Florida Audit Finds Local Governments Stressed

BRADENTON, Fla. — Some 113 of Florida’s cities, counties and special districts could be declared in a state of financial emergency, according to a recent assessment of fiscal 2011 audits.

The 113 local governments and districts, up from 111 the year before, met one or more of the conditions established in state law for determining the entities that may be struggling, according to an annual report on significant financial trends and findings by Florida auditor general David Martin.

A financial emergency, if declared, would allow the governor’s office to provide technical assistance to resolve financial problems. The city of Miami was in a fiscal emergency in the 1990s that required state oversight for a number of years.

Earlier this year, the Legislature passed a bill that said it would constitute “malfeasance, misfeasance, and neglect of duty” if members of a local governing body or a school district fail to resolve a state of financial emergency. They can be removed from office by the governor. The law went into effect July 1.

This year’s report also discovered that 90 local governmental entities were “experiencing deteriorating financial conditions” in fiscal 2011.

Auditors studying financial indicators found trends such as high levels of ad valorem millage rates for lesser and higher-populated counties and municipalities, insufficient fund equity, declining excess revenues over expenditures or decreasing operating incomes, low or declining levels of cash and investments, and increasing long-term debt.

The report also showed there continues to be substantial erosion of taxable property values, which could be a sign that the economy combined with measures limiting the ability of local governments to raise taxes haven’t hit bottom.

“Although taxable property values and taxes levied have increased in total since 2002, there has been a significant decrease over the past five years,” auditors said. Ad valorem taxes are the largest source of income for cities, counties, and schools.

Since 2006, taxable property values across the state have decreased by $349 billion or 21%. The amount of taxes levied has decreased by $2.2 billion or 26%. The amount of property tax collections has decreased by $2.2 billion over the same period.

In fiscal 2010, auditors said taxable values since 2006 had decreased by $290 billion or 18%.

“Contributing factors to the decline in taxes levied include lower taxable property values, reductions in millage rates, and 2007 and 2008 legislation that limited the ad valorem revenue-raising capabilities of local governmental entities,” auditors said.

Between fiscal 2011 and 2012, taxable values statewide are projected to drop another $940 million to $1.26 trillion, according to preliminary estimates by the Florida Department of Revenue.

The annual audit review is designed to provide uniform financial information to the Legislature and the joint Legislative Auditing Committee to improve the financial condition of local governments.

For reprint and licensing requests for this article, click here.
Florida
MORE FROM BOND BUYER