According to the City Council auditor’s mid-year review, the city expects to have an $8.5 million positive balance, or “favorable budget variance,” as the report calls it.
That figure is buoyed by saving $11.7 million in expenses. But it’s the projected $3.2 million in revenue shortfalls that Sherman finds worrisome.
“It’s generally OK,” Sherman said of the financial situation. “Revenue is down a little, but expenditures are holding the line.”
As it has been the past several years, the main culprit is a shortfall in property taxes. Final property values were less than preliminary values, resulting in about a $1.6 million shortfall.
“It’s going to take a little bit longer,” said council member Greg Anderson, who serves as the Finance Committee chair.
While the economy has rebounded for some home values, Anderson said the public needs to understand that not all properties have seen a bump.
Other than ad valorem dollars, there’s a $1.1 million projected shortfall from the JEA utility service tax, and an estimated $1.4 million less coming from county and municipal sales tax. Other revenue streams exceeded expectations.
The report shows the $11.7 million expected not to be spent is a “significant improvement” over the $5.7 million the first quarter report showed.
At $8.3 million worth of unspent costs — mainly from $6.5 million in permanent and probationary salaries — the Jacksonville Sheriff’s Office leads the way.
If history is an indicator, those funds might not remain unspent.
Last year, the council restored almost $27 million to the sheriff’s office budget that was considered “extraordinary lapses,” or unaccounted for cuts, as part of Mayor Alvin Brown’s budget. Of that restoration, $7 million came from carryover savings. The year before, Sheriff John Rutherford successfully lobbied members to have more than $10 million his office saved rolled over into the next year to avoid layoffs.
And while the Finance Committee
won’t deliberate until later this summer, Rutherford told a budget committee in April that his department needs $8.1 million to combat rising crime rates. That money would be spent to hire 40 additional officers and 40 community service officers next year.
The report notes that $5.7 million was left on the table from the office last year and “this trend of excess budget capacity should be considered when preparing future years’ budgets.”
On the other side of public safety, the Jacksonville Fire and Rescue Department is expected to have not spent just more than $665,000. The department has a $2.9 million salary and benefit lapse and another $4.4 million in overtime. A federal grant to hire 67 full-time firefighters is expected to lower those overtime costs for the rest of the year and the department wants to hire another 67 people to fill vacancies within the general fund.
Overall, the “extraordinary lapse” issue council members dealt with last year is still present, but only a projected $1 million worth. The Supervisor of Elections ($588,000), mayor’s office ($367,000) and Medical Examiner ($120,000) account for those.
Outside the general fund, there are 32 subfunds. Several are “financially challenged” with five having a negative cash balance, four having projected unfavorable variances and three having both.
For example, the Clerk of Court subfund is projected to lose almost $439,000 because of revenue lost, the majority of which comes from a decrease in recording fee collections.
On-street parking is slated to lose almost $158,000, with unpaid late-parking fees and fines contributing to the shortfall.
Sherman said the halfway report tends to be the most important for city leaders, as the first quarter report tends to be early and the third quarter too late.
“There’s still time to make changes,” Sherman said.
And possibly bump up that grade heading into months of lengthy budget hearings.
Brown is slated to present his budget to council by July 15. The finance committee will then take time to review and tweak that budget leading into the Oct. 1 start of the fiscal year.
If it were a classroom, Kirk Sherman would give the city’s financial outlook a C-plus at the halfway mark of the fiscal year.