Amid increased scrutiny of their property tax collections, some cities and counties are emphasizing a different method to fund core services.
They’re turning to service fees to augment their budgets, using them to pay for spiking public safety salaries, construction costs for new fire stations, equipment and digging up aging pipes below busy streets. Tacked onto property tax bills, these fees can’t be spent as freely as general tax revenues, but they often don’t draw the same complaints either.
Ocoee more than doubled its fire fee this year to $139. Kissimmee created a new fire fee of $150 to pay for about 25% of its fire department budget. Oviedo’s stormwater fee is on a path to increase more than 250% by 2033 to $41.54 per month.
Last year, Orlando substantially hiked its stormwater fee – with plans of it nearly doubling by 2028.
And Orange County officials are studying if creating their own stormwater fee could help fund needed upgrades.
Local officials argue that even as they’ve collected large sums in property taxes, the result primarily of surging Central Florida property values, those funds don’t go far enough to meet the needs. For instance, fast-growing Kissimmee will use its new fire fee to help hire 49 firefighters and allow the agency to go from a 56-hour work week to 42 hours – a model encouraged under a new state law.
“We’re constantly losing our firefighters to the larger jurisdictions in the area,” said Mike Steigerwald, Kissimmee’s city manager. “For us, the obvious issue we face is when we’re adding 49 new personnel, how do we pay for that with the current revenue sources we have? The only real way to do it is to raise taxes, or you come up with other mechanisms to raise revenue.”
Some Kissimmee property owners opposed the fee at a June council meeting, questioning why their property taxes couldn’t cover the need.
“We don’t need to be taxed and strangled. We’ve been strangled,” said Dominic Depola, who said he owns several properties in the city.
The fee increases come as local spending has drawn a watchful eye from Gov. Ron DeSantis and other state leaders, who are on a quest to eliminate property taxes on homesteaded properties. Such an action would require an amendment on the ballot next year.
They’ve argued their mission wouldn’t defund public safety and core services, but would force local governments to eliminate what they consider to be wasteful spending elsewhere. But it may also persuade local officials to look even harder at fee revenue, a funding source state-level GOP critics so far haven’t taken on.
Steigerwald said the potential loss of property taxes was a factor in seeking a different revenue source, though fees are limited by various state statutes. For example, fire fee revenue can’t be used to fund emergency medical services, and there’s no such thing as a similar fee to fund law enforcement — though some counties, like Orange, have a separate property tax that helps fund the sheriff’s office.
“It was a factor in the mindset, I believe, in the decision makers here, because at the end of the day we have to make sure we’re diverse in our revenue streams,” he said. “Assessments have been viewed as an alternative to property taxes or a supplement for certain services.”
Unlike property tax revenue, fee money is restricted and can’t be used on services other than what the particular fee is designated for. It also applies to all property owners – even those like churches and hospitals that are property tax-exempt.
Ocoee assesses its fire fee based on something called a fire protection unit, which measures the amount of square footage under a roof. That means a particular piece of property may pay more than $139.23, the new base rate.
The previous fee, collected for 13 years, paid for about 17% of its fire department, while the new figure amounts to 34%.
At a meeting discussing the fee increase, the fire chief said his agency had to find a way to meet needs like more staff, higher wages and a new fire engine to replace one reaching the end of its useful life. In 2021, the city purchased one for $579,000. That same model now costs $1.2 million, he said, and it can take years after submitting a purchase order to receive it.
Still, the fee hike drew blowback from residents of the fast-growing west Orange city, some of whom charged the fee was just a way to avoid raising the property tax rate, also known as the millage.
“I’m vehemently opposed to any more assessments,” said Ralph Jones, a retiree on a fixed income. “It’s basically 10% of my property taxes – it’s a big hit.”
Cities also use fees to fund stormwater upgrades and maintenance, in a time when hurricanes are getting stronger and dumping more water on Central Florida as they blow through.
Orlando bumped its fee last year for the first time since 2008. Because the fee had gone untouched for so long and prices had since skyrocketed, the city had to borrow $17 million just to balance the stormwater budget in 2023.
Its stormwater pipes have been underground for between 80 to 100 years and many are in need of extensive repairs, including massive roadwork along Summerlin Avenue from South Street to Marks Street to repair infrastructure first installed before World War II.
The fee increase is expected to take place gradually through 2028. A home with 2,000 impervious square feet paid $13.49 per month last year – an increase of $3.50 per month from the previous rate – eventually climbing to $21.24 per month in 2028. The first increase brought in about $35 million, and by 2028 it will have raised $54.5 million.
Oviedo is charting a similar path.
In February, it raised its fee for stormwater from $11.72 per month to $14.65 – a 25% bump. Ultimately, it will increase annually until it reaches $41.51 per month in 2033, a 254% increase over the previous rate.
The revenue will be used to fund more than 50 stormwater projects totaling more than $43 million that the public works office deems critical.
