A.G. Gancarski
Some good news emerged for Jacksonville budget hawks Thursday, with City Council Auditor Kyle Billy lauding recent budgetary performance.
“Everything’s looking real good,” Billy said, presenting the FY 17/18 year end report to the Council Finance Committee.
This year-end report will be the last before city elections, which happen in March, with a May runoff if needed.
Revenue, said Billy, presents an overall favorable variance: $18,149,468. That should be cut to $16 million, Billy said, after a settlement with the Jacksonville Association of Fire Fighters.
He expects that $6 million will go to operating reserves in the end.
Councilman Jim Love noted an issue with state shared revenues from sales tax.
“The economy was booming,” Love said.
“It did not come in at the budgeted amount,” Billy noted.
State Shared Revenue underperformed budget by $5,371,563.
“We obviously miscalculated,” remarked Councilman Matt Schellenberg. “That’s a huge variance that we missed in the budget process. I guess we took last year’s number and put some other number over it.”
The report spotlighted ongoing concerns about JEA litigation and hurricane recovery costs.
“As it relates to JEA, S&P Global lowered their ratings outlook on September 28, 2018 for the
JEA Electric System from stable to negative. S&P also downgraded JEA’s Electric System, Bulk Power Supply System, St. John’s River Power Park, and all Electric System short and long term variable rate bonds due to their view of the cumulative effect of the numerous delays and cost overruns of the Plant Vogtle project. The negative outlook also reflects S&P’s opinion of JEA’s ongoing litigation,” Billy wrote.
“On October 11, 2018 Moody’s downgraded JEA’s Electric System, Water and Sewer System,
and District Energy System bonds, reflecting JEA’s exposure to the delays and cost overruns of the Plant Vogtle project in addition to the ongoing litigation between JEA and MEAG (this
downgrade is not reflected in the ratings as of September 30, 2018). Moody’s also stated that
their outlook remains negative for all three systems,” Billy added.
The JEA situation has had ripple effects for the city at large.
“Moody’s downgraded approximately $2.1 billion of outstanding City bonds and changed their outlook to negative from stable due to the City’s participation in litigation with JEA against the Municipal Energy Authority of Georgia (MEAG) related to the Plant Vogtle project. According to Moody’s, JEA and the City are seeking to have a Florida state court invalidate a “take-or-pay” power contract between JEA and MEAG,” Billy wrote.
While none of this information is new, critics of Jacksonville Mayor Lenny Curry have suggested that his administration stacked the board (all members of which were approved by the City Council) to put in a preferred CEO (Aaron Zahn) and drive a debate about privatizing the utility.
Recovery costs from Hurricane Matthew (2016) and Irma (2017) are also still a factor. Between the two storms, the city has already spent $90 million of a $121.3 million expected financial impact.
The city has already budgeted $15 million for amounts that won’t eventually be covered by FEMA’s 87.5 percent reimbursement.
