CITY OF TALLAHASSEE
CITY COMMISSION AGENDA ITEM
ACTION REQUESTED ON: July 1, 2009
SUBJECT/TITLE: Approval of Tentative Millage for the Fiscal Year 2010 Proposed Budget
TARGET ISSUE: N/A

STATEMENT OF ISSUE

In accordance with Florida Statute 200.065, the City is required to set the tentative Fiscal Year 2010 (FY10) millage rate by August 4, 2009 and to advise the local Property Appraiser of the proposed millage and rollback rates, as well as the date, time, and place of the budget hearings. The adopted tentative millage rate must be based on the certified property value provided by the Leon County Property Appraiser on July 1, 2009. The numbers presented in this item have been updated as of today to reflect the July 1 values hand delivered to the City this morning by the Leon County Property Appraiser.
With a majority vote, the Commission may adopt up to the maximum millage rate of 3.6030 mills. For purposes of TRIM legislation the rolled-back (forward) rate, including various adjustments, that will recover the same amount of ad valorem revenue as collected in FY09 is 3.5151 mills.
Two statutorily required public hearings are scheduled for September 9 and September 23, 2009 to adopt the FY10 budget and millage rate. Each hearing is scheduled at 6:00 p.m. in the City Hall Commission Chambers at 300 South Adams Street. Budget public hearings for the City, County, and School Board cannot be held on the same day. The County has also scheduled their first public hearing for September 9, 2009, but will consider rescheduling that date at their July 14, 2009 meeting.

RECOMMENDED ACTION

1. Adopt the rolled-back rate of 3.5151 mills as the FY 2010 tentative millage rate for the City, and 1.0 mill for the Downtown Improvement Authority. Approve September 9 and 23, 2009, as the dates for public hearings to begin at 6:00 p.m. in the City Hall Commission Chambers at 300 South Adams Street.

FISCAL IMPACT

1. Adopting a tentative millage rate of 3.5151 mills for the City and 1.0 mill for the DIA will result in ad valorem revenues of approximately $34,735,207 for the City and $181,450 for the DIA for fiscal year 2010 (based on July 1, 2009, certified values from the Leon County Property Appraiser).

Beckye Simpson, Budget Manager, Office of Budget and Policy

Anita Favors Thompson, City Manager

For information, please contact: Robert Bechtol, extension 8053

SUPPLEMENTAL MATERIAL/ISSUE ANALYSIS
HISTORY/FACTS & ISSUES

Using the July 1, 2009, certified values and following statutory requirements, the City’s maximum millage rate that can be adopted by a simple majority vote is 3.6030 mills. The maximum millage rate is the rolled-back (forward) rate, 3.5151 mills, adjusted for Florida growth in personal income that is 2.5% for FY10. Any rate that is finally adopted which exceeds the rolled-back rate must be advertised as a tax increase. The City’s current millage rate is 3.2115 mills and was set at the maximum millage rate for FY09.

The maximum millage rate would generate $35,603,587 and the rolled-back rate would generate $34,735,207. For initial planning purposes in developing the FY10 proposed budget, the current millage rate of 3.2115 mills has been used which generates $31,753,083, a reduction in ad valorem revenue from the amount collected in FY09 due to the reduction in assessed values from FY09. The rolled-back rate will provide the same amount of ad valorem revenue as collected in FY09 but will generate approximately $2.9 million more than the amount used for preliminary FY10 budget projections. Likewise, the maximum millage rate will generate approximately $3.7 million more than the amount used for initial budget projections.

The impact of increasing the millage rate from the current 3.2115 mills to the maximum rate of 3.6030 mills to the owner of a homesteaded property with an assessed value of $200,000 is $58.73 and to the rolled-back rate is $45.54. For a non-homesteaded property of the same value, the increases would be $78.30 and $60.72 respectively.

Any of the three previously mentioned rates, or any rate up to the maximum rate, can be adopted with a simple majority vote. The statutes also provide for options to adopt a higher millage rate under the following conditions:

With a 4-1 (2/3) affirmative vote, the City Commission could go up to 110% of the statutorily allowed maximum millage rate. This would result in a millage rate of 3.9633 and would generate $39,163,945.

With a 5-0 affirmative vote, the City Commission could adopt a millage rate greater than 110% of the statutorily allowed rolled back millage rate.

State statutes require that local governments adopt a tentative millage rate and set the dates and times for two statutorily required public hearings and report this information to the local Property Appraiser by August 4, 2009. The tentative millage rate and date and times of the public hearings are reflected on the TRIM notices mailed to all property owners in late August. State Statutes require that budget public hearings for each unit of local government be held on different days to allow citizens to attend all of the hearings if desired. School board dates have the highest priority with County dates at the second highest priority. Currently the County has scheduled September 9, 2009 for their first public hearing. They will consider changing this date at their July 14, 2009, Commission meeting. If it is not changed, the City will have to reschedule the first hearing to another date.

The Commission may adopt a lower rate, if desired, at either of the two scheduled public hearings. A higher millage rate may be adopted at the first public hearing but requires that each taxpayer be notified by first class mail of the impact of the millage rate adjustment. Any change in the time or date of either public hearing also requires the same notification process. At the second public hearing in September, the Commission will approve the FY 2010 Budget and adopt a final millage rate.

OPTIONS

1. Adopt the FY 2010 tentative millage rate of 3.6030 for the City.

Pros:
This is the maximum millage rate that may be approved with a simple majority vote.
Provides additional ad valorem revenue that may be used to offset projected budgetary shortfall.
The rate can be reduced at either of the two statutorily required public hearings if desired.

Cons:

This must be advertised as a tax increase of 2.5%.
Given the current economic conditions, this may cause a hardship for some taxpayers.

2. Adopt a tentative millage rate of 3.5151 for the City, which is the rolled-back rate that will generate the same amount of ad valorem revenue as received in FY09 (adjusted for new construction, annexations, etc.).

Pros:
This is the rolled-back rate that continues the same level of ad valorem revenue as received in FY09.
This is not a tax increase.
The rate can be reduced at either of the two statutorily required public hearings if desired.

Cons:
Unlike prior years, where non-homesteaded property values were increasing, the major impact of this increase will be to homesteaded properties.
Given the current economic conditions, this may cause a hardship for some taxpayers.

3. Adopt a tentative millage rate of 3.2115 mills, which is the current millage rate.

Pros:
This will provide for a tax decrease for non-homesteaded properties and provide relief for businesses during the current recession.

Cons:
The rate cannot be increased (without expensive notifications) at a later date.
The amount of ad valorem revenue collected will be less than collected in the current year.

4. Provide staff guidance in modifying the tentative millage rate or scheduled public hearings.

5. Adopt a tentative millage rate for the DIA of 1.0 mill.

6. Set public hearings dates for September 9 and 23, 2009 at 6:00 p.m. in the City Hall Commission Chambers at 300 South Adams Street and discuss an alternative date for the first public hearing of September 10, 2009, if there is a conflict with County public hearing dates.

FISCAL IMPACT

Adopting a tentative millage rate of 3.5151 mills for the City and 1.0 mill for the DIA will result in ad valorem revenues of approximately $34,735,207 for the City and $181,450 for the DIA for fiscal year 2010 (based on July 1, 2009, certified values from the Leon County Property Appraiser).

RECOMMENDED ACTION

Approve Options 2, 5 and 6.
Option 2. Adopt a tentative millage rate of 3.5151 for the City, which is the rolled-back rate which will generate the same amount of ad valorem revenue as received in FY09 (adjusted for new construction, annexations, etc.).

Option 5. Adopt a tentative millage rate for the DIA of 1.0 mill.

Option 6. Set public hearings dates for September 9 and 23, 2009 at 6:00 p.m. in the City Hall Commission Chambers at 300 South Adams Street and discuss an alternative date for the first public hearing if there is a conflict with County public hearing dates.