The Palm Coast City Council in a disorderly special workshop meeting this evening agreed to fully fund the Flagler County Sheriff’s request for 10 additional deputies for city policing, four more than it had originally budgeted. But that’s as far as it got in agreeing to a new budget. The rest remains a churn of conflicts as the council nears its deadline of approving the budget and next year’s tax rate in the first of two public hearings next Thursday.
A bare majority agreed to lower the property tax rate. But that majority, which includes Mayor David Alfin, has yet to agree to what extent the tax rate may be reduced, and to what extent to reduce the city’s reserves to pay for the unusual profligacy of committing to more recurring spending while reducing the tax rate, ensuring less revenue.
Despite Alfin’s efforts to find consensus, the workshop reflected a frayed council that, as matters now stand, doesn’t have the votes to approve the budget come Thursday. The reason: Council members Nick Klufas and Eddie Branquinho are against reducing the tax rate. They want it kept where it’s been for the past three years. Alfin and Council member Victor Barbosa are for reducing it some, though they’re not saying how much.
Council member Ed Danko, who boxed himself in during his election campaign by pledging to drink antifreeze before raising taxes, is proposing going back to the rolled-back tax rate, the rate at which the city would take in as much revenue next year as it did this year. Only adopting the rolled-back rate or a rate lower would safeguard against a tax increase. Under Florida law, even a reduction in tax rate that brings in more revenue than the previous year is a tax increase.
That leaves the council potentially deadlocked. If Danko won’t vote for anything but a rolled-back tax rate, neither Alfin and Barbosa on one hand nor Branquinho and Klufas on the other have the third vote to break a 2-2 deadlock, with Danko in the opposition either way. A council member is going to have to give: either Danko will have to break his pledge, or one of the other council members will have to concede some ground. Klufas could conceivably give ground on the tax rate reduction, assuming it’s not more than symbolic and the reserves aren’t plundered to accommodate it.
Much as the administration tried to get more clarity from Alfin, he said he was looking for a tax rate “somewhere halfway back to the rollback. That would be exciting, I don’t think that would be possible,” he said.
“Just to remind you again, and I’ll be happy to show it to you,” Danko told Alfin, “You ran as a conservative who won’t raise taxes. Do you really want to break your promise to the voters right out of the gate? I would hope not.” Danko specified in an email later that he was referring to a campaign flyer that headlines Alfin’s claim that he won’t raise taxes. In a pre-election interview, Alfin’s answers on taxes were more measured than a categorical no-new-taxes pledge. “Deciding an outcome before data analysis may lead to an incomplete and false conclusion,” Alfin had said in answer to a question on taxes during his election campaign. “Predetermining an outcome based on incomplete data analysis is a recipe for mistakes on a $230,000,000 budget.” Either way, Alfin didn’t take the bait.
Danko, back from quarantining–he wasn’t sick, he says, and remained unmasked this evening–was also back in full, rude form, taunting the mayor and insulting Branquinho (“to hell with you,” Danko told the councilman, when Branquinho tied him to unruly members of the public that compelled the city to install costly security measures. “Why don’t you go back to Jersey where you can be a Democrat again,” Danko told him, or rather yelled. Council members are ostensibly non-partisan.)
Danko had started the meeting by proposing the tax-rate reduction, eliminating merit raises for employees, eliminate new hires and eliminate funding for the projected expansion of the city’s tennis center. He had forwarded none of those suggestions to the administration so the finance department could be prepared.
“This is the first time we’re hearing about them,” Klufas said, “and it puts our staff in a very difficult position because their job up to this point has been give us presentation after presentation on exactly how the dollars are being spent, line item by line item. This is the first time that this is all–you want to cut this, that’s great, but now it’s the 11th hour, and none of these things have been brought forward. And now you’re putting a lot of pressure on employees.”
The current property tax rate is $4.6989 per $1,000 in taxable value. A $175,000 house with a $50,000 exemption would pay roughly $588 for the year. The rolled-back rate would be $4.4593 per $1,000, or $557–a saving of $30, or less than a tankful of gas for most cars. The saving for property owners would be slight. The effect on the city’s budget would be significant. Each decimal point in the tax rate equates to $625,000 in revenue–or lost revenue, if the rate was reduced by a decimal point. If the tax rate goes back to the rolled-back rate, it would be a loss of $1.5 million in projected revenue.
The special workshop was scheduled because the council hadn’t resolved those questions in previous attempts in August, making this the most drawn-out budget wrangle in the city’s history: no council had approached its two legally required September public hearings, when the budget is approved and the property tax is voted on, without final agreement on either. That agreement is still lacking as the council moves toward those two public hearings, the first scheduled for Thursday evening.
The council’s indecision, including that of Alfin, left the administration perplexed, forcing Interim City Manager Denise Bevan to ask the mayor to be more precise about the sort of tax rate decrease he was seeking. The answer was still not forthcoming. Alfin said that would depend on the extent to which the reserves could be drawn down while still keeping them within the policy requirement that they amount to 10 to 20 percent of the size of the general fund.
The reserves are currently at just over 27 percent of the general fund. That’s not unusual for Palm Coast’s reserves: it’s the reason the city’s fiscal conservatism has been a long-standing characteristic of its budget management. Reserves are not designed to be spent on operational items–that is, recurring spending, like deputies or to fund a tax decrease. Reserves are typically used to pay for one-time injections, either for infrastructure expenses or, as was the case earlier this year, for subsidies benefiting the two universities that have set up satellites in Town Center–the University of North Florida’s Mednexus and Jacksonville University.
As things stood at the end of the hour-long workshop this evening (it had been scheduled for 30 minutes) Alfin directed Helena Alves, by way of the city manager, to bring back the latest calculations at Thursday’s hearing, leaving the council in a position to still be making additions and deletions at the very hearing where it is to adopt the budget resolution and tax rate on first reading.
In an interview last month Alfin, who was elected in last July 27th’s special election, mused about when his honeymoon period would end. This evening’s meeting was an indication that, if the honey hasn’t run out yet, it was at least getting occluded by flies to be visible much, or worth tasting.