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Cape city manager: Hold tax rate at current level

Hurricane Irma, need for SROs, impacting budget

July 26, 2018
Island Reporter, Captiva Current, Sanibel-Captiva Islander

If Cape Coral City Council follows the recommendations of the city's top administrator, the property tax rate will remain the same as will the city's tax on electric bills while the fire assessment rate will climb next year.

Cape Coral City Manager John Szerlag released his FY 2019 proposed budget on Tuesday.

The working document includes a recommendation to leave the property tax rate unchanged at 6.75 mils, keep the public service tax (PST) at 7 percent and increase the fire services assessment (FSA) cost recovery rate from 59 percent to 62 percent of the cost of operations.

"The recommendation to maintain the current rate is based on the financial impact Hurricane Irma had on the City's fund balance and emergency reserves," a release from the city states.

The City Council will take its first official action on the property tax rate Monday when it is expected to set the not-to-exceed millage rate.

The resolution also sets the city's rollback rate, the amount needed to raise the same amount of revenue, at 6.4402 mills.

Council has already set the not-to-exceed rates for lot mowing, solid waste, and stormwater fees.

With the budget process just getting under way, council members said they haven't reached any conclusions.

Mayor Joe Coviello said he is waiting to hear from the Bridget Review Committee and the upcoming budget workshops and see how they come together with recommendations.

Overall, though, Coviello said keeping the property tax rate the same is prudent for now.

"With what we dealt with last year not knowing whether or not the FEMA reimbursement is going to come, leaving the ball where it's at is a good start," Coviello said. "I'm very happy that most things are staying status quo, with only a slight increase to the FSA and the PST is going to stay the same."

The city's taxable values increased 8.49 percent this year. The proposed property tax rate of 6.75 mils, or $6.75 for every $1,000 of taxable valuation, will generate about $92.7 million in property tax revenue. The other two revenue sources, the public service tax and fire assessment, will produce an estimated revenue of $33.4 million, for the general fund budget.

These revenues will help address some of the city's financial challenges in the FY 2019 budget, officials said in the release issued by the city late Tuesday, with the first and foremost being the continued recovery following Irma last September.

"The City used $9 million of emergency reserves and $8.6 million in unassigned reserves. The City expects reimbursement for some of these expenditures from FEMA, however, it could take years for these funds to be reimbursed," the release states.

"While Hurricane Irma has impacted our FY 2019 budget, we will still be able to maintain a good level of service and keep Cape Coral one of the most affordable cities in Florida," said Szerlag said in the statement.

Coviello said the goal is to replenish reserves with the current millage in the event the city doesn't get reimbursed by FEMA, which makes budget planning all the more difficult.

"If the money comes, it will help us replenish the reserves to put us in a strong financial position," Coviello said. "We'll have to look at the budget from a perspective of where the money will go and how long it will take. I don't think anyone can tell what the process will be. It's in the hand of the government when and if a reimbursement will happen."

One councilmember, John Carioscia, said he supports the 6.75 rate considering the city hasn't gotten FEMA money yet.

"It would be foolish to cut the millage hoping FEMA comes through. We can always come back and make a cut if we're compensated, but now we're stuck between a rock and a hard place," Carioscia said.

The caveat to that, however, is that Carioscia wants to see to the dollar what the city has spent and what the budget for the fiscal year to start Oct. 1 will demand, especially with the enterprise funds such as community development.

"When all is said and done, what will we have in the pot to spend. When I get that, I can stand up and say I support it or say I want to cut it," Carioscia said.

Others agree it's too early to say what will happen although the goal is to keep the millage a low as possible.

"It's hard to make a determination until we go through the line items, and that's important to do before commenting if it can be the rollback rate," said Councilmember Marilyn Stout. "The stormwater is going to increase, and it almost has to because of utility expansion."

"Our reserves were depleted because of Irma, so for that reason I have no real heartburn over that. But we don't know what we can take and or what to put in," Councilmember Rick Williams said.

The budget contains a number of other challenges, officials said.

"One of these challenges required funding for School Resource Officers in all schools for the upcoming school year," the release states. "While the City partnered with the Lee County School District to share these costs, the net annual impact is $1.3 million to the City's General Fund."

"Even with the challenges presented by Hurricane Irma and hiring more than 20 school resource officers, we have managed to craft a budget that allows Cape Coral to move the City forward and remain economically sustainable," said Szerlag.

Williams and Stout said those challenges will be offset somewhat by the increase in property values.

"There are funds needed to do some of the things we're doing now. I hope some of the parks and rec budget will include some projects and not wait for the November referendum," Stout said. "If it doesn't pass we have to find a way to do some of the things that need to be done."

The budget, which includes $6.5 million for local road paving, $100,000 for new streetlight fixtures, $312,000 for median improvements and $520,000 for alley paving, also maintains some key ongoing capital projects.

Budget workshops are planned for Aug. 7 and Aug. 9, at 1 p.m. in council chambers, with an "if necessary" meeting set for August 23. Public hearings are set for Sept. 6 and 20 at 5:05 p.m., also in council chambers.

Monday's Council meeting will begin at 4:30 p.m. in the council chambers at City Hall, 1015 Cultural Park Blvd.



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