Following a decline in projected revenues from last year, the city of Sarasota faces a $3.6 million general fund deficit in the proposed 2014-15 budget.
At a City Commission budget workshop Friday, Finance Director John Lege presented the initial budget in advance of two additional workshops scheduled for later this month. The total citywide expenditures total nearly $199 million, a 3.37% increase over last year’s budget.
Within the city’s general fund, the $60.45 million in proposed expenditures represents a 2.16% increase from FY 2013-14. Roughly 47% of the $1.28 million general fund increase comes from the Sarasota Police Department budget, which makes up 49.7% of the total general fund expenditures.
If the city’s millage rate were to remain flat, the $56.84 million in projected general fund revenues would represent a $2.34 million decrease from the 2013-14 adopted budget. That decrease was attributed to lower-than-expected revenues from red light cameras and the state communication service tax.
Those revenue decreases also affect the actual 2013-14 budget. The city manager’s office plans to bring a proposal before the commission to shave $1.2 million from that year’s operating expenditures. In addition, the finance department recommended the use of an additional $1.18 million in revenue stabilization funds to help balance the budget.
Last year, the commission approved the use of $1.1 million in revenue stabilization funds. If approved, the use of roughly $2.3 million in revenue stabilization funds in the 2013-14 budget would leave the city with just $650,000 remaining for that purpose going forward.
Lege outlined a series of possible solutions to eliminate the 2014-15 general fund budget deficit. Those solutions included the use of interfund transfers, the continuance of a hiring delay, a decrease in the level of services, an increase in ad valorem taxes and the use of additional revenue stabilization funds.
The leading recommendation from city staff for covering the deficit, however, was the use of Other Post-Employment Benefit funds. These funds cover non-pension benefits to retirees such as health insurance.
Currently, the city contributes money to an OPEB trust fund, a policy decision that is not required by any law. Lege said that many municipalities use a pay-as-you-go OPEB funding policy, and that the city could reexamine its OPEB system with insurance and actuary consultants over the next year to make the program more sustainable going forward.
Staff recommended a reduction of $3.91 million in general fund expenditures toward OPEB, which would cover the projected deficit and potentially allow for an additional $300,000 to be put toward the revenue stabilization fund.
The overwhelming majority of the city’s general fund expenditures are tied to personnel costs: 79% of the budget — $48.2 million — is devoted to salaries, pensions and other benefits.
More than half of that total, $25.3 million, is slated to go toward benefit spending. The city will spend $13.1 million on pensions next year, including roughly $8 million on police pensions.
As with last year, the dominant source of general fund spending is the Sarasota Police Department budget; $30.1 million — nearly half of the overall general fund budget — is dedicated to police spending in the preliminary budget.
On July 23 and 24, commissioners will examine individual departmental budgets at two workshops. Following the second workshop, the city will establish its preliminary FY 2014-15 millage rate.
Contact David Conway at [email protected]