by Glenn Tschimpke
Staff Writer
Despite a projected budget shortfall of over $6 million by the end of the fiscal year in October, the City figures to keep its general fund ledger in black ink through decreased spending.
In a quarterly report issued by City Council auditor Robert Johnson, a dip in projected state revenues is expected to shave $6.1 million from the City’s projected income. Yet, if City spending continues at the same rate, it will come in at $11 million under budget, putting the general fund ahead by $5 million overall. The decreased income stems from a half-cent sales tax collected by the State.
“It’s a sharing, if you will, from the State,” said Johnson. “It’s collected by the State and remitted back to the counties.”
The shortfall is another effect from the terrorist attacks of Sept. 11. Because much of Florida’s sales tax is generated by travelers, the dip in tourism and business travel has affected the State’s income levels and the difference is passed on to local municipalities. So far, Jacksonville is faring well, but Johnson warns not to make too much of it.
“It might not be a good thing to say the first quarter is an annualization for the year,” he said. “That’s the danger. We’re looking at it on a pro-rated basis rather than a historical basis.”
Rather than comparing the City’s financial situation to the first quarter of previous years, the report exists in the vacuum of 2002, which cuts both ways. While comparing this year’s expenditures to previous years would be fairly easy, Florida hasn’t experienced a budget shortfall like this in years, so direct comparisons would draw weak correlations. Plus, Johnson says, historical comparisons are more work to generate than they’re worth.
As it stands, the City is in no threat of breaking the budget. It’s operating expenses are projected to come in at $11.1 million under budget, partly because of personnel hiring freezes.
But the state of the budget could change from quarter to quarter, Johnson notes. Tourism could pick up around the state and boost revenues. A particularly hot summer could boost operating costs through energy consumption and increase operating costs. As of now, though, Johnson sees no reason to worry, especially this early in the fiscal year. The next three quarterly reports will warrant progressively closer scrutiny.
The basis of the report, Johnson says, dates back to the early 1970s when an oil embargo by Arab nations sent the cost of oil skyrocketing. JEA, which was largely dependent on oil to produce electricity, suffered accordingly and could not make its budgeted contribution to the City. The shortfall caught the City in a bind. City leaders decided to adapt a more proactive approach to monitoring the budget. Thus, the quarterly financial report was born.