City leaders enter into fuel tax pact with county

City leaders in Destin will see their share of gas tax funding both decrease and increase due to a change recently adopted by County Commissioners.

"It's a decrease on the percentage we get as a whole from the county, but an increase based on the 3 cent tax increase," Finance Director Bragg Farmer told The Log.

Under the new distribution plan for the local option fuel tax, County Commissioners adopted a measure that would use a 64/36 percent split between the county and its cities. The previous split, which remains in effect until Jan. 1, was 60/40 percent.

Based on state statute, governments can levy local option fuel taxes — to generate revenue for transportation projects and related expenses — up to 12 cents per gallon on fuel. Okaloosa now levies 7 cents after County Commissioners agreed to increase the tax earlier this month.

While Okaloosa County keeps a majority of the funding, the remaining 36 percent is split between the cities of Fort Walton Beach, Crestview, Cinco Bayou, Niceville, Destin, Mary Esther, Valparaiso, Laurel Hill, and Shalimar. Funds are distributed based upon each city’s expenditures on transportation related costs over a specified period of time.

The city of Destin will receive 7.9133 percent of the remaining funds, which is second only to the city of Fort Walton Beach, which will receive 9.7956 percent. Under the 60/40 split, the city had received 8.79 percent of the funding.

The fuel tax has generated a significant portion of funding for the city of Destin over the years. In 2010 they collected roughly $492,000; $478,000 in 2011; $547,000 in 2012; $530,000 (with two months still remaining) in 2013. For the next two years, Farmer said the city expects to collect roughly $670,000 and $720,000 respectively.

Gas tax revenue is up, Farmer told city leaders during their Sept. 17 City Council meeting. During the meeting city leaders unanimously agreed to enter into a new interlocal agreement with Okaloosa County that reflects the new tax split.

"At a later date, we will bring forward the projects the gas tax will be used for," Farmer said.

In other business, city leaders finalized the FY2014 budget in the amount of $13,048,424, which includes the $1,194,771 contract with the Okaloosa County Sheriff's Office and adopted the FY2014 millage rate of 1.500 mils, which is a slight increase from last year's 1.455 mils.