Sunday, February 26, 2017
St. Johns County braces for another challenging budget process (SAR)
Sheriff DAVID SHOAR and St. Johns County Administrator MICHAEL DAVID WANCHICK
(Ponte Vedra Recorder)
Last year's secretive Budget hearing before County Administrator MICHAEL DAVID WANCHICK was not held in the County Commission Auditorium. It was not televised on St. Johns County Government TV. There was no podium allowed -- there was one in the closet, in two pieces which a helpful Sheriff's deputy helped me find. But then-Assistant Budget Director Jesse Dunn asked me what the podium was for, and I explained it was for public comment. Jesse Dunn said, the podium would "get in the way." And staff put the podium back in the closet of the Health Building conference room. (The next day, I brought my own desktop podium from home).
Weasel WANCHICK wanted "his" budget discussion secret. But thanks to video-journalist Jeffrey Marcus Gray, it was live streamed. WANCHICK was overtly hostile to Messrs. Jeff Gray, Tom Reynolds and me as we asked questions. WANCHICK had seven (7) deputies at the Health and Human Services meeting room, fearing accountability; he was threatening, rude, nasty, bullying and brutish. After I asked an initial question or two, weasel WANCHICK whined,"We're not going to have this for three days." So I filed a complaint with the Assistant Attorney General for the Civil Rights Division in media res. So, mirabile dictu, mutatis mutandis, we kept asking questions, demanding answers, expecting democracy. WANCHICK showed his asininity when he said, "Be careful, this guy's filming -- he's a professional agitator."
The deeply flawed process did not allow such questions of Sheriff DAVID BERNARD SHOAR and his henchmen -- no questions in that format for the five constitutional officers. WANCHICK covers for SHOAR, so there was no discussion of SHOAR's bloated budget, except at the margins, when WANCHICK got really angry, and a vested SWAT team deputy all but kicked the door open on command. SHOAR's wasteful spending must be scrutinized, along with his arrogant refusal to provide body cameras.
You can watch my comments after Jesse Dunn's through presentation online, on St. Johns County GTV.
There's still no countywide Inspector General, still no Ombuds. There's still waste, fraud and abuse, misfeasance, malfeasance and nonfeasance. Why, at the County Commission meeting on February 21, 2017, Jesse Dunn testified that there had been some 100 people listed on the County insurance rolls who were illegal participants. Why no mention in this otherwise excellent article? Why no response to Open Records requests on whether there will be civil, criminal or administrative investigations or employee personnel actions for health care fraud -- health care costs went up 18% last year. Was fraud a contributing factor?
We deserve ansswers.
Yes, WEASEL WANCHICK will find the process "challenging." You're damn straight, WANCHICK. For We, the People stopped his attempted penny sales tax increase (a whopping 16.66% increase in actual math) at the June 16, 2015 6 PM County Commission meeting -- I was the first speaker. We're not putting up with his flummery, dupery and nincompoopery. Ask questions, demand answers, expect democracy.
Democracy dies in darkness.
Posted February 26, 2017 04:54 am - Updated February 26, 2017 05:03 am
By JAKE MARTIN email@example.com
St. Johns County braces for another challenging budget process
Fiscal year 2018 may be months away, but St. Johns County is already gearing up for another challenging budget process.
Tuesday’s commission meeting included an overview of the county’s budget, focusing on the General Fund as well as initial budget guidelines for next year. Projections through fiscal year 2022 were also provided.
Jesse Dunn, director of management and budget for the county, said the budget is a fluid document that reflects the policies adopted by the board.
He said the “only analogy” he could come up with was seeing the board’s dais as Starship Enterprise and commissioners as a collective Captain Kirk.
“You set the policy, you direct the ship,” Dunn told commissioners. “I’m coming up from the engine room. I’m Scotty, and I kind of tell you what your engine can do and what your engine can’t do.”
One of his first assessments was that the commission could not expect the county’s millage to perform like it did before the Great Recession and before statewide property tax reform in 2007. Although residential growth, in terms of permits issued for single-family homes, is back near 2006 levels, the tax base isn’t there to keep up.
“The rules have changed,” Dunn said.
Reform had three major components: an increase to the homestead exemption from $25,000 to $50,000, the institution of state rolled-back local government millage rates and the capping of non-homesteaded property valuation increases, which were not capped prior to reform, at 10 percent. Valuation increases for homesteaded properties continue to be capped at 3 percent.
Millage rates for fiscal year 2007 versus those for fiscal year 2008 illustrate the effect of those changes. The General Fund rate dropped from 4.9275 to 4.2214, the Transportation Trust Fund rate dropped from 0.9000 to 0.7652, and the Fire District Fund rate dropped from 1.200 to 1.094. According to Dunn’s presentation, residents with a homestead exemption on their average market value home of $250,000 in 2008 would have paid about $365 less in taxes than in 2007.
In fiscal year 2017, the General Fund rate was 5.1200, the Transportation Trust Fund rate was 0.7300 and the Fire District Fund was 1.4700. However, Dunn said a historical millage analysis does not provide any real insight because valuation methods have changed.
The county’s taxable value growth of 22.3 percent in 2006 climbed even higher to 26.7 percent in 2007 but plummeted to 11.2 percent in 2008. There were decreases in value of 5.1 percent in 2009, 12.3 percent in 2010, 10.2 percent in 2011, 5 percent in 2012 and 2.5 percent in 2013. Things picked up slightly with a 2.9 percent increase in 2014, which climbed to 6.2 percent in 2015 and 9.1 percent in 2016. It was 8.9 percent in 2017, but is projected to be 8.5 percent in 2018.
Growth of 8.9 percent this year translated to $5 million in funding to maintain status quo operations across the board and just $3.9 million in discretionary funding. Meanwhile, there were about $22.7 million in budget requests.
Although this year’s total budget is up more than $40 million from about $632 million in fiscal year 2016, the majority of that increase came from rollover funds for projects budgeted in previous years and yet to be completed.
Dunn said using the total county budget to determine the health of the county’s finances isn’t really a good measure of how government works from year to year.
There are many funds that comprise this year’s $673 million budget, but the bulk of monies for county services and programs over which the commission has the most discretion comes from three funds totaling $307.5 million: the General Fund, which accounts for $196 million, the Transportation Trust Fund, which accounts for $69.8 million, and the Fire District Fund, which accounts for $41.7 million.
The General Fund has the most flexibility. If there is a need for a park, a library, a sheriff’s deputy, animal control, growth management, economic development, EMS or maintenance on a facility, Dunn said those decisions are made with General Fund dollars. As he explained, you can’t build a park with transportation dollars and you can’t build a library with fire district dollars. (A future agenda item will deal specifically with the financial health and outlook of the Transportation Trust Fund and Fire District Fund.)
Other funds are more restricted.
Enterprise Funds, for water/sewer and solid waste services where user charges are established to recover all costs, account for $173.9 million. Debt Service Funds, for payment of principal and interest related to long-term debt from specific pledged revenues, account for $22.3 million. Capital Improvement Funds, for multi-year construction of major capital facilities, account for $25 million. Internal Service/Trust Funds, for services provided by one fund to other funds (or held in trust) and which sometimes have the effect of “double-counting” monies, account for $37.7 million.
In the meantime, Special Revenue Funds, for revenues used for a designated purpose, account for $107.4 million. This pot of money includes Tourist Development Council dollars, impact fees, beach services and community redevelopment agencies.
For fiscal year 2018, Dunn said commissioners can explore re-categorization for TDC monies as well as imposing an increase in the bed tax. Impact fees will be revisited after a study is completed later this year. The county continues to look at charging for off-beach parking to make up for an annual deficit in beach services that has been filled in with General Fund monies.
As far as CRAs are concerned, the General Fund has also been aiding with payments for debt service.
Dipping into reserves
The county continues to use reserves to resolve the General Fund’s structural deficit. Revenues are projected to slightly be outpaced by expenditures and reserves are expected to decline from $47.9 million to near the recommended minimum of $33 million in fiscal year 2020.
Dunn said using reserves is “OK” because the county should remain above its target reserve level until 2021, assuming no additional revenues, no changes in property values and no reduction in services.
“It’s certainly a dire situation but it’s a dire situation where we have time,” he said.
General Fund deficits are expected to decrease from $7.3 million in fiscal year 2017 to $5 million in 2018, $2.4 million in 2019, $2.1 million in 2020, $1.7 million in 2021 and $1.3 million in 2022, assuming 8.5 percent growth next year and a baseline 5 percent growth in subsequent years. However, Dunn said even this model does not put significant revenue toward growth-related services or capital infrastructure. Other models with lower growth rates offer grimmer outlooks.
Dunn said he did not consider the expected property value growth of 8.5 percent for next year a conservative figure.
Commissioner Henry Dean was less optimistic, factoring in exemptions and reduced property values for some Hurricane Matthew-damaged homes.
“I hope it’s 8.5 percent but I’d make you a side bet it’s less,” he said.
Dunn said the Consumer Price Index on homesteaded properties gave him some hope, however, since valuation increases are actually capped at 3 percent or the CPI, whichever is lower. Last year, it was 0.7 percent; this year it’s 2.1 percent. Dunn also pointed to an increase in new construction.
Challenges new and old
In terms of some budget guidelines for fiscal year 2018, Dunn said they’re expecting general operating expenditure increases of 2 percent, property/liability insurance increases of 6 percent, gas price increases of 5 percent, utility increases of 3.5 percent and upward pay plan adjustments (including cost of living indexing). The county also will have to address benefits, including actuarial requirements for health insurance, other post-employment benefits, workers’ compensation rates, and state-mandated retirement rates; continue initiatives for five-year computer replacement, deferred maintenance, equipment and vehicle replacement; and revisit the commission’s multi-year approach to shift millage and property taxes from the General Fund to both fire services and pavement management.
Some challenges have lingered.
In the short-term, there’s the remaining budget shortfall for fire services ($2 million) and pavement management ($8 million), funding the community’s requests for countywide programs, consideration of off-beach parking, and addressing the needs of a growing county population. There is also a 10-year backlog of capital projects, mostly infrastructure needs, in excess of $292 million.
Despite multi-year millage shifts, the Fire District Fund continues to burn reserves to fund operations and does not accommodate the needs of a growing population. Not until fiscal year 2021 are revenues expected to outpace expenditures. Despite similar millage shifts, the Transportation Trust Fund continues to underfund capital projects, pavement management and other ongoing programs. As of fiscal year 2017, there is a nearly $12 million deficit. The General Fund suffers from the lost millage all the same. Additionally, health insurance has been increasing by double-digit percentages (18 percent in 2017).
Commissioner Jeb Smith said the increases this year were a “dagger” to him.
“That’s an unknown that we need to have mitigated,” he said, adding commissioners should consider capping services.
Smith questioned whether the county has recently put out a request for proposals on that front to which County Administrator Michael Wanchick said they are going through that process.
“It has been a constant focus,” he said, regarding the county’s efforts to deal with the rising costs.
Wanchick said the county did an audit a few years ago of all its employees and their families and found close to 100 people who shouldn’t have been on the rolls that the county then took off.
Smith asked whether the extra participants on the roll were a contributor to the 18 percent increase. Wanchick said he was not sure because the plan, “as a whole,” went up.
“I think 18 is a raw 18,” he said.
Dunn told commissioners the bottom line is they can add revenue sources or reduce levels of service. He said finding deficiencies might help the county get through a year but it won’t resolve long-term issues.
Wanchick said most municipalities are raising other revenue sources, not property taxes. He also said before voters approved the half-cent sales tax increase for the school district in 2015, St. Johns County was the only Florida county charging the minimum sales tax and not charging any extra gas tax.
“We don’t charge anywhere near what we could,” he told commissioners.
Dunn and Wanchick said it all comes down to what level of programs and services residents are willing and able to pay for over the next few years. Specifically, “Is it most important to keep taxes and fees as low as possible even if it means reducing the current level of programs and services?” or “Is there a level of revenue increase acceptable to the community if it means preserving current levels of programs and services?”
There’s still a long way to go. The budget process for next year kicks off in March. A draft budget is due from the administrator in May, after departmental input. A recommended budget is due in July. The board will hold public hearings and adopt a final budget in September. The next fiscal year starts Oct. 1.
The county also provided a list of possible revenue sources for a variety of purposes, as follows:
Possible revenue sources
1-cent sales tax increase paid by residents and tourists to generate $28.4 million a year for capital projects (infrastructure);
Property tax increase (1 Mil) paid by property owners to generate $21 million a year for the General Fund;
Utility franchise fee paid by property owners to generate $7 million a year for the General Fund;
Stormwater utility fee paid by property owners to generate $6 million a year for water quality;
Additional gas taxes paid by residents and tourists to generate $5.5 million a year for transportation;
1 percent additional bed tax paid by tourists to generate $2.4 million a year for tourism;
Increase/add user fees paid by residents to generate $1 million a year for the General Fund;
Off-beach parking paid by residents and tourists to generate $500,000 a year for beach services;
Animal licensing paid by residents to generate $100,000 a year for the General Fund.
Beam me up Scotty. Forget deporting immigrants, let's just tax the aliens! Budget problem solved!
Another, slightly modified, analogy comes to mind from Lost in Space, danger County Taxpayers danger!