Fernandina Beach Sets Highest Tentative Property Tax Rate Amid Budget Risks

By Mike Lednovich/Editor

FERNANDINA BEACH — Faced with uncertainty over paid parking revenue and a proposed state constitutional amendment that could reduce future property tax collections, the City Commission voted 4-1 Tuesday to set the city’s tentative property tax rate at 4.8530 mills — the highest of four options presented by city staff.

The decision does not establish the final tax rate for the 2026-27 budget. Commissioners can lower the rate during budget hearings in September but cannot raise it above the rate approved Tuesday.

Mayor James Antun and Commissioners Tim Poynter, Genece Minshew and Joyce Tuten supported the higher tentative rate. Vice Mayor Darron Ayscue voted against it.

The 4.8530 rate would generate an estimated $24.7 million in property tax revenue, approximately $1.5 million more than the 2026-27 budget proposed by City Manager Sarah Campbell.

Campbell recommended a lower rate of 4.5444 mills, a 3% reduction from the current 4.6849 rate. Her proposed budget is balanced at that level and would generate an estimated $23.1 million.

Campbell said the higher 4.8530 rate was presented as a contingency because the city has committed $1.5 million in anticipated paid parking revenue to its marina redevelopment project.

“The reason that number is specific is because $1.5 million is how much paid parking revenue we have allocated to the waterfront redevelopment project,” Campbell said.

City voters will decide an Aug. 18 referendum concerning paid parking. City Attorney Teresa Prince has advised that the referendum would not automatically repeal the downtown paid parking program already in operation. Commissioners, however, could subsequently vote to end the program.

“However, you may choose to make a different decision,” Campbell told commissioners. “And if you were to choose to eliminate the paid parking program, we would need a replacement for that revenue that’s been allocated to that contract that we signed.”

Campbell said choosing the highest tentative rate would give the commission the flexibility to replace that money if paid parking revenue is lost.

“This is that ‘what if’ scenario,” she said. “It would provide you the cushion of $1.5 million.”

Poynter said the commission should preserve its options until the outcome of the referendum is known.

“We can always lower it,” Poynter said. “But if we go too low and, I mean, we’ve got the bill (for the marina). I mean, someone’s got to pay for it. So, it’s either we keep the paid parking and have outside people contribute or the taxpayers pay it all.”

“I’d rather go safe than sorry,” he said. “And we can always lower it, see what happens.”

The commission is also awaiting the November vote on a proposed increase in Florida’s homestead exemption, which officials have warned could substantially reduce the city’s future property tax revenue.

Antun said setting the highest tentative rate gives commissioners maximum flexibility while they await the referendum results and examine Campbell’s proposed budget.

“There’s no reason before we see a budget to prevent us from having the most flexibility to make a vote in the future,” Antun said. “So, for that reason, I’m comfortable today with the 4.8530, knowing that if we see a lot of opportunity, we will come down.”

Commissioners had not received Campbell’s proposed budget before Tuesday’s vote. The deadline for submitting the budget is Friday.

“You are required to set a tentative millage rate before you get the budget,” Campbell said. “None of you have seen the budget yet.”

“You have to make a decision somewhat blindly about what I’m proposing to you, and then you have the ability to make adjustments tonight and going forward throughout the budget process,” she said.

The rollback rate — the rate calculated to generate approximately the same property tax revenue as the current year, excluding new construction — is 4.4425 mills. Campbell said adopting that rate would require another $519,000 in reductions from her proposed budget.

“Most likely, I would go to the capital budget and find one project to defer,” Campbell said.

The city has already deferred $2.5 million in capital projects in the upcoming year.

Minshew said she could not support the rollback rate because the city is already struggling to catch up on delayed capital needs.

“I cannot vote for the 4.4425 because, again, that’s gotten us to where we are today, where we continue to defer important capital projects that cost us more in the long run,” she said.

Minshew also cited the likelihood of cost increases for the marina project, new athletic fields and other unresolved needs.

“We have significant issues sitting on the table that are all connected financially that we do not have a long-term plan for today,” she said.

“But this idea that that money is in jeopardy is very worrisome,” Minshew said of the paid parking revenue committed to the waterfront.

Tuten said the higher rate could provide money for contingencies, land conservation and debt reduction if it is not needed to replace parking revenue.

“I don’t know what’s going to happen with the vote on August 18th,” Tuten said. “We can lower. We can lower to whatever we need to after the August vote. But we can’t raise back up.”

“With all that’s coming down the pike, I would like to see a robust contingency fund,” she said. “I would like to see land conservation. And heck yeah, pay down some debt.”

Ayscue supported the rollback rate and argued that residents and businesses need property tax relief. He said non-homesteaded and commercial property values could rise substantially even if the current millage rate were maintained.

“If you were to even hold it, you’re talking about a 15% increase in non-homesteaded property and commercial property values,” Ayscue said. “Fifteen percent. That’s incredible.”

Ayscue also questioned the rationale for replacing paid parking revenue when no majority of commissioners has publicly committed to repealing the program after the referendum.

“Nobody on this commission has said that if the vote is yes on the referendum, that you will repeal paid parking,” he said. “I don’t understand how we’re preparing for something that nobody up here has said that they will do.”

Tuten responded that commissioners had been advised by Prince not to publicly announce in advance how they would vote after the referendum because doing so could reveal their intentions to one another outside a commission meeting.

The city’s current millage rate is 4.6849, the same tentative rate commissioners approved in a 4-1 vote last year. One mill equals $1 in taxes for every $1,000 of taxable property value.

Campbell said the city was able to build its proposed budget around a lower 4.5444 rate partly because the golf course and marina are now operating without general fund subsidies.

“Golf and marina are self-funded for the first time in several years,” she said. “That saves the general fund $1 million this year.”

Those savings are being partially offset by increases of approximately 8% for employee health insurance and fuel and approximately 4% for electricity and workers’ compensation.

The city will hold budget workshops before conducting two public hearings in September. The final budget and millage rate are scheduled for adoption Sept. 15.