Town Manager Tom Harmer and town finance director Susan Smith presented their early analysis to the Town Commission on Monday afternoon.
At the halfway point in the 2019-20 fiscal year, Longboat Key officials typically take a look at their town budget and how year's economic realities are stacking up to actual revenue and spending.
With the effects of the COVID-19 pandemic and shutdown, a lot will change and a lot of that will take time to fully understand, town officials said. One source of revenue not immediately of concern is property taxes, officials said. Values of property are taken from early in the calendar year, before any effects could have taken hold.
Town Manager Tom Harmer on Monday told Town Commissioners it's still too early for the Florida Department of Revenue to provide solid revenue impacts that the pandemic has had.
“We had a partial-month impact in March,” Harmer said. “Our first full month impact will be in April. We typically don’t get those numbers until, say, mid-May or later.”
Still, to get a sense of the impact, Harmer said Finance Director Susan Smith used “projections and prior data” to put together an analysis for commissioners.
Preliminary estimates show the town’s general fund fall short by $273,526, because of shortfalls in revenue from local half-cent sales tax, state revenue sharing, the FPL franchise and communication service tax.
“That's what we're projecting for the last six months of the year as a negative impact on the revenue side,” Harmer said.
The estimates also show other funds — the infrastructure funds, beach fund and road and bridge fund — could be impacted by $485,727.
“We've been watching this [and] we continue to do that,” Harmer said.
Harmer said current spending levels are “in-line” with last year, when the town produced a $650,000 surplus.
“We're taking other actions to make sure we can be prepared for the deficit in revenue. I did want to highlight that,” Harmer said. “Again, I said before, I think we're in a good spot financially to address this, at least on the short term. We do need to have a long-term view as well as we go into the budget process for next year.”
Harmer mentioned several sources of funding to offset the losses to the towns’ funds. The offsets include $100,000 from red-tide contingency funding, $182,860 from a fund set up for town commission contingencies, a $100,000 potential surplus from legal spending and some expected recovery from FEMA from previous hurricane effects.
The commission also proactively set aside $1.3 million in an economic uncertainty reserve for a downturn in the economy.
The analysis did not include the potential impacts the pandemic could have on property taxes.
“You don't see property tax on here because property tax is, as I mentioned, paid end of year/beginning of the yea, and our property tax also ties back to a prior year,” Harmer said. “So even as we talk about next year, our property tax values are will be as of Jan. 1 this year, for next fiscal year. So there may be a lag in impact depending on happens with the real estate market.”
While Harmer said there should be “minimal impact” on property tax revenue, that Longboat Key town staff and commissioners should continue monitoring it because it is the largest revenue source in the town’s general fund.
Tennis Center revenues are also down. Smith said the March 22 closure of the Tennis Center had caused revenues to drop 27% compared to March 2019.
“We have not [done] a complete financial projection for the Tennis Center,” Smith said. “But as of April 30, I can tell you their revenues exceed expenses by $97,000, so that’s a positive.”
The Tennis Center is set to reopen on Friday with several restrictions in place.
Harmer, Smith and town staff will continue to monitor the revenue shortfalls related to the COVID-19 pandemic. For now, it's wait and see for the specifics on how much that will be.
“We've talked and I've talked to the department heads about the rest of the fiscal year, and how we need to monitor and reduce expenses where possible while we're still maintaining our current service levels,” Harmer said.
The town of Longboat Key is planning to have a budget workshop meeting for fiscal year 2021 meeting at 9 a.m. Monday, May 18. The town has yet to determine what kind of format it will use for the meeting.
The town will then meet again for a general fund update on June 15.
The first reading for the budget for fiscal year 2021 is set for Sept. 14 with adoption scheduled for Sept. 29. Fiscal year 2021 begins in October.
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