It’s a busy season for Mark Finigan, finance director for the City of Key West. Finigan is a Conch and has worked for the city in different capacities for 17 years, working on projects from the sinking of the Vandenberg to wading through the FEMA reimbursement process after Hurricane Irma. Leading up to the finalization of the 2019-2020 budget, which will be set in September, Finigan is at the helm of balancing revenue and expenditures.
“My philosophy is there are always three elements of a good operating budget that I try to keep in balance,” he said. “One is the need to be sure we have adequate reserves. Two is to be sure we have sufficient resources: manpower and supplies to fulfill quality of life obligations the city has to its citizens, and third, to recognize that since the citizens are paying for it, that it should be affordable.” It’s a delicate balance, said Finigan. “You don’t want to overtax the taxpayer, but you need to fulfill their needs.”
Indeed, the potential of raising property tax is an issue on many folks’ minds, though as Finigan points out, it’s only a fraction of revenue: shy of $17 million out of an approximately $188 million budget. The city has been in rollback for eight out of the last 10 years, which means while costs have increased, tax revenue has remained stagnant—some taxes have even lowered, based on property value.
“Rollback is not necessarily always good in a community,” said Mayor Teri Johnston. “We are now faced with a massive amount of streets that aren’t in good condition, sidewalks that aren’t walkable.” Johnston noted that trip-hazard lawsuits are also not good for the city economically or otherwise. She said a minor increase, while politically unpopular, could be good for the city and likely would not affect homesteaded homeowners, but rather developers or homeowners whose second — or third — home is in Key West.
“We do long-term modeling, so we can sustain a low or no increase,” said Finigan, “but occasionally you have to have them to keep up with providing the services, because costs go up.” He also mentions other sources of revenue, like parking and utility funds.
The draft budget meetings on July 24, 25 and 26 are open to the public. What should residents know about how the new budget affects them, beyond the recurring property tax conversation? Finegan helps break down priorities.
One major issue is what the reserves look like entering the 2019 hurricane season. Finigan says he’s proud of what the city has managed to accomplish fiscally regarding Irma recovery. “We’ve been able to work collaboratively with FEMA and the state, and they’ve appreciated our level of documentation. We’ve received back the bulk of the money,” he said. Acknowledging that other areas along the Keys bore the brunt of the storm, Finigan explained that the city has largely recovered its reserves, and didn’t have to borrow money.
“We have a fund balance, which is reserves, and it calls for the city to have between 20 to 25% of our operating reserves, which equates to 72 to 92 days.” Those reserves were tapped into for Irma recovery, but after working diligently to recover them, Finigan says he believes at the end of this fiscal year, the reserves will be back in the 78- to 80-day range. Each day, it costs $130,000 to $140,000 to run the city.
“A lot of it depends on the severity of the storm,” Finigan says. “There are storms that would require us to borrow money.” The city inventoried 20 to 30 coastal tourist-based communities in Florida and settled on an adequate reserve number based on that research. At the projected 80 days of reserve, it means we’d be in strong shape if a storm hit.
Key West residents and visitors often bemoan the cracked sidewalks or roads in ill-repair, though the city is constantly maintaining infrastructure. Rising costs have made improvements a challenge.
“We’ve been applying about the same amount of money for 5 to 10 years, and it’s pretty apparent that it’s falling behind in keeping pace with the normal degradation of the roads and streets,” Finigan said, “which brings me full circle to the question of needing adequate resources to catch up.” Finigan notes that the city would have to much more aggressively spend to address infrastructure issues, and they’d need to look at different ways to finance it. “We don’t have a whole lot of debt. So we do have excellent bonding capacity.” If the city were to tackle infrastructure more proactively, it’s possible that it would need to borrow money. “If we do go that route, and it’s a commission decision, we would get the most favorable rates.”
Finigan also notes accomplishments. He says the city has done a good job in the last 5-10 years “improving our vertical,” ie, with building projects like the new City Hall and Truman Waterfront Park. He said the infrastructure focus is shifting from vertical to “more quality of life, green space and open space. It sounds like streets and sidewalks are a priority.” The good news? The city already has a study that Finigan calls “pretty granular” in surveying each street and looking at what degree they need to be repaired, so preparation is already taking place.
“Our budget process, in terms of how it unfolds, is like any government agency, corporation, or non-profit,” he says. “It’s a bottom up approach, where you re-establish needs every year.” Each department presented its needs to Finigan and his staff in March, and now the finance department is assembling those inputs. He also reminds that there isn’t a single general fund, or pot, for the city, but rather upwards of 20 different funds, including utility funds like sewer and stormwater, the Key West and Garrison Bights, and community redevelopment areas, like the Caroline Street Corridors and Bahama Village. Thus certain money can only be used for certain purposes.
On July 24, 25 and 26, they will present the budget in a workshop setting to the commission. In September, they will present the budget in two hearings: a tentative approval and then a final reading. The budget is adopted by commission resolution. If anyone questions the city’s spending, or where the money is going, these hearings are open to the public, to clarify the reasoning and the process.
The Weekly will continue to update readers as the process unfolds.