Four of the five Palm Coast City Council members voiced opposition today to adopting the rolled-back property tax rate as they did last year, with one week to go before they have to vote on a tentative rate. Nevertheless, the fifth and lone dissenter, Ed Danko, inexplicably carried the day staving off a decision and keeping the rollback proposal alive.
The city administration is asking the council to keep the tax rate flat. Doing so would generate more than $5 million in new dollars, half of it from new construction (and new residents), all of it needed to keep up with public safety and services in a city adding several thousand new residents a year and seeing its infrastructure, including roads and parks, decay. Increased costs in public safety alone–$2.86 million for the sheriff and fire services combined–account for just over half the new dollars.
Danko is pushing for a reduced tax rate that would eliminate $2.5 million from the proposed budget, saying residents can use the savings, even though those savings would amount to just $20 to $30 for the typical homesteaded property, while homesteaded property owners have seen their tax bills drop over time, when inflation-adjusted.
“I am not minimizing that I understand that every dollar counts,” Council member Theresa Pontieri said. “But I refuse to set aside the fact that half of the increase in our budget this year is because of public safety. So we have an increase in the sheriff’s budget. We have an increase in the fire budget. And I’m not willing to sacrifice public safety. And from what I hear from the public, they’re not willing to sacrifice that either. So if we did the full rollback, vice mayor [Danko], how do we pay for the increase in the police contract? How do we pay for the increase in the fire contract? Those are the issues that we have to figure out before we can just–it’s easy to say: yeah, I support a full rollback.”
Danko is running for a County Commission seat and needs to maintain the aura of a council member cutting taxes. Mayor David Alfin is running for re-election and Council member Nick Klufas is running for a County Commission seat, but neither have been dogmatic about taxes. What is unclear is why, since they already have a majority to sideline Danko on the issue, they keep courting him as if he were the deciding factor. The Flagler Beach City Commission has frequently had a loner pushing for lower taxes against the rest (Rick Belhumeur), as did the Bunnell City Commission in years past (in Elbert Tucker). But both bodies heard the dissenter among them and moved on, never granting him more than a few moments’ grumbles.
Both bodies had more confident hands wilding the gavel at those moments–a confidence that has eluded Alfin in recent months as he buckles from anguish over a difficult reelection prospect.
The Palm Coast City Council not only gave Danko a wide berth today. It delayed giving the city administration the direction the administration needs as budget season proceeds. Moments after praising transparency, it agreed instead to one-on-one, closed-door meetings between council members and the city manager between now and next Tuesday so the manager can make the case for the budget, and council members can make their case for what they want. Only next Tuesday will residents know what the maximum proposed tax rate the council will set, as it sets it then and there. The public will have no chance to weigh in except at that time (though in fairness to the council, budget meetings tend to draw rapt indifference from the public.)
The consequences of going to rollback for the second year in a row, however would not be minor for the city administration.
Last year the council went back to rollback for the first time in the city’s history, eliminating $2.7 million from the budget the administration was proposing and requiring many positions to be left vacant for the year. (The city went up to rollback during the Great Crash to counter the effects of plummeting property values, increasing the tax rate.) If the council were to adopt the rolled back rate again this year, the budgetary strains would be compounded with another equal loss. The rolled back rate would force the city to take in the same revenue next year as it did this year, excluding new construction. (See: “What is the Roll-Back Rate in Property Taxes?“)
Property values have increased almost 14 percent for the second year running, with half of that generated by new construction. At today’s property tax rate, that would translate to a $5 million increase in property tax revenue–$2.5 million of which from new construction. Even if the city were to go to the rolled back tax rate next year (the lower tax rate that would keep revenue flat), that $2.5 million would still be part of the budget. The city also gets state revenue. It is projecting state revenue of $8.4 million, but the actual share will not be known until later this month. In sum, the general fund budget for next year is projected at $61.5 million, up from $59.2 million this year–a 10.1 percent increase. Again: that’s assuming the council follows its administration’s recommendation and keeps the property tax rate the same.
If the council does so, it would be left with $615,000 in discretionary dollars.
“There are no new general fund positions included in the budget for fiscal year 2025. But we are proposing to bring back several positions that were left unfunded from fiscal year 2024,” Finance Director Helena Alves said. Those would add up to $938,253 from the general fund budget and $328,000 from the IT budget. Some of them could be funded with that $615,000.
The administration gave the council options. One option would partially fund some of the additional staff positions. Another would shift the money to paving or capital projects, though that wouldn’t accomplish much. Interim Manager Lauren Johnston said the money could go to additional street-paving–or to reserves. In the past, repaving a residential road cost $50,000 per lane-mile (that is, for one half the side of a road, $100,000 for the full road’s mile). But that figure may have changed, Engineering and Stormwater Director Carol Cote said. Either way, Council member Nick Klufas did not consider the amount significant enough to make a big difference in the city’s repaving needs.
A third option would reduce the property tax rate, eliminating that $615,000 from the budget. The reduction would be nowhere near rollback. Only a few fractions of the way there: $0.0643 per $100,000 in taxable value, or the equivalent of $6 for every $100,000 taxed. For a $250,000 house with a $50,000 homestead exemption, that would mean a $12 saving next year. Again, other than Danko, none of the council members were for that, except maybe in part.
“I want to see more boots on the ground in our city,” Pontieri said, lending support to the funding of additional positions. “It’s really important that our residents see everything from more law enforcement to more groundskeepers to more people just out doing what our city does best, which is make our city beautiful, increase the quality of life. That’s where I’m leaning right now if we’re going to fund personnel.”
Alfin would “blend” the staff-funding option with a reduction in the property tax rate. “I would look at each of those positions very, very carefully,” he said. “I’m not in favor of all of them, but there are some I think that are strategic and option number three, I think we’ve set the precedent, I think we should follow that path forward.” By precedent, he meant last year’s decision by the council to adopt the rolled-back tax rate, which reduced the city’s expected budget increase by some $2.7 million and caused the retrenchment in new positions. But Alfin was not proposing another year of roll-back–just some reduction in the tax rate.
That rolled back rate would be $3.9961 per $1,000 in taxable value, compared to $4.2570 this year.
That’s the rate Danko wants. He favors setting that rate and letting the administration work within the constraint. “I really want to see us set the direction and the expectations and then let our CEO do the job with her staff,” he said, referring to the city manager as the CEO. “So I’m not going to pick and choose from door number one or door number two or door number three. I find that difficult to do.”
His aim all along has been to go to the rolled back rate, come what may. When Alfin asked him what direction he would give the administration, Danko went off on another one of his ideological rants, blaming Joe Biden for this and that before restating his position: set the rate at rollback, and let the city manager deal with it.
Pontieri called Danko’s approach contradictory–on one hand calling for transparency with where the city’s dollars are spent, and on the other, calling for the city manager to handle the budget any way she sees fit, once the council set its tax rate. “The approach that staff has taken has been a direct result of what they’ve heard from this dais and what they’ve heard from the public, which is we want to know where the dollars and cents are going,” Pontieri said. She commended the administration for laying out the needs, having met with directors to hear their needs.
When Council members Cathy Heighter and Alfin asked the city manager what it would mean to go to rollback, Johnston said: “Many of the items in your Strategic Action Plan would would have to be delayed or deferred to a future year because we wouldn’t have the staffing to accommodate that request. The only new position request was the Flagler County Sheriff’s contract.” The sheriff is requesting nine new deputies for the policing contract, bringing the total number of deputies assigned to Palm Coast to 57.
“So we would have to re evaluate those positions,” Johnston continued. “And then the positions that are frozen or we are looking to unfreeze, we would have to delay or defer those people, boots on the ground, etc. So a lot of the things would not be accommodated in this current budget that we’ve presented to you today.”
“My question would be: are we willing to sacrifice that in terms of our community, our city” Heighter said, “kind of similar to what Councilwoman Pontieri brought up. Are we willing to sacrifice those things in lieu of making sure that we have our safety and making sure that we have our fire department up and operating up to speed?”
Klufas questioned the reduction of the tax rate for its own sake. “We could try to get to a 0 percent millage tax rate,” he said. “At what point do we draw the line to say, hey, here are city services that we need to be able to maintain the level of service that we expect in Palm Coast?” He noted that residents are paying less in taxes today than a few years ago, when their bill is inflation-adjusted. A minor reduction in the tax rate could still accommodate most of the city’s budget proposal.
Four of the council members had made it very clear: they would not go back to rollback. They hewed close to the administration’s proposal. They could have decided then to agree on that and move on. Instead, Alfin directed the city manager to have individual meetings with the five council members to “explain the net effect of what is not going to be done due to the decrease millage or going all the way to the rollback,” in his words. In other words: to restate what Johnston had already told them.
“That certainly gives us a starting point,” Alfin said, repeating Danko’s characterization at the end of a 70-minute presentation and discussion the administration thought would be closer to an end point.
