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Irma changes city’s budget in a big way

October 11, 2017
By MEGHAN McCOY (mmccoy@breezenewspapers.com) , Island Reporter, Captiva Current, Sanibel-Captiva Islander

The Sanibel City Council approved a millage rate of 1.9139 with a budget of $60,033,596 during its final hearing Thursday, Oct. 5, as well as a 15 percent increase to membership fees for the Sanibel Recreation Center.

"The hurricane has changed our budget dramatically. I do believe that we had the ability going into the budget to go back to the roll back rate before the hurricane. I think that was probably the direction we would have went in," Mayor Kevin Ruane said. "Unfortunately the hurricane came and unfortunately it depleted a lot of resources very quickly."

With that said, the city did prepare themselves for Hurricane Irma.

"I recall coming here in 2004. I can recall not having a hurricane fund, or reserve allocated to natural disasters like a hurricane," Ruane said. "We learned a lot from Charley."

When looking at the first draft of the budget, compared to the final budget, Ruane said there is a profound difference in the budget, due to the cash in the general fund. He said at the start of the first budget the cash fund was more than $979,089 and today there is $94,221.

"We are very grateful that Hurricane Irma didn't affect us any greater, but certainly is going to deplete cash very quickly as we saw through this event and we are only a couple weeks in," Ruane said.

The City of Sanibel made some adjustments from the drafted budget on July 18, 2017 to the tentative budget on Oct. 3, 2017. Those changes took the total budget from $61,853.295 to $60,033,596.

"The vast majority of the budget is the beginning fund balance," Finance Director Steve Chaipel said. "That's 37 percent of the money that we did not spend last year. Again, the vast majority is what we are expecting the beginning fund balance to be. That does take into consideration the hurricane reserves we spent."

Chaipel said with the arrival and passing of Hurricane Irma the tentative budget went through some changes as far as utilizing some disaster relief reserves for the rest of the year in response to emergency preparedness and debris cleanup.

"It in turn lowers the beginning fund balance because of the unexpected usage of funds for this year," he said. "The fiscal year 2018 Disaster Reserve Fund based on the fund balance of the general fund could not be fully restored to the $4.5 million. In fact the 2018 fiscal year budget of $3.79 million."

The city has begun the federal and state level process for reimbursements for Hurricane Irma, Chaipel said, but with the amount of resources being deployed for several storms throughout the nation, they expect it to be a very lengthy process.

"The reimbursement from FEMA is certainly going to be very slow to say the least," Ruane said. "We will use our reserves and in any indication we have used those reserves very quickly."

During the final budget hearing, Ruane said this is the first time since he has sat at the dais that they have not been able to reestablish the disaster reserves to the full amount they had the prior year.

"We have not had a hurricane affect us from a physical point of view since 2004," he said, adding that all of the expenditures they have paid thus far, they are still able to replenish almost 90 percent of where they were.

The 1.9139 millage rate is a 5.55 percent roll back rate for FY18 of 1.8132.

Ruane said before Hurricane Irma there was certainly consideration about taking the millage rate to the roll back rate because they had enough cash.

"With $94,000 we are not in the position to do that. To go to roll back rate would be about $500,000," Ruane said.

He said before Hurricane Irma they had some challenges in front of them and were certainly in a stronger cash position than where they currently are.

One of the items the mayor brought to the dais was options to close the gap at the Sanibel Recreation Center. He said a cap was established where the general fund subsidizes the Rec Center in the amount of $1.4 million.

Based on projected revenue and expenses they were anticipating almost an additional $400,000 funding requirement.

"I came up with a very comprehensive change in the Recreation Center and certainly heard loud and clear from citizens the potential changes that might take place," Ruane said. "One of the changes that certainly is not being embraced, certainly not going forward with the recommendation, is to have a charge per class."

The option for revenue enhancement would have been a $7 charge for classes for Recreation members and $10 per class for nonmembers. The charges were estimated to bring in $170,000 in revenue.

"I'm going to take that off the table, so we have $170,000 to make up," Ruane said. "My recommendations are certainly to have operating reductions for $76,000. Staff reductions of $156,000 that has not changed. In addition to those reductions, that only gives us about $230,000. We need another $170,000 to bridge the gap."

He said he only has $94,000 available in cash, which was decreased that morning with $15,000 going to Community Housing & Resources.

"The good news and the bad news is we reserved an awful lot of money for the hurricane, but we have certainly gone through a great deal of funds throughout the hurricane. The impacts are not only to the transportation fund, which are the funds received from tolls from the county, and administration fees," Ruane said. "Beach parking, certainly based on the trends, and with the increase, is anticipated to be down. Again, it has accumulative affects on top of us spending a great deal of money in trying to get Sanibel back on its feet."

The Sanibel Recreation Center opened 10 years ago and did not have any increase to membership fees for the first six years.

"Now it is 10 years old and we have sinking funds, which obviously replaces all aspects of the building, as well as the components of the building," Ruane said.

Another consideration, which was voted upon, was increasing the membership fees at the Sanibel Recreation Center. The increases ranged from 5 to 25 percent.

"We are trying to find a way to stay true to the subsidy that we capped at $1.4 and have the Rec Center and the users pay for the user fees associated with that," Ruane said.

Councilman Jason Maughan said people have lost their jobs in order to close the gap and operations have tightened their belt. He suggested pulling the band-aid off fast and increasing the membership fee by 25 percent, worth $175,000.

"We are below half of where anywhere else is," Maughan said of other fitness facilities. "To that end, and to avoid the nightmare of counting at the beginning of classes of who has the golden ticket and who doesn't, I would propose that we raise it by 25 percent in the membership and call it a day and move on with the budget."

Ruane said they could do a hybrid of increased membership and reduce what they put into their sinking fund.

"I don't know if you will keep membership not being affected by a 25 percent increase," Ruane said. "You are going to have a lot of additional expenses that the community is going through with the hurricane and most of them are going to have out of pocket expenses and no relief from insurance companies whatsoever."

Maughan replied by saying that 60 percent of the money that they need to come up with has been cut.

"I have more respect for the citizenry to say look here's the story, the government has cut 60 percent in cost by tightening its own belt. This is an excellent service. It's far below what is the market rate for this level of service. I think they would be more understanding of this is what we need," he said.

Vice Mayor Mick Denham said that approach may have consequences with them losing membership.

Recreation Director Andrea Miller said last year they did a 5 percent increase on resident membership, a 10 percent for on island employees and a 20 percent for visitors. She said that had resulted in about a $35,000 reduction in membership revenue this year.

"Overall our revenue is down about 60 percent," Miller said.

The annual resident membership for family is $243, a resident individual annual is $182.

If the membership was raised by 10 percent, an individual would pay $200 a year, and at 15 percent would pay $209 a year. A family annual membership would be $267 for a 10 percent increase and $279 at 15 percent increase.

The City Council unanimously approved a 15 percent increase for membership fee.

 
 

 

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