IN YOUR CORNER


Rarely do we devote two successive columns to the same topic. We try to provide readers a wide variety of local taxpayer issues and insights. However, the City of Stuart’s fiscal problems are so severe, we must expand on our most recent column to further explain them.

Last column we criticized the City for excessive deficit spending. Upon further investigation, we find the City has run significant budget deficits every year since 2001. The deficit in 2003 was $1.2M; it will be $3.1M in 2004; and it will be $3.3M as proposed for 2005. Recently released long-range forecasts show only more red ink beyond 2005.

To put these deficits into perspective, if the City raises property taxes one mil from the current 4.15 mills to 5.15 mils, its annual revenue will increase only $1.4M. In reality, to make up the proposed deficit for 2005, the City would have to increase taxes to 6.4 mils today!

We examined the Undesignated Fund Balances, i.e. “Reserves” in the City. This is the cookie jar where funds are saved for unexpected expenses such as hurricanes, major equipment failures, etc. City policy has been to keep 3 months of operating funds on hand, or about $7,500,000 for all Reserves combined. At the end of 2003, total Reserves were $7M. A short two years later, at the end of 2005, it is projected that, if everything goes according to budget (it never does), total Reserves will be less than $3M, barely more than one month’s worth. At that point the cookie jar is essentially empty, and the fiscal chickens come home to roost.

Assuming that during the next five years property values increase 60%, personnel costs increase two-thirds as fast as the previous five years, and capital expenses decrease to 60% of the past five years, the projected deficit in the General Fund alone is $10.6M.

The reader may wonder how this disaster came to pass. We do not have the resources to conduct such an investigation. It probably deserves a full investigation by an independent outside entity, and consequences for the parties at fault. Basically, fiscal discipline crumbled in the face of regular revenue increases from multiple sources. Too much prosperity led to a lax budget process.

We can point to rapid capital spending for just about anything anyone could think of, much of it downtown. Personnel costs skyrocketed. Accounting errors and irregularities contributed. The City Enterprise Funds (utilities and sanitation) have been raided to make up deficits, transferring the cost of General Government to utility bills.

The Commissioners and the City Manager must shoulder the blame.

In the meantime, the City continues down the path to fiscal disaster with remarkably little discussion. Commission meetings are short and a majority of Commissioners apparently do not believe a problem even exists.

When double digit increases in water, sewer, stormwater and sanitation bills are followed by massive property tax increases; the public will fully understand the magnitude of this debacle. Permits and fees will be increased. If nothing else, we can look forward to bigger bills for utility services this coming year, and the first big property tax increase next summer.

The City desperately needs a new police/EMS station. A referendum will be on the ballot August 31. It will call for an immediate increase in property tax of .5 mils to pay the $8.3M cost. Voters may well ask themselves whether the present Administration can be trusted with their money.

Unless the City addresses its fiscal problems right now, this budget year, we would have to say, “No, this Administration cannot be trusted with the citizens’ money”. On the present course, within three years, citizens may well be discussing whether they can even afford to have a City.