Projected budget deficit: $6 million

Sarasota City Manager Tom Barwin and Finance Director John Lege will spend the next few weeks with department heads for daily budget meetings.

The mission: To begin paring down a projected $6 million budget deficit by trimming department budgets.
Barwin and Lege seek to operate city services more efficiently, collaborate more with the county and trim costs.

Barwin and Lege had originally estimated a property value increase for the city of 1.5%. That number would have resulted in an anticipated general fund revenue hike from $54 million in 2012-2013 to $55 million for the upcoming fiscal year. But, when the property appraiser released preliminary assessed value for citywide properties May 29, the values increased 3.5%. If commissioners decide to keep the same millage rate used in 2012-2013, the city would see an additional $622,000 in property tax revenue, Lege said.

“It’s not going to save anything,” said Commissioner Paul Caragiulo. “It is a good indication that properties are coming back, and we are about to come out of this malaise. But it’s not party time.”

The largest contributor to the project deficit is an anticipated $3.9 million increase in the city’s pension costs.

Two years ago, commissioners approved a change that switched general employees from a pension to a defined-contribution plan. And in July, after three years of heated discussions, the city cut a cost-of-living-increase adjustment for police pensions and delayed the pension increase until a retiree reaches 65.

The city anticipates paying $11.7 million for its current pension plans in 2013-14, compared with $8 million in 2012-2013. Much of the rise in pension costs is due to a lower return on investments in the pension plan, Lege said.

City officials will present a preliminary budget to the City Commission July 8. If a deficit remains, commissioners could face some difficult decisions as they choose between further reducing costs or increasing property taxes.

The city’s current millage rate is 2.9249 mills. One mill equals $1 in property tax for every $1,000 of assessed value.

“Commissioners indicated in February that they didn’t want to take from our (general) fund balance,” Lege said.

Commissioners have said they would consider using funding for the city’s “revenue stabilization fund,” a $3 million account set aside in 2008 for years when revenues don’t meet city costs.

Barwin said city staffers will continue to do what they can with a workforce that has been reduced 25% over the past few years, working on a “shoestring” when necessary.

The city manager said it is too early to tell if layoffs or eliminated positions will be necessary.

Barwin also says further reductions could impact services such as road paving or park improvements.

Mayor Shannon Snyder said one possibility is a reduction in the workforce through “natural attrition,” including fewer officers at the police department.

But, for him, “raising taxes is not the answer.” He said he won’t vote for a millage rate increase.

Caragiulo agrees with Snyder in that he would rather see a reduction through attrition and hiring freeze, rather than layoffs.

Snyder wants to see plans to regionalize police services with the county.

“We can take the savings from the reduction in duplication of services and plow that back into keeping the city solvent,” Snyder said. “If we don’t do that, there is not enough to pay all of those pensions.”

He also thinks the city needs to take a look at its take-home vehicle policy for police employees, because some officers are driving their vehicles as far as Parrish at a cost to the city.

Other options include combining the city’s building department with the county’s building department.