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County, City See Revenue Eroding

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By ELLEN GEDALIUS and MIKE SALINERO, The Tampa Tribune

Published: February 10, 2008

Updated: 02/09/2008 11:46 pm

TAMPA - Now that Florida voters have overwhelmingly approved Amendment 1, city and county governments are finding themselves faced with a double-whammy: Amendment 1 will cut property taxes next year while many of the other sources that fund their budgets also are falling.

Sales tax collections are projected to be down almost 9 percent in Tampa and more than 10 percent in unincorporated Hillsborough County as recession-wary residents cut spending.

And with the housing market at a standstill, permit fees are flagging.

"We're looking at a very tough time," Mayor Pam Iorio said. "There is a bigger picture here. Things are slowing down."

"The citizens locally are going to feel a change, no question about it," County Administrator Pat Bean said.

The property tax amendment is expected to have a $12 million impact on Tampa and a $70 million impact on Hillsborough County. Decline in other revenue sources, though, appears likely to have an additional multimillion-dollar effect on local governments.

Property taxes make up the lion's share of local government budgets - about 46 percent of the city's $347 million general fund and about 80 percent of the county's $1 billion general fund.

Sales taxes make up a lesser, yet significant, portion of revenue: 9 percent of the city's general fund and 6.8 percent of the county's.

The state estimated in June that Tampa would get $30.5 million in sales taxes this year. The state in December revised its estimate to $29.5 million.

But after seeing a couple of months of lower-than-expected collections, the city dropped projections even more, to an estimated $27.9 million for the fiscal year ending Sept. 30.

Bonnie Wise, the city's revenue and finance director - cautioning that two months of data don't make a trend - said she needs to continue closely monitoring the numbers.

The county is projecting a $10 million shortfall in sales taxes based on early collections. The county was expecting to collect $94 million in sales taxes for the fiscal year. But tax totals for November and December, prime shopping months, were down $1 million compared with the previous year, and lower-than-projected collections are expected to continue.

The decline has been gradual but steady. In 13 of the past 14 months, county sales tax collections have been lower compared with the same month the year before.

The decline in collections was even more pronounced for the Community Investment Tax, a half-cent sales tax passed by voters in 1996 that has built schools, roads and Raymond James Stadium. In December, the county's CIT collections totaled $8.1 million compared with $10.3 million in December 2006.

Absorbing The Shortfall

Management and Budget Director Eric Johnson said the county is prepared to absorb the shortfall, though that might require dipping into reserves. State law requires counties to budget 95 percent of their anticipated collections to cushion their budgets against shocks when the economy dips.

The county added two other layers of protection: a $9.5 million reserve in the sales tax fund and a $46 million reserve in the general operating fund.

"If you don't spend it, you roll it over from year to year," Johnson said. "That reserve kicks in if we have a shortfall. Right now, the reserves far exceed what we anticipate as a shortfall this year."

The fallout from a slowing housing market is another area of concern. Permit fees are down for the city and county.

During the past fiscal year, the city had projected about $5.8 million in permit and other fees but collected about $5.2 million.

"It's not a tremendous shortfall, but it's not what we expected we would do," said John Barrios, construction services manager.

During the past six months, the city has seen a significant downturn in residential permits. Take December 2006, for example, when the city issued 1,931 new building permits, compared with just 867 in December 2007.

The city estimates it needs an additional $14 million to carry forward from this year to next year to cover increased personnel costs, such as health insurance.

"Looking at building activity, we will not be looking at $14 million in new revenue," Iorio said. "It is a challenging time, but we will get through it."

Less Revenue Means Fewer Jobs

The county Planning and Growth Management Department had to cut 47 jobs in its Building Services division last year because of the housing slump. In December, the department issued 1,482 permits, down from 2,504 in the same month a year earlier. The reduction cost the county nearly $1 million for that month alone.

Director Peter Aluotto said the department started the past fiscal year with $9.3 million in reserves. The reserve now stands at $3.2 million because of slumping permit sales.

"It's important to take that carryover and try to preserve it," Aluotto said, "because if we burn through it, we've got no safety net at all."

City gas taxes also are expected to decline. Tampa was expecting about $11.1 million from the local option gas tax this year but now is anticipating less, though exact numbers weren't immediately available.

County gas taxes are in "pretty good shape," Johnson said.

"They're all coming in pretty much as we expected," he said. "Gas taxes are not really being influenced by our overall economy."

Iorio plans to meet with the city council Wednesday to discuss the budget. County commissioners also are holding a budget session that same day.

Reporter Ellen Gedalius can be reached at (813) 259-7679 or egedalius@tampatrib.com. Reporter Mike Salinero can be reached at (813) 259-8303 or msalinero@tampatrib.com.

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