Rec Center a concern for next year’s budget
The City of Sanibel approved its tentative budget last week with concerns regarding the Recreation Center.
City Council adopted the tentative operating and voted debt service ad valorem millage rates at 1.8922 for tax year 2020, fiscal year 2021.
The tentative budget of $67,193,944 was also approved unanimously.
Finance Director Steven Chaipel said some changes have been made to since the draft budget, which although normal, was a little more challenging this year due to the COVID-19 pandemic. He said a lot of the revenues and expenditures were uncertain to where they will end up in fiscal year 2021.
“When we had and prepared the draft budget in July, we used some of the best information that was available at the time. Some of that has evolved over the summer, some has not, so what we are projecting now is the best assessment we have for both finishing fiscal year (20)20 and entering fiscal year (20)21” he said.
With COVID-19, there had been a lot of affects, including city operations for the past six months. Chaipel said there has been some closures — beach parking and the Rec Center closed for a period of time.
“There have been a lot of changes, and what they call moving parts for the budget in the estimates working through the summer,” he said.
In the early stages of the pandemic, City Council was quick to take action and looked at the budget while trying to evaluate what affects were going to be had to revenues while taking corresponding responses to expenditures.
Chaipel said in June, the fiscal year 2020 budget was reduced by $4.3 million. Seventy-six employees were furloughed and the Recreation Center and beach parking closed for a period of time.
The July draft budget included about $2.6 million in operating and capital expenditures that were canceled, or pushed into future years.
As far as the fiscal year 2021 tentative budget, Chaipel said property values increased 26 percent from 2019 tax year to come in at $5,417,871,020. The budget is prepared at 1.8922 operating millage rate, which is the same operating as adopted for 2020.
The total millage with voted debt for fiscal year 2021 is 2.1818, compared to the 2020 fiscal year of 2.1855.
The 1.8922 tentative millage rate is a 24.31 decrease from 2007. The total tax rate has seen a 24.72 percent decrease since 2007 with a 2.8983 mills in 2007 to 2.1818 mills in 2021.
Approximately 15 percent of the total tax bill for Sanibel residents remains in the city, while the rest goes to other government organizations with the largest always being the school board and then Lee County.
Chaipel also discussed the importance of the estimated beginning fund balance, as well as the ending fund balance.
“In Florida your total source of funds always includes your carry over from the previous year, so that is called the beginning fund balance. That is an important component of budgeting. Of the $44 million total budget in the governmental funds, about 45 percent of that is beginning fund balance. That is residual from 2020 that we expect to carry over to 2021 that we need to fund operations again given some of the potential shortfalls we are going to have next year,” Chaipel said.
Whatever is left over is the ending fund balance, which again is an important piece of funding. About 37 percent of the $44.8 million will carry over into fiscal year 2022.
For the general fund, there is about 38.57 percent of the $26 million in the beginning fund balance and about 38.09 percent in the ending fund balance and reserves.
The capital project funds equals $5.8 million of sources and uses of funds, which is $5.1 million of that is funded with beginning fund balance.
The total reserves that the City of Sanibel has available is $1.6 million. Chaipel said with the uncertainties still up in the air for next year, the reserves allows for some flexibility to accomplish some things that need to be accomplished, or react to further reductions in revenue.
Chaipel said some of the revenue sources are a little bit better between the draft and tentative budget than anticipated in July.
“We are significantly still under what we had originally planned for Fiscal Year ’20 in a lot of areas. Recreation, beach parking and toll revenues are some of the big buckets. A lot of the state revenues are still down from where they were last year at this time,” Chaipel said. “The change schedule that I included with the draft agenda actually increases the budget for Fiscal Year ’21 by about $1.1 million from the draft budget. That is based on a better than expected revenues, but again it is important to remember different from draft budget. It is still below our expectations of where we thought we were going to be for Fiscal Year ’20.”
Mayor Kevin Ruane said the changes they made in April were proactive and helped the city a great deal. But having said that, he said the revenues they received from the state are better than they anticipated.
The stimuli effects of PPE and EIDLA loans is what Ruane said he did not take into account. He said there was an influx of capital that was being used to keep businesses afloat, but sales tax, state revenue and gas tax all increased because more money was injected into the economy. Ruane went on to say it was no different for the supplement given out for unemployment.
“The conservative approach that I certainly took into consideration when I asked you all to get behind the budget was for that purpose,” he said.
There was also a “massive amount that was given out through CARES,” Ruane said. “The different pockets of money that has been injected into this economy to hold it up will have a burn rate and my concern is how long the burn rate is. I’m going to guess sometime next year we are going to have a hangover.”
Another highlight Ruane spoke about was beach parking. Rather than looking back at figures in 2019, they looked at figures in 2020, which were very conservative. He said revenue in March and April was nonexistent because the beaches were shut down.
A realistic number for April, Ruane said was $4,000 that they collected in beach parking, compared to $300,000 the year before.
“We could have a favorable outcome in beach parking,” he said.
The stimulus, Ruane believes is why they have the money. He said in March and April when there was no stimulus, a $6 toll kept people from coming over the bridge.
“When you got more money than you ever anticipated from unemployment, you’ll pay a $6 toll,” Ruane said. “When that goes away you might not. Or if you have $150,000 in EIDLA appropriate, or not appropriate, sales tax is collected.”
The biggest challenge they will have is the Recreation Center.
“I don’t have anyway to solve that,” Ruane said. “We are going to have to make some tough decisions. I just don’t know what to do with the Recreation fund.”
A reality is not having the Rec Center open as many hours as they have right now because ultimately the citizenry is going to have to pay for that.
“I think if we can fit the time they use the Rec Center in a schedule, it’s better for all parties,” Ruane said.
The revenue is down about $400,000 and the expenses are running much higher even when staff is cut to the bone.
Chaipel said there is a slight bump in the 2021 budget of the Rec Center because there is no assumption the Rec Center will be closed next year. This year it was closed for six weeks.
“I don’t know if people feel in the COVID world we live in if gyms are the advantageous place to be,” Ruane said. “Everything we do is a projection and we do the best guesses. The reason I would like to have a higher number of unappropriated reserves is to give us the flexibility. I don’t want us to be in a position where we don’t have that flexibility. It gives us some covers with some conservative efforts.”
Ruane said he does not want the council to fall in love with the end balance of $400,000 because he would be shocked if it would come in at that number.
“Citizenry needs to understand we cannot have the same hours we once had at opening up at 6 a.m. and closing at 8 or 9. We just don’t have that capacity. On top of the fact we don’t have the ability to bring the staff on. I don’t have staff and the CDC guidelines are only requiring me to have more staff. The people that make the Rec Center work are the people we pay hourly. We furloughed them, so now did they find another job? Are they on unemployment? Can we bring them back?”
Ruane said he does not know what the demand would be of the Rec Center, which is why there is an uncertainty of what to do.
The final budget hearing will be held at 5:01 p.m. Tuesday, Sept. 29.