Just how much will Lakeland raise taxes? And what will it cut? Here are some early winners and losers

Lakeland commissioners are grappling with an uncomfortable decision of how much to raise the city's tax rate next fiscal year, after eight years of holding the line on taxes while implementing new programs and services.

The City Commission was unable to collectively decide on a proposed millage rate for fiscal year 2025, which starts Oct. 1, after nearly four hours of debate at Monday's Budget Workshop.

Officials have stepped back from the advertised high of $6.05 per $1,000 of assessed property value. Now, they are considering two proposals:

Proposal 1

• Millage rate: 5.5644 mills.
• About $5.56 per $1,000 of assessed property value.
• Increase of $20.08 per year for a single-family homeowner whose property has an assessed value of $152,000.
• Returns to the city's previous tax rate from 2016-2018.

Proposal 2

• Millage rate: 5.62 mills.
• About $5.62 per $1,000 of assessed property value.
• Increase of $28.53 per year for a single-family homeowner whose property has an assessed value of $152,000.
• Would be the city's highest tax rate to date.

The commission has asked Financial Director Mike Brossart to have both proposals ready for review at the city's first budget hearing set for Sept. 5.

The two proposals might seem similar to residents, but there's a major difference in how much money the city predicts to have in its General Fund Surplus, or its operating cash on hand, three years out at the proposed tax rates.

"We are covering so many expenses and growing much faster than our revenues are," Brossart said.

The city is anticipating having roughly $54.25 million in surplus at the end of the current fiscal year on Sept. 30. It will have to spend about $14 million of its reserves to balance next year's budget at the lower proposed tax rate.

The city's policy is to have an estimated 45 to 60 days' cash on hand in the General Fund Surplus when projecting three years out to have money to cover possible emergency costs and to maintain Lakeland's bond ratings, Brossart said. He gave an example that the expenses of cleaning up and rebuilding after a major hurricane, if necessary, would come from these funds.

Either proposal, if approved, would represent the city's first proposed tax increase since October 2015.

Here's a look at winners and losers in the 2025 budget so far.

Affordable housing — out

To reach this point in the proposed 2025 budget, commissioners eliminated funding for some of the city's key objectives while earmarking money for various projects being pushed by community leaders.

Commissioner Mike Musick led the charge to "push pause" on the city's funding of affordable housing. Musick asked the $1 million annual set-aside for support and incentives for low-income housing projects be cut from next year's proposed budget.

"We don't have something to put that money against right now," Musick said.

Commissioner Stephanie Madden said she was reluctant to cut the $1 million for affordable housing unless the city had other money available to support potential affordable housing project proposals. 

"That's an actually successful thing where we've seen dollars leveraged," she said. "We wouldn't have affordable housing today if we didn't wrestle for that money."

The city anticipates having $7.4 million, between its own cash, state and federal funds, that can be used to incentivize affordable housing to carry into next budget year.

Arts & Culture — makes the cut

A proposal that called for the city to increase funds for the Mayor's Council of the Arts by $200,000 next year, a group that provides grants to support and promote Lakeland's arts and associated creative economy, was cut in half.

Instead, the commission seeks to increase funds by $100,000, giving the council a total of $375,000 to dole out next year.

Officials agreed to fulfill the city's two-year commitment to give $250,000 for the expansion of the Polk Museum of Art, recently renamed The Ashley Gibson Barnett Museum of Art at Florida Southern College.

Community projects — In

Two nonprofit community groups asked Lakeland officials in July to consider providing some funds in next year's budget to show their support.

Lakeland Senior Hub Inc. requested $300,000 from the city to help with launching a Senior Hub. The site would serve as a place residents 60 and older could come together for activities and be connected with existing service providers.

Lakeland Police Athletic League, or PAL, asked commissioners to donate a piece of city-owned land adjacent to the existing Simpson Park for a new facility and provide financial support to help it hire an architect to draw up plans for the proposed multi-use building. James Ring, a volunteer on PAL's board, said the organization has received quotes of $250,000 to more than $800,000 for the plans.

After much debate, the commission has added in a $100,000 grant for each organization, totalling $200,000, but not without conditions. This falls well short of either group's request.

Commissioner Sara Roberts McCarley said she wasn't ready to provide more funding to either group yet. She has a sitdown meeting with Lakeland Senior Hub next week.

"From a nonprofit standpoint, I'm a big believer in the community comes alongside and it's not necessarily that government funding is appropriate when there isn't any," she said.

McCarley said she has wanted to see more detailed budgetary and strategic plans from the organizations moving forward.

"We need to show them something," Commissioner Bill Read said. "I want them to know we care."

Mayor Bill Mutz said he would want to have a list of deliverables in exchange for the city's funding. The funds will also be a one-time matching grant, meaning the nonprofits will have to raise some money themselves.

Commissioner Guy LaLonde said having the city's commitment of land for a PAL building is more important than funds because having the land would make it easier for the nonprofit to start fundraising.

Public Safety — In, for now?

Lakeland Police Chief Sam Taylor raised alarms about the need to get more police officers on the street in upcoming years to match the city's population growth.

The chief had asked the commission to add five police officers for each of the next three years, followed by seven officers in 2028-29 to reach this goal. Taylor said his reason for slow implementation is to ensure, despite recruitment woes, he is able to hire, train and retain the necessary officers.

As of Monday, the Lakeland Police Department had seven vacant positions. Several commissioners wondered whether Taylor would be able to hire for those seven positions and the additional five requested, for 12 new officers. If not, some questioned whether the nearly $900,000 budgeted for hiring and outfitting five officers could be cut, or eliminated from future budget calculations.

When the mayor asked Taylor whether he preferred cutting the proposal for five new officers in 2026 or 2027, his answer was a resounding "No."

"The 35 officers number was based off the calls for service and population today. That number will certainly be different next year, the year after and the year after," Taylor said. "My best guess is it will go up."

Budgeting based in part on assumptions

A hot point of debate when determining where to set the city's tax rate is what kind of growth Lakeland will see on its property tax rolls.

For the past three years, the city's rapid growth and exploding home prices have given it much more sizeable increases in its property tax roll, from around 10.7% to nearly 15%. This allowed the city to still collect substantially more in revenue, while holding the line on property tax rates.

"We have been living off the windfalls that have been coming from property values skyrocketing," Brossart told commissioners.

By comparison, Lakeland saw about a 5.48% increase on its overall property tax roll this year.

Brossart has, historically, been very conservative when planning the City Commission's budget, expecting an increase of 4% to 5%.

However, city commissioners agreed on Monday to make a budget with an assumption Lakeland will see at least a 5.48% increase again next year.

Musick said, based on the city's historic numbers, the city has averaged 9.5% growth over the past seven years dating to 2019.

Commissioner Bill Read, a realtor who specializes in commercial acquisition, said while interest rates are coming down, construction costs are skyrocketing. Read said he felt expecting 5.48% growth in Lakeland next year was optimistic, and his view was echoed by city staff.

"Our permit numbers aren't as strong as they have been the past few years leading up to now a 5.48% increase," City Manager Shawn Sherrouse.

Sherrouse said the largest construction projects underway in the city are by nonprofits, who will not pay property taxes the same as if it were a commercial or industrial site.

Brian Rewis, the city's director of community and economic development, said the number of construction permits is down 20.4% so far this year, while new construction permit filings remain on par with last year.

While the city is seeing many new residential developments, Brossart said the majority of the city's property tax roll increase has come from large commercial and industrial projects — not residential buildings.

What's next?

The commission is scheduled to hold two budget hearings at 6 p.m. Sept. 5 and 19 at City Hall, 228 S. Massachusetts Ave.

Residents also have the opportunity to address city officials on the budget or other topics of their choice during the audience portion of regularly-scheduled city commission meetings. There are three scheduled for 9 a.m. Aug. 19, Sept. 3 and Sept. 16 before the budget and tax rate is voted on.

Sara-Megan Walsh can be reached at swalsh@theledger.com or 863-802-7545.