A 25 percent overall increase in Palm Coast government’s budget, paired with a 7 percent property tax increase, drew an unusual number of protesting residents Wednesday to what are normally staid and barely attended annual budget hearings.
But most of the complaints were based on misperceptions or mischaracterizations of the budget, while several of those complaining will see their city taxes barely budge. The hearing illustrated a divide between readily available evidence on one hand and, on the other, cherry-picked assumptions and misreading of the evidence to reach unsupported, exaggerated or at times outright false conclusions. (Watch the hearing here.)
“I’m on a fixed income, and I object to any tax increases, Dave Flynn, a resident of Fordham Lane, told the council. “Just because my property value is increased doesn’t mean my viable cash on hands is increased. So I live within my means, I expect the government to live within its means, and I love Palm Coast.”
But Flynn won’t see a tax increase–not from the city, not from any local governments: his taxes will decrease from $1,985 he paid this year to around $1,335 due next year, according to the notice the property appraiser sent Flynn back in spring, a 33 percent decrease. (The property appraiser’s 2019 numbers were based on maximum tax rates allowable, so if there are any changes after budgets are adopted, the tax bill may only go down.) Flynn’s Palm Coast taxes on his $200,000 house are falling from $420 to $198.
The reason: Flynn has double the homestead exemptions most residents may have. In addition to the $50,000 standard exemption, Flynn filed for the $50,000 senior exemption from the county, and a similar, $50,000 exemption from the city. Both governments approved those exemptions locally, so if anything, Flynn should have been thanking the council rather than objecting, particularly since his exemptions mean that other property homeowners who don’t have those exemptions, including the council members, are subsidizing Flynn. (Council member Jack Howell is the exception: as a veteran and a senior, he pays no property taxes on his homesteaded house.)
There was also Ed Danko, who has filed to run for council member Bob Cuff’s seat. “Folks,” he told the council Wednesday evening, “we have a slogan here in Palm Coast. It’s a nice slogan, we took it from a Kevin Kostner movie: build it, and they will come. I might suggest after you approve this budget, you change that slogan, to tax it and they will run.” Danko, who only recently moved from North Carolina, may have been confusing his geography: Palm Coast has not, in fact, had such a slogan. Its current slogan is “Find Your Florida.” (But Danko after this article initially ran shared an image from the current city newsletter with an item about ongoing development headlined “Build It and They Will Come.”)
And for all of the city’s and the county’s tax increases over the years, both city and county have continued to cause a run into their jurisdictions, rather than out of them, Danko himself an example.
Turning his appearance to the council into a campaign commercial, as some candidates who have never appeared before local governments tend to do once they file their papers to run, Danko used his own favorite slogan, saying that “after I’m elected I want to assure everyone in here, I will never vote to raise your taxes. Never. I’d rather drink antifreeze than raise your taxes.”
But Danko, like many other speakers, was grossly misinformed about his own taxes, or who was taxing him.
Danko and his wife bought the 2,400-square foot house with a pool at 56 Wasserman Drive in Palm Coast in April 2018 for $305,000. Their taxes are unquestionably going up this year, but not by much, and only because they’re new arrivals, and the property lost the nearly $50,000 of accumulated, “protected” value under Save Our Homes, the Florida law that prevents homesteaded properties from seeing tax increases exceeding 3 percent in any given year. Their tax bill will go from $3,311 to a maximum of $3,647, a $336 difference.
Palm Coast has hardly anything to do with it: Danko’s Palm Coast taxes are going up $15. His county taxes are going up $12. The bulk of his tax increase is due to school taxes, and those rates aren’t even set by the Flagler County School Board. They’re set by the Legislature. The school board has no choice but to ratify them. And comparatively speaking, the Flagler school tax rate is still historically low.
So despite moving into a new house and losing all homestead exemption protections, Danko will still see a limited tax effect, because he benefits from a $100,000 homestead exemption. His tax bill’s increase this year, modest as it is, will likely be the highest such increase for several years to come as his protected values begin to accrue, while his exemptions shift the tax burden to other taxpayers in the city, presumably those whose votes he will seek as he will claim, with demonstrable inaccuracy from the get-go, that he would drink antifreeze before raising their taxes: his tax status inherently does so already.
“Senior exemptions are a pretty big exemption,” Flagler County Property Appraiser Jay Gardner said today, speaking by phone from a conference. “Any break that someone gets I don’t care what it is, the people who aren’t receiving it are the ones who are paying for it.”
The numbers are startling: as of today, total property in Palm Coast is valued at $8.3 billion. If all properties were taxed at the current city tax rate without exemptions, the city would be generating $39 million. But property taxes generate just $24 million. Regular homestead exemptions take out their share. But the exemption Flynn, Newland and other seniors qualify for takes out an additional $148 million in value, denying the city $695,000 in revenue that has to be made up somewhere. Compound that with other exemptions, and those who are paying fairer share of taxes end up being burdened significantly more than the Flynns and Newlands of the city.
“You can’t come up with an exemption, a cap, a break that doesn’t cost taxpayers money. There’s no free ride,” Gardner said.
Similar story with Denton Newland of Fountain Gate Lane. He wondered if there was a taxpayer “watchdog group” in Palm Coast as he took to the podium before council members Wednesday evening, answering his own wryly rhetorical question. “There isn’t. Well, I think there will be now,” Newland warned. “I don’t like it when it hits my pocket book. I’ll be seeing you.”
But nothing has hit his pocketbook. If Newland does see a tax increase on his $178,500 house, it will be, at most, a $22 increase in total, from all government agencies, including the school board. His Palm Coast taxes are going up $13. He, too, enjoys a $100,000 exemption and is subsidized by other taxpayers.
There briefly was a watchdog group a few years ago, but it floundered on its own, gravely misinformed facts and allegations–so grave that its legal actions were first tossed out of court, then declared frivolous, and it was ordered to pay the county–the agency it was watching over–legal fees it had incurred. If there hasn’t been another successful “watchdog” group since, it’s largely for the same reason that a majority of residents don’t feel the need to show up at budget hearings, understanding their rather simple tax notices for what they’ve meant for the past decade or more: taxes have been mostly flat, regardless of tax rates, and services, judging from the city’s annual surveys, have been mostly applauded, with three of the city’s two most expensive services (fire, police, parks) getting the highest marks.
As Palm Coast’s tax rate and tax burden was the target of one batch of mischaracterizations Wednesday evening, the size of the city’s budget was the target of another.
The city’s overall budget is going up significantly: by $40 million in a $203 million budget, or 25 percent. It’s an arresting number. But it has very little to do with what residents who addressed the council Tuesday evening claimed.
The general fund budget, where residents’ taxes go, is going up by less than $3 million, and half that increase is generated by new construction that doesn’t touch existing residents. Increases in the rest of the budget are better understood as increases in fee-based services rather than in the size of government. Those services are mostly their own enterprises, but since they’re run by the government, the bottom line shows up in the overall figures.
For example, $10 million of the increase is due to the increase in the monthly stormwater fee, which pays for drainage in the city, but as a self-sustaining, independently-funded department separate from all others (and funded with your money, of course). The city’s water and sewer utility, which residents pay for as they would any utility, through their monthly utility bills, also increased fees, and accounts for another $10 million in the overall increase of the budget, most of it in the capital improvement fund that pays for upkeep or additions to water and sewer plants. Absent that upkeep, residents would be protesting before the council in droves much larger than droplets of antifreeze.
Recreation, fire and transportation impact fees, which are levied on new development, not on existing residents, account for another $10 million, with much of that money slated for widening the north end of Old Kings Road. And so on: a few minutes’ look at the actual numbers removes the mystery about the budget’s size and explains its purposes. See the full chart, with all funds’ comparisons between last year and this year, below.
“The $202 million mark is a bit striking but that also includes all the Old Kings expansion grants and the funds that carried over from last year,” Nick Klufas, the vice mayor who chaired Wednesday’s meeting, said. On several occasions he explained the numbers–as did City Manager Matt Morton, as did Finance Director Helena Alves–though some members of the audience seemed primed to object regardless. “So even though that number is percentage wise, not just our millage rate staying the same, there is money that is being carried over from the previous budget and then also all the grants for this operating fiscal year that are being compiled into that $202 million number.”
If the council had a bellwether of discontent with the city’s finances, it was Howell, whose assumptions before he got on the council were best shadowed by rigorous fact-checking. He was convinced the city’s books were cooked. He wanted a “forensic audit” and made it a goal to have one. On Wednesday, he spoke like a city convert.
“I had mentioned when I campaigned and when I got elected I had talked about the possibility of looking at a forensic audit of our books,” Howell said, “because I just wasn’t comfortable with some things on the campaign trail I picked up. Then when I got into office, it was time that the auditors were here. I sat down with the auditors and I checked them out. And they told me they would be more than happy to do a fiscal audit, or a forensic audit, if I had some strong suspicions. So I asked them, and I said look, if you’re going through the books, would you–if you see anything that you’re uneasy with, let me know. Then would be the time that if we needed to pursue a forensic area to study that, we could do that. And as it turned out they found no issues whatsoever, which attests to the fine workmanship of our fiscal director here.”
The council approved both next year’s tax rate and the budget in 4-0 votes. (Mayor Milissa Holland was absent.) The tax rate will remain the same, at $4.6989 per $1,000 in taxable value. A $175,000 house with a $50,000 homestead exemption will pay $587.
It’s helped Howell to see government’s operations from the inside, though an inside look isn’t necessary, given the city’s published numbers. Some of those numbers are below.
Palm Coast Budget, 2019-20
|Communications and Marketing|
|Policing Contract with Sheriff's Office|
|Parks and Recreation|
|General Fund Total|
|Community Development Block Grants|
|Recreation Impact Fees|
|Fire Impact Fees|
|Transportation Impact Fees|
|Old Kings Road Tax District|
|Town Center Community Redevelopment|
|Special Revenue Funds Totals|
|Utility Capital Projects|
|Garbage (Waste Pro)|
|Enterprise Funds Totals|
|IT Internal Service|
|Internal Service Funds Totals|