Bad News for the Keys

Update:  See follow-ups here and here.

Saw this on KeysNews.com this morning.

State Cuts Keys Funds for Projects

No more sewer money this year.  This is unfortunate.  I’d like to take a closer look at certain statements made in the article.

The loss of funding could have serious ramifications for the Key Largo Wastewater District, which is line to receive $17 million in sewer funding this year to pay down debt.  The county was looking at a money swap with the Key Largo district, because Gov. Rick Scott said he will not allocate money to pay down debts, only for new projects.

The county commission had agreed to take the state money for the Cudjoe Regional and other new projects and then give Key Largo county infrastructure sales tax money in exchange. But with no state funding coming this year, the county will have to reconsider the funding agreement, Gastesi said.

“The timing is going to be tight,” Gastesi said.

The $17 million was approved last year.  My understanding is that the $17 million is still coming through.  The District was in line to receive another $12.5 million this year.  This appears to be an error in the newspaper article.  Confirmation is pending.

A brief comment about this bit:

Gov. Rick Scott said he will not allocate money to pay down debts, only for new projects.

I’d like to make one thing crystal clear.  The Mayfield Grant was intended to finance and refinance Florida Keys wastewater projects.  The state was pushing Keys entities to complete the projects, but was not in a position to provide the promised funding as work began on the first of the projects (Key Largo and Marathon).  That is why the language allowing for refinancing was included.  It was only after the Key Largo project was completed that the “new projects” requirement was imposed.  In effect, Key Largo taxpayers are being penalized for fulfilling the state’s requirement to complete the wastewater project on time.  I would argue that the state’s withdrawal of promised funding after the required project was completed constitutes an unfunded mandate, which is prohibited by the state constitution.  While this may be true, Key Largo taxpayers have no legal recourse to correct it.

And a not-so-brief comment about this bit:

The county commission had agreed to take the state money for the Cudjoe Regional and other new projects and then give Key Largo county infrastructure sales tax money in exchange. But with no state funding coming this year, the county will have to reconsider the funding agreement, Gastesi said.

“The timing is going to be tight,” Gastesi said.

Again, my understanding is that Year 2 of the Mayfield Grant is still coming through.  The District is still getting the $17 million.  This year’s ask was for Year 3 of the Mayfield Grant.  The District stood to receive another $12.5 million.  Regardless of what happens with the state, the county owes its taxpayers in Key Largo $26 million in wastewater funding, and needs to come up with a contingency to plan to fulfill its obligation.

In 2012, the Board of County Commissioners (BOCC) stated that 10% of the infrastructure sales tax could be used to help the District pay down debt.  I would argue that this 10% cap does not apply to the Key Largo project, but for the sake of discussion, let’s assume it does.  The county anticipates that it will receive $19 million from the infrastructure sales tax for each of the next five years.  That’s $1.9 million per year.  Assuming those projections are correct and continue for the foreseeable future, the county could clear its obligation to Key Largo in a little less than 14 years.  No state money needed.

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