Lakeland grapples with possible tax increase or cuts to services amid explosive growth

Lakeland officials are considering whether to raise city's property tax rate for the first time since 2016, but not all are convinced it's the right decision.

Commissioners will consider raising Lakeland's property tax rate from $5.43 to potentially $6.05 per $1,000 of assessed value. This would allow the city to raise over $6 million more in revenue for fiscal year 2025 to help pay for increased services, many of which residents have asked for and enjoyed the past two years.

For the average Lakeland homeowner with an assessed property value of $152,000, this would increase their property taxes by about $94, to a rough total of $920 per year. The tax increase would require a super majority — or approval by five of seven commissioners — to implement.

Not all commissioners are convinced that a tax increase is necessary, and they may settle on a lower tax rate before September. Commissioner Chad McLeod was the only vote against setting a proposed maximum millage rate of 6.0529.

"I would like us to leave the rate where it is this year," McLeod said. "There is still an increase property owners are experiencing due to increasing property values."

McLeod said many property owners face skyrocketing home insurance premiums in addition to general inflation, as families are seeing their budgets stretched tight. Plus, the city plans to raise its water and wastewater rates for utility customers, including those outside city limits.

Financial Director Mike Brossart advised the commission against holding the tax rate flat, or potentially lowering it, given the city had added a number of recurring costs in new employees, services and programs in the past two years — and will need more to keep up with Lakeland's rapid growth.

"It is kicking the can down the road," he said.

Recurring city costs add to the bottom line

In the past two years, Lakeland has added more than $9.7 million in new programs, employees and initiatives that have significantly increased the city's overall budget, according to Brossart. Most of this spending has been focused on improving public safety.

"We have seen a marked increase in the level of expenses added to the budget, not for any wrong reasons," Brossart said. "Growth has required so much investment into public safety, we've needed to do those things."

Starting in December 2023, Lakeland Police Department was equipped with body-worn cameras after years of public debate. The system carries an annual recurring costs of a little over $1 million per year.

The police department has added 13 officers, at a cost of roughly $1.8 million annually, and taken back in its 12 school resource officers, at $1.65 million, after all contracts were shifted to Polk County Sheriff's Office.

Lakeland Fire Department received about $1.7 million in last year's budget to hire an additional 24 firefighters to implement a "Kelly Day," or a system that provides officers an additional day off to reduce scheduled overtime. The city has already set aside more than $1 million annually to hire 12 officers for Fire Station 8 — despite Fire Chief Doug Riley saying it would be "optimistic and aggressive" to have it operational by 2026.

The commission committed to setting aside $1 million annually to incentivize affordable housing in fiscal year 2023. And last year, it dedicated $1 million per year to its Transportation Fund to improve maintenance of the city's roads.

Despite adding these program and staff, the city has been able to avoid raising its tax rate. This has largely been possible because of rapid growth in Lakeland's tax base, as the gross value of taxable property within the city grew by nearly 15% in 2022 and almost 13% last year. This provided Lakeland with a significant boost to its property tax revenues without raising its rate.

By comparison, the city's taxable property value grew about 5.4% last year. This won't provide quite the same windfall as the previous two years.

"We can't keep saying yes without knowing how we are going to pay for it," Commissioner Mike Musick said.

Proposed additions to this year's budget

Lakeland commissioners are being asked to approve a number of one-time purchases and additional city employees in the proposed fiscal year 2025 budget.

Various city departments are asking for more than $3 million for one-time equipment purchases ranging from massive vehicles to compute software. Oscar Torres, Lakeland's director of information technology, has requested $1.1 million to upgrade the city's IBM Maximo computer software and help with migration, a project that's been planned for several years as its slated to be obsolete by next September.

Other large purchases include more than $775,000 for the Water Utilities department to purchase an industrial vacuum truck that will help reduce time for pipeline repairs and shorten water outages to customers. The stormwater department has asked to purchase a tandem dump truck to help haul away aquatic vegetation harvested from the city's lakes as part of its water management program, according to City Manager Shawn Sherrouse.

"They are not wants, they are needs, as we have hopefully been able to demonstrate," Sherrouse said.

There is funding requested to add roughly 17 employees to the city's payrolls next year. Overall, there's been a request to add 12 new organization positions, including funds to hire an additional five police officers, adding two positions at Lakeland Linder airport and several staff members at Lakeland Electric.

Sherrouse said several city departments are seeking to change seven contract positions to city employees in an effort to save money. One of these would be a marketing liaison for the airport, three multicraft operators and a plant mechanic for Lakeland Electric.

LPD Chief Sam Taylor made clear to commissioners that the police department needs to add about 35 officers over the next five years in effort to keep up with recommended law enforcement staffing for the city's rapidly growing population. This year's budget will include five officers, but he plans to ask for funds to hire another seven next budget cycle.

"One thing we have not compromised is public safety and being able to build that into the future in a realistic way," Mayor Bill Mutz said.

Short changing the future

Brossart warned city commissioners that failing to raise the city's tax rate incrementally this year could require a significant hike in future years or cutbacks in services.

The commission has a goal of having an estimated 45 to 60 days' operating cash in its general fund reserve three years out, in fiscal year 2027, based on a projected estimate of its adopted budget. This is to ensure the city's bond rating remains high when it needs to borrow money for capital improvements or an emergency.

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Brossart said he estimates the city would have only reserves for 47 days in 2027 based on its proposed budget at the current tax rate, $5.43 per $1,000 of assessed value. If the City Commission approves pay and benefits increases for its first responders — which is under consideration to improve recruitment and retention rates ― its fund balance could dip to 25 days.

Potential budget cuts?

Lakeland officials are eyeing the city's $1 million annual setaside for affordable housing incentives as a possible cutback to help offset any increase in the city's tax rate.

"It might be a good year to pass on the $1 million for affordable housing we would typically allocate into this budget otherwise as part of the offset," Mutz said.

Under the current year's budget, Lakeland has about $7.42 million for various affordable housing projects and incentives, Brossart said. However, some of the funds, such as $2.5 million from the State Housing Initiatives Partnership Program, come with specific restrictions. The Midtown Community Redevelopment Agency's funds for affordable housing are geographically limited to being spent within Lakeland's Midtown District.

"We have dollars carried forward from previous budget years, if there was a year we want to pass — we have prioritized affordable housing in years past. It can still be a priority if we have a different budget allocation or skip it altogether," McLeod said.

For next year, the city's dedicated funding for affordable housing is proposed at $2.7 million. Lakeland expects to receive significantly less in state funds, potentially contribute $1 million from the general fund and $500,000 in the Downtown Community Redevelopment Agency.

Commissioner Stephanie Madden said she's concerned about making sure the city can pursue some of the opportunities it has been presented for future affordable housing projects. 

But some commissioners have suggested reducing or eliminating the $1 million setaside to help prevent a tax increase. Musick, Guy Lalonde and others discussed whether the funds should be used instead to help support the launch of senior center or a new PAL building. Groups behind both projects have solicited the city for financial support.

What's next?

City commissioners will likely hold another budget meeting in August to narrow down a more precise tax rate. It will also provide a final opportunity for commissioners to make cuts or suggest reallocating money toward specific initiatives. An exact date and time has not yet been announced for this commission workshop.

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