Saturday, June 4, 2011

It (Florida) is going to get ugly

Dear ______,

Here are the best answers to your questions I can come up with.  They’re based upon my understanding of the law and the accounting processes used at the District but may not be precisely correct since I’m neither a lawyer nor a CPA.

1.  Can the District "generate/fund/tax" projects on a "basin by basin" basis?

Ans.:  Legally, yes, but this is what they are saying is so inefficient that they’ve fired all their basin board members and are moving the tax decisions normally made by the basin boards to the district’s governing  board.  No longer will local citizens be able to set the tax levy for the projects of their choosing.  Further, in order to not lose the .5 mil taxing authority that the Legislature has parceled exclusively to basin boards within SWFWMD, the district is saying it will continue to levy the basin tax at the governing board level.  Frankly, there may be some intentional obfuscation here.  This is how they responded to a reporter’s questions:

“… the District was going to continue to levy the Basin Board millage rates without the Boards meeting to vote on their millage rates. Staff explained that the budgets of the Basin Boards were rolled (??) into the Governing Board. The District will be setting the millage rate in order to achieve the $107 million ad valorem cap. Although we won’t know what that millage rate is going to be until we receive the certified taxable property values from the property appraisers in July, it could be somewhere around .41 mill. As a result, residents will see a savings on their property taxes.”

I’m not clear how they’re going to reduce the levy on property owners just by “rolling” ( I think they actually mean combining) the basin tax with that of the governing board.  The reduction to the taxpayers is more likely due to the 36% tax revenue cutback mandated by the Governor and legislature.

2.     What kind of financial information does the District have these days that are tantamount to a Balance Sheet"? and,  an "income and expense statement"? Can I get these on line?

Ans:    It may be there somewhere but I could not find online a report that depicts the status of the district current income vs. its current expenses or something similar to a balance sheet, although I know these numbers are tracked closely internally.  However, you might look HERE ([1].pdf) to see what its anticipated revenues are for the fiscal year 2011. 

The District’s total budgeted anticipated revenues from all sources for 2011 is $279,807,363Of that amount, The district’s current tax levy (0.3770 mil) is expected to generate $131,852,163 and the basins all together will generate $122,159,462.  The basins’ taxing millage rates range from 0.0 for the Green Swamp basin (because the governing board levy absorbs those costs) to 0.26 mil for the Pinellas Anclote Basin.

So … before the 36% reduction is applied, the unavoidable conclusion is that $122,159,363 formerly levied by local basin boards for local basin projects will in the future be levied by a regional board controlled, de facto, by Tallahassee.  Additionally, these revenues will be levied uniformly across the district causing taxes from a low maintenance basin to be spent in other basins where maintenance and program expenses are higher thus violating a 50-year trusted mechanism put in place specifically to prevent just that from happening.

3.     Are any of the "basin projects" funded with debt? or, have they been funded with cash on a current basis?

Ans.   The latter.  The district has wisely never incurred debt though often tempted.   The first time occurred when the district was given the unfunded mandate to assume the state water quality regulatory programs pursuant to the Warren S. Henderson Wetlands Protection Act in 1984, found in Sections 403.91 - 403.929, Florida Statutes (F.S.).  The district was forced to enlarge its headquarters office in Brooksville to house the greatly expanded staff administering the act would require.  The second time occurred when the district was mandated to purchase lands under the Preservation 2000 and Florida Forever Act (§259.105, F.S.) (nationally heralded environmental land acquisition programs).   More land could be bought quicker, and debt amortization revenues theoretically would be generated from a state trust fund created by revenues from the Documentary Stamp Tax on private land transactions.  Other districts did borrow funds for these purposes and may still have debt obligations.

4.     What kind of cash does the District have to fund its requirements? 

Ans:   In short, I believe the district has ample funds available to fund its core programs but those programs are being greatly reduced or have been subsumed by unfunded state mandates.  The SWFWMD and SFWMD districts have been asked to reduce large cash reserves thay have on hand and reduce millage rates.  The reserves at SFWMD to the south, however, are said to be needed to meet the its local portion of the Everglades Restoration program.  The reserves at SWFWMD are, I’m told, mostly to provide matching dollars for local water supply and other water management programs.  Due to the inability of the local governments to match district funds because of crashing property valuations, however, this reserve is probably larger than it should be and can be reduced.  This cost-sharing program has been highly valued by local governments and the district because, instead of having to require locals to meet statutory-based water management standards through regulation, it’s a program that uses cash incentives to generate positive support for a project that will accomplish the same objective.  Not only do they want to do it but they get help doing it  Thus, a win-win.  The program, however, will most certainly now have to be significantly reduced because of Tallahassee mandated cutbacks.

As an aside, the more I get into this the more it's apparent the districts are being squeezed into a no win position.  On the one hand, Tallahassee has inundated the districts over the years with unfunded mandates that push the high cost of such programs onto the backs of private property owners.  On the other, the district's ability to fund what they've been mandated to do is being taken away.  What Tallahassee should do is return those programs back to DEP and leave the water management districts to their core missions, if anybody can figure out what they might be these days.  Of course, we all know this will never happen because the impact on the state budget would be huge and not politically doable.  But, should it happen anyway, these programs, which are critical to Florida's future, will simply be done away with just as what happened this past session to the growth mangement laws which were developed over the last 30 years. 

Stay tuned, I fear it (Florida) is going to get ugly.

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