Weekly comments from Dale Martin

Dale Martin
City Manager
Fernandina Beach
June 9, 2017 1:00 a.m.

Dale Martin City Manager

The City’s General Fund is the principal source of funding for municipal operations. The City Commission, City Clerk, City Manager, and other departments including Finance, Information Technology, Human Resources, Legal, Parks and Recreation, Planning, Building, Code Enforcement, and Streets are all part of the General Fund. Those departments account for approximately fifty-one percent of General Fund expenditures.

The remaining forty-nine percent of General Fund expenditures are attributable to the Police and Fire Departments, critical core services of the City. In the current fiscal year, Police expenditures are budgeted at roughly $5 million; Fire, $4.5 million.

General Fund expenditures are funded through primarily through property taxes. The City is currently experiencing substantial growth as indicated by property values. The taxable value of the City is anticipated to increase by ten percent. In general, the taxable values of individual properties (as determined by the Nassau County Property Appraiser) are multiplied by the various millage rates to determine the amount of property taxes due to governmental units (City, County, Schools, and other agencies such as St. Johns River Water Management District, Mosquito Control, and Amelia Island Beach Renourishment). The burden of property taxes is also modified by state constitutional amendments: the Save Our Homes constitutional amendment (approved by Florida voters in 1992 but not effective until 1995, limiting the assessment increase on homes to three percent or the change in the Consumer Price Index, whichever is less) and the Homestead Exemption (amended most recently in 2008, extending the exemption to the first $50,000 of a property’s value for non-school assessments).

The Homestead Exemption will garner attention over the next eighteen months as a result of the Florida Legislature’s recent action to extend the exemption for yet another $25,000. The State’s voters will formally consider this additional exemption as a constitutional amendment on the November, 2018, ballot. State legislators argued that the exemption is necessary as a tax-cut for homeowners whose homes have yet to recover from the housing market downturn several years ago.

In reality, the reduction of taxes is not likely; rather, cities and counties will likely raise local millage rates to counter the loss of revenues (estimated to be approximately $700 million across the State). For communities without the capacity to increase local millage, significant cuts in services will likely result.

As indicated above, police and fire services are mainly funded through property taxes. The costs of those services, as likely the cost with most everything, will continue to rise. A key consideration as part of the City Commission’s review of the annual budget is the desired level of services, especially police and fire services.

What is often overlooked or unknown to many Fernandina Beach residents are the police and fire services being provided beyond the borders of the city. It is commonly misbelieved that Fernandina Beach and Amelia Island are one and the same, and that the City Commission exerts authority across the Island. Examples of this misperception arise on almost a daily basis, in most part, likely due to the very irregular boundaries of the city.

The practical application and real cost of the irregular boundaries is the “cordial” extension of city-funded services, especially police and fire, to areas outside the city (i.e., Nassau County). As the cost of those services increases, it will become necessary to consider the implications and costs of those services.

City residents are providing costly services to non-city residents. Those non-residents have no reason to annex into the city because of the “generosity” of the city: why should those non-residents pay the additional higher city millage when core city services are being provided to them at no cost? With the looming impact of next year’s Homestead Exemption amendment, it is necessary to discuss the cost of this generosity to city residents.

The costs can be addressed in a variety of ways: annexation, special assessment districts, or amended mutual aid agreements. Some preliminary discussions have been conducted related to the “double-taxation” of city residents (who also pay County taxes for law enforcement and fire services). After some initial headway to address this issue, it appears that the issue will not be resolved in adequate time to affect next year’s budget. Discussions do, however, continue.

The most dramatic resolution of the service issue is to simply not extend services beyond the city limits. With the cost of services likely to continue to increase and tax revenues threatening to decline, this action may warrant more consideration. This issue may have been contemplated in the past, but appears to have faded away each time.

Perhaps this isn’t a significant issue or cost to city residents at this time, but it may soon begin to have a more noticeable impact upon the pocketbooks of those residents. On the other hand, perhaps non-city residents hope the generosity quietly continues.