It's time to talk about tax rate and reliance on cruise ships
The city of Key West
is in a curious position when it comes to the annual rite of assembling
and approving a budget.
Many municipalities
would envy our prosperity — a tax base that rockets upward each year,
fueled by our seemingly unstoppable real estate market and fattened with
new construction despite our limited opportunities for development.
Yet the budget
hearings just concluded were still difficult, as the city commission and
management attempted to find a way to meet all the city's needs, keep up
with rising costs — and still keep the tax rate at the magical number
called rollback.
Rollback is a goal
that many public officials espouse. It was instituted to keep municipal
officials honest about their taxing decisions through a state law called
Truth in Millage (millage is another word for tax rate). Basically, if
assessments go up and you apply the same tax rate, you will collect more
money. So before the Truth in Millage law, officials could claim that
they were not raising taxes — but your average property owner was still
paying more.
Rollback is the
reality check — it takes the average amount of assessment increase, then
calculates the rate needed to collect the same total amount in taxes. If
you apply rollback, you get a flatline budget.
The problem is that
expenses generally are not flatlined — employees expect to at least keep
up with the consumer price index, insurance costs have no rollback
requirements and of course those pesky citizens keep demanding more
services — not to mention emergency expenditures such as the homeless
safe zone or security improvements for the port. We should still be
constantly examining our public payrolls to make sure we are getting the
most efficient, effective services possible. Employees may be willing to
trade a pay increase for more time off, or vice versa.
And there's the great
divide created by the Save Our Homes amendment, a divide that grows
greater each year. That provision in the state constitution protects
homeowners with a homestead exemption by limiting increases in the
assessed value of their property to a maximum of 3 percent each year.
Commercial and rental properties, and homes occupied seasonally, have no
such protection.
The nettlesome subject
of cruise ship disembarkation fees was also on the table, with
commissioners considering a 50-cent increase. The rate was increased
from $8 to $10 in January, with a 63-cent surcharge for security tacked
on. Meanwhile, the long-awaited quality of life study is finally under
way, with results expected in February. That study may well have some
important findings or recommendations on the city's approach to the
cruise industry.
Commissioners are
certainly wise to consider this source of income and to ensure that the
city receives every penny it deserves for port security, police, public
works, administrative and other costs associated with hosting a huge
number of cruise visitors each year.
But the city also
should be careful about relying too heavily on a single component of the
tourism industry. The cruise industry appears to love Key West but, as
we learned with construction on the Outer Mole this year, the income can
disappear overnight. Any kind of unforeseen event could lead to an
abrupt halt in that income, and leave the city holding the bag. The
land-based lodging industry also is affected by greater economic forces,
but even if they have lower occupancies or discounted rates, they will
still be here, employing locals and paying property taxes and utility
fees. A guesthouse or resort hotel cannot simply pull anchor and sail
away.
For now, commissioners
have set a rate higher than rollback. There's no need to panic —
commissioners have to set some rate for preliminary tax notices and they
are allowed to reduce it before their final approval of the budget in
September. By the time those public hearings roll around, most decisions
will have been made so citizens who want input on these matters would be
wise to contact their city commissioners now. Tell them how you feel
about how much we pay, what services we receive, and how much of our
fiscal security should be riding on a single segment of our already
concentrated economy.
The city has recently
been spending a lot of time with various plans and studies but in the
end the only plan that matters is the one that determines how many
checks are cut and for how much.
— The Citizen |
