HomeMy WebLinkAbout022225 email - PUBLIC COMMENT regarding public comment regarding PFD projected revenues and insolvencyALERT: BE CAUTIOUS This email originated outside the organization. Do not open attachments or click on links if you are not expecting them.
Commissioners,
During the public comment period provided for discussion of the proposed PFD, I raised concerns about the likelihood that insufficient revenue would be generated by the 0.2% PFD sales
tax to meet the revenue bond obligations of the District and that, in any event, there will be insufficient revenue generated from users of the pool (dues, fees) to support the operations
of the proposed pool (or any other amenities associated with it).
In the limited time available for public comment, I unartfully cited the change in sales tax revenue experienced by the county during the COVID pandemic. Mark McCauley correctly noted
that sales tax revenues had increased dramatically during that period, but that was not my point. The main reason for that increase was the trillions of dollars of federal stimulus
money that was poured into the economy to avoid a depression. My point was that those increases will not be sustained in future years, and creating any budget based on such a false
assumption is unrealistic.
It is clear that, under the Trump administration, no such stimulus money will be available in the future, that almost no new grant money will be available, and that efforts are underway
to stop payment of already-approved grants and even to claw back previously granted funds.
This month’s report to the county budget committee states that “construction accounted for 58.6% of the regular & optional local sales tax revenue and that large construction projects
(broadband, sewer, roads) were 43.8% of the regular & optional local sales tax revenue”. Meanwhile, retail sales tax revenues are declining, as inflation continues to eat away at the
purchasing power of consumers.
For several years, Mark McCauley has said that he has been expecting a recession, and I agree with that view; the difference now is that a recession will likely be much deeper than expected
and will happen much sooner and more quickly.
So, back to COVID and sales taxes…
At least $5 trillion was pushed into the economy during COVID to stave off a depression. It worked, but it left government at all levels with a hangover, with budgets that unrealistically
expect revenues, specifically from construction and other stimulus, to continue.
But in an environment where there is no new money available for construction projects, either large or smaller, there goes that 50% of sales tax revenue. The county should expect to
see sales tax revenues return to pre-COVID levels and lower. The boom times will soon be over.
Here is the history of the county’s Mental Health sales tax (0.1%):
Year Mental Health Sales Tax
2012 $360,083
2013 $404,817
2014 $402,466
2015 $438,907
2016 $500,457
2017 $516,131
2018 $573,509
2019 $606,456
2020 $585,314
2021 $711,230
2022 $801,399
2023 $699,168
Double the above amounts, and you see the amount that would be raised by a 0.2% PFD sales tax.
The Heathier Together Task Force forecasted about $1.6 million of annual revenue from a 0.2% PFD sales tax (apparently based on a very optimistic continuation of total sales tax revenues
similar to 2022.)
Given the much more probable scenario of no stimulus money for the foreseeable future, we can expect, at best, sales tax revenues to return to 2019 levels; a recession will make the
picture even worse, closer to 2017’s numbers.
So, for 2026 and beyond, a far more realistic number is $1.2 million of revenue from a 0.2% PFD sales tax. That’s not enough to even cover the bond debt payments for a $20 million pool,
much less any part of the operating costs of any aquatic facility, regardless of any amenities that may or may not be included.
I hope the above clarifies my concerns about the difficulties that will be encountered in financing both the construction and operation of the proposed aquatic facility.
Thank you,
Tom Thiersch