of those cuts in service took place in the middle of this fiscal year, he noted, while others will go into effect as of Oct. 1.
A bleak ‘rainy day’ fund forecast
Lewis also pointed out that the passage of the referenda on the November ballot would have a significant impact on the board’s goal of building back up its Economic Uncertainty — or “rainy day” —Fund. The FY19 budget includes $2.5 million for that reserve, he said, calling it the first significant step the commission has been able to take to replenish that fund in the wake of the Great Recession.
Staff analysis shows the fund’s total at $15 million this fiscal year, but only $8 million for each of the next five fiscal years.
If the referenda on the November ballot fail, the fund could be up to $48 million by FY23, the staff analysis says.
Botelho pointed out that the commissioners have used $60 million from the Economic Uncertainty Fund over the past six years to balance the budgets.
Referencing the replenishment of the fund as a board priority, Commissioner Charles Hines concurred with the staff projections. “We’re really not going to do it.”
Yet, Sean Snaith, director of the Institute of Economic Competitiveness at the University of Central Florida, told the board during a May 25 presentation that it should be prepared for another recession, potentially in FY22 or FY23, Hines continued.
“I’m out of here in 2020,” Hines added, indicating the year term limits will necessitate his stepping down from the commission. “I would sure hate to leave [future boards] in a very tough situation [financially].”
Although some county residents have called for increases in the levels of service of certain departments — especially the Libraries and Historical Resources Department — Hines said he and his colleagues need to make clear to their constituents, “Here’s the reality” of the economic forecasts.
Higher taxes in the future?
The commissioners told Lewis months ago that they had no intention of raising the millage rate, which has been stable since the 2008 fiscal year except for a slight increase in the mosquito management millage rate in FY13. With that bump, the rate climbed from 3.34 mills to 3.39, Botelho pointed out.
Several members of the public who addressed the board this week during the budget workshops asked for a millage rate increase so the county can enhance its services, especially in the libraries. Hines noted those comments, saying, “That’s interesting.”
Among the speakers was Sarasota attorney Dan Bailey, who provided the commissioners with an analysis of ad valorem tax rates per capita for counties in Southwest Florida. Monroe, he said, has the highest, at $1,100 per person. Collier is second, he continued, with $978; followed by Charlotte — $791; Manatee, $622; Lee, $533; Pinellas, $543; and Sarasota at “the very bottom rung,” with $533.
Considering the services Sarasota County residents demand — especially in regard to libraries, public transit and parks — Bailey said, “We’re probably underpaying … ad valorem taxes.” He added, “I know this is heresy to say it,” but perhaps the time has come for the County Commission to raise the millage rate.
During the board discussion, Hines indicated that commissioners talking with constituents this summer — before the new fiscal year begins Oct. 1 — should ask what they want to see in terms of county finances in the coming fiscal years.
The board will hold its final budget workshop on Aug. 22. The public hearings on the FY19 budget are set for Sept. 12 in Sarasota and Sept. 27 in Venice.