September 19, 2023

Honorable Chairman and Members of the Pasco County Board of County Commissioners

37918 Meridian Avenue

Dade City, FL 33525



Dear Commissioners,

It was the genius, Albert Einstein, who said, “Out of clutter, find simplicity. From disorder, find harmony. In the middle of difficulty lies opportunity.” It was only with the Board’s guidance, through passionate discussion and genuine display of sound fiscal stewardship, we were able to secure a dependable future for Pasco County.

At the core of every debated topic and measured decision were the citizens of Pasco County and the collective desire to preserve their safety. We were pleased with the outcome of preserving life safety by adequately funding the Fire Rescue Department, while ensuring financial safety through a general millage reduction to relieve the tax burden. We were again reminded that the life of public servant ship is not for the faint of heart, but truly rewarding when a sustainable goal is reached. It is with great respect that I present the Fiscal Year 2024 Annual Operating and Capital Budget. I believe the annual operating and capital budget offers balance between providing the services upon which our customers depend, including providing a reliable public safety network and maintaining a safe, efficient transportation system; and creating a sense of place by supporting our libraries, parks, and rural heritage as well as other quality of life features that are important to our community.

The Fiscal Year (FY) 2024 net budget totals just over $2.1 billion which represents a $99.2 million, or 4.90%, increase over the FY 2023 net budget of $2 billion. Reserves experienced a decrease of $41.3 million, or -5.35%, over the reserves set aside in FY 2023. Capital investments increased by $51 million, or 37.50%, over FY 2023 capital spending primarily due to additional investments in parks, libraries, and fire stations.

Although debt service decreased in some areas due to refinancing, the overall debt service increased slightly from the issuance of the Tourist Development Tax Series 2023 bond (please refer to the “Debt Service” section of this Budget Book for more details). Finally, overall operating expenses increased by $86.6 million, or 8.20%, over last year. A large measure of the reason for the increase was fully funding the Sheriff’s request, preparing for the opening of the first phase of the Detention Center expansion, additional funding to combat homelessness, and a wage increase for Board of County Commissioners (BCC) and Constitutional Officer’s employees.

Economic Headwinds

Pasco County’s economic health remained remarkably strong during and after the pandemic. There are; however, several economic headwinds considered while building the FY 2024 budget. The first consideration was inflation. The rate of inflation, driven primarily by energy and supply chain disruptions, is 6.7% from the 10.5% we saw this time last year. At 6.7%, the rate of inflation for the Tampa-St. Petersburg-Clearwater MSA (of which Pasco County is included) is still higher than the national inflation rate of 4%. This upward price pressure on energy, raw materials, and finished goods has already had an impact, and this price pressure will undoubtedly continue to impact all departments’ operating and capital budgets.

Despite these economic headwinds, we believe the economy of Florida in general, as well as the Tampa Bay region, will remain healthy in the near term as people continue to move to the area in high numbers.

The County has made a consistent commitment to invest in Public Safety as shown in the graph below. Annual expenses have grown by more than 12% per year. In fact, the adopted budget is almost double the amount spent five years ago.

In 2018, Pasco County. along with numerous other cities and counties. filed suit against manufacturers and distributors of opioids. At the same time, the state of Florida also sued 11 corporate entities for their wrongful conduct in the opioid epidemic crisis. In 2022, a global settlement of all the cases, through cooperation between the State Attorney General and local governments in Florida, resulted in the State negotiating its share of the nationwide opioid settlement. The litigation from the opioid settlements represents thousands of lawsuits across the country against opioid pharmaceutical companies and distributors, whose practices contributed to the opioid crisis.

In 2021, the Pasco County Board of County Commissioners approved Resolution 21-266, establishing the Pasco County Opioid Task Force (OTF). Then in 2022, Pasco County entered the Florida Opioid Allocation and Statewide Response Agreement to become a Qualified County. Becoming a Qualified County enabled Pasco to have access to $8,451,613 from nationwide opioid legal settlements and create the Opioid Fund. Through community partnerships, these monies are used to fund community-based activities to engage residents affected by the opioid epidemic through programs in substance use disorder treatment, overdose prevention, substance misuse awareness and education, and harm education. The County will continue to receive funding for the next 18 years while the settlement is being satisfied. The OTF serves as an advisory body to the Pasco County Board of County Commissioners on how to spend the opioid funding and maintain compliance with the Florida Plan and community Abatement Plan.

Pasco County and its BCC have been focused on policy and strategy to make the County a place where people want to live, work, and play. In the Spring of 2023, when the Governor signed Senate Bill 102, the County began to realize some of the challenges this piece of legislation could bring with it. The rapid growth within the County demands an equitable or larger growth in jobs for the County to continue trying to shed it's image of a bedroom community.

The below are two pieces which cause immediate concern:

• Florida Statute 125.01055(7) allows commercial and industrial sites that local governments have reserved for job creation to be administratively converted into residential units, which would further exacerbate the job-to-housing deficit.
• Florida Statute 196.1978(3) regarding the mandatory property tax exemption allowing for the affordable portion of projects to be fully or partially exempt from ad valorem taxes for a period of 35 years may cause a strain on the revenue source typically used to fund the services required in residential areas, namely public safety, culture, and recreation.

Immediate action taken by the Board is to sue developers who are seeking to build apartments on industrial or commercial land, as permitted under the new law. The rationale is to callout elements of the Live Local Act as unconstitutional. The County will continue to research and monitor to ensure we are fully aware and able to mitigate any of the unintended consequences of the newly established Live Local Act.

Aligned to the Board's Strategic Plan for FY22-24, in the Enhance Quality of Life focus area, activities and resources have been dedicated at unprecedented levels to improve the homelessness situation throughout the County. The Board approved a one million dollar initiative to fund the Pasco HOPE Homelessness program to support a Housing First model to effectively combat homelessness. This program is modeled off of the Tampa and Pinellas HOPE structures, which have demonstrated success rates. The intent of the first year of this program is for the County to financially support the acquisition/purchase of a site near public transportation, jobs, medical care, and other community resources; in addition to, developing the location to provide utilities and purchasing the shelters.

The Board also approved funding for a Housing Navigator to assist persons experiencing homelessness to break the cycle of homelessness by connecting clients who need to rapidly obtain permanent housing with the appropriate housing opportunities and agencies who can fund those housing needs.

The County is committed to financial integrity and long-term sustainability. Several years ago, the County began the process of reshaping its financial trajectory by implementing a plan to adequately fund the Commission’s financial reserve goal. This has been achieved by continued discipline to make long-term financial decisions (please refer to the “Financial Strategy” section of this Book for more details), controlling the growth of expenditures, forecast modeling with various optimal and dismal scenarios, and adhering to financial policies (please refer to the “Financial Policies” section of this Book for more details). In addition, the County works diligently on business retention, attracting new businesses, and developing a retail strategy to diversify the tax base and increase the property values of our community. The resilience and prosperity of our local businesses is paramount to a sustainable future.

In February 2019, the Board committed to achieving the Government Finance Officers Association (GFOA) recommended best practice of a setting aside two months of budgeted operating expenditures (i.e., 16.7%) into a committed reserve (also known as an emergency reserve). The purpose of the emergency reserve is to accumulate the funds necessary to support County operations during a prolonged emergency. Despite the economic downturn, we have been able to stick to our plan to increase the General Fund Committed Reserve from the FY 2019 baseline level of 9.6% to 11.1% of budgeted expenditures in FY 2020; 12.5% in FY 2021, and then 16.7% of budgeted expenditures in FY 2022 and FY 2023. This reserve level took a slight dip for FY 2024 at 15.5% (or 56 days of operating expenses) when the BCC made the tough decision to reduce the general operating millage to alleviate some of the property tax pressure felt by the citizens related to increased home values.

Given the unprecedented growth in taxable assessed values as well as the uncertain, future economic headwinds, we are maintaining our two-pronged financial strategy. First, we have limited the amount of new, recurring expenses in FY 2024. Since we are not expecting the taxable assessed values to remain at these double-digit growth rates for an extended time, limiting recurring spending will prevent the County from severely restricting future programs or eliminating positions in the event of an economic downturn. Second, we have invested the additional revenue in one-time, capital projects, which are easier to pull back if the economy worsens. In addition, these capital investments allow the County to close the gap on important projects that have been delayed due to funding shortfalls. These projects will greatly enhance the quality of life for our citizens.

The FY 2024 budget includes a spending plan that will close out the Board’s current Strategic Plan, as they embark on the planning cycle for the next five years. (For more information about “Strategic Initiatives” check out Strategic and Business Planning.) For example,

Create a Thriving Community

• Continue to work Master Plans for potable water, wastewater, and reclaimed water to include large developments in outlying areas of Pasco County.
• Set aside $14 million over the next five years for culvert replacement.
• Complete targeted stormwater drainage projects in the following locations: Hidden Lake; Alico; Gulf Highlands; Wildwood; Mitchell Ranch; and Sea Pines neighborhoods.
• Fund a position to collect data and information needed to identify areas of risk.

• Provide funding to educate partners in Pasco County to be Autism and Special Needs friendly through the International Board of Credentialing and Continuing Education Standards.
• Increase the funding provided for marketing and sports event sponsorships to bring larger and more sporting and other events to Pasco County.
• Continue with the Comprehensive Plan update.

Spending on capital projects will also allow the County to get caught up on important infrastructure improvements, such as:

• Set aside $1 million for ongoing maintenance and repairs to Parks and Recreation equipment. This investment will allow the County to ensure its Parks equipment remains in good working order.
• Additional funding to support the Detention Center expansion due to inflationary pressures.
• Completing Pinehill Park Improvements, ongoing annual funding for sod upgrades and field maintenance at scheduled parks, and Magnolia Valley Park Phase One.
• Over $4 million for coastal dredging.
• The remaining $5 million to complete the construction of the Wesley Chapel, Seven Oaks Library.

Clerk & Comptroller

An 18.73% overall increase to fund pay raises as well as:

• Additional funding for the Criminal Justice Information System (CJIS) software suite.

Property Appraiser

An 8.76% overall increase to fund pay raises as well as:

• Includes funding for CAMA Software maintenance.

Sheriff's Office

A 13.88% overall increase ($20.8 million) for the Sheriff will fund:

• Additional patrol deputies funded by PSO and 10 additional deputies funded by the County.
• A Public Safety Liaison Program to handle nonemergency tasks for deputies to allow deputies to efficiently respond to the increasing number of urgent calls for service.

Supervisor of Elections

A 20.99% overall increase to fund pay raises as well as:

• The costs associated with the Presidential Preference Primary election.

Tax Collector

A 17.59% overall increase to fund 7% pay raises as well as:

• Increase in the County's Tax Roll.

The County is responsible for partially funding the operation of the Sixth Judicial Circuit. The County directly funds 11 personnel. Significant changes to the Judicial budgets include:

• A new Security Analyst Position for Court Technology Administration.
• Implementation of the Red Tent Treatment Initiative for the Public Defender. This program is offered to first-time, nonviolent-female offenders as an alternative to incarceration in an attempt to rehabilitate.

As our local economy continues to defy odds, our Board remains steadfast in ensuring the citizens, visitors, and businesses are heard and represented. From each thoughtful policy created or updated to every touch decision made, the intent to make Pasco a place where people want to live, work, and play is actualized.

I believe this budget will help us wrap up the final year of our current Strategic Plan, as we ramp up our execution on the remaining strategic goals and priorities. We are simultaneously regrouping and focusing on the next iteration of our planning horizon. True to our vigilant nature, we will continue to monitor the local economy as well as the business climate to ensure that we continue to provide the highest level of service our residents have come to expect.

This County would not be poised to enter the next phase of our journey without the dedication and hard work of our employees. It is this 3,000-strong team of professionals that I wish to thank for putting the people of Pasco County first! I am also grateful for the Board's active engagement and guidance throughout the budget development process.

In the following pages, you will find budget summary information and detailed revenue and expenditure data for a fully transparent and comprehensive view of the FY 2024 Annual Operating and Capital Budgets.

Sincerely,

Michael Carballa

County Administrator