City staff identifies preliminary budget challenges

The City Commission will take one of its first looks at the budget for fiscal year 2021-22 at a special meeting today, beginning the process of sorting through a series of preliminary challenges staff has identified.

In total, city staff has forecast a $1.53 million hit to the general fund and parks and recreation fund as compared to the current budget, and it is asking the commission to provide guidance at Thursday’s meeting.

Of the new expenses staff has identified, $1.92 million is tied to the resumption of some activity that was frozen to save costs during the COVID-19 pandemic. The city plans to resume funding for 14.5 positions that were put on hold in 2020 or 2021, including three jobs in the parks, police, finance, engineering and maintenance departments. The city also intends to resume its equipment-replacement program.

The city’s budgetary challenges extend beyond the effects of COVID-19. Since 2018, officials have discussed strategies for covering the costs of managing seven city-owned parks that Sarasota County previously operated. When the county and city struck a new parks agreement in 2018 at the county’s behest, the county agreed to provide three years of funding for the parks it handed back to the city to manage. Because 2021 was the final year of county payments, the city must now deal with the loss of $882,000 in parks funding.

The city created a parks and recreation taxing district in 2018, a mechanism officials intended to be a tool to help manage parks funding. But establishing a new dedicated tax rate for the parks district requires a unanimous vote of the City Commission, and Mayor Hagen Brody has repeatedly opposed the prospect of a parks tax. As a result, the city has continued to fund parks operations via general fund revenue.

Projections suggest most of the new costs can be covered via the unassigned balance in the general fund. After accounting for federal emergency funding, the city anticipates it will end 2021 with a balance of $24.7 million — $1.5 million more than at the beginning of the fiscal year. That fund balance could cover all but $29,135 of the negative impact on the 2022 budget staff has identified.

Documents included with the agenda for today’s meeting indicate the city’s projections are based on the use of the roll-back millage rate, which is the rate at which the city would generate the same amount of property tax revenue as it did in 2021, new construction excepted.

Although the city has received emergency funding and the state has lifted most restrictions related to COVID-19, City Manager Marlon Brown said the pandemic continues to dampen revenue projections. At a March meeting, Brown said staff will continue to take steps to limit the city’s financial commitments in the proposed 2022 budget, including not allowing any department to request the creation of new positions.

“We’re going to try our best to keep everything neutral,” he said.