Palm Coast’s $696 Million Budget, Explained: Where the Money Comes From, Where It Goes

Part 1 in a series on Palm Coast’s Fiscal Year 2026 budget

Palm Coast is operating under a $696,444,327 budget for Fiscal Year 2026, the spending plan the City Council adopted on Sept. 24, 2025. It’s the biggest budget the city has ever had, up 65%, roughly $275 million, from last year’s $421,551,721.

The full budget with line-by-line expenditures for each department can be found here.

That top-line figure, though, doesn’t tell the whole story, and city staff says as much. The surge isn’t mainly about ramping up routine services. It’s largely driven by one item that doesn’t repeat year after year: about $283 million in bond financing tied to upgrades at Wastewater Treatment Plant 1 and related water infrastructure. Take that borrowing out of the picture, and the city’s regular operating costs look a lot closer to what residents have seen in prior budgets.

What follows is a guided tour of what the city published in its FY2026 Annual Budget Report: the tax rate, the revenue mix, how dollars are split among funds, what departments spend, staffing levels, and outstanding debt. All numbers below come directly from that report.

Palm Coast’s fiscal year runs Oct. 1 through Sept. 30.

The tax rate, a modest dip

Palm Coast trimmed its property tax rate, the millage rate, for 2026.

• Combined city millage rate: 4.0893 (down from 4.1893 in FY2025)

That total includes a general operating rate of 4.0391 plus a stormwater capital rate of 0.0502.

A millage of 4.0893 means $4.0893 per $1,000 of taxable value. The city’s own example: a home assessed at $150,000 with a $50,000 homestead exemption has $100,000 in taxable value. So the city portion of the tax bill is ($150,000 − $50,000) ÷ 1,000 × 4.0893 = $408.93 for the year.

Also, Palm Coast is only part of the overall property tax bill. Of each dollar paid in property taxes by a Palm Coast homeowner, about 45 cents goes to Flagler County, 29 cents to the School Board, 23 cents to the city, and 3 cents to other taxing districts.

The city’s millage has been sliding for several years: 4.6100 in FY2022, 4.6100 in FY2023, 4.2570 in FY2024, 4.1893 in FY2025, and 4.0893 in FY2026.

Even with a lower rate, the city expects about $1 million more in property tax revenue because taxable values climbed. Total taxable value rose 10.34% to $11,005,474,334, with around $548 million tied to new construction.

The stormwater capital slice of the millage dropped too, from 0.0554 to 0.0502, a decrease of 0.0052, based on the city’s latest rate study.

What residents will pay in fees

Taxes aren’t the only changes residents will notice. The budget reflects adjustments in several service charges:

Stormwater fee: The highlights section lists the residential stormwater fee rising from $32.87 per ERU in FY2025 to $36.16 per ERU in FY2026. ERU means Equivalent Residential Unit, the standard billing unit for stormwater. Notably, elsewhere in the same report the forecast assumptions show FY2026 at $38.33/ERU and FY2027 at $39.10/ERU. That mismatch is in the public document.

Water and wastewater: The average homeowner is projected to see an 8% increase across water and wastewater charges. This follows the Council’s March 2025 ordinance (Ordinance 2025-04), which set 8% increases on April 1, 2025 and Oct. 1, 2025, with more 8% increases planned for FY2026 and FY2027.

Residential solid waste (trash): The monthly rate moved up to $34.37.

Where the money comes from

Total FY2026 revenue is $696,444,327. Because that includes both borrowed dollars and internal transfers between city funds, the city also presents a “net” figure after subtracting interfund charges and transfers. Net of those, revenue totals $644,855,805. (Interfund charges and transfers add up to $51,588,522.)

Below is the city’s revenue-by-source table across the last three budget years:

The dominant item is Debt Proceeds: $286,394,000, or 41.12% of total revenue. That’s the borrowed money for water and wastewater construction. After that, Charges for Services comes in second at $148,141,734 (21.27%), made up of utility bills, sanitation, recreation and golf, and other user fees.

Looking at major individual revenue streams, the adopted FY2026 amounts include:

Property taxes by themselves bring in about $42 million, about 63% of the General Fund, the city’s main account for day-to-day services.

Where the money goes

Palm Coast groups its spending two main ways: by category, meaning the type of expense, and by function, meaning what area of government it supports.

By category

Two things jump out here. Capital Outlay, the spending for buildings, plants, roads, equipment, is $244,607,107, more than a third of the full budget. Reserves are also large at $200,170,677 (28.74%). The city ties that unusually high reserve balance to the bond funds being held until they’re needed over the multi-year construction timeline.

By function

The Physical Environment bucket is the largest at $221,914,348 (31.86%). That’s where the big water, wastewater, and stormwater investments land.

The 25 funds, dollar for dollar

Palm Coast doesn’t run everything through a single checking account. Like most cities, it divides money into separate funds, often with dedicated revenue sources and legally defined uses. Here are all of the city’s funds and their adopted FY2026 totals.

General Fund, the core operating fund: $67,601,395

Special Revenue Funds:

• Streets Improvement Fund: $9,632,495
• State Road 100 Community Redevelopment Agency: $3,336,344
• Old Kings Road Special Assessment Fund: $1,233,573
• Community Development Block Grant Fund: $806,000
• Special Events Fund: $166,660
• Neighborhood Stabilization Fund: $121,035
• Police Education Fund: $12,000

Capital Funds:

• Transportation Impact Fee Fund: $54,173,103
• Capital Projects Fund: $23,697,976
• Fire Impact Fee Fund: $12,326,600
• Recreation Impact Fee Fund: $9,291,385
• Town Center Impact Fee Fund: $660,319
• Development Special Projects: $122,275

Enterprise Funds, self-supporting operations paid mainly by user fees:

• Water/Wastewater Capital Projects Fund: $326,390,581
• Water/Wastewater Utility Fund: $88,214,320
• Stormwater Management Fund: $42,801,621
• Collection and Sanitation Fund: $19,698,024
• Building Permits Fund: $3,779,254
• Information Technology Enterprise Fund: $1,576,231

Internal Service Funds, services the city provides to itself:

• Fleet Management Fund: $10,664,763
• Self Insured Health Fund: $10,467,183
• Information Technology Operations Fund: $6,953,140
• Facilities Maintenance Fund: $2,273,201
• Emergency Communications Fund: $444,849

The Water/Wastewater Capital Projects Fund is by far the largest at $326,390,581, close to half the entire city budget, because it holds the bond-funded construction work.

Inside the General Fund, department by department

The General Fund pays for most of the services residents see daily. Here’s how the $67,601,395 is split across departments for FY2026, with the prior two years for comparison:

Public safety is the biggest General Fund commitment. Fire ($16,002,655) plus Law Enforcement ($11,181,587) accounts for about half of General Fund spending. The city says public safety funding is up 17% from last year, including nine added sheriff’s deputies and two new fire stations. Palm Coast contracts for law enforcement through the Flagler County Sheriff’s Office. The contract calls for 66 deputies in FY2026 and is budgeted separately from city employee headcount.

For comparison, the city lays out the Water/Wastewater Utility Fund ($88,214,320) by division this way:

Big-ticket projects, a $459 million capital plan

Palm Coast says it plans to put $459 million into capital improvements and facility upkeep in FY2026. The budget highlights major work including:

• Major stormwater system upgrades
• Water and wastewater treatment plant expansions
• New Fire Stations #22 and #26
• Park renovations
• Road expansions, including the Palm Coast Parkway Extension and the Matanzas Woods Parkway Extension
• $1 million for neighborhood street maintenance through the pavement management program
• $500,000 toward the saltwater canal dredging initiative
• $1 million in capital investment for a new Maintenance Operations Complex
• $1.3 million for economic development incentives
• Stormwater projects including the P-1 Weir replacement and K-Section drainage improvements

The city also reports cutting more than $500,000 in IT costs by restructuring platforms and using grants.

Staffing: 597 employees, 10 new roles

The budget funds 597 full-time positions in FY2026, up from 590. Officials describe the net change as about 7.5 full-time-equivalent positions after factoring in additions and removals. This count does not include the five City Council members or the contracted sheriff’s deputies.

The city lists 10 new positions and 3 eliminated positions. The added roles are:

• Fire Inventory Clerk, Fire Department (General Fund)
• Maintenance Worker, Public Works/Streets (General Fund)
• Maintenance Worker, Public Works/Streets (General Fund)
• Equipment Operator III, Stormwater Maintenance (Stormwater Management Fund)
• Equipment Operator II, Stormwater Maintenance (Stormwater Management Fund)
• Equipment Operator II, Stormwater Maintenance (Stormwater Management Fund)
• Equipment Operator II, Stormwater Maintenance (Stormwater Management Fund)
• Temporary Maintenance Worker, Stormwater Maintenance (Stormwater Management Fund)
• Utility Systems Operator II, Wastewater Treatment Plant 2 (Utility Fund)
• Trades Worker I, Facilities Maintenance (Facilities Fund)

On the reduction side, the city isn’t funding two positions in the Building Fund and one in Human Resources, and it is eliminating two positions in the General Fund and one in Internal Services.

The compensation plan includes a 2% cost-of-living adjustment plus merit increases averaging up to 3% across departments.

Requests that didn’t make it into the budget

The budget also shows $1,716,394 in requested positions and vehicles that weren’t funded for FY2026:

What the city owes

Palm Coast says it has kept debt low, pointing to its City Charter and a pay-as-you-go preference. The Charter requires voter approval for any unfunded multi-year contract longer than 36 months or above $15 million.

As of Sept. 30, 2025, outstanding long-term debt totaled $138,970,756. The city’s breakdown by loan:

By fund, the debt is held in the Utility Fund ($102,351,502), Stormwater Fund ($30,481,312), and the SR100 CRA Fund ($2,409,809), which totals $135,242,623, plus a $3,728,133 interfund loan from the Utility Fund to the Old Kings Road Special Assessment District.

The debt service schedule, principal plus interest, looks like this:

The FY2026 budget also anticipates a new revenue bond issue of roughly $275 million tied to construction of Water Plant #3 and expansions at Water Plant #1 and Wastewater Plant #1. That expected borrowing is consistent with the $286,394,000 shown as debt proceeds in the revenue section. The city notes its 2013 bonds are rated “AA-” by Standard & Poor’s and “AA” by Fitch.

How the budget became official

Palm Coast followed Florida’s standard two-hearing adoption process. The first public hearing took place Sept. 10, 2025, and approved a tentative budget of $696,444,327. The second hearing was Sept. 24, 2025, when the Council adopted the final budget (Resolution 2025-152) and set the final millage at 4.0893 (Resolution 2025-153). The documents were signed by Mayor Michael Norris, City Clerk Kaley Cook, and City Attorney Marcus Duffy.

For comparison, the prior year’s FY2025 budget was adopted at $421,551,721 and later revised down to $348,618,723, a reduction of $72,932,998 (about 20.9%), mainly because several large capital projects were pushed back.

The bottom line

Palm Coast’s FY2026 budget is really two stories laid on top of each other. The headline is a record $696 million plan. Under that, the day-to-day budget stays more familiar, the General Fund moves from $61.2 million to $67.6 million, while the overall total balloons because of a massive, bond-funded push into water and wastewater infrastructure. The millage rate dropped, yet rising values plus higher utility, stormwater, and trash charges mean plenty of residents will still feel the increase.

Later pieces in this series will focus on individual sections of the budget, public safety, utilities, capital projects, and more, as the city starts turning toward the next fiscal year.

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Disclaimer: The figures in this article are public record, taken from the City of Palm Coast’s official website and its Fiscal Year 2026 Annual Budget Report. This summary reflects the numbers as shown in that document. Any deeper, line-item detail beyond what the city publishes would require a public records (FOIA) request submitted to the City of Palm Coast.

Another budget series for Palm Coast will be published when the budget hearings have been completed, outlining the budget for the fiscal year 2026-2027.

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