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Sarasota Thursday, Sep. 19, 2019 2 months ago

The city’s fiscal fiasco

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With the city having to tap its savings for $19.7 million next fiscal year, if it were a business, shareholders would dump the board and CEO.
by: Matt Walsh Editor & CEO

This is truly bizarre: the fiscal idiocy of the Sarasota City Commission and city administration.

In a public company, the budget plan the City Commission adopted this week would be unacceptable and in all likelihood would result in a shareholder revolt, leading to the firing of the CEO and replacement of the offending board members.

Let’s start with that now-worn-out subject of the Bobby Jones Golf Club.

This is stunning. In the face of definitive national trends showing the continued decline of golf and experts’ projections showing virtually no hope of Bobby Jones ever operating profitably, three of the city commissioners — Mayor Liz Alpert, Vice Mayor Jen Ahearn-Koch and Commissioner Willie Shaw — voted to borrow $15 million to renovate 36 of the golf club’s 45 holes.

And defying any fiscal logic is how they debated which of the money-losing renovation options to choose. They chose the option estimated to lose the least amount of money. Renovating 36 holes is expected to produce annual deficits of $575,000 the first six years.

Great choice. But how bizarre that it apparently did not occur to the commission majority to examine this fiscal illogic. What business owner do you know who would borrow $15 million, lose another $4 million over the next six years, have to tap savings or cash from other operations to make the debt payments and never recover all of this borrowing and spending from the business to begin with in his lifetime? There’s not one.

Not only that but if this were a real business, you couldn’t find an investor or banker dumb enough to finance this debacle.

That’s for starters. Now let’s go to the 2019-2020 city budget.

In the budget summary the city administration included in this week’s City Commission agenda packet, it shows the following:

Revenues: $236,296,835

Expenditures: $256,061,555

Difference: ($19,764,720)

To balance the budget, the city will be tapping its savings to cover next fiscal year’s expenses.

Now part of the reason for the overall deficit spending will be $59.7 million in capital expenditures toward water and sewer upgrades.

But that $19.7 million deficit actually is going to be worse. As Commissioner Hagen Brody (the only commissioner, by the way, who voted against adopting the budget) pointed out, the budget does not include an additional $1.43 million needed to cover the 3% raises for city employees, nor an additional estimated $500,000 to cover police raises.

And there’s one more: Also not included is an estimated $900,000 subsidy to cover next year’s losses at Bobby Jones.

City budget officials told the commission the budget includes $2.4 million for parks and recreation — presumably part of the new 10-year plan to upgrade city parks. But the $900,000 needed to subsidize Bobby Jones will come out of that $2.4 million.

When Brody asked about these amounts and the fact they were not included in the budget, City Manager Tom Barwin matter-of-factly responded that when the city administration knows the exact amounts needed for the employee raises and Bobby Jones subsidy, it will present budget amendments to the commission. Ho-hum, no big deal.

Brody called the budget “troublesome and dangerous” and urged the commission and administration to “reverse course.”

Not one of the other commissioners voiced a peep of concern.

Now if we were to turn over this space at this point to the three commissioners and city manager for comment, they likely would defend all of this dodgy fiscal management by noting taxpayers’ property tax rates for the next fiscal year are holding steady. No tax increase.

To be sure, the strong economy helps mask the city’s fiscal mismanagement. Thanks to the physical attractiveness of Sarasota, the high value of property on the surrounding barrier islands and the increasing discovery of Sarasota by retirees and others, new downtown development and rising real estate values have boosted the taxable value of the city 16%, or $1.6 billion, over the past two years. For the next fiscal year, that translates to an additional $2.28 million alone in new property-tax revenue.

All of this brings to mind the often repeated comment of longtime Sarasota real estate developer and broker, Bob Richardson. Long ago, at another time of subpar City Commission governance, Richardson said, “Sarasota has an amazing ability to succeed in spite of itself.” In spite of City Hall.

This is another one of those times. But as any responsible business owner, or for that matter any responsible household couple, knows, eventually imprudent spending causes bigger problems later on. There will be a day of reckoning.

Changing course requires new thinking and new behavior at the top.

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