When Bill Phillips last served on the New Port Richey City Council, the city was facing a financial crisis.
Now, some 20 years later, Phillips is once again a councilman and finds the city facing a financial crisis.
"I feel like Bill Murray in 'Groundhog Day,' " Phillips said Tuesday night. It was his first council meeting after taking the oath of office.
A perfect storm of financial conditions is gathering on the horizon, an auditor warned council members. "The economic tsunami hits in 2014," Phillips said.
Unless things change, huge spikes in expenses could plunge the city's general fund into cumulative losses of $9.3 million during the next five years, according to Chad Whetstone, a partner and audit manager with the Tampa Bay office of Carr, Riggs and Ingram.
Based in Enterprise, Ala., Carr, Riggs and Ingram is the fourth largest CPA firm in the Southeast.
Pension contributions could spike soon, especially if the Florida Supreme Court upholds a lower court ruling that a law requiring public employees to contribute 3 percent of their pay toward their pensions violated the state constitution. Then the city pension plan contributions probably would rise 15 percent a year after the initial spike, Whetstone said.
"My concern is I'm too low," the auditor said, referring to his pension-cost projection.
In addition, the city's Community Redevelopment Agency will go broke by the end of 2014 if current projections hold, Whetstone emphasized. The CRA is saddled with debt left over from a downtown property-buying spree in the middle of the last decade.
Debt service and other expenses are likely to rise as well. The stormwater fund is about out of cash.
The audit report paints a worst-case scenario, Mayor Bob Consalvo emphasized. Many variables remain, he said.
For one thing, property values, depressed since the 2008 real estate and housing collapse, could begin rising again in the near future, Consalvo said. Also, the city is discussing debt-refinancing options with its bankers.
The city's general fund property tax rate already is getting high, Consalvo said, with a millage rate of about 8.3 mills.
A mill is one dollar of property tax for each $1,000 of assessed property value. The state constitution says a city, county or school district can levy no more than 10 mills.
The city could use its share of Penny for Pasco sales tax revenue to pay down some CRA debt, City Manager John Schneiger said.
"It's a worst-case scenario," Councilwoman Judy DeBella Thomas agreed about the audit report. Nevertheless, she said, "That pension fund is a big nut to crack."
"The trends are working against us," Whetstone said. New Port Richey is not the only city or county in the nation facing debt problems, he said.
In August 2011 the tiny town of Central Falls, R.I., was forced to file for Chapter 9 bankruptcy protection after city retirees refused to agree to pension cuts. In November 2011 Jefferson County, Ala., filed a Chapter 9 petition because it couldn't pay off bonds it floated to make sewer system improvements.