Flagler County and Palm Coast officials have some thinking to do about their budget.
Flagler County Sheriff Rick Staly is asking for 15 new deputies, an 8 percent increase in his uniformed ranks that would cost $1.5 million and represent the largest single-year increase in the size of the force since before the Great Recession. That fact also explains in part why the sheriff is making the request: the county’s population has grown by well over 10,000 residents since then, most of them in Palm Coast.
The sheriff is requesting 10 of the new deputies from county government, which covers most of the sheriff’s budget out of the county’s general revenue fund, itself drawn from property tax revenue. The sheriff is requesting five additional deputies, for a traffic unit, from Palm Coast government. The two requests are politically separate: the county commission will make its decision independently of Palm Coast, which contracts for policing services with the sheriff. But both requests are causing the two governments to figure out how, or to what extent, to accommodate what amounts to a big impact on their respective budgets–$1 million for county government, $500,000 for Palm Coast government.
Both governments have signaled that they may not want to accommodate the entire request at once this year, preferring a staggered approach. Palm Coast Mayor Milissa Holland—who spent part of a shift riding with Staly in a patrol car last week—spoke to that effect last month. County Administrator Craig Coffey told county commissioners during a workshop Monday that negotiations are ongoing with the sheriff to get the budget request down.
The request for additional deputies is only one part of the budget hit on the county’s coffers, with the total request from the sheriff and other constitutional officers amounting to a $3 million increase.
“I’m working with the sheriff right now, I think that $3 million, I’m trying to get down to $2 million,” Coffey said. “Here’s the strategy. If you want 10 new deputies, but you start at mid-year, you can chop that price down by half, but when you walk in the door next year, that’s a half million dollars that’s not in your cash flow, so it’s partly about spreading out things, but there are things that are going to come hit you next year that you’ve got to do eyes wide open.”
County commissioners have not said one way or the other how they see Staly’s request, details of which will not be submitted to the county until next week. Once that budget is submitted, the sheriff or his designate could either appear before commissioners to answer questions, or commissioners could speak to the sheriff independently. In the past, commissioners have preferred to conduct those negotiations in the open. Surprisingly, on Monday, Coffey suggested to commissioners that should they have questions of the sheriff, they should speak to him one-on-one, which will amount to closed-door sessions. The public will not witness the talks.
But the sheriff himself, who hinted that he left an appeal to the governor on the table as an option, should budget negotiations not go well,could request to be heard in open session, if only for political reasons: he has been popular and visible, and so far has been scandal-free, strengthening his hand in this type of negotiations. The county administration may want to keep those negotiations behind closed door possibly to avoid being pushed against the wall in public, where commissioners wouldn’t want to be seen denying the sheriff the sort of request that might resonate with his supporters. Honoring the request, however, would also almost certainly mean that the county commission would not be able to keep its tax rate flat, let alone lower it, this year, given other challenges.
Those challenges are no small matter.
Coffey laid them out in a nearly three-hour workshop Monday, with the bottom line adding up to $9 million in additional needs (the constitutionals’ $3 million included), and a projection of only $3 million in new revenue, assuming the current tax rate stays the same. “Some of the constitutional requests we think are going to be larger than we originally anticipated,” Coffey said, referring to requests from the sheriff, the supervisor of elections, the tax collector, the property appraiser and the clerk of court.
Coffey never used the word “shortfall” in his presentation and said commissioners should not panic at the figures.
“Historically when we’ve come into budget hearings, you’ve laid that out as a shortfall,” County Commission Chairman Nate McLaughlin said. “The $9 million this year is not shortfall, we’re pretty level, the $9 million is the challenges we’re facing that are in front of us that may or may not be done or prioritized, whereas in the past we’ve come in and said, you’ve used the word shortfall, so this is a little different this year, we’re in a little better financial condition.”
Coffey did not disagree. “Some of those you have to fund regardless, but they’re not quite as bad,” he said. But none of the constitutional officers’ budgets would be turned in until next week.
There was good news. Property values are expected to rise between 5 and 6 percent again this year, as they did last year. That means new revenue, if the tax rate stays flat, and even greater revenue if the tax rate is increased modestly. Fuel costs have remained flat, so the county’s spending on 6,000 gallons of fuel annually won’t increase. Even health care costs have been flatter than not, except for medical costs at the jail. The county-owned airport, an economic development zone where the county is essentially a landlord, is full up, with all but one space leased. There have been major capital improvements in the county’s (and the sheriff’s) information technology infrastructure, with more needed.
But there are also burdens. The county continues to lose $1.25 million a year in revenue because of the Town Center Community Redevelopment Agency in Palm Coast. A Community Redevelopment Agency is an enterprise zone where all tax revenue that would normally go to the county (beyond a baseline) remains within the CRA, to be spent there exclusively. The idea is to spur economic redevelopment—not that the Town Center CRA was ever under-developed in the traditional sense: it simply was not developed. But, to the county’s perennial chagrin (and lost revenue), that’s another story. Every year, it must remit that tax revenue back to Palm Coast. Flagler Beach has a CRA too, but the amount remitted to the city is less than $100,000.
Medicaid costs are increasing for the county, so are inmate health costs. The way Medicaid is billed to counties has also changed. It’s no longer based on billing per patient, but on the net number of Medicaid patients in the county, whether they are using services or not. That could potentially increase the burden on the county (just as the state is diminishing its spending on Medicaid: the current budget slashes Medicaid significantly.)
“At the end of the day, service is our business,” Coffey said, listing the numerous services many taxpayers don’t know are provided by the county exclusively—not by cities. Those include the 911 center, ambulance and emergency helicopter services, meals on wheels for the elderly or disabled, adult day care, the public library system, agriculture extension services, veteran services, the jail, even burials for the poor, and so on.
“Use of reserves is not an option for us anymore,” those having been wiped out by spending on Hurricane Matthew related expenses. Just to get the reserves back up to the necessary 7 percent minimum of the budget would require an additional $1 million.
A cost of living adjustment and retirement responsibilities toward all county employees would cost $700,000. Increased costs of running the sheriff’s facilities such as the new jail and the operations center are adding $20,000. Software replacement—some of that equipment dates back to 1999 and isn’t even Windows based–would cost $1.8 million.
That doesn’t address long-term challenges. Those include continuing to rebuild the reserves, building a better fire station at the airport, modernizing the countywide emergency communications system (known as the 800 megahertz system, on which all emergency personnel and many government workers depend, whether in the county or in the municipalities), establishing a fixed-route transit system, and, not least, beach renourishment.
There may be steeper challengers ahead, courtesy of the Legislature, if voters go along. One of those is a proposed extra $25,000 homestead exemption, which would increase the current exemption to $75,000 (not including school taxes). That proposal goes to voters in November 2018. If it passes, it will mean an inevitable reduction of close to $4 million in revenue for Flagler County government alone, though all local governments but schools will be affected. That would affect policy discussions in coming years.
Coffey wants to know what commissioners are prepared to do—raise taxes or keep them flat—as he continues to refine the budget. Those answers were not apparent Monday as each commissioner did more listening than talking, and with three commissioners going through their first budget season on the board (Greg Hansen, Donald O’Brien and Dave Sullivan).
For the next three months, the agenda will be dominated by budget discussions on every local government board, culminating in hearings setting next year’s tax rates.