The tentative rate is almost 11.7 percent higher than the current rate of 3.43 mills, which equals to $343 per $100,000 of taxable property value.

CRESTVIEW – In a 3-2 vote, the Okaloosa County Commission on Tuesday set the county’s tentative residential property tax rate at 3.83 mills for fiscal 2018, which starts Oct. 1.

If the commission adopts that rate in September, it would mark the county's first millage rate increase since fiscal 2014.

The tentative rate is almost 11.7 percent higher than the current rate of 3.43 mills, which equals to $343 per $100,000 of taxable property value. If the tentative rate receives final approval, the owner of a single-family home with an average taxable home value of $138,500 would be charged $55 more on his or her tax bill.

Most commissioners agreed with County Administrator John Hofstad’s suggestion to raise the rate to balance the budget without dipping into General Fund reserves.

Commission Chairwoman Carolyn Ketchel and Commissioner Trey Goodwin voted no.

Commission Vice Chairman Graham Fountain, a certified law-enforcement officer, said the county has used reserves for about the past 15 years to balance the budget. Among other concerns, he said he doesn’t want to force Sheriff Larry Ashley to lay off deputies. Budget issues had led to the Sheriff’s Office letting 20 deputies go between 2009 and 2013.

Now, “I am troubled where we find ourselves” financially, said Fountain, who added that he wants his supporters to “trust me to help fix the dilemma we’re in.”

Without the tax increase, the county would have to use about $3 million of the roughly $6.7 million in reserves to help make ends meet, Hofstad said Tuesday. The reserve fund should be tapped only for emergencies such as post-hurricane cleanups and repairs, he said.

Fountain and other commissioners voiced support for a possible local-option sales tax referendum that could go before voters in the November 2018 general election. The sales tax would be a sustainable funding source and a more equitable one than property taxes, some commissioners said

'Heavy water'

The county has had the 3.43 millage rate since fiscal 2014 and has routinely competed with Monroe County in the Florida Keys for the lowest millage rate in Florida. But Monroe County has higher property values than Okaloosa County and, unlike Okaloosa, has its own sales tax, Commissioner Nathan Boyles said.

“This is heavy water to carry” politically, he said of increasing the tax rate, “but I think there’s at least three or maybe four shoulders up here broad enough to carry it.”

Hofstad said the projected 3.83 millage rate would generate an extra $6.3 million, which still would not provide enough money to pay for all the county’s anticipated needs.

“Collectively, over $7 million is needed, with $4 million in the General Fund alone,” he said.

Hofstad said some of the possible new money could be used to provide the Sheriff’s Office with more than the $550,000 “bare minimum” it needs to pay for 12 new deputies and for higher starting pay to stay competitive with neighboring jurisdictions. 

At Monday’s budget workshop, Ashley requested an 8.7 percent, or $3.1 million, increase to his budget, which the commission has yet to finalize.

The modest 4.6 percent increase in county property values will generate about $2.4 million for the General Fund. But that has been offset by a decrease in projected cash of more than $3.6 million for the General Fund, according to Hofstad.

He said in a recent budget letter that major revenue sources have remained flat or have declined. State revenue funding is projected to decrease and initial requests for funding “far exceeded the projected additional revenue by over $6 million.”

Hofstad shared other budget challenges Tuesday. For example, he said the county is being asked to pay $90,000 more than anticipated in state Department of Juvenile Justice costs, and must make up more than a $100,000 shortfall in court information-technology fee revenue.

For fiscal ’18, the commission is considering giving annual pay increases of $866 each to the 751 county workers who fall under its control. Doing so will require $908,062, which would be almost evenly split between General Fund and Enterprise Funds.

About $800,000 in revenue generated by the higher possible tax rate could go into General Fund reserves, boosting its total to about $7.5 million, and other new funding could help restore the county’s proposed $3 million capital outlay budget, which staff had trimmed to about $270,000, Hofstad said. Top capital items that should be restored include lightning protection work for the emergency operations center, he said.

Differing views

Commissioner Kelly Windes said the commission has pretty much held the tax rate down for about the past five years.

“But after awhile, leadership has to kick in and consider the unpleasantry of raising taxes,” Windes said.

Goodwin disagreed. He said simply maintaining the current 3.43 rate would be a tax increase, with higher property values leading to larger tax bills.

“I’m still hearing from our senior citizens who are living on fixed incomes,” Goodwin said.

He added that while he doesn’t want to balance the budget on the backs of county employees, he doesn’t want to balance it on the backs of taxpayers, either.

Also, taxpayers’ trust in the commission will be lost if the board increases the tax rate and later asks voters to approve a local option sales tax, Goodwin said.

Ketchel, who with Goodwin voted against a higher tentative millage rate, said the proposed budget is probably one of the most difficult ones she has looked at.

The commission plans to have its final budget workshop at 8:30 a.m. Monday in the County Administration Building in Shalimar.

The first public budget hearing is set for 5:01 p.m. Sept. 5 at Crestview City Hall. The second hearing and final vote on the tax rate and budget is set for 5:01 p.m. Sept. 19 in Shalimar.