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New transportation plan could affect bond ratings, Hillsborough administrator warns

Published Jul. 21, 2016

TAMPA — A proposal to pay for Hillsborough County's vast transportation needs through tax revenue growth could hurt the county's stellar bond rating.

That's one of several red flags County Administrator Mike Merrill raised Wednesday as he introduced his recommended budget for 2017.

The $4.9 billion budget projects a $49 million jump in tax revenues without raising the millage, thanks to increasing property values and growth in the tax base.

In the past, the board has directed a chunk of that money toward the county's reserves, which must remain at 20 percent of the general fund expenses to satisfy the bond rating agencies and earn AAA status, Merrill said.

But county commissioners have indicated they plan to allocate new revenues toward transportation. That decision was made in lieu of a half-cent sales tax hike, which commissioners twice rejected earlier this year.

Depending on how that is accomplished, it could funnel money away from reserves. By next year, without any new money for reserves, that would put Hillsborough below the 20 percent threshold.

The uncertainty regarding the commission's plan for paying for transportation has made passing the second year of this biennial budget a more involved process than in previous budget cycles.

Merrill's budget injects $20.6 million of the additional revenues toward transportation. Almost half of that, though, will go toward buying back impact fee credits that developers earned in exchange for doing transportation work connected to their projects. Hillsborough is trying to eliminate those credits as they transition to a new system called mobility fees that charge developers more for the infrastructure impacts caused by their new construction.

"These are the consequences and the additional considerations as they make decisions about this proposal," Merrill said. "It's choices."

Commissioners got a taste of what those choices will be like during Wednesday's commission meeting.

Commissioner Stacy White asked his colleagues to vote to fund a new ambulance for a Fishhawk fire and rescue station to mitigate the county's plan to shift the existing rig to Riverview, where the call volume is higher. Fishhawk residents came out in force to warn about the effect on public safety that could have in their community.

The cost is about $300,000 to purchase and about $1 million to maintain per year.

White asked for that to be paid out of existing reserves but he was rebuffed by commissioners. Instead, they will decide whether to include it next week when they give up and down votes to individual projects that would need to be funded out of surplus revenues.

That commissioners will even have votes on those projects is a return to an old budget process called "flagging" that Merrill phased out after he took over as administrator in 2010.

It's another sign tough decisions may have to be made in this budget.

"With the potential of committing more dollars to transportation, it'll further limit resources," said budget director Tom Fessler. "So we're at the point where we need to have them review some of those items."

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Contact Steve Contorno at scontorno@tampabay.com. Follow @scontorno.

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