Questions on budget balance push off decision on your property tax rate

Jacksonville’s Finance Committee says there’s not enough information yet available to decide what property tax rate you should pay next year.

During a special meeting this morning, the committee was set to recommend whether there should be a preliminary hike in the property tax rate allowed. The decision must be made by August 4th so the Property Appraiser’s Office has enough time to send out notices to property owners about any potential change.

Instead, the committee decided they needed more information about the budget in front of them.

“We need to find exactly who’s going to tell us if this is a balanced budget,” says Finance Chair Richard Clark.

Council members argued today that the budget proposal presented by the Mayor does not appear to be balanced. The Council Auditor says the budgeted pension contribution for police and fire is about $11 million short.  He also believes the amount of reserve funding used by the Mayor is too large when considering the amount the City is legally required to have on-hand.

“Is it even lawful to use the reserve account which is baked in to this budget of $16 million dollars? Why is that in there, why are we using that money,” says Council President Clay Yarborough.

That discussion led to questions on how the Council could determine if the budget was balanced and what options they have if it is not. The Office of General Counsel said it would need time to make that determination- and the committee wants to grant that time.

The OGC previously issued a legal opinion allowing the use of reserve funding. The budget can only spend “current year” funding, and the legal opinion states that because this is just a proposal, and all the funding is subject to the final vote, using the funding sources listed from the Mayor would mean they would be “current year” at the time of the adoption.

A bill dealing with the preliminary tax rate the council could set was expected to come for a vote Tuesday night.  Clark told the Council the committee wants to delay the overall vote, however, and he was granted that time. A new meeting was scheduled for August 4^th, which is also the day the decision is due.  The rate set by Council would not be the guaranteed final rate, but rather the maximum they would be able to increase the rate as part of the ongoing budget talks.

The committee members want the more comprehensive view of the budget in order to decide if there is any hole. If that exists, they would have to figure out how to plug it.  Clark says he does not support any tax rate increase that would be used to offset expenses. Councilman Bill Gulliford further said during the meeting that the budget has a “spending problem”, and that will be where the Council needs to look to balance the budget.

“It’s just sad for our city that we have to get citizens very excited for projects, and then we have to come back within a month or two and say ‘well, that’s not the top priority this year’,” Yarborough says.

Clark says a tax rate increase can’t be entirely ruled out, however, because there are some long term needs the Council needs to look at. He says pending pension reform legislation requires an annual $40 million contribution from the City over what is already paid toward benefits.

“This is our single biggest issue the city’s probably ever faced,” he says.

He says the City’s need to help fund projects at JAXPORT will also require a long term spending plan. While the Mayor has appointed committees to work on both of those funding questions, Clark and Gulliford would both support using a sales tax.

“I believe the broad base is a much better use than always going after a property owner,” Clark says.

A sales tax increase would trigger a decline in the property tax rate, and it would also apply to people traveling through and visiting Jacksonville instead of just current property owners.

Overall, many on the committee were frustrated at other portions of the budget, and question whether there’s any legislative change they can make to prevent these questions from coming back. Last year, the Mayor’s proposal included multi-million dollar holes in some departmental budgets. While Council enacted some change to prevent that from happening again, many now feel there are just different technical issues, like the use of some one-time funding.

Councilman John Crescimbeni plans at least one other legislative change he hopes will smooth out the process moving forward.

“I’m going to introduce legislation to require the municipal budget be introduced to us on July 1,” he says.

One of the concerns from the Council Auditor is that his office is still working through the budget proposal, and it’s that preliminary information the Council is using to make decisions- like what your tax rate could be.

Given all of these concerns, I circled back with the Mayor’s Office, which says they still support the proposal and believe it is balanced as required by law.  In a statement, Chief of Staff Chris Hand says they are within the law to use reserve funding and feel that is an important source to tap this year in order to keep economic growth moving forward.