Flagler County government is disseminating false information as it seeks letters of support from Palm Coast, Flagler Beach, Bunnell and Beverly Beach to increase the county’s sales tax by half a percent.
“It is estimated that almost 40% of the funds collected will be paid by non-residents, with 100% remaining in Flagler County,” County Administrator Heidi Petito wrote the cities last week.
County commissioners have been repeating the claim, as Commissioner Dave Sullivan did this week at a business organization presentation in Flagler Beach, swaying Flagler Beach City Commissioner Jane Mealy.
“When I first heard about this, it sounded to me like the County would reap all the benefits and, therefore, I was opposed to it,” Mealy said on Tuesday. “This morning, Commissioner Sullivan did a brief presentation to the Flagler Beach Business Bureau’s quarterly meeting and explained that each municipality and the County would receive a proportional share based on population. If that holds true, and in addition to the fact that a good percentage of the proceeds would come from tourists, I will more than likely vote to send the County a letter of support.”
But the “almost 40 percent” claim is false. It was not researched by the school board, the the board, too, mis-used it.
The claim (“Would you support the continuation of the half cent, if you knew 40% is paid by visitors and non-Flagler County Residents?”) was made in a survey disseminated by the Flagler Education Foundation last year when the foundation was supporting the continuation of the district’s half-cent sales surtax.
Asked about the claim’s methodology, Theresa Rizzo, the foundation’s executive director, said the foundation was only transmitting the information on behalf of a political action committee supporting the renewal (though Rizzo was closely connected with the committee), Funding Flagler’s Educational Future.
After FlaglerLive’s inquiry, the survey added a footnote: “*Percentage derived from 2019 Rockford Analysis published by Visit Florida and compared to 2019 sales tax collected.”
The footnote was wrong.
First, nowhere does the analysis claim that anything near to 40 percent of sales tax revenue anywhere in Florida–the second leading tourist destination. in the United States–is generated by visitors. The report notes that “Visitor-generated
sales taxes constitute 16% of all sales taxes collected in the state.”
Second, the Rockport report is a statewide analysis with only a peripheral bearing on Flagler County. The 16 percent figure is heavily skewed toward tourism hubs like Orlando and South Florida, with many other counties’ percentages likely much lower. Flagler County is never mentioned in the report. (See the full report here.)
Third, even if visitors accounted for 30, 40 or 80 percent of sales tax revenue in Flagler County, it does not in any way change what local residents must pay: the sales tax a local resident must pay on a car or a textbook or a restaurant bill will not be any different because 10,000 or 100,000 people visited the county that month.
Nevertheless, the 40 percent figure continues to be a selling point as the county begins its lobbying of cities for the new tax.
The Flagler Beach City Commission did not ask to be placed in that position. But like it or not, it will be the first of Flagler County’s cities to be made to respond to the county’s request when it discusses the issue at its meeting Thursday.
The County Commission is asking for letters of support from the cities eve though the commission itself has not committed to such an increase. It is essentially using the cities’ reactions as a measuring stick before risking its own neck.
The reaction is already tepid.
“I personally do not support the tax increase,” Flagler Beach Commission Chairman Eric Cooley said. “Flagler Beach recently during budgeting had a similar discussion on the proper utilization of the money we receive from the gas taxes accomplishing the intended purpose. I think before taxes are raised, a deep dive into potential budget decisions that can be made to close the gap.”
Palm Coast on Tuesday dropped plans to impose a new utility franchise fee on electricity bills after a torrent of opposition, and FPL telling the city that it would not agree to the rate being guided by a referendum. A thin majority of council members favored the fee, but conditional on giving residents a chance to weigh in on the rate, through a referendum.
The sales tax is currently 7 percent in Flagler, with half a penny generating revenue for the school district and another half generating revenue for the county and the cities.
County government attempted to raise the sales tax by half a penny, to 7.5 percent, two years ago. Then-County Administrator Jerry Cameron wanted cities to weigh in, but did not risk much himself. Palm Coast shut the proposal down.
Like Palm Coast, the county is facing shortfalls in its abilities to pay for road maintenance and repairs. At a commission meeting last week, commissioners again decided to give the sales tax increase another go, directing County Administrator Heidi Petito to send a letter to each municipality, asking for support. (See: “Tone-Deaf Flagler County Wants Palm Coast and Other Cities to Support Sales Tax Increase.”)
Petito sent the letters the next day. “As our community continues to grow, and the cost of maintaining and constructing roads increase, these revenues simply cannot keep up,” Petito said of gas tax revenue currently paying for road maintenance.
“As you know, anything tied to Ad Valorem ( property tax) has residents paying additional costs with little to no control,” Petito wrote. “On the contrary, 1/2 cent sales tax is based on purchases made, in which the consumer controls.” It isn’t clear what Petito means by saying that consumers “control” what they’d spend sales tax, other than to suggest that somehow consumers could spend less on their daily needs if they want to reduce their sales tax burden.
The $9.7 million in new revenue would be split between the county and the cities, but not in proportion to population, as had been the case with a similar tax until 2012. The county would take 45v percent of the revenue (45 percent). Palm Coast would take just under 50 percent ($4.8 million). Flagler Beach would get 2.7 percent ($264,000) and Bunnell 1.9 percent ($180,000).
“I don’t like the distribution of that tax,” Flagler Beach City Commissioner Rick Belhumeur said. “If it’s being distributed as they claim, according to population, why is the county keeping the majority of the money? It should be distributed at the same rate that it is generated by the county or the municipalities.”
When Palm Coast initiated a half-penny surtax in 2002, it did so by popular referendum, and for 10 years. At the time, the money was distributed according to population, with Palm Coast getting a much larger share. When the tax came up for renewal in 2012, the county sought to change the proportionate distribution, because it wanted a larger share.
Palm Coast balked, refusing to support the county in a renewal referendum. So the county opted to unilaterally impose the tax by a supermajority vote of the county commission, and changed the distribution ratios. The additional half penny increase would adopt the same ratios.
“I don’t think it’s fully appropriate to back the city into a corner of a potential lobbying position for a new county tax that was never a city initiative,” Cooley, the Flagler Beach commission chairman, said. “Unless new information is presented at the meeting, I do not plan on recommending the city write any letters. If the city was to draft the letter, then the city becomes the reason it would get voted yes by the county. I believe votes should be based on merit of the tax or because it represents the will of the voters. In this case, I do not feel this meets either criteria.”