Ultra-conservative isn’t necessarily the most venerated way to describe government. In Palm Coast’s fiscal management this year, it may well be, and it is allowing the city to hire two additional sheriff’s deputies, restore employee raises, and restore the city manager’s own raise, which he had declined last year on the approach of Covid’s era of uncertainty.
The Palm Coast City Council learned today that a combination of City Manager Matt Morton’s hiring, salary and other spending freezes, less dire revenue shortfalls associated with the coronavirus pandemic, more-than-expected tax revenue and a significant assist from Covid-related federal aid known as the Cares Act, the city is in a far better financial position today than it projected it would be once the pandemic started and when it prepared its current budget last year.
General fund revenue ran $2.6 million ahead of revised budget projections, the majority of that from federal aid dollars (and $1.7 million ahead of pre-revised projections). General fund savings from projected spending totaled $2.6 million , not including savings in separate, independent funds such as the water and sewer utility and the stormwater fund, which have their own budgets (and realized savings of $3 million).
“This is not something we see on a regular year,” Finance Director Helena Alves explained to the council.
The council agreed to reinstate the 3 percent cost-of-living raise due employees on Sept. 1 but suspended since. The raise will not be awarded retroactively. Rather, employees will begin seeing it in their first February paycheck. The council also agreed to again grant Morton the 5 percent raise he had earned following his first performance evaluation last year. Again, because the council had never stopped him from taking it. Rather, Morton in June opted not to take what amounted to a $7,000 raise to his $145,000 salary, declined it, because “leading by example in this community is what we need,” he said at the time: he could not take the raise while his employees were denied theirs, he said. Morton’s raise will also not be retroactive, the new rate kicking in next month.
Additional merit increases will still not be restored this year.
The better financial summary also enables the city to make good on its promise to hire the two additional sheriff’s deputies for added policing in Palm Coast. The council last year agreed to hire three deputies, two of them paid from, the city’s general fund, one paid through the more restricted revenue generated by the Town Center enterprise zone. Sheriff Rick Staly had asked for five deputies. The city resisted, considering it not prudent to budget all five in September, given the uncertainties, but pledging to revisit the matter should the numbers allow it. Today’s numbers did. So the two deputies will be hired shortly.
Morton and Alves had reported the financial update quite routinely.
“At the very outset of the pandemic, when we were unsure of where we were going, staff, Helena, myself and others having enough experience in dealing with crises at the local government level through different downturns, recessions and other impacts,” Morton said, “we wanted to make sure we were taking all appropriate measures to do two things: ensure that we continue to have a solid budget, and our goal was to not touch any disaster reserves if possible. And we did not want to see interruptions in service to our community, and minimize any disruptions to our community. I think all things considered, both those efforts were realized. I do want to call out that these measures were freezes, not cuts, so many of these items were included and budgeted for.”
Property tax revenue came in close to budget, generating $2 million more than last year, thanks to an increase in assessed value and the council keeping its property rate flat (the tax rate did not increase, but by keeping it the same as last year’s, it amounted to a small tax increase, since better valuations meant the city would generate more revenue overall).
The city’s share of the half-cent sales surtax revenue was projected to decrease 23 percent. “We did experience a slight decrease for the months of April to July, however the balance of the fiscal year was only slightly under the original budget, so leaving a balance of approximately $580,000 available when compared to the final budget,” Alves said. The revenue supports the general fund, and is separate from the half-cent, small-county surtax that supports capital projects.
The communications services tax and state revenue sharing came in close to budget, with a net balance of $112,000. Parks and recreation fees were expected to generate lower revenue as the city closed facilities and stopped many programs. There was a significant decrease, but revenue was enough to net a balance of $100,000, compared to the budgeted amount. Federal stimulus money from the Cares Act drew a $1.4 million allocation to the city for public safety salary reimbursements, “which was an item of course we had not budgeted for,” Alves said.
Then there were savings from Morton’s freezes and what at one point amounted to a workforce some 50 employees short (between illnesses, leaves and other Covid-related consequences). The general fund administration and finance came in under budget by about half a million dollars, community development was under by $200,000, public safety, including the fire department, under budget by $590,000, parks and recreation–including maintenance–under budget by $607,000, the streets division by $625,000. The city also recovered over $500,000 in Covid-related spending, ranging from IT equipment purchases to reimbursement for personnel expenses under the Cares act.
“Many of these items were included and budgeted for but we chose to wait to certain ‘times certain’ in the future, which, now we’re in the future from where we can budget,” Morton said, “to make sure revenues would track or justifications would come in, to start unfreezing these things, because these freezes are not items or programs that will lead us to be successful long-term. In other words, we don’t want to eliminate travel and training, long-term, that’s not a good strategy for success of our community. Freezing our very successful tuition reimbursement program: we have seen a lot of directors grow, graduate with their degree, and they’re putting those skills toward here for us, for our citizens and our community.”
Holland noted one such example to illustrate the city’s investment in employees’ education: Kyle Berryhill, a battalion chief and rising star in the Palm Coast Fire Department whose grant writing was able to secure additional dollars for the fire department. “Anywhere from $10,000 to $50,000 worth of grants that he picks up from place to place,” Palm Coast Fire Chief Jerry Forte said, aside from a quarter of a million dollar grant he secured previously. “He doesn’t go out for that big white whale, he goes out for all the little ones he can get that have a good impact. Kyle spent a lot of time at Flagler College, got his Master’s degree. He is being groomed for upper management, even further than where he’s at. I actually did his evaluation, and it’s phenomenal. This is a person that keeps going and going.”
Surprisingly little was made of any of the financial issues at today’s workshop of the council: aside from one summation from Mayor Milissa Holland after Alves had outlined the city’s fiscal situation–“Thank you Helena, thank you Matt, job well done, very fiscally responsible”–there was no back-patting or self-congratulatory words. Unlike, say, at county government, where the slightest saving–in a year of considerable financial losses and new debts–or even minor employee milestones are cause for fawns and panegyrics that lengthen meetings, the city’s item had been sandwiched between an update of city goals and a discussion of the city’s internship program, to which the council moved on immediately after Alves was done.