by Mike Sharkey
Staff Writer
The list of reasons the City is facing a budget deficit at the midpoint of the fiscal year is long. The solution is short: cut back.
That’s the message from both Council Auditor Kirk Sherman and the mayor’s office.
“The revenues are a little challenging and belts are being tightened to live within those revenues,” said Sherman, whose office recently released the financial summaries for the City, its departments and independent agencies.
According to the report, lower than anticipated sales tax revenue from the State of Florida has resulted in an unfavorable variance of $15.8 million since Oct. 1, the beginning of the fiscal year. About two thirds of that deficit — $10.7 million — can be attributed to shortfalls in the local half-cent sales tax, a reflection of an economy in which people are not spending.
“We are pretty much struggling,” said Sherman, adding the $15.8 million certainly seems like a lot, but it’s actually 1.5 percent of the City’s overall budget. “We know these are tough times and the departments are being told to stay within their means.”
Despite the unfavorable variance, the City isn’t on the verge of economic collapse thanks to several factors. In fact, expenditures by year’s end are expected to be $22.4 million below budget. Much of the savings will come in the form of $7 million in salaries of unfilled positions and another $7 million associated with the benefits of those positions.
The mayor’s office also acknowledged the City is facing budget challenges. However, mayoral spokesperson Misty Skipper said Peyton believes the City will end the fiscal year without any kind of major deficit.
“Our projections are, we will end the year essentially flat,” said Skipper, adding “flat” is perfectly acceptable given the state of the national and local economy. “We have been closely monitoring this for some time.”
Skipper said the price of gasoline is playing a role in keeping City costs down. She said when the 2008-09 budget was being formulated last July, the price of gas was well on the way to $4 a gallon. Since then, gas has fallen off by as much as $2 a gallon, paving the way for a considerable savings for the City.
Sherman did say the midyear report supports the need for a restructuring of the City’s Building Inspection Division. As of midyear, the division had only raised about half the expected revenue.
“There is not enough revenue for their expenditures,” said Sherman. “People are not building, but we don’t want to lose people. There is a fair amount of business, but there are not enough high-dollar permits. People are doing renovations instead of building new and the costs with those permits are not as high.”
Skipper said the mayor’s office is currently working on the 2009-10 budget and it’s too early to speculate on what kind of budget the City will operate under next fiscal year.
“We don’t have all the pieces and no revenue estimates yet,” she said. “There are two pieces we are being very cautious of: a deficit in revenue in the $10 million to $20 million range and the largest driver of expenditures which will be an increased pension contribution.
“This year, the pension contribution was $76 million. Next year, it will be closer to $100 million. That ($25 million difference) is what we are working through at this time.”
Skipper did say the 2009-10 budget will be presented to City Council with no raises across the board, the elimination of 100 currently vacant positions and every department outside of public safety will be asked to submit a budget that’s 5 percent below last year’s.
Once the budget is submitted to Council in mid-July for review, Sherman’s office will also dissect it line-by-line. At this time, Sherman has no idea what to expect from Peyton and his staff.
“What I can tell you is they will bring a balanced budget. Then, we will roll up our sleeves and slice it and dice it,” he said, adding his office will pore over the proposed budget for about six weeks. “We will shut everything else down.”
Sherman said he’ll assign parts of the budget to members of his staff who have gained a working knowledge of various aspects of the budget over the years.
The quarterly report touches on every City department as well as the City’s independent agencies. The following is a brief recap of the status of those agencies:
• JEA — As of March 31, JEA was showing an operating surplus of $19.4 million. JEA is also projecting lower-than-budgeted revenues offset by lower-than-budgeted expenses.
• JTA — Budget operations are down $2.3 million, but officials indicate there won’t be any budgetary stress at the end of the fiscal year.
• Jacksonville Port Authority — Officials are projecting expenditures will be $536.4 million lower than budgeted. Most of that is in costs associated with the Hanjin Terminal. Those costs were budgeted this year, but only $600,000 will be expended this year.
• Jacksonville Aviation Authority — The year-to-date report shows a deficit of $1.5 million. However, operating expenditures are expected to be lower than operating revenues. JAA officials are projecting a surplus of $2.98 million by year’s end.
356-2466