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Council debates rollback, utility tax

By Staff | Aug 12, 2016

On Tuesday, Cape Coral City Manager John Szerlag showed City Council staff’s proposed 2017 budget.

Thursday, the elected board gave its response, a mix of proposals that included debate on using the rollback millage rate, reducing the public service tax and/or the fire service assessment, spending less in the reserves and possibly making cuts in a budget that has already cut spending slightly from last year.

On Monday, Szerlag presented the city’s $194,907,280 general budget for 2017, which cut spending by $234,699 from 2016 and lowered the millage rate to 6.75, a .207 decrease from last year.

The millage is expected to generate $78.1 million, with the PST taking in $7.6 million and the FSA another $21 million. The budget would also use $8.3 million in fund balances to bring it down to $31.5 million, which would fund the city for 2.57 months in case of emergency.

Szerlag presented a proposal that fudged the current numbers of his “three-legged stool” approach. The numbers reduced the tax on utility bills from 7 to 6 percent and the fire assessment from 64 to 59 percent, which stoked a lot of debate from council, which was generally mixed on the idea.

Marilyn Stout and Rana Erbrick approved the idea of using a rollback rate in the millage rate, which is what the millage would be to maintain the same amount of money to the budget. That rate is 6.5702.

“I’m not comfortable with the way we have grown government in the last few years,” Erbrick said. “I believe rollback is an option.”

Rick Williams had little problem with the $195 million general fund budget than as it was about the increased debt that will be incurred with Fire Station #11 and the fleet maintenance facility. He also wondered about the PST and whether they could lower that by a point.

“We have a lot of smaller companies who use an awful lot of power. I advocate bringing the PST down to zero and putting the money back into the community,” Williams said. “Lowering the ad valorem will benefit those who only live here a few months out of the year and have $1 million homes. We need to look at both.”

Budget Review Committee member Joe Coviello said the consensus was to use the rollback rate, as the trend in recent years has been for property values going up and because the PST and FSA were there as failsafes in the event of another downward trend.

Mayor Marni Retzer said she was comfortable with what they had. She said the city is still years away from everything coming back to normal following the Great Recession.

She also tweaked Erbrick with her thoughts on rollback rates.

“We are a fast-growing community and we want to grow responsibly. A rollback rate sounds like something a politician would say,” Retzer said. “This budget gives us flexibility. I don’t want to skim so much that we can’t respond to issues. We’re still playing catch-up.”

CouncilmememberJim Burch warned about the consequences of using the rollback rate and reserves, and that the “three-legged stool” approach to taxation is needed.

“I don’t want things to get out of hand again. We need to try to maintain the progressive things we’ve been doing,” Burch said. “I just don’t like pulling money from reserves. If anything, we need to build it.”

Councilmember John Carioscia said there are some desperate needs the city has, such as the new firehouse, and if people wanted to lower any of the three tax source components or not spend as much of the $8.3 million in the fund balance proposed, they would have to decide what programs to cut.

“If we cut the PST one point, what do we cut? We need paving and we need the firehouse,” Carioscia said.