Flagler County Administrator Heidi Petito on Wednesday said property values in the county may have risen by as much as 15 percent this year, sharply more than the 9.2 percent recorded last year and the highest rate of increase since 2007. The higher valuations are generating a potentially huge windfall for local governments, if they keep their property tax rates unchanged.
In Flagler County, Petito projects a windfall of $12.3 million in addition to current revenue, yielding $7.5 million in new revenue for county government operations, $3.7 million for the Sheriff’s Office, and a little over $1 million between the other constitutional offices. Again, that’s assuming the county commission does not lower the property tax rate to account for the new revenue.
Despite the projected windfall, the sheriff has requested a 20 percent budget increase, going from the current $28.5 million budget to a requested $34.2 million. That leaves a $2.1 million gap between the revenue the county expects (absent cuts in the property tax rate) and the budget request from the sheriff. Those figures do not include the sheriff’s separate policing contract with Palm Coast. The Clerk of Court and the Supervisor of Elections also have gaps between what they’re requesting and what would be available–$159,000 for the clerk, $317,000 for the supervisor.
“A lot of this is really up in the air,” Petito said. “We won’t know the exact number for a property valuation until July 1, and again this is looking at a flat millage and it’s going to be a decision of the board moving forward on how you want to proceed.” Valuation estimates don’t usually fluctuate much beyond May estimates, especially after the property appraiser has provided local officials with preliminary figures.
“It’s in the ballpark,” Flagler County Property Appraiser Jay Gardner said of Petito’s figures. He expects it may even be better. “Palm Coast is over 17 percent right now.”
For every tenth of a mil reduction in the property tax rate, county revenue would decrease by $1.2 million. And for every reduction, there would be a concurrent widening of the gap between budget requests, wants and needs and available revenue.
County commissioners did not reveal what they would do with the tax rate, opting for more time and prudence.
“The longer we can hold off on a final decisions this time, and keep looking at things, the better,” Commissioner Dave Sullivan said, “because if we go into a recession a year from now, and we’ve established some pretty high-level costs, it’s going to be hard to take any of it back. So I just think we should be a little cautious about increases and things like that and hold off final decisions as long as we can.”
“I’ve got an overriding kind of philosophy to try to reduce the tax burden but also meet the needs of the county,” Commissioner Andy Dance said. “And I don’t necessarily want to just set an arbitrary number to millage. I think that ends up being a result of of what we view as our priorities and what we base that on, and it could be anywhere–preferably under under the flat millage. So I’ve got time, and as far as direction goes, I just I think we could set another meeting. I think each of the commissioners can chime in, but for me, I need time to break the numbers down, maybe have a personal meeting with finance just to get a better idea of of the individual breakdowns.”
Commissioner Joe Mullins lightly hinted at reducing the tax rate–he and Commissioner Greg Hansen are running for re-election–but said he was not interested in “nit-picking” the budget, leaving it to the administration to run its departments as it sees fit. But he noted that the flush amounts from federal aid that amplified local budgets are drying up, with consequences.
“I know that this does seem like a lot of money, and it is,” Petito said of the county’s needs, leaving aside constitutional officers, “but this is really being used up for some ongoing operational needs, increased costs with inflation along with addressing some of our aging fleet and facilities. But this money is entirely allocated already for next year without making any reductions in millage.” (Millage is another word for property taxes.)
For example, of the $7.5 million that would be added to county coffers, $3.9 million would go to pay increases, covering a collective bargaining agreement with firefighters, $1.6 million for capital improvements, $677,000 for ordinary operational cost increases. (Petito projects spending $1.6 million on the Agricultural Museum and utility services next year, among other projects, addressing a “quite large” backlog deferred maintenance. The entire backlog adds up to 40 million. The county’s emergency radio system requires a $2 million infusion for debt service alone.
The budget taking shape would also spend $444,000 on technology improvements mostly geared toward jail security and surveillance cameras countywide. The cost would include the price of servers and data storage. That does not include an annual $500,000 in needed maintenance and storage for the county’s technology. Expect $1.15 million in roof repairs at the Government Services Building and the courthouse, as well as flooring repairs.
And numerous wants or needs–what Petito refers to as “decision units,” meaning they’re up to the county commission to decide whether to fund or not–remain unfunded, among them a $5 million replacement for FireFlight, the county’s ageing emergency helicopter, or extending FireFlight’s service to a 24-hour clock, which would add $260,000 to the budget.
Like all governments, businesses and households, the county is contending with rising inflation. In 2015 the county passed a resolution basing budget baselines on each year’s consumer price index as of December, and capping that figure at 4 percent. Inflation hasn’t been an issue since, so there’s been no need to change the resolution. But it is an issue now. “I don’t think that the 4 percent cap is working right now with the market the way it is,” Petito said, seeking guidance from the commission to revise the resolution, move the December point as a baseline, and raise the cap. The commission was receptive.
Health costs amount to $10,500 per employee. Insurance rates have stayed the same since 2016, both for employees’ premiums and the county’s share of those premiums. The county’s own health clinics has helped stabilize costs. But it’s now a double-edged sword: it is beyond capacity, causing employees to seek care in more expensive clinics around town. Petito is proposing expanding clinic hours by 24 hours at a cost of $420,000.
The county is exploring collaborating with the cities to have joint clinics and satellite locations. Palm Coast has even proposed a 2,500 square foot building to that effect. It could be ready to go in 16 weeks, for $350,000. “I don’t know where the city manager is in Palm Coast with their board but it is something that we are looking at,” Petito said. “I don’t know if they will have an appetite to do that. But certainly we are trying to partner with the cities to see if there is an opportunity there for us.” The county is needing to solidify its insurance system, because it’s dipping into its insurance reserves to keep it going.
The county administration completed budget discussions with its various departments a month ago and expects to submit a tentative budget to the commission on July 11, Petito said. The county currently have enough reserves to run government operations for two months. Its goal is to have three months’ worth.
With some pride, Petito listed ongoing major projects: the construction of the Sheriff’s Operations center and additional purchasing building for the agency, a west-side fire station to go up at the intersection of State Road 100 and County Road 305, expected to cost $4.1 million, a new south side public library that would also house the county’s Health and Human Services Department and go up across the street from the Sheriff’s Operations center, expansion of broadband access to poorly served areas on the west side of the county, a $1 million project, drainage projects, new pickleball courts in the Hammock, and a software upgrade plan that cost $2.8 million just for its first phase.
“As a board I think that you guys should be extremely proud that you’re able to accomplish all of this with not adding any new debt service, which I think is truly remarkable,” Petito told the commission. In fact, the $23 million Sheriff’s Operations Center is being financed with a $20-million bank loan. The additional building to be used for the sheriff’s purchasing department, a $1.27 million project, is not part of that financing package. That money will be drawn directly from the county’s half-cent sales tax revenue.
See Petito’s presentation here.