Town preps for property value drop

Taxable property values will likely drop for the fifth year in a row on Longboat Key.

Town staff estimates that ad valorem property valuations for the 2012-13 fiscal year will drop by 3%, which could reduce tax revenues by approximately $255,000, according to a memorandum from Finance Director Tom Kelley.

Kelley told the Longboat Observer that although the town is preparing for a 3% drop in property values, staff expects the actual drop will be less. The memo and upcoming discussion are intended to give commissioners an overview of the current situation and keep them involved with the preparation of next year’s budget.

The town won’t have a clear picture of budget revenues until June 1, when Sarasota County Property Appraiser Bill Furst and Manatee County Property Appraiser Charles Hackney typically distribute property-tax estimates.

The town projects a $346,743 increase in its required general fund contributions to its three pension plans in the next fiscal year, which will most likely come from the $1 million that the Longboat Key Town Commission set aside for rising pension costs.

The town also typically budgets for a 10% hike in health insurance costs, amounting to approximately $100,000.

Revenues for the 2011-12 fiscal year from state-shared taxes and franchise fees for electricity and gas are projected to come in $300,000 below budget, with no known expenditure savings to offset the shortfall, the memo states.

The projections are based on the first four or five months of the current fiscal year and could reverse. Electricity and gas franchise fees could recover, somewhat, during the remainder of the fiscal year as the result of rising fuel costs.

The memo lists two potential additional revenue sources:

• Municipalities are authorized to levy by ordinance a public-service tax on the purchase of electricity, metered natural gas, liquefied petroleum gas and water service at a rate of no more than 10% of payments received by the seller of the taxable item. If levied on electricity, the tax could bring in approximately $400,000 annually.

• The town could also require the water-and-sewer utility system to pay for use of the town’s right of ways and pay a franchise fee. The town could generate approximately $500,000 by bringing in 6% of water and sewer revenue; however, the charges could affect utility rates.

The Town Commission held the millage rate flat for the 2011-12 fiscal year at 1.8872 mills. One mill is equal to $1 for every $1,000 of assessed valuation.

The commission will discuss the budget at its 2 p.m. Thursday, April 19 regular workshop.

A preliminary budget will be prepared after property-tax estimates are distributed.