by Mike Sharkey
Staff Writer
From a financial perspective, the first six months of the fiscal year have not been good for the City of Jacksonville and most of its independent agencies and business partners.
The latest City Council audit was released Tuesday and, as of March 31, the City’s general fund is showing a net deficit of nearly $13.3 million. The report was compiled by City Council Auditor Richard Wallace and shows budgetary shortfalls, negative balances and budget deficits for nearly every City agency including the Jacksonville Transportation Authority, SMG, the Jacksonville Airport Authority and JEA.
Much of the City’s general fund shortfall can be traced directly to last fall’s hurricanes, which did millions of dollars in damage. In order to clean up and dispose of the waste, the City diverted funding from several accounts into Community Services, Fire Rescue and Parks and Recreation. The City will be reimbursed approximately $9.5 million from the Federal Emergency Management Agency (FEMA) for hurricane-related expenditures, but that still leaves a several million dollar shortfall.
According to Wallace’s report, for the entire fiscal year “the City is projected to have total deficits of approximately $6.2 million for which alternate funding sources have not yet been identified.”
In the report, Wallace said he sees fiscal year 2005-2006 as being “a very difficult budget year” and urged the City Finance Department to find ways to hold down costs and avoid using one-time budget sources to cover recurring costs.
“For example, the administration may need to institute a City-wide hiring freeze and/or make other reductions in controllable operating expenses in order to build the beginning fund balance and initiate actions that would be consistent with reducing the use of one-time funds and matching recurring revenues to recurring expenditures,” suggested Wallace in the report (he was out of town and couldn’t be reached). “Otherwise, if these budgetary problems are not addressed, it will make it very difficult for the City to achieve its budgetary goals set for the next fiscal year beginning on October 1, 2005.”
The report is fairly detailed in its analysis of each entity that contributes to the City’s overall budget.
SMG
SMG, the management group that oversees the operations of Alltel Stadium, the Baseball Grounds of Jacksonville, the Arena, the Osborn Center, the equestrian center and several parking facilities is currently reporting a budget surplus of $139,828. However, projected deficits for the equestrian center ($204,468) and the game day fund ($256,428), the monies collected during 10 Jaguars games, total nearly half a million dollars. Overall, SMG is projecting revues for the year will be $15,844,396 while expenditures and net losses will total $25,022,567. The City will have to make up the $9,178,171 difference.
JEA
For the first half of the current fiscal year (Oct. 1, 2004-Sept. 30, 2005,) JEA is reporting electrical system losses of $14,503,341. However, the utility contends it will ultimately end up a little over $5 million on the plus side after rate increases, restructuring of debt and the reduction of operating capital outlay. Officials at JEA also plan to place a little over $20 million into a rate stabilization fund to offset future fuel price increases.
JTA
The Jacksonville Transportation Authority is reporting an overall budget deficit of almost $600,000. About half of that is from the mass transit system while the other half is shortfalls experienced by JTA’s Connexion service. The Skyway, thanks to heavy traffic during Super Bowl week, was about $12,000 on the plus side.
Port Authority
The Jacksonville Port Authority reported overall operating revenues of $16,400,350, which was about 1.8 percent below budget, but 1.1 percent above the prior year.
JAA
Also in the red for the fiscal year-to-date is the Jacksonville Airport Authority, which reported a budget deficit of $2,240,418. Sherwin Burman, the chief financial officer, attributes the deficit “primarily to timing differences related to debt service funding versus debt service payments.” The JAA is also planning to bring a budget amendment to City Council that will cover increased expenditures related to its baggage handling system and security measures.
Others
Four sub-funds, the Duval County Law Library, Judicial Alternative to Incarceration Juvenile Drug Court, Adult Drug Court and Legal Aid have a combined deficit of a little over $2 million. These subfunds were budgeted at $2,651,352 for the year based on projected revenue generated by the $65 fee associated with felonies, misdemeanors and criminal traffic infractions. However, those fees have only raised $431,768 to date. According to Wallace’s report, funding for all of these programs is in jeopardy. An ordinance has been crafted to address the current shortfall, however a funding source for future shortfalls has not been identified.
“We have estimated that for all four programs to continue their operations for the remainder of the year, the City would need to potentially fund $980,000 of expenditures that will not be covered by the $65 fee,” explained Wallace. “We are currently in the process of trying to determine an alternate revenue source that could cover this deficit and allow the programs to operate uninterrupted for the remainder of the fiscal year.”