Rhea Rivera, CGFM
Assistant Director, Financial Services

Issue Statement : The City must adopt a preliminary FY 2020 millage rate to be provided to the County Property Appraiser by August 2, 2019.

Recommended Action: Adopt a preliminary FY 2020 millage rate of 6.0880 mills and establish the time, date and place for a public hearing in regard to the adoption of the tentative FY 20 millage rate and annual operating budget.

Guided by the City’s values and aspirations, the strategic plan, and direction from the Commission, the proposed FY 2020 budget seeks to maintain momentum as the City continues on a path of progress.  As property values have grown and the broader economy has done well, Oakland Park is one of only four Broward cities that have reduced millage consecutively over the past five years, while also maintaining some of the County’s lowest special assessment rates. 

During these years, the City invested and improved the infrastructure and amenities provided to our residents and businesses, with much of the cost funded through grants and matched through the use of City reserves. New infrastructure creates new operating expenses that must be allocated in order to properly maintain this infrastructure investment.

 We have also made reasonable commitments to our employees to achieve more competitive salaries, with the Commission approving labor contracts with wage adjustments consistently above changes in the consumer price index.  These wage adjustments came after a recession that included a difficult period of wage freezes and benefit cuts.  Contracts also sought to establish benefits that restored those lost during the recent recession. The closing of the City’s local Police & Fire Pension Plan and the migration of our firefighters to the Florida Retirement System (FRS), created an additional annual cost of approximately $1.0 million a year.  In time, the payments to the closed plan will decline and help offset these new FRS costs, but these initial transition years elevate personnel costs, which must be funded.  These costs are within the context of other growing public safety costs, including the Sheriff’s contract.   From FY 14 to FY 20, the annual cost of police services has grown by almost $3 million, from $13.5 to $16.3 million, an increase of 21%. 

The recommended budget for fiscal year 2020 acknowledges that fiscal stability has been and must continue to be the bedrock for implementing the City Commission’s vision for Oakland Park.  The FY 2020 budget recommends a modest increase in the millage rate, raising it from 5.9985 to 6.0880 mills, a 1.49% increase.  Although the proposed millage rate would be the first millage rate increase since FY 14, the millage rate would still remain the second-lowest adopted by the City since FY 13.   Oakland Park’s proposed millage rate would be the 11^th lowest among Broward cities. With the millage rate adjustment, the Recommended Budget maintains fiscal responsibility and stability for our City, which includes maintaining a General Fund reserve of at least 20% of operating appropriations, as required by City Commission policy.

In accordance with Florida Statutes, the City must conduct certain public hearings and set a millage rate for the FY 20 annual operating budget within a defined time frame. To ultimately adopt a final millage rate and budget, the City must hold two public hearings. The first, the “tentative” hearing, is advertised on the Notice of Proposed Property Taxes (TRIM Notice) that the County Property Appraiser mails. The City must notify the Property Appraiser of the proposed millage rate, as well as the day, time and place of the City’s public hearings on the tentative millage rate and the tentative budget by August 2, 2019.

From 2007 to 2012, the property tax base of the City fell from $3.5 billion to $2.1 billion, a reduction of roughly 41%. As a result of the overall decline in the property tax base, the City's ad valorem revenues decreased to a low of $12 million in FY 2012. This reduction was in spite of the increasing millage rates adopted by Commissions. The millage rate peaked in FY 2014 at a rate of 6.3995 mills and in FY 2015 was lowered for the first time since 2009 when the Commission adopted a millage rate of 6.2744. Since then, the millage continued to be reduced - reduced to 6.1995 for FY 16; 6.1555 for FY 17; 6.0985 for FY 18; and further to 5.9985 in FY 19.

The 2019 property tax base, which forms the basis of the FY 2020's ad valorem revenue, has increased  8.14% in the past year to $3.5 billion.  The current property tax base is approximately 99.8% of the peak property tax base, that was in FY 2008.

An increased millage rate of 6.0880 is recommended for FY 2020.

This is an increase of 0.0895 mills from the FY 2019 millage rate of 5.9985 and if approved, would be the first increase after five consecutive rate reduction, but would remain the second lowest millage rate since FY 2013.

Under the state's TRIM statute, the City will be required to advertise a 9.02% increase over the rolled-back rate of 5.5845 mills. With the current property base increase, the proposed rate would generate $1,688,424 more in revenue than the rolled-back rate at a 95% rate of collection.

The proposed tax value of the millage rate will appear on the TRIM notices to be mailed in the latter part of August. This proposed millage is normally the maximum millage rate the Commission will consider during the September budget hearings. The Commission can exceed this amount in September if necessary, but only with significant additional time and expense. Conversely, the Commission may reduce this amount at that time.