OMB-26-0020

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1. 1Feb 17, 2026
   Board of County CommissionersR50Regular businessNo disposition in the minutes

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   Oakley

   1:13:05Right now onto our regular agenda, R fifty.

   1:13:12O and B. Oh.

   MarianoChair

   1:13:20Hello, Amy Farrell, Budget Director with Pasco County's Office in Management and Budget. Sorry if I'm a little raspy. I'm coming off of a two-month-long cold. It's shenanigans. I don't like it. Alright, so what are we going to talk about today? Um we're gonna go over our budget cycle, show you where we've been, where we're at, and the body of work still left to adopt a budget this September. We're going to look at different predictors of our taxable assessed value, economic indicators. We're going to look at our major revenue sources

   1:13:50that fund both operating and capital. And then we're going to look at those known expenses and impacts of That are going to be impacting our FY27 budget build. Now, the story that we're going to be seeing today with our numbers really is showing us how our localized Pasco economy is very reminiscent of the pre-COVID economy in most instances, except for just the cost of getting stuff done.

   1:14:19Alright, so budget cycle overview. In January, we had a workshop with you all where we talked of our five-year strategic plan moving into the second year of that. What should we be focusing on as we build our budget? We had an internal kickoff with our county departments and said, go forth and start building your budget packets. Now here we're doing our revenue projection here in February and then we're gonna be briefing you all um late February, early March, looking

   1:14:50at the general fund and a deep dive into our MSTUs. Then from March to May, there's a big body of work that happens where we really um fine-tune those budget submission requests. Department directors first come through me. I hack 'em down. I do good work, so Mike comes in and then we can start talking about, you know, needs and plans and things like that. Um good cop, bad cop, that's how we do this. And then in June we're gonna come oh, in April, we're gonna come with our constitutional officers and the

   1:15:20chief judge and we're gonna get some good dialogue with them on what their upcoming budget needs are and their long-term plans. And then in June, we're gonna come back and workshop with you all. At that point, we'll have preliminary taxable assessed value numbers. We'll have um pretty close to our proposed budget. And we're gonna come back to you and say, we've been listening, but did we get it right? Is there still more work we need to do before we come back in July and set that trim? And then from July to September, we'll be doing more briefings and

   1:15:50fine tuning those things so we can come back and adopt a budget with a first and final public hearing in September.

   1:15:57But don't it's a lot of work, but don't be tired yet. We still got a lot to do. Alright, so now we're looking at some of those what we call predictors of our taxable assessed value. So here we're looking at our new home permits, and those are leveling off. As you can see, we're So you want to look at that purple line and we're right back to where we were two thousand twenty two, right? So We had a big spike, but now we've kind of leveled off. So growth is still happening. It's

   1:16:28just not that huge skyrocket. And so you might say, Okay, Amy, why are we looking at this? Well, new construction is half of our taxable assessed value and um These permits are somewhere between a two to three year leading indicator, meaning permits that we're seeing today will impact our taxable assessed value growth from new construction two to three years down the road. So we like to pay attention to this. So if we're building an FY27 budget, those FY25 permits are pretty

   1:16:58indicative of what we think that new construction growth rate might be.

   1:17:04And then if we look at our Total new construction values. So you'll see they've been climbing, climbing. We don't expect them to continue to climb. And when we look at that breakout of residential, which is this previous slide, right? Our new home permits, those residential, and then our commercial, residential makes up about 85% of our new construction, with commercial being roughly 15%. Now over the years, we've seen Pretty steady somewhere in the four to six percent range

   1:17:34when we're looking at our new construction taxable assessed value growth. But now when we look at our total taxable assessed value, this also incorporates our revaluations of existing properties. Now over the years it's been this revaluation piece. Those have been coming in in double digits and that's what's really been bumping up our total taxable assessed value. But now let me jump forward one more slide and you can see how that's starting to come down. Well that's because our new construction

   1:18:05is still holding pretty steady in that four to six percent range, but those revaluations are coming down. Okay, Amy, so what does all of that mean? That is a great question.

   1:18:16Well, that means we are scenario planning anywhere from a 4%, 6%, or 8% total growth and taxable assessed value for FY27. And we like to do a scenario plan because, let's be real, I don't have a Magic 8-ball and I can't tell you exactly what's coming. But we like to have some different scenarios so that way as we're planning and things start to shake out, it's a little bit easier to pivot and maneuver. Once July 1st happens and we do have those preliminary taxable assessed values. And so here

   1:18:46you can see what that looks like for the general fund if it's at four, six, or eight. So Six million additional dollars coming to the board after the sheriff's forty percent of new revenue, after the payments to the CRAs, and to our tax increment finance units. And then you can see at 6% that would be roughly 11 million, all the way to 16 million if it does look like that 8%. Now again, just to remind you, the four to six percent range

   1:19:17is that new construction, and we are seeing a cooling off in the market where those revaluations are concerned, which is why we're modeling that four percent bottom number.

   Oakley

   1:19:26Well you're talking about you. No, this is one. Thank you.

   MarianoChair

   1:19:37Alright, so that was our taxable assessed value predictors, and now we're going to look at our economic indicators. And so the economic indicators that we're looking at kind of help us predict what we think our major revenues might be, half cent sales tax, those kinds of things. And as we go through these slides, you're gonna see that we are pretty in line with pre-COVID trends. So we hit um some anomalies during COVID, but we are back to how things looked

   1:20:07pre-COVID. So there might be some literature or things going out that are like might sound worrisome, but when you look big picture and you go back pre-COVID, we've actually just I'll call it renormalized if that Makes sense. And so if you look overall our US economy at the macro level, it continues to be strong. We're looking at our real GDP percent change from the previous quarter, but now let's do a dive into just the last quarter. And so you'll see here from this slide that consumer spending is really what

   1:20:37props up that GDP number. And that's pr still pretty strong. So we are still seeing some consumer spending happening. Now let's take that a little step further and talk about well, what type of spending are we seeing? Now when we say that we think the economy is still pretty strong here, still pretty strong here, and still pretty strong here, because when you look at the categories of where we're spending, that's what we call discretionary spending. So we're looking at like non-store retailers, think

   1:21:08your Amazons, your online shopping, sporting goods, restaurants. clothing stores, all of that spending signals um signals a strong um consumer behavior.

   1:21:21Okay, so what does that mean? Well, that means that we are seeing our Florida sales tax to still be pretty strong. Now, when I talk about that anomalous period, so think that 2020 to your 2022 where we've got those that big spike. But now if you go back to 2013 to 2017, 2018 and you see how that trend line is slowly, steadily marching up, that's the same trend line that we're starting to see now when we look at Twenty three, twenty four, and twenty-five.

   1:21:52So that's what we say when our economy's starting to look like that of pre-COVID. This is what we mean. If you just kind of took those center ones out, you've got that same kind of modulated growth.

   1:22:05All right. So now the other side of the economy, we look at what is what is that inflationary look like, and then we also look like what does that job growth look like. And now again, this is one of those where if you just take the anomalous pre-COVID data out of there, we're back to pre-COVID norm. Um, so roughly seven million dollars of um Job openings is actually what the economists say makes a strong economy. During the COVID time, we were looking at

   1:22:35like $12 million of or 12 million open jobs. Um, but there was a lot of money getting pumped into the economy. A lot of jobs were being created, but now we're back to that same kind of strong normal about 7 million job openings.

   1:22:52All right, so inflation is still cooling, but we've been hovering right around that three percent range for like the past year. So we're looking at about two point seven percent inflation. It's not at the two percent target, but we are expecting it to kind of stay flat. It's been right around that two point seven for about a year now. So we're still forecasting um that same inflation rate.

   1:23:16All right, so now when we're looking at that unemployment, we're looking at this from a more localized level. That left piece shows you where PASCO is. So the lighter blue was this time last year, the darker blue is this year. So while our unemployment rate is up from last year, we're still in what the feds call a full employment rate, which pretty much means we've got a strong balanced economy between unemployment and inflation. Yeah. And then that second slide is showing you employment costs. So

   1:23:46the cost of having people and employing people. And the target there is to be right around 4%. And we are just a little bit below that 4%. So we're we're looking good there too. Alright, so all of this, all of these things come into factor when we start to look at how do we think our major revenues are gonna perform. So the first one up is our half-cent sales tax. And there's three key things that impact this revenue. So it's directly tied to inflation, it's tied to consumer spending, and it's tied to

   1:24:16our population size. And so um Our as you can see with our permits, our population size is kind of leveling off. We've got small steady growth, but nothing hugely major. Um consumer spending. People are still spending discretionary funds. Um so we're still holding pretty firm there. And then inflation has has kind of stabilized, right? So we're expecting, as you can see, kind of a stabilized half cent sales tax with just a little bit of an increase.

   1:24:49So then our county revenue share. So this is our net cigarette tax collections and our net sales and use tax collections. And so this revenue source comes to us monthly and we get a flat amount every month until we reach June and July. And then the state does what we call a true up based off of total collections and then we get um an allocation that kind of we'll call it backfills the previous months.

   1:25:19Now there's been an interesting phenomenon. So normally it's that same amount every year, but when we looked at our November to December distribution, there was a slight decline. So we have been mimicking the state's conservative posture in our revenue project projection here.

   1:25:38But still anticipating a slight increase.

   1:25:43Alright, and then communication service text. So this is on all of our voice, data, audio, video, think. Phone calls, landline, cell phones, video streaming, satellite, fax, all of that fun stuff. And we generally use this for emergency services. So this is again we're showing just a steady incline, nothing major.

   1:26:08All right. Any questions on our very modulated, slightly increasing nothing crazy to see revenue projections. All right, that means Amy's doing a good job explaining. All right, so budgetary pressures. We talked about these in January, so really not much has changed here. There's the property tax reform, which we're still monitoring, and we do have a couple slides um geared towards that. We are looking at addressing what we call a structural imbalance

   1:26:39in the general fund, which basically means the recurring revenue that comes in is a little bit less than the recurring expenses going out. And so we like those numbers to be the same. But we've been eating into our fund balance a little bit to keep our operations going, but we have been making steady work, chipping away at getting back to being balanced. And so we will continue to do that. Good work. behind the scenes to keep us in what we like to call a good fiscal solvency standpoint. Um public safety, staffing and expenses. Um We've

   1:27:10got sheriff expense pressures. We've got we're expanding a jail. Um you know, still working through operationalizing that. Wages and benefits, when we look at our total budget, the majority of what we spend our money on is related to people, people, salaries, and benefits. Um so that's always gonna create some kind of pressure on any budget that we're building. Um, general inflation and growth demands on our operating and capital budgets, um I don't I don't know if there's gonna be a

   1:27:40point where that bit ever comes off this slide. Um solid waste rate study. So building the FY27 budget, we will be um done with the seven for seven solid waste rate. So they are working right now on that rate study, so that'll be coming uh soon adjacent. Um sustainment of our public facilities. So we need to maintain our public facilities. If we don't, the cost to repair them will only become um Higher really is kind of how that works, right? Wesley

   1:28:11Chapel Library. So we will have the full operational and personal burden on the budget. We've done a great job being very creative as we've been going through the different renovations to utilize existing staff when those libraries have been shut down, but they are all gonna be fully online and operational come fiscal year 27. And then um our Medicaid rates we get those in June. Typically those go up. Um we'll have those in June, but you know, it's here 'cause we keep an eye on that and typically it goes up,

   1:28:41not down.

   1:28:44All right, so property tax reform. So our office is paying very, very, very close attention to what's happening. Um it's too soon in the legislative process to really know how things are going to shake out, but we do continue to monitor, um, and to my knowledge, nothing has fully come off the table, which means everything's still technically in play, which means we just have to keep watching. But it's too soon to really start

   1:29:14building any kind of concrete firm plans around what might happen. We continue to scenario plan as amendments come out we're keeping um keeping our pulse our thumb on the pulse of that, making sure that we're aware so when we know what's gonna happen we can pivot. But it is important for us to talk about when we're looking at yes, ma'am.

   Starkey

   1:29:37Could you go back that side? Yep. What is uh we got I've not I've not seen this one, this tangible personal property do we do that? Is that something that we were we have been doing? Senate uh five fifty?

   Oakley

   1:29:51Yeah, t tangible taxes are Predominantly carried by businesses. Yeah.

   Starkey

   1:29:56Right. Uh

   MarianoChair

   1:29:57yeah. So so think of it stuff inside a building that businesses have that they get taxed on. Big things. Yeah. So

   Starkey

   1:30:04schools. What does this mean? I mean, have you guys heard them say this? Prohib h

   MarianoChair

   1:30:11So it so the Senate's proposing that that we don't tax those things. Huh? The Senate's proposing that we wouldn't tax those things. Now, really I think the big takeaway from this slide is that the variety of reform being proposed. varies greatly. Um, anywhere from tangible personal property for businesses up to if you're improving your home to

   1:30:41be more resilient against wind damage, the assessed value increment that your home is now worth more you wouldn't be taxed on to a wholesale reduction of homesteaded property tax. The breadth and depth and width and variety of reform is vast. Right? And so it's really hard for us to pin down what the implications might end up being.

   Starkey

   1:31:07What on on your two seventy four, what are you basing that on? What what is the is that an additional fifty thousand off or a hundred thousand or I'm just curious because there were a couple we heard a couple proposals when we were in the Senate President's office.

   MarianoChair

   1:31:24Give me one second, I don't have that in front of me. But my team will look

   Starkey

   1:31:32It's it's not important if you don't have your I'm sure we'll get to that when Ralph gives us his update today. Hopefully today he's giving us up.

   MarianoChair

   1:31:41After twenty years of ownership and residency, it provides an additional homestead tax exemption equal to fifty percent of the assessed value of property other than the school district levies for persons who have owned and resided on the property as their permanent residence for thirty years or more.

   Starkey

   1:31:58And that's that big of a hit to us. Yeah. So we have a lot of longtime residents.

   Joanna Cheshire

   1:32:04Mm-hmm.

   Starkey

   1:32:05Does that have portability?

   1:32:09Which would continue the pain.

   MarianoChair

   1:32:12Maybe, maybe not. Perhaps. But if you want to dance on it.

   Starkey

   1:32:16Okay.

   1:32:19All

   MarianoChair

   1:32:19right. Thank you. Oh, you're welcome. So when we're talking about this property tax reform, it's important for us to understand. So this is just looking at the general fund, but the uh municipal service taxing units are also funded through property taxes. But here we're just looking at the general fund, and it's important to recognize that. that there are mandated services, things the state says local government will provide. And then depending on some of these property tax reform bills, there are also some protected services. And so when we look at

   1:32:49our general fund and we look at what of those services are either mandated or protected. That makes up 86% of our general fund budget, less reserves. So we're not including reserves. Um so that means 14% of our budget is not mandated, not protected. And when you look at the impact of some of those large proposals, we're looking at a revenue loss of more than eighty-eight point four million, fourteen percent of our non-mandated,

   1:33:20non-protected services. So depending on how this shakes out, We're gonna have to have some conversations around levels of service and what does that look like. And so, okay, so let's take that fourteen percent pie slice and let's break that down a little bit further into well, what are those services? So parks, libraries, planning and economic growth, senior services, community services, um, our debt payments, um, internal support

   1:33:50services, human resources, uh our payments to the C R E's. would be impacted. Um and then um some of our other constitutional and judicial officers that aren't in that protected class.

   Oakley

   1:34:03In

   MarianoChair

   1:34:04Yes.

   Oakley

   1:34:04Uh or somebody else. So in our collective bargaining agreements.

   Alan Rose

   1:34:10Hmm.

   Oakley

   1:34:12Are there provisions if if any major shifts and in in revenue come for a downfall. I mean, how's that impact our collective bargaining agreements? I I'm assuming that it'll put us in a corner 'cause we have to fulfill those obligations, right? So

   Mike Carballa

   1:34:32I would have to check with with Barbara specifically on those. I I'm sure there are valid agreements that would allude to larger circumstances, but I I know we have reopeners and we can get the board an answer on that question one hundred percent. I don't have it with any other type stuff.

   Oakley

   1:34:52I understand

   Mike Carballa

   1:34:52what you're

   Oakley

   1:34:52saying. Fine. Thank you. Sorry.

   MarianoChair

   1:35:01All right, so any other questions before we move on?

   1:35:06Alright, so I'm gonna shift our focus just a little bit and start to look at okay, so for every dollar of property taxes that a resident in Pasco pays, where does that money go? So on the left you'll see that dollar distribution. So 38 cents goes to schools, one cent goes to mosquito control, one cent goes to Swift MUD, 60 cents comes to the county, and that's under this board's discretion. So now if you look at the second half of the slide over to the right, um what are the

   1:35:36different levies that make up that 60 cents? So we have our general operating, which is our largest, that's 44 cents of that 60 cents. There's the fire MSTU, which is 13 cents. The Road Rehabilitation Services MSTU is two cents, and then our general obligation bonds make up one penny. All right, so now let's see how that 44 cents of general operating gets distribu distributed.

   1:36:05And so when you look, 63% makes up public safety. So that's 45% is the sheriff, 13% is corrections, and then five percent is rescue. Um three three cents goes to our TIFFs and our CRAs. Um Four cents goes to our other constitutional officers, so really this just shows you how that $0.44 cents is broken down into type of service.

   1:36:37All right, so the other um so we've looked at the taxable assessed value growth predictors and what we think that might shake out to be. Then the other part of the equation when we talk about property tax revenue are the millage rates. So the law enforcement MSTU, so this is new, that ordinance was established and adopted in November, and we'll be talking this budget cycle about um millage rates. I know the county administrators having conversations with the cities in terms of participation, and all of that's still kind of

   1:37:08a work in progress. So really this is um just it's coming, we'll be talking about it, um, a placeholder if you will. Yeah. So then we when we go to the parks, capital maintenance MSTU. So um no levies or no millages have been levied against this property tax. Um but last year we did give three million dollars of capital maintenance money to parks. Um and then I was chatting with my friend Keith, and he said the two major projects

   1:37:38that they're looking to accomplish in FY26 are. the dugouts at San Pasco Park and a floating dock replacement at the Withlacoochie River Park floating. And so they're through design and the team's currently negotiating construction on both of those projects. So they're putting that money to work quickly. And then when we look at the road rehabilitation MSU, FY twenty seven will be the third year that we've got um a millage for this service and um The

   1:38:08new growth money, we haven't touched that millage rate, so the new growth related to the taxable assessed value has just been funneled back into the program to continue to get work done. And then the fire and rescue MSTU. So back in November, the same time we established the law enforcement MSTU, we updated that ordinance to be able to incorporate the rescue component of fire and rescue. And so this year, as we go through this budget cycle, we'll be working on what does that appropriate millage rate need to be to absorb those expenses and then the commiserate

   1:38:38reduction to the general fund. So again, we're still working through the the math on how that will work but you know more information coming. And then the last bit is the general fund and we would be remiss if we didn't show how for the last four years this board has done some hard work and has made some tough decisions to give money back to the taxpayers in the result of um millage reductions consistently.

   YeagerSecond Vice Chair

   1:39:03Just a quick question.

   MarianoChair

   1:39:04Yes, ma'am.

   YeagerSecond Vice Chair

   1:39:05When the sheriff goes on his own, that would be able to let us lower the millage rate, correct?

   Pastor Jim

   1:39:10Correct.

   Starkey

   1:39:14Um

   1:39:17I I mean we've gone from seven point six to seven point four. That's pretty significant. Um I I I if there wasn't this talk in Tallahassee, I'd say, you know, maybe we keep chipping a little bit of that, but I don't know how we even discuss that, if they're talking about taken away some of our you know ability up there. So um just a r a reminder that when we did this well I wasn't on the board, I think Commissioner Mariano

   1:39:48was. When they rolled it back, rolled it back, rolled it back without any thought to the future and then Save Our Homes came in, it devastated this county. We're still climbing out of that hole. So we gotta be real careful. um about what what we're doing here. So we don't get caught like we did before. Hopefully we have a little more thoughts about uh how we fund our future than they were doing back then. But

   1:40:19Yeah. Because otherwise I'm very happy about this, except s of the toxin goal on the Dallas. Well I'm

   Oakley

   1:40:25I'm not afraid of uh finding ways to reduce millage. Um no secret there. But uh I'm confident we'll figure it out as accurate. Amy always does.

   MarianoChair

   1:40:38Thank you for your confidence. Yes.

   Starkey

   1:40:45I'd just rather be in control of it than Tallahassee telling us what to do. 'Cause we know what our needs are.

   MarianoChair

   1:40:53Any other discussion?

   1:40:56Alright, so now we're gonna pivot out of the general fund and we're gonna start to look at some of our other major revenues and what those projections look like. So here's our ambulance fees. And so um while the number of trips are remaining relatively flat, um the net payments per trips have increased 7% in FY24 and 10% in FY25, which is a testament to the good work happening in our ambulance billing team.

   1:41:25Alright, so now let's look at our local option fuel taxes. So the blue bar is our first local option, and this funds our operating expenses for our public works team. And then the orange bar funds our capital is one of our funding sources for our capital road construction program. And so while these revenues are continuing to slowly climb, the expenses are outpacing the revenues. And now while most of what we've seen Is indicative of pre-COVID trends. Our expenses,

   1:41:56especially when it relates to capital projects, the costs of materials and supplies skyrocketed as a result of COVID. Those costs have not come down. That has become our steady norm. So while we are seeing some increase in our revenues, it is not enough to cover the costs of construction. And so we have things like mobility fees, penny for Pasco, and the multimodal tax increment, multimodal transportation tax and tax

   1:42:26increment finance out of the general fund that is subsidizing and helping to fund things like the our big road capital program.

   1:42:38And then when we look at our penny for Pasco, um, so this one is also continuing to have some moderated growth. And this is very indicative of our steady local economy, because what gets paid here comes back here. Um, and so this tends to slightly outperform um the other revenues.

   1:42:59All right. And so we've confirmed our budget cycle touch points and the times that we're gonna hang out and talk about budget and make some tough decisions. We've explored our major revenue projections within the general fund. We talked about overarching um budget pressures, and then we explored some of our major revenue projections that are not in the general fund. And our next step um again is gonna be one-on-one briefings with each of you where we look at the general fund and our different MSTUs and we do that long term long term horizon

   1:43:30look. Any questions for me?

   Oakley

   1:43:33Any questions from the board?

   YeagerSecond Vice Chair

   1:43:36Just a comment. Um I think you did an amazing job, Amy. I like how you just wrote everything down the penny slide and all of it. Just great job.

   MarianoChair

   1:43:44Thank you. It's my team. They're pretty awesome.

   Oakley

   1:43:48Well I can tell you since joining this board in November of twenty twenty two, in my opinion, you're you and your team have come made significant strides in in uh simplifying this process for understanding for us and the public and the tweaks that you continue to make along our budget journey every year um are very much appreciated by me and I I think probably others out in the community as well. So thank you guys for for um taking time

   1:44:19to to try to understand how the average citizen thinks that isn't in this every single day and um uh that's that's just a testament of of your work for transparency for our money and and to our citizens. So thank you.

   MarianoChair

   1:44:33You're welcome, thank you.