Oviedo City Council drops tax rate after paying off debt

The Oviedo City Council established a new tentative tax rate of 5.6692 mills during its meeting on Monday that would drop property tax rate by just under 3% from last year’s rate of 5.8610. 

The new rate was determined by making no additions to the rollback rate, which is the property tax rate that would bring in the same amount of total property tax revenue as the previous year, adjusting for increasing property appraisals.

In addition to the general fund tax rate there is also a rate of 0.1075 mills to service debt for the 2003 General Obligation Bond to implement the city’s downtown master plan. The General Obligation Bond tax rate has also dropped from last year’s number of 0.1140. 

This means that, in dollars, the new tax rate represents $5.7767 for every $1,000 of appraised home value, or $577.67 for every $100,000 of appraised value. 

While the tax rate has dropped, General Fund Ad Valorem revenue is actually expected to increase by $230,781 over last year, totalling $24,815,579. The jump is due to the fact that “the city’s gross taxable value for operating purposes increased to $4,790,582,758 or by 4.63% when compared to tax year 2025” according to the proposed budget. 

“Since assessed value goes up and taxable value goes up,” Ott said, “That millage rate is going to be lower than the one last year because you’ve got more value to collect money on.” 

The proposed city budget using the new tax rate is projected to fund the following:

• Maintains FY 2025-26 Service Levels

• Funds a 4% salary increase for General Government employees 

• Funds salary increases for Police and Fire Bargaining Units employees

• Funds increases in benefits costs

• Funds a 10% increase in Workers Compensation costs

• Funds a 10% increase in General Insurance rates 

• Funds increases in fixed costs such as leases, telephone, and utilities

• Funds the Vehicle Replacement Plan

• Funds capital items 

• Funds capital purchases for IT as recommended by the IT Infrastructure and Organizational Assessment Plan

• Complies with the Government Finance Officers Association (GFOA) Best Practice of 16.67% Target Reserve Fund Balance

• Complies with the City’s Budget and Financial Policy of Maintaining a Minimum 15% Reserve Fund Balance

In another checkbook balancing act, the Oviedo City Council approved a resolution to pay off the city’s outstanding debt.

Oviedo Finance Director Jerry Boop said paying off the debt is what allowed the city to avoid raising the tax rate beyond the rollback rate in the first place. 

“I just want to say it was a great job by the directors, our City Manager Brian Cobb and our council giving us the direction to do that.”

The debt was used to fund two different projects: building and outfitting a fire station and public works complex in 2007 and making improvements to Oviedo on the Park’s Center Lake Park in 2013. 

The combined remaining balance was settled on Tuesday with a total one-time payment of $1,593,487.

Moving forward Oviedo Mayor Megan Sladek said she would like for the city to stay debt free “forever.” 

“Once we get rid of this debt I see no reason why we take out debt to run our city,” Sladek said, “What we would do instead is what we have done with the water fee. We’re getting a new water plant. That’s not right now, but we sort of plan that there’s no way around it. So when that happens, the debt is going to be secured against future water payments and it’ll be baked into the monthly rate.”  

The difference between this model compared to the debt Oviedo just paid off, Boop said, is the pledged funds would come from a “defined revenue source” – such as water fees – rather than the general fund. 

“When you use general fund revenues to pay for debt service, that limits what revenues you have left to pay for other services in the general fund,” Boop said, “Like police and fire, like salary increases, operating expenses, new capital equipment and and things of that nature.” 

According to the resolution’s agenda memorandum “the general fund’s annual debt obligation beginning in FY 2026-27 will be zero dollars.” 

“We are heading in the right direction,” Sladek said, “In a climate where it’s hard to know how we’re going to pay all the bills, to not have to pay interest on loan payments is a really great elimination of a current cost.”