There are several similarities between Longboat Key and the city of Sanibel.
Both are similar barrier-island communities with virtually the same amount of beach frontage and similar numbers of seasonal and full-time residents.
The list of aesthetic and demographic similarities goes on and on — except when it comes to budgeting reserves.
Town Manager Bruce St. Denis provided a report on the city of Sanibel’s reserves at Thursday’s Aug. 27 budget workshop to compare how the two islands budget their rainy-day funds.
St. Denis reported that because Sanibel received storm damage from Hurricanes Charley and Wilma in 2004, it raised its millage rate from 1.7291 mills to 2.5 mills for three years to build up its disaster reserve.
Now, the city’s current millage rate is 2.1561 and it's proposed to climb to 2.2808 in the upcoming fiscal year.
In comparison, the town’s current millage rate is 1.5 mills and the Town Commission may reduce the millage rate at budget hearings later this month.
The city of Sanibel also has a reserve balance of $15,113,000, which is 122% of the city’s operating expenditure budget.
Sanibel’s reserve balance includes $4.5 million for disasters.
St. Denis noted at the meeting that total costs incurred by Sanibel related to Hurricane Charley were $12,754,000, with the city forced to pay $2.5 million out of pocket after all insurance claims were paid.
To put Sanibel’s reserve numbers in perspective, the town of Longboat Key’s reserves were $6 million at the end of fiscal year 2007.
“Reserves were being increased a few years ago, in part, because of the storm experience of communities such as Sanibel,” St. Denis said.
But by the end of fiscal year 2009-10, St. Denis said the town’s reserves (unreserved fund balance) is expected to be $4.2 million, or 30% of the general fund’s operating expenditure budget.
St. Denis and Mayor Lee Rothenberg would like the town to adopt the maximum millage rate of 1.6 mills to prepare for another year of declining revenues.
Rothenberg expressed his desire to increase reserves, pointing out that Sanibel has more than $15 million in reserves just in case it needs the money.
Commissioner Gene Jaleski, however, disputed the numbers presented at the meeting, explaining that Sanibel has only $4.5 million for use as disaster reserve funds.
“The rest of the reserve funds sit in different independent reserve accounts to help offset losses in other budget line items,” Jaleski said. “What this means is we have virtually the same amount of reserves on hand as Sanibel that are slated for emergency purposes.”
And, just like Sanibel, Jaleski said the town has more than $20 million worth of insurance and federal funds to draw from in case a storm hits the area.
But Finance Director Tom Kelley said although Sanibel has $4.5 million available in storm reserves only, the city can allocate its other reserves to help pay for storm damages before resorting to borrowing money.
St. Denis said the town presented the data to simply show what a community that’s similar in size is doing to prepare for future storms.
And the town manager noted the town has made it a policy decision to perform storm cleanup on the island, regardless if it gets reimbursed for the costs.
“If you reduce your reserves, you increase the risk of possibly increasing costs involved with storm damage and cleanup,” St. Denis said.
Currently 2 Responses
- Mr. Kelly is correct that Sanibel could have dipped into the "Retirement Adjustment Reserve Fund" and various other legally earmarked and separate "reserve" funds after Charlie. Sanibel chose to barrow money instead.
LBK has beach reserves and sewer reserves and utility reserves that can also be used after a hurricane by order of the commission. I suspect we too would barrow money until we are compensated by insurance and FEMA.
The bigger question is how to we prevent the town government from mixing apples and oranges and have any way to know what we are actually talking about.
- The reserve issue aside, a valid reason for a nominal increase in the millage rate would be to apply the increased revenue generated to reducing the amount of the underfunding of the pension plans. While the amount needed for disaster reserve is subject to debate, the $25 million underfunding of the pension plans is a reality. The funds' investment choices and actural assumptions need to be reviewed as well.
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6 4th annual Longboat Key Gourmet Lawn Party
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6 Santa Jaws at Mote Aquarium
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