Palm Coast’s 547 miles of roads are deteriorating. A fifth of the arterial roads and half the residential roads are “fair to poor,” putting them on the verge of failing. The city is running out of “microsurfacing” band-aids. It has a $10 million deficit between immediate needs and budgeted funds.
But aside from an extra $1 million a year from the general fund, the council is opposed to any new fee or tax to add to its $2.5 million street budget even though, as its engineer made clear, it is partly to blame for creating the current dilemma.
As he has with increasing levels of despair over the years, Carl Cote, the city’s director of stormwater and engineering, again updated the council on the state of the city’s roads, the cost of the repair bill, some options, and how the city got here.
Toward the end of his presentation, and after much hand-wringing on the council’s part, Cote put part of the blame on the council. He reminded it of the 2020 and 2021 tax rate in effect at the time. It has been reduced since. “In lieu of the rollbacks that council had done since then, if that was dedicated to resurfacing, that would be an additional $8.5 million we’d have in that program today,” Cote said.
“Repeat all that again?” Norris asked him. He probably wasn’t the only one in the room who wasn’t sure he’d heard that much gutsiness from a staffer.
Cote obliged. “The millage dropped about just over 0.6 mills since ‘21,” he said. “In lieu of doing the drop, if that drop was dedicated to resurfacing instead, we would have $8.5 million in this year’s budget added to the $2.5 million. So we’d be at the $11 million, and we’d be just about fully funding the program.”
In case the council still hadn’t heard right, City Manager Mike McGlothlin made it explicit: “I believe the millage suppression long term is a negative factor. And I think that’s what, as an example, is what’s brought us here. We have lost millions of dollars,” he said.
There is so much deferred maintenance that the costs are accumulating: $69 million worth of needed repairs in the coming fiscal year, $116 million by 2031.
On Tuesday, the council again did not agree on a long-term solution. At least not yet.
“We have funding challenges, so we have to figure that out,” Council member Ty Miller said. “Otherwise, we’re just kicking this can down the road. It’ll get to a point where we cannot afford to get out of the hole that we’re digging.” He wants to “have some hard conversations about how we’re going to fix this situation.”
When Mayor Mike Norris reminded his colleagues of the increase in the sales tax that the county had proposed to fund beach protection, he appeared to get support from Miller and Council member Dave Sullivan. That sales tax increase would have allowed Palm Coast to keep a large share of revenue for its own uses.
If the council did not have the conversation Miller wanted, it agreed to a coming workshop discussion about that very subject.
Otherwise, it leaves the city to make do with limited dollars and a five-year plan that would focus on choosing between repaving arterial roads such as Belle Terre Parkway, Town Center Boulevard, Old Kings Road, and so on, to keep them from failing, or putting some efforts into repairing residential roads–or a combination of the two.
“Even with the efforts that we’ve done, we’re still losing the battle,” Miller said. “We’re sticking our finger in the dam and more are popping up. More holes are popping up. Eventually we’re going to run out of fingers to keep it from getting over that point. Our overall [pavement condition index, or PCI] is going down despite all the extra efforts we’re doing in terms of dedicating money from the general fund to this.”
Miller diagnosed the situation succinctly: “The reality is right now, we don’t have the money to fix things properly, and because of that, things are getting worse, and they’re only going to cost us more money in the long run.” But there is no appetite for a costly fix.
“I am not going to advise for any new fees or taxes to pay for roads,” City Council member Theresa Pontieri said. “So we have to figure out what we’re going to do with the money we have. I’m in support of dedicating some current millage towards the roads, but not increasing anything to pay for them.” Millage is property tax revenue. Pontieri is also reluctant to use reserve funds for continuing needs.
Cote earlier had provided a fuller history, going back to before the property tax rollbacks.
The city incorporated in 1999. In September 2002, voters approved the renewal of a countywide half-penny sales tax referendum for infrastructure, with Palm Coast getting 72 percent of the revenue. The council had sold the referendum renewal on the promise of dedicating the money to a 10-year resurfacing plan. By 2012, Palm Coast was getting $2.6 million from its share of the tax. The city resurfaced 50 miles a year.
“After the expiration of the half-cent surtax during the period from 2013 to 2017, there’s a drastic drop in the amount of resurfacing being completed,” Cote said.
Cote’s characterization of the “expiration” of the surtax is incorrect, and his presentation stating a “loss of dedicated revenue source” is mostly incorrect. Yet the council has been operating on those incorrect assumptions, as it did again on Tuesday.
The sales tax never went away. In 2012, the county and the city clashed over the share of sales tax each government would get. The county wanted to increase its share to 45 percent, as it had to build a new jail that Palm Coast would mostly benefit from. The council, led by then-Mayor Jon Netts and City Manager Jim Landon, refused.
So the county renewed the sales tax anyway, but by supermajority vote of the County Commission instead of by referendum, taking away either government’s ability to use the revenue to back bonds. Revenue continued to flow, with Palm Coast getting 55 percent of the share instead of 72 percent, a loss of about $500,000. (See: “Snubbing Voters, Lame-Duck County Enacts 20-Year Sales Tax While Slashing Cities’ Shares.”)
The council could have continued to dedicate the remaining money to the road program, especially since it kept increasing year after year. It did not do so. It was a policy decision to no longer include sales tax revenue as part of the street maintenance mix. Instead, the city is using only revenue from its share of the gas tax and from state revenue sharing.
The city had resurfaced and maintained more than 950 miles of roads between 2002 and 2012. Between 2013 and 2026, a 13-year span, it maintained 350 miles, some of those through band-aid methods.
The council tried enacting an electric franchise fee, which would have more than made up the $500,000 loss. Residents rebelled. There have been three such failed attempts since 2012, the last one in 2023.
An electric franchise fee or a utility tax would have generated millions. It would generate large sums from the planned data center in Town Center and from organizations and non-profits that pay no property tax, such as the school district and AdventHealth Palm Coast. In its absence, the city is limited to property tax revenue, if it applies.
The council in 2023 had actually approved a franchise fee at first reading, conditional on a referendum that would have set the rate at which the fee would apply. “However, the motion was reversed at a subsequent council meeting due to a legal opinion regarding the inability to have a referendum for approval of the franchise fee,” Cote said–again mischaracterizing the matter: the city is always free to hold a referendum. But Florida Power and Light said it would not agree to a rate set by referendum–a legally dubious position, since private companies have no authority over government decisions, but the city did not challenge it.
The city has since taken a patchwork approach to resurfacing, extending the life of its roads through such means as microsurfacing, a form of sealant that coats the road with a tar solution but does not mill or repave it. It can extend the life of a road for a few years, but it is the literal equivalent of a resurfacing band-aid.
“We are running out of roads that we can microsurface,” Cote said. “It adds no strength to the roadway. It gives it a nice black look. Covers up the cracks temporarily.” He added: “It’s definitely a very short term fix. It makes things look good for a little bit, buys you a little bit of time, and it’s limited to residential roads.” The fix may last five years.
Some roads “are falling apart,” falling into ratings of 40, on a 100-point scale, with 100 being a perfect road. The key number is 60: when a road falls below that rating, the road is in trouble. Today, the average rating for the city’s 547 miles of roads is 72.
Meanwhile, the cost of road milling and resurfacing has soared 300 percent since 2005, far exceeding the rate of inflation.
Cote again presented the utility franchise fee and the public service tax as options for new funding. He also presented dedicating a portion of the property tax to the road program, though to do so, it would entail subtracting that revenue from another commitment. Beyond that, the only additional option would be the mayor’s suggestion: pursuing an increase in the local sales surtax.
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