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City council considers taxes, fees for revenue

By Staff | May 28, 2009

New taxes and fees proposed to offset Cape Coral’s reliance on property tax revenues could lead to a reduction in the millage rate, but they would still leave the general fund budget more than $3 million short of the city council’s target of $116.4 million.
Council members weighed the pros and cons of levying new taxes and fees Wednesday during a budget workshop.
A 10 percent public service tax tacked onto electric bills, a communications services tax increase from 4 percent to 5.1 percent, and a fire services assessment were among the proposed new revenue streams.
The new fees would take in an estimated $7.5 million, $1 million and $25 million, respectively, and lead to a reduction of 3.304 mills from the rollback rate.
The rollback rate, or rate needed to garner the same amount of revenue as the previous year, for the 2010 fiscal year is estimated at 7.706, assuming a 35 percent drop in property values.
The extra revenue streams mean the millage rate could fall to 4.402, or $4.40 for every $1,000 in taxable value. The current millage rate is 4.768.
Diversification of revenue for the city is the overall goal of the new taxes, as the Cape’s reliance on property tax revenues has drastic cuts on the table as a result of the bursting of the housing bubble.
“All we’re talking about is providing this city with some level of stability in its revenue sources going forward,” Financial Services Director Mark Mason said.
Council members, however, are far from reaching a consensus as to which, if any, new taxes should be implemented and under what circumstances.
“Most of these diversification of taxes are regressive in nature. It puts a heavier burden on those who are least able to pay, and it shifts some of the burden from vacant land to developed land,” Councilmember Pete Brandt said.
Brandt urged his colleagues to look at making more cuts before resorting to tax increases, but most council members are resigned to an increase in some form.
“The task is pretty clear, if we want to maintain services we have to do some things that are unpleasant,” Mayor Jim Burch said.