The Longboat Key Town Commission agreed on first reading and public hearing Tuesday night to raise the town’s millage rate 10%, in fiscal year 2013-14, up from 1.8872 mills to 2.0760 mills.
It’s the first time the commission has agreed to raise the property tax rate since September 2010, when the commission raised the tax rate 25.8%, from 1.5 mills to 1.8872 mills.
One mill is equal to $1 for every $1,000 of assessed valuation.
For a Longboat Key taxpayer with a $500,000 home, the annual property rate tax increase is $94.20.
The decision covers all town expenditures this year and generates an additional $210,100 to the town’s General Fund. It also creates 95 days of operating revenue for Town Manager Dave Bullock to use in case of an emergency.
Commissioners agreed to raise the millage rate after Bullock explained rising pension costs called for an increase, either this year or the following fiscal year.
The state of Florida’s Division of Retirement is questioning the assumption rates for two pension plans the town is trying to close by the end of the month.
State officials believe an 8% rate of investment return for the firefighters’ pension plan and a 7.75% rate of return for the general employees’ pension plan is not attainable moving forward.
Because state officials are pushing for a 7% rate of return for both closed plans moving forward, Bullock decided to change his initial recommendation, which called for keeping the property tax rate flat.
Commissioners debated for more than an hour the pros and cons of raising the millage rate between 4.6% and 13.2%.
Bullock recommended a 4.6% millage rate increase last week that would cover the $400,000 increase in pension costs, but would not have covered all expenditures.
The commission agreed to designate the additional $400,000 to the town’s pension reserve account to pay for the anticipated pension increase. The millage increase agreed to on first reading pays for half of that cost, while the other half will be taken from the General Fund.
Mayor Jim Brown and Commissioners Jack Duncan, Phill Younger and Pat Zunz approved the 10% millage rate increase.
Vice Mayor David Brenner and Commissioner Terry Gans voted against the 10% millage increase.
Commissioner Lynn Larson couldn’t attend the meeting due to a family commitment.
Brenner wanted a higher millage increase and voted for a failed motion that would have set the maximum millage rate at 2.1372 mills, for a 13.72% millage rate increase.
Gans, though, wanted a more conservative millage increase and urged the town to approve an 8.7% millage rate increase.
Duncan and Zunz agreed to the 10% millage increase compromise Younger offered, although they both would have rather seen a larger millage rate increase.
“Any millage increase just galls me, but, unfortunately, we’re in a situation where we have to do something,” Younger said.
Duncan said the town “has to err on the side of having additional funds when we know pension liabilities are something we have to face.”
The commission will approve the fiscal year 2013-14 budget and millage increase on second reading and public hearing 5 p.m. Sept. 23, at Town Hall.
Contact Kurt Schultheis at [email protected].