Okaloosa County BOCC — 2013 meeting #1123 (date undetermined) — Budget Policy Document FY14 — reading text

be levied except in pursuance of law. No State ad valorem taxes shall be Okaloosa County Taxes to Total Budget levied upon real estate or tangible personal property. All other forms of taxation shall be $350,000,000 $304,080,099 preempted to the State except as provided by $300,000,000 $280,421,796 general law (Article VII, section 1(a), Florida $263,569,236 $261,624,931 $257,241,963 Constitution). $250,000,000 With the exception of the ad valorem tax and several constitutionally authorized State $200,000,000 shared revenue programs, local governments are dependent on the Legislature for the $50,672,326 $150,000,000 $54,574,058 $42,363,259 $45,386,520 $43,138,304 authority to levy any other forms of taxation, thereby increasing the relative importance of $100,000,000 the ad valorem tax. $50,000,000 To ensure tax equity, appropriate allocation of revenues and expenses between the $0 incorporated and unincorporated areas of 2009 2010 2011 2012 2013 Okaloosa County are evaluated annually. Taxes Total Budget Florida Statutes prescribes that appropriation of no less than 95.0% of all receipts reasonably anticipated being received from all sources, thereby establishing an almost 5.0% margin for error in revenue estimates, particularly in the area of ad valorem tax revenue. Ad Valorem Tax Okaloosa County’s property taxes comprised about 17.0% of total revenues in Fiscal Year 2013. Increasing property values is the largest potential source of revenue to support growth in service demands for most local governments. The State Legislature, along with the Tax Reform Commission, has and continues to study the Millage History Since Last Increase 6.0000 5.0000 4.0000 3.0000 2.0000 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Page 4 Ad Valorem Tax System imposed by the Florida Constitution. Some laws and Constitutional changes have already passed limiting this source of revenue. Staff continues to monitor ongoing legislative activity. Ad valorem taxes are currently used in the General Fund, County Health Department and Emergency Medical Services. Local governments may levy ad valorem taxes subject to ten mills for county purposes. Two targets attractive to County citizens, as well as the State Legislature, as they debate local government response to citizens’ desire to lower taxation, are the current millage rate and the rolled-back rate. Adoption of the rolled-back rate would generate the same amount of tax dollars as the prior year, plus the amount generated by new construction. For the most part, the new construction dollars generated are intended to fund existing services demanded by owners of the new property. Based on Final 2013 Taxable Value of $13,565,838,217 Board of County Commissioners Taxes paid by Taxpayer* Millage Rate Increase County Taxes@95% Increase $100,000 Increase 3.2899 $42,398,739 $328.99 3.3500 0.0601 $43,173,280 $774,541 $335.00 $6.01 3.5000 0.2101 $45,106,412 $2,707,673 $350.00 $21.01 4.0000 0.7101 $51,550,185 $9,151,446 $400.00 $71.01 4.5000 1.2101 $57,993,958 $15,595,219 $450.00 $121.01 *Before exemptions & discounts. For sake of discussion, staff has estimated a 1% increase in local value. That scenario would produce an estimated increase in value amounting to a total value of approximately $13,690,000,000 in countywide value for Fiscal Year 2014. If this estimate is close to accurate, then taxes generated for Fiscal Year 2014 countywide will be approximately $42,790,000, assuming adoption of the current millage rate of 3.2899 mills. This amount would be $390,000 more than current year taxes countywide or about $13,000,000 per each 1.0000 mill or $1,300,000 per each .1000 mill. Based upon the State maximum millage rate computation last year the Okaloosa County maximum millage rate was calculated to be 5.2657. Although the staff estimates a minimal increase in value this year, the prior year decreases in value have hampered the County by not providing additional dollars to maintain the current services and not providing for the fixed cost increases in the budget and, thereby, not providing any dollars for needed capital projects. Okaloosa County Ad Valorem Tax Revenue History $80,000 $62,066 $59,751 Thousands $54,817 $54,574 $60,000 $50,553 $43,475 $45,318 $43,072 $42,400 $42,790 $38,833 $40,000 $20,000 $0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Page 5 Adoption of the current rate would generate approximately 1.0% more dollars based upon the current valuation estimate. Last year’s millage rate target was set at 3.2899. This target rate is a rate above which the Board of County Commissioners does not intend to levy property taxes. The graph below depicts how Okaloosa County’s aggregate rate, the lowest of all similar counties by size or geographical location, compares to other counties. FY2013 County Aggregate Millage Comparisons Similar Size Counties 10.0988 $12.000 8.4878 8.1660 8.0928 7.8851 Dollars per $1000 7.5909 7.4553 7.2566 $10.000 6.0953 $8.000 4.1196 3.6018 3.3755 $6.000 $4.000 $2.000 $0.000 Bay Clay Walton Osceola Okaloosa Hernando St Johns Charlotte Escambia Santa Rosa Alachua St Lucie A separate unincorporated ad valorem millage assessment is utilized to fund unincorporated county park activities and improvements. Property valuation for the unincorporated area, based upon the same percentage estimate as mentioned above for Fiscal Year 2014 is estimated to be approximately $6,500,000,000. Unincorporated ad valorem millage assessment at the current rate of 0.1800 mills will generate approximately $1,110,000 in Fiscal Year 2014. The approximate increased amount in the unincorporated area assessment would generate about $10,000 more than current year taxes or about $585,000 per each .1000 mill. Fiscal Year 2014 revenues will be estimated at 95.0% of actual taxes levied in view of early payment discounts and successful appeals of appraised value or denied exemptions to the Value Adjustment Board. Policy Recommendation. Because of the current demand for new services, the increase in operating costs and unfunded mandates from the State, infrastructure and capital project delays, as well as, minimal anticipated increases in taxable valuation, staff recommends consideration by the Board of County Commissioners to increase the current rate of 3.2899 mills, countywide, and establish a higher target rate of 3.6249 mills. This .3350 mill would generate an additional $4,351,211 to overcome the projected budget gap; however this countywide operating millage combined with the Municipal Service Taxing Unit (MSTU) millage would still remain below all other comparative