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Policy governs reserve spending

A new fiscal plan will split the county's unanticipated revenue into three accounts for emergencies, capital projects and tax relief.

By WILL VAN SANT
Published February 13, 2005


BROOKSVILLE - Since taking office in 2002, county Commissioner Robert Schenck has been a firm advocate of restraint in government spending.

Last year, he attempted to get approved a plan that would bar the commission from passing a budget that exceeded 95 percent of anticipated revenue. Under the plan, revenue over the cap would go into reserves and set the stage for property tax reductions.

The idea went nowhere.

But last week, the commission unanimously approved another fiscal policy that Schenck brought forward - one that has a different approach but seeks to achieve similar goals. Although residents will feel no immediate impact, the new policy could have far-reaching effects for taxpayers in years to come.

Under the plan, unanticipated revenue, which is money brought in during a year that exceeds the approved budget, would be placed in three reserve accounts. Forty percent would go into an emergency account to pay for such things as storm cleanup. Forty percent would go to a capital projects account to pay for new buildings and other infrastructure. The remaining 20 percent would be set aside to allow for property tax reductions.

Annual unanticipated revenue over the last five years has averaged $1.5-million, said George Zoettlein, director of the Office of Management and Budget. The figure fluctuates considerably, he said, and has been as low as $589,000 and as high as $2.5-million.

Budget officials said the money previously had been plowed back into the general fund reserve account or used to cover unforeseen expenses but had not been earmarked for specific purposes until now.

Both Zoettlein and County Administrator Gary Adams, who backed Schenck's plan, are wary of supporting any tax cut in the 2005-06 budget, which is being developed. The idea is to let the property tax relief account fatten until modest reductions are possible without causing budget shock.

An eventual trim of one-tenth of a mill from the millage rate of 8.4204 is one possibility that has been discussed. A single mill represents a $1 levy on every $1,000 of assessed, nonexempt property value.

Under current projections, such a cut would result in $650,000 in lost revenue to the county. It would save a homeowner whose house is valued at $100,000 and who has a $25,000 homestead exemption $7.50 on his tax bill. That savings, however, could be negated by property value increases.

Officials acknowledged that the possible cuts are modest. Also, because the relief account would have to be replenished once it was used to cover the cost of a cut, the property tax reductions would not be permanent but single-year trims. Some years, the tax rate might dip slightly, only to go back up again.

Still, Schenck said, that's progress.

"I'm happy that we took a strong step, one that in the future will allow for tax relief," he said. "That's certainly better than what we had in the past."

According to the new policy, a decision on whether to recommend a tax cut to the commission for approval will be made by the county budget director and the county administrator. A simple majority of three votes would be needed to pass any cut. Change to the actual structure of the new policy, however, would require a super majority, four votes of five.

Zoettlein has been tireless in trying to get the commission to beef up reserves in the county's general fund, which is fed by property taxes and pays for the general operations of government. One key function of the reserve is to keep government operating from Oct. 1, the beginning of the fiscal year, to December, when residents start to pay tax bills.

Emergency spending during the period could cause problems, and Zoettlein wants to see his reserves closer to $20-million rather than the current $17-million. He greeted Schenck's plan with enthusiasm.

"It helps me out," Zoettlein said. "As a budget person, I would much rather put it in reserves. I have always said that."

One critical area where the new policy could produce big dividends for taxpayers is in the construction of new government buildings and infrastructure. Last year, residents defeated a half-penny sales tax referendum that would have generated $70-million for such projects over 10 years.

As a result, the commission has had to continue issuing bonds for capital projects, which saddle taxpayers with debt for years.

As of September, the county owed nearly $119-million in bonds and more than $110-million in interest on the debt. The county also owed more than $6-million in loans with interest of more than $500,000.

The infusion of unanticipated revenue will actually go into an existing capital projects account that was created last year at the urging of Commissioner Nancy Robinson. That account now holds about $500,000. Robinson pointed to creation of a steady revenue stream to feed the account as a critical part of the new policy.

"Pay as you go is the way to move forward," she said. "The more that you have in long-term capital savings, the less you are going to have to bond and the less taxpayers are going to have to pay in debt."

Perhaps just as important as the impact the new policy will have on county spending is the message it sends to taxpayers. Robinson said it shows that the commission is taking concrete steps to be fiscally responsible.

Should the county again go to voters seeking a sales tax increase, she said, that show of good faith could be important.

"It will give the county a proven record of prudence," she said. "It gives the board more credibility."

Will Van Sant can be reached at 352 754-6127 or vansant@sptimes.com

[Last modified February 13, 2005, 01:07:16]


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