Sales tax lag prompts Dunedin to pare Penny capital project plans
DUNEDIN -- The city is paring down its list of capital projects in hopes of warding off a projected deficit of nearly $7.8 million in expected Penny for Pinellas funds by the time the sales tax program ends in 2020.
Since 1990, the Penny program has distributed revenues from a 1-cent sales tax among cities and the county to reduce reliance on property taxes to pay for capital improvements, including roads, bridges and parks, as well as preservation land purchases.
But because of the sluggish economy, Dunedin finance director Jeff Yates said the Penny program has been generating only about $2.7 million annually for Dunedin instead of the projected $3.4 million-a trend expected to continue through at least 2015. Furthermore, he said, there's no guarantee county voters will renew the program after 2020, so it's best to start seeking alternative funding sources now.
Alternative sources to be explored this budget season include the general fund, which is an operations fund the city used before Penny for Pinellas existed; the gas tax fund; or - to the dismay of at least one commissioner, Julie Ward Bujalski - new revenue that could be generated by raising the city's property tax rate.
"We've talked before about trying to get off the Penny drug that we've all gotten used to having," Mayor Dave Eggers said during Thursday's City Commission meeting. "We're in the third decade of it and at some point, presumably, the residents of the county will say 'It's been great, we've upgraded our roads and buildings, that's what it was for and that's enough.'"
Yates' department will unveil its first draft of the proposed 2012-13 budget next week. He asked commissioners during their meeting last week for input on which projects should be earmarked for Penny funding and which ones staff should try to find alternative financing for.
Commissioners' top priorities for Penny funding, at least for now, include roads, economic development and recently-approved projects connected to ongoing city master plans.
Staff was told to return with a list of options for paying off debt as well -- namely on the Dunedin Community Center, which counts for about $3.4 million of the projected $7.8 million Penny shortfall.
Commissioners also asked staff to find other pots of money to finance items that they believe would better be absorbed into their respective city department budgets. Those include firefighter equipment purchases as well as a fence replacement, building furnishings and recreational court resurfacing requested by the parks department.
Those items are allowed in the Penny budget, Yates said, but he, Eggers and Bujalski agreed that they don't meet the intended spirit of the Penny fund.
They "are maintenance and they should not be, in my opinion, in the Penny. It's kind of nickel-and-diming it," Bujalski said. "To me, we should be doing big-dollar things in the Penny."
--Keyonna Summers, Times Staff Writer