19.02% increase covers the budget shortfall and more
The Apopka City Council at its Wednesday meeting voted 5-0 to raise its millage rate for Fiscal Year (FY) 2018-19 to 4.2876, which is a 1/2-mill increase. The higher rate adds approximately $1.4 million revenues to the budget, which more than closes a shortfall of approximately $700,000 according to City Administrator Edward Bass.
The 19.02% raise brings Apopka into comparable range with Winter Garden (4.26 in FY2017-18), and Winter Park (4.26 in FY2017-18), and above Orange County (4.048 in FY2017-18). It also puts this current draft of the budget approximately $700,000 above the proposed expenses.
According to the agenda packet published by city staff for the meeting, the Council was presented an overview of the FY 2018-19 general fund revenue projections at the July 5th workshop. The projections included increases in intergovernmental revenues, specifically the half-cent sales tax and state revenue sharing dollars. The total FY 2018-19 general fund revenues were projected to generate approximately $46,406,650 before setting the higher millage rate. The City’s general fund service levels, personnel, and capital needs reflected a total operating and capital budget of approximately $47,140,337.
In accordance with the Truth in Millage (TRIM) statutory requirements, the City must set the proposed millage rate and advise the property appraiser of the proposed millage rate, rolled back rate, date, time and place of the tentative budget hearing, which is scheduled for Wednesday, September 5th, at 5:15 pm in the City Council Chambers.
The proposed millage rate can be adjusted down at any time during the TRIM process but the process to increase above the proposed millage rate requires extensive notice requirements.
According to the City staff, a millage rate of 4.2876 generates approximately $13,999,181 in property tax revenues for the upcoming fiscal year 2018-19.
The staff also recommended that the Council approve and set the FY2018-19 proposed millage rate at 4.2876, which is a 19.02% increase over the rolled-back rate of 3.6024.
Bass opened up the discussion by stressing that the budget is still fluid and that a millage rate increase could be lowered before the final budget is passed.
“Looking at the overall budget, it’s my intention to shore it up so that going forward we can do some of the things we want to do. This budget is still a work in progress. We are still looking for savings and we are leaving nothing uncovered in attempting to balance this budget. After the budget workshop on July 5th, we were out of balance a little over $700,000. We talked about a 1/4-mill increase which would just about balance the budget. We also talked about a 1/2-mill increase which brings in approximately $1.4-1.5 million additionally should we go that route.”
Apopka City Commissioner Kyle Becker, who proposed the 1/2-mill increase at the workshop, remained steadfast on that number.
“I haven’t moved from where I was at during the budget workshop. We can still take that down if we so choose, but I’m not of the mindset that we need to take it down. We can sit up here and say we have the lowest tax rate of any full-service city in Orange County, but if we’re not meeting the demands of the residents, we’re failing. It’s time to invest in our city. Ed (Bass) and I had a conversation about where I thought we should invest these dollars and it circles around a very pointed and concerted effort for economic development, which would grow and diversify our tax base. We would also have monies that would at least start the process of reserve funding. With all that said I do fully support a 1/2-mill increase.”
Later in the discussion, Becker drilled-down on the importance of economic development.
“Economic development is kind of a nebulous term that we had discussed in prior budgets, and we put placeholders for economic development resources but those have gone unstaffed. I think a few dollars towards a human resource will go a long way in terms of the goals and focuses that I think would be very beneficial to the city. I think the return on that investment would be significant.”
Commissioner Doug Bankson was also in agreement with the increase if the budget could add a couple of fiscally stabilizing features.
“The reason I voted against the budget the last two years was that we had nothing in place to keep us from freefalling to where we’re having this discussion now. The two things I want to know we’re going to do is set a reserve policy and also a debt policy. If we have those, we’re not going to overspend and then get caught having to make painful cuts. As long as I know we have that in play, then I am willing to give us some room on that millage. I still think there’s an advantage to staying competitive with other cities, not that were competing against them. We are Apopka and we need to do what’s right for Apopka. But as long as I know we have those standards in play, then I’m comfortable in giving ourselves the headwind.
Mayor Bryan Nelson was skeptical of adding reserves in this budget cycle, but he seemed to be on the same page as Bankson on debt policy.
“I don’t know if this is the year to do any reserves. Let’s get in a financial position where a few years down the road we can look at that. We probably have one more budget cycle before we turn the corner. I think our commitment is that we’re not going to do any capital improvements that don’t have a lifespan of at least 10 years. We’re not going to buy trucks or cars with borrowed money. If we need a new fire truck that’s $200,000, or if we need a big long-term capital project that’s something we can borrow money for, but we’re not going to pay for cars or trucks or equipment with borrowed money. That won’t happen.”
“The policy I proposed was a five-year window to get it to there,” Bankson said in clarification. ” I’m not saying it all has to be there this year. My point is if you don’t have any reins on spending practices, it will get worse, not better.”
Commissioner Alice Nolan was in agreement at least to move forward with the proposed rate, but expressed reservations.
“I spoke with department heads about planning ahead and not going from budget season to budget season to budget season. I want us to have some idea of how we’re going to replace things in the future with some rotation, and it seems like that’s what we’re heading for and if we are I would be okay making this an option this budget season to raise the millage. To me, it’s a difficult option when I have so many mothers that can’t even pay for soccer right now. They’re asking for payment plans for soccer. Maybe they’re renters, but where do you think those homeowners are going to get that money from? To me, it’s very difficult but I want to go into the TRIM process with all the options available. I know we’re all working very hard to do what’s best for Apopka.”
Commissioner Alexander Smith was also comfortable with the 1/2-mill increase and had ideas about what to do with the additional revenues it would generate.
“I don’t have a problem with accepting a 1/2-mill increase. And we still have an opportunity to bring it down. I know a 1/4-mill balances the budget and a 1/2-mill gives us an additional $700,000.”
Before the millage vote, a large group of Apopka police officers spoke during public comments and pushed back on a proposal that cut their merit raise program from 6% to 3%. That cut was felt by all departments, and Smith referenced this in his thoughts on what to do with the additional revenue from the rate increase.
(Editor’s Note: The Apopka Voice will cover the merit raise program in an article published on Friday.)
“We’ve heard our first responders say they would like to keep their 6% incentive raise, Smith said. “And since we already accepted the budget at 3% (incentive raises), maybe there’s a possibility some of those dollars could go to them and to all of the city staff.”
The next budget action is scheduled for the August 1st City Council meeting when the proposed budget is presented. Also, the possibility of an additional budget workshop was discussed, but not scheduled.