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City manager’s budget proposal recommends reduction to tax rate

By Staff | Jul 23, 2019

Cape Coral City Manager John Szerlag released his FY 2020 proposed budget Tuesday, which includes a recommendation to reduce the Cape’s property tax rate but not to go as low as a full rollback.

Szerlag proposes to lower the property tax rate to 6.55 mills, the fourth reduction to the property tax rate since FY2014, but the first since 2017 after Hurricane Irma.

The current property tax rate is 6.75 mills, which equates to $6.75 per every $1,000 of taxable valuation. One mill is equal to $1 for every $1,000 in taxable valuation.

The rollback rate, the rate that would generate the same amount of property tax revenues as approved for the prior year, is 6.4903 mills.

“We continue to meet the increased level of service needs required by a growing community,” said Szerlag. “This proposed budget allows us to do so at a competitive rate compared to other municipalities.”

Cape Coral’s total taxable valuation increased 7.96 percent this year or more than $1 billion, from $14.3 billion in 2018 to almost $15.4 billion in 2019. New construction represents about 41 percent of the total increased taxable valuation, and was a major contributor to the proposed millage reduction.

The proposed rate of 6.55 mils would generate about $96.2 million in property tax revenue.

The city manager’s proposed budget also would keep the public service tax rate at 7 percent, while the fire services assessment cost recovery rate would return to its original rate of 64 percent. The public services tax is a city-imposed tax on electric bills. The fire assessment is a tax designed to “capture” a part of operation costs for fire services, which previously were funded through property taxes.

The public services and fire assessment taxes will together produce an estimated $33.7 million.

Cape Coral City Council set the fire assessment rate during its regular meeting on Monday.

The tier 1 (universal) rate increased from $132.79 to $144.88, up more than 9 percent. The tier 2 rate, which represents 30 percent of the assessment calculation went from $2.50 to $2.54 per EBU.

Also set by council on Monday were the not-to-exceed lot mowing services fees ($65.40, $49.98, $50.62 and $48.48 for districts 1, 2, 3, and 4, respectively per 10,000 square foot lot), with the one-time $15 hurricane debris removal charge being lifted this year.

Residential solid waste assessments were set at a not-to-exceed $199.59 rate for each dwelling unit, up from $196.22 in the FY 2019 budget, while the stormwater fee was set at $119, up from $115 last year. The fees will increase to $125 in 2021 and increase $5 annually the next two years.

The rejection statewide of Constitutional Amendment 1, which would have provided for additional Homestead Exemption, and a reduction of pension costs were other reason for Szerlag’s proposed millage reduction.

Reimbursements from FEMA related to Hurricane Irma were not included in the proposed budget. While the city was awarded $5.6 million in FEMA grant dollars, the timeframe for receipt is unknown.

For the FY 2020 proposed budget, the total for all city funds is $897,493,398. The General Fund represents $233,409,130 of the budget.

The proposed budget includes:

$6.5 million for local road paving;

$100,000 for new streetlight fixtures;

$312,000 for median improvements;

$520,000 for alley paving.

No fund balances will be used, and will remain 3.09 months of expenditures.

City Council will hold several workshops with the Budget Review Committee to iron out the rough spots throughout the month of August.

It will adopt the final FY2020 operating budget following two public hearings that will be held in September.