Palm Coast government is proposing to keep the same property tax rate in 2020 as the rate in place now, with a projected 9 percent increase in property valuations and an expected revenue increase of “about $2 million to the general fund,” according to Helena Alves, the city’s finance director.
“That’s a good thing. No tax increase. That’s what we wanted for the people,” Council member Jack Howell said at this morning’s council meeting toward the end of Alves’s budget presentation. Howell was wrong. No one corrected him.
But it’s a common mistake, or misconception: that when the tax rate stays the same, the tax bill stays the same. It does not. During the Great Recession years, many a homeowner’s tax rates went up but the amount of money paid in taxes went down. The reverse is just as true today. Tax rates can stay flat or even decline some, yet the amounts taxpayers will pay will go up.
Under Florida law, the property tax rate Palm Coast is proposing is, in fact, a tax increase–and a substantial tax increase for non-homesteaded properties–because it would generate more revenue next year than the rate did this year: property taxpayers who’ve seen their property values rise will see their tax bill rise as well. Based on the current proposal, the tax increase would be pegged at 9 percent.
Howell won’t see such an increase because even though his $145,000 house on Felwood Lane saw a handsome 12 percent improvement in market value this year, his assessed value of $124,000 is entirely exempt from taxes thanks to the homestead, military and other exemptions. He paid zero dollars in taxes to the county, the city or the school board this year. He’ll pay zero next year.
Fellow-council member Bob Cuff’s property on Bren Mar Lane is more typical of what homesteaded property owners can expect by way of tax increases next year: Cuff’s property saw a 10 percent increase in market valuation this year, to $151,000, but because it’s homesteaded, the assessed value was limited to a 2 percent increase, to $100,000. Under Florida law, the assessed value of a homesteaded property may increase by no more than 3 percent or by the inflation rate, whichever is less. The inflation rate has been hovering around 2 percent. Knock off the $50,000 homestead exemption, and Cuff’s taxable value is reduced to $49,667.
Cuff’s Palm Coast tax bill last year was $225. If he votes to approve the same tax rate the city administration is proposing ($4.6989 per $1,000 in taxable value), his bill for this year will be $233, an $8 tax increase.
Most homeowners in Palm Coast are homesteaded. Almost none show up at their local governments’ budget hearings, even when a tax increase is in the works, for that reason: most are protected from the more dramatic effects of a tax increase.
Not so for businesses and non-homesteaded properties, such as rentals. Take the Publix at Belle Terre Parkway and Palm Coast Parkway. Its market value and assessed value are the same, because it has no exemptions. That value jumped $678,000 this year, to $5.5 million a 14 percent increase. Publix will pay every cent of that tax increase: It paid Palm Coast $22,800 in property tax last year. At the proposed rate, it will have to pay $26,000, a $3,200 tax increase.
Multiply that by the three Publix stores in town, and the company’s tax bill will increase by around $10,000. (Keep that in mind when you detect that seemingly inexplicable cent or two-cent increase in the price of parsnips: ultimately, you still end up paying every form of tax increase on the books, whether you’re homesteaded or not, making Howell’s statement about “no tax increase” inaccurate even for himself, assuming he shops in town for anything.)
Additional revenue to the city would underwrite a $2.6 million spending increase, though $1 million of that would be drawn from reserves (and a budget transfer of $1 million from reserves to the capital fund, in large part to pay for improvements at the city’s public works plant on U.S. 1). The new money would include paying for almost 10 new positions, raising the total number of city employees paid through the general fund to 233. The number does not include employees in so-called “enterprise funds,” or government funds that don’t depend on property taxes, such as the utility department and the stormwarter department.
Both the fire department and the policing contract with the Flagler County Sheriff would see 5 percent spending increases. Alves only cursorily mentioned the increases.
But the increase for the sheriff, of around $176,000, is nowhere near the original increase of six deputies Sheriff Rick Staly is seeking, at a cost of over $600,000.
“The feeling is we’re going to stick with the contract,” Palm Coast City Manager Matt Morton said today in a brief interview. He said the council still has plenty of room to discuss the issue and decide otherwise, though the two options it would then face would be either to trim the budget to accommodate the sheriff’s request, or raise the tax rate. The budget is already trimmed, Morton said.
The sheriff has also requested four additional deputies from the county commission.
“The sheriff is still in discussion over the entire issue, it’s certainly not a closed matter,” the sheriff’s Chief Mark Strobridge said today. In 2017, the sheriff asked for–and got–five new deputies to form a traffic unit in Palm Coast. The city’s policing budget increased by $550,000 at the time. “Those numbers are delivering,” Strobridge said. “I’m going to steal some of his words,” he continued, referring to Staly, “it’s really not time to take our foot off the gas.” He said the city continues to grow and crime reduction is not yet crime elimination. “We can’t lose our gains.”