'Penny' Figures Back Grim Outlook Seen for Largo Finance
By Leo Coughlin
LARGO - In what apparently is an attempt to blunt the effect of the memo put out by Commissioner Curtis Holmes about financial matters in Largo, the city manager issued a letter to the City Commission last Thursday attempting to clarify what funds the city will get from "Penny for Pinellas."
That is the popular name for what officially is the Local Option Sales Tax, an extra penny imposed on all purchases in Pinellas County. The tax, first begun in 1990, is entering its third 10-year phase.
Holmes issued on June 30 to his colleagues and city officials his views on a worsening financial situation for the city in the context of the budget discussions for fiscal year 2011 coming up in August.
One concern expressed by Holmes in his memo, reported in this newspaper July 1, was the Penny for Pinellas funds. "I think we're over committed (borrowed) on the LOST revenue."
Holmes cited projected Penny for Pinellas income to Largo as low as $55 million to $60 million over the next 10 years.
City Manager Norton Craig's letter dated July 8 to the City Commission appears designed to rebut this observation by Holmes.
Craig wrote, "The purpose of this memo is to share with you Finance Director (Kim) Adams comments regarding Sales Tax Fund projections. There seems to be some confusion as to how much of the fund has been committed and what is left in reserve.
"The latest information indicates that the projection for Penny Three (2011-2020) is approximately 72 million dollars programmed for the City of Largo."
Craig did not reveal from where he got his figure of $72 million. All the projected figures are guesswork at best because, given the severe economic situation and the fact that future revenue will be impacted by loss of tourism because of the Gulf oil spill, there is no certainty in any figures.
Even the best forecasts for revenues at the county and state level have not factored in the possible catastrophic loss of tourism dollars. And tourism dollars account for much of Penny for Pinellas funds.
What is intriguing is to look at existing, real figures and contrast them to what Craig and Adams, whose July 8 memo to the commission supplemented Craig's letter, assert.
Largo collected $61,186,252.10 from Penny for Pinellas in the 2001-2010 period. All but the last two years of that span were fairly prosperous.
It is hard to believe that given the bleak economic outlook and the concomitant falling off of revenue that Largo is going to get 17.6 percent more in LOST revenue in the next 10 years than it received in the last 10.
The county itself paints a dismal picture. It points out that "Originally, the LOST fund was expected to bring in $1.9 billion" in the 2011-2020 phase. "But because of the severe downturn in the economy, a drastic decrease in revenue is expected." And that statement does not factor in the oil spill impact.
County estimates indicate a 12.26 percent drop in revenue from the original $1.9 billion forecast. Obviously, any decrease would be across the board, affecting the county and all municipal jurisdictions more or less equally, so it is absurd to imagine that Largo's share of LOST funds would go up by 17.6 percent, according to Adams, while the county and everyone else went down by 12.26 percent.
A decrease of 12.26 percent would mean a $7,503,366 reduction for Largo off its 2000-2010 income. That brings the total over the next 10 years to $53,682,886, far from the $72 million Craig and Adams are talking about.
According to Adams' July 8 memo, he lists spending derived from Penny for Pinellas (LOST) funds at $57,700,000, greatly in excess of what could come in. Adams cites $25,000,000 for vehicles, $11,700,000 for the Community Center, and $21,000,000 for the Highland Recreation Center, a project for which the original figure of borrowing given was $15,000,000.
Amazingly, while Adams in his memo lists the outlays as just given here, he says in the memo that the projected costs for "the above projects is $50 million - $53 million," which means that he did not read his own memo or that there is an arithmetic deficiency, not too good in the case of a finance man.
Using the erroneous figures based on his own language, he then brightly goes on to say that $20 million would be available over the next 10 years for other projects, sticking, obviously, to the $72 million figure he and Craig seem to believe.
Again, all the figures, from whatever source, are guesswork in terms of revenue. But what Largo has committed to borrowing is cast in stone, absolute obligations.
In looking at Largo's FY2011 budget which has just been submitted by Craig, in the LOST fund department he lists as supplemental to the fund "grants and donations" of $1,145,400, a phenomenal figure of mysterious origination.
Budget figures list $81,815 in grants and donations in 2009 and $425,000 in the current year. None is listed in outlying years.
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