Weekly comments from Dale Martin – Budget preparation

Dale Martin
City Manager
Fernandina Beach
June 5, 2020

City Manager Dale Martin

As the calendar turns to June, preliminary figures from State and County agencies are beginning to be provided to City staff to incorporate into next year’s budget. In accordance with the City Charter, Section 71, “Annual estimate of expenditures and revenues for the forthcoming year; submission to city commission by city manager. The City Manager shall set forth an estimate of the expenditures and revenues of the city for the upcoming fiscal year. The estimate of expenditures and revenues shall be submitted in compliance with the procedures set forth in the laws of Florida. The estimates and budget so given and constituting the recommendation of the City Manager as to the amounts necessary to be appropriated for the ensuing fiscal year shall be supported with information giving the reasons therefore in such detail as may be necessary to afford the City Commission a comprehensive understanding of the needs and requirements of the various departments and divisions of the city government for the ensuing fiscal year.”

The proposed budget will be provided to the City Commissioners on July 20 and formally presented to the community the following day at the regularly scheduled City Commission meeting. In the weeks following the presentation of the proposed budget, the City Commission will adopt the proposed millage rate (Jul 28), conduct budget workshops as needed (tentatively scheduled for Aug 5 and Aug 11), and hold two public hearings for the budget (Sep 8 and Sep 22).

The County Property Appraiser has indicated that the preliminary total property value growth within the City limits is approximately nine percent, increasing from $2.5 billion to $2.74 billion. The estimated increase in comparable values (properties remaining unchanged from the previous year) is a little over six percent. According to a report presented by the Florida Association of Realtors, using data submitted by the Amelia Island Nassau County Association of Realtors, the housing market remains strong in Nassau County, with median and average sales prices higher this year (April). Nearly $55 million of real estate transactions occurred in April.

The Florida Department of Revenues Services has reported than the annual Save Our Homes increase will be capped at 2.3%. The Save Our Homes provisions of the Florida Constitution limit property assessment increases to 3.0% or the change in the Consumer Price Index, whichever is less. If you review your property’s 2019 ASSESSED VALUE and multiply that by 0.023, you will have a likely indicated of what your 2020 ASSESSED VALUE will be. If you had any changes of ownership or alterations to the property, these external factors may lead to a different increase (or decrease).

A different number, prepared by the State’s Office of Economic and Demographic Research, establishes the Florida Per Capital Personal Income. The annual percentage change to the Per Capita Personal Income is used to calculate what is referred to as the “rollback rate” for government (City, County, Schools) millage levies. The concept of the rollback rate is to establish a millage rate that generates approximately the same amount of revenue from comparable properties as was generated the year before. In Florida, any millage rate set higher than the rollback rate is considered a “tax increase.”

The language of municipal finance can be very precise, and this is an example. In theory, the millage levy (or tax RATE) can decrease, possibly resulting in a property’s tax BILL decreasing, but, if the millage levy exceeds the calculated rollback rate, the State of Florida requires this to be a declared a tax increase. The increase is in total revenues, primarily resulting from increasing property values, not necessarily increasing tax bills. And people wonder why government finance is confusing: tax rate goes down, tax bill goes down, but it’s an increase (in Florida- although the State exempts itself).

The rollback rate also leads to the final thresholds required to support the proposed budget. At the rollback rate (and even slightly higher), the budget requires three Commissioners to adopt. At higher millage rates, the support of four or five Commissioners are required to adopt the budget.

This whole process will play out over the course of the next four months. I encourage you to follow and observe the City’s efforts to create the budget for next

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