Palm Coast Proposes to Increase Its General Fund Budget by $700,000 and Add 9 Positions
FlaglerLive | July 10, 2013
For the first time in seven years, property values have increased in Palm Coast, if only fractionally. Even so, residents will likely see a small property tax rate increase that for most would mean a slightly higher tax bill as the city continues to balance tight budgets with residents’ demands for services, and loosen the tight belt somewhat.
The council on Tuesday agreed to tentatively set its new tax rate at $4.50 per $1,000 in taxable value, a 4.8 percent increase over the current rate. That’s not necessarily the tax rate the council will finally approve once it’s done analyzing its budget over the next few weeks. But the council is required to set a maximum possible rate, for legal purposes, above which it may not go once it does set its final rate. The tentative, higher rate will give the council breathing room as it figures out what to levy.
The council did just that last year, initially setting the rate at $4.5 per $1,000 before approving an actual tax rate of $4.2958, or the equivalent of a $430 bill for a house with a taxable value of $150,000 and a $50,000 homestead exemption. In its survey of cities of Palm Coast’s size in the state, the administration found that Palm Coast still had the third-lowest tax rate, after Weston and Boca Raton.
The rolled-back rate, meaning the tax rate the city would have to set to generate exactly the same revenue next year as it did this year, would be $4.2705 per $1,000, a barely-perceptible decrease from the current rate. If the city goes for the $4.5 rate, it would generate $650,000 more in revenue. (For a fuller explanation of the rolled-back rate, go here.)
That $650,000 happens to be awfully close to the budget increase the administration is asking for in 2014. The city is proposing an overall general budget of $26.5 million, a 2.7 percent increase over the current year’s budget of $25.8 million. To pay for that increase, a tax rate increase closer to the $4.5 per $1,000 is more likely than not.
“The problem right now is, until you see the full budget, you don’t know exactly how much money you’re going to need,” Jim Landon, the city manager, told the council. “But there’s other variables you have. Last year you raised the stormwater fee to balance the budget, and we’ll go through that where you have other variables. You can lower the millage rate and increase something else. You can shift it from operating to capital, vice versa, there’s all sorts of options we’ll present to you once you have the full budget.” (For an explanation of millage, go here.)
Even if the city approves the higher tax rate, taxpayers will not see a difference, because that higher rate is negated by a nearly equivalent decrease in a local school levy that expired on June 30. Taxpayers should also keep in mind that the tax rate is not by itself what determines their tax bill. The value of their property combined with the tax rate does. So if your house lost 5 percent of if value last year, but the tax rate goes up by 3 percent, you will still pay lower taxes. Conversely, if the value of your property has increased 5 percent, but the tax rate stays flat, you will pay more taxes.
Many residents who have added a pool or made other home improvements protest at tax time because their tax bill goes up, Forgetting that the increased value of their house, not just the tax rate, is what led to the heavier burden.
Still, Palm Coast residents have been groaning louder in the last few years even as their property tax bills have generally stayed flat or fallen, because the city has shifted its tax burden through other fees: as Landon noted, residents took a heavy blow when the stormwater fee was increased by a staggering 46 percent in December 2012—a $44 a year increase for the typical house. Just two months later, the council approved a nearly 18 percent increase in water and sewer rates. That increase is spread over three years, but the first 8 percent started in April. FPL is raising its rates. The city has nothing to do with that, but some residents blame the city anyway.
In sum, council members may rationalize their modest tax rate increases all they please: residents at tax time are not inclined to pigeonhole any rate increase the way council members may wish they did, packaging instead any and all rate increases under the same banner.
Nevertheless, council and city administration have to manage the city—and residents’ demands for services—and do so with real dollars, however elusive.
To do so, the city is proposing that $26.5 million budget, and also proposing to add nine people to its general fund staff, for a total of 215. That figure does not include dozens of employees in departments bankrolled outside the general fund, such as the city’s utility. That’s the most lavish increase in city staffing since the recession began. The largest previous such increase was the result of an additional fire station.
Landon repeatedly told the council that he was not trying to bring back the city to its spending ways before the recession–only that some additional spending was necessary to keep up with demand.
Palm Coast had barely a 1 percent overall increase in property values in 2012—tiny, but in relation to the declines of the five previous years, the indicator of a turn-around is more significant than its size at this point. Half the increase was due to new construction, and half due to higher property values. The city’s overall property values are still only half what they were at the peak of the housing bubble in 2007, when values hit $7 billion. They’re currently $3.69 billion.
“I think the revenues are going to be over budget based on what we’re experiencing right now,” Chris Quinn, the city’s finance director, is predicting, “so we’ll have a very positive net change for the year.”
A few details: The City Council itself will have a budget of $96,000, unchanged from the previous year. The city manager’s division will have a $363,000 budget (more than half of which accounted by the manager’s salary and perks). The city attorney’s budget will increase by almost 2 percent, to $394,000. That covers all the city’s contracted legal services, not just those of William Reischmann, the attorney who sits in at all council meetings. Economic development’s budget will decline by 3.7 percent, to $285,000 (almost half the county’s budget).
The city’s contract with the Flagler County Sheriff’s Office for policing will remain flat, at $2.6 million. Fire services will remain relatively flat, at $7.3 million, a $63,000 increase over the current year, with 59 employees.
The city’s golf and tennis centers continue to run in the red: the city golf course, budgeted to break even this year, will be $50,000 in the red, while the tennis center, budgeted to run a $100,000 deficit, is actually short $125,000
Communications and marketing, which includes the city’s PR position and now will include the city’s two-man video production team, will have a budget of $349,000. The city is not adding capacity to that video team, though, as City Council member Bill Lewis said, are “backed-up”—a gentler way of saying they’re overworked.
“They would love to have additional staff. I just don’t think you’re in a position right now to start adding that kind of capacity, because if you do, it’d be a fairly major ticket item,” City Manager Jim Landon said. “We are not proposing to loosen that belt and get back to where we were. We’re trying to stay right where we are, but be a little more realistic in some areas. You’ll see that with development starting to pick up, and major cutbacks there, because we didn’t have the work, now the work is coming in. But this is not one of those areas we’re proposing to in any way add capacity. We’re trying to maintain it.”
Lewis wondered why not bring in interns, who wouldn’t have to be paid. Landon said he’s offered high school students to work at the city on an intern basis. He noted that television ratings for the city’s productions isn’t where the numbers are, so much as through video streaming online and by way of social media.
The Town Center Community Redevelopment Agency—a special enterprise zone that was supposed to be benefiting the city—is costing the city another $500,000 next year.
The city will no longer be supporting the Agriculture Museum, which will become a county responsibility. The city will continue to subsidize the arts only marginally, with a $20,000 annual allocation. Lewis protested, hoping to get that figure increased at least some. He got little support.
Lewis also wanted the city to charge a fee for those who use the city’s Business Assistance Center. He got even less support for that as Landon and council members, at times irritated, said that it would go against the purpose of the center—to entice small businesses to seek help and get a jump start, not to discourage them from doing so. “If we start charging for people coming in the door, they won’t come in the door,” Landon said. If anything, Landon said, the center is on pace to broaden its services because of its successes.
“If we’re going to add to the staffing I would accept to be some justification,” Council member Bill McGuire told Landon. “Show a need, because I’m not interested in just building staff. I think Joe is solid gold, but do I need another Joe? I don’t know, you’re going to have to tell me.” Joe Roy heads the Business Assistance Center.
The council will formally set the tentative tax rate at its July 16 meeting. The council will then hold budget workshops focused on its proprietary funds (July 30) and its special revenue and capital funds (Aug. 13) before its final budget workshop on Aug. 27. Public hearings when the actual tax rate will be adopted are scheduled for Sept. 4 and 18, both at 5:05 p.m. at the Palm Coast Community Center.