A SPECIAL MEETING OF THE BOARD OF COUNTY COMMISSIONERS
MARCH 7, 2008
The Lake County Board of County Commissioners met in a special Budget Workshop session on Friday March 7, 2008, at 8:00 a.m., in Training Room 233, Lake County Administration Building, Tavares, Florida. Commissioners present at the meeting were: Welton G. Cadwell, Chairman; Jennifer Hill, Vice Chairman; Debbie Stivender; Elaine Renick; and Linda Stewart. Others present were Sanford A. “Sandy” Minkoff, County Attorney; Cindy Hall, County Manager; Gregg Welstead, Deputy County Manager; Ed Havill, Property Appraiser; Gary Borders, Sheriff; Emogene Stegall, Supervisor of Elections; Neil Kelly, Clerk of the Circuit Court; Barbara Lehman, Chief Deputy Clerk, County Finance; and Susan Boyajan, Deputy Clerk.
PRESENTATION ON IMPACT OF LEGISLATION ON PROPERTY TAX REVENUE
Ms. Cindy Hall, County Manager, stated that Mr. Doug Krueger, Budget Director, would be giving a presentation on the property tax implications and millage rates that he was working with so far to give them an idea of where the County stood based on Amendment 1 and legislation that took place last year.
Mr. Krueger stated that his first presentation would be regarding the important subject of property taxes, which was made somewhat more complicated by the legislation that had passed last June and also by Amendment 1. He reported that they kicked off their budget process on February 27, and the departments were working on their budgets and would bear in mind any information or comments that came from the Board today as they prepared those requests. He related that he would first talk about property tax rates and revenues, including the FY 2008-09 rollback rate, which was an important rate because it was what the Department of Revenue used to determine whether local governments were initiating tax increases or staying at the same tax rate. He mentioned that the rollback rate brought in the same revenue as the prior year, except for new construction. He explained that the statutory rate was the one that was included in House Bill (HB) 1B last year, which provided that local governments could adopt millage rates that were rollback plus the increase in per capita personal income. He reported that the FY 2008-09 statutory rate affected by Amendment 1 basically would reduce their tax base, which was the statutory intent of the legislature. He pointed out that under the bill that was actually passed, local governments were not required to lower their revenues, but the previous one that was struck down by the courts did require them to roll back revenues. He noted, however, that it was the legislative intent for them to reduce revenues, so he would be providing information that showed the impact of that. The last rate that he would talk about was what would happen to their revenues if they adopted current millage rates. He also stated that after that they would open it up for some discussion about the handouts that were previously given to the Board on programs and services areas supported by the general fund to get some direction on how to move forward in some of those areas.
Mr. Krueger reported that the budget process for every county was governed by F.S. Chapter 129, which dealt with the preparation and adoption of the budget, and Chapter 200, which was the determination of millage. He noted that it was also impacted by HB 1B passed by the Legislature in June, 2007, which provided that the maximum millage rate could be the rollback rate plus the growth in per capita personal income, and Amendment 1. He mentioned that there were a number of variables that came into play that affected the property tax projections, some known and some unknown until July 1 when the Property Appraiser would provide the tax base information. The known variables were the current year tax base, the current year tax rates and revenues, and the current year Community Redevelopment District (CRA) payments; and the unknown variables were what the overall growth in the tax base would be through reassessment, new construction, exemptions, and the impact of the portability aspect of Amendment 1; incremental growth in the CRA tax base; and per capita personal income. He commented that all of the figures presented today were based on the per capita personal income that was in effect when they adopted HB 1B, but the update he received this morning changed all the numbers. He related that the assumptions he was using during this presentation was a five percent growth in the tax base prior to the adjustments that would be made regarding Amendment 1; $800 million in new construction, which was down from last year’s figures of $1.4 billion; incremental CRA tax base growth of $622 million based on last year’s numbers; and data regarding the impact of Amendment 1, which was about a $9 million impact on the general fund revenues. He related that currently the general fund tax base was $22.4 billion, and assuming a 5 percent growth, it would be $23.5 billion. However, once the Amendment 1 exemptions were applied, it would reduce that tax base to $21.6 billion, which amounted to an 8.5 percent decrease of what it would have been if Amendment 1 had not passed and a 3.5 percent decrease from the current tax base. He commented that the same relationship held for the MSTU Ambulance and the MSTU Stormwater taxes.
Mr. Krueger reported that the current revenues for FY 2007-08 were $100.7 million based on the current tax rate of 4.741, and revenues based on the FY 2008-09 rollback rate adjusted for new construction and other factors would be $104.8 million, with the tax rate jumping to 5.1169 under that scenario. He pointed out, however, that was not considered a tax increase under the State’s definition of property tax increases, because it would calculate a tax rate that would bring in the same revenue as the previous year, even though the tax base went down. He also noted that in most cases the tax base grew, so the rollback rate was actually less than the current rate. He then showed $108.4 million as a figure that would reflect what maximum revenues for FY 2008-09 that they could adopt under the Statutory rate in HB 1B, which included the growth in new construction of 3.4 percent and the estimated per capita personal income rate of 4.25 percent. He noted, however, that it was posted this morning that that rate had dropped to 2.33 percent, which would result in a decrease in those numbers of about $2 million, or $106.4 million. He also emphasized that the tax rate associated with this figure was 5.29, which was a 55 cent increase and would be considered a tax increase under the State’s definition of a rollback rate, because they would be adopting revenues above the rollback rate, but this would be allowed under HB 1B. The next figure that he showed on the overhead was the statutory rate less the impact of Amendment 1 of $97.4 million, which would be a reduction of $1.1 from the current collections of $100.7 million. He pointed out that that figure used the tax rate of 4.84, which would not be considered a tax increase because it was below the rollback rate, and then he showed a final scenario showing what the revenues would be if they adopted the current millage rate of 4.741, which would be $95.2 million, a $5.5 million reduction from last year’s revenues.
Mr. Krueger explained what those figures would mean for a person with a $200,000 home with a homestead exemption, and specified that under the current year they would pay $830. He continued to explain that for FY 2008-09 using a rollback rate of 5.11, that homeowner would pay $798; and under the statutory rate, they would be paying $825 or a $5 reduction of what they were currently paying. He also reported that with Amendment 1 impact factored into this scenario, the property tax would drop to $756, but with the current millage rate, this figure would further drop to $740, which would be a $90 decrease. He pointed out that this decrease was far less than what was promised by the Governor, although it only reflected the general fund portion and did not reflect homes of larger value. He also stated that it would be a similar scenario for the other taxing districts, such as for ambulance and stormwater. He mentioned that the tax rate for the debt service would remain at .2 of a mil, which would bring in about the same amount of revenue. He pointed out that the figures presented could still change once they got actual data from the Property Appraiser on tax base increases and other factors on July 1.
AREAS FOR DISCUSSION
Ms. Hall stated that they had given out two sets of handouts, one of them which listed everything that had an ad valorem tax impact or was funded by ad valorem tax in response to the request by one of the Board members, and also a three-page handout that contained areas for discussion that might be more focused, which were the type of issues or activities that seemed to have come up at some point in time in the past for discussion. She commented that they were looking today for just some general guidance and not any hard and fast decisions. She explained that there was a lot that went into the preparation of the budget, and they were just now beginning to look at that.
Customer Service Space Expansion
Commr. Cadwell stated that they had had discussions with Constitutional Officers in regard to looking at all of the customer service spaces for expansion and that they talked several times about the Dodge Dealership in Clermont. He commented that they needed to give Ms. Hall and staff some direction on that and whether they would continue to lease space down in that area. He noted that the Sheriff’s Office could not continue to stay where it currently was located in that area and that there was discussion about a maintenance area for them. He wanted to give staff direction to look at purchasing the Dodge Dealership building or a lease/purchase for a South Lake office and get back to the Board with how much it would cost to get the building ready and what the expected life of that building would be.
Sheriff Gary Borders stated that his only concern was that they were in the old Clermont Police Department next door to the new Police Department, and Clermont had asked them to move out about two years ago, since they wanted that space. He also commented that it was only about 2200 square feet, and obviously they were growing at the south end as far as the amount of work they were doing down there.
Commr. Cadwell added that he understood that there was additional property by the dealership if they wanted to look into everyone being in one location down there at some point, and they needed to look at the numbers on that.
Commr. Renick asked if they needed to have a discussion about the South Tavares campus and whether this was the wrong time to go ahead with that project.
Ms. Hall responded that that discussion would take place next Tuesday, and even if they were planning on doing everything they talked about in South Tavares, which was unlikely, the Sheriff was still looking for a substation in South Lake County. She asked if she could have direction to look at what the dealership property would cost them and come back to the Board with some analysis on the cost. She commented that by that time, they would have heard the presentation next Tuesday on the building program, and it would all fit together in a timely manner.
Commr. Renick commented that she thought the dealership was in a good location and that it seemed like a very practical way to go. She was concerned, however, about the impression they gave about any additional spending at a time they needed to pull back.
Commr. Cadwell opined that the South Tavares campus would probably not happen anywhere near the scale of what they thought it was, if it happened at all.
There was discussion of possibly combining many kinds of offices on the dealership property, since it had a large amount of land.
Mr. Ed Havill, Property Appraiser, pointed out that one of the offsets would be what they were currently paying for rental space in South Lake County.
Mr. Sandy Minkoff, County Attorney commented that the highest rent they were paying was in Clermont.
County Paid Health Insurance and Salaries
Commr. Cadwell stated that they needed to give direction on what the County was going to do salary-wise next year. He suggested, even though he has always opposed this in the past, that they do a flat $1,000 per employee raise next year instead of a percentage like they had previously done. He noted that not all of the Constitutional Officers agreed with that, but they could make their own decision after the Board decided what they were going to do.
Mr. Havill commented that since this was such a tight budget year, he thought that if the County decided they were going to give a thousand dollars a head, all the constitutional offices ought to do the same thing and divide the money any way they wanted within the office.
Commr. Cadwell noted that this would not be long range.
Ms. Hall related that the health insurance cost would be a savings this year to the County because they were getting better rates.
Supplement to Solid Waste
Commr. Cadwell suggested that they talk about what would happen to the solid waste rates if they reduced that supplement.
Ms. Hall answered that if they reduced that, they would need to make adjustments to the rates. She commented that they might need to increase the rates anyway, because the hauler contracts were on automatic increase. She pointed out that this was not a tax that the citizens paid, but a cost of collection for picking up the garbage twice a week, and currently they were subsidizing the solid waste fund by $4.9 million. She related that one of the suggestions that the Environmental Services Department has given to them was to separate out on the tax bill the cost of the administration of that service versus the actual cost of collection, which increased every year.
Mr. Havill commented that the taxpayers would only be concerned about the bottom line and what came out of their pocket.
Commr. Stewart asked whether they could renegotiate for once-a-week pickup during the negotiation process to keep from raising the fees.
Mr. Daryl Smith, Environmental Services Director, stated that they could certainly do that, but that would be no guarantee that they would realize a significant decrease in rates enough to compensate for the $4.9 million. He also added that they were actually in the process of having some discussions with the franchise collector, and if the Board wanted to give them some direction on looking at once-a-week pickup, this would certainly be the time to move in that direction. He advised that instituting once-a-week collection would be a tough situation as well, because some residents have claimed that they could not live with one collection a week.
Commr. Hill inquired whether Mr. Smith would look into how they could keep the fee at this reasonable rate during the negotiation.
Mr. Smith mentioned that they might realize some reduction in the Covanta contract next year. He stated that they had an opportunity right now to just extend the garbage collection contracts as they existed for the same rate increases, but they were able to talk about reducing or changing the services to get a reduction in cost.
Commr. Cadwell stated that the whole discussion about changing the level of service was something for another day.
Ms. Hall informed the Board that they were in the process right now of writing checks to the children that were not in the City of Clermont but signed up for the City’s sports programs. She related that they had asked the City Manager if they would lower their rates down to $25 instead of $50, but they will only do that if they entered into an interlocal agreement with them stating that next year they would also pay the City directly $25 per child, instead of to the children. She asked the Board if they would like her to work on that and if they wanted to have an interlocal agreement with the City of Clermont assuring them of $25 per child next year.
Commr. Cadwell related that in the past it was based on how much money they had and not on a set fee. He commented that if they were going to do that, though, they would have to look at all of the cities, and they had some history on the numbers with the other cities that they needed to calculate into it. He also noted that they needed to do that in a timely manner, because the cities wanted to set those fees for the next season.
Ms. Hall stated that she would look at the cost of that and get back to the Board with what that cost would be. She also wanted direction on whether to talk to their City Manager about a piece of property that was a spray field that might be a good location for a regional park in a year or two and to come up with some arrangement as far as the County developing that particular piece of property as a park.
Commr. Renick explained that they would not have to buy it up front, and they could use that money for developing the park and would be able to get it up and running a lot faster than if they were buying it from someone else. She also commented that she thought the location of this was good for everyone in that area and that this would be a regional park.
Commr. Cadwell related that Mr. Gregg Welstead, Deputy County Manager, had the numbers showing where the children were coming from and commented that if they looked at the children that were currently participating, it would make sense to locate it in that area.
Ms. Hall related that last year the Board set aside $1 million for park development, which was still available.
Commr. Cadwell mentioned that the long-range plan was to stop the youth assistance program that they were spending general fund money on over and over again once they got those parks built, and the cities would be satisfied that the County was doing what they were supposed to do as far as recreation.
Commr. Cadwell commented that the County could not provide the care themselves that Lifestream provided for patients with mental and behavioral issues for that amount of money. He added that Lifestream understood that things were tight and that they were not looking at any more programs and just maintaining what they had.
Commr. Cadwell stated that he sent Ms. Hall a memo last week in regard to the whole Economic Development program, and this was an area where he thought they could save some money. He thought that once they started moving forward with their economic development plan, they would have a different relationship with the EDC (Metro Orlando Economic Development Commission) at a different level money-wise.
Commr. Hill asked if the cities were contributing to the inter-circulator LakeXpress route.
Mr. Ken Harley, Public Transportation Manager, responded that currently none of the cities were contributing to the LakeXpress service, and everything was coming from the County. He added that one of the things that they have been working on was getting the cities to be an active participant on the fixed route.
Mr. Sandy Minkoff, County Attorney, reported that the cities were contributing a small amount of money for advertising.
Mr. Harley mentioned that the FDOT (Florida Department of Transportation) was helping to pay 50 percent of the cost of operation for the Highway 192 LYNX service in South Lake County, but at the end of December, LYNX would expect the County to pay the full cost of operating the service, and it was anticipated for both routes to be approximately $600,000.
Commr. Renick was concerned that the cities would not step up to help pay those costs.
Mr. Harley stated that at this point in time, he did not think that the County would get the participation level from the south Lake County cities, especially on the South LakeXpress. He mentioned that they were getting a number of riders in the Four Corners area, but they were not able to get documentation yet on what percentage of those riders were coming out of Lake County, since only 1.8 miles of that was actually in Lake County.
Commr. Renick opined that the LakeXpress was a great idea and was worth the effort, but she did not think it has panned out the way everyone hoped it would.
Hours of Operation
Ms. Hall explained that if they got to the point where they needed to look at reduction in hours, the types of things they would need to be looking at were libraries; landfill operations; and solid waste drop off centers, which would impact the general fund because of the supplement that goes to the solid waste fund. She stated that at some point in time they might come back to the Board and need to make some recommendations having to do with hours of operation, but they were not at that point at this time.
Commr. Renick commented that she thought it would be nice for the libraries to be open during the current hours of operation, but she did not think it was necessary to be open six days a week and that she thought they could reduce the hours.
Commr. Cadwell directed Ms. Wendy Breeden, Library Services Director, to poll the cities on this issue.
Commr. Cadwell commented that every year the Board talked about the School Board paying for the School Resource Officers, so they needed to discuss that issue again.
Sheriff Gary Borders stated that he had asked city police departments to see if they wanted to take over the school resource function in their cities, but they were in the same position that the County was budget-wise, so they did not have any takers. He related that the School Board paid $33,000 per deputy and commented that he thought they ought to pay more for those services. He reported that the cost of the first year of a deputy going into a school was about $119,000, because they needed to buy cars and equipment. He also mentioned that deputy salaries started at $35,000 plus benefits.
Commr. Cadwell directed that they get the total cost of putting deputies in the schools and make a proposal to the School Board for them to pay a bigger cut of that.
Commr. Stewart thought that they should include the cities, because the cities would benefit from a good school located there.
Commr. Cadwell reported that part of the problem was that years ago the philosophy was that they wanted to have deputies in the schools and not local police officers.
Sheriff Borders added that some large schools had more than one resource officer.
Commr. Cadwell asked if there had been any discussion about sharing an officer between two schools that were close together.
Sheriff Borders answered that there had not been any discussion about deputies floating from school to school.
Commr. Stewart commented that it was a huge necessity for today’s schools.
Sheriff Borders opined that the cities would not be able to take those over because of the budget cuts.
Commr. Cadwell suggested that they make an official request to send to the School Board asking them to pay more.
Commr. Hill pointed out that there was a time factor and that they needed to do that immediately, before the School Board set their budget.
Commr. Cadwell commented that the school system had pockets of money, such as Safe School money, other than just their ad valorem that was available that they could spend on this.
Ms. Hall assured the Board that they would look into it quickly and bring it back to the Board.
Mr. Doug Krueger, Budget Director, added that the School Board was not affected by the extra homestead exemption in Amendment 1 like the County was.
Ms. Hall gave the Board an update of the status of the fairgrounds improvements, stating that they were using a little bit of that money for safety improvements and site work for the fair in April, but the bulk of that was for air conditioning in the main building. She specified that there was probably about $1 million available that would do about half of an air conditioning system.
Ms. Stewart asked if the County got any revenue from the fair grounds.
Mr. Greg Mihalic, Tourism and Business Relations Director, replied that they received the differential between the expenses and revenues, which he believed was about $35,000.
Ms. Hall also noted that there never had been air conditioning in the building, but it would be used more if there were. However, she pointed out that it was a huge building, so putting air conditioning in it would not be an easy or inexpensive thing to do. She stated that it would come down to whether they wanted to make that building more useable year round.
Commr. Cadwell commented that the question would be whether they wanted to put more money into a bad site.
Commr. Renick thought that they should limit it to whatever the safety improvements were.
Commr. Hill was also concerned about what the cost would be to air condition that building.
Commr. Stivender commented that they needed to have a discussion one day and make a decision on the fairgrounds.
RECESS AND REASSEMBLY
The Chairman announced that there would be a ten-minute recess at 9:20.
OTHER BUDGET PRIORITIES
Commr. Stivender stated that she had talked to Ms. Hall about looking at consolidation and elimination of some positions.
Ms. Hall stated that they were looking at that now, and they were freezing positions with the idea of perhaps being able to consolidate them and shift people around. She related that she would let the Board know what some recommendations would be regarding that.
Commr. Renick asked about the suggestion made earlier regarding Page 6 of the property tax presentation that they could compensate by having a higher millage rate, and she wanted to make sure they were not even considering that and that it was just shown to them for informational purposes. She commented that the voters certainly were not thinking in terms of a higher millage rate.
Ms. Hall responded that with the combination of the impact of Amendment 1 and the allowances that were provided by Statutes, which was new construction and per capita income growth, it was possible that the overall millage would be slightly higher and the amount of money that homesteaded properties would be paying would still be less. She pointed out that if the direction of the Board was to keep the millage completely flat, it would be another couple of million dollar hit.
Mr. Havill commented that people would notice if that millage went up.
Commr. Renick added that she thought it would be bad form to raise the millage.
Commr. Cadwell stated that they were telling staff that they needed to budget back to the current rate.
Ms. Hall stated that if the direction was to keep the same millage, then that would be the assumption they would go under. She commented that it would be difficult to do, but they would go in that direction and see what they could come up with.
Commr. Cadwell stated that they would have to have another one of these meetings to decide specifically what they would not do and provide anymore.
DISCUSSION OF BUDGET PROCESS
Ms. Hall related that they intended to come back to the Board in this form monthly on the second Tuesday of each month to give them an update on where they were in the process. She noted that they also had a three-day workshop scheduled to do that at the end of July this year. She related that one of the comments that they heard last summer was to get citizen input, and she suggested that they hold community or district meetings. She stated that they would be glad to come out and participate in those and work that out with the Board to give their constituents some information about the budget process.
There being no further business to be brought to the attention of the Board, the meeting was adjourned at 9:50 a.m.
WELTON CADWELL, CHAIRMAN
NEIL KELLY, CLERK