Making Cents- Central- Feb. 2003
Now, voters will consider a new request from Orange County commissioners for another half-cent sales tax increase, this one for road construction. Apart from the issue of whether voters are willing to impose the tax, the projections for the road-construction half-cent have raised questions about the projections used to sell the schools tax.
Commissioners estimate their half-cent tax will raise $2.6 billion -- but over 20 years. That's less money over a much longer span than the school board's half-cent, amounting to a billion-dollar discrepancy over the life of the taxes. In its first year, the schools tax is forecast to raise $142.5 million; the roads tax, $119 million.
Critics and supporters of both taxes say something is clearly amiss. "There is always some variation in forecasting," says economist Hank Fishkind of Fishkind and Associates. "But recessions notwithstanding, I think it's true the school board made some errors in their calculations."
The school board's growth estimate includes an average of 3% population growth a year and 4% inflation. Those may be realistic assumptions, but they ignore the fact that the inflation that boosts tax collections will also boost project costs, Fishkind says. Most such forecasts -- including the commission's, which figures on 3% to 4% growth in collections -- ignore the effects of inflation, figuring the increase in revenue will be offset by the increase in costs.
The difference in allowing for inflation only accounts for about half of the billion-dollar discrepancy between the two sets of projections. The other half may have come from a mistake by a former University of Florida Bureau of Economic and Business Research economist who helped the school district prepare its estimates.
The economist -- and the school district -- apparently neglected to account for the fact that the sales tax increase applies only to the first $5,000 of big-ticket items. Over the 13-year term, ignoring the cap would account for some $448 million in projected sales tax income the school district will never see. School district CFO Henry Boekhoff has repeatedly said he's comfortable with the projections.
The two different approaches do make some sense, says Fred Winterkamp, manager of fiscal and business services for Orange County.
"If we collect less money than we expect, we can't stop a road 50 feet from its intended destination," he says. The school board "has more flexibility in changing its plans to account for how the tax collections actually go."
A Question of Projections
The Orange County School Board projects its 1/2-cent sales tax hike will raise $2.7 billion over 13 years.
Orange County commissioners say their 1/2-cent sales tax hike will raise $2.6 billion over 20 years.
IN THE NEWS
Altamonte Springs -- The state is suing World Golf League, a fledgling company that held golf tournaments for members and promised to pay cash prizes to the winners, for failing to pay up. The company said it was trying to line up licensing agreements to pay for increased prize pools, but none of those agreements materialized. Golfers paid $95 to play in a tournament, with the entry fees going into the prize pool. Without the licensing income, the company said, it didn't have enough money to pay the promised prizes.
Cape Canaveral -- Royal Caribbean International (NYSE-RCL) plans to regularly sail its new vessel, the 3,114-passenger Mariner of the Seas, from Port Canaveral when the ship is delivered in October.
Space Exploration Technologies Corp. says it will use Cape Canaveral's launch facilities for its Falcon commercial rocket, which is slated to make its maiden flight in 2004. The company, which goes by the name SpaceX, says the Falcon will be able to launch 1,000-pound payloads for a third of the cost of existing launch vehicles.
Celebration -- Four Seasons Hotels and Resorts bought 400 acres in Celebration with plans to build a 425-room luxury hotel, golf course and housing development. In 2002, the Osceola County Commission approved changes to the Celebration master plan that enabled the development to be built. The company did not give a timetable for construction.
Kissimmee -- Osceola County officials have voted to kill a deal with Xentury City Development after critics said Xentury City's Saudi-owned parent company, Xenel International, had ties to a bank that allegedly helps finance terrorism. Xenel's CEO sits on the board of supervisors of an Islamic bank that has a subsidiary that was a founder of another bank the State Department suspects of financing terrorists. Osceola officials say they will renew talks with Texas-based Landmark Organization, which came in second in the most recent bid for the convention center.
Lake Mary -- Recoton Corp. (Nasdaq-RCOT) plans to shed "non-strategic assets" in an attempt to raise up to $100 million to pay down debt. The company says it will focus on its core Jensen, Advent and A/R brands while selling subsidiaries involved in video games, car stereos and musical equipment.
Orlando -- Darden Restaurants (NYSE-DRI) expects to open a test concept restaurant this month near the Florida Mall. The new restaurant, Seasons 52, will feature a healthy menu that changes weekly and a wide variety of wines by the glass.
The city of Orlando has approved a plan to offer incentives to filmmakers who use Orlando for production work, particularly the sound stages at Universal Studios Florida. To get the maximum incentive -- $1.05 million over three years -- a production company would have to spend $21 million over those three years producing a regular slate of programming, such as a TV series or movie. Production work at Disney-MGM Studios does not qualify because that location is outside city limits.
The 800-room Delta Orlando Resort abruptly closed in December after struggling in the aftermath of the terrorist attacks. The 20-year-old Canadian-owned hotel had temporarily closed parts of its 11-building complex in the last year and a half, and the property had been for sale for half of its appraised value of $16.3 million.
Transit Group Inc. emerged from bankruptcy in December after a judge approved the trucking company's reorganization plan. The company filed for Chapter 11 protection a year earlier and sold its Groveland subsidiary, Carroll Fulmer, earlier this year.
Surgilight Inc. (OTCBB-SRGL.OB) founder Jui-Teng Lin faces sentencing next month in New York after he was convicted of money laundering and securities fraud following a pump-and-dump scheme of the company's stock in 1999 and 2000. Prosecutors say he released misleading press releases, then sold company stock when the price went up.
Orlando Regional Healthcare System Inc. got permission to boost emergency room capacity at Sand Lake Hospital and Orlando Regional South Seminole Hospital. The expansions will add 24 ER beds to Sand Lake, bringing the total to 44, and 20 beds at South Seminole, bringing the total to 30. Both projects will take about a year. Separately, Arnold Palmer Hospital for Children & Women got regulators' approval to build a nine-story, $130-million addition.
MOVING THE DOUGH
ORLANDO -- Interstate Bakeries Corp. says it will close an 80-year-old Wonder Bread bakery in Tampa and move those operations to an expanded Merita bread bakery in Orlando. About 100 employees will lose their jobs in Tampa.
GAINS AT ISLANDS OF ADVENTURE
ORLANDO -- Universal Orlando's Islands of Adventure racked up the only attendance gains among major central Florida theme parks in 2002, with visitors increasing by 10% to 6.1 million, according to trade magazine Amusement Business.
Disney's Magic Kingdom dropped 5% to 14.7 million; Epcot fell 8% to 8.3 million; MGM Studios fell 4% to 8 million; and Animal Kingdom was down 6% to 7.3 million. Universal Studios Orlando fell 6% to 6.9 million, a decline that was exacerbated when Universal moved Halloween Horror Nights to Islands of Adventure. SeaWorld's attendance was flat at 5 million.