County faces $5M budget shortfall
Published: Friday, January 23, 2009 at 6:01 a.m.
Last Modified: Thursday, January 22, 2009 at 11:24 p.m.
It appears Alachua County will have a $5 million budget shortfall because of declining sales tax revenue, a drop in interest earnings and higher than expected medical costs for jail inmates.
County Management and Budget Director Suzanne Gable said the shortfall comes in a 2008-09 budget that was already tight.
Budgets are developed a few months before the current budget year ends, a process that produces some uncertainty to begin with, Gable said.
"We prepare the budget before we close our books on the year, so it is a crystal ball deal. By the end of the year, when we closed everything, we had inmate medical costs that we did not expect at all. It was about $1 million," Gable said. "For 2009 we are already seeing about a 4 percent reduction in all the sales tax related revenues. And with interest earnings, when we built the budget, there was an anticipation they would be a little bit better or at least stay steady. But we are seeing them go down to stimulate the economy."
The end result is $5 million less in the general fund portion of the budget and a drop of $250,000 in the municipal service funds for law enforcement, fire and general services in the unincorporated area.
Gable said some action already taken by the commission - postponing some projects, reducing energy use - should help make up the shortfall.
Among the planned construction projects that have been postponed is a court support services building in downtown Gainesville.
But Gable added biggest impact will likely be felt in the 2009-10 budget because the county will have less money to carry forward.
"We really need to be very, very thoughtful as we use our reserves because that's what that cash can relate to," Gable said. "The biggest impact this is going to have is next (budget) year. What we will have to start 2010 is already $5 million less than what we thought."
The Florida Legislature two years ago capped the amount of property tax money cities and counties can collect.
Additional tax revenue has been sliced by the increase in the homestead exemption last year.
Meanwhile, the falling economy has sharply reduced the amount of sales tax collected statewide.
The Legislature last week closed a special session by cutting $2.6 billion from the current budget.
Legislators will return to Tallahassee in March for their regular session and are expected to cut another $4 billion for their 2009-10 budget.
Gable said the county in its 2009-10 budget likely will lose more sales tax revenue.
She said potential drops in property tax revenue will depend on the amount of growth in the per capita income of Florida residents.
The state-mandated property tax caps are tied to income growth.
Alachua County deputy property appraiser Rob Puckett said it is too early to tell whether taxable property values will be up or down for the 2009-10 budget, or how the values will impact the next budget.
"It's too early in the cycle to tell. My gut feeling is it's coming down," Puckett said. "The real estate market is not what it's been and we are going to have to react to that. It's so seldom that we encounter a recession of this magnitude. It's not something we deal with everyday. We are used to at least having slight increases, and sometimes huge ones. It's very seldom that the market goes down."
Contact Cindy Swirko at 374-5024 or at email@example.com.
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