Town residents who didn’t buy or sell a home or condominium in the past year can finally gain something from Manatee and Sarasota counties’ superheated real estate market, beyond paper gains in property values.
Based on early looks at property-tax millage rates proposed by Longboat Key leaders for the next budget year, homesteaded owners could see a reduction in what they owe the town in 2023. And even owners of non-homesteaded properties could see reductions while the town potentially gains revenue against its proposed expenditures.
"We think there is potential next year and the year after that we may need some of that to make up for a potential downturn that may be occurring," Town Manager Tom Harmer said.
Although the final millage rate will be set in September, Town Commissioners on July 1 will set a not-to-exceed rate, likely dipping below $2 per $1,000 of taxable value after staying unchanged at 2.114 since 2017. Town millage hasn't been below 2 since fiscal year 2013.
Town staff is proposing a rate of $1.95 per $1,000 in taxable value, though some town commissioners are informally leaning toward 1.99 to ensure adequate reserves in what could be an uncertain three-year economic stretch.
"We felt like that was a good balance because of the significant increase in taxable value to find a rate that would still be safe for the town to maintain its fiscal sustainability over more than a one-year period, but a three-year plus period," Harmer said.
The catalyst to the potential tax reduction lies in how state regulations cap how sharply homesteaded properties can gain taxable value, no matter how hot the local market gets. Even in a year with massive increases in median sales prices, homesteaded values are capped at 3% and non-homesteaded properties are capped at 10%.
In comparison, the sale prices of single-family homes in Sarasota County rose from $380,000 in April 2021 to $515,000 a year later. Town property values are estimated for the upcoming tax year at more than $7 billion, up 13.5% from 2021.
In the Manatee County portion of town, 29% of properties are homesteaded and 38% in the Sarasota County portion.
If the town left the millage rate unchanged, at 2.114, about $1.76 million in additional tax revenue would flow into the operating budget. At 1.95 (a 7.8% decrease), that figure falls to $608,917. At 1.99, it's $890,000.
The proposed 2023 budget calls for $18.3 million in revenue, $13.7 of it from ad valorem taxes based on 1.95 millage. Expenses are budgeted at $17.8 million.
According to figures provided by the town, a homesteaded resident of the Gulfside taxing district would pay about $185 less in 2023 on a $1 million property, accounting for beach millage, operating millage and the millage rate levied for the rebuilding and remodeling of the town's two fire stations. A Bayside resident would pay about $100 less.
Non-homestead property owners would see smaller reductions, ranging from less than $10 to about $58.