Rejecting the second wave of pleas and demands from residents this week for a substantial property tax cut, and decrying disinformation, the Palm Coast City Council this evening voted 4-1 to adopt a budget that would keep the city’s tax rate flat, but equate on paper to a somewhat misleading 15 percent tax increase.
That tax applies to a relative fraction of the city budget: the general fund, which pays for fire and police protection, street maintenance, parks and recreation and other such essential services, and which is just $28 million this year. It would grow to $33.4 million next year, a record single-year increase of $5.4 million driven by an 18 percent increase in property valuations–steepest in 16 years.
By state law, when a local government adopts a tax rate that will bring in more revenue than the previous year, it’s defined as a tax increase, even though the vast majority of property owners, especially homesteaded property owners, will not see anywhere near that steep of an increase. The steeper increase is driven by a surge in new construction.
The city is proposing to use the additional revenue to add five sheriff’s deputies, two firefighters and a fire inspector, increase the street-maintenance budget by $1.5 million and the parks and recreation budget by $1 million (compared to the current budget when it was adopted last year), and of course pay for the council members’ 151 percent salary increase, which starts in November.
Still, the more than two dozen residents who addressed the council this evening–calmly and respectfully, if with occasional hints of outrage–had a hard time with the pairing of surging revenue with the impossibility of even a slight reduction in the tax rate. They had no illusions (“I don’t think anything that’s that’s been said here tonight is going to change anybody’s opinion and you guys already know how you’re going to vote,” one speaker said toward the end of the public comment segment, which lasted well over an hour). They were less repetitive or even misinformed (there was some misinformation, to be sure) than illustrative of people coping with a broad array of disparities that undergird Florida’s byzantine of taxes, assessments, exemptions and fees, some of which apply differently to property owners depending on when they moved to the state, or how long they’ve been in their home.
A woman addressed the homestead exemption: “Everybody is homesteaded but the people that are going to pay this 15 percent are the landlords, the business owners, the people that we have to do business with to live, the shop owners, the salons, everybody else is going to have to pass that 15 percent on down to us.” That might have been true if it were accurate: in fact even those businesses will not see anywhere near such a tax increase, since commercial properties’ tax increases are capped at 10 percent, when their property values increase that much, and many will not see the sort of property value increases that cascaded over residential homes. (The Publix on belle Terre Parkway, for example, will see a 7 percent tax increase.)
Another resident, who’s been a local property owner for five years, noted the not-so-intangible but tax-like increases in city services: the doubling of the stormwater fee, the huge increase in the garbage fee, the continuously increasing water and sewer utility fees, which mask sharper increases by building in annual inflation “adjustments” (that is, increases). So even if homesteaded property owners are not getting taxed heavily, they are still the ones who bear the brunt of those other increases.
Many of those who spoke reflected the irony of Palm Coast’s attractiveness to new residents, thousands of whom have moved in in the last couple of years, and who end up being those paying the steepest property taxes, because they are at the ground floor of the homestead exemption’s protections. Some criticized that growth, essentially telling those new residents they were not wanted.
Most did not have specific proposals, other than a demand for a lower tax, and many did not appear to grasp the difference between a lower tax and a lower tax rate: even if the tax rate were reduced fractionally (the way the County Commission reduced its rate at a similar hearing Wednesday evening), there would still be a substantial tax increase. And just as many appeared to be there because they’d been driven there by the electioneering videos of Alan Lowe, the perennial candidate for a seat on the Palm Coast City Council, and close ally of Council member Ed Danko.
Danko was the dissenting vote. He asked for a budget that would go to the full rolled back tax rate of a shade over $4 per $1,000 in taxable value, as opposed to $4.61. But if the city adopted that rate, Council member Eddie Branquinho said, it would have to cut $4.3 million from the budget it’s proposing. He said even a hiring freeze (such as the one Danko was proposing)_ would yield only $1.2 million in savings.
Danko said the council should just tell the administration what it can spend, and have it fogure out how to divvy up the money, rather than let the administration shape a budget that the council then has little time or ability to pare down. Other council members objected to Danko’s characterization, saying the council has, in fact, been working on the budget for six months, with numerous opportunities for members to propose changes, reductions, shifts in priorities.
Dank was also misleading when he repeatedly referred to his proposed tax rate in the context of what he referred to as a “quarter billion dollar budget,” a rhetorical attempt to make it seem as if the city’s budget is bloated enough to sustain the $4.2 million paring he is proposing. In fact, the budget includes, for example, the $91 million utility budget, which consists entirely of fee revenue and debt. Same story with the $26.7 million stormwater fund, the $14.3 million garbage fund, and numerous capital funds driven by impact fees, none of which have anything to do with property tax revenue, or the property tax rate.
Where Danko was more on point was when he attempted to link current capital expansions with future impacts on the general fund, since future buildings will have toi be staffed. But Mayor David Alfin said that was not related to today’s discussion.
“The disinformation has been rampant,” Alfin said, “and it bothers me to no end that the factual information which is available and has been on our city website, every day of those seven and a half months, is not understood or even realized by all of our residents because I would invite all of the community to participate in the process every step of the way.” He agreed with Danko that the budget-review process could be “tweaked,” though even in that case, Alfin and others on the council–including Nick Klufas–suggested that the budget process is what council members make of it. (Flagler Beach devotes two full days to go through its budget, line by line, in workshops that went eight hours twice this year.)
“There’s not any fat to go through that you’d be able to chop off a million dollars here, a million dollars there,” Klufas said, acknowledging, however, the inequalities of the homesteading system–that byzantine tax structure bedeviling local governments in Florida. ‘It can go from several hundred dollars to five, six, $7,000 dollars,” he said of the way property taxes can change on a house changing hands.
“I don’t want to pontificate and reiterate what has already been said,” Klufas said. He said data-driven decisions led to the replacement of vehicles, for example (the city is replacing or adding 69 vehicles and pieces of heavy machinery), just as data drives the decisions on which streets to pave, to keep them from falling into disrepair. “A lot of these questions that have been asked and the justifications for a lot of these positions are explained,” he said. Going back to the rollback rate, he said, “worries me on where those cuts would come from. Are we not going to hire the seven emergency personnel that are going to help save, potentially, our lives or provide safety? Or are we going to be eliminating additional money from the street paving program? I think these are decisions that we are responsible for up here and that is the burden. But that is also why we sit up here, and we sit through these extensive workshops, so that so we understand exactly the justification for these things.”
In his closing remarks, and just before the vote this evening, Alfin–always a quick study in adjustments–acknowledged that using Garfield, the cartoon character, to illustrate a point when he defended the budget last week created “a distraction.” So he would argue for the budget without the prop this time. And he returned to the theme of a budget discussion at times hijacked by grandstanding and electioneering during an election season, at the expense of factual information. He had passed the gavel to Branquinho so he could make the motion for the adoption of the budget. He did, Danko repeated his old line about drinking anti-freeze rather than approving a tax increase, and the council took its 4-1 vote.