Volusia County sets taxes at rollback for second year in a row

By By Al Everson
BEACON STAFF WRITER

posted Jul 19, 2008 - 9:51:22am

Claiming it is responding to a lagging economy and a decline in the tax base, the Volusia County Council adopted a working budget and a tentative property-tax rate for the fiscal year that starts Oct. 1.

"We do not have the revenue we've always had," County Council Vice Chair Joie Alexander said. "We owe it to our taxpayers to be fiscally conservative."

The county's 2008-09 budget totals almost $634.7 million, which is about $32 million more than the spending plan adopted for the current fiscal year.

The proposed ad valorem tax rates are at the rollback levels recommended by County Manager James Dinneen, but rollback this year does not mean what it meant in prior years.

Rollback is the rate that would generate property-tax revenues equal to those of the preceding year, without taking into account new construction or annexations.

In normal times, the rollback rate declines each year, because the value of property in the tax base grows, as more land is developed and homes and businesses are assessed and added to the list of properties subject to taxation.

Moreover, in a thriving and desirable market such as Central Florida, the prices of existing homes and commercial buildings usually go up.

This year, however, is not a normal time. Because the county's tax roll is about 10 percent lower this year than last, rollback tax rates are higher than the tax rates of last year.

What a difference a year makes

Last fall, the County Council adopted a general-fund property-tax rate of 3.90 mills, or $3.90 per thousand dollars of taxable value.

The rollback rate for 2008-09, however, is 4.5 mills, or $4.50 per thousand dollars of taxable value.

The rate of 4.5 mills will yield approximately $160 million for the county's general fund, or about one-fourth of the total spending proposed.

Dinneen said many people do not understand the budget, which contains special accounts, known as enterprise funds, that receive no property-tax revenues.

The enterprise funds — for trash collection, water and sewer systems, Daytona Beach International Airport or the Ocean Center, for example — depend on sources of revenue other than property taxes.

"I do not have the flexibility to move that money," Dinneen said. "I can't take the airport funds and use them for general government."

He noted enterprise funds are supposed to take in as much revenue as they need to operate, from their own sources.

"We run those like businesses," the county manager said.

The general fund, on the other hand, which is funded by ad valorem property taxes, includes basic governmental operations such as law enforcement, the jail, public health, the beaches, elections, maintaining and operating courthouses and other county buildings, and public transportation.

Adopting the rollback rate represents a standstill principle, Dinneen said.

"We've never adjusted our budget for inflation," he said.

However, the county's costs for fuel and employee pension funds, along with other expenses, are rising.

Yet, continued Dinneen, the county administration is committed "to live within rollback again ... keeping our services intact, making sure the organization stays lean."

The budget amount rises only by taxing new property.

"The only increase we get is from new construction," said Charlene Weaver, the county's chief financial officer.

She explained the general fund would reap an extra $6 million in property-tax collections over the 2007-08 sum from new construction.

The state is watching

Another factor in the current round of budget deliberations is state-mandated tax reform. The Florida Legislature set maximum millages — rates local taxing jurisdictions may exceed only with supermajority support or even a referendum.

This year's maximum rate for Volusia County's general fund is 4.28 mills, which is below rollback.

Thus, if the County Council chooses to officially adopt the 4.5-mill rate it has tentatively set, at least two-thirds of the seven County Council members will have to vote for it.

Dinneen's budget, as tentatively accepted by the council, provides for 16 new personnel slots, including an associate medical examiner, six staff members at the Ocean Center, six at the Deltona Regional Library's Environmental Learning Center, and three in Utilities.

"We add jobs if we have the revenue to pay for them," Dinneen said.

He reminded the County Council most of the new openings are in the agencies using enterprise funds, such as the Ocean Center and Utilities.

Go directly to jail! Do not pass Go! Spend $10 million!

Yet another outlay in the county's draft 2008-09 budget is $10 million for dormitory improvements and mental-health amenities at the Branch Jail. Dinneen said the county is obligated to provide "humane" care for inmates with mental problems.

"Our building was never built for that," he said, referring to the jail as a correctional facility rather than a mental-health center.

The county will borrow the $10 million for the jail addition.

"I want to make it humane, but I don't want to make it too comfortable, because I don't want people looking forward to going there," Council Member Andy Kelly said, in response to Dinneen's recommendation for jail improvements.

More $$$ for bus service

Not least, the administration's budget allocates almost $1 million more for public transportation. Dinneen said the County Council will need to consider spending more on bus service, as rising fuel prices burden residents struggling to pay the cost of commuting to and from their work.

Next steps in the budget process

By state law, counties, cities, the School Board, and other state and local taxing jurisdictions must adopt tentative property-tax rates by July 31.

Without objection, the County Council approved the draft budget and the tax rates on which the spending plan is based.

Having adopted these tentative rates, the council may lower them, but may not raise them before the budget is finalized.

Taxing agencies, including the county and cities, frequently conduct budget workshops during the latter part of July, August and early September, as they examine ways they could change their spending or tax rates.

The tentative millage represents a sort of worst-case scenario, as the taxing agency may reduce spending and reduce the millage, but may not increase the rate. The tentative tax rates will be advertised for public hearings, and they will appear on the preliminary tax notices, called TRIM notices, Volusia County property owners will receive next month.

As it adopted the tentative budget and tax package, the council set the first public hearing and vote on the 2008-09 fiscal plan: 6 p.m. Thursday, Sept. 4, in the County Council Chambers of the Thomas C. Kelly County Administration Center, 123 W. Indiana Ave., DeLand.

The second and final public hearing and binding action on the new budget will be scheduled at a later date. The county's new fiscal year, as well as the fiscal year of the cities, begins Oct. 1.

— al@beacononlinenews.com

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