Are tax cuts squeezing services…yet?

Are tax cuts squeezing services…yet?

By Deborah Nelson
September 6, 2008

Santa Rosa property tax revenues have increased an average of 8.5 percent annually since Fiscal Year 2000/2001.

But County government slashed youth group services for the coming year, as leaders blasted State legislators for capping local government tax hikes.

The County is moving into a second year of lower tax collections after windfall increases spurred by hurricane recovery.

Commissioners adopted tentative budget and millage rate numbers at a September 2 hearing. During the meeting, local youth groups asked officials not to pass more maintenance costs onto sports associations.

The 2008/2009 proposed millage rate is unchanged: 6.0953 mills. But Commissioner Tom Stewart says he could be convinced to lower it further.

The millage is the number of dollars property owners pay per thousand dollars of assessed value.

In the coming year, 2008/2009, about $8.7 billion worth of county property will be taxed. That’s 6.5 percent less than 2007/2008’s $9.3 billion.

Santa Rosa government will collect $53 million in property taxes in 08/09, down about 6.5 percent from $56.7 million in 07/08.

County property tax revenues rose by an average of 8.6 percent between 2000 and 2006.

But in 2006/2007, the County collected a ‘windfall’ 34.7 percent increase – about $58.6 million (versus $43.5 million the prior year). The windfall was due to new construction after Hurricanes Ivan and Dennis.

County leaders did not ‘roll back’ the 06/07 millage to return some of that windfall to taxpayers, sparking local criticism.

This year, 07/08, County government collected less revenue – as forced by new Florida laws.

The June 2007 laws limit revenue increases to about three percent per year, plus new construction. They forced most local governments to roll back millage rates.

Santa Rosa’s legislatively-mandated cuts decreased 07/08 revenues 3.2 percent from the ‘windfall’ amount -- to $56.7 million.

For 08/09, the County will collect $53 million. That’s another 6.4 percent cut – but still 21.9 percent above pre-windfall levels of $43.5 million.

“That’s primarily due to Amendment 1 -- the voters extended the Homestead Exemption. That removed almost $900 million dollars from the tax roll,” County Administrator Hunter Walker noted.

Florida voters reduced the amount of property that can be assessed for taxing through an “Amendment 1” constitutional change passed in January.

About $883.9 million, including real and other property taxes, came off tax rolls as a result of Amendment 1, but another $242 million was added from new construction, Walker said.

The total proposed $111.4 million 08/09 budget is about 3.7 percent less than this year’s $115.7 million document. That includes operating costs, as well as debts, assets and other accounts.

Of that total number, it will cost $77.9 million to operate the county in FY 08/09 -- down about 4.2 percent from this year’s $81.4 million.

Florida’s 2007 tax reform law caps the amount local governments can increase property tax collections each year.

Because Amendment 1 pushed 08/09 collections under the new limit, the BOCC could have raised the millage rate to 6.3193 to meet the cap.

Officials say they won’t raise millage rates to compensate for Amendment 1 losses, but will seek ways to save money, including reducing 51 government positions this year and 31 last year.

The average salary of the top 20 county government employees equals $95,020, according to information published by the Independent News.

Commissioner Tom Stewart, who narrowly lost his seat in the August primary, says he’ll consider lowering the millage at the September 15 final hearing.

“On the fifteenth, unless I can find enough courage, I’m going to be voting to lower the millage even below 6.09, and wherever it falls is where it falls, and let the next Board determine where they make the cuts along with staff,” Stewart remarked.

“Because I heard the message, and the message is ‘we don’t care, we want tax relief.’”

Either way, taxpayers are unlikely to see much savings on this year’s tax bill.

A state-mandated hike in this year’s school property tax will likely erase tax bill savings. Schools account for over half of property tax bills.

Local school property taxes are increasing to make up for State sales tax losses. Florida legislators passed State shortfalls onto local school districts, who must collect a state-determined portion from property taxes.

“You’re going to see probably a status quo, maybe even an increase,” Commission Chair John Broxson noted. “In some cases you’ll see a substantial increase.”

In the meantime, Commissioners recently notified local sports associations they must pay more to use County parks.

The groups will now be billed for certain maintenance costs, including landscaping. Last year, the Board passed electricity bills onto park user groups.

Pace Athletic Recreation Association President Charles Baxley asked Commissioners to reconsider. He estimates the new charges will add 10 to 15 percent to operating costs.

“As far as Pace goes, our increase in expenses due to the electrical costs we absorbed last year increased our budget at the ballpark 10 percent,” Baxley told the Board.

“Unfortunately our only recourse was to raise the fees we charge the kids to play youth sports at our ballparks.”

Baxley asked the Board to find some other way to fund youth activities.

“I’m a strong believer our most precious investment is our youth. We really feel like you can’t go wrong in investing in the youth…we lost a lot of participation this year when we had to raise our rates. We’re going to lose more participation next year if we have to raise them. And every kid we turn away leaves him with idle hands and the very good possibility of him getting in trouble.”

“I’m not sure that our organization can handle this extra [cost]. It would be a shame if we had to close our doors, but that’s what might have to happen,” added Chumuckla Soccer Park Football Club President Robert Breland.

“To me it’s appalling, I’m sorry.”

The County Extension will also lose its Home and Community Educator agent, a job supporters say has been in Santa Rosa County since 1939.

Commissioners say service cuts are an inevitable result of tax cuts.

“I want to remind you all that 61 percent of the people of this county, 64 percent statewide, voted for a dramatic and drastic reduction in property taxes. If that’s not a mandate, I don’t know what is,” Commission Chair John Broxson noted.

Some officials said they’d consider reallocating franchise fee funds towards park operating costs.

Franchise fees are an extra charge, added to electricity bills, that go to County government.

Currently, 50 percent are allocated towards transportation capital funding; 40 percent towards parks and recreation capital expenses and 10 percent towards ‘economic development’ capital expenses.

Money earmarked for capital expenses must be used for new construction, and cannot be spent on day-to-day operations. That rule is subject to change by majority Commission vote.

“There is a franchise fee, and a portion of that is set aside for parks and recreation,” Commissioner Bob Cole noted. “And of course it is for capital, but I’ve seen what I thought was a good suggestion in putting a percentage of that towards the general operating revenue of these parks.”

The funds should be overseen by the county Finance Department, Cole noted.

“Why have we built all these parks if we’re not going to continue to support them?” he remarked.

Commissioner Gordon Goodin disagreed.

“In regard to the parks, I don’t feel like we’ve put a burden on them. I feel like we’ve provided tremendous, millions of dollars of assets to provide opportunities,” he said.

Goodin invited sports association officials to forward their budget to the County, but was skeptical about financial assistance.

“As Commissioner Broxson pointed out, the mandate is to reduce taxes, to reduce the budget,” he noted.

“So far we’ve heard a lot of folks, and I’m afraid this trend is going in the wrong direction, a lot of people asking for more money when the fact of the matter is, we’ve got to go the other way.”

“There’s less money coming in and we have a mandate to spend less, and to do more with less, or do less with less, I’m not sure which, probably less with less.”

Goodin’s philosophy does not appear to encompass ‘economic development’ expenses.

Commissioners, Monday, are expected to approve another $150,000 in franchise fees for a TEAM Santa Rosa marketing contract to help bring aerospace industry to the area. The contract contains no specific job creation requirements. Commissioners unanimously approved an initial $50,000 towards the contract in July.

Meanwhile, a proposed accountability contract to oversee and measure TEAM Santa Rosa’s performance and spending appears to have vanished from County radar after August Primary elections. TEAM Santa Rosa currently has no contract, agreement, ordinance or other legal relationship with Santa Rosa County government.

TEAM has received $2.17 million in county funding since 2005/2006, including a programmed $468,000 for the coming fiscal year. The Santa Rosa Chronicle has not been able to locate any jobs-creation figures for that time period, and none appear to have been collected.

Commissioner Don Salter criticized State legislators for shunting more schools funding onto counties.

“It’s kind of like the levees in New Orleans,” he remarked. “We keep reducing the amount of water that’s coming into those levees; and the State keeps adding more. And eventually, you lose ground.”

Salter notes the county has already reduced taxes.

“I think it’s important when we talk about, people expect tax relief,” he noted.

“We’ve done our share, and I know people don’t care. But they don’t understand, if the taxes are coming from us [or] if they’re coming from the school system.

Eventually, says Salter, State tax burdens may overwhelm local government operations.

“We can’t keep giving, every year, if the state continues to add on top, more than what we’re giving,” he observed.

“We’re losing ground. And it’s just a matter of time that we’re going to have to close down the County, and you’re still going to be paying the same amount of taxes that you’ve always paid, because the state keeps mandating that the school system raise the taxes.

“It’s a wonderful thing to sit in Tallahassee, and it makes me sick, because I’m a resident of this county and a native of this county,” Salter added.

“It makes me sick when we have state representatives who run campaigns on tax reform [and] ‘we mandated that we cut taxes.’ No, what they did, they took away Santa Rosa County residents’ revenue, made us cut taxes, and they added on state taxes on top of what we cut.

The final budget hearing is September 15, at 6 p.m.