NORTH PORT – Planning to build up a cushion against the potential for an economic downturn, the North Port City Commission set the stage for a budget based on the current property tax rate, which, because of soaring property values will bring in millions more in revenue next year. 

The proposed budget for 2022-23 may include $2 million for the city to buy 10 acres so the Economic Development Department can create developable commercial land to entice businesses and a $150,000 discretionary fund for City Manager Jerome Fletcher to use on potential projects as he sees fit. It also calls for pay increases for employees.

Two public hearings on the final budget are set for 5:01 p.m., Sept. 8 and Sept. 22. 

Previously:North Port commissioners to examine 2022-23 budget built on property value increase

In case you missed it:North Port commissioners approve new deal to promote economic development

The commission could opt to trim the budget and reduce the property tax rate at either public hearing.

Based on July figures from the Sarasota County Property Appraiser's office, the taxable value of property in North Port increased 26.2%, based on both new construction and increased values of existing businesses and homes. That would generate an additional $5.4 million in tax revenue for the general fund at the existing tax rate of 3.7667 mills, which is about $3.77 per $1,000 of taxable property value.

As a result, many property owners, especially those without homestead exemptions, would pay more in property taxes.

In total, the city is projected to collect about $26.5 million in property taxes next year.

The tax rate that would allow for the city to collect the same property tax revenue as this year given the increased values -- called the rolled back rate -- would be 3.1990 mills, or $3.19 per $1,000 of taxable value.

The overall proposed budget is about $214.4 million, which includes a $63.7 million general fund budget, as well as special district funds for roads and drainage, solid waste, and fire and rescue services.

The bulk of the revenue raised by the increased property values is being earmarked for the reserve fund, in part to guard against a possible decrease in property values, similar to what happened during the Great Recession.

Fletcher noted that the city has the ability to build up that fund, so “we’re putting money aside for the leaner years.”

The current adopted general fund budget is roughly $55.3 million, though to maintain the same level of services, for the 2022-23 fiscal year, it would have to spend $58.9 million because of increased costs, so only about 7% of the budget involves new proposals.

The largest portion of that $4.7 million general fund increase involves the police and fire rescue departments. About $1.2 million of that is slated to go to police and $792,960 to the fire rescue.

That increase also includes as much as $250,000 for “non departmental,” which is the city manager discretionary fund.

That amount was cut to $150,000 after discussion among the commissioners. Though the board didn’t vote, four of the five supported creation of that fund. Commissioner Debbie McDowell opposed it, noting that the city manager could already repurpose funds saved during the annual spending process for special projects.

This year, that exercise resulted in a salary survey that found that North Port has been underpaying its employees compared to other municipalities.

The commission opted to pump $1.7 million into the overall salary structure – which essentially came out to a 5% pay increase for most non-contract employees. Police and Fire Rescue aren’t part of that overall bump, because of their respective union contracts. Members of the American Federation of State, County and Municipal Employees are eligible, because of the way that contract is written.

Vice Mayor Barbara Langdon acknowledged that she heard rumblings that many city employees were earning more than many residents.

“I think there is some truth to that but I think its because our workers are overly reliant on the hospitality industry and the retail industry, which we all know does not pay as well,” Langdon said.

Rather than penalize city staff and lost people to municipal governments, she said the city must attract businesses with higher-paying jobs.

“We need to calibrate our salary and our benefits to the municipalities that we compete with and not so much what our residents are making,” Langdon said. “That problem gets solved through our economic development initiatives.”

One of those initiatives involves the city taking on the role of creating commercial properties by assembling land now zoned residential and cut into  80-foot by 120-foot lots originally laid out by General Development Corp.

The commission earmarked $2 million in federal American Rescue Plan funds to purchase land and another $250,000 to change the entitlements and establish about 10 acres of developable commercial land.

Economic Development Manager Mel Thomas noted that it may not be one 10-acre parcel but several smaller parcels that could accommodate businesses that have approached the city about relocation but can’t find a suitable site.

She added that the $2.3 million “investment” by the city could result in a return of as much as $15 million in return, just because land was developed.

Luke noted that the businesses would purchase the land, so that $2 million would come back to the city.

While some real estate enterprises specialize in aggregating parcels – for example Eastern Meridian Property Group is doing that for a 14.45-acre parcel in the northwest quadrant of the Interstate 75 /Jacaranda Boulevard interchange – it is easier for the city to shepherd that process through.

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The commissioners also agreed to absorb an 8.3% increase in employee health care premium costs.

McDowelll wanted to split the cost with employees but the other commissioners balked at the idea, since it would have resulted in a 20% increase in employee premiums.

Luke said that the city could absorb that increase this year, before adding that in future years that may not be the case, especially if the economy slowed.

Commissioner Alice White said that the 20% increase would reduce take-home pay, which would counteract the 5% pay increase.

Earle Kimel primarily covers south Sarasota County for the Herald-Tribune and can be reached at earle.kimel@heraldtribune.com. Support local journalism with a digital subscription to the Herald-Tribune.