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Palm Coast Proposes to Increase Its General Fund Budget by $700,000 and Add 9 Positions

| July 10, 2013

It's up to them now. Members of the Palm Coast City Council at a July 4 ceremony. From left, Mayor Jon Netts and council members Bill McGuire, Bill Lewis, Jason DeLorenzo and David Ferguson. Click on the image for larger view. (© FlaglerLive)

It’s up to them now. Members of the Palm Coast City Council at a July 4 ceremony. From left, Mayor Jon Netts and council members Bill McGuire, Bill Lewis, Jason DeLorenzo and David Ferguson. Click on the image for larger view. (© FlaglerLive)

For the first time in seven years, property values have increased in Palm Coast, if only fractionally. Even so, residents will likely see a small property tax rate increase that for most would mean a slightly higher tax bill as the city continues to balance tight budgets with residents’ demands for services, and loosen the tight belt somewhat.

The council on Tuesday agreed to tentatively set its new tax rate at $4.50 per $1,000 in taxable value, a 4.8 percent increase over the current rate. That’s not necessarily the tax rate the council will finally approve once it’s done analyzing its budget over the next few weeks. But the council is required to set a maximum possible rate, for legal purposes, above which it may not go once it does set its final rate. The tentative, higher rate will give the council breathing room as it figures out what to levy.

The council did just that last year, initially setting the rate at $4.5 per $1,000 before approving an actual tax rate of $4.2958, or the equivalent of a $430 bill for a house with a taxable value of $150,000 and a $50,000 homestead exemption. In its survey of cities of Palm Coast’s size in the state, the administration found that Palm Coast still had the third-lowest tax rate, after Weston and Boca Raton.

The rolled-back rate, meaning the tax rate the city would have to set to generate exactly the same revenue next year as it did this year, would be $4.2705 per $1,000, a barely-perceptible decrease from the current rate. If the city goes for the $4.5 rate, it would generate $650,000 more in revenue. (For a fuller explanation of the rolled-back rate, go here.)

That $650,000 happens to be awfully close to the budget increase the administration is asking for in 2014. The city is proposing an overall general budget of $26.5 million, a 2.7 percent increase over the current year’s budget of $25.8 million. To pay for that increase, a tax rate increase closer to the $4.5 per $1,000 is more likely than not.

“The problem right now is, until you see the full budget, you don’t know exactly how much money you’re going to need,” Jim Landon, the city manager, told the council. “But there’s other variables you have. Last year you raised the stormwater fee to balance the budget, and we’ll go through that where you have other variables. You can lower the millage rate and increase something else. You can shift it from operating to capital, vice versa, there’s all sorts of options we’ll present to you once you have the full budget.” (For an explanation of millage, go here.)

Even if the city approves the higher tax rate, taxpayers will not see a difference, because that higher rate is negated by a nearly equivalent decrease in a local school levy that expired on June 30. Taxpayers should also keep in mind that the tax rate is not by itself what determines their tax bill. The value of their property combined with the tax rate does. So if your house lost 5 percent of if value last year, but the tax rate goes up by 3 percent, you will still pay lower taxes. Conversely, if the value of your property has increased 5 percent, but the tax rate stays flat, you will pay more taxes.

Many residents who have added a pool or made other home improvements protest at tax time because their tax bill goes up, Forgetting that the increased value of their house, not just the tax rate, is what led to the heavier burden.

Still, Palm Coast residents have been groaning louder in the last few years even as their property tax bills have generally stayed flat or fallen, because the city has shifted its tax burden through other fees: as Landon noted, residents took a heavy blow when the stormwater fee was increased by a staggering 46 percent in December 2012—a $44 a year increase for the typical house. Just two months later, the council approved a nearly 18 percent increase in water and sewer rates. That increase is spread over three years, but the first 8 percent started in April. FPL is raising its rates. The city has nothing to do with that, but some residents blame the city anyway.

In sum, council members may rationalize their modest tax rate increases all they please: residents at tax time are not inclined to pigeonhole any rate increase the way council members may wish they did, packaging instead any and all rate increases under the same banner.

Nevertheless, council and city administration have to manage the city—and residents’ demands for services—and do so with real dollars, however elusive.

To do so, the city is proposing that $26.5 million budget, and also proposing to add nine people to its general fund staff, for a total of 215. That figure does not include dozens of employees in departments bankrolled outside the general fund, such as the city’s utility. That’s the most lavish increase in city staffing since the recession began. The largest previous such increase was the result of an additional fire station.

Landon repeatedly told the council that he was not trying to bring back the city to its spending ways before the recession–only that some additional spending was necessary to keep up with demand.

Palm Coast had barely a 1 percent overall increase in property values in 2012—tiny, but in relation to the declines of the five previous years, the indicator of a turn-around is more significant than its size at this point. Half the increase was due to new construction, and half due to higher property values. The city’s overall property values are still only half what they were at the peak of the housing bubble in 2007, when values hit $7 billion. They’re currently $3.69 billion.

“I think the revenues are going to be over budget based on what we’re experiencing right now,” Chris Quinn, the city’s finance director, is predicting, “so we’ll have a very positive net change for the year.”

A few details: The City Council itself will have a budget of $96,000, unchanged from the previous year. The city manager’s division will have a $363,000 budget (more than half of which accounted by the manager’s salary and perks). The city attorney’s budget will increase by almost 2 percent, to $394,000. That covers all the city’s contracted legal services, not just those of William Reischmann, the attorney who sits in at all council meetings. Economic development’s budget will decline by 3.7 percent, to $285,000 (almost half the county’s budget).

The city’s contract with the Flagler County Sheriff’s Office for policing will remain flat, at $2.6 million. Fire services will remain relatively flat, at $7.3 million, a $63,000 increase over the current year, with 59 employees.

The city’s golf and tennis centers continue to run in the red: the city golf course, budgeted to break even this year, will be $50,000 in the red, while the tennis center, budgeted to run a $100,000 deficit, is actually short $125,000

Communications and marketing, which includes the city’s PR position and now will include the city’s two-man video production team, will have a budget of $349,000. The city is not adding capacity to that video team, though, as City Council member Bill Lewis said, are “backed-up”—a gentler way of saying they’re overworked.

“They would love to have additional staff. I just don’t think you’re in a position right now to start adding that kind of capacity, because if you do, it’d be a fairly major ticket item,” City Manager Jim Landon said. “We are not proposing to loosen that belt and get back to where we were. We’re trying to stay right where we are, but be a little more realistic in some areas. You’ll see that with development starting to pick up, and major cutbacks there, because we didn’t have the work, now the work is coming in. But this is not one of those areas we’re proposing to in any way add capacity. We’re trying to maintain it.”

Lewis wondered why not bring in interns, who wouldn’t have to be paid. Landon said he’s offered high school students to work at the city on an intern basis. He noted that television ratings for the city’s productions isn’t where the numbers are, so much as through video streaming online and by way of social media.

The Town Center Community Redevelopment Agency—a special enterprise zone that was supposed to be benefiting the city—is costing the city another $500,000 next year.

The city will no longer be supporting the Agriculture Museum, which will become a county responsibility. The city will continue to subsidize the arts only marginally, with a $20,000 annual allocation. Lewis protested, hoping to get that figure increased at least some. He got little support.

Lewis also wanted the city to charge a fee for those who use the city’s Business Assistance Center. He got even less support for that as Landon and council members, at times irritated, said that it would go against the purpose of the center—to entice small businesses to seek help and get a jump start, not to discourage them from doing so. “If we start charging for people coming in the door, they won’t come in the door,” Landon said. If anything, Landon said, the center is on pace to broaden its services because of its successes.

“If we’re going to add to the staffing I would accept to be some justification,” Council member Bill McGuire told Landon. “Show a need, because I’m not interested in just building staff. I think Joe is solid gold, but do I need another Joe? I don’t know, you’re going to have to tell me.” Joe Roy heads the Business Assistance Center.

The council will formally set the tentative tax rate at its July 16 meeting. The council will then hold budget workshops focused on its proprietary funds (July 30) and its special revenue and capital funds (Aug. 13) before its final budget workshop on Aug. 27. Public hearings when the actual tax rate will be adopted are scheduled for Sept. 4 and 18, both at 5:05 p.m. at the Palm Coast Community Center.

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19 Responses for “Palm Coast Proposes to Increase Its General Fund Budget by $700,000 and Add 9 Positions”

  1. tom jack says:

    here we go again. the unemployment rate stays the same so landon and his cronies want to spend even more. what will we get for the extra money, same as always NOTHING.

  2. Gia says:

    The city do not need more in the payroll, they’ve got too many already doing nothing.

  3. Gia says:

    They should slash the payroll, they’ve got too many already doing nothing.

  4. Magnolia says:

    Somebody needs to ask them what is going to happen to our flood insurance here under the new FEMA rules. In many coastal areas, the rates are going to be as high as $27,000 per year. When this happens, property values here are going to plummet to about $35,000 per house.

    It also means nobody will be able to sell or buy a house here.

  5. Magnolia says:

    ” In its survey of cities of Palm Coast’s size in the state, the administration found that Palm Coast still had the third-lowest tax rate, after Weston and Boca Raton.”

    I’ll bet that Weston and Boca have jobs. We need to vote these people out of office. If they find a penny in their pocket, they are going to spend it, whether the community can afford, wants it or not. How about we take a referendum vote on tax increases, allow the community to have a say in what they want?

  6. popo3984 says:

    thank god the city is doing the right thing and raising taxes we need these essential city services I for one am all for it you get what you pay for and the way things are going now the city is starting to look very trashy bunnell and flagler beach should follow suit so they to can finally get the services they had before the recession.

    • William says:

      Give me a break the city of Palm Coast can waste money faster than Capitol Hill just look out your front door

  7. fruitcake says:

    What demands have residents made for more services?

  8. Realty Check says:

    Being realistic we should all understand that taxes must go up at some point just to keep up with the demands on public services, Police, Fire, streets and roads and so on. You have to understand that payrolls go up every year, yes city and county employees are entitled to a raise same as every other business; would you stay at a company if you did not get a raise? The problem we face is the amount of money the average resident uses in public tax money and the amount paid in by residents and business. With out industry the tax burden fall on residential tax payers, here is a quick breakdown

    • Residential tax payer uses about $1.38 in services for every dollar paid in, Fire, EMT, roads and city services
    • Industry only uses about 40 cents on every dollar paid in
    • With out that balance there, the tax burden will increase higher each year we attract no new business’s
    I will pay my fair share of taxes, but I would like to see new industry come in to help equal the burden and allow us to add some new amenities and jobs to this City. We will not have a multi- generational community if we only educate our children here, but then they do not have a job to come back to and help build a strong community. We will only waste our tax dollars year over year renting our education system and never benefiting from those that come back, Wall-Mart and Olive Garden will not provide a stable financial structure for a young couple to raise a family here. I know no one likes tax increases but they are needed to actually build a strong community, I am not condoning frivolous spending in any way, but a community center or a museum would not be a bad thing.

    • Magnolia says:

      NOT when we are in the red. If the city/county want to attract business they do it by being fiscally responsible and balancing their budgets.

      We just had our water bills raised 20%. Do you think those who are not working can continue to pay more and more taxes?

      We are not seeing anything for our efforts except more Section 8 housing, that’s GOVERNMENT housing for those who many not know what it means. Do you think the Projects are going to attract business to Palm Coast?

  9. Robert says:

    “The city’s golf and tennis centers continue to run in the red: the city golf course, budgeted to break even this year, will be $50,000 in the red, while the tennis center, budgeted to run a $100,000 deficit, is actually short $125,000”.

    This isn’t news it has been going on since these facilities were built.

    One commenter is happy to see taxes being raised. Well taxes have been raised each year over the past several years. Home values have plummeted by up to 50% and more and the rate of taxation has continued to increase. Has anyone given thought as to what is going to happen to the rate of taxation when values begin to increase? If you think that the rates will decrease you are whistling Dixie.

    Where are the tea bag people and their excessive government spending and taxing mantra?

    They are probably golfing and playing tennis, wishing for ground to be broken for a new city hall.

  10. ken says:

    Watching some of our city “workers” is like watching a slow motion movie.
    Who is responsible for supervising them?

  11. tulip says:

    @ Magnolia

    Raising insurance rates for people who live right on the coast should’ve been done long ago. There are many rich people who live or own these coastal homes, and can easily afford the higher rates. Why should everybody else pay for people who want to live in dangerous areas and keep rebuilding in the same place over and over again? Why should a person who lives in a modest home away from dangerous areas and are a lower risk, pay nearly the same as those who live in high risk places?

    If a person lives on the coast, or in a flood zone, their insurance rate should be higher than those who don’t. I doubt the higher rates will knock down the value of Flagler County homes, anymore than it does anywhere else.

    Fron what the article regarding PC tax rate, it will be minimal or a non event, depending on how someone’s house gets revalued, which is Jay Gardner’s job.

  12. confidential says:

    Now…there are at least 3 items in the city budget that really upset me;

    1) the Town Center CRA is costing “the city aka us the city taxpayers” funding it for half a million a year..? Can Landon and the current and past Council, with the six on board, can explain that to us! I understood that the CRA’s do not generate taxes for the general tax revenue basis of the cities or counties that they are located, but instead the CRA’s only generate tax revenue for themselves! But also I know that they are not to be funded either by the local general tax revenues generated by the residents. One more travesty…added to the original 5 million from our tax revenues utilized for the original creation of the Town Center CRA.

    2) Kemper Sports profiting from the Palm Harbor Golf Course and with a full parking lot of golfers all the time still in the red and asking for more money from us? When are they going to actually generate a profit for running a profitable business? They get all the perks for free don’t they? What about a glimpse of their books?

    3)Ditto and worst the tennis center. 125,000 a year? Got to be a better way.

  13. m&m says:

    When they hire 7 more people then 6 can watch while the seventh leans on the shovel.. What a waste of our tax dollars..

  14. Magnolia says:

    @ Tulip, suggest you take a look at the new FEMA maps at the new flood plain designations. You don’t have to live on the coast to live in a flood plain. They include a major portion of the country and most of Florida.

    I know people in NJ who live miles from the ocean and are now facing $27,000 ANNUAL flood insurance bills.

    Yes, the program is losing money, but in NJ, people are now losing homes because of this increase. Just so you are aware. The only people exempt are those who don’t have a mortgage.

  15. tulip says:

    @ Magnolia

    Why would someone who doesn’t have a mortgage be exempt? Those people still need to have homeowner’s insurance, unless they are so rich that if they lost everything, they have the cash to rebuild.

    Sounds like the banks don’t want to lose money by having people with a mortgage just walk away from their destroyed properties and leaving the bank to take a loss and rebuild, so the insurance rates are going to cover the bank and the homeowner. I don’t think that’s a fair way to do it. They could have a clause that they will pay on “as the work gets done basis”, that way if the homeowner “walks” they get no insurance money.

    It seems like the person who just wants to have a nice home, live a decent life, reasonable insurance, gets screwed because of all crap that goes on in the insurance industry.

    • Magnolia says:

      @ Tulip, Wrong word, exempt. If your home is paid for, if there is no mortgage, under current law you cannot be required to have flood insurance. In other words, if you lose everything, you lose everything. Some people cannot get flood insurance because of where they live, right on the beach. I think the majority of these are second homes.

      But my friend in NJ is in a panic. She lives over two miles from the beach and she and her neighbors cannot afford $27,000 for flood insurance. Doesn’t seem like anybody in Washington, DC cares about that, does it? They’re too busy sending billions to countries that hate us, spending millions on constant presidential campaigns, blowing our money on things that don’t help the average citizen here.

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