CITY OF HALLANDALE BEACH

MEMORANDUM

CM07-272

DATE: August 10, 2007

TO:                  Honorable Mayor and City Commission

FROM:            D. Mike Good, City Manager

SUBJECT:     Discussion of the State’s Total Tax Levies Calculation

CAD 008/07

_________________________________________________________ ___________

Purpose:

Discuss the effects of the HB 1B; the reduction in the roll-back rate by 9%; the City’s efforts to adjust the reduction in the roll-back rate by inserting the accurate population figure into the calculation; and the impacts of a reduction in the roll-back rate of 5% on the City’s FY07-08 Budget.

Background:

House Bill 1B requires cities to reduce the amount of roll-back rate by a graduated scale of percentages which are based upon the Compound Annual Growth Rate in Per Capita Taxes levied between 2001 and 2006. The calculation of the roll-back rate is based upon formulas adopted by the Florida Department of Revenue. The formulas incorporate population figures which are generated by the University of Florida Bureau of Economic and Business Research (BEBR). The Florida Department of Revenue publishes the “Compound Annual Growth Rate in Per Capita Property Tax Levies” which are figures used by the State in the calculation of roll-back taxes, and required the City to file a “Report on the Correctness of Total Tax Levies.”  This report certifies that the City finds the figures published by the State and used in the calculation of roll-back rate either correct or incorrect.  These reports are incorporated into the department revenue estimates and presented to the Florida Revenue Estimating Conference.

The City has now received a letter from the University of Florida providing the BEBR 2007 population estimate which if accepted will be relied upon by the Department of Revenue in determining revenue distribution for the City. The estimate is as of 4/01/07 the population is 38,193. This is 1,179 less than the US Census population estimate figure for April 1, 2006.

Discussion:

After evaluating the figures, staff met with Senator Steve Geller and participated in conference calls with the Staff Director of the Legislative Committee on Intergovernmental Relations and the Executive Director, Jim Zingale of the Florida Department of Revenue.  Despite these efforts the Department would not adjust the population figures. Therefore the City filed the “Report on the Correctness of Total Tax Levies” objecting to the figures. The Department of Revenue did add a footnote to its report to the Revenue Estimating Conference indicating that the City objected to the figures provided by the State Department of Revenue and the reason for the objections.   The Revenue Estimating Conference did not specifically consider the City’s objections and the meeting only lasted approximately thirty minutes. 

Below is an analysis of the computation performed by the State, the basis for objecting to the figure, and the correct computation results as performed by Staff.

ANALYSIS:

Staff has determined that population figures both for 2001 and 2006 used by the State in the calculation are inaccurate and low due to: a) an error in the 2000 Census; and b) the overall calculation is in error due to the formula used by the University of Florida Bureau of Economic and Business Research (BEBR) and the figures are below the U.S. Census Bureau figures.

I. Census Error

The U.S. Bureau of Census while performing the census in 2000 excluded a portion of the City and apportioned the residents in that particular area to the City of Pembroke Park.  Attached as Exhibit “1” is a portion of the Census Bureau’s map indicating in red lines how the Bureau divided the different sectors of the Cities. As Exhibit “1” shows, a portion of the City of Hallandale Beach (white portion) in the southwest corner of the City,  just east of I-95, was included in Sector 1005 (pink portion) which should have only been Pembroke Park (pink portion). Staff used the census figures and calculated an increase in the population in the amount of 1,932 residents.  In addition, Staff has reviewed additional, unaccounted for households and calculated the actual population at 45,346 for year round residents. 

II.   Underestimating of 2006 Population by BEBR Formula

The Department of Revenue uses the BEBR figures for all of the revenue sharing and tax formulas.  Although the BEBR figure is derived from a formula based on the 2000 US Census Bureau figures, the actual Census Bureau figures for each year since 2000 have been higher than the calculated figures BEBR has provided to the Department of Revenue.

      III.    Impact of Errors on Tax Assessments

The impact of these errors has been calculated by Staff and if the population figures are adjusted properly the Compound Annual Growth Rate in Per Capita Taxes levied from 2001 to 2006 would be 10.14%, as opposed to 15.44%.  As a result, under House Bill 1B the City would now be required to levy 95% of the roll-back rate instead of 91% of the roll-back rate, which is the calculation using the BEBR population and is attached as Exhibit “3”.

-           Tax Levy with BEBR figures (9%) reduction:             $24,345,389

-           Tax levy with accurate census (5%) reduction:         $25,415,516

-           Increase in Tax Levy:                                               $  1,070.127   

IV.        CONCLUSION:

According to the numbers provided by the Department of Revenue the City of Hallandale Beach is required to accept a maximum millage rate of 91% of the roll-back rate or, in other words, accept a budget reduction of 9%.  Despite strong efforts by staff to have these population figures corrected, including intercession by Senator Geller and contacts with all agencies involved in the process, the Florida Department of Revenue, the University of Florida Bureau of Economic Research, the United States Census Bureau and all of the Legislative Committees participating in the decision making, the City was forced to accept the population figures provided by the Department of Revenue. Staff will be working diligently to ensure the 2010 census is accurate and is looking at all avenues to resolve this error in the population figures relied upon by the State.

Recommendation:

The City staff closely monitor and actively participate in the LUCA process and ensure that accurate figures are contained in the 2010 census. The City has received the invitation to participate in the LUCA process and will be hosting a workshop by the State which will be open to all municipalities and will explain the LUCA process and procedures and will provide instruction and information regarding the computer software that has been made available by the Census Bureau at no cost to the City.

In addition, the City should consider asking Legislators to sponsor legislation changing the current law to require the Department of Revenue to use the most recent U.S. Census Bureau estimates instead of the University of Florida figures for purposes of calculating revenue sharing amounts.

Prepared by:

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Franklin L. Hileman,

Manger of Intergovernmental Relations

DMG/fh/nmr

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