For local governments, balancing budgets in an era of fiscal stress can be like playing Whac-A-Mole.
Pound out a solution to one revenue hole, and an unexpected expenditure pops up. The only option is to continue beating away until the buzzer blares Oct. 1, when the new budget takes effect.
So it is with the New Port Richey City Council, which learned Tuesday that there are solutions to plug an $800,000 deficit in the city's proposed $16 million general fund , but it will take luck and timing to do so without raising millage rates.
The three-and-a-half hour presentation on the 292-page spending plan rehashed old quandaries while introducing several new potentially significant problems, including an unanticipated $400,000 annual bill from Pasco County, starting next year, to treat and store used water.
Meanwhile, two new revenue sources – traffic light cameras on U.S. 19 and cell tower leases – could provide enough income to offset declining property tax revenues to balance a spare, no-frills budget for at least the coming year.
Regardless, as things stand now, the city plans to withdraw $500,000 from its "designated" reserve account, and another $309,000 from its "undesignated" reserve account, to balance its proposed FY12 budget.
The bottom line, Deputy Mayor said as he propped duct tape and baling wire on the table before him, is it's an "ugly" budget.
"It really is. We have some tough times ahead for us as a city," he said. "We are, literally, going to be sticking this thing together."
The preliminary budget calls for a .2840 increase in property tax millage, from this year's 8.1037 levy to 8.3877 in FY12.
One mill equals $1 for every $1,000 in a property's taxable value. The hike would amount to a $28.40 increase in city property taxes for a home valued at $100,000 last year and this year, improbable considering the city's composite assessed property value this year – the fourth consecutive year of citywide property devaluation.
The proposed 8.3877 mill rate, although the city's highest levy since 1978, is a roll-back rate designed to generate the same amount in property tax revenue from year to year, regardless of how much land values go up or down, City Finance Director Douglas Haag said.
The council is expected to set a preliminary 8.3877 mill rate at its meeting Tuesday. By state law, the rate can go down before the final budget is adopted Sept. 27, but it cannot go up.
Despite trimming more than $1.106 million in expenditures, the proposed $16.026 million general fund budget is $325,000 more – or 2 percent higher – than this year's $15.736 million budget.
One reason for the increase is a $280,000 increase in police and firefighter pensions. Another is a $540,000 spike in salaries and expenses for 18 employees that the general fund must absorb because the city's redevelopment agency doesn't have the money to do more than pay $2.1 million in debt obligations in the coming year.
Two years ago, said, the CRA's redevelopment fund actually contributed "$2 million plus" annually to the general fund. By FY13, he said, the general fund may have to directly subsidize it.
The proposed budget includes an anticipated $1.2 million in revenue generated by tickets issued by traffic light cameras at four U.S. 19 intersections in the city.
Earlier this year, the city agreed to pay American Traffic Solutions $4,750 a month for every three-lane intersection where it installs a traffic-light camera. Arizona-based ATS has similar pacts with about 60 Florida cities and counties.
In early July, New Port Richey Police Chief Jeffrey Harrington said the city plans to contract with ATS to install two more traffic-light cameras on U.S. 19 in the city's south end.
Harrington said studies indicate that each traffic-light camera can generate about $500,000 a year, although it is uncertain what that will mean in New Port Richey.
Haag said the program has been officially in effect for less than a month, so the $1.2 million in anticipated revenue is just a preliminary estimate.
Regardless, Schneiger said, without the anticipated income from traffic light cameras, the city's proposed budget would be even tighter.
However, any money from the program "could disappear next week," Marlowe warned, in the wake of a June decision by Broward County Judge Fred Berman, who ruled the difference between fines issued by the cameras and those from police officers is unconstitutional.
By state statute, fines generated by traffic light cameras cost offenders $158, while those issued by police officers carry a $261 fine, plus four points assessed against the driver’s license.
While the ruling is being challenged by the state and only applies to municipalities in the 17th Judicial District, there is no guarantee that a judge in the 6th Judicial District, which includes Pasco County, won't issue a similar decision.
"If that happens by Oct. 1," the city's budget would be in big trouble, Marlowe said.
"Scary," Councilman agreed.
City Attorney Mike Davis declined to comment on the Broward County ruling, other than to say, "We're keeping an eye on it."
While $1.2 million in projected revenue from traffic light cameras is incorporated into the budget, there is no similar inclusion for income from cell tower leases, although such a prospect is increasingly likely.
In April, the council reviewed a to lease up to eight city-owned sites to Collier Enterprises II LCC of Tampa, to erect 150-foot cell towers.
The agreement could generate up to $360,000 annually for the city.
Initially, the plan was to present the council with one ordinance to create a uniform lease agreement that could be easily approved after a public hearing.
However, Davis said, it will be best to have individual leases for each proposed agreement because some sites have restrictions on how they can be used, especially if tax-free municipal bonds financed their purchase or subsequent improvements.
"There are only a couple" of sites with such restrictions, Davis said, noting the city is negotiating "about a half a dozen" lease agreements with Collier Enterprises.
"We expect to have one shortly" for the council to review in a public hearing, he said.