On split vote, County Commission keeps Local Business Tax in place

Commissioners Moran and Ziegler vote for its elimination

This is a graphic that Commissioner Mike Moran showed his colleagues on June 8, 2021, as he proposed eliminating the Local Business Tax and reducing county funding support for the EDC of Sarasota County. Image courtesy Sarasota County

Almost exactly a year ago — on June 8, 2021 — Sarasota County Commissioner Michael Moran won the support of two of his colleagues in proposing to eliminate the county’s Local Business Tax by the end of the 2024 fiscal year — Sept. 30, 2024.

In the meantime, he called for reducing the tax by a third for the 2023 and 2024 fiscal years.

Moran consistently has contended that the Economic Development Corp. of Sarasota County (EDC) — which has been receiving the county’s share of the tax revenue — has failed to demonstrate a return on investment to justify continuation of the tax.

However, following a June 7 discussion, it turns out that the Local Business Tax not only will remain at its full level, but it will not be eliminated at the conclusion of the 2024 fiscal year.

Rob Lewis, director of the county’s Governmental Relations office, explained during a presentation to the commissioners that state law allows a local government body to raise or lower its local business tax by no more than 5% every other year. Therefore, Lewis said, the commissioners could vote to repeal the tax — as Moran proposed last year; they could vote to reduce it by 5% starting in the 2023 fiscal year, which will begin on Oct. 1; or they could keep it as it is.

The revenue the tax produces, Lewis continued, is divided among the county and the four municipalities on the basis of population, as outlined in Section 205.0315 of the Florida Statutes. However, a history of the tax — included in the June 7 agenda packet — notes that the Tax Collector’s Office is authorized “to withhold up to 20% of the annual gross revenues to pay for costs of collection, administration, and enforcement.”

This chart shows details about the Local Business Tax collections and allocations over the past several years. Image courtesy Sarasota County

The state law also says that the revenue received from a county tax “may be used for overseeing and implementing a comprehensive economic development strategy through advertising, promotional activities, and other sales and marketing techniques,” the document pointed out

As of April, that document added, 66% of the businesses registered for the tax in the current fiscal year are located in the unincorporated portions of the county; 18% of them are in the city of Sarasota; 8% in North Port; 6% in Venice; and 2% in the town of Longboat Key.

If the board members chose to reduce the tax, Lewis pointed out, the Cities of Sarasota, Venice and North Port, plus the Town of Longboat Key, would get less money for their budgets — unless the number of new businesses paying the tax offset a County Commission reduction in it.

In the 2021 fiscal year, according to a slide that Lewis showed the board members, the county received $507,085.70 from the Local Business Tax. The City of Sarasota’s portion of the proceeds was $12,201.14, while the City of North Port was allocated the largest share among the municipalities: $15,852.90.

This shows the breakdown of allocations of the tax revenue for the 2021 fiscal year. Image courtesy Sarasota County

The EDC’s budget for the current fiscal year includes $478,400 from the county’s portion of the Local Business Tax revenue. Lewis pointed out that the EDC had reduced the amount of tax funding in its 2023 fiscal year budget by one-third, in keeping with the motion the commissioners approved in June 2021. The figure in the 2023 budget is $321,600.

Lewis did note, “Each of the cities has their own individual local business tax,” whose revenue would not be affected by the County Commission’s decision.

These are the Sarasota County Business Tax fees as of March. Image courtesy Sarasota County

Still, Lewis did acknowledge that Moran was correct when Moran pointed out during the discussion that, between 2009 and 2024, the tax will have raised $40 million, but no more than 300 to 350 new jobs will have been created in the county.

Commissioner Michael Moran makes a point during the June 7 discussion. News Leader image

“I’ve had six years of fancy, glossy brochures” and hundreds of PowerPoint slides from EDC representatives, Moran emphasized, touting the potential that the agency could bring 5,443 jobs to the county. “Do we genuinely believe that?” Moran asked. He would argue, he said, that the answer “is a hard ‘No.’”

Commissioner Nancy Detert pointed out that the municipalities would be affected negatively by the loss of revenue as they prepared their budgets for the 2023 fiscal year, if she and her colleagues were to agree to reduce the tax.

Later, she stressed the fact that no county representative appeared to have asked leaders of the municipalities — or business owners — their opinion about eliminating the tax. “I think it would have been nice if we would have talked to them.”

Moreover, Detert said, “One of the reasons we have the tax” is to cover the county’s expenses in regulating and inspecting businesses. “Florida is kind of the fraud capital of the world,” she continued, “so the public needs some reassurance that their businesses are legitimate businesses.” If the board repealed the tax, she said, that would hurt the county.

Nonetheless, Moran responded, “I’ve made my frustrations crystal clear over the years. … I just can’t, in good faith, support a tax on our local businesses,” especially considering the supply chain issues and inflation with which the businesses are contending right now. He again cited the lack of “a clear public purpose” for the funds, as well as easily understandable results from the EDC’s expenditure of the money.

This EDC of Sarasota County website banner provides statements about what the organization does. Image from the EDC

Firm stances

“I support full repeal of this,” Commissioner Christian Ziegler added. “I never really understood it. … There’s probably a lot of people operating without … even knowing about the tax. … I’ve yet to hear a good reason why we’re taxing our businesses and a compelling reason why we need to continue doing that.”

Further, Ziegler pointed out, if the board eliminated the tax, that could be used as a marketing tool to bring businesses to the community.

Commissioner Ron Cutsinger then voiced his opposition to repealing the tax.

Commissioner Ron Cutsinger. News Leader image

Noting that the EDC had a waiting list for its recent luncheon at the Hyatt Sarasota, with approximately 500 people in attendance, he added that “business leaders across the county” are showing a high level of enthusiasm for the EDC, with its new executive director, Lisa Krouse. EDC staff members are “reaching out and helping companies that want to be here and working very diligently with existing companies to help them,” Cutsinger continued.

Business owners want to keep the tax in place, he said. Problems with the EDC are “in the past,” Cutsinger pointed out.

“You are much more optimistic than I am,” Ziegler responded.

Still, Ziegler said of Krouse, “I think Lisa does a great job,” along with the EDC board chair, Joe C. Hembree, vice president of Hembree & Associates, a commercial real estate and property management firm in Sarasota.

Still, Ziegler said, “I don’t think anyone’s owed any tax.”

Detert then noted that she paid the tax for 25 years, and it cost her $25 to $50 on an annual basis. “If that’s going to put you out of business,” she said of the fee, “you don’t deserve to be in business. And I don’t think it’s a great thing to advertise that we’re going to save you $8,” she added, referring to Ziegler’s marketing comment.

Referencing the history of the tax, which was provided in the agenda packet for the June 7 meeting, Detert noted that community business owners came to the County Commission in 1991 and asked for the tax, to raise funds to help promote the county to potential new businesses. In years past, she pointed out, the county was not “overflowing with businesses.”

Ziegler finally made a motion to eliminate the tax, and Moran seconded it. It died on a 2-3 vote.

Then Cutsinger made a motion to leave the tax as it is, and Detert seconded it. Chair Alan Maio joined them in voting for the motion, while Moran and Ziegler opposed it. Last year, Maio sided with Moran and Ziegler in voting for its eventual elimination.