Inflation, low unemployment and the prospect of rising interest rates are key considerations, as Pasco County prepares its budget for fiscal year 2023.
“We’re expecting taxable assessed values to be at or near what they were last year. You can see the taxable assessed values for ’22 — this fiscal year — was 10.8%,” Robert Goehig, budget director for Pasco County, said during the Pasco County Commission’s Feb. 22 meeting.
“I’ve been in local government for a long time. I’ve never seen the taxable assessed values that are this high and that have been assessed at this high level for a long time. So, we want to prepare for the inevitability that they are not going to be at that level forever,” Goehig said.
While revenues are expected to be up in some categories, expenses are expected to increase, too.
Goehig identified some key drivers to higher expenses:
- Medicaid, expected to go up $300,000 to $400,000
- Employee health care, an increase of minimum of $500 per budgeted FTE (full-time equivalent)
- Property insurance
- Workers compensation insurance
- 4% negotiated firefighter wage increase
- Pay and classification study
- Capital needs and maintenance
- Rising fuel costs
- Opening of two new fire stations
- Higher costs for vehicles and construction
- Increasing expense for indigent burials and cremations
The budget director’s remarks came before news broke regarding the Russian invasion of Ukraine. The war, of course, could affect the world economy, as well as the local fiscal picture.
Still, at the February meting, Goehig provided a briefing to the county board regarding the current situation and how the county plans to proceed with budget planning.
The county needs to pay attention to increasing costs, he said.
“As you can see here, the unemployment rate is at an all-time low and it has remained at an all-time low in the Tampa Bay region, Pasco County included, for the past couple of years,” Goehig said.
Nationally, at this time the unemployment rate was 6½%, while it was 3½% in Pasco. It remains at 3½% locally.
“With that low unemployment and with that very high demand for employment, that’s going to cause wages to increase,” Goehig said.
The employment cost index, which measures all compensation, not just wages, has increased by 4%.
At the same time, the rate of inflation is at 7.5% nationwide and 9.6% in Tampa Bay.
The region’s inflation rate is the highest it has been for 40 years, Goehig said.
“It’s always higher in Florida than it is throughout the nation, but that gap is much wider than we would expect,” he added.
As the county considers wages, Commissioner Ron Oakley wants to be sure that it addresses the differentiation in pay rates between highly experienced employees and those less experiences. He said thinks there needs to be a bigger gap between those pay rates.
County Administrator Dan Biles said a wage study will address pay issues.
The cost of doing business also is going up because of inflation, Goehig said.
He attributes rising inflation to a combination of the federal government pumping money into the economy through American Rescue Plan funds at the same time there are supply-side issues because of the pandemic.
“We have a lot of money chasing too few goods,” Goehig said.
The Producer Price Index also increased 9.7% over the past 12 months, he said, including an increase of 87% for the cost of construction materials.
“That is insane,” Goehig said. “Anybody who has been out trying to buy a 2-by-4 recently can feel the pain of that 87%.”
The cost of housing also has gone up, with Pasco home values increasing by 25% to 30%, he said.
Interest rates, which are expected to increase, will affect impact the county’s long-term taxable assessed values, the budget director said.
Once those interest rates hit 4% there will be fewer people in the housing market, which will have an impact on the county’s budget because of a decrease in taxable assessed value.
But that impact won’t be felt immediately, Goehig said, because once a house is permitted, it takes about two years for that house to show up on the tax roll.
“Moving forward, we’re optimistic about the future, however, we do want to keep in mind that it’s important to maintain the level of service that our customers have come to expect, and given the rate of inflation and the increase in wages, just maintaining that level of service moving forward is going to be more and more expensive.
“We don’t want to bring on additional costs now that we may not be able to sustain in the future,” Goehig said.
Pasco County Administrator Dan Biles put it this way: “This isn’t going to be a year when we see a lot of new initiatives, just because we’re trying to maintain our level of service across the enterprise.”
The county board is scheduled to have a budget workshop on May 24.
Pasco budget considerations for 2023 fiscal year
- Taxable assessed values expected to rise by 10.8%
- Higher values are expected to yield $27 million in additional revenues
- Low unemployment rate will translate into higher wage costs
- Inflation in Tampa Bay area at 9.6%, outpacing national rate of 7.5%
Source: Robert Goehig, Pasco County budget director
Published March 02, 2022
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