Revenue Projections Discussion

1:03:01Now we'll go to the regular agenda and R thirty one.

1:03:20Found it.

1:03:22Okay.

1:03:24All right. Hi, Amy Farrell, Budget Director with Pasco County's Office of Management and Budget. I'm here with R 31 or OMB 2500. three three revenue projections discussion All right, so we're gonna lead in with some data and metrics that help us predict taxable assessed values. We're gonna talk about other major revenues that live within our general fund. Then we're gonna talk about some key expense drivers that are applying some pressure to our general fund and our

1:03:54other funds overall. Um Then we'll pivot to some other major revenues outside of our general fund and then wrap up with a discussion of the budget cycle, where we've been and what's left to cover.

1:04:08All right, so the first bit of data that we're going to look at is our new home permits. And so we're looking at how they're performing. This for us this is a leading indicator that gives us about a two-year outlook into what we think taxable assessed values might start to look like. What we're kind of keeping an eye on right now is fourth quarter fiscal year 24 and first quarter fiscal year 25, where we're seeing a slight drop. We're not sure yet if this is attributed to all of the hurricane type

1:04:38stuff that's been happening in this county. So we're keeping an eye uh because that could potentially impact us about two years out.

1:04:48All right, so the other piece of our total taxable assessed value when we're looking at the new construction bit is also commercial. So this shows us the last 25 years of commercial plus residential new construction and the ebbs and flows that we've experienced. So this is pretty cyclical, and this leads us to believe that at some point we're gonna start leveling off from new construction as well.

1:05:15All right, so new construction is one piece of the taxable assessed value pie. The other piece of that pie is revaluations. And so what you see here is the totality of new construction plus revaluations. Going back as far as 1997. Now, it's important to note that when we look at fiscal year 23 through 25, we've been experiencing double-digit growth in our taxable assessed values. And the biggest attributor to that is the revaluation piece of the pie. And there's three things and three

1:05:45drivers that really make up those revaluations. And what we've experienced over these past couple years. So, one of the biggest things is we've had some northern migration. where there's been home sales that will re-trigger that that value of that home without any Florida homestead portability, right? So they they didn't have any saver homes or homestead portability. And so we've seen a big trigger in what those assessed values are. The second bit is just market conditions, right? So market

1:06:16conditions will also dictate what those assessed values come out at. And then for recent builds, year one, the assessed values off a parcel, and then year two, it's parcel plus building or parcel plus home. And so What we're seeing with those three big drivers in the revaluations is our market conditioning is starting to correct itself. So those values of those existing homes are starting to come down a bit. We're also seeing less

1:06:46migration from the north. Um and so

1:06:52All of that leads us to these double digit growth numbers that we've ex been experiencing these past three and four years. We're not expecting that high of a number coming into this next budget cycle. So what are you expecting, Amy, you might be thinking. Well so so There's a lot of uncertainty on how it's gonna shake out. So, what my office is doing is we're modeling three different scenarios that we're pushing through our financial models to help us plan as we build our budget

1:07:22to bring back to you in June once we do have preliminary assessed values. So we're running a model at 5%, 7%, and 9% growth. And then you'll see at each of those intervals what the share's 40% allocation looks like, our expected payments to TIFF, CREs, all of those things, and then what's left for To handle our growth and uh you know other expense pressures within the general fund.

1:07:54All right. So that's the taxable assessed value piece of the general fund pie. There's some other major revenues that live in the general fund that help us operate. But before we go there, we're going to talk a little bit about our regional inflation, localized inflation, because that does correlate very greatly to the next bit of revenues that we're going to talk about. And so you can see since 2022 there is a cooling off of that inflation with just a small uptick in first quarter of 2025, fiscal

1:08:24year 2025. And so as we look at our half-cent sales tax revenue and our other tax revenue, they're following kind of a similar pattern. Half cent sales tax, to put this into perspective, this is about 10% of our recurring revenue within our general fund. Over the last 40 years, we've seen a 6% average growth in this revenue stream, and we're predicting right now a 3% increase. So we're still expecting an increase, it's just not as high as the increase we've gotten used

1:08:54to seeing from this revenue stream.

1:08:59All right, the next one is county revenue sharing. So the 11-year average for this one has been a 9% increase. We're actually predicting just this this one to flatline right now. Part of the issue with predicting this one is the way this gets distributed from the state is equal monthly increments. And then at the very end of the state fiscal year, June, July, we get what we call a which that then gives okay here's what our total annual revenue amount is.

1:09:30Well, June and July hasn't come yet, so it's un so we're unsure unsure yet of how twenty-five is gonna shake out, but we did experience a slight drop from fiscal year twenty-three to twenty-four. So we're just maintaining a steady projection at this point and we'll continue to monitor and see how this shakes out.

1:09:49All right, our ambulance fees, that's another major revenue in um in our general fund. And this one we're projecting about a seven, two percent increase, which is fairly in line with our eleven-year average um growth here, which is roughly nine percent. Yeah.

1:10:06And the last revenue that we're gonna talk about in the general fund is our communication service tax. If we look at our ten-year average here, this overall is a declining revenue, even though we are projecting a slight increase of 2.2% over the next fiscal year.

1:10:23All right. So that's our revenue. So now let's talk about some of the expense pressure that we're seeing in the general fund and just across all of our budgets in general. So within the general fund, we've got some key public safety expenses. Uh detention center expansion, we've been uh Slow stepping into a staffing model so that way we can run the expansion once that construction's completed. And fiscal year twenty six will be the first full year of our D Shift expenses. We've also had a step into that staffing model two

1:10:53plan that we've been working alongside with fire rescue so that way They were able to staff all of those shifts at all of their stations and fiscal year 26 will be the first full year of fully burdened expenses. Constitutional budget increases, we are estimating some increase, but we will get more line of sight next month when we have our second annual budget workshop with our constitutional officers and the chief judge. Um personnel uh That always has some kind of an increase. We're watching the

1:11:23retirement bill very closely as that that goes through the legislative session to see how that might impact us when when that shakes out. General inflation on our operating budgets and our capital projects. So one of the big things we've noticed is the cost of materials and supplies went up during the COVID pandemic. It really hasn't come down. So while inflation might be cooling, the cost of stuff is still up. And so that's applying some pressure on our budgets. And then just general government growth

1:11:53trying to keep pace with our demands for service. All right. Amy, what does that all mean? Okay, so here's what that all means. If I could bring that down to three uh Kind of specific points, here's what we're looking at. We're entering this budget season very conservatively. Our revenues are looking a bit challenging for us. We have some public safety must-pay expenses that we've built into our model to make sure that we can afford those. And we're looking at a limited ability to increase or

1:12:24expand services going into the next fiscal year. So we're gonna be running um very lean, very lean budget.

1:12:33All right, so now if we pivot outside of the general fund, let's look at our local option fuel taxes. So the blue bar is our first local option fuel tax, and this funds up roughly 27% of our public works ops and maintenance budget. And this one we're predicting a 2.8% increase. The other bar, our yellow bars, that's our second local option fuel, fuel tax. This one funds part of our transportation capital program, and this one we're estimating

1:13:03about a 4% increase.

1:13:08All right, so the last revenue that we're gonna look at today is our penny for Pasco. So our 14-year average on this one is roughly a 6.3% increase, and we are projecting 26's revenue to be right in line with a 6.2% increase. The neat thing about this one, it's reflective of PASCO's local government. The revenue that gets collected here comes right back to Pasco. So as you can see, our localized economy continues. Yeah.

1:13:37All right, so where have we been and where are we going? So in January, we workshopped with you all and we got your priorities for the upcoming budget cycle. Internally we kicked off and all of our department heads went to work on building their budgets. Typically in February we have this conversation, but we pushed it back a little bit because we needed to have some really good dialogue around MSTUs and our approach to that. And so now we're back here in March talking about our major revenues. Next month, as we just discussed, we'll be meeting with our constitutional officers

1:14:07and the chief judge, and we'll we'll have a workshop to talk about their budget priorities in the upcoming year. And then in June, we're gonna come back and we'll workshop again once we have preliminary taxable assessed values. July we come back with final taxable assessed values. You all will vote to set the ceiling on our millage rates and then in September we'll come back for two public hearing. Where we'll adopt our final millage rates and our overall budget.

1:14:33Amy, if you could stand the slide just for a second.

1:14:35Yep.

1:14:35I think when did we do the um One on one briefing's coming up. I think you ni really need to focus on what the jail and uh the D shift. Those are two things that our citizens really wanted to see. And I know the jail since we took it over it's a lot more than ten percent of what the uh allocation was, but we need to really g dive in to see how much that's costing us, especially with the expansion coming up. And again that D shift that benefit has been phenomenal. I know we get some breaks with the overtime that we save, but uh still there's gonna be some extra expense. Well I think as

1:15:06we go through to kind of really dive into what we're doing there. Um I know we look at the MSTU funds, so I think As far as we look at parks, I think it's gonna be a big thing and also the paving assessment program I think is working real good, but I want to make see how far along we are. I know I've had several road projects that I've had citizen complain about the roads aren't done and I find out they're not in the three year plan, so Uh I know we put some extra money into it last year um and I want to see where we are as far as what the projections are because I think if we're putting that MSTU out there for the transportation,

1:15:36but we're not getting ro enough roads done then uh we're kinda putting ourselves in a bad spot.

1:15:42Absolutely.

1:15:46All right. I took all those notes.

1:15:50All right. Anyone else? All right. Well with that, thank you.

1:15:57Any questions for Amy?

1:15:59Hang tough, Amy, and

1:16:00too.

1:16:01I told her I don't envy you at all, Amy.

1:16:04No.

1:16:05Thank you again.