Bradenton Beach could be operating in a deficit next year.
Based on the spending plan endorsed July 15 by the four city commissioners, the city will be enacting a 9.18 percent tax increase.
The city’s 2016-17 fiscal year budget — as submitted by the department heads — was approved based on a millage rate of 2.3392, which resulted in $8,423 in unbudgeted revenue.
A July 19 letter from Manatee County administrator Ed Hunzeker put a dash on that hope.
Hunzeker informed Bradenton Beach Mayor Bill Shearon that the county recalculated its annual fifth cent local option gas tax and made a change in the distribution formula.
The city budgeted revenue of $45,600 from the gas tax, but now will receive $25,650.
The gas tax is a tax on every gallon of motor fuel, excluding diesel, sold in the county. Enacted in 2006, the tax is distributed to the municipalities to be used for transportation costs or to cover capital improvements.
According to Hunzeker, the tax distribution formula is recalculated every decade. With the recalculation, Bradenton Beach’s share was reduced by almost half, from 0.64 percent to 0.36 percent.
It’s a loss of $19,950 that, combined with the unbudgeted revenue, could put Bradenton Beach $11,527 in the hole.
Bottom line
Shearon was vocal about his disapproval of the incoming budget before the gas tax loss was known.
“We never looked at the bottom line,” Shearon said July 27. “And that’s what worries me.”
He fears the commission and department heads didn’t take into consideration all the potential projects, unforeseen costs and prospect of unpaid taxes.
“We were in a deficit last year and now, magically, we have a more balanced budget without cutting costs or raising taxes?” Shearon asked. “It doesn’t make any sense.”
To avoid cutting costs, the city is planning on moving funds from various reserve sources to pay for planned expenditures, such as police radios, the AMI SUNTrail and repairs to various streets and parks around the city.
“Everyone keeps thinking all this money is coming from a big pot but it’s not. These were line items and we keep taking away from specific projects without replacing the money,” Shearon said.
Before moving to Bradenton Beach and becoming involved in city government, Shearon worked 27 years as an independent petroleum manager.
“I used to buy up companies that did exactly what the city is doing now,” he said. “They were spending money without even knowing they were broke.”
The city is running $184,000 in the red in the current fiscal year that ends Sept. 30.
The commission voted 4-1 to approve a tentative millage of 2.3392 for next fiscal year’s ad valorem taxes — the income from property taxes. The rate is the same as last year, but rising property values result in increased revenue.
Millage is $1 per $1,000 of assessed property value. At $2.33 mills the ad valorem tax on a property valued $500,000 will be $1,165.
To avoid raising property taxes, the city must adopt the 2.14 rollback rate. The rollback rate is the millage needed to produce the same revenue as the current budget year.
At the millage rate of 2.33, the city will increase revenue by $120,127, but $90,000 was allotted for an 8 percent pay raise for city employees.
Subtracting the pay raise and lost gas tax revenues could mean the city only has $10,177 for unforeseen expenses.
Top that with commission approval of up to $70,000 for air conditioning replacement needed at the restaurant on the Historic Bridge Street Pier and the budget goes into the red.
There’s also a plan to replace the pier day dock.
“That’s estimated to be $130,000 for just one side,” Shearon said. “We want to build two docks. That’s $260,000 that isn’t budgeted.”
Shearon compared the city’s situation to that of Holmes Beach in 2015. “They were doing the same thing we were doing: Taking from their reserves to cover expenses.”
“And the only way they got out of it was to raise taxes,” he said.
The Holmes Beach commission voted to raise the city’s millage from 1.75 mills to 2.25 mills, which raised the ad valorem tax on a property valued at $500,000 from $875 per year to $1,125.
“It’s too late to do anything,” Shearon said. The tentative millage rate is due to the Manatee County tax collector Aug. 4, further dashing Shearon’s hope of increasing the millage to cover expenses.
The budget approval can take three weeks or more.
“I hope I’m wrong. I really do,” Shearon said. “Because if I’m wrong then everything will be OK.”
Bradenton Beach’s millage and budget will have a public hearing at 5 p.m. Thursday, Sept. 8, at Bradenton Beach City Hall, 107 Gulf Drive N.
Bradenton Beach
2016-17 budget
Total proposed budget expenditures: $3,080,738
Total proposed budget revenues: $2,874,911
Proposed reserve spending: $205,827
Approved millage rate: $2.33
Rollback rate: $2.14
Percent of increase: 9.18
Total assessed property value: $510,995,936
2015-16 budget
Budget expenditures: $3,000,855
Budget revenues: $2,814,336
Reserve spending: $186,519
Millage rate: $2.33
Rollback rate: $2.15
Assessed property value: $467,736,000
Budget hearing dates: First reading of millage ordinance is scheduled for 5 p.m. Thursday, Sept. 8, at Bradenton Beach City Hall, 107 Gulf Drive N.