On Tuesday morning, the Palm Coast City Council will consider adopting a utility franchise fee that could add up to 6 percent to the cost of residents’ electric utility bills and significantly add to the city’s tax-revenue structure.
It is at least the fourth time the council has considered the fee in the last 11 years. Three times before, in 2012, 2018 and 2019, it also considered adding a public service tax on utilities, which can run up to 10 percent. A vehement response forced the council to abandon the plan in 2012 and 2018. It was only briefly discussed in 2019 and dropped. (See the table at the foot of the article including a history of electric and utility taxes in Palm Coast.)
The council was prompted again to discuss both possibilities after the administration presented $52 million in street-repaving needs over the next five years, without a revenue stream that would fund much of the amount. Last week, the council agreed to consider only the franchise fee.
Some of the council members see it not as a way to generate new revenue, but to shift revenue from the property tax to the fee. In other words, the property tax would be lowered, possibly to the rolled back rate, and that revenue would be made up through the utility franchise fee. The property tax would have to be lowered further than roll-back, however, to account for over $5 million in revenue from a 6 percent fee. If this were the council’s approach, it would defeat the purpose of the administration’s attempt to spur the council to find additional revenue to account for a gap that a revenue shift will not close.
Either way, the proposal of a franchise fee is generating a significant public response. It is also generating inaccuracies–from one of the council members.
Palm Coast City Council member Ed Danko, who is running for a County Commission seat, on July 14 paired a campaign ad with a call to followers to show up at the council meeting on Tuesday. The ad included one factually incorrect statement and one misleading statement.
Danko wrote: “I will get right to the point; the City of Palm Coast wants to impose a so-called ‘Franchise Fee,’ a whopping 6% on your FPL monthly electric and an absurd 10% on your monthly City Utility bills.” Only half of that claim is correct, and possibly not entirely so.
The reference to the 10 percent tax is to the potential utility tax. It is flatly inaccurate. No such tax is on the agenda Tuesday. The council and the city’s finance director discussed it previously as a possible source of revenue, and discussed it again last week. But the council made clear last week that it would consider only the franchise fee. “The one that council wanted to hear more about was the electric franchise fee, and that’s the one being discussed tomorrow,” a city spokesperson said on Monday. “There was no movement on looking into the utility revenue source.”
Danko on Monday was right when he texted that “The up to 10% utility fee/tax was brought up at last week’s workshop,” but he was puzzling–or wrong–when he added that it “will be coming soon to an agenda and a vote. The public needs to know this in advance.”
Mayor David Alfin disagreed. “It’s not an agenda item that I am aware of. I’m not aware of that coming up in the future,” he said.
Council meetings’ agendas include a list of upcoming topics the council will discuss or vote on through the end of the year, and an additional list of “future” project discussions, with open dates. The list is fluid. But it has no mention of a workshop or business discussion of the utility tax over the next five months. The closest thing to a change in customers’ utility bills–and it likely won’t be a small change–is a future discussion of the council approving a new rate study, which would eventually lead to a rate hike. But that’s different from a utility tax.
Danko in his campaign email also wrote: “Worse, this TAX would last for 30 years before it would have to re-emerge before the council for renewal.” That’s misleading, especially since Danko’s context does not distinguish between the franchise fee and the utility tax, and if he is assuming that readers know he is referring only to the franchise fee, it is misleading on that account, too.
The proposal the council is set to vote on Tuesday is, in fact, a 30-year contract between the city and Florida Power and Light, and as drafted, it does call for a 6 percent levy. But the council has not yet decided that it would be 6 percent. The levy may be set anywhere between 0.5 percent and 6 percent. In most cases, it’s set at 6 percent. While such fees have a way of embedding themselves into the budget like stony Egyptian steles, never to be altered, the council does have the authority to alter the percentage of the fee every year, at its discretion.
Danko acknowledged that in today’s follow-up text and, judging from other cities’ experience, is probably pon solid ground when he states that “While the franchise fees could be brought up every year by council, we all know that will never happen. It doesn’t take a genius to know If these franchise fees are passed, and we will be living with these taxes for the next 30 years.”
Most cities in the state, including Flagler Beach, Bunnell and Ormond Beach, max out on both the franchise fee and the utility tax and don’t make a habit of discussing the fee every year. But that’s in large part because constituents don’t know they can demand a reconsideration. Palm Coast is among the 12 percent of cities that do not impose either a franchise fee or a utility tax.
Danko refers to the fee as a “tax” throughout his campaign email. There’s less disagreement on that debate–whether it is a tax or a fee– even in court decisions, though prevailing law makes a distinction only to the extent that it allows cities to impose both the franchise “fee” and the utility tax, thus evading the charge of double-taxation. To those paying the bills, however, it is a distinction without a difference.
Semantics aside, he is accurate when he notes that “it is not only a TAX on homeowners, it’s a TAX on renters, and it is a TAX on businesses. No doubt, businesses will pass this TAX onto you, the consumer.” But that’s one of the reasons the council is looking at the franchise fee: as regressive as it is, compared to the property tax (which is more means tested according to a property owner’s home value, and therefore ability to pay), the franchise fee would apply to innumerable customers who don’t pay the property tax: non-profits like AdventHealth Palm Coast’s two hospitals, the Government Services Building, the county courthouse, all schools, all churches, and of course renters, though renters have always paid property taxes through their rent checks. They are not likely to see a drop in rent even if the property tax rate goes back to rollback, but they would see an increase in their utility bills.
A city calculation estimates that at the full 6 percent, the franchise fee would generate $5.75 million next year, and cost the typical customer using 1,000 kwh per month an additional $7.78, or $93. It is unlikely that the median property owner would see an equivalent drop in the Palm Coast property tax.
“There have been a lot of emails from residents to both council members and the administration,” the spokesperson said, referring to the issue–whether because it’s been reported over the past two weeks or because of Danko’s email is unclear: it’s probably both. “It does look like there’s going to be a pretty significant display of public participation tomorrow morning,” the spokesperson said of the council’s 9 a.m. meeting at City Hall.
Romuald Flieger says
Hi there, I think that the city needs to reduce it’s spending. Why a five million dollars water feature in Holland park when could have built a wading pool for probably half a million or less. I was in the commercial building industry for thirty years and I just don’t understand where they come up with these prices on projects. Someone is making a bundle of money.
bill says
what about knocking off some of these high six-figure salaries, that are floating around in city employees paychecks
Denali says
What do you think that will save? $5 – 10 million a year? Try again; maybe around $500K maximum. https://govsalaries.com/salaries/FL/city-of-palm-coast
Labor cost is never a huge cost factor in local government costs unless you are a two horse town with no economic base. Then again, the only real economic base in Palm Coast is its residents . . .
robjr says
Exactly. More strip malls, and more storage facilities won’t provide a real economic tax base.
Adding a tax to the electric bill and then rolling back the real estate property tax rate is nothing more than a shell game of guessing where the little pea is. They simply roll back the rate one year and then move it back the next year.
And the housing developments keep proliferating.
Tjmelton says
Thieves, liars, inept, corrupt, dysfunctional idiots who think home owners will fund their outrageous requests. Buy the cops more Harleys & mustangs while you’re at it. Who is up for reelection?
Deborah Coffey says
Until people STOP voting for REPUBLICANS, this is the way they will be taxed and their taxes will always be badly used. The history is clear.
TR says
Like it would be any better if Democrats were elected. How’s that working out for the Country. I don’t think it matters what side of the political spectrum your on. It’s all about GREED.
Tired of it says
Actually, if you stopped listening to Faux and the Republicans you would see. https://www.businessinsider.com/us-economy-doing-way-better-than-rest-of-rich-world-2023-7
TR says
I don’t listen to Faux or the Republicans. So you thinking listening to CNN or MSNBC is the answer? NOT! Hahahahahahaha. I agree with what Concerned Citizen said below. The entire system needs an overhaul. But that won’t ever happen because the members in congress now regardless of what side of the isles they are on, wouldn’t make their millions in salary.
Concerned Citizen says
Can you promise us Dems will do any better?
From what I’ve seen the entire political structure in America is about due for an overhaul. The two party system is archaic and antiquated. It allows for both to empire build with no accountability. You will protest what I’m about to say. But I’ve seen a fair number of Dems lie and break election promises also.
TR says
I’m not going to protest it at all. I agree 100%
JimBob says
Amen! I’ll stick with the Repubs—they hate the same people I do!
Jimbo99 says
Wow, kicking around ways of getting the franchise fee done first without rolling back taxes. Either way the masses pay more either monthly in our bills and/or at the end of the year when the tax bill arrives. It’s a Biden iuflationary shell game. It’s been 2 years since the Alfin era of growth began. All there ever are in those Government buildings is budget shortfalls & higher taxes & fees. They’ll fire city managers and replace with a higher cost employee that is saddled with the same BAB financial crisis. As I understand it, the growth was supposed to pay for all of this. I think we’re being gaslighted again into mismanaged/managed poverty.
Pissed in PC says
No tax rollbacks! What needs to happen is we keep the current rate and use the excess to fund road repaving and water main infrastructure! That covers businesses and homeowners! Far too long the city hasn’t done future planning knowing that the water mains were corroding and the roads would need repaving not just patching pot holes.
Romuald Flieger says
That’s true some of the salaries are way above the norm for the area. According to zip recruiter some of employees in certain positions are making thirty percent or more for this area, also more than people in the North East corridor area.
Jim99 says
With my recent $300+ electric bill the fee will be over $18.00 a month.
And each Tim FPL raises rates, so does the cost of the fee. Who at the city calculated $7.78 a month.
The city should take care of its “Has to’s” and not all these other extra projects like pickle ball, water park, tearing down a firehouse they just spent thousands to renovate.
Love it when it’s $5.00 here or $10.00 there, or just this extra per month. It all adds up. The same with the county.
With the tripling of my house insurance, doubling of car insurance, property tax increases, water, trash etc.. my social security can’t keep up with all this. This state, county, city are all going to hell.
To bad there aren’t jobs that pay enough to live here any longer.
The dude says
Your power bills are only $300?
I’m jealous.
Hell, I get water bills up around the $200’s…
jeffery c. seib says
Sadly, after today’s meeting of the Palm Coast city council we will have more taxes and fees added to our already bloated government expenses. This is really a done deal. The ordinance has already been written by city staff. They sit around at city hall dreaming of additional ways to squeeze the people of our city. This is a tax that won’t go away either, forever. Then at a future meeting they will all be crowing that they are cutting our property taxes, just like we told them to do. How dumb do they think we are. This, in addition to being money squeeze, is insulting they think we are so disinterested in what goes on down there. The mayor, as ‘leader’ of the city council has repeatedly just done whatever he pleases, as if the city of Palm Coast is his play toy.
atwp says
Elect more Republicans get ready to live in poverty.
Ed says
It’s probably not a salary issue. Maybe a productivity issue. Experience tells us that public employment is not as efficient as private enterprise. Profits drive productivity.
It’s not a political issue either.
It’s definitely a spending issue. It’s that simple.
The problem is always, who or what gets the budget cut. Obviously they can’t make everyone happy, read the posts.
Since no one wants to pay more, get ready for cuts. You can’t expect more for less.
Tony says
A fee is nothing more than a tax in sheeps clothing.
Pinelake79 says
Non-partisan elections. Put them all on the ballot and elect the top 2 or 3….that would get rid of playing the blame game for Dems & Reps!
Leila says
Love the way those here are blaming Republicans for Biden’s inflation, and the way that Danko blames the very body which he sits on for what he considers not to be the solution. Blame, blame, blame. Much easier than finding solutions, isn’t it?
Remember these issues and show up at the election debates to ask the candidates what they are going to do about them. It’s your future, it’s your home. And it’s time that each take a greater role in the process.
The dude says
Florida’s inflation rate is much higher than the rest of the country.
This is Biden’s fault how exactly?
#Floridaflation is real ya’ll.
Duane says
Deborah, Can you think of anything other than blaming the republican party.
How about looking into the budget for spending cuts.
Maybe alternative revenue solutions like a 1/2 cent sales tax for transportation improvements. That tax will be shared with visitors into the county and not just residents and will be so small it will almost be unnoticable.
Maybe we need to have a more experienced city manager who looks at alternatives.
Pissed in PC says
Better yet why not elect a democrat that would actually hold the city manager accountable instead of believing that these current republicans (realtors/developers) would actually care about people over profits?
me says
Vote Blue and get these idiots out of office. They are against the people of this country and only care about themeselves.
Ban the GOP says
Energy companies bought those republicans and put them in office ,now they want a return on thier investment. Who cares if poor peole pay more, the companies are getting really cheap energy. Profits over people
Dennis C Rathsam says
If your gonna stay in the house you currantly live in for the next 30 years, invest in solar pannels. YES they really work! My a/c is set on 78, I have 2 TV,s playing all day from 7am to 11pm. My pool runs 8 hours a day. I have 2 refigerators, & 1 large freezer. The outside of my home has plenty of gun light all night long. I also have a street light in my backyard, that luminates 3 yards along the lake. My last electric bill was $98 bucks. The point is they arent cheap, but they really work. PS Dont use a solar company, they are ripoffs. I used a Electrical Engineer out of Deland. They were installed 6 or 7 years ago, & they work perfectly. You ask why I used the co. in Deland…They were $3.000 cheaper than anyone in this area.
Nephew Of Uncle Sam says
A GQP member making inaccurate claims again? Surprise, Surprise, you get what you Vote for. If you didn’t Vote then you have yourself to blame.
Stephen says
I wish the city would leave our utility bills alone. They are high enough. Find some cuts and other sources of revenue.
George says
Time to clean house and get the cult party out of office. They are takers and have caused enough damage to the people of this country with their greed. Vote Blue our democracy depends on it,
Wow says
“Misleading statements” and “inaccurate” statements could also be called lies.
Romuald Flieger says
Hi there for what reason does the town leases all the light poles in Palm Coast. They should be owning them so they don’t have to pay FPL. And just have a truck and two guys maintain them, it definitely would be alot cheaper, then they wouldn’t have to have a 6 percent FRANCHISE FEE to gouge the people.