Andrew Thompson, CGFO
Director, Financial Services

Rhea Rivera, CGFM

Asst. Director, Financial Services

Adoption of the Tentative,  FY22 Millage Rate and Operating Budget

Issue Statement: A public hearing is to be conducted on September 8, 2021, for the purpose of receiving public comments on the proposed Fiscal Year (FY) 22 operating and voted debt service millage rates and annual operating budget, after which the Commission will adopt a tentative FY 22 operating and voted debt service millage rates and annual operating budget.

Recommended Action:  Adopt a tentative FY 22 operating millage and voted debt service millage rates and annual operating budget after receiving public comments on these subjects.

As part of the City’s annual budget process, this is the first of three public hearings in September leading to the final adoption of the City’s FY 22 property tax operating millage and voted debt service millage rates, annual operating budget and special assessment rates related to various services provided by the City.

The public hearings are for the purpose of receiving comments on the proposed FY 22 operating millage and debt service millage rates and annual operating budget, after which the Commission will adopt a Tentative FY 22 millage rate and annual operating budget.  Notice was provided to property owners in the TRIM (Truth-in-millage) notice distributed by the Property Appraiser's Office in August.  

As indicated, the operating and voted debt service millage rates and operating budget are tentative.  At the September 22nd  Commission meeting, the Commission will adopt the final FY 22 operating and debt service millage rates and annual operating budget after receiving public comment(s). The FY 22 Capital Improvement Program (CIP) and Compensation Plan will also be adopted at this meeting.

Between these two meetings, September 8th and 22nd, there will be a public hearing on September 13th, at which time the Commission will adopt the final fire, residential solid waste, and stormwater assessment rates after receiving public comment. Of the three, only the fire assessment is a component of the General Fund, and as a important source of revenue for this fund, the fire assessment rate adopted will have a significant impact on the Commission’s flexibility in adopting a final operating millage rate and annual operating budget on September 22nd. Advertisements for these special assessment hearings were published in August; property owners were also advised of these hearings as part of the TRIM notice distributed by the Property Appraiser's Office.

The City Manager’s Recommended Budget was distributed to the Commission on July 14th and presented during the July 21st City Commission meeting. The operating and voted debt service millage rates and operating budget were discussed during this meeting and the Commission adopted a preliminary operating millage rate of 5.8890 mills and voted debt service millage of 0.5198 mills and the recommended assessment rates for inclusion on the TRIM Notices distributed by the County Appraiser in August.

As discussed, the rates on the TRIM Notices are, except in extraordinary circumstances, the maximum the City will consider for FY 22 and are the starting point for Commission deliberation as to what the final adopted rates will be. Additionally, the tentative operating millage rate adopted on September 8th becomes the maximum rate the Commission may consider for final adoption on September 22nd.

During the July 21st Commission meeting, staff presented a summary of the Recommended Budget's key elements, including the proposed FY 22 business plan capital purchases, grant activity, and the financial impact of the proposed recommended operating and voted debt service millage rates and assessment rates on residents. The below sections detail the proposed tentative operating and voted debt service millage rates and budget.

Tentative Millage Rates (Operating & Debt Service)

As required by the TRIM process, the first requirement of the initial public budget hearing is to adopt a tentative millage rate. The Recommended Budget included a preliminary operating millage rate of 5.8890 and a voted debt service millage of 0.5198, which was adopted by the Commission.

The recommended tentative operating millage is 5.8890, which is unchanged from the preliminary rate.  This rate is a decrease of .034% or 0.0020 mills, less than the FY21 millage rate of 5.8910. This will be the seventh reduction to operating millage in a eight-year period.

The 2021 property tax base, which forms the basis of the FY 2022's ad valorem revenue, has increased by 6.81% in the past year to $4.0 billion.  With the current property base increase, the proposed rate would generate $1.4 million more in revenue than the rolled-back rate at 95% rate of collection. Due to State requirements, the City will be required to advertise a 6.45% increase over the rolled-back millage rate of 5.5323 mills under the State's Truth-in-Millage(TRIM) Statute.

In 2018, over two-thirds of Oakland Park's voters approved the issuance of $40 million in general obligation bonds to rebuild and enhance the City’s Fire-Rescue and community facilities.  In May 2020, the City was assigned an investment grade AA credit rating by Standard and Poor’s and in June the first tranche of bonds was sold, securing $26 million of the approved $40 million.  These proceeds will be utilized to fund Oakland Park’s Building Our Second Century program facility efforts.  This initial tranche will pay for phase 1 construction and phase 2 design, a  These bonds are financed over a 20-year period.  The City is required to pay the bonds' debt service costs by levying the voter-approved debt service millage.

The general obligation bond debt service to be paid next fiscal year is approximately $2 million, which will require that a debt service millage of 0.5198 be adopted. 

Tentative Budget

In July, staff presented the City Commission with a Recommended Budget of $128 million. The document represents a financial plan based on the policy direction established by the Commission and the best information the staff has available at this time. As changes occur and new information becomes available that impacts these plans, revisions to the budget will be needed, either as part of the adoption of the final budget or later through the budget amendment process after the fiscal year begins. The Tentative Budget is attached as "Exhibit A."  The attached FY 2022 Budget Message also provides a detailed narrative explanation of the proposed budget. Additional detail regarding the proposed fiscal year 2022 budget is included in the FY 22 Recommended Budget Book.  This document is available upon request thru the City Clerk's Office. 

As stated earlier, the Tentative Budget incorporates only information that is available now.  There are a number of outstanding elements that will have an impact upon the FY 22 budget.  These include the award of grants for which the City has applied, adjustments to staff salaries as a result of the ongoing collective bargaining unit negotiations and the preliminary rate renewal notification from the City's current health insurance carrier, Humana.  This rate renewal will be provided in early September, after the publication of this agenda item.  Necessary adjustments will be presented to Commission shortly after the beginning of the 2022 fiscal year on October 1st, 2021.

After adoption of the Tentative Millage and Tentative Budget, public notice is required by state law.  A tentative budget advertisement in conformance with Florida Statute 200.065 will be published in the Sun Sentinel to provide notification of a public hearing to be held on the 22nd day of September, 2021 at 6:30 p.m. for the tentative budget and millage. This meeting is for the purpose of setting a Final Tax Levy and Final Budget.

The recommended operating millage rate is 5.8890 mills and debt millage rate  is 0.5198.  The operating millage will generate about $1.4 million over the rolled-back rate for a total property tax revenue of $22.38 million while the debt millage will generate $2.0 million for the debt service of the G.O Bond due in FY 22.  This presumes a 95% collection rate.

As provided for in Florida Statute Section 193.155(1), beginning in 1995, or the year after the property receives homestead exemption, an annual increase in assessment shall not exceed the lower of the following:

For 2021, the CPI change reported by the Florida Department of Revenue is 1.4%.  As such, the maximum growth in taxable value a homestead residence can experience is 1.4%. About 61% of all Oakland Park residential properties  are homesteaded. 

With the maximum taxable value increase of 1.4% and the proposed operating millage rate of 5.8890, the median, homesteaded single-family home from last year would experience a $13.98 increase in City property tax for operations. With the debt service millage of 0.5198, the estimated cost for the median, homesteaded single-family home is   $ 0.11 cents.   

To ensure compliance with TRIM requirements, it is recommended that the City Commission do the following in the indicated order to ensure proper adoption of the tentative millage and budget:  

1. Conduct a public hearing in regard to the FY 22 tentative millage;  

2. After deliberation, adopt the FY 22 tentative millage resolution.  Prior to adopting the millage levy resolution, staff must formally announce the name of the taxing authority, the rolled-back rate, and percentage increase over the rolled-back rate, and the millage rate to be levied;  

3. Conduct a public hearing in regard to the FY 22 tentative budget;  

4. After deliberation, adopt the FY 22 tentative budget.