Dale Martin
City Manager
Fernandina Beach
August 11, 2017 1:00 a.m.
As we work toward the completion of the City’s 2018 budget, the general consensus among the City Commissioners appears to be to slightly reduce the millage rates from last year’s levy. Despite the reduction in the operational levy from 6.0682 mills to 6.0000 mills, the State of Florida classifies the proposed levy as a tax increase, since more tax revenues will be generated than during the current year. Based upon reports from other Florida communities, most communities appear to be proposing the same millage rate for 2018 as was levied in 2017.
The City’s ability to reduce the millage rate but still generate sufficient funding for maintaining municipal operations as well as providing for expanded services and capital improvements lies with the significant increase of property values. The total property value in the City increased by nearly twelve percent to over $2 billion. That property value is significant in that the City’s property value had previously peaked at a nearly similar amount prior to the Great Recession. While the total value has approximately recovered, individual properties may not fully recovered lost value from almost a decade ago: much of the “recovered” value is, in part, due to the sheer growth in the number of new homes constructed over the last ten years. An early glimpse of State projections for the next few years indicates that the increasing property values will continue.
It is very interesting to contrast our financial conditions with those of my former state, Connecticut. An article in last month’s Atlantic bemoaned, “What on Earth is Wrong with Connecticut?” Recognized as the richest state (based upon per capita income), the state is facing a projected two-year deficit to exceed $5 billion. Members of the state legislature, the General Assembly, believe they addressed $1.5 billion of the expected deficit by extending a labor agreement with state workers for ten years. The savings, though, will likely be nothing more than theoretical- the projected savings are not actually reductions, but simply assumptions that costs that would have been expected to occur will now not occur.
The more immediate impact of the Connecticut budget challenge is the fact that it still doesn’t have a budget- and its fiscal year started July 1! Record tax hikes, both upon individuals and businesses, have led to a more politically balanced legislature, and it is now very difficult to cobble together a majority to complete the sausage-making task of an annual budget. The Governor is operating the state in a series of executive orders.
The impact is now being felt on Connecticut towns and schools. Schools are delaying the start of school and laying-off teachers and staff because state funding will likely not be available. The Governor has demanded that towns provide historic financial information to state officials so that he can discover what towns have surpluses (resulting from more sound financial planning than the State) so that he can redistribute state education funds to towns that have a greater need.
Connecticut’s difficulties are evident in the departure of signature corporations. Florida Governor Scott has made several visits in an effort to lure business from Connecticut. General Electric moved its global headquarters to Boston (after the General Assembly called GE’s bluff that it would consider leaving if additional corporate taxes were implemented) in 2016. Aetna, founded in Hartford 150 years ago, is moving to New York. The City of Hartford itself is teetering on bankruptcy and pleading with surrounding communities for assistance.
Connecticut people are leaving, too: the state has lost population for three straight years. State income taxes rank in the top ten and property taxes rank in the top three nationwide. While many believe that the migration mirrors my own from Connecticut to Florida, the most common destinations for departing residents are New York and Massachusetts (not necessarily considered tax havens). The population of 35-44 year olds in Connecticut has decreased by about twenty percent since 1994.
The Atlantic article actually drew my attention because of the prominent painting that accompanied the story- it was a picture of 1877 Winsted, the town that I left prior to coming to this community. Over the course of my career, I have served in similarly sized communities in three different states. I find it intriguing that the taxing philosophies and policies are so dissimilar between those communities- some, like Fernandina Beach, are very successful; others, continue to struggle, at both the local and the state level. Not many people pay much attention to those struggles elsewhere, so it is good to keep our good stead in perspective.
Our budget preparations will continue, somewhat quietly compared to other communities. Nonetheless, I hope that you do take the opportunity to examine the proposed budget and, if desired, attend the scheduled public hearings related to the budget in September.