Fiscal Year 2023 - Revenues
Trends and Analysis
This section describes important revenue sources for the City of Tallahassee's 14 operating funds. There are over 350 different revenue and fund combinations at the City. While staff analyze all of these, some revenues have a minimal impact on the overall budget. The 26 sources on this page account for over 80% of the City's revenues. Explanations of trends and forecasts are included for each.
General Fund: Ad Valorem
The authority for the City of Tallahassee to collect and utilize Ad Valorem (also commonly referred to as “property taxes”) is derived from Florida Statutes, Chapter 192. The City’s FY23 adopted millage used as the basis of these collections is 4.1 mills. Florida Statutes authorize municipalities to adopt up to 10.0 mills. A residential homeowner can use this millage rate to calculate their annual property tax payment by utilizing the Leon County Property Appraiser’s “taxable valuation” amount for their property divided by 1,000, then multiplied by 4.1 mills. Example: $100,000 Taxable Value/$1,000 = 100 x 4.1 mills = $410 annual property tax amount (this does not include potential exemptions granted under State of Florida statutes).
Each fiscal year the Leon County Property Appraiser’s Office forwards a preliminary (June) and then final (July) estimate of total private property valuation for the entire City. When this valuation is certified on July 1, it becomes the basis for the estimated revenue amount derived from property taxes in the following year. The City uses these calculations to provide estimates of property tax revenue collections to the Commission and the public at two budget workshops in addition to the two budget public hearings in September of each fiscal year.
This information, along with an estimate of the tax amount, is mailed to all property owners in August as part of the Truth-In-Millage (TRIM) process. When property values grow due to new development or other factors, the City is required by the TRIM process to advertise the effective increase in property tax revenue that results, even if the millage rate stays the same.
The chart to the right shows this relationship as the City has held its millage rate at a constant 4.1 mills since FY17 while the budgeted revenue for property taxes has increased yearly.
Over 50% of the real property inside the city limits is owned by federal, state, and local government entities and is exempt from ad valorem or property taxes. To ensure these properties “pay their fair share” of city services, the electric, gas, water, and sewer utilities provide a contribution or transfer to the General Fund. The City's finance policy sets the amount of each utility’s contribution. Before fiscal year 1998, contributions were not recorded as General Fund revenues. Pursuant to the interpretation of Chapter 200, F.S. by the Department of Revenue, the City revised its procedures in fiscal year 1998 to account for the contributions as General Fund revenues and utility expenses. The amount of the contribution increases each year by CPI.
Public service taxes are imposed on the sale of electricity within the City’s corporate limits. The current tax rate equals 10% of gross sales (excluding the fuel adjustment charge), the maximum allowed under state law.
Frequency: Due to the City by the 20th of the month following the month of the sale.
Revenue Estimating Methodology: Revenues are impacted by
increases/decreases in electric rates, population changes, and weather.
Anticipated receipts are based on electric sales forecasts.
The purpose of this state revenue sharing program is to provide relief from ad valorem and utility taxes in addition to providing counties and municipalities with revenues for local programs. The City is eligible for “ordinary” distribution of a portion of the sales taxes collected within the county, based upon a participation formula and other requirements established by statute.
Frequency: The Florida Department of Revenue remits tax revenues on a monthly basis.
Revenue Estimating Methodology: Estimates for the budgeting are obtained from the Florida Office of Economic and Demographic Research, and Legislative Committee estimates are provided at the end of each year's session. Projections are adjusted by changes in the population growth rate and the consumer price index.
The Communications Services Tax replaces the cable television franchise fee, public service tax on telecommunications, the local option sales taxes applied to cable television and telecommunications, the municipal franchise fee on telecommunications, and certain permit fees imposed on communication service providers. The Communications Tax was implemented on October 1, 2001 and set at the rate of 5.6% for the first year, the maximum rate permitted in the Communications Services Tax Simplification Law. Thereafter, the rate is set at 5.3%.
Frequency: Remitted monthly by the Florida Department of Revenue.
Estimates for the budgeting are obtained from the Florida Office of Economic and Demographic Research, and Legislative Committee estimates are provided at the end of each session. Projections are adjusted based on telephone landlines in the jurisdiction. As technology has changed consumer habits, the number of landlines declines yearly.
General Fund: State of Florida Revenue Sharing
In addition to the Half-Cent Sales Tax, the municipal revenue sharing program includes other tax sources collected as State Revenue Sharing revenues. Municipalities must meet the requirements of s. 218.23, F.S., to be eligible to participate in revenue sharing beyond a “minimum entitlement.”
Frequency: The Florida Department of Revenue remits tax revenues every month.
Revenue Estimating Methodology: An estimate for the budget year is obtained from the Legislative Committee on Intergovernmental Relations following the close of the annual legislative session.
Building Code Enforcement Fund: Building Permits
Building permits are required for any new construction, additions, alterations, or repairs with an estimated cost of labor and material greater than $1,000 and for both commercial and residential owners. As Florida law requires, building permitting revenues flow into a dedicated enterprise fund to ensure full cost recovery. Building permits ensure that new construction completed is up to current building codes, which grants some degree of assurance to the real estate market that construction is sound in the area.
Fire Services: Residential, Commercial, Resident: County, and Governmental
Description: The City of Tallahassee charges all improved property within the city limits and unincorporated Leon County a fire non-ad valorem assessment to pay for providing fire services each year. The use of a non-ad valorem assessment to charge for fire services is derived from Florida Statutes Chapter 191. Tallahassee is the state capital and the site for multiple federal buildings, two major universities, a community college, and a vocational college. Almost 50% of the improved property is governmental and therefore pays no property taxes. The city’s use of non-ad valorem assessments allows for the cost recovery from these properties that require the same fire protection as the non-governmental properties within the Tallahassee Fire Department’s (TFD) service area.
Residential properties pay per dwelling unit, and all non-residential categories pay on a square footage tier basis. City and most unincorporated ratepayers pay for these services on their utility bills every month. However, a small group of County ratepayers pay for the service via a quarterly invoice, and there are also approximately 10,000 County ratepayers who pay for the service annually.
Basis for revenue estimates: Revenue estimates for future years are based on the annual growth rate of utility accounts and the tracking of the number of “improved” parcels in the unincorporated portion of the County. Periodically, the rates will be updated through an internal evaluation or an outside study, and these changes will be factored into future revenue estimates. Leon County also sends out assessments for solid waste services and uses that data to cross-check the number of fire accounts.
Residential establishments of up to six units receive single-family service. This service consists of once-a-week curbside pickup of a 96-gallon garbage container and a 64-gallon recycling container. Trash and bulk waste are collected curbside once every two weeks.
The City provides garbage dumpster, roll-off, and barrel collection services to commercial customers inside the city limits. Solid Waste works individually with each commercial customer to determine the appropriate level of service. Customers lease two, four, six, or eight cubic yard containers and are charged based on the size of the container and the frequency of pick up based on their needs. For customers with periodic large volumes of waste, roll-off service is offered on a demand basis.
Water Fund: Residential & Commercial Revenues
Description: Water system revenues are generated through service rates and fees. Rates are developed through periodic rate studies with the primary purpose (i) to determine the annual revenue requirements, (ii) to determine potable water rates and charges for recovering the total cost of providing water services, (iii) to recognize the implementation of a water conservation rate structure, and the current economic conditions.
Revenue Estimating Methodology: Estimates are based on water consumption and customer growth trends outlined within the rate study. Rates are also adjusted each year on October 1 based on the consumer price index (CPI) per the City’s code or ordinances.
Trend Analysis: Revenues are estimated based on water consumption, connections, and system growth.
Sewer Fund: Residential & Commercial Revenues
Description: Sewer revenues are generated through rates and fees for services provided. Rate studies are completed periodically with the primary purpose (i) to determine the annual revenue requirements, (ii) to determine wastewater service rates and charges for recovering the total cost of providing wastewater services, (iii) to design rates to recover a portion of the cost of reclaimed water service and, (iii) to review the design of the rates and charges for wastewater service as required to reflect generally-accepted rate design techniques, regulatory requirements and City policy. Sewer rates are adjusted by the consumer price index (CPI) annually on October 1 per the City Code of Ordinances.
Revenue Estimating Methodology: Estimates are based on water consumption, which determines wastewater billing, and customer growth trends outlined within the rate study.
Trend Analysis: Wastewater revenues show moderate growth. The forecast includes a conservative growth projection for customer service points and less than 1% growth in consumption, combined with adequate CPI rate changes to recover wastewater operations costs.
Stormwater Fund: Residential & Commercial Revenue
Description: Stormwater service is provided on a full cost recovery basis with associated revenues and expenditures accounted for within the Stormwater Fund. Rates are based on an equivalent residential unit (ERU). Commercial rates are established in multiples of the ERU, with the actual amount dependent on the impervious area at the customer’s physical location. The primary sources of revenue within the stormwater fund are residential and commercial fees.
Revenue Estimating Methodology: Estimating Methodology: Estimates are based on historical trends to provide projections for customer growth along with fee changes based on the City approved ordinance that provides for the stormwater fees to be adjusted annually on October 1 by the positive difference in the Consumer Price Index.
Trend: Stormwater revenues have a positive upward trend. The forecast includes a conservative growth projection for customer accounts of less than 1% combined with adequate CPI fee changes to recover stormwater operations costs.
Electrical Fund Revenues
Description: Electric rate revenues are composed of two categories: Energy Cost Recovery Charge (ECRC) and base rate revenues. The ECRC is a pass-through charge that recovers the cost of fuel used in the City’s power-generating facilities and wholesale power purchased from other utilities. The City reviews the actual over or under-recovery of these costs monthly and modifies the ECRC charge, if required, on at least a semi-annual basis. All other rates (referred to as base rates) are reviewed and adjusted periodically to ensure rate level sufficiency and equitable rate structure. The rate revenues include specific accounts such as Residential and General Service Demand/Large Demand/Non-Demand, which constitute over 90% of overall Electric revenues.
Revenue Estimating Methodology: Estimates are based on electric sales and customer growth trends outlined within the rate study. Rates are increased each year on October 1 by the consumer price index (CPI) per the City Code of Ordinances.
Trend Analysis: Electric revenues are budgeted based on a positive upward trend. The forecast includes a conservative growth projection for customers and sales combined with adequate CPI rate changes to recover the cost of operations.
Gas Fund Revenues
Description: Gas rate revenues are composed of two categories: Purchased Gas Recovery Charge (PGRC) and base rate revenues. The PGRC is a pass-through charge that recovers the cost of gas purchased for the gas utility. The City reviews the actual over or under-recovery of these costs monthly and modifies the PGRC charge, if required, on at least a semi-annual basis. All other rates (referred to as base rates) are reviewed and adjusted periodically to ensure rate level sufficiency and equitable rate structure. The rate revenues include specific accounts, such as Residential and Non-Residential, constituting over 70% of overall Gas revenues.
Revenue Estimating Methodology: Estimates are based on gas sales and customer growth trends outlined within the rate study. Rates are increased each year on October 1 by the consumer price index (CPI) per the City Code of Ordinances.
Trend Analysis: Gas revenues are budgeted based on a positive upward trend. This forecast includes a conservative growth projection for customers and sales combined with adequate CPI rate changes to recover the cost of operations.
