A short agenda at the Jan. 23 meeting of the Osceola City Council meant more time to discuss everyone’s favorite subject - the city’s budget.
Osceola City Administrator Ty Wheeler led the discussion on the upcoming budget, beginning with the city having received their valuation a couple of weeks prior, allowing him to begin working through numbers. Wheeler reported that for Fiscal Year 2026, which will begin July 1, the city’s taxable valuation is at 2.5%. He reminded the council of House File 718, which was passed in the 2023 legislative season, which included claw-backs. Those claw-backs state that if an entity’s taxable valuation grows by more than 2.75%, the rate is clawed-back to a rate of growth deemed appropriate. Last year, the city’s taxable valuation growth was 4.1%, which was clawed-back by 2% down to 2.1%.
“This year with 2.5% growth we won’t be subject to any claw-back, so we’ll get to realize all 2.5%,” said Wheeler.
Councilman Dr. George Fotiadis said he felt that the state was punishing cities and towns that were showing successful growth, with legislation being counterproductive. Wheeler cautioned that it is still early in this year’s legislative season, but already pieces of legislation were being proposed that would put a hard cap on revenue growth, yet not take into consideration growth in tax base. He said that would likely be seen most to affect those in the developmental community.
Mayor Thomas Kedley asked if the money is capped, where it goes.
“It just is not realized,” replied Wheeler.
Tax classes
Osceola looks at three basic property taxes classes - residential, commercial and industrial. Wheeler said that the ag amount is a very small portion. Residential properties are always subject to a rollback, which is adjusted every year. This year’s rollback is 47.4316%, which makes taxable valuation on residential properties subject to a 47% rollback; last year’s was 46%. For example, on a $100,000, the taxable valuation this year would be $47,431.60. Two years prior, the rollback was 54%.
“Last year we had one of the single biggest drops in that rollback, in part because we saw residential valuations go way up,” Wheeler said. He said even with valuations up, some were pulled way down and resulted in modest changes in actual property tax collections.
On the other hand, commercial increased quite a bit after having little change in the last 15 years. Until the mid-2010′s, commercial and industrial properties were valued at 100%, and that was their taxable valuation. Then, they were rolled back to 90%, until Fiscal Year 2024. Now, the first $150,000 of a commercial or industrial property is rolled back to a residential rate. Any value over the $150,000 is rolled back to 90%. Due to the change in the commercial rollback system, a projected collection not realized for next year would be about $291,000 total, about $159,000 in the general fund.**
“All the sudden, we’re just not going to realize that funding and growth for our community?” questioned Kedley.
Wheeler also spoke of the phasing out of the state’s backfilling initiative for commercial and industrial properties, where the state would provide partial backfill payments to those local governments whose revenue is impacted by the reductions in taxable valuation. However, the amount to be backfilled is slowly decreasing, until Fiscal Year 2029 when it will become zero; residential backfills will remain as of now.
Backfilling is paid for out of state revenue. In terms of the general fund, Wheeler said the reduction in backfill meant that like last year, this year there might be some projects that have to be moved around or not get done that would be paid for using the general fund.
“We’re just keeping the doors open right now. I think people need to understand too, with these backfills as they go away, it’s because the state wants to keep cutting the taxes off that, but then they’re still suppressing your growth…I can’t stop a town from growing. And if our community keeps growing, you need more law enforcement, you need more fire, you need more of everything to work,” Kedley said.
Currently, the general fund levy is $8.20. In Fiscal Year 2029, there will be a hard cap on the levy of $8.10. The city’s general fund is used for all of the city’s departments except for roads and wastewater.
“We’re going to have to start looking at what the long-term plan [is]...what our expectations are,” said Wheeler.
“If this is a new reality, we have to make some pretty tough decisions on what do you cut. And I don’t know what you cut,” said Kedley, noting the cuts from the state have forced the city to be more aggressive in finding grants and other means of funding for projects. He also commended city staff for being responsible and working hard with the budget.
The Osceola Public Library was brought up as an example of one area where funding from the city may be reduced. The library has a special revenue fund and their own foundation. Discussion of the use for the hotel/motel tax that is used for cultural recreation possibly being rerouted to the Parks & Recreation Department for operating expenses.
“The state talks about, we’re going to do all these good things, reduce all these taxes. What do they do? They hit money that’s small government,” said Wheeler.
The budget for Fiscal Year 2026 will not be approved until this spring.
Other council news
The council approved the re-appointments of four persons to serve on boards - Stacey Manternach to the Osceola Parks and Recreation Board with a term to expire on Dec. 31, 2026, and Deb Yorba, Paula McClaflin and Angie Williams to the Historic Preservation Commission with Yorba’s term to expire Dec. 31, 2027 and McClaflin and Williams Dec. 31, 2028. Two appointments were made as well - Shange Wagner was appointed to the Osceola Parks and Recreation Board to fill Walker Adams’ term set to expire Dec. 31, 2025, and John Kooiker was appointed to the Osceola Water Works Board of Trustees to fill Dr. Jim Kimball’s vacancy with a term to expire Dec. 31, 2025; Adams moved outside of city limits and Kimball died.
Kedley spoke of the need for volunteers.
“It’s becoming harder and harder to find volunteers and I just want to take the time to say, being a part of the community and volunteering, the more you get involved with your community in a positive way, the more you become a part of that community,” said Kedley. He said anyone interested in serving or looking for volunteer opportunities to reach out to him.
“...gratitude to people that fill these [roles], we’re lucky to get the people we have. And good people, we’re not just filling holes. We’re putting quality people in positions,” said Fotiadis.