TO: Honorable Mayor & Members of the North Port Commission
FROM: A. Jerome Fletcher II, ICMA-CM, MPA, City Manager
TITLE: Discussion and Possible Direction Regarding the Fiscal Year 2027 Electric Utility Tax Fee Reduction, Budget Proposal 3570.
Recommended Action
Discussion and possible direction regarding the Fiscal Year 2027 Electric Utility Tax Fee Reduction, Budget Proposal 3570.
City Commission Options
Option 1: Retain Budget Proposal 3570 in an approved status and include Budget Proposal 3570 in the Fiscal Year 2027 Tentative Budget scheduled for the City Commission Special Meeting on September 10, 2026.
• Pros: Continues progress to achieve tax reduction. An eventual tax reduction would directly lower electricity bills, helping households manage increasing living costs and making local businesses more competitive. Would also show signs of fiscal responsiveness, especially in times of inflation and rising energy prices.
• Cons: Reduces the forecasted revenue for Fiscal Year 2027 to the City. Less revenue reduces unrestricted funding for General Fund programs such as Police, Fire, Parks, and several others.
Option 2: Deny Budget Proposal 3570 and do not include Budget Proposal 3570 in the Fiscal Year 2027 Tentative Budget scheduled for the City Commission Special Meeting on September 10, 2026.
• Pros: Aligns to proactive financial planning while the statewide Property Tax Reform referendum is pending voter approval. Lowers the burden on City programs dependent on General Fund dollars, such as Police, Fire, Parks, and several others.
• Cons: Would not lower electricity bills or help households and businesses manage increasing energy costs.
Option 3: The status of Budget Proposal 3570 shall be contingent upon the outcome of the statewide Property Tax Reform referendum scheduled for November 3, 2026. If the referendum passes, the City will not proceed with the proposed reduction to the current 10% Electric Public Service Tax. If the referendum fails, the City will proceed with Budget Proposal 3570 and reduce the Electric Public Service Tax from 10% to 9.4%.
• Pros: Allows the City to evaluate the fiscal impacts of the statewide Property Tax Reform before implementing an additional tax reduction; preserving financial flexibility; and supporting a more informed budget decision.
• Cons: Delays potential tax relief for residents and businesses; postpones any reduction in electricity costs; and creates temporary uncertainty until the statewide referendum results are known.
Background Information
Florida Statutes Section 166.231 authorizes a municipality to levy a tax on the purchase of electricity within the municipality, at a rate note to exceed 10 percent of the payments received by the seller of electricity from the purchaser of the service. The following provides a chronological order of events regarding the Public Service Tax:
Ø February 4, 1991: During the City Commission Regular Meeting, the Commission adopted Ordinance No. 91-3, providing in part for the levy of a Public Service Tax of two percent (2%) on each and every purchase of electricity service within the municipal boundaries of the City.
Ø July 13, 1998: During the City Commission Regular Meeting, the Commission adopted Ordinance No. 98-27, repealing Ordinance No. 91-3 in its entirety, and providing in part for a levy of a Public Service Tax of two percent (2%) on each and every purchase of electricity service within the municipal boundaries of the City.
Ø October 26, 2021: During the City Commission Regular Meeting, the Commission adopted Ordinance No. 2021-40, repealing Ordinance No. 98-27 in its entirety, and providing in part for a levy of a Public Service Tax of six percent (6%) on each and every purchase of electricity service within the municipal boundaries of the City.
Ø October 24, 2023: During the City Commission Regular Meeting, the Commission adopted Ordinance No. 2023-28, repealing Ordinance No. 2021-40 in its entirety, and providing in part for a levy of a Public Service Tax of ten percent (10%) on each and every purchase of electricity service within the municipal boundaries of the City.
Ø January 13, 2026: During the City Commission Regular Meeting, the Commission discussed the Electric Public Service Tax on Florida Power & Light (FPL) electric service bills and options to reduce the impact of FPL rate increases on North Port residents.
Ø March 13, 2026: During the City Commission Budget Workshop, the City Manager provided two scenarios to the City Commission to reduce the Electric Public Service Tax, a revenue neutral approach or a reduction to 6%.
Ø June 10 and 11, 2026: During the City Commission Budget Workshops, the City Manager presented the Fiscal Year 2027 recommended budget to the Commission. The recommended budget included Budget Proposal 3570 recommending the revenue neutral approach to reduce the Electric Public Service Tax from 10% to 9.4%. The estimated annual General Fund revenue reduction associated with the proposed tax reduction is approximately $501,155.
Per Florida Statutes Section 166.233, a tax levy or any changes must be adopted by Ordinance which requires two readings. The Ordinance may become effective only on January 1, April 1, July 1, or October 1. In addition, City shall notify the Florida Department of Revenue at least 120 days before the effective date of the Ordinance. Based on these statutory requirements, the earliest estimated effective date for the tax reduction under Option 1 would be April 1, 2027.
Strategic Plan
Good Governance
Financial Impact
The discussion and possible direction provided shall assist the development of the Fiscal Year 2027 tentative budget scheduled for the City Commission Special Meeting on September 10, 2026.
Procurement
Not applicable.
Attachments:
1. Proposal 3570 Detail Sheet
2. Presentation 26-0967
Prepared by: Jake Gaub, Budget Manager
Department Director: Irina Kukharenko, CPA, Finance Director