Pasco preparing for COVID’s negative effect on revenues, budget

During recent budget discussions, Pasco County Commissioner Mike Wells expressed his opinion that county employee raises should remain 3 percent instead of dropping to 2 percent this year.

NEW PORT RICHEY — Like plenty of other government bodies across the country, Pasco County is preparing for its fiscal worst-case scenario.

Budget talks will intensify in the months moving forward and county commissioners received a quick peek behind the curtain June 30. Budget Director Robert Goehrig provided the not-so-rosy snapshot toward the end of the first of two meeting sessions June 30, opening with a slide that depicted past economic impacts of the Great Depression and Great Recession and current projections in the age of COVID-19.

“We’re expecting the state of the economy to be at least as bad as it was during the 2007-09 Great Recession, so we’ve built our budget to reflect that,” Goehrig said, speaking remotely via video.

According to Goehrig’s presentation, the peak national unemployment rate during the Great Recession was about 13%. The unemployment rate as of April was listed at 14.7% and is projected to reach as high as 20%. The total decline in gross domestic product during the Great Recession was 4.3%. That figure was estimated to be around 5% as of March and may soar as high as 37%, according to government estimates.

In comparison, the total decline in GDP during the 43-month Great Depression was reported at 26.3%, with peak unemployment rates being about 25%.

“Just as the pandemic has a negative impact on the private sector, it also has a negative impact on the revenues of the county,” Goehrig said.

“Based on March and April numbers, we calculated a worst-case scenario. In the general fund, the worst-case scenario in 2020, we might lose as much as $14 million from the loss of sales tax revenues.”

Goehrig provided examples of tax revenue declines, such as a 12.9% drop in the half-cent sales tax, from about $3.1 million in pre-COVID years to about $2.7 million now. Penny for Pasco revenue dropped 17.6% , from about $2.6 million to about $2.2 million.

Goehrig provided projections released by the Office of Management and Budget that estimate national revenues may return to pre-COVID level within 18 months.

Because of projected reductions in revenues for an extended and unknown period, Goehrig proposed a drastic cut in business plan initiatives. Of 115 suggested initiatives, only 11 are recommended to be continued this fiscal year. Those include the opening of the Starkey Library and Starkey District Park contractual obligations.

Another of those initiatives is a 2% pay raise for county employees that keeps pace with inflation. The annual raise is typically 3% and Commissioner Mike Wells said he’d like to see the county keep it that way.

“The state’s doing 3%,” Wells said. “I believe almost all the constitutionals are doing 3%. There is nothing more important on this budget instead of taking care of our folks. We have to take care of our team. I would like to see that be 3%; I think that’s an extra half-million to the budget.

“I know we’re in a tough spot and I know it’s a tough time. I wasn’t here back through the recession when employees went four or five years without any raises."

County Administrator Dan Biles reiterated that the figure was adjusted to 2% because it matches the inflation rate, which was about 2.1% last year. “And we also wanted to be mindful of what is going on in the rest of the community as well, which is why we stated that number,” he said.

Commissioner Kathryn Starkey backed the decision to cut back at this time given the current state of the economy and the uncertainty that lies ahead.

“I appreciate our staff very much, but I agree with what the administrator is doing,” Starkey said. “I think we’re kind of known as a conservative county. … I think our benefits package is excellent and I feel we’re taking really good care of our employees. I’m OK with the 2% for this year and, if things get better next year, back up to 3.”

Chairman Mike Moore directed staff to look into the topic further as budget discussions continue.

The next scheduled regular county meeting is Tuesday, July 14.