TAXES: Valparaiso Saves $200,000 on Insurance, May Balance Budget on Reserves

No tax hike this year? Looks likely.

All signs point toward another year without a tax hike in Valparaiso, thanks to a switch in health insurance carriers.

At their previous budget hearing, earlier in August, the Valparaiso City Commissioners had considered a .2 Mill increase in residents’ property taxes, which would have raised the average homeowners’ taxes about $80 per year.

In an empty room, save the commissioners, some staffers, and two residents, the city’s elected officials celebrated a pretty big break: the city will save $227,000 on its health insurance by switching from Blue Cross Blue Shield to United Healthcare.

City Clerk Tammy Johnson found the savings when she decided to go out onto the market to look for alternatives when Blue Cross Blue Shield announced there would be a price hike on insurance costs to the city.

But, the city will still have to take about $200,000 from reserves to balance this year’s budget without raising taxes.

Additions to the Bottom Line

City Clerk Tammy Johnson took the city commission through the high points of the budget – including four new positions to the city’s staff of around 80.

The four new positions would cost the city about $225,000 in new payroll obligations for fiscal year 24. Because those expenses don’t account for a full year, the city plans to hire these positions mid-year; the cost would increase to about $350,000 in Fiscal Year 25, before the cost of living and other salary raises.

The city wants almost $5 million for payroll in the coming year.

Valparaiso City Manager/Administrator

On top of the list for the city: $71,000 to hire a city manager to run the city’s day-to-day operations and coordinate the goals and plans of the city’s part-time elected officials.

The $71,000, which would cover the salary and benefits of the city manager for six months of the fiscal year, was the most significant addition to the budget. The following year, the cost would roughly double for the position. During their last several meetings, The city commission discussed creating the administrational position to expedite city functions and help the city’s governance become more citizen-friendly.

Because of Florida’s Sunshine Laws, which stop local elected officials from discussing the affairs of the city unless they put out a notice beforehand to the public, city employees can only receive direction to act on problems as minor as moving a pipe from a person’s private property to a public right of way (this happened in June) to whether or not to hire a city manager, once a month at city commission meetings. To say it’s a logistical nightmare is an understatement. It’d be like having the General at Eglin sign off on junior airman’s bunk assignments.

Two New Valparaiso Police Officers

On top of the list for the city: $71,000 to hire a city manager to run the city’s day-to-day operations and coordinate the goals and plans of the city’s part-time elected officials.

An Additional Valparaiso Firefighter

Finally, the Consolidated Niceville-Valparaiso Fire Department has requested another firefighter, weighing in at about $52,000 for this budget year, slightly more than the per employee cost of the police officers requested by Police Chief Hart.

The Firefighters have a union to collectively bargain, as they are under the Niceville Fire Department’s Union – and will begin negotiations for a new agreement in September of 2023.

Final Thoughts on the Valparaiso Budget Before September

The city will, most likely, keep its property tax rate unchanged (so far in this process) for Fiscal Year ’24. The budget is balanced, and no tax increases have to happen to keep the city whole and the police and other essential services paid.

But this may not be the win it’s supposed to be. After all, the city will still need to take $280,000 from its reserves to make ends meet – a five percent shortfall in a year where no significant capital improvements occur other than city hall renovation, admittedly a large-ticket expense for the city which has hampered the budget for the last two years.

Property values may not continue to increase at their current rates to partially cover the increase in costs the city will have to maintain over the long term. Indeed, the positions added this year will become more expensive the year – after to the tune of $100,000 in extra salary.

The city will need to come up with a more permanent solution in the next year or face being back in a cash crunch – and next time, there may not be an insurance rate deal to cover the difference.