More Santa Rosa revenue cuts looming

More Santa Rosa revenue cuts looming

By Deborah Nelson
February 19, 2008

As local taxing authorities like Santa Rosa County move into this year’s budget season, lawmakers must decide how far to allow Florida’s recent Tax Reform Amendment to impact incoming revenues.

The constitutional amendment, passed January 29, expands Homestead, non-Homestead and Tangible Property tax savings and allows homeowners to transfer Save-our-Homes reductions to new homes.

In total, it would exempt about $1.15 billion worth of Santa Rosa property from taxation.

That translates to a $7 million loss in county revenues, or 12.3 percent of county ad valorem tax income, according to Property Appraiser Greg Brown. Brown estimates the new Homestead Exemption will save Santa Rosa County homeowners an average $153, at this year’s millage rate.

But legislative caps on local revenue, passed last year, could end up working to offset Amendment cuts. The caps establish maximum annual revenue levels for local taxing authorities.

They were designed to limit local government income hikes, adjusting millage rates accordingly. But this year, the caps could have the opposite effect.

If Amendment cuts reduce local revenues enough to bring them below cap allowances, a ‘roll-forward” millage rate increase would kick in until tax revenues rise to meet cap levels. Taxpayers would lose a portion of Amendment savings.

At this year’s millage rate, homeowners paid 6.0953 dollars for every $1,000 in assessed home value. Brown estimates next year’s ‘roll-forward’ millage at 6.72697.

But officials have the option of lowering the roll-forward rate, by majority vote, to allow Amendment cuts to fully take effect.

Santa Rosa Commissioners discussed the issue at Monday’s Committee hearing.

“Since the people of Florida and the people of Santa Rosa County have spoken on property tax reduction, our role in this is clear,” Commissioner John Broxson read from a prepared statement, at Monday’s Committee meeting.

Broxson advocates that County government absorb Amendment cuts.

“We should transition as smoothly as possible, to cut expenses for all county departments in the upcoming fiscal year, beginning October first,” he noted.

Broxson says the Board will concentrate efforts on maintaining citizen quality of life.

“Since we must operate with considerably less revenue, we are obligated to our taxpaying citizens to do so with as little disruption as possible,” he remarked.

Officials say they’ll prioritize next year’s budget in three sections: with constitutional requirements taking precedence; followed by contractual obligations like debt service and active contracts; and “everything else that is discretionary,” bringing up the rear.

“Before we go any further, I just need to know, how much money do we really need to do what we are legally obligated to do, and where does that leave us,” Commissioner Gordon Goodin remarked. “I think that will help everybody else in the discussion…to figure out what are we going to provide in the way of services. And then we prioritize.”

“I can’t figure out in my mind how much of this is rhetoric, and how much of it is real,” he added.

Official reaction to the Amendment, at Monday’s hearing, focused on Tallahassee.

“I never want to miss an opportunity to let everyone know how impressed and how excited I am about Big Brother down in Tallahassee and the activities that they’ve been going through for the last couple of years,” Commissioner Don Salter remarked.

Tax cuts, Salter said, should have started at the state level.

“We have said basically from day one that we work hard to keep taxation in this county low. And I think our record shows that,” he noted.

“But to have leadership coming out of Tallahassee that goes on television and has Town Hall meetings criticizing local government for not tightening our belt, being out of control, is hypocritical, when the Governor turns around and submits a budget, last week, $70 billion dollars, where he is recommending raiding the trust funds and increasing school taxation to where 40 percent of your savings will automatically go away.”

Governor Charlie Crist’s proposed $70 billion budget totals about $870 million below current state spending. It would tap $1.1 billion in reserve funds, including tobacco lawsuit trust funds; and increase revenues through additional Lotto gambling. Crist’s proposed $338 million in added schools taxing could reduce Amendment savings by about 40 percent in 2009, according to a Miami Herald report. The budget is expected to encounter a difficult journey through Legislature.

“Where’s their seven percent rollback [like the one] they mandated to us last year,” Salter remarked, “it didn’t happen.”

“Where is putting something on a referendum? Why don’t they put something on the referendum in November [like] ‘do you want to reduce your state sales tax by 30 percent?’ ‘Do you want to reduce your state gas tax by 30 percent?’ ‘Realtors, do you want to reduce your doc stamps by 30 percent?’ Put that on the referendum and let people vote on that as well.

“It’s hypocritical for our legislature to beat up local government when they’re sitting down there fattening their budget at our expense, and at the expense of taxpayers in Santa Rosa County. It is wrong and it is hypocritical.”

Commissioner Tom Stewart said he’ll vote in favor of Amendment tax cuts, but defended local spending.

“I’ve been sitting here for two years trying to figure out how to go out there and tell people what our problems were, and trying to tell them what the budget that we’re dealing with meant, what the recovery from the hurricanes meant,” he remarked. “I don’t think I got anywhere. I don’t think anybody believes me.”

Stewart predicts County government will absorb Amendment cuts.

“I can tell you what I think’s going to happen this time, just so everybody knows up front,” he remarked. “We’re going to lose $8 million. We might lose as much as $10 million, off of an $80 million dollar budget…depending on how much state revenue-sharing goes down this year, and it will be going down, because they’ve got to pump more of the sales tax money into the schools.

“And so this Board’s going to have to deal with a maximum of probably about a $10 million dollar reduction in our budget this year, and we’re going to deal with it. We’re going to make the cuts necessary to bring us in line with the dollars we’ve got available to us.”

Officials say they fear local government will feel the blame if new school taxes take a bite out of Amendment savings.

“One of the possibilities we face is the perception property taxpayers might have, that the cutbacks we might accomplish in our budget will in effect provide relief, which they will expect overall on their next tax bill from the tax collector,” Broxson noted.

“The reality is that this might not happen as expected. It could come as a surprise to many that the Governor has released his budget proposal to the Legislature which will require a substantial increase in school funding from local property taxes, through required local effort. This increase by the legislature and the Governor could wipe out or at best diminish any expected tax relief.”

“The state’s going to raise it to where this tax savings that the general public sees on their tax bill goes away,” Stewart remarked. “And then they’re going to blame us again for it, just like they have for the last four or five years, and that’s just the way life’s going to be.

“But I can promise you one thing, I’m voting to have a budget that [cuts] that $8 million dollars…now, we don’t have to give that…our millage rate could roll forward to give us the same money by another action that the State Legislature took last year.”

Florida’s Legislature capped local revenue collection in June, 2007.

It forced local governments to roll revenues back to 2006 levels, plus another 3, 5, 7 or 9 percent cut, depending on increases since 2001 (Santa Rosa had to shave 7 percent off last year’s revenues, after the rollback).

Starting in 2009, taxing authorities must cap growth at new construction and per-capita income levels (currently four to five percent, statewide, according to Florida Tax Watch).

“That rollback rate from last year of seven percent carried with it a stipulation, that that’s our basis for the future,” Stewart remarked.

Further reductions this year, he predicts, may impact future revenue levels.

“Whatever we roll back to this year, is our basis for next year,” Stewart pointed out.

“We’re fixing to spiral. And we’re going to spiral until Eglin and Hurlburt’s missions change, and we get that huge influx of people coming in here and our economy turns. And even then, I’m not sure it’s going to turn enough to get county government back on its feet.

Nevertheless, says Stewart, he’ll vote to make Amendment cuts happen.

“It’s coming, people have spoken, and we’re not going to argue about it any more,” he remarked. “I’m going to vote to roll that millage back to whatever we’ve got, in fact it’s probably going to be at 6.09 or 6.0. because that’s what people have spoken, said they wanted us to do, that’s what we’re going to do.

“Can we continue to provide the same quality of life services for $10 million dollars less than we have in the past? We’re going to do our best.”

In coming months, the BOCC will hold pre-budget workshops with constitutional officers.