Spending Cap for the "City"
Myth: We pay higher taxes because we are a city. Fact: This one’s easy, because I also own property in the unincorporated area of Collier County on Mainsail Dr. The first tax receipt is on my condo on Marco Island. The second tax receipt is on my condo in Collier County. As you can see, the Marco mill age rate is 13.5539. The County millage rate is 13.8877.
The “county” area takes in Isles of Capri. If I could move my Marco Island condo across the bridge and keep the same assessed value, my property tax would go from $3362 to $3444. We are protected from the higher taxes just across the bridge because we are a city. You can figure the “county increase” yourself. Just divide 13.8877 by 13.5539 and multiply the result by the total amount on your property tax bill.
Myth: Our city runs inefficiently and wastes money. Fact: When Marco Island became a city three years ago, it had about $2 million either in the bank or coming in from various sources. Since that time, the city has saved about $4 million, and has $6 million saved. Myth: The city only saved money because we had a spending cap in place. Fact: Sorry, this one’s wrong, too. The spending cap was no help whatsoever, because it didn’t go into effect until this year (or more specifically, the budget of 2001). The city saved the money with no help from the cap.
Myth: The city controls most of our property tax. Fact: The city has very little control over your property tax. Remember, your property tax is made up of two parts – the “assessed value” of your property and the “millage rate.” The “assessed value” is controlled by the County. The city has no control whatsoever over the “assessed value.” Now look at the property tax stubs above (or look at your own). Only millage rates are shown – because the city only controls millage rates. Or should I say, only one millage rate. This is the rate labeled “city,” and it’s currently 1.5087. This is the only part of your tax bill controlled by the city. All of the other millage rates, plus all of the assessed value, are controlled by other entities. The city just reduced the “city” millage rate from 1.65 to 1.5087, after much discussion. I saved about $37. Yes, $37 is important, – but I bring up that figure to point out that sometimes we use a sledgehammer to kill a fly. Note: I will be quoting the Florida State Constitution and applicable statutes in some of the following questions. To look them up yourself, go to www.leg.state.fl.us and click on the applicable Title, Section, or Chapter. Myth: We need a spending cap because there is no protective cap on taxes. Fact: The “assessed value” is capped at the lesser of 3% or the increase in the CPI (less than 3% last year), but only if you “homestead” your property. (Article VII, Section 4.c.1 – Florida State Constitution)
Myth: This protection is Florida law, and can be changed by the lawmakers in Tallahassee. Fact: This protection is in the Florida Constitution, and can only be changed by a vote of 2/3 of the voters voting in that election. (Article XI, Section 7 – Florida State Constitution)
Myth: We may be protected on the “assessed value” side, but not on the “millage rate” side. Fact: Actually, this is almost true. We are “protected” by a 10 mill “ceiling.” But since we are only at 1.5 mills, that would be a huge rise in our millage rate. (Article VII, Section 9 – Florida State Constitution)
Myth: OK – then we’ll put a cap on our millage rate. Fact: Sorry – that’s against the law. Our charter is prohibited from limiting the City Council’s authority to levy property taxes. (Title XIV, Chapter 195, Section 195.207 – Florida State Law) Myth: We should lower our millage rate even more – from 1.50 to 1.43, for instance. Fact: Our taxes are so low that we are sitting just above a financial “floor” put there by the state. The “floor” is currently $8,523.247.31. If we don’t collect at least that much in certain revenues, the state will withdraw $2.2 million in revenue sharing. Right now, we are about $360,000 above the state’s “floor.” Another millage rate decrease would probably put us below the state’s figure, and the $2.2 million would be withdrawn. Are you sure you want to do that?
Myth: The spending cap protects us from higher taxes and from borrowing by the city. Fact: The spending cap protects us from spending. Period. That may or may not translate into lower taxes or reduced borrowing. The city has just decided to borrow almost $1 million to replace the bridge on Barfield just north of Cedar Bay Marina. The spending cap is in force, but it didn’t stop the city from borrowing money to replace this bridge, even though it had enough money in the bank to pay cash. Myth: The spending cap will keep our city from going bankrupt. Fact: I called the Florida League of Cities, and spoke with Lynn Tipton. If you want to check on the following information, you can call her or Ken Small at 1-850-222-9684. I found out that cities in Florida had indeed declared a “fiscal emergency,” but it was due more to very poor fiscal practices than anything else. The emergencies were caused by everything from embezzlement to poor planning, to bad financial decisions, to simply “nobody minding the store.” The biggest embarrassment of all was the famous Miami fiaso about 5 years ago, when the Miami City Council suddenly woke up and discovered a $68 million debt they didn’t know existed. Would a spending cap have helped these folks? Aside: I have heard all about what all of you went through during the last few years. I have heard the bitterness and recriminations. Let’s not be so angry that we put on blinders and wind up worse off than before. Myth: We may have a spending cap, but if we get a grant from the state, county, or district, we can spend it. Fact: Sorry – the spending cap doesn’t care where the money comes from. If the grant comes in under the cap we can spend it. If it pops up above the cap, we can’t. Myth: OK – if we get a $50,000.00 grant to repair storm drains, and it’s above the cap, we’ll just reduce the general budget by $50,000.00 and spend it on something else – like landscaping or road repair. Fact: Wish we could. Grants, however, are pretty specific. We not only have to use them for exactly what we applied for, but we are usually required to apply the money in exactly the way the granting authority wants. Therefore, we will usually have to give the grant back to the grantor. Myth: The cap won’t hurt us if we borrow money. Fact: The cap makes us “hurt” twice as bad. Take the Barfield Bridge as an example. The City is going to borrow about $1 million to replace the bridge. We are paying about 5% interest. The money in the bank is earning about 5%, so the interest on the debt is a wash. But the impact of the bridge on our budget will be double what it would be without the cap. When Bill Moss writes checks to the contractors in 2001 and 2002, that money is “spending” and will limit other things the city could be doing under the cap. Then we have to pay $95,000/yr for 15 years to service the debt – and when Bill writes that $95,000 check each year, that’s also “spending” and will again limit the City – even though we are getting nothing in return. So the cap makes the bridge impact our budget twice – once when we build it and once when we pay for it.
Myth: Our city government will run more efficiently under the spending cap. Fact: Our city government is encouraged to run less efficiently under the spending cap. If Bill Moss doesn’t spend all the money he is allowed to spend, he doesn’t get that amount + 3% + COLA (2.4%) next year. What’s the responsible thing to do? Save the City $2 million, and next year get along on $2 million less, or spend the maximum to make sure you have enough money for unforeseen contingencies? Remember, the City saved about $4 million over the last 3 years, with no help from the spending cap, and we have lower taxes than the County. But the city had flexibility, since the cap wasn’t in force. The spending cap takes away that flexibility, so Bill has to take that into account. He can’t see into the future – no one can. If he comes up short, due to the spending cap, we will blame him – not the cap. What would you do?
Fact: Sorry – I forgot this one when I was talking about millage rates. Naples’ millage rate is less than ours. Ours is 13.5539. The City of Naples is 13.3121. But the tax base of Naples is almost double the tax base of Marco Island. (Abe Skinner)
Myth: The City Council can borrow money without telling us. Fact: The City Council must hold a public hearing before borrowing money against the property tax revenue. That is your chance to listen to their reasons for the borrowing, and then to express your opinions. True, they can ride roughshod over your objections – but that is why you have the vote, the petition, and, as Jim Curran reminded them, the recall. I guess the question is: just how timid are we? Do we want a spending cap to do our work for us, or will we accept the responsibility of being the “bad guy” and stepping up to the speaker’s podium? From what I’ve seen so far, we don’t seem to be a “timid” bunch.
Myth: The City Council can raise our millage rate (to 10 mills max) without telling us. Fact: The City Council has to declare that it is going to raise the millage rate, must put a public notice in the Naples Daily News, hold a public hearing, and do other things as dictated by the state. (Title XIV, Section 200.065 - Florida State Law
Myth: The City doesn’t have to balance its budget. Fact: The City must balance its budget every year. (Title XII, Section 166.241 - Florida State Law) Myth: We can’t limit borrowing by the City Council. Fact: Oh yes we can!! The city of Palm Coast has forbidden its city council from borrowing more than a certain amount or borrowing for more than a certain period of time without a vote of the electorate. (www.online sunshine.com) Nothing like an election to alert the electorate!
Myth: No other city in Florida has a spending cap but us. Fact: Here again, I called the Florida League of Cities, and was told by Lynn Tipton that to their knowledge, no other Florida city had a spending cap. She was talking about the cities they heard from on a regular basis. She said if another city had a spending cap, it could be limited to an ordinance.
Enough about the spending cap. I know that it sounds like I’m “anti-cap,” but, in fact, I’m neutral. I don’t care if you keep the cap, modify it, or get rid of it. GEORGE LESTER
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