TAMPA — Hillsborough commissioners looked at freezing more than $300 million in highway and construction projects Wednesday after hearing the county's creditworthiness may be downgraded, making it more costly to borrow money.
With the economy ailing, it might seem like a good time for government to build things, with construction companies offering bargain-basement prices.
But Hillsborough County officials at a budget workshop discussed deferring as much as much as a third of their building program — for everything from road widening projects to a jail expansion — through 2016.
Governments across the country are grappling with falling tax revenues from sales taxes and property taxes. This has led to a negative forecast from Moody's Investors Service on the creditworthiness of every local government in the land.
The problem is particularly pronounced in Florida, where an economy driven by construction has flat-lined.
Earlier this month, Moody's put Florida on its watch list for a possible downgrade on the rating of its general revenue bonds.
Fitch Ratings, another major investment adviser, downgraded the Hillsborough County School District's rating on bonds backed by sales taxes by a half a grade. That can mean tens of millions more in interest payments.
County government is being whipsawed by the same forces. And those factors could eliminate from $300 million to $350 million in sales tax revenue available to the county over the next six years.
"The sales tax is a really big funding source for us," said Mike Merrill, the county's utility and commerce administrator. "And that's the thing the rating agencies are most concerned about."
If there is a good side to this, it is that the county goes into the fiscal doldrums with a sales tax bond rating that is AA Plus, near the top of the scale. But when you're dealing in billions, even a small interest rate jump can be very costly.
"I'm extremely disappointed that many of our transportation projects that are needed the most may potentially be delayed," said County Commission Chairman Ken Hagan. "But I'm fearful that this is just the tip of the iceberg with respect to the number of projects and services and departments that are going to drastically be reduced (in coming years)."
Hagan leads a county transportation task force that has won commission approval to fast-track several road building projects, totaling nearly $500 million. Now many of them are on a list of nearly a half-billion dollars in new construction that county budget officials say could be delayed.
The list includes $38.8 million for widening Lutz Lake Fern Road between the Suncoast Parkway and Dale Mabry Highway in northern Hillsborough; $50 million for widening U.S. 301 from Balm Road to SR 674 and $147.6 for intersection upgrades.
County Administrator Pat Bean emphasized during a budget workshop Thursday that the projects would be delayed — not eliminated — until the economy recovers.
"Right now I'm liking the word 'parked,' " she said.
Bean has already said she will have to cut about $110 million in operating expenses for next year due to falling property tax revenue. That could require the elimination of 1,000 jobs.
The projects of the transportation task force dominate the list because they were added most recently to the county's construction program.
"They were some of the last ones in," said Eric Johnson, the county's management administrator. "That's where we have the most money that we haven't moved forward on yet."
Commissioners will haggle over the list of projects to cut in the coming months, with a final decision not due until September.
In the meantime, they are also considering whether to ask voters to approve an additional penny sales tax for transit and other projects. So some of those cut road-building proposals could get renewed financial support from the added tax, assuming voters approve it.
Bill Varian can be reached at email@example.com or (813) 226-3387.