Facing $6 Million Hit, County Begins Long Budget Season as Tax Hike Appears Inevitable

In Florida these days, there’s a season that starts a month earlier than summer, and burns hotter, particularly for certain seats. It’s budget season, when politicians and their top administrators sweat, squirm and gloom their way through balance sheets unhinged by the continuing collapse in property values and revenue on one hand, and an electorate’s distaste for tax increases to make up the losses.

On Monday, the Flagler County Commission held its first of close to a dozen budget meetings over the next three months. Flagler Beach holds its first on Tuesday. Palm Coast got a brief budget overview from its finance director at its last meeting, and will get a couple more in coming weeks. But those overviews are designed more for public consumption—to soften the ground for a possible tax increase—than for the council, which usually tackles its budget later than other governments, and does so more cursively and opaquely than others.

County Administrator Craig Coffey’s annual budget breakdowns, which he submits in advance to commissioners and posts in successive chunks on the county’s website well before his actual proposed budget is presented in July, is more transparent and accessible than that of any other local government agency, outlining every expense line by line down to salaries (minus the names), the $1,000 the administration budgeted for snacks and goodies at various public meetings, even the cost of business cards for a new deputy county attorney ($100, which seems high: 1,000 cards can be had for half that price).

Monday’s meeting of the commission was its first immersion in what Coffey calls “a formidable financial obstacle”: with property valuations falling 13.5 percent, the county’s $68 million general fund budget, which pays for everything from fire services to elderly care to general administration, is losing $5.5 million ($40 million in the general fund is generated by property taxes). The county is also facing what will likely be an extra $500,000 hit from higher fuel prices, since general revenue dollars pay for the sheriff’s office gas. That adds up to a $6 million hit.

Commissioners have to decide between cutting services and raising taxes, or doing some of both. On Monday, after going through the preliminary budget figures, they did not come up with substantial savings.

It will be a combination of both, but I expect that we will be hard-pressed to find any major areas to reduce unless we decide to substantially reduce services to residents,” Alan Peterson, chairman of the commission, said after the meeting. “I think that the majority of it will come from a millage increase. We went through a fairly large portion of the budget today, excluding obviously the constitutional officers”—who have their own budget: the tax collector, the property appraiser, the sheriff, the supervisor of elections, the clerk of courts—“and we did not appear to find any reduction of any significant amount beyond what the county administrator had proposed.”

The county will save some money regardless, now that all public employees, rather than the government they work for, will be required to send 3 percent of their pay to the Florida State Retirement Fund (actually, to the state’s general fund, which is balancing its books this year and next partly on the back of its employees). The remainder of this year’s saving to the county on that account is $202,000. Next year the county will save $700,000.

The saving to the county is a 3 percent pay cut to public employees, coming on the heels of what will be the third year in a row, in county government, without raises (for most, anyway). Commissioners discussed the option, presented by Coffey, of making up the 3 percent with local dollars. The commission was split on the idea. Peterson said this year employees should go without, because the 2 percent cut in the Social Security payroll tax, in effect for only this year, would dull the effects of the 3 percent increase in retirement contribution. But he said he’d be willing to re-consider the matter next year. He notes that a quarter of the county’s residents are on fixed incomes and sustaining the effects of higher fuel, food and medical costs.

The issue is not settled: expect in coming weeks to see the county’s employees flood the commission’s chambers to press the case for some form of relief, particularly in light of the absence of raises and the continuing escalation of health insurance premiums.

The current property tax, or millage, rate in the county is $5.5337 per $1,000 in taxable value. For a $150,000 house with a $50,000 homestead exemption, that works out to a $553 tax bill (not including your city taxes, mosquito control, the water management district or the school board). For the county merely to maintain its current level of revenue and offset the 13.5 percent drop in valuations, it would have to raise the tax rate to $6.36 per $1,000–or $83 for that house. On the other hand, most houses in the county would have seen property values drop in line with the county average. So the net effect, even if the county were to increase the tax rate by that much, is not likely to be an $83 increase. It could be far more modest than that, or no increase at all, depending on the value of that house compared with the previous year.

While the administration was looking for some direction on how to proceed with the budget, commissioners delayed that decision on Monday. “They’re reluctant to jump in and pick an arbitrary goal without seeing more of the budget,” Coffey said, though he echoed Peterson’s prediction that a combination of budget cuts and property tax rate increase would close the gap—with a caveat.

“We can’t really cut anymore without seriously affecting some services,” Coffey said. “I think they understand the $2 million-plus cuts a year we’ve been doing aren’t there. We’ve reorganized, we’ve privatized, we’ve laid off, we’ve reorganized.” Now, Coffey said, there are no similar measures left.

The next budget meeting is on June 13, with a third later that month, at which commissioners are expected to have a clearer idea of where they stand. Coffey is aiming to have his budget, usually required by July 15, prepared by late June.

With that in mind, commissioners delved into the finer details of the county’s budget today.

The county administration is a $639,000 operation, almost all of it salaries and benefits. But that’s just administration. It does not include the county commissioners’ costs nor the county attorney’s.

The county administrator is paid $141,400. The salary does not include deferred compensation (an additional $18,000) or an auto allowance ($5,200), which brings the total salary package to close to $165,000. The deputy county administrator, Sally Sherman, is paid $109,000, and Carl Laundrie, in charge of PR and communications, is paid $63,000. Two executive assistants have a combined $90,000 salary. The county also has a special projects and grants position for $48,000, which it had recently filled, but only briefly. The position is open again.

The commission itself has a proposed $412,000 budget, $345,000 of it to cover the salaries and benefits of the five commissioners, who are paid $48,000 each. That salary is set by state law. The county’s lobbying costs, $119,000 in 2008, have fallen to $40,000 this year, and would stay at that level. Commissioners travel ($10,000) and membership in various organizations ($8,400) adds sundry costs.

And the county attorney’s office, led by Al Hadeed, has a proposed $559,000 budget, including a $161,000 salary for Hadeed, $105,000 for a deputy county attorney, and $105,000 for two legal assistants, not including benefits. Hadeed’s salary would include a 3 percent merit raise. It’s a contractual agreement, but it would also represent one of the only raises awarded a county employee: most others are going on their third year without raises. The exception: county commissioners, whose salary is set by the state. That salary has been rising, too.

Other departments are less visible, but have a more immediate impact on those who benefit from them, and illustrate the broadness of county government services—and how many of those services are under budgetary siege.

“We’re not funding what we need, that budget would be much bigger” if the county was funding what it needed in such things as indigent health care, Coffey said.

Human services, for example, is a $1.5 million department, but only $154,000 of that is personnel. The rest is driven by state-required costs such as Medicaid reimbursements to hospitals and nursing homes, which go through the county, as do county grants: The Children’s Home Society gets $28,500, Children’s Advocacy gets $50,000, the Boys & Girls Club gets $30,000, Stewart Marchman, drug-abuse and detox center, would maintain the $173,000 it’s received each of the past four years, and the Family Life Center would get $40,000, among others.

The Family Life Center’s $40,000 grant was questioned. The center has had trouble with the IRS. “How are we assured that this contribution will go to the operation of the center rather than some issue that may come down from the IRS?” Commissioner Milissa Holland asked. “When I spoke to them, they didn’t think they were going to keep their doors open, or be able to.” Lynda Link, the county’s social services director, said the grant was more targeted at emergency services. “To the best that I can see and tell you, it is,” she said.

More surprisingly, the county is proposing to cut in half the $18,000 contribution it was making to a local food pantry, though Linke explained that given the existence of seven other food pantries in the county, and other sources of food for the pantries, the county could cut its contribution.

The county also oversees elderly care and meals to the elderly, at a cost of $382,000 (as proposed for the coming year), adult day care and other community services.