City tax rate to drop a microscopic amount

Photo by Norman Schimmel

Florida governments for the past several years have kept a race running, in a manner of speaking, between declining income and reducing expenses. Revenues declined because politicians refused to raise tax rates to compensate for the declining property tax rolls. Instead, the politicians slashed payrolls and services to keep a fiscal balance.

Now we’ll see what happens when the tax roll stabilizes.

The City of Sarasota’s overall tax roll increased by 0.44%, which translates into a $151,575 increase in ad valorem tax revenue.

That is a drop in the bucket for the $56.9 million budget proposed for Fiscal Year 2013. Of that figure, $16.2 million is from property taxes. It is the first time in eight years property values have increased.

The city commissioners responded by adding $168,000 in expenses during the budget workshops on Tuesday and Wednesday, July 17 and 18. They started the workshops with a $3.3 million deficit, and they ended with the same amount. Finance Director Chris Lyons indicated he plans to use money from reserves to cover the shortfall.

“There is $2.9 in the revenue stabilization fund right now, and I’d propose using $1.8 million of that,” said Lyons.

City Commission Terry Turner said, “I’m comfortable spending about $2 million out of reserves.”

At the end of the workshop, the commissioners set a preliminary millage rate that will be used to calculate the Truth in Millage postcard taxpayers will receive next month. The property tax rate for the city will actually go down a minute fraction, because the amount necessary to pay for debt service on bonds is decreasing.

The actual tax is the product of your property assessment, calculated by the tax appraiser, and the millage rate adopted by the City Commission. In other words, if the tax rate is flat, but your property assessment rose, you’ll pay more in taxes for FY 2013. For the bulk of the taxpayers in the city, this will mark the first increase in taxes – in dollar terms – in almost a decade.

Looking at the future, dimly

Most of the two-day budget session was spent on tweaking at the margins. The $168,000 in add-ons were allocated to weekend restroom cleaning at Whitaker Gateway Park, Lido Beach restroom maintenance during spring break, hiring a planner on contract to pick up work left over from city retirees and putting $43,000 into code enforcement.

At the end of the workshop, the commissioners stood back to look at the bigger picture. Pensions are a major and growing burden. The city saved about $1 million from the police pensions for FY 2013, but that situation remains in flux.

“In a formal meeting, we should have a discussion about our assumptions,” said Turner. “I don’t know of anybody who thinks long-term equities will return 8%.”

Turner and Commissioner Paul Carragiulo agreed one answer is – more people. And because the city is mostly built out, “more people” is a code phrase for higher density. But changing the future land-use plan is no guarantee, said City Commissioner Shannon Snyder. “You could double the density, but what if nobody moves in?” he said.

The real problem, said Snyder is the enormous number of people coming into town every day who do not pay city taxes. “Everybody in the region comes downtown, but probably 80% of them live in the county. People are going to say, eventually, ‘I’m tired of toting the note for their fun,’” said Snyder.

Lyons noted a $1 billion project would bring in about $3 million in annual property tax revenue.

Snyder pointed to the now-vacant Quay property at U.S. 41 and Fruitville Road. “It will be somewhere around 2019 before we see any dollars come out of there,” he said. “We need to be racing towards regionalization in many of our activities. We can no longer do some of these things on our own.”

The city over the years has regionalized some activities. Sarasota County is now responsible for fire, rescue and stormwater services. It had been responsible for many city parks, but last year, the County Commission formally withdrew from that management to gain some savings of its own.