Around HereBy Leo CoughlinAs I recall from my long-ago schooldays, I=PRT. That is, interest equals principal times rate times time. One begins with a sum of money. Say, 100 dollars. That is the principal. The rate is say, 6 percent. And the time is one year. (Pay attention now, Mac.) Thus, 100 dollars times 6 percent in one year equals 6 dollars. Voila! Thus I=PRT comes to life. It is a truism that for the formula to work all the elements must be present. There must be principal (money), a rate and time. And that is where Norton Craig, Largo's city manager, runs into trouble with his comment during the budget discussion with the City Commission last week. It has to do with the Penny for Pinellas fund, the official name of which is the Local Option Sales Tax (LOST) fund. Craig has been whooping about how Largo will get some $72 million over the next 10 years in the third iteration of the fund, which began in 1991. This pie in the sky dream is maintained despite county predictions (and it is the county that does the collecting and distributing) that there will be a fall-off amounting to some 12.6 percent from 2011 to 2020. Craig's mental machinations predict Largo will get 17.6 percent more in the next decade than it did in the 10-year period just ending. Hold it! There is a uniformity to this thing. If the fund goes up or down or sideways, all jurisdictions are equally affected. So if it goes down 12.6 percent, the county and all cities and towns go down 12.6 percent. And that 12.6 percent, according to one high-ranking county official who must perforce remain nameless, is overly optimistic. That same personality added, "Craig's seventy-two million dollars is a dream. It will never happen." These are the words that the county is already on record with regarding the LOST fund - "Originally, the LOST fund was expected to bring in $1.9 billion" in the 2011-2020 phase. "But because of the severe downturn in the economy, a drastic decrease in revenue is expected." That statement was produced before the oil spill out in the Gulf that has and will affect severely tourism in Florida and Pinellas County. The I=PRT thing comes up in this context - In the first budget discussion by the Largo City Commission last week, the LOST fund and its possible future adventures came up. One of the heartening things, Craig chipped in, was the interest that will accumulate and bolster the fund for Largo. Huh? How in heaven's name would interest money pile up if the do-re-mi coming from Penny for Pinellas is spent (as it appears to be) as fast as it comes in? (It should be added here, parenthetically, as you can see, that Commissioner Harriet Crozier, apparently equally adept in finance as Doctor Craig, was bloviating the same errant nonsense. But then, she is Craig's sponsor, having been the chief proponent of hiring him - with no experience whatsoever - as city manager three years ago. Proof, once again, that 17 years on the commission does not sharpen, but rather, dulls the brain.) Yes, the Penny for Pinellas money will be going out the door as quickly as it arrives but worse yet much of the "money to come" has already been obligated. Rule one of finance, especially in small cities where financial disaster can hit hard, fast and unexpectedly, is to not obligate money you do not have in hand yet. So. Interest? The principal may be there (momentarily before it slides out the door), and there may be a rate to be found somewhere better than 2 percent, but there is no time. I=PRT fails if one of those three elements is not present. Largo collected $61,186,252 from Penny for Pinellas, 2001-2010. Figure it out. To get $72 million over the next 10 years, beginning now, there needs to be $11 million more coming in. Even the city's own forecasts of LOST revenues over the next several years do not conform to the hopes that Craig expostulates about. Largo is a troubled city these days. Stupendous compensation packages for some officials in a small city like Largo does not go down easily with the citizenry, which we now know, is agog with these developments. A city manager and his wife, who works for the city, too, hauling out about a quarter of a million dollars of taxpayer money a year is equally grinding to the sensibilities of the citizenry, perhaps mistakenly regarded as yokelry by some. And more trouble may lie ahead based on obligations graven in stone and expectations, which are still in the area of hope. One prays to be wrong.
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