- May 3, 2024
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(Editor’s Note: This letter was addressed to Palm Coast Mayor Jon Netts, in response to his letter, which was published in the Aug. 22 edition of the Palm Coast Observer.)
Thank you for your recent letter regarding the community's ongoing discussion about the continuation of a local option sales tax. Your continued attempt to reach a compromise on a formula for our county and its cities is appreciated.
The County Commission has repeatedly expressed their desire to reach a fair compromise provided we can meet the county's current and future responsibilities in a reasonable timeframe.
In response to your recent formula offering I, respectfully, disagree with the analysis of the data provided in your letter. First, the population vs. distribution data provided would make perfect sense if the county's only responsibility were for the unincorporated areas. As you know, the vast majority of county services provided are countywide services and most have capital needs associated with them. These range from court facilities, jail/detention, 911 system, 800MHz radio system, Sheriff's Office space, health department facilities, Guardian Ad Litem facilities, library, senior services, to the millions in mandates for Medicaid, HCRA, juvenile justice and many other countywide services.
For these services the county receives no assistance from the cities and, in fact, the cities’ (community redevelopment areas) cumulatively take away almost $1 million per year from the county's funding ability to meet these needs.
In contrast, the majority of the cities’ CRA funds currently go to provide future growth-related infrastructure versus taking care of our county residents’ existing needs, whereas, the county's sales tax revenues will primarily go towards meeting the current countywide needs for existing residents.
Also, using the population vs. distribution logic in your letter, the reality is that the county's percentage should actually be depicted as 100% of the county population plus the percentage of the incorporated area. That is why the statutory distribution formula is based on population and takes into account the countywide obligations for all residents. Based on the rationale expressed in the letter and a true weighting of the population, the county's distribution percent should be greater than 55%. However, we can work within the statutory formula (45% today) that almost all communities in Florida abide by.
The second analysis is equally flawed in that it presumes that the location of the sale is somehow an indicator of where the customers actually come from and who actually pays the sales tax. Unlike property taxes, which are drawn from a specific geographic area and its spending should be restricted as such, sales tax comes from customers from all of the county and beyond.
For example, I shop at Target in Palm Coast but live in Flagler Beach. The sales tax distribution shouldn't discriminate based on where the person sleeps at night or where the store was located. Because these sales/purchases are countywide and beyond, revenue should be utilized primarily for countywide services and should not be construed to be owned in a parochial manner.
If we were to truly utilize this form of analysis, we would also have to look at who utilizes countywide services versus who ultimately pays for the same countywide services. Although the unincorporated area makes up only 14% of the county population, and arguably 14% of the service impacts, it pays over 34% of the property tax load for these services. Conversely, the population of the city of Palm Coast makes up almost 80% of the county population, and arguably 80% of the impact on services, and shoulders only about 60% of the property tax burden to fund these services.
Property taxes currently make up approximately 80% of the county's general fund. It could be argued that the sales tax distribution helps even out this inequity between the users of service versus who actually pays for the services.
The third item that should be addressed is the financing plan offered. To be straightforward, it is unrealistic in the sense of funding the county's identified primary need, expansion of the county detention facility. Besides not meeting the funding for the county's primary need, it would not provide the county with any funding for any other county capital needs for almost two decades. While the Board of County Commissioners has not yet agreed upon any other capital projects it needs to pursue, it is abundantly clear that there are many important countywide needs that the county will have to address in the coming decades and for which there is a lack of available funding to meet those needs.
To better explain why the plan provided would not work, 10 years at the statutory default formula will not provide enough funding to meet the anticipated costs of the county's primary need. Your suggestion for a four-year phase-in and, after that, three years at the old interlocal formula, would only compound this shortfall and clearly would not work.
As you know, to accommodate the cities and ease any transition, the county has made a second compromise offer to provide for an eight-year transition. This eight-year phase-in will require us to have a sales tax in place for at least 16 years and modify our financing terms. Although every entity wants to maximize its non-ad valorem revenues, this compromise has been accepted by Beverly Beach, Bunnell, Flagler Beach and Marineland. For the County, the eight-year phase essentially provides eight years at the statutory population-based formula and eight years in transition. If we were to extend the concept you propose beyond 10 years it would take over 20 years to finance one countywide project and, again, it would essentially not allow the county any funding resources to fund any other capital projects for the next two decades. With your scenario we would be in transition or at the full Palm Coast formula for over 12 of 15 years or 17 of 20 years. During these timeframes at the statutory formula, the city would be able to do many of its capital projects as it has in the past, whether it is for roads, drainage, trails, median landscaping, golf courses, tennis courts or city offices. It is unreasonable to expect the county to ignore its countywide responsibilities by only receiving enough for one capital project and ignoring all others.
Historically, the county agreed to provide the city of Palm Coast more funds then it otherwise should have received during the past decade in order to get its infrastructure caught up and get our newest city on its feet.
Lastly, let me address your suggestions for a definite time period and your release of a public statement. With regard to a definite period, the city/county local option sales tax has been in effect for 22 years — 12 years at a one-cent level with the statutory formula and almost 10 years at a half-cent with the locally modified formula. Although we anticipate needing the tax for at least 16 years for our primary project, we know that we will face other capital needs during the next two decades. With regard to the primary project (the county detention facility), the design is not complete, bids have not yet been received, nor has the financing rate and terms been established. Rather than set an arbitrary timeframe today, any future commission will have the ability to repeal the tax any year with a simple majority vote when they determine these funds are no longer needed to meet city and county capital project needs.
I believe the city understands the daunting public infrastructure challenges we all face and I believe you recently said at our group sales tax meeting that you did not see the need to put a time limit on the length of the sales tax. Although unlikely, if someday no public capital funding is needed, the board will be able to quickly repeal the tax or at the very least reallocate its usage to offset property taxes. Based on most of the feedback the commission has received to date, it appears that most people are in support of a local sales tax versus increases in property taxes. If this scenario were to happen, a future commission would have an interesting decision. However, based on today's infrastructure challenges, setting an arbitrary date would be shying away from our leadership responsibilities and may be insincere to the public trust by giving them an expectation of an ending date, when sitting here today we cannot reasonably predict the future with any certainty past the next decade.
With regard to the city issuing a public statement, we applaud the city's initiative and believe all entities will have to account for their individual use of funds when and how they believe they are needed. I am not sure what public statement you are expecting from the county, but we have been clear for many months now that our primary use of almost all our funds for the foreseeable future (10-plus years) will first and foremost be to solve expansion of our jail detention facility.
In September and October we will be holding a series of informational meetings for the public on this project. We believe all local leaders face difficult choices in order to provide critical infrastructure and services to meet the needs of their citizens. We have taken the position that we do not want to publically debate or degrade what other elected officials believe is their responsibility to provide and, sincerely, hope that any funding we approve to meet our responsibilities provides the resources necessary for other local leaders to meet what they believe are their most important public responsibilities.
We have many good elected officials in whom we must ultimately trust they are doing their best whether, even when looking from the outside with partial facts, we agree with them or not.
In summary, this response reflects the numerous discussions our board has had during past meetings and workshops. We have evaluated our financial needs and options and believe the best compromise we can offer the city of Palm Coast at this time is an eight-year phase-in to transition to the statutory default formula. If the city desires to work with the county for an eight-year phase-in, please let us know and we will draft an interlocal agreement for this approach. If not, we will assume you wish to support the county in its countywide efforts with the statutory formula, the majority of which will benefit Palm Coast/Flagler County residents as a whole. I hope this better explains the county's position on this matter.
Barbara S. Revels is the chairwoman of the Flagler County Board of County Commissioners.
