Niceville Budget: Property Taxes Stay Put, But Trouble Looms As City Spends Reserves

Niceville’s city leaders likely won’t raise property taxes this year. However, city manager David Deitch says the city will have to continue cutting expenses to make ends meet.

Deitch reported to the council at a budget hearing on Thursday that the city will have to take about $500,000 in reserves to make the budget for the upcoming fiscal year work.

He also told the council that the city faces a cash flow cliff; the federal government will turn off the spigot of money it opened to help local governments during the depths of the COVID-19 pandemic on December 31.

The city, for now, will hold the millage rate at 4.000. It increased last year from 3.700, about a $150 annual increase for the median home in the city.

The city projects that revenues from property tax will continue to increase without a tax hike – thanks to increasing property values in the city.

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Now that they’ve made this initial decision on the property tax rate, “we cannot increase [the rate] unless [the city mails out a first-class letter to every property owner affected.]” City Clerk Dan Doucet noted in a memo to the council and city leadership. He added that mailing letters to change the rate would be very expensive.

Deitch advocated for a three percent pay raise for the city’s 200-ish employees (it fluctuates as people come and go), which would cost taxpayers about $830,000 in the next year. According to the city manager, about ten fewer employees work for the city compared to last year.

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Spending Tax Money in Niceville

According to Deitch, despite the pay increases, the city has continued to reduce its costs to property taxpayers and its withdrawals from reserves. “In fiscal year 23-24, we reduced the overall budget by $3,240,930. In fiscal year 24-25, we’re currently projected to reduce our overall budget by another $2,980,730,” Deitch claimed. We have a lot more to do.”

Councilman Sal Nodjomian agreed and called for the city to compare its spending levels to the last budget before the pandemic as a benchmark for normalcy. “I think it’s important to note that our budgets have gotten bloated in a three-to-four-year period as well because that free money flowed in,” Nodjomian said.

“We are continuing to cut and innovate our way out of this problem,” Deitch added. We’re on a glide path regarding our expenses. We’re headed in the right direction. There is a lot more work to do.”

Still, the city is uncertain about its expenses for the upcoming year. In the same memo to city leaders, Clerk Doucet said city bureaucrats still needed information about insurance, worker’s compensation, and liability costs. ” It is too early for us to know what our bottom-line needs are for FY25,” he wrote.

The city of Niceville’s next budget hearing will be on August 8 at 4 p.m. The first of two final budget hearings, where council members will vote on the property tax rate for the year, will be on September 5, 2024, at 6:00 p.m.

The city council will hear requests for money from what they term ‘aid organizations,’ which include non-profits the city has funded over the years.