$130M+ hit for Jacksonville from hurricanes, as financial storm clouds loom

Reimbursements will come sooner or later for the city of Jacksonville from the federal government for Hurricanes Matthew and Irma.

Until then, however, the impact of the storms will be felt in the city’s general fund budget.

The Jacksonville City Council Auditor’s quarterly report for the final three months of 2017 puts the figures in sharp relief.

“The latest Hurricane Matthew projection estimates the financial impact will be approximately $45.1 million. As of January 31, 2018, the City incurred expenditures of $28.0 million related to Hurricane Matthew,” the report contends.

“87.5% of the total allowable expenses are subject to reimbursement, leaving the City to fund the remainder. The fiscal year 2017/18 approved budget includes an appropriation of $7.0 million from the GF/GSD to cover the City’s estimated obligation,” the report adds.

Irma is worse: the financial impact will be approximately $86.4 million.

“This could result in an estimated $10.8 million negative impact to the GF/GSD in the future. As of January 31, 2018, the City incurred expenditures of $45.8 million related to Hurricane Irma,” the report contends.

Jacksonville’s general fund budget is $1.27 billion currently. Reserve levels are in the $150 million range.

Even before Hurricane Irma, there was pushback from the Jacksonville City Council in terms of bolstering the city’s reserve levels.

Mayor’s Office staffers cautioned that obligations were coming due and it would pay off to bolster reserve levels.

That ultimately was not convincing to the Council Finance Committee.

In September, Jacksonville Mayor Lenny Curry said that he was confident that the city had sufficient reserves to weather a storm with an impact comparable to that of Matthew.

However, Irma’s track created a greater impact.

With slow reimbursements, one wonders if the discussion of reserve levels will be a more forceful one this summer.

The city has already been dinged by analysts for high fixed costs. These, combined with a reluctance to hike taxes, are leading influencers and policy makers to take a hard look at JEA privatization, which could net the city $3 to $6 billion.

Meanwhile, the city has worries regarding increasing interest rates and the equity market volatility of recent weeks.

“Also, a flattening of the yield curve continued throughout the 4th quarter, as the current market expectation is that the Fed will raise rates approximately three times in 2018. The downward shift of the long end of the curve continues to be interpreted as a sign that increased volatility may be on the horizon,” the auditor’s report contends.