PORT RICHEY — Faced with a tight budget year, city officials approved a plan Tuesday night to balance the budget:
Take a half-million dollars that's earmarked for redevelopment efforts and divert the money into the city's general fund, where it can help pay for employees' salaries and the other costs of running the city.
"We're choosing this right as opposed to raising the millage, which is our right, to cover expenses," Mayor Richard Rober said.
The city declared itself blighted back in 2002, setting up a program to earmark a certain portion of property tax dollars for redevelopment projects.
Under the rules of that program, Port Richey should put an estimated $542,681 into the Community Redevelopment Agency fund next budget year.
But city officials struck a deal with themselves Tuesday night — acting on one hand as the CRA, and on the other hand as the City Council — to put only 3.27 percent of that money, or $17,770, into the redevelopment fund.
The rest of the year's contribution, $524,911, will sit in the city's general fund.
"It's a very clean way to do it, because it's all down in writing," Carol Westmoreland, executive director of the Florida Redevelopment Association, told the Pasco Times. "No one can say, 'We didn't know.' "
The cash swap is just for one year, although officials can revisit the concept next year.
Port Richey will still receive the same amount of redevelopment dollars from Pasco County. About $3-million is sitting in the city's redevelopment fund.
David Cardwell, an Orlando attorney who specializes in CRAs, worked with City Manager Richard Reade to iron out the agreement.
Cardwell said the idea for these kinds of agreements came about in 2006, when counties asked the state Legislature to change the formulas for redevelopment acts, which they thought were too strict.
Cardwell said after the change occurred, the Florida Redevelopment Association said cities could enter into such agreements to provide financial relief.
"With property tax reductions, budget restraints, and an economy that won't turn around, you have the same demand for services but a different task to return revenue to pay for those services," Cardwell said. "As a result, the city that created the CRA enters into an agreement with itself that says instead of paying the full amount that the statute says, we will pay a smaller amount."
The city is also losing an estimated $264,000 next year by eliminating the utility tax. But Reade said the city is offsetting that loss through other savings, such as reduced cell phone bills and fixing the leaks that caused massive water losses.
Reade said during the next year, if necessary, the city will draw on those diverted redevelopment funds. He said the agreement was a new approach worth looking into.
"We're not trying to do the same things we did before," Reade said.
Camille C. Spencer can be reached at (727) 869-6229 or firstname.lastname@example.org.