A special MEETING OF THE BOARD OF COUNTY COMMISSIONERS
April 18, 2018
The Lake County Board of County Commissioners met in special session on Wednesday, April 18, 2018 at 11:30 a.m., for a Lake 100 meeting at the Mission Inn Resort, Howey in the Hills, Florida. Commissioners present at the meeting were: Timothy I. Sullivan, Chairman; Leslie Campione, Vice Chairman; Sean Parks; Wendy Breeden; and Josh Blake. Others present were Jeff Cole, County Manager; Jennifer Barker, Director of the Office of Management and Budget; Fred Schneider, County Engineer; and Kathleen Bregel, Deputy Clerk, Board Support.
welcome and agenda
Dr. Kasey Kesselring, Headmaster of Montverde Academy, welcomed everyone to the Lake 100 meeting and thanked the Lake County Board of County Commissioners (BCC) and County staff for accepting the invitation to attend. He mentioned that the meeting agenda was dedicated to the education of the proposed five-cent gas tax, focusing on why the gas tax was being proposed, what would be the operational impacts on the county, and the Commissioners’ points of view regarding it. He indicated that this would be helpful to Lake 100 members as they decide whether to support it.
questions and comments
Commr. Sullivan thanked Dr. Kesselring for the opportunity to speak and introduced the County staff and Commissioners. He remarked that county roads affect every district and every Commissioner and that many of the emails he receives are asking about road improvement. He reported that Lake County has county unmaintained roads, which are roads not in the county system because they were never platted or turned over to the county, and yet the County contributes from a public safety aspect to make sure ambulances and fire trucks can reach those roads. He indicated this is an extra expense for the county budget. He reported that the county has 1,391 miles of road, 27 bridges, 197 sidewalk miles, and 20 miles of guard rails to maintain with a $14 million trust fund that pays for everything and is comprised of gas tax revenues and state revenues. He clarified that impact fees can only be used for increased capacity and not for maintenance, repaving or widening of current roads. He remarked that the following Central Florida counties already have this additional five-cent gas tax: Volusia, Marion, Polk, Osceola, Pasco, Hernando, Alachua, Putnam and Citrus. He explained that the gas tax rate is regulated by Florida State Statute and that if it passes, the extra five cents would generate approximately $6 million in revenues, with about $2 million going to the municipalities in accordance with State Statutes, netting approximately $4 million to the County. He noted that on average, revenues that go into the trust fund only increase about one percent a year.
Dr. Kesselring asked if one of the reasons for considering the five-cent gas tax was concern that if the Super Homestead Exemption is raised, it would be a loss of revenue to the County and the gas tax may be a way to balance that.
Commr. Breeden replied that the Super Homestead Exemption would affect the General Fund; however, road projects are not paid from the General Fund and therefore the gas tax would not necessarily help with that situation.
Commr. Campione remarked that the Board had received suggestions through the years to take money out of the General Fund to use for roads. She stated that many of the emails she receives from residents revolve around transportation and question why projects to resurface roads with potholes cannot get done. She stated that historically in Lake County, property taxes have never been used to fund roads, but that the County always relied on the gas tax, grants, and impact fees for this. She reiterated that impact fees can only be used to build new roads where capacity is being added. She said the Board voted to propose the gas tax as a referendum and put it out to the voters, but opined that if information regarding this does not get out to the public, then people will most likely say no to a tax. She indicated that the Commissioners voted to place the gas tax on a referendum and would appreciate the support of a business group, like Lake 100, since the BCC can only put out material saying what projects the money from the gas tax would be used for. She added that staff was creating a list of projects within each district that the tax could be applied to and would be putting it on the County website.
Dr. Kesselring asked if there was data on what other counties are allocating towards roads to compare Lake County’s funding.
Mr. Fred Schneider, County Engineer, replied that for Lake County, staff calculated the total annual expenditure for resurfacing per road mile owned by the County, which showed it costs $800 per road mile. For example, he said if the county had 1,000 miles of road at $800 per mile, it would spend $800,000 on resurfacing all roads. He shared amounts per road mile that other counties spend as follows: Marion $1,078; Orange over $3,000; and Polk $2260.
Dr. Kesselring asked if any of those counties contribute money from their General Fund or if they use gas tax. He inquired if the gas tax passes and brings in an estimated increase of $6 million, what would then be Lake County’s cost per mile.
Commr. Parks added that he often gets asked why it is so expensive to build roads.
Mr. Schneider replied that most counties use the gas tax. He said he would need to calculate the cost per mile but stated this year the County was resurfacing 8.5 miles of road. He commented that in an optimum system, where the county is able to maintain its system and resurface roads when needed instead of waiting till they are breaking down, then the county would resurface fifty to sixty miles per year instead of the eight and a half miles per year they are currently doing. He commented that is the issue for the county. In response to Commissioner Parks’ question about why it is so expensive to build roads, he explained that when he started working in Lake County 25 years ago, the average cost for new road construction was significantly less than it is now. He remarked that in present day, the average cost for a new four lane road is $10 million a mile. He indicated that the first few pennies of the gas tax came in the 1940’s, then in 1972 there was another penny, then in 1983 there was the first six-cents added, which he said was re-optioned again and will expire in the year 2043. He concluded that there currently is about ten cents from the gas tax, which equals approximately $12.5 to $14 million a year and is primarily used for operations and maintenance. He clarified there has been a two to three times increase in the price of road construction today compared to the cost in 1984 when the first pennies of the gas tax came out. He added that there is also inflation and fuel efficiency of vehicles that affect the amount of revenue. He gave the example that 20 years ago vehicles had fuel efficiencies of 20 miles per gallon, but today they get 30 miles per gallon; therefore, people can drive 50 percent more on the same tank of gas but counties are still only getting the same amount per gallon. He recapped that the amount per gallon is affected negatively by inflation and fuel efficiency, noting even though there are more people buying gas, it is not enough to overcome the cost of road construction and the additional road miles. He stated that as far as the budget for Public Works, the County had started about 10 years ago to use sales tax to supplement the budget of road operations for resurfacing because the gas tax was not keeping up with the need. He mentioned there is a lot of infrastructure that has to be maintained and that 48 percent of what is done with road maintenance is privatized, such as mowing, re-trimming, stripping, and maintaining traffic signals. He summarized that this is the situation the county is in with the tax dollars they have, and that the buying power of those dollars is not keeping up. He clarified that the difference for the state of Florida is that they have indexed their gas tax to inflation since 1992 so they are not affected as much, but the state legislature has not allowed the gas tax to be indexed for the counties and the cities so their buying power goes down every year. He noted that the Florida Association of Counties (FAC) had tried to talk to legislators about that issue, but their viewpoint is that the counties still have the other five-cent option they can utilize, which is why some counties are starting to adopt that additional five-cent gas tax.
An attendee asked Ms. Barker what sources of revenue were available to build or maintain roads and which ones was the county utilizing.
Ms. Barker responded that road impact fees are used to build new roads and the gas tax is used for maintenance after the roads are built. She mentioned that they also receive funding from the state and gave the example of state funding for the widening of County Road (C.R.) 466A. She added that the local option penny sales tax is also used.
Commr. Breeden clarified the four sources were gas tax, impact fees, penny sales tax, and grants.
An attendee asked the amount that came from the sales tax.
Ms. Barker responded that the County used to use 50 percent of that allocation for transportation but now allocates approximately 33 percent.
Commr. Campione added that the types of projects the infrastructure sales tax went towards included buying items such as sheriff’s vehicles, ambulances, fire trucks, and capital facility type purchases, reiterating there are other needs that the County has to have funding for.
Dr. Kesselring asked if that change was due to a state statute.
Commr. Campione replied that it was an ordinance from the County Commission.
Ms. Barker added that the new ordinance does not actually give specific percentages.
Commr. Parks remarked that the budget is based off of very conservative revenue projections and suggested they could consider allocating any amount from the penny sales tax that is above the budgeted revenue towards road projects.
Commr. Campione asked if the penny sales tax could only be used for construction or if it could also be used for resurfacing.
Ms. Barker responded that it could be used for resurfacing, intersections and sidewalks, which is the majority of what it pays for.
Commr. Breeden specified that one of the reasons the percentage split was not as concrete was because there was a backlog for infrastructure needs, such as roofing, air conditioning, information technology, radios, etc.
Mr. Bud Beucher, Vice President & General Manager of Mission Inn Resort, asked when the County started collecting road impact fees and how roads were funded prior to that.
Mr. Schneider replied that impact fees started in the early 1980’s and that prior to that, there was a time when some money from the General Fund went to funding roads. He said at that time, Lake County was still fairly rural and therefore was mostly paving clay roads; however, today the county has a much larger infrastructure to maintain as it has gone from rural to urban roads.
Mr. Beucher commented that eight percent of the general revenue used to go to roads but today nothing does. He made the point that unless he buys a product that produces sales tax or buys gas in the county, he is not contributing towards the cost of the county roads he uses, which he opined was not good.
Commr. Breeden elaborated that approximately 30 percent of the gas tax collected comes from outside the county due to people driving through and buying gas.
Dr. Kesselring asked why it changed that no funding now comes from the General Fund.
Mr. Beucher opined that was because the County started collecting impact fees.
Commr. Campione said that impact fees are now going to actual construction of new roads. She gave an example of North Hancock Road being funded by impact fees.
Commr. Breeden reiterated that Lake County’s needs are different now than they were back in the 1970’s and 1980’s, giving the example that South Lake County was more agricultural then and did not need the road infrastructure.
An attendee stated he was in support of the five-cent gas tax but was concerned it would not get the County to where it needed to be for funding, noting that it would only make up for the 17 percent penny sales tax that was diverted. He opined that the County still needed to find other ways to fund the building of roads.
Commr. Blake remarked that the county is divided into three regions for impact fees and that the South Lake County impact fee is higher and since there is a lot of growth in that area, they are receiving more revenue from the impact fees than some of the other districts.
An attendee asked since the percentage of revenue going towards roads had already been reduced, what was the assurance that would not happen again if there was revenue coming from the additional gas tax. He asked what the total amount of revenue coming from the four sources currently was and how many roads the County had to support with that revenue.
Ms. Barker responded that close to $30 million was coming from the four sources of revenue.
Mr. Schneider replied that there were 1,300 miles of county road with 8.5 miles being resurfaced each year.
Commr. Campione explained that the entire Public Works Department is funded by the $30 million and that amount gets broken down for different uses. She asked what the dollar amount was that goes to resurfacing.
Mr. Schneider commented that currently the sales tax for this year was $1.4 million for resurfacing. He explained that there was some of the previous sales tax which carried forward plus the new sales tax, noting that the previous sales tax as mentioned had 50 percent of county share going to Public Works and it was still being used to build roads, to build intersections, and to put up traffic signals. He mentioned that this year’s funding for resurfacing did drop from previous years but that staff was looking to add to it. He said if the County did receive the $4 million in gas tax revenue, then that would get the County to the point where it could resurface, between those two sources, about five percent of their roads every year. He elaborated that would put the County on a 20 year cycle for resurfacing, which is where it should be, instead of the 60 to 70 year cycle they were currently operating.
Mr. Jeff Cole, County Manager, remarked that it was important to remember the difference between the sales tax and the gas tax and what each gets used for. He stated the gas tax can only go towards road projects.
An attendee asked for clarification on the percentage of the $30 million that goes towards roads.
Commr. Campione replied that some of the $30 million was grant money and that the County is dependent on the state for that, noting that they submit requests for projects but they do not know which ones will receive funding.
Mr. Schneider elaborated that in general, approximately $10 to $11 million goes to road and traffic operations, with about a third of the $30 million going to the basic operations of mowing, filling potholes, trimming trees, etc. He stated that last year the County received $10 million in legislative appropriations for roads and this year they did not, noting that it can vary from year to year. He specified that the money received from the gas tax is used for operations and maintenance.
Commr. Breeden commented that in South Lake County, the impact fees are levied at 75 percent of the allowable rate, and that in the North, they are levied at 15 percent of the rate. She suggested that the Board look at that and consider changes that might need to be made.
Commr. Sullivan stated that when he joined the Commission, there were six impact fee zones and each area could only use the amount of revenue brought in by their impact fees. He added that transportation is a system and the Commission split it into three zones in order to generate more money and be able to fix roads quicker.
An attendee opined that he liked the idea of the user fee in which the people who use the roads, pay for the roads. He asked why diesel fuel was not included in the gas tax as he thought trucks were wearing on the roads but not paying the tax.
Commr. Breeden commented that was per Florida Statutes.
An attendee stated that in his business he is always looking for revenue and efficiencies and wondered what the County was doing to look for efficiencies. He recalled that it had been mentioned that 40 percent was outsourced and therefore 60 percent was in-house and asked if the County had compared the cost of outsourcing to in-house expenses as it related to the per mile amount needed to repair roads, since equipment and personnel are expensive to maintain.
Mr. Schneider responded that outsourcing was approximately 48 percent, that some of the heavy equipment is leased, and that there has not been much increase in personnel since they are still operating with the same number of employees as they had ten years ago.
Commr. Parks added that it had generally been the same staff since 2003.
Commr. Blake mentioned that shortly after he was elected to the Commission, he met with a vendor who does outsource road maintenance labor, noting that Polk County works with this vendor, because there is a high turnover rate in that department and worker’s compensation expenses. He said this vendor gradually over time, through attrition, takes on the new hires and handles the long term needs like workers compensation and financial liabilities specific to road maintenance.
Mr. Cole said he had been talking to this company and looking at their business model. He added they have different approaches and opined that some would work well, not only for public works but also for a variety of county operations.
Commr. Sullivan elaborated that with the paving of roads, Lake County also rates roads regarding the condition they are in, noting that a 10 rated road is perfect but a four rated road needs to be repaved right away otherwise it will be more expensive to rebuild. He reported the county had 75 miles of four rated roads that need to be fixed and that this gas tax will help the county be able to keep up with the maintenance needed.
The attendee reiterated that his point was that it could be cheaper to outsource.
Commr. Sullivan indicated that the County was looking for efficiencies for multiple departments in order to provide the services needed at the most cost efficient level.
An attendee asked how the bus program in the county was funded.
Ms. Barker replied that it is funded by a transfer from the General Fund and also through Federal Transit Administration (FTA) grants.
Mr. Cole commented that during the Board’s goals workshop in March 2018, they identified the bus program as an area to evaluate this year and look for efficiencies.
Commr. Parks stated that was a big concern for him since it is supplemented from the General Fund and that they would be reviewing the system to find a better, more efficient way to provide transportation.
Mr. Beucher asked what the incremental change was from one year to another in General Fund revenue.
Ms. Barker responded that last year there was a nine percent increase in property values to the General Fund ad valorem tax revenue, which equated to approximately $8 million.
Mr. Beucher remarked that he was not against paying more with the gas tax but opined he would like to see the County government be more efficient.
Mr. Cole remarked that when he started in the position of County Manager, he committed to finding efficiencies and that within the first four months, staff worked together and identified $1.5 million in reductions to the budget. He noted that there was an additional pressure on the budget because debt incurred prior to the new authorization of sales tax could not be paid from the new authorization, and had to be paid for out of the General Fund ad valorem taxes. He elaborated that Hurricane Irma recovery costs were approximately $8 to $9 million dollars, which was paid for from reserves and the efficiencies identified. He said the new budget adopted in October 2017 had a five percent reduction in all the county departments and that he was asking the county departments to do the same thing for this year’s budget. He noted that it is difficult to accomplish that type of reduction without reducing services but that staff was considering all possible options.
Commr. Breeden added that the Sheriff needs $4 to $7 million more in funding to pay for school resource officers. She then passed around a slide from the Board’s budget presentation which showed the General Fund budget for the county departments and the Constitutional Offices over the last 10 years.
Commr. Campione explained that as far as percentage breakdowns of the General Fund, the Sheriff’s budget is about 54 percent, and the county departments’ budget is about 32 to 33 percent. She elaborated that when the County makes reductions, there is only a certain amount of impact they can have, and she noted that they encourage the Constitutional Offices to also make reductions and look for efficiencies but they do not have control over their budgets.
Mr. Cole said that going into the FY 2019 budget, which starts in October 2018, there is already an additional $2.5 million impact to the General Fund because of the debt obligation prior to the new sales tax. He stated they also wanted to take $6 to $7 million to rebuild the reserves from the hurricane impact; therefore, there was already $9.5 million of required funding from the start.
Commr. Campione remarked that the $2.5 million was the debt service associated with the judicial complex which was built in 2008, explaining that they were able to use sales tax money to pay for that debt service through the years but then that sales tax ended and the new renewal could not be used to pay for prior debt service. She said the County will have this debt every year until the year 2037.
Ms. Barker specified it was $3.1 million for the current year but then it goes up to $5.4 million.
An attendee shared concern about the potholes on roads being a safety hazard that can cause accidents and damage to vehicles, and asked if the County was liable for not fixing the roads if they had been identified as rated four roads and if that liability is another expense for the County.
Mr. Beucher said that since the Board was asking for support of the five-cent gas tax, could they make a commitment that some percentage of the incremental increase year over year from the General Fund revenue would be dedicated to roads. He indicated that was something he would support because it shows that the County is willing to commit money towards roads as the tax payer does through the extra gas tax.
Commr. Blake said he would support that suggestion but unfortunately, this Board cannot make long term decisions for future Boards. He clarified that he voted against the five-cent gas tax because even though he agreed that letting voters decide was the right process, he did not want families to have the extra expense. He gave the example that for an average family that uses 1,000 gallons of fuel annually, it would mean an extra $50 per year and that could be a big impact to some families in Lake County.
Commr. Parks stated he was in favor of a General Fund allotment.
Commr. Sullivan relayed that the Board had changed the wording on the ballot to take out broader eligible uses and to specify that the revenue generated from this tax was designated for road paving and resurfacing.
Commr. Campione said that with the Super Homestead Exemption possibly being adopted, there would be less people paying property taxes which means money will be shifted but the needs are still there. She commented that all five Commissioners and the County Manager are committed to looking for efficiencies on a regular basis. She opined that the property owners in the higher taxing bracket will continue to pay more and felt that having this gas tax as a user fee, with the revenue going strictly towards keeping roads in good shape, was better than adding to the property tax.
An attendee asked about the figures mentioned earlier, if it was all roads in the county or just county roads. He also asked if it represented miles or lanes and when the five-cent gas tax would go into effect.
Commr. Sullivan answered it was just county roads, that it represented per mile and that the five-cent tax would go into effect in the year 2020.
An attendee opined that this was a long range problem that the County has had since 1983 and that there needs to be a big educational push to get voters to vote for the gas tax.
Commr. Campione indicated there was anecdotal information from drivers who drive from Marion County, which has the extra five-cent gas tax, to Lake County that suggests that what is paid at the pump does not change but that retailers adjust the price to cover the extra gas tax in order to remain competitive.
An attendee mentioned that he often travels to Volusia County, which also has the extra five-cent gas tax, and that the gas is seldom higher than Lake County but is often lower.
An attendee asked what the predicted life of a road was.
Mr. Schneider responded about 20 years.
An attendee described that if there is a 20 year lifetime and 1,361 miles in the county, then the county should be repaving 70 miles a year just to break even, which means the county is very behind and asked how does the county get to where it needs to be.
Mr. Schneider remarked that the approximately $4 million from the tax could get the County back on track as far as the road maintenance system and would allow roads to be resurfaced before they need to be reconstructed.
An attendee asked if all the roads were on a maintenance schedule in order to be proactive and estimate the costs for the future.
Mr. Schneider responded that the county road system is inspected annually and noted that the same people do it each year so that it remains consistent. He reminded everyone that a four was a low rating, a ten was a high rating, and that ideally roads at a six rating need to be considered for resurfacing.
Mr. Cole added that staff was currently evaluating the entire road network to identify the roads that need repaving.
Dr. Kesselring asked for each Commissioner to give a thirty second closing remark.
Commr. Campione thanked the Lake 100 members for allowing the Board to be there. She remarked that she learned from their great questions and indicated that she liked Mr. Beucher’s idea to take a percentage amount of value increase from the General Fund to dedicate towards roads, especially if that made it a better message and program. She thanked participants for their input and stated the Board valued their opinions.
Commr. Breeden thanked everyone for allowing them to come and speak and said that for 23 plus years she had sat in the audience as a staff member. She stated that she had brought this issue up for consideration and even though she knew it would not solve everything, she felt it was important to take steps towards addressing the needs. She opined that with development coming into Lake County, the roads would continue to decline and need to be better maintained.
Commr. Sullivan also thanked everyone for the opportunity to speak and said that he always learns something from this group. He stated this is an education process and that even though the Board cannot promote the gas tax, he would give 100 percent to support it since it gets the county closer to the goal of maintaining the quality of life they want for Lake County.
Commr. Parks showed his appreciation for the opportunity to share and remarked that this Commission was very open to looking for efficiencies. He reminded the attendees that the percentage of the budget was getting lower, that there were Constitutional Offices that they work with, that 100,000 people could be coming to the county in the next 10 years, and that it is important for leadership to work together. He mentioned he would like to have another session with this group dedicated to the discussion of transit in the county.
Commr. Blake thanked Lake 100 for the invitation to come and said he also liked Mr. Beucher’s idea regarding the percentage amount dedicated to roads. He expressed that it can be difficult to get the Constitutional Offices to maintain status quo but that he is interested in supporting that. He mentioned that he had received an email the previous day from a constituent who did the math on the existing taxes and that this new gas tax would represent a 9.86 percent increase in the existing taxes collected per gallon.
Dr. Kesselring asked if there were any plans for an organized effort, similar to the penny sales tax, to educate the public on this gas tax.
Commr. Sullivan replied that they were currently formulating one and that the Board has to stay within the parameters of what they can do, noting they can educate but not advocate.
Dr. Kesselring thanked the Board and County staff for attending.
There being no further business to be brought to the attention of the Board, the meeting was adjourned at 1:10 p.m.
Timothy I. Sullivan, chairman
NEIL KELLY, CLERK