2008-2009 Budget
Introduction
The City of Port St. Lucie’s proposed budget for FY2008-2009 totals $517.9 million. This represents a 44.48 percent decrease of last year’s amended budget of $932.8 million. The decrease is attributed to the drop in CIP projects for fiscal 2008-09. We do expect to amend the budget in FY2008-09, adding unforeseen Capital Improvement Projects, Police Forfeiture items and projects that need to be re-budgeted from the 07-08 adopted budget.
It is important to note that ad valorem taxes make up 8.2 percent of the total budget and is dropping by 19 percent due to the drop in value. Other revenue sources for this budget year include franchise fees, utility taxes, gas tax, impact fees, grants, license and permit fees, loan proceeds, drainage user fees and water & sewer operating revenue.
This budget reflects months of staff preparation, meetings with the City Manager, department heads, and review by the City Council at their semi-annual council retreat. We worked diligently to develop a budget that meets council guidelines, City Manager approval and meets the Tax Reform restrictions placed upon us by the State Legislature.
Key budget points include:
- 19 percent taxable valuation decrease
- Where does the millage rate go?
- Multi-year approach to the impact of tax reform
- Police officer staffing
- Future buildings program
- Proposed millage rate
Taxable valuation decreases by 19 percent
The City of Port St. Lucie experienced a decrease of 19 percent in taxable property valuation. There are several factors that contributed to the drop in value. The largest issue is the drop in value of existing properties due to the shifting real estate market causing a $2 billion drop in value, while the passage of Amendment One allows for a second homestead exemption of $25,000 which caused another $1 billion drop in value. New construction added a half-billion dollars to the taxable value figure, but that figure was twice that in the prior year. Only when existing property changes ownership, can the taxable value increase to market value. Existing residential property that is homesteaded can only increase in value by 3 percent or CPI factor allowed for under the Save our Homes state statue.
This level of new construction was supported by the level of commercial construction in our community. Residential construction is down form prior years plus the slower sales of existing homes meant fewer homes were being adjusted up to their new market value for taxing purposes.
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Where does the millage rate go?
Ad valorem taxes will generate $42,669,530. The general fund receives 59.1 percent of this revenue, absorbing 57.6 percent in operating expenditures and 1.5 percent in debt service. The road and bridge fund receives 6.1 percent, helping this fund with shortfalls due to the limited growth in gas tax. The remaining 34.8 percent will go to two capital improvement project funds for the annual resurfacing program, road improvements and the Crosstown Parkway road project.
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Multi-year approach to the impact of tax reform
Due to the statutory change to the property tax rules, for fiscal year 2007-08 budget and then the Constitutional Amendment One hitting FY 2008-09, the development of this proposed budget required a multi-year approach. Also impacting the city’s budget is the dropping taxable value. The city has been able to survive without any layoffs by setting aside contingencies. In 2006-2007 and 2007-08, there has been a hiring freeze and holding off on replacing equipment to generate a larger carryforward balance in several funds. This balance that was purposely created is being used to offset the lack of future tax revenues. However the projections for FY 2009-10 in the General Fund show a sizable deficit of over $4 million and will require the attention of management and the elected officials.
New staffing standard for police officers
City Council approved a new staffing standard for police officers at the council retreat. The new police staffing standard of 1.6 officers per thousand of population reduced the police staffing by 10 officers. The city’s estimated population as of October 2008 is 166,500. Due to the level of vacant residential homes, it is estimated that ± 4,000 of the completed homes are not occupied. Therefore, a more accurate population figure might be 160,000; thus the sworn staffing should be 256 (160 x 1.6). This amounted to a reduction of the four additional officers that were proposed in the 2008-2009 budget, plus six vacant officers in current level.
Future buildings program
In the proposed 2008-09 budget there are only limited amounts for the future buildings program. The reconstruction of the Ravenswood facility which is being cash funded at an estimated cost of $8.3 million is the only project budgeted.
Typical tax bill for PSL homesteaded property
With the changes in property tax reform and increasing homestead exemption in 2008 a typical tax bill is down by $84.07. The city has elected to use a total millage rate of 4.2172, which is the rate generated under tax reform last year that required a 9 percent reduction from the roll-back rate.
| TYPICAL TAX BILL FOR PSL HOMESTEADED PROPERTY |
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| 2007 | 2008 | |
| Assessed Value | $168,826 | |
| CPI | $173,891 | |
| Less Homestead | ($25,000) | ($50,000) |
| Taxable Value | $143,826 | $123,891 |
| PSL Tax Rate | 4.2172 | 4.2172 |
| PSL Tax Bill | $606.54 | $522.47 |
| City property tax bill drops by $84.07 | ||
The budget process
Budget development starts with establishing goals by working with the City Council at a budget planning workshop held early each year. A long-range model is used to study property valuation, millage rate and their effect on funding. Final approval of the annual budget by the City Council follows several levels of review. The original budget requests of the departments are first reviewed by the City’s Director of the Office of Management and Budget and later the City Manager. Revenue projections are made by studying multiple year trends for each revenue such as impact fees, building permits and inspection fees. As the updated property valuation is made available from the St. Lucie County Property Appraiser’s Office, the effect to the city’s ad valorem tax revenues is reviewed. Through meetings with department heads, the departmental budgets are adjusted accordingly, so that a balanced budget, which meets the desired goals of the City Council, can be submitted for their review. The council conducts final review with any directed changes made by city staff.
Population growth
This population chart again shows the strong growth pattern experienced by the City of Port St. Lucie. Of special note is how the latest years’ figures are above the average trend line on the chart. After being incorporated in 1961, our population was only 330 in 1970. However, our population was estimated to be 97,000 in June 2002 and is now estimated at 166,000 as of October of 2008. Annual increases had been averaging approximately 3,000. The growth pattern exceeded that trend in 2003 thru 2006 as the tremendous number of new homes being constructed was at a record level. Port St. Lucie often is listed as one of the fastest growing cities in the nation. This level of growth in recent years is the driving force behind the infrastructure needs of the city and also increasing levels of service. Over the years, the Parks and Recreation, Police and Utility Departments have grown to reflect the growth of the community.
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Such strong growth patterns have had an equally demanding impact on other government agencies that service our community. The county public school system is struggling to handle the increasing number of students. The county government is experiencing increased maintenance demands for their infrastructure. State roads are also being widened to accommodate the growing volume of traffic. And the public assistance and welfare programs are enrolling increasing numbers of participants each year. Since roughly January 2006, the number of housing permits has dropped. The housing market has slowed and there are more homes sitting on the market than in previous years. Several factors point to a slowing of the growth rate of both population and taxable value.