Multi-Year Financial Forecast
Long-Range Operating Financial Plans
The Office of Management and Budget prepares multi-year financial models for the major funds as well as those funds that are important to the Board of County Commissioners (BCC). Major funds are defined as those whose revenues and expenses are at least 10% of the total budget. These three major funds comprise more than 61% of the County's total budget:
- General Fund
- Water and Wastewater Unit Fund
- Solid Waste Fund
The funds that are important to the BCC are:
- Municipal Service Fund
- Building Inspections and Permitting Fund
- Transportation Trust Fund
- Fire Municipal Service Taxing Unit (MSTU) Fund
- Stormwater Assessment Fund
Taking a long-term view of these funds allows the County to obtain a better understanding of the County's future financial opportunities and challenges. The financial models are dynamic and change constantly as OMB analyzes and adjusts assumptions. Overall, the models are tools to illustrate the impact of policy decisions and potential trends.
The County utilizes a set a budget principles to guide the preparation of the multi-year financial models, annual budget, and Capital Improvement Program. These budget principles include:
- Funding recurring operating expenditures with recurring revenue sources.
- Using one-time (non-recurring) revenues for non-recurring expenditures such as capital projects and capital expenditures.
- Maintaining sufficient reserve balances to address unforeseen events.
- Using a conservative approach to revenue estimation to avoid budget shortfalls.
- Following existing master plans for future growth as well as replacement and maintenance schedules to ensure adequate funding is available to fund them.
The assumptions for General Fund revenues focus on property taxes, which includes the millage rate and property values, and the half-cent sales tax as these are the major revenue sources. The forecast includes the assumption there will be no increase in the operating millage rate of 7.6076. Growth in property tax revenue, therefore, is expected to come from increased taxable assessed values of existing properties as well as new construction value. While the growth in Pasco’s taxable assessed values has averaged over 10% per year for the last five years, the forecast assumes a slow cooling of the economy with assessed values gradually falling to 7.% per year by FY 2028. The half-cent sales tax revenue generates the largest amount of revenue for local governments among the state-shared revenues currently authorized. Revenues have increased significantly to match the pre-pandemic trends with an estimated increase of 7.9% for FY 2023. The State forecasts increases related to tourism, motor vehicles, business purchases, and household goods. Each county’s share is based on a percentage of County population, so as Pasco County’s population grows faster than the population of other counties, we are expecting this revenue to taper down to 6% by FY 2025 for three years and then resume an average of 5% per year starting in FY 2028.
The expenditure assumptions focus on personnel as well as the allocation of property tax revenues to the Sheriff as those are the major expenditure drivers. The County conducted a compensation and classification study for FY 2023 to ensure employees pay is competitive with neighboring counties. This explains why the adjustment is 9% that year. Future year projections decrease until FY 2027 where they are somewhat connected to the change in property values. The County committed previously to provide the Sheriff's Office with a portion of the increase in property tax revenue to help sustain their operations due to population growth within the County. That commitment was originally at 50% prior to the detention center transition and is now agreed to remain at 40% for the next 10 years.
General Fund Reserves to Target
GFOA recommends maintaining a minimum of two-months of operating expenditures in reserves for unforeseen events. This graph illustrates that the assumptions utilized in the forecast do not allow for the target to be met for the next ten years due to the decrease in the General Fund millage rate from 7.6076 to 7.5700.
General Fund Cash in vs. Cash Out
This graph compares revenues to expenses while excluding fund balance and reserves to ensure that there is a sufficient cash flow to maintain an adequate reserve. The first few years are intentionally spending more than receiving in revenue as the County spends down revenue replacement funds received from ARPA in FY 22.
Municipal Service Fund
The Municipal Service Fund accounts for the various municipal services, including Planning & Development, Code Compliance, Animal Services, Emergency Services, Engineering Services, and Natural Resources Regulation that are provided in the unincorporated areas of the County.
It is a quasi-self-balancing fund where any shortfalls between expenses and revenues are filled by a subsidy from the General Fund. This strategy allows this fund the ability to always maintain the GFOA recommendation of two-months of operating expenditures in reserves while making any adjustments to the General Fund to keep the Municipal Service Fund stable.
The primary sources of revenue for this fund include fees for service for the Development Services Branch as well as the Communications Service Tax. The Development Services fees for service are projected to grow at 5% per year while the Communications Service Tax is a declining revenue.
The expenditure assumptions follow the same assumptions as the General Fund where expenses are expected to increase over time. This, in-turn, leads to a greater dependence upon the General Fund to fill the gap as shown in the chart to the left. Ideally, this line should either be flat or declining over time.
Water & Wastewater Unit Fund
The Water & Wastewater Unit Fund supports the services surrounding water, wastewater, and reclaimed water in Pasco County. Revenues are collected through service fees, which are tied to usage rates. Revenue sufficiency analyses are conducted yearly to assess the current maintenance needs, as well as future capital needs. Expanding customer growth and increased account usage present the need for capacity increases and technology updates to the potable water, reclaimed, and wastewater transmissions systems.
Current risks to the Water & Wastewater Unit Fund include aging infrastructure, increased population, increased infrastructure assets, and a shortage of maintenance equipment. These risks are mitigated by aligning capital improvement plans (CIP) and renewal and replacement (R&R) to the asset management program. The fund’s proactive approach will lead to continued increases in levels of service to customers while maintaining affordability.
As mentioned in the Water & Wastewater Fund Summary, in FY 2024, Pasco County is projecting that annual customer growth will increase by approximately 3.3% for water services, 3.4% for wastewater services, and by about 9.6% for reclaimed water services. FY 2024 represents the third year of an updated four-year water and wastewater schedule of rates, fees, and charges, which increases water rates and wastewater/reclaimed rates annually by 1.5% and 3.5%, respectively.
Solid Waste Fund
The Solid Waste Fund provides support for the operations, maintenance, and capital improvements needed to provide Pasco County’s citizens, businesses, and future generations with efficient, cost-effective, and sustainable waste management. The Solid Waste and Resource Recovery Department conducts annual revenue sufficiency analyses to assess Pasco County’s future recycling and waste disposal needs and ensure sufficient infrastructure investment is made to meet those needs.
Current risks to the Solid Waste Fund include expanding customer growth as well as per-capita residential and commercial waste tonnages. This increased waste generation has resulted in a need to expand the County’s Waste-to-Energy Facility to ensure the system has the capacity to process these growing waste volumes in an environmentally-sustainable and cost-effective manner which maximizes recycling and beneficial reuse while minimizing the land required for landfilling.
Building Inspections and Permitting Fund
The Building Inspections and Permitting Fund is a Special Revenue Fund that is used to account for revenues and expenditures associated with the administration and enforcement of the Florida Building Code. The Fund is designed to be self-supporting meaning the fees for service must be sufficient to cover related expenditures. As such a Fee Study was recently completed to evaluate the cost of conducting the various aspects of the business and determining which, if any, fees require adjustment. The County Commission will be asked to consider adopting a revised fee structure in the upcoming fiscal year.
The assumptions for Building Inspections and Permitting Fund revenues focus on permitting. The forecast includes the assumption there will be no increase in the fee revenue (until voted on in the upcoming year), therefore, is expected to come from increased volume growth. While the growth in Pasco the last several years has been higher than average, the forecast assumes a slow cooling of the economy with more historical growth of 3%
Transportation Trust Fund
The Transportation Trust Fund supports the paving, operation, maintenance, and traffic operations for existing County arterial and collector roads. In FY 2024 approximately 67% of this fund is supported by fuel tax revenues, while 33% is supported by tax increment financing funds.
The County projects gas taxes for this fund to steadily grow at 2.5% through FY 2033. The portion of tax increment funds received in this fund are projected to grow at an average rate of just under 6% for the next decade. As the County has homes built on available land, taxable-assessed values will grow, as will the amount of tax increment financing funds allocated to the Transportation Trust fund.
The operational expenditure growth assumption for the next decade is 2.5%. The capital expenditure doubled in FY 24 to $4.2M. Capital expenditures are expected to steadily increase beginning FY 25 to roughly $6M per year and will remain as such through FY 2029.
Fire Municipal Service Taxing Unit Fund
The Fire Municipal Service Taxing Unit (MSTU) Fund is a special revenue fund to provide fire prevention, suppression, and protection services to the citizens of Pasco County who do not reside within a municipality or are within a municipality where the County provides fire services in place of the municipality.
The revenue assumptions for this fund focus on property taxes, which includes the millage rate and property values, and the Fire Plan Review fee as these are the major revenue sources. The forecast includes the first increase to the operating millage rate since 2016 of 2.1225. This is a 0.3189 increase from previous years millage rate of 1.8036. Growth in property tax revenue, therefore, is expected to come from increased taxable assessed values of existing properties as well as new construction value. Like the General Fund, the forecast assumes a slow down in economy with assessed values gradually falling to 9.5% per year by FY 2026. The Fire Plan Review is forecasted to grow at 10% for the next two years and then will drop to 7.5% FY 2026.
The expenditure assumptions focus on personnel and operating expenses. Personnel expenses are forecasted to grow at 8.5% for the next ten years. Operating expenses will be at 18.0% in FY 2024 and then drop to 9.4% beginning in FY 2025 and will remain at this rate through outward years.
Fire MSTU Fund Cash in vs. Cash Out
This graph compares revenues to expenses while excluding fund balance and reserves to ensure that there is a sufficient cash flow to maintain an adequate reserve. The first few years are closely matched together as revenues outpace expenses in the future. It should be noted; however, that while this fund can afford increased expenses, those increased expenses usually result in a similar increase to the General Fund because of the Rescue portion of the Fire Rescue Department. The General Fund does not have the same cash flow availability; therefore a limited amount of expenses are added in these assumptions.
Fire MSTU Fund Reserves to Target
GFOA recommends maintaining a minimum of two-months of operating expenditures in reserves for unforeseen events. This graph illustrates that the assumptions utilized in the forecast allow for the target to be met and exceeded for the next four years.
Stormwater Management Fund
The Stormwater Management fund supports the prevention of County flooding through the routine maintenance of swales, drainage ditches, retention ponds, catch basins, culverts. and other flood control infrastructure. As the County's natural watershed becomes congested by increased development, the need for water retention and drainage systems will grow.
Funding for projects is primarily via the Stormwater Utility fee (SUF) charged to each property in the County. In FY 2018, the SUF increased from $57 per Equivalent Residential Unit (ERU) to $95 per ERU. The additional funding is being used to fund engineering design and permitting of capital projects, and to increase the level of service for maintenance.
The County projects the Stormwater Management fund to grow an average of roughly 2.50% through FY 2028. This can be attributed to new development coming to the County.
The operational expenditure growth assumption for the next decade is 1.25% but will continue to be evaluated during the annual budget process to account for continued challenges from increased inflation. Capital expenditures are heavily dependent on the completion and implementation of the Stormwater Master Plan. This plan is currently under development and will drive future capital efforts and impact both long and short term projections.
Strategic Plan Context
The Financial Strategy and the Strategic Plan are complimentary in nature, as data and information flow between and inform each other. The Financial Strategy is an input into the Strategic Planning Process, which occurs during the Environmental Scan as Leadership is reviewing economic data and information. As Pasco leaders collaborate on determining the Strategic Goals and the annual activities to achieve the Strategic Plan, they develop related Business Plan Initiatives (BPIs) requiring additional resources. The costs associated with these BPIs are used in the forecasting models, and scenarios are run to ensure long-term financial sustainability and resiliency. The forecasting and scenarios assist County Leadership in prioritizing and ultimately funding or not funding the requested BPIs.
Use this hyperlink for a more detailed look at Pasco County's Strategic and Business Planning.