A plan by the city’s staff will reduce the pressure to raise the property tax rate if a request for rent relief by Lakeland Regional Health is  granted, but it won’t be pain-free, City Manager Tony Delgado said.

Public response to news that rent relief for Lakeland Regional Health Medical Center could lead to higher property taxes was swift. Commissioners told Delgado to come up with a budget plan that both grants the relief but cuts from the city budget to keep the tax rate steady. The plan will be discussed Monday at 10 a.m. A vote on Lakeland Regional Health’s request is expected at the 3 p.m. commission meeting the same day.

“In the areas (city departments) we’re taking a look at: there will be some angst,” Delgado said of the five-year plan. “However, my goal was not to impact those areas that A. maintain public safety or B. impact growth.”

Broadly, the staff’s plan removes a number of open positions from the city’s organizational chart and expects to close other positions that open through employee attrition, Delgado said. There will also be hits to the city’s public improvement fund, a pot of money used to build city infrastructure and amenities like new parks.

That means several planned projects will be delayed, Delgado said, some to a significant degree. He declined to discuss particulars until the commission was shown the plan Monday. 

But, “the commission feels that it’s important to maintain some level of funding to move forward with good projects,” including the “catalyst” projects intended to encourage downtown growth, he added. 

With the five-year plan in place, Delgado said the commission will not have to increase the property tax rate to make up for the loss in revenues and the reduction in city services will be nominal.

By the numbers

Lakeland Regional Health will pay the city $14,378,614 for the year’s rent through 2019. Under the terms of a 2015 agreement with the city, which raises the rent by 2.75% each year, the hospital was expected to pay about $395,000 more for 2020.

Changes to the city’s expected revenues — the hospital’s expected rent — would compound through the five-year freeze. By the final year, the hospital will have paid $6.2 million less in rent.

Looking out to the end of the contract, the hospital would pay about $48.5 million less in rent through 2040. This is compared to the total $468 million paid over 25 years set in the 2015 agreement. 

The hospital’s lease payments support the city’s public improvement fund which in turn bolsters the city’s general fund — the city’s annual operating budget — by around $5 million each year.

Commissioner response

Commissioner Justin Troller said the staff’s plan should calm the intense public response. 

“I do think, though, staff went back and heard the conversations we had at our last budget meeting,” Troller said at an agenda study meeting Friday, “and they found a way to do the best with our partner (the hospital) and keep our millage rate (property tax rate) the same.”

“Once people realize the millage issue has been solved … I think people will ease themselves a little bit,” Troller said. 

Meanwhile, Troller said the city and LRH need to better communicate “the inter-connectivity with the hospital and why we (Lakeland residents) should care,” adding that “for the hospital’s sake it’ll need a communication campaign as well.” 

Commissioner Bill Read opposes the hospital’s proposal, adding that he would not vote to raise the property tax rate but also recognizes the city has large issues it needs to deal with, like improving the health of its lakes. 

But he offered a third way Friday. 

In an effort to split the difference, Read’s proposal would still increase the hospital’s rent over the next five years, but to a lesser degree. 

Under Read’s proposal, the total reduction in rent payments over the next five years drops to $4.5 million from the $6.1 million requested. Over the life of the lease, under Read’s proposal the hospital would pay $23.2 million less through 2040, compared to $48.5 million.

There was little discussion of the proposal Friday, but more debate is expected during the budget meeting Monday. 

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