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Monday, Jul 28, 2014

Economic turnaround drags on in Pinellas


Published:

CLEARWATER — Property taxes may be going up and the unemployment rate falling, but the financial forecast for Pinellas County government remains stubbornly downbeat.

County officials are projecting they will have to make up a $4 million shortfall in 2015, despite a projected 3 percent increase in property tax revenue and a 4 percent increase in sales tax collections.

They will also have to plug a $3.4 million deficit in the county’s EMS system, which could mean clashes with local cities that have opposed reductions in the county’s 911 system.

The sobering news comes in the midst of signs that the county’s economy is on the rebound. The unemployment rate in Pinellas is down to 6 percent, its lowest level since June 2008, and tourists in 2013 contributed a record $31.1 million in bed taxes.

But county economic analysts fear that the high number of foreclosed properties will dampen growth in the real estate market and the local economy. Lenders foreclosed on more than 6,100 homes in 2013, roughly 3,000 less than in 2012 but still a cause for concern, county officials said.

“The slow recovery we are experiencing at this point will continue for the next three or four years,” said Jim Abernathy, a county senior financial management and budget analyst.

The forecast, presented at a county commission workshop Tuesday, was the first indication that commissioners may face further tough decisions before finalizing the county’s 2015 budget by Sept. 23.

Clouding the picture further is a possible housing crisis stemming from soaring flood insurance rates. The federal Biggert-Waters Act is intended to tackle the $20 billion deficit in the nation’s flood insurance program, but Realtors and local politicians fear high premiums will affect property sales.

County officials said any slump in home values because of premium hikes will not be felt until the 2016 fiscal year, but county commissioners remain concerned.

“We’ve got reserves in both EMS and general funds we can tap,” Commissioner Ken Welch said. “Beyond that, it’s the uncertainty of the flood insurance issue — that’s the major unknown for the forecast.”

County officials are hoping that shorter shifts for some first-responders will produce savings to bring its EMS fund back into the black. The change in working hours was the main recommendation from a $300,000 EMS study by Fitch & Associates, but has yet to be agreed upon by other cities in Pinellas.

“They know we have a gap; they know the Fitch model when translated can result in a balanced budget,” County Administrator Bob LaSala said.

Commissioners did not discuss how to make up any deficit this year, but with a referendum looming in November on raising the sales tax to pay for expanded transit, they may be reluctant to raise property taxes as they did in 2013 when facing an $8.3 million shortfall.

Then they raised the general fund property tax rate by 5 percent. That was despite a despite a 3.4 percent increase in property taxes, the first in five years. The budget included a pay raise of roughly 2.8 percent for county employees.

Welch said he will want information about the effect of the flood insurance hikes before making a decision.

“Any decision we make this year has to be made with the knowledge that the next few years could have some big swings with flood insurance,” Welch said. “We’ve gone to back to uncertainty.”

codonnell@tampatrib.com

(727) 215-7654

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