Discussion - Fiscal Year 2022 Revenue Projections - No Funding Required
What the county recorded
Staff recommendation
Presentation Only
DispositionApproved
Approved for another Port-a-Potty to be placed at the Suncoast and 54 Trailhead by a roll call vote.
The source document
The county’s agenda for Board of County Commissioners, Mar 9, 2021
The published PDF, as served by the county. This item is one entry in it.
The county’s minutes for Board of County Commissioners, Mar 9, 2021
The published PDF, as served by the county. This item is one entry in it.
This case, across meetings
OMB-21-0016 in full →Heard once. OMB-21-0016 appears on no other agenda in the archive.
- Mar 9, 2021BoardR79▶Approvedthis item
What was said
Machine transcription of 31m of recording, with speaker names inferred from voice matching. 96% of 121 lines carry a name. It shows what was said, not what was decided, and both the words and the names can be wrong.
We'll go to R seventy nine. Yes, yes.
Morning.
More.
Bob Gorig, Pasco County Budget Director. That'd be Like show.
Oh.
Like. Well, good morning. As part of our budget process this morning I wanted to have a discussion with you all about uh the fiscal twenty two budget in particular. If you could go to the next slide, please. In particular we wanted to talk about uh where we see the uh economy going next year during the fiscal year 22 budget time period, and then look at how that uh economy and what's happening with the economy, how we're expecting that to impact our revenues and expenditures. Next slide, please. And the next.
All right, so as you may recall when the coronavirus and the pandemic first came upon us, we experienced uh the economic recession, which is defined of course as Two consecutive quarters of negative economic growth. And so for the first and second quarter Of the Uh year, the calendar year we we were in this recessionary period because of the coronavirus. It's interesting to note that the depth of this economic recession was much larger than the depth of the Great Recession of the two thousand seven, eight, nine time period.
But on the bright side it was only two quarters. It was so much shorter in length than the Great Depression. And so so as you can see in the third and fourth quarter Uh we've experienced economic growth. So that recession in itself was one of the shortest in uh in US history, being only two quarters long. And so we're expecting this economic growth to continue as we begin to roll out the vaccine. And as more and more people get this vaccine, we're expecting folks to Again. Uh come out, feel free to
come outside to to uh engage in activities and so on. And so Really as the we're expecting the economy to kind of move along at kind of a very slow pace until a substantial portion of the population is vaccinated and whether that be April, May, June, whenever that is, once we have that substantial portion of the population Uh vaccinated we expect the economy to grow at a very fast pace and I've seen some Uh Estimates that the economy in the second
half of calendar year could grow as high as uh eight percent per year. So next slide please.
And so this is uh interesting. So just a little explanation on this. The first bar, the red bar, that is the year-over-year spending, consumer spending on each one of those goods in May of 2020. And the second bar would be year-over-year spending for November. And as we can see, May was when the pandemic really took hold and things began to shut down. And as you can see, food and beverages from grocery stores. Right. We were fewer of us were going to the grocery were going to restaurants. We're going to the grocery stores
and so grocery stores Uh the sales in the grocery stores skyrocketed almost fifteen percent. From the budgeting standpoint Most of what you purchase in the grocery store is not taxable. So this shifting our expenditures from restaurants to uh grocery stores was a revenue loss for us. And then the next thing you see here is non-store retailers. This is what the federal government calls online purchases. You can see the online purchases during the pandemic skyrocketed and they continue to remain high. The only other area that
has really increased here is this area of sporting goods, musical instruments and so on. So I I guess the more we're locked at home with nothing to do, the more we're spending on on musical instruments and so on. So I'm expecting some really good bands coming out of this uh Coming out of this pandemic. And you'll notice the rest of these, this is really what's driving the economy. This is where we'll look in a little bit about our unemployment rate. These are the areas where we'll see that our unemployment is. We'll you notice the gasoline stores. Most of our sales
taxes, most of our revenues have recovered during the recession, with the exception of gas tax. And so you can see here why the gas tax still remains. Remains so low. Next please.
So you can see during the uh when the recession started, when the pandemic came along in February, March, the the numbers in the little box, that's the Pasco County unemployment rate. You can see the unemployment rate in Pasco skyrocketed from 3.4% to 14%, as all of those kinds of things that we just saw on the previous slide began to shut down, the gas stations, the restaurants, the department stores, and all of those things. But since then we see that Do you uh unemployment rate again dropping to about five point two percent in December. And we're expecting
that unemployment rate to continue to fall during next calendar year as things begin to open up and as as folks get back into the economy. Now we're not expecting it to get back to that three, three and a half percent rate, but still it's gonna get down into the four, four and a half percent unemployment rate. Next, please.
And so luckily we're in an area that is expected to see growth even above the national Average. So if we're expecting a national growth rate of eight percent, we're expecting the Tampa region to be even higher than that. And the industries that we're expecting most of the growth is in construction, this financial services, and then this other catch-all area called other services. And we have some evidence to point towards the fast-growing Tampa region. The first one you can see here, Tampa-based startups raised over $180 million
in. 2020. So these startup businesses have gotten investment from outside sources to the tune of 180 million. And that was much higher than the hundred twenty nine million that was raised in twenty eighteen. And this was even during the pandemic. Next slide, please. We look at the economic small business job growth index and we can see the number one city on here is Tampa. at almost ninety eight percent. And the only other city on here in the Florida is Miami. So Tampa's leading the nation in small
business job growth. Next please.
And so a phenomenon that had begun prior to the pandemic, but was certainly accelerated during the pandemic was this idea of corporations relocating to the south from the northeast and from the rust belt moving down in here into the into the Florida region. And this was just accelerated during uh the pandemic, where folks are trying to get out of the, you know, trying to get out of this very crowded area. and social distance down here with the rest of us. Related to this is another phenomenon that was accelerated during
the pandemic where residents are moving from the northeast down here. And if if they're anything like me, it's we moved down here to we were tired of scraping the ice off of our windshields. And so we see a lot of that. So during the pandemic again, folks were Tired of being in crowded areas, they couldn't uh social distance. And so now they're moving down here for the quality of life. Next slide, please. And so what this is leading to, of course, is a Shortage of homes. We can see the bottom line here,
which is the existing home price, the median existing home price in the last Last year or so took a sharp spike, and that sharp spike generally indicates uh a shortage of these existing homes. And so this partially explains the reason why there's so much new construction happening in our region. Next please.
Whoa.
Apologize for this, this didn't turn out too well, but that is a map of Florida there.
And so John Burns has looked at the housing market for the major cities in Florida and you can see the very strong housing markets are Tampa and Sarasota. with the strong markets being in uh Naples, West Palm, and so on. And I think you just have to step into our building department to realize that that is probably very accurate that the Tampa region is a very strong housing market. Next please.
So not only do we have a very strong housing market, here's evidence of that housing market. In fact, two of the top 50 planned housing communities. in the United States, two of those best sellers are right here in Pasco, that's Starkey Ranch and Bexley. Next please.
Of course, all this growth does come at a price, and that would be uh inflation in our area is more than double the national average of inflation. So as we are going into construction. the demand for these scarce materials is causing the prices for all these construction materials, both vertical and horizontal, to increase. And that's where as the county, that's where we're gonna see the inflation hit us the most is during in construction. both building, road construction, and that kind of thing. Next please.
So just to summarize here, we are seeing our economic indicators pointing towards strong growth in our region. And as the vaccine rolls out, as people become more comfortable getting out, we really expect the economy to really take off. Next please. Alrighty, next. And so what's the impact of all this good Good economic news on uh our budget for fiscal year twenty two. Well as you recall in fiscal year twenty one we were very conservative because the budgeting for this year because
the pandemic had just started. It was having an impact on our revenues, but we weren't really sure what the total impact was going to be on our revenues. And so we were really very conservative. We didn't bring on very much new spending at all. We believe because of the optimistic economic forecast that We can now turn to investing back in some of the things that our customers would expect. funding some some new initiatives and so on. There is the new stimulus bill does uh contain language that would allow
us would allow cities and municipalities to recover lost revenues as a result of the Pandemic. However The language of the bill is not clear. And we won't really want to wait until we have the guidance from the Treasury Department before we make any recommendations on how we should be spending that money. Next please.
So as we talked about, new home permits. This is just single family homes, and at the end of the year we were seeing single family home permits. coming into the building department at record levels at 600 homes per month and we thought well we are at the peak we can't possibly get any higher and then we turned the calendar into January and we had almost 900 single family homes. In January. And so we expect this to continue. The important part here is that new construction is a big determinant of taxable assessed value, which is one of the inputs
for property tax revenues. So one of the things you'll note is that A new house that goes into permitting today won't reach the tax rules for two years. And so if we look back, even look back to the twenty twenty, so those new houses that were built in twenty twenty will be in the tax rolls for the twenty-two. uh budget year. And so even in twenty twenty, which is Whatever color that is,
Uh huh.
Purplish. So even that was a pretty strong growth. And so that's we'll begin to see in two years. Next, please. And so because of the strong value uh construction
on this? Yes. So you're only showing new homes, but on the that slide, what about permits for commercial and industrial? Is there a slide for that?
We don't have a slide but for that, but we do have the information for that and the actually the The permit value for for commercial properties is way above where it is historically. So we're so we have all these new homes coming in and then commercials coming in to support all the residents.
So and I you know, I I recall always hearing that the um homes Maybe don't necessarily add to the tax rolls that much as compared to the services they require. So it seems to me a really relevant number for the commission is the value of the commercial and industrial property coming online, which really adds to the tax base without taking a lot of services. So I I think in the future that's really important number to put in here.
So Commissioner, we l we watch that and look at that, but you you really can't break that down by month. Because commercial Permits come in a variety of sizes and shapes. And so you could have a month where you have twenty five or thirty permits and a real low value because they're all tenant improvements. That's still all new commercial. Or you could have shells or you could have you know multifamily complexes. So it kinda The data there is much harder to look at on a month per month basis. We can do an
annual.
We can do an annual and we have that. Yes.
That's good numbers.
Yeah. Mr. Chairman Mariano. If I'm not correct, wasn't um twenty twenty Up approximately eighteen percent, eighteen point seven percent from nineteen on the commercial side. In a few seconds, I have the spreadsheet. Let me tell you eighteen point seven, eighteen point nine percent increase from FY nineteen, twenty. Yeah.
Yeah, let's definitely check that trend out.
Yeah, the the twenty twenty
story.
The value of the
commercial
almost doubled in twenty from nineteen. The increase of permits is what I should have stated.
Yes, Commissioner, we saw a sixteen point seven percent increase in twenty o above nineteen and our property um the new cur commercial valuation was almost six um hundred million dollars and that's a hundred and sixty. Six percent above the nineteen valuation. So double.
Oh, double.
It it six hundred million increase? Yes,
ma'am. So it doubled.
It went from about three
hundred million to six hundred million.
Three hundred million year?
Yes, ma'am.
Okay. To six hundred million in the year. Yes, ma'am. Yes. Okay. Yeah, I I think in the future those are freight slides to
that that just keep in mind total
Well great, that's still a small, very small segment of our total number 'cause so you're talking six hundred million in the entire new construction, let me pull it up, was two point six billion. So two Total permitting was two point six billion. only six hundred of that was commercial. So The reason we watch Single Family is it's so it's so much more from a volume perspective.
I know, but I it's still, you know, we've been known as a bedroom community and I really wanna tout the other parts of our growth. Highly. Yeah.
No, I understand. I just it's it's it's a lot more scatter shot, so it's hard to see trends in that on a monthly basis. Okay.
Yeah, and that's that's a good point. In the future we'll we'll add those and that's a good point because as we meet with uh the rating agencies and we go out for loans, that's one of the things they point out is that we're no longer a bedroom community here in Pasco. They're impressed with the amount of commercial, industrial that's coming online. And so because of all this uh building activity that's been happening for the past since the end of the Great Recession, we are expecting taxable assessed values For fiscal year 2022 budget year to be, somewhere in the seven to ten percent increase, somewhere
in that range. Next, please.
So next, I'd like to focus on the importance of tourism to the overall economy of the region. And so often we think of tourism as bringing in that tourism development tax. But here, as we attract more visitors to the area, you can see that those visitors spend money outside of the hotel. And in 2019, visitors to our area actually spent half a billion dollars in our local economy. And to put that into context,
it is equivalent to about thirteen percent of our overall overall uh sales tax revenue in the region. Next please. And so on this next slide there's a lot happening here, but We get a weekly report and the first chart there is our weekly occupancy rate of all hotels in Pasco. And the bottom one is the average daily revenue for all of our hotel rooms in Pasco. And here we wanted just to point out the importance of sporting events to our local economy. And you can see the Super Bowl there
on that week of of February 6th, even though the the Super Bowl was held in Tampa, the average daily revenue for our uh hotels in the area spiked in that week, exceeding where it was the the year before. Yeah. Next slide, please. So the next slide here shows this is the green would be the revenues that we received from the tourism development tax in 2019. The blue with the circles is the what we received in 2020. And you can see there
beginning in April when the pandemic was really hitting us as the travel really slowed down. You can see the difference in the amount of revenue that was brought in from the tourism development tax during the months of uh March, April, May, and June. Beginning in July, August, and September, it has begun to recover. And then you can see the purple line here started off well and it's uh we expect it to do well again as the economy begins to open up. Next please.
And so half cent sales tax revenue, this is a shared revenue with the state. This red line that we put in there, that was the monthly average revenue that we received for half cent sales tax in 2019, which was the year before the pandemic. And then we mapped This is the monthly revenue that we received. You'll notice in December, January, there's always a spike because of the Christmas. And the interesting thing here is in May, if you'll notice that huge dip in May, that's about a half million dollars lost in just that one month because of the because of the economic downturn. And then
beginning again in September, we can see that those half-cent sales tax revenues are above that red line. And in fact, our January Revenues were just much higher than they were the previous January. Next please. Now we look at penny for Pasco, which again is the one cent sales tax. You can see the orange line there. Again in April, May, you can see how quickly that dropped out. That was about an $800,000 loss in those two months in that revenue. But then beginning in June, July, we
began to recover. And then as we look at the revenues again for this month, we can see, I mean for this fiscal year, we can see that those revenues are much higher. That's that purple line are much higher than they have been in years past. You'll notice those spikes that occur coincidentally every quarter. The reason for that is because those are internet sales tax. The state holds those and then gives them out to us every quarter. And so that's why it kind of jumps around like that. Next, please.
Yeah.
Here's our one required doom and gloom slide. Communication service tax is 1.86% of your phone bill. And we use those funds, we use that revenue to fund the 911 Emergency Operations Center. And we're losing about 3% per year on that revenue. You can see in just the last decade, the revenues have declined from about 6 million. We're expecting to be right around four million. In fiscal twenty two. And so because of that loss of revenue, we are offsetting that loss of revenue with general fund
dollars to keep the 911 center operating. Next please. So we look at gas tax. So most of our other sales tax revenues have recovered. Gas tax is one that we are keeping an eye on. Again, we have the 2019 monthly average here. And this first local option, gas tax, which is what we use to maintain existing roads, you can see that it is really has been struggling. We had the giant dip again in May when the pandemic was at its height. And
just in January, it's just once more exceeding where it was in 2019. So we're keep an eye on this. We'll see if this is a trend that's going to continue, whether it's actually going to continue to recover or it's just a one-month anomaly. Next please. So second local option, gas tax. This is the gas tax that we use to build new roads, add new capacity. And as you can see, since the recession, since the pandemic hit, we've really had difficulty getting back to
where we were in 2019. Next please. So on the right side, we have the U.S. Energy's short term energy outlook. The US Department of Energy believes that. Uh usage of fuel is going to remain low until the towards the end of fiscal year. uh calendar year 21 and for us that's good news because that's October and that's beginning of our new fiscal year for 22. So
we're expecting these gas taxes to at least to have recovered to where they were in the 2019-20 when we begin budgeting for our 22 uh budget year. Mr. Chairman
Yeah, sure.
Okay, just r repeat that again. You th you think the demand for gas will remain low for how much longer?
Well the Department of Energy says towards the end of calendar year twenty one. So in the October time frame it the
How ironic it is that the gas prices continue to rise for some unknown reason, isn't it? This really doesn't uh It kinda contradicts why they are, but I'll leave it at that. Very good.
Next please.
And so the the interesting point here is that uh gas tax revenues, you can see some of those are are in the positive, and that's simply because we budget revenues at ninety-five percent of what we were expecting. Had we budgeted those revenues at a hundred percent, all of those gas tax revenues would have been in the negative. Next please.
Okay, so although uh most of our Revenues are uh Recovering. We are expecting increased revenues coming into the next fiscal year. There are some increased expenditures we want to look at, first of all, is the county share of the Medicaid. And so that is increases in the neighborhood of three to four hundred thousand dollars per year. So it's up around almost eight million dollars a year that we pay for Medicaid here. Employee health care, as you know, uh health care inflation is one of the highest
uh inflationary rates in the country, and we're certainly not immune from that. And so we right now are planning to increase the amount we budget per employee for health care by five hundred dollars. Employee retirement, we expect that to increase. The state has already mentioned uh they've announced that they've increased the what they call the assessment fee, which is the overhead charge for managing the employee retirement. So they've already announced an increase there, and that's cost of that is half a million dollars for all funds in the in the county. And in addition to
that, we're expecting increases property tax and property insurance workers comp. And you can see, although we're not building four new fire stations this year and two new libraries, we've got a plan for those that come online in the future. And then the state keeps telling us we need to do this update of this thing called a comprehensive plan. So those are just some of the things that are on the horizon that we've got. that we've got to fund with these ex uh increased revenues coming online. Next please.
And so finally, we just want to talk about the budget calendar and what you can expect moving forward. So May 1st is the deadline for three of our five uh constitutional officers for their budgets. June 1st. We will get their preliminary taxable assessed values from the property appraiser and that will give us a pretty good idea of where we think the property revenues will be for the next year. We'll get the final assessed values from the property appraiser on July 1st. And then at your July 6th meeting, we will set the trim for the following year. And
that is all I have. I'd be happy to answer any questions you might have.
Mr.
Chairman Mariano.
Just Mr. Moore.
Hey, thanks. Just one thing I wanted to make a statement too. You mentioned about like Super Bowl weekend for for example, health sports, um, obviously help with tourism and the economy. Um, but kudos to the county and the DMO and um Center Ice and uh Rad Sports because actually what happened that weekend is there was the hub the big hub that was here for a month and a half, hockey teams from all over the nation. They were here that weekend, a Super Bowl weekend, and there was also a huge gymnastics meet
this that weekend here in Pasco County too. So actually Talking to the team and the and and the DMO, what actually drove room nights up that weekend. Yeah, the Super Bowl was a little bit, tiny bit, but it was really because of this huge hockey um tournament that brought in over 4,500 room nights during that time, as well as um the big gymnastics meet. So that goes to show you obviously the decisions we make here, the benefit that have to the entire community and the economy. And
you mentioned sports and youth sports and the Zambershire sports are huge. They actually bring in more revenues than professional sports do. It's just a fact. So I did want to state that. So again, kudos to those two facilities and and uh our are uh DMO team. And I also want to state, and I think this, you know, because of decisions this board has made, as well as county administration, to keep Pasco County open. Yeah. That's one of the big reasons. Big reasons why
We're seeing the success. I know obviously, yes, unfortunately, people are hurt looking and we know that. But at the same time, good decision making, keeping the businesses open, not shutting businesses down was a huge imp positive impact on the community as a whole. That's why our un current unemployment numbers are at six point what? Five point two. Now we went down even more than I looked yesterday. The national is six point two, but Pasco five point two. Five point two. So there you go.
So we're below the national average. So again, kudos to everybody. Thank you. And um I know our our our citizens in the in the business community as well really appreciate it. Yeah. Thank you.
Good job. Very good report by the other.
Mr. Chairman Mariano
Uh yes, sir.
Uh just want to say that uh you know the discussion earlier with um the the homes that we're having uh increase I think one of the great things that a high end home. You improve your demographics, you're probably improving your workforce. And it's gonna bring better retail, better employers to the area. So I think You know, the down like do home homes actually help the tax base? I think they actually do, especially when the high end and as the short point is going to increase it, but it
does make it more marketable. And uh Commissioner points are right on the mark as well.
Thank you. Thank you.
I I had a quick question. Um you said this cell phones for the 911s were going down three point two percent.
Yes.
Um how can Can we raise those numbers or why are they going down so much? Because more and more people have cell phones nowadays.
The reason for the decline is first of all it's it's a favorite topic of our state legislature. So every legislative session there's they're taking something away from that. And at the same time, there's fewer devices that are taxed. So although everyone has a cell phone. We no longer have fax machines. We don't have a phone in our house. And so the number of devices that are subject to this tax is declining as as we move forward. So is the fees
price actually going down per device or you're saying there's just because more people seem to have cell phones now and there's usually five people having a cell phone in a house compared to one house phone. So is the unit rate less than what it was before?
It's it's the same tax rate, but there are fewer devices that are subject to that tax. And then as we have our folks who move to the area, they come down and they keep their old phone number. And so those phone numbers, the state doesn't know that they're local and so they're not charged that tax.
Oh on the commissioner. On the on the on the cell phones? On the mobile devices. the the CST is charged based on the zip code of the billing address for those devices. So if you're paying by a credit card, so those they come down in the winter,
if
they're paying by a credit card with a billing address in another state, they don't get charged Florida sales tax, communication sales tax because they're getting billed based on where their billing address is to that account. So there is a pretty big gap there.
Is there a way we can change, I guess, legislative that If they're using our cell towers, so it's based off cell towers instead of being based off of They're billing?
That's something that we can bring up with Yes for a mental folks.
I
mean
we should bring that up at fact. I mean that seems like a Common sense change.
Yeah, this has been a topic of discussion that that we the county has taken to Tallahassee every year I've been here. Yeah, you know, and so and uh we continue to see this. There really isn't an appetite in the legislature for At least recently for making an adjustment.
Yeah, there's so many people that live. I have out of state phone numbers. So they really need to be paying the nine one ones in this area. Not paying.
I have an out of state phone number, but my billing address is in Pasco County. So I pay in Pasco County. Absolutely.
And so it's based on the billing address of how you're billing. Your your However you're billing, whether you're paying via credit card or or bank or whatever, it's based on that address, your service address. And if your service address is in another state, then that's where you're getting charge. And most of them, if they would change their address to Florida, actually you'd see a reduction. in the sales tax on their bill. Because most of the northeastern states charge more than the state of Florida does on their bill.
Well maybe cell towers or something.
Very good. Okay. Very good report by it. Thank you. Okay. Now I'm gonna move to um