Mid-year county revenues exceed COVID-19 expectations

As leaders head into budget season, they are learning that county earnings are not as low as projected. 

 Sean Snaith, the director of the Institute for Economic Forecasting at the University of Central Florida, told County Commissioners last week Florida is seeing something of an economic resurgence as the state begins to see tourism and optimism return.

“We’re kind of experiencing pent up demand squared because there’s traditional uncertainty and then everyone’s been kept up in their homes, so there’s a double desire to return to normal.”

Sean Snaith

Economist at University of Central Florida

Snaith said the national debt had surpassed a trillion dollars before COVID-19 hit and has steadily continued to rise to its current rate of $28.3 trillion. The increased debt could mean local governments experience pressure on interest rates and a general lack of consumer spending. 

However, he said spending in 2021, particularly in Florida, should begin to increase due to pent up demand. 

“We’re kind of experiencing pent up demand squared because there’s traditional uncertainty and then everyone’s been kept up in their homes, so there’s a double desire to return to normal,” Snaith said. “Many who are tired of being locked up decided, ‘We’re traveling as a family and friends,' which is an indication of pent up demand.” 

During spring break, the county saw 145,600 visitors who stayed in paid accommodations, with hotels reporting an occupancy rate of 91.7% at an average of $231 a night. 

Those numbers were reflected in the county’s collected Tourism Development Tax. The TDT is a 5% tax on all hotel rooms and residential unites rented for six months or less.  Taking the pandemic into consideration, the county anticipated a collection of $9.7 million at mid-year. However, to date, the county has collected $12.7 million, a 31% return over the estimate. 

The infrastructure surtax has collected 2.1% better than budgeted and combined utility revenues have collected 10% more than was budgeted at the mid-year review. 

The half-cent sales tax and FPL franchise fees are both up as compared to budget, at 2.4% and 5.5%, respectively. 

“When we were in the budgeting process last year, we still didn’t quite know where we were going to be as it related to COVID-19 and the economic impacts as a result of that,” county administrator Jonathan Lewis said. “So this is good news.” 

However, some metrics are falling short. The communications services tax is off budget projections by 6.6% and state revenue sharing is down by 2.7%.

An unexpected loss, however, came in the form of ambulance fees, which are down 9.4% compared to the projected rate. Director of Financial Management Kim Radtke said the shortfall was attributed to fewer people calling for assistance in less-than-emergency circumstances. 

All told, the county's revenues exceed budget expectations by approximately $525,000 with mid-year spending at or below expectations. The county 

"We took a very determined approach at the beginning of COVID to not just make cuts but also make pauses,” Lewis said. “We continue to monitor that as we go forward.”

The county also was able to secure $122.8 million in grants to help offset several costs it faced during the pandemic. The county is awaiting approval of another $94.2 million.  

The improvements mean that the county will be in good financial shape when it comes time to finalize a budget for fiscal year 2022. 

Already, the county is projecting about $320 million in fiscal year 2022 and just over a half-billion to through fiscal year 2026 to invest on capital improvement projects throughout the county. 

In fiscal year 2022, the county has approximately 85 capital improvement projects planned, the largest of which include improvements to fire stations and the addition of a regional fire training academy, jail facility renovations, a remodel of the R.L. Anderson Building and continued upgrades to the county’s wastewater systems.