Pinellas commissioners get first look at six-year budget forecast

This chart shows that the general fund forecast is balanced for the current fiscal year; however, expenditures exceed revenues and reserve targets beginning in FY 2023.

LARGO — Pinellas County commissioners received mixed news Feb. 18 during a presentation of the budget forecast for fiscal years 2022-2027.

The forecast is used by the Office of Management & Budget and commissioners to develop a multi-year assessment of long-term financial sustainability and help understand how decisions made today could affect the future.

Jim Abernathy, budget and financial management analyst, showed a number of charts and graphs depicting ways to balance revenues and expenditures over the six-year forecast period. His presentation included the county’s 10 major funds: the general fund, emergency medical services fund, surface water utility fund, tourist development tax fund, county transportation fund, capital projects fund, sewer funds, solid waste funds, water funds and airport revenue and operating fund.

The impact of the COVID-19 pandemic may not prove to be as harmful as officials feared, except for the county’s tourism industry. Much of the direct expenses in response to the pandemic are being paid by funding from the federal government and reimbursements from the Federal Emergency Management Agency.

However, some sources of revenue for the general fund will be decreased for FY 2021, such as the state-shared half-cent sales taxes and state revenue sharing. The situation is expected to return to growth conditions by FY 2022 and FY 2023.

Perhaps the best news is that the general fund is balanced through the forecast period and will have enough money to maintain reserves over the policy amount of 15%. No millage rate increase is needed.

The general fund pays for the majority of the county’s operating expenses, including the constitutional officers. It is funded primarily by property (ad valorem) taxes.

Property taxes and ambulance user fees provide revenue for the emergency medical services fund and are expected to be sufficient to keep the fund balanced through the forecast period as well as maintain reserves. No millage rate increase is proposed.

The news is not so good for the surface water utility fund, which is paid for by assessments on properties in unincorporated parts of the county. The money pays for flood control and water quality improvements. Staff says the fund is not balanced through the forecast period and accumulated fund balances will have to be used. A rate study is underway.

The hardest hit area of the local economy has been the travel and tourism industry. After years of record-setting collections of tourist development, aka bed, tax, the pandemic has had a devastating effect.

Revenue fell by 22.6% in FY 2020 and is estimated to grow by only 12.1% next year and remain below pre-COVID-19 levels until FY 2025. Revenue is projected to grow by 5.4% in FY 2022 and 3% annually from FY 2023-2027.

Tourist development tax money pays for marketing and operations for Visit St. Pete/Clearwater, the county’s marketing agency. It also pays for capital improvement projects that benefit tourism in the county, such as spring training facilities, museum expansions and municipal sports facilities. It helps pay for beach nourishment.

Staff says despite the loss in revenue, reserves built up over past years will allow business to go on as usual with careful spending and the assumption that tourism conditions will improve.

The transportation trust fund is another problem area. It is funded primarily by state and local fuel taxes. The forecast shows that expenditures exceed revenues throughout the forecast period. Less gasoline was consumed during the COVID-19 pandemic and that decline is anticipated to continue. The fund balance is projected to be gone by FY 2022.

The capital projects fund is balanced for FY 2021 only, staff says. It is funded primarily by the Penny for Pinellas sales surtax. The fund’s budget will need to be adjusted during FY 2022 based on actual activity and prioritization of projects.

All projects will be reviewed and, in keeping with the county’s new CIP Portfolio Management process, projects that provide multiple benefits will be prioritized. An example would be a project that improves drainage, reduces stormwater/wastewater overflows and provides infrastructure to support economic development.

The forecast for the sewer funds shows that the multi-year rate increases approved in 2019 will be provide enough revenue to maintain reserves, pay the debt service and fund capital replacement needs through the forecast period.

The rate increase includes at 9.5% hike each year through FY 2024 and 3% thereafter. Expenditures will exceed revenues through FY 2023 and the fund balance will be used to complete major capital projects.

Solid waste funds are enterprise funds that are used to support the department of solid waste only. Staff says the forecast is not balanced throughout the six-year period.

An agreement with Duke Energy to sell power produced by the waste-to-energy plant expires in December 2024 and a new contract has not yet been negotiated. If the county doesn’t enter into a new agreement with Duke, it will be forced to enter a standard offer contract or sell its electricity on the open market. The forecast shows a “significant gap” in revenue starting in FY 2025.

Multi-year rate increases approved in 2019 for the water system funds will provide enough revenue to maintain reserves and fund capital replacement needs through the forecast period. The increase is 1% from FY 2023-2027.

The airport revenue and operating fund is an enterprise fund that accounts for revenues and expenditures at St. Pete-Clearwater International Airport. The airport is self-supporting and receives no money from property taxes of other general revenues.

Revenues have grown in recent years; however, operations were greatly impacted by the COVID-19 pandemic. Projections were made based on anticipated recovery. The airport likely will have to use its reserves to pay for its capital improvement program during the forecast period. However, federal stimulus funds will help pay for the losses.

Staff will continue work on the budget and departments will make presentations to the commissioners in coming weeks. The commission has until Aug. 3 to notify the property appraiser of the tentative millage rates so they can be included in the annual Truth in Millage Notices, which will be mailed out to property owners on Aug. 23.

The first public hearing on the budget is scheduled on Thursday, Sept. 9, and the second and final hearing will be held on Sept. 21. Fiscal year 2022 begins Oct. 1.

For more information on the budget, visit www.pinellascounty.org/budget/default.htm.

Suzette Porter is TBN’s Pinellas County editor. She can be reached at sporter@tbnweekly.com.