Palm Coast Council Signals Approval of Proposed Budget. Danko Wants $2.14 Million Slashed, But Won’t Say How.

The Palm Coast City Council on Tuesday signaled it was ready to approve a $421 million budget next year, with a general fund of $61 million. Property tax revenue goes to the general fund, which pays for police, fire, parks and other essential services, and defines each year’s property tax rate.

The council also signaled approval of a tax rate of somewhere between 4.2570–the current tax rate–and 4.1893, possibly a shade lower, but not the rolled back rate of 3.9961.




What those numbers mean is that you’d pay $4.1893 per $1,000 of taxable value on your property. If you have a $250,000 house with a $50,000 exemption, your Palm Coast property tax bill would be $838 next year, as opposed to $851, a $13 saving, assuming the value of your home did not climb.

The rolled back rate would be the rate at which the city would take in the same revenue next year as it did this year, excluding revenue from new construction. If the city went to the rolled-back rate, your city taxes would be $799.

But the city would have to remove $2.14 million from its budget. It would not be able to pay for nine additional sheriff’s deputies the council has agreed to add, or additional firefighters, or a series of other services the council directed the administration to add through its strategic action plan. The council earlier this summer directed the administration to find some additional cuts. The administration cut $250,000, enabling the tax rate reduction to 4.1893.

For all that, Council member Ed Danko repeatedly pushed for the rolled back rate of 3.9961. He also repeatedly refused to provide any direction on how to get there, saying that it isn’t his job, but that of the city manager and her staff. His job is only to set the goal, the goal being rollback. His colleagues disagree. It is their job and Danko’s job, they say, to set the city’s policy direction, including budget policy. That’s done yearly through the strategic action plan, which Danko approved. The plan set out the direction to the administration to hire the additional deputies, the firefighters and so on.




The administration crafted the present budget based on that direction. “Staff has come forward, and they have said: this is the budget, the best budget that they can provide, based on what direction we have given them,” Mayor David Alfin said. “So until that direction changes, they can’t do any better.”

Danko would not accept that. “So you’re basically telling the public they’re not going to get a full millage rate roll back,” Danko said.

“Not based on the policies that we have adopted as council,” Council member Theresa Pontieri said.

For half an hour, and despite a clear three-member majority against him (the council is down to four members since the sudden resignation of Cathy Heighter last week), Danko insistently pushed for rollback, repeatedly–and at times rudely, as when he compared Interim City Manager Lauren Johnston to a “union shop steward” (not that there’s anything wrong with union shop stewards, though to Danko, the designation was clearly not intended as a compliment) or called her “incapable” of bringing back the kind of budget he was asking for.

“I don’t think that’s true, sir,” a steely Johnston told him. “I’m trying to seek policy direction from City Council of what you would like to prioritize. I hear a lot of things that everybody wants to do. But I need consensus from the dais on what policy that you would like to be have implemented.”




Johnston has been hearing those priorities for the past months. Tuesday’s meeting was to be an overview ahead of the public hearing on Sept. 5, the first of two where the council will ratify and approve the budget and tax rate. It turned instead into yet another wrangle as Danko pushed for cuts he would not spell out.

“Over 45 percent of this budget is being prioritized for public safety,” Johnston said. “That’s nine new deputies and a contractual increase, as well as an increase for our fire department. We’re also protecting our quality of life with enhanced code enforcement and short-term rental adherence [through] the new tentative ordinance that’s coming in front of you at your next business meeting.” The proposed budget increases city workers’ pay with a 3.9 cost-of-living raise, the same rate adopted for county employees, increases spending on street lights, expands hours at the Southern Recreational Center, and increased efforts to improve citizen engagement through the city’s app.

“Appreciate all your hard work. However, the public would appreciate a full millage rate rollback,” Danko said. He did not provide evidence. Council chambers, like county commission chambers, have been largely if not entirely empty of public participation through budget hearings, as was the case Tuesday. Two years ago, many new residents, shocked by their first property tax bill, complained to local boards. There’s been no such outcry this year. It is generally true that taxpayers would rather pay less taxes, just as it is true that they would rather pay no taxes. In that sense, they might “appreciate a full millage rate rollback.” What is certain is that they have not conveyed that message to the council in any appreciable numbers.

Only one member of the public addressed the council after Tuesday’s discussion, Ceilia Pugliese, who attends almost every meeting. She said her taxes were going up $100 this year. In fact, even if the city were to adopt the same tax rate next year as this year, her city taxes would only go up less than $25. In the aggregate, when all taxing authorities’ bills are added up, her taxes would go up a shade less than $100.




As Property Appraiser Jay Gardner has often remarked in the past, the reason people aren’t filling government chambers at tax time is because their taxes are not going up. At least not for the homesteaded, who account for more than three quarters of taxpayers. If anything, their taxes have been going down. Mayor David Alfin documented the fact with data from Gardner’s office: “More than 75 percent of our residents in the City of Palm Coast over the last four years, that would be from the year 2020 through the year 2023, have enjoyed a 0.7 percent decrease, or a $17.06 decrease, in their median tax bill.” (Pugliese challenged Alfin, saying of the appraiser that “maybe he was wrong,” and citing county taxes’ increases. Between 2020 and 2023, Pugliese’s overall property tax bill rose 4.5 percent. But compared to her 2010 tax bill, she is paying 30 percent less in overall taxes–not accounting for inflation.)

The homesteaded enjoy a 3 percent cap on how much taxable value may increase year over year. If the inflation rate is lower than 3 percent, so is the cap: it follows the lower of the two. In essence, the non-homesteaded, who have a 10 percent cap, are subsidizing the homesteaded’s low taxes.

The decrease is more steep when adjusted for inflation–even moderate inflation. “We are creating a bigger inequality every year that we have more and more people claiming homestead exemptions. I’m one of them,” Council member Nick Klufas said. “I don’t want my taxes to go up either. But we have to take a sharp look at reality that we’re creating this inequality between taxes collected, first the property taxes that are rising, but also the level of services that we’ve been providing to our citizens, adjusted for inflation.”




Kufas was explaining a basic concept not often discussed at budget time in local governments, especially when Danko-like ideology abut low taxes replaces basic economics: If rollback was adopted year over year, services would decline because the purchasing power of $1 today is not what it was in 2020. The rolled back rate does not account for inflation, in essence forcing reduced purchasing power on a city’s budget. An employee is entitled to a 3.9 percent cost of living increase. The rolled back rate does not allow for that increase. The increase must be absorbed by the existing budget, forcing cuts in other areas. Services suffer.

Take Pugliese’s tax bill: she paid $3,274 in overall taxes in 2010, the equivalent today of $4,752 in inflation-adjusted dollars. Instead, she is paying $2,431 this year, 64 percent less than in 2010, in adjusted dollars. Local governments have had to absorb that loss in purchasing power, a loss rolled back rates ignore, because to rolled back rates, there is no such thing as inflation.

“So to me, it’s math,” Klufas said. “We have heard from our public loud and clear that we needed to increase services. Specifically in places like our swale management, I think adding another internal swale management team is something that we can’t say the citizens didn’t want. I think we do a great job managing our funds and our millage rate has been as tight as it could be for the expected services that we have here in Palm Coast. I support the proposed fiscal year millage rate, and I support that because I think it’s the level of service that we provide to our citizens that is tangibly measurable to the quality of life here in Palm Coast, and I’m not willing to compromise that.”

Ignoring those nuances, Danko has taken a hard line against anything but rolled-back tax rates in the last four years, repeating that he’d rather drink antifreeze than raise taxes. Voters have not rewarded him: he lost his bid for a County Commission seat in last week’s election, and will be stepping down from the council at the end of his term in November. Danko conceded that he lost, but said it was a message to the council that council members were not listening to the public. He said he would spend his last months listening. But he did not change his tune. He pushed for the rolled back rate again on Tuesday. “I think there’s places you can find the cut. That’s your job, that your department head jobs, but I won’t vote for anything less than a full millage rate rollback,” Danko said, directing his remarks at the administration.




Pontieri commended the administration for the additional $250,000 cut, resulting in a second reduction in the tax rate from when the budget process started in early summer. She is continuing to look for further cuts. She challenged Danko, as she has in the past, to propose ideas on how to further reduce the tax rate. “I understand what you’re saying. It’s staff’s job,” Pontieri told Danko. “But we direct them based on the policies that we adopt. So I guess my question for you, so that I can go back this week and look: what policies would you recommend we take a second look at in order to reduce the millage?”

Danko said he wasn’t recommending a policy. “It’s not our job to micromanage each department. We’re not capable of it,” he said, though he mentioned some new hires. “I’ve not seen one layoff, not one reduction in the workforce. Are you our city manager, or are you the union shop steward? Because this is very concerning to me.” He went off on one of his frequent tangents about “Bidenomics” and inaccurate statements about “these ridiculous cost of living increases”–the rate of annualized inflation is back below 3 percent and was 3.4 percent last year–before saying he’d be happy to get into the administrative budget and “tighten it for you. Give me that authority. I’d be happy to go and do it. I’d get it done in two minutes.”

“I’m not asking you to micromanage vice mayor, and I’m just going to restate this one more time because I feel like I’ve beaten this dead horse to death,” Pontieri said. “It is our job to direct policy.”

The disagreement was not resolved. Alfin proposed that each council member continue to look for cuts and bring those ideas to the Sept. 5 hearing, which takes place at 5:15 p.m. at City Hall.