County Budget Update – July 8

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The next county budget workshop is Monday, July 11, at 9:30AM at 301 N. Olive, WPB in the 6th Floor Commission Chambers. Because of a scheduling issue, the BCC action to set the maximum millage rate that was scheduled for July 19 has been moved up to the 7/11 meeting. We expect the County Administrator to ask that this be set to rollback, currently estimated at 4.8751 (about a 2.6% increase in tax rate), or higher. The majority of homestead property owners would see a larger increase of course, because their valuations are still catching up.

TAB opposes a tax rate increase of any size and is calling for the millage to remain at 4.75.

Public comment begins at 10:00 but you should be there at 9:30am for the start of the meeting if you plan to speak. Please consider making your thoughts known to the commissioners, either in person at the meeting, or by email or phone prior to next Monday.

Since the June 13 meeting:

1. New estimates of property valuation show a smaller decline that Administrator Weisman sees as $3M more in tax revenue than expected. Consequently, he now calculates “rollback rate” at 4.8751. There is also an expectation for $2M more in revenue from other sources (sales tax and revenue sharing).

2. The Sheriff, who is expected to see a reduction in FRS pension costs of $18M, has objected to the county trying to “share the wealth” and take some of that savings for the county department budget. Bob Weisman has conceded the point and estimates that his shortfall will increase by $12M as a result.

The June budget package at flat (4.75) millage, had a $45M gap versus 2011. $15M of this was from valuation decline ($588M in taxes versus $603M), and $30M from declines “elsewhere”. The Revenue chart on page A-2 only identifies $14M of the “elsewhere” – notably $4M less in interest income, $10M in “other BCC revenue”, and a little more than $1M less from the Sheriff, offset by some small revenue increases in other areas.

Where is the rest of the “budget hole’? We asked Budget Director John Wilson to clarify the $45M, and he gave us this data:

• $15.470M – loss of tax revenue at current millage rate of 4.75
• $9.066M – decrease in one-time funding sources (available funding from existing capital project funds)
• $4.902M – decrease in other revenues (primarily interest income)
• $6.953M – reduction in beginning balances brought forward in Palm Tran, County Transportation Trust Fund & Court Tech. Fund.
• $2.687M – increase in new capital project funding
• $5.184M – increase in General Fund transfer to D/S Funds (additional issue and loss of one-time funding)
• $.781M – increase in non-department operations – primarily due to reduction in indirect cost allocation

 

We are still a little fuzzy on the fund transfers and one-time funding sources, but he assured us that it would be explained in the July budget package.

Now that the package is available, we are still trying to understand it. We are also having some difficulty in bridging our analysis of the 2003-2011 period with 2012, since the budget package is in a different format than last year, and the section “Comparison of Revenues, Appropriations, Net Ad Valorem Requirement and Positions by Department” has been omitted. This section was important to us because it has appeared mostly unmodified in all the budgets since 2003. Now we are dealing with apples and oranges. The OFMB folks assure us the data is there, just spread around between different sections, and (in some cases) between the June and July packages. If we can unravel this Chinese puzzle, we will update our multi-year tracking charts in a future article.

We are adding another point to the TAB proposal. Since the “$45M gap” (now closer to $40M) is related to starting fund balances and interfund transfers, we think it is appropriate to consider using some small amount of reserves to avoid a tax rate increase. In 2006, Florida TaxWatch pointed out that our unreserved fund balances (then 71% of revenue) far exceeded our peer counties and were remarkably high. Today, the levels have come down some but we are still far above Orange, Hillsborough and Miami-Dade, and slightly below Broward. The balances are a significant multiple of a “prudent miminum” of 15-20% of revenue. Consequently, we are adding “Utilize undesignated reserves to fill a one-time budget hole”.

The TAB Proposal:

1. Maintain the county-wide millage at 4.75
2. Take the majority of cuts from PBSO, not the county departments
3. Take action to reduce the inventory of county property and reduce the debt
4. Utilize undesignated reserves to fill a one-time budget hole.

*Note: The TaxWatch study that relates to item #3 is in draft. We hope to share some of its findings in the near future.