Commissioners said no to reducing the level of publically visible service for the upcoming fiscal year.
They also said no to increased department expenditures, new positions and wage increases (except for the police bargaining unit).
But they couldn’t say no to the possibility of a millage increase during a special budget workshop June 16, when they directed town staff to prepare a budget with a 2.1817 maximum millage rate — an increase of 0.1057 mills over the current rate. For a non-homestead property valued at $500,000, the increased rate amounts to a tax bill that is $52.83 higher than it would be if the commission held the millage rate flat.
The cap for tax increases on homestead properties is 1.5% statewide this year.
Last month, ommissioners directed town staff to prepare the budget with a flat millage rate. So, why the increase?
The town froze its three pension plans over the past year and continues to wrestle with how to pay down approximately $27 million in unfunded liability debt.
“This pension is going to be here the next year and the year after that and the year after that. And I’m not going to be able to hold operating costs at the same level,” Town Manager Dave Bullock told commissioners.
Bullock warned commissioners earlier this year that the town would face higher pension costs “for the next three critical years” until it begins to pay down pension liabilities. Those costs will rise, in part, because the town is working to lower the estimated rates of return to 7% for all pension plans.
The town needs an additional $412,322 to fund pension increases for the upcoming year, an amount that a 0.0863 millage increase would generate.
Bullock told the commission the 0.1057 millage rate would generate an additional $505,000, allowing the town to achieve its 90-day target emergency operating fund. Holding the millage rate flat at 2.0760 would drop the total fund balance to 80 days’ operating expenses and leave the town with a $67,154 budget shortfall.
Bullock recommended the commission proceed with a 2.1817 maximum millage or with a 5% Payment in Lieu of Taxes (PILOT) on the utility system that would generate an additional $361,550 in revenue in addition to a 0.0300 millage hike that would generate $143,450.
At a minimum, Bullock recommending increasing the millage rate to 2.1623 mills to cover pension costs.
George Spoll spoke against increasing utility fees to fill budget holes.
“You raise the millage rate and it’s tax deductible. You raise the cost of utilities and it falls more directly on those who live here full time, and I think that’s the wrong way to go as a citizen,” he said.
Commissioners reached consensus by a 6-1 show of hands to proceed with a 2.1817 maximum millage.
Commissioner Lynn Larson said the commission could set a rate that’s lower than the maximum millage when it adopts the budget in September.
“Between now and the end of September, if we were to have any kind of storm or anything unexpected, we can have a cushion for that,” she said.
Commissioner Phill Younger made a motion, which failed, to direct staff to prepare a budget with a 2.1623 millage rate, acknowledging that it would leave the town short of its 90-day target.
“I realize 90 days is important, but I also am optimistic that given continued increases in ad valorem taxes over the next few years that we may have the opportunity to grow into that fairly shortly,” he said.
On May 30, the Manatee and Sarasota County property appraiser offices estimated a 5.4% increase in island property values — higher than the 3% increase the town expected. Based on the town’s current millage rate of 2.0760 mills, the town would receive an additional $467,816 over last year’s budget.
However, Bullock told the commission last month that rising “uncontrollable expenditures,” including pension costs, have created a deficit.
The commission will set its maximum millage at its July 7 regular meeting and adopt its final budget at two meetings in September.
Here’s how the recommendations in this year’s budget could impact you:
• The owner of a non-homestead property worth $500,000 will have a tax bill that’s $52.83 higher than it would have been under the current millage rate if the commission adopts a 2.1817 millage.
• Owners of homestead properties won’t see their tax assessments rise by more than 1.5%, as mandated by the state based on the Consumer Price Index (CPI).
• Publicly visible levels of service will not be impacted.
• The town could charge to perform notary services and lien research.
Here’s how the recommendations in this year’s budget could impact town employees:
• No new positions
• No wage increases, except as required by the town’s contract with its police union
• Employees will maintain current certifications but will not undergo additional training to control costs
Contact Robin Hartill at [email protected]