Economic improvements don't add up in the budget

The real-estate market shows signs of life, and the region had a booming spring tourist season. But recent economic improvements aren’t likely to factor into the town’s 2012-13 fiscal-year budget.

Town staff is preparing for a $746,784 shortfall for the next fiscal year, Town Manager David Bullock told the Longboat Key Town Commission Monday, May 21 during its first 2012-13 budget workshop.

The town will get a clearer picture of its budget situation June 1, when Sarasota County Property Appraiser Bill Furst and Manatee County Property Appraiser Charles Hackney distribute property value estimates, because more than two-thirds of the town’s revenue comes from ad valorem revenues. However, the town is preparing for a $254,973, or 3%, drop in ad valorem revenues and a $70,050, or 1.9%, drop in non-ad valorem revenues.

So, why don’t economic improvements add up in the budget?

County property value estimates typically lag by about 18 months behind the market, which is why most Florida municipalities collected peak ad-valorem revenues in 2008, a dismal year for real estate.

While tourism has been up this year, tourist-development taxes won’t be a source of additional revenue. The vast majority of the so-called bed tax that Longboat Key gets back from both Sarasota and Manatee counties can only be used for beaches.

For the current fiscal year, the town has also experienced a drop in non-ad valorem revenues, which come from sales taxes and communication services taxes and gas and electricity fees. The decrease in franchise fees has been felt by municipalities throughout the state and was attributed to warm weather throughout the winter and a period of lower gas prices.

Sales-tax data lags behind collections by approximately two months, meaning that numbers from peak season aren’t available yet.

The town will also face a $349,533, or 13.3%, increase in its required pension contributions and a likely $72,228, or 7.8%, increase in health-insurance costs.

Bullock said he is preparing the budget with the goals of keeping town services at current levels and not increasing taxes for anything other than pension impacts. He is also aiming for expenditures not to exceed projected revenues. Currently, expenditures are 2.8% higher than revenues for the next year.

The town will have a better sense of its fiscal situation when the commission meets for its next budget workshop, scheduled for 1:30 p.m. Wednesday, June 6, at Longboat Key Town Hall.

In the meantime, Bullock asked the commission for direction about whether to prepare a budget that uses the $1 million that the commission reserved in the general fund to offset future pension costs. The commission reached consensus for him to split the pension shortfall between the general fund and the operating budget.