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St. Pete eyes $10 million revenue shortfall

Margie Manning

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The first estimates are in for how the Covid-19 crisis will impact the budget for the city of St. Petersburg.

Expenses will be higher than projected and revenue will be lower than expected for the current fiscal year, which ends Sept. 30, Liz Makofske, budget and management director, told the City Council Thursday as she reviewed second quarter financial reports.

Expenses are expected to be about $6.1 million over budget, while the city is projecting a revenue shortfall of about $10 million. Revenue will be impacted by declines in taxes – including sales, utility and franchise taxes – as well as by charges for city services.

“We are estimating that the loss of revenue in the general fund due to the current pandemic can be absorbed by the general fund’s fund balance. We do not anticipate having to dip into the economic stability fund at this time,” Makofske said.

The city is now projecting revenue of $276.6 million for the current fiscal year, and expenses of $291 million, with the general fund balance — a kind of cushion built into the city budget —  covering the gap.

The numbers are only projections at this time, Assistant City Administrator Tom Greene told council members.

“We tend to proceed conservatively. We still have six months left of this fiscal year and there’s time for us to make additional progress,” Greene said. “We instituted a hiring freeze. That’s one of the biggest steps we can take to manage expenses. We’ve asked administrators and directors to look at their budget. We know, based on the current activity, that there are some expenditures we won’t spend. We won’t be traveling, going to trainings, so we’re going to see reduced expenditures. We’ve asked department directors and administrators not to redeploy those savings into other priority investments but to capture those savings. Absolutely, we’re managing this real time on a daily basis, and we’ll continue to keep our foot on the pedal when it comes to looking for savings opportunities.”

St. Petersburg has not had to furlough public safety workers, like some other cities have done, said Deputy Mayor Kanika Tomalin. She credited the city’s fiscal stewardship.

“We consider ourselves in a good financial position and we’re grateful we’re able to maintain financial strength, even in this trying time,” she said.

The city is in good financial shape, Council Chairman Ed Montanari said, but he added he sees the trend lines.

“We are heading into a period of uncertainty and I want to stay on top of things,” Montanari said.

Closer look: Why sales taxes matter

Revenue from sales taxes are projected to be $2.6 million lower than budgeted for the city of St. Petersburg for the rest of the current fiscal year.

Sales tax collections throughout Florida are largely dependent on activities such as going out to eat, buying new clothes or investing in the latest electronics, appliances and cars. But consumer spending came to a virtual standstill over the past two months, as people were urged to stay at home to slow the spread of the virus, a report from the Tampa Bay Partnership said.

Statewide, sales taxes provide the single largest source of tax revenue, at $29.3 billion. That’s about 79 percent of the Florida budget.

Businesses in the Tampa Bay area remitted about $9.8 billion in sales taxes to the state between January 2018 and December 2019, the Partnership report said. Taxes from auto dealers make up 18 percent of the total, while general miscellaneous merchandise stores account for 12 percent and restaurants contribute another 11 percent to the total.

Source: Tampa Bay Partnership

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1 Comment

1 Comment

  1. Bob Griendling

    Bob Griendling

    May 15, 2020at7:01 pm

    What is “balance”?

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