FCCMA - Property Tax Reform in Florida

1. FCCMA - Property Tax Reform in Florida How Local Governments are Responding – A Fort Walton Beach Perspective July 11, 2007

2. Issues Facing FWB (small cities) Reduction in Property Tax Revenues = Reduction or Elimination of Services Determining What’s Essential Services and Employees Depletion of Reserve Funds Limited Ability to Generate Additional Revenue Quelling the Panic in the Workforce

3. FWB Revenue Decline $2.1M or 10.5% decrease in General Fund revenues Ad Valorem Estimated Millage Rate Decreased 8.3% from 4.6458 to 4.2591 Down $54,727 or 1.1% in General Fund Down $54,727 or 1.1% in General Fund Required 5% reduction from roll-back; however, new construction offset much of the reduction CRA Fund benefited from new construction, up $47,562 or 4.9% Communication Services Tax Vendor remittance error resulted in 28 months of overpayment Down $881,645 or 37.8% (exclusive of payback) Municipal Revenue Sharing Down $55,095 or 6.5% Half-Cent Sales Tax Down $185,940 or 9.8%

4. Constitutional Amendment Assessed Value of Homestead Properties: $564M “Save our Homes” Taxable Value: $366M “Super Exemption” Taxable Value: $177M Impact of Super Exemption 91% of homestead properties have assessed values less than $200K Possible $807K ad valorem revenue reduction

5. What is FWB Doing to Combat Declining Revenue? On-going Dialogue with Legislators Budget Policy Workshop with Council (April) Revenue Review Update existing sources Evaluate new sources Evaluating & Prioritizing Services Gaining consensus on service delivery levels Determining Essential Services Personnel Issues Determining Essential Personnel Positions Eliminated or Unfunded – 26 positions or 5.78% Reductions In Force Accomplished via: attrition, retirements, lay-offs

6. Surviving Property Tax ReformFWB’s Action Plan Revenue Sources Diversification, diversification, diversification! Move to user-based fees and revenue sources Compare fees to surrounding jurisdictions Adjust current fee schedule to reflect cost of services – especially building fees for FBC and sanitation fees Storm Water Management Fee feasibility study underway Impact Fee study underway Consider Fire Services Fee in the future Service Delivery Reductions Renegotiate Tennis Center contract with higher fees for users and a 40% reduction in City subsidy Reduce Capital improvements (e.g. street paving cut 43% or $75K, parks improvements cut 84% or $260K, fire station renovations delayed) Reduce Library, Museum, Senior Center hours Await results of Alternative Service Delivery study

7. Citizen Feedback Budget Policy Workshop in May Consider using Great Neighborhood Partnership Meetings to Communicate and Engage Residents on Budget Issues. Budget Workshops in August

8. Steps to Prepare for Additional Reform Alternative Service Delivery RFP Consolidation, Privatization, Outsourcing, Partnerships Determine Cost of Services % Support by General Fund for City Services Consider Debt Financing v. Pay As You Go for Capital Consider Debt Defeasance Adjust Current Fees to Reflect Cost Explore Additional Fees Expand Impact Fees – water, sewer, streets, recreation, library, etc. Storm Water Utility Fees Fire Service Fees Explore Removing Cap from Public Service Taxes (F.S.S. 166) Establish Dialogue with Fire Union

9. Surviving Property Tax Reform Revenue Diversification Contact Ken Small (800-342-8112) at League of Cities for his Revenue Enhancement Program Adopt Multi-Year Fee Schedules to ensure rates keep pace with costs Evaluate & Prioritize Service Levels Consider Alternative Service Delivery Methods Communicate with Citizens

10. Thank You. Contact Information: Joyce Shanahan, City Manager City of Fort Walton Beach, FL 850-833-9504 Email: jshanahan@fwb.org