published: Friday, November 28, 2008

Lake sales tax collections down

Reductions will have little impact on projects

BENJAMIN ROODE

Staff Writer

Lake County's sales tax revenues dropped slightly in the 2008 budget year, county figures show.

In the short term, reductions are small enough to make little impact on projects planned for the year, county officials say. Budget officials were planning for reduced sales tax revenues and have revised their projections for 2008-09.

Long term, revenue reductions mean a diminished ability to sell bonds, which could make paying for the second phase of new judicial buildings in downtown Tavares more difficult.

The county's 1/2-cent sales tax, split among the county and city governments for operating expenses, was down about 6 percent and ended at $11.9 million this past budget year. The 1-cent local option sales tax, which is split three ways among the school board, county government and city governments as a whole and was approved by voters, was down about 6 percent to $10 million. The county's portion of the state fuel tax also declined about 4 percent to $11.1 million for the year. That tax pays for road maintenance and construction.

County budget officials have expected a downturn in sales tax revenues and have revised their budgets accordingly, said county Budget Director Doug Krueger. The budget year runs from Oct. 1 to Sept. 30 of the following year.

Shortfalls in the non-fuel taxes should affect little in the way of project funding, Krueger said. Officials can make small cuts across the board to absorb the low estimate and keep infrastructure and other capital projects on track.

The drop in those two taxes hurts Lake in the bond markets, where the county is trying to find financing for a new judicial building. When sales tax revenues go down, the county's ability to pay off the government bonds it issues drops off in tandem, making it harder to secure loans.

That slide, combined with a bond market wary of lending money, has reduced the amount Lake can get right now. That means the county will have to look elsewhere to fund the new judicial building, even pouring money from the sales tax revenues directly into construction costs, Krueger said.

The third tax, on fuel, is used mainly for road maintenance and repair, not new road construction, said county Public Works Director Jim Stivender. His department will likely have to slash its five-year construction plan because of a downturn in building in the county resulting in a drop in transportation impact fees, used mostly for new road construction.

Any increase or decrease in the sales tax revenues is at the whim of the Lake County consumer. There's little county officials can do to bolster the sales tax numbers as they are driven by local consumer spending, Krueger said.

"They're tied to obviously the economy," Krueger said. "Right now, the economy is at one of the lowest points in many many years."