Cape Council passes tax rate, budget for FY 2019
Discussion for lowering the millage rate was quashed rather quickly Thursday when the Cape Coral City Council got straight talk regarding the consequences of such a move.
In two ordinances, the millage was officially set at 6.75 mills, the same as it has been the previous two years, while the General Fund budget was set at $211.6 million during the special meeting of the city council at City Hall.
The millage passed unanimously while the budget passed 7-0 as Councilmember Rick Williams had to leave early.
The core of City Manager John Szerlag’s “three-legged stool” approach to financial diversification also set a 62 percent cost-of-operations fire service assessment (FSA) and a public service tax (PST) on electric bills of 7 percent, the current rate.
The ad valorem taxes are expected to raise $92.7 million, still the lion’s share of the budget. The FSA is expected to bring in $26.1 million and the PST will bring in $7.3 million.
One mill is equal to $1 for every $1,000 of taxable valuation.
Due to an 8.49 percent increase in overall taxable property valuation, the 6.75 mill rate will result in an estimated $4.3 million more in revenue.
The budget does not include money the city anticipates receiving from FEMA as a result of the damages incurred from Hurricane Irma last year.
Szerlag said he didn’t know when the money would come and didn’t anticipate it coming. He said it can be found money “but only can be found once.”
The storm cost the city $19 million.
Also to be considered is the referendum to increase the Save Our Homes homestead in November, which Szerlag said could cost the city another $4 million if approved.
Councilmember John Gunter had suggested a quarter-mill decrease at the Sept. 6 meeting.
Szerlag advocated for the 6.75 millage, saying it is his job to present a balanced budget. They also have to hire or reinstate personnel and keep their wages at a competitive rate to keep Cape Coral from being a “training ground” for workers before going elsewhere, he added.
Reducing the millage .25 mills would mean in three years a shortfall of nearly $19 million if the additional Homestead Exemption passes. They also wouldn’t be able to subsidize charter schools and pay for another disaster, staff said.
Szerlag said any mill reduction would come from reserves, which would lower the level of service down the line and be unsustainable.
The quarter-mill decrease would also reduce reserves to 2.43 months in 2019, 2.12 in 2020, and 1.58 in 2021.
City management mandates at least two months in reserves as any less could impact borrowing rates.
Stantec brought its model to show in real time the results over a 10-year period. Reserves would be substantially reduced and cuts would have to be made. The same would happen if a recessionary situation occurs over the next 10 years that would bring property values down.
Gunter was convinced and motioned to pass the tax rate ordinance.
In other business, Council’s regular workshop meeting was again moved, to Oct. 10