Tuesday, July 17, 2018
Business

Calling it a 'dangerous precedent,' Tampa chamber opposes city tax increase

TAMPA — Calling the possibility a "dangerous precedent," the Greater Tampa Chamber of Commerce on Thursday took the rare step of opposing City Hall's proposal to raise Tampa's property tax rate because of its impact on business.

The city's $974 million budget for 2018 would boost the tax rate from $5.73 to $6.33 for every $1,000 in taxable property value.

"Business leaders in Tampa make tough budgetary decisions to keep their companies running effectively," chamber CEO Bob Rohrlack said in a statement. "We expect that same leadership from our elected officials."

It is unusual for the chamber to weigh on the city's budget, which will get one more public hearing at 5 p.m. Sept. 28.

"It's not entirely unexpected," said Mayor Bob Buckhorn, who met with the chamber's board of governors about three weeks ago with his top budget officials. Still, he said, "it's the first time that I've been the mayor that they have interjected themselves into this process. I've never seen them do that at the county or anywhere else."

Buckhorn challenged the idea that the city has not made tough budget decisions or exercised fiscal restraint. In the years after the Great Recession, Tampa property tax revenues dropped by as much as a third. In response, officials cut more than 700 positions from the city's payroll, refinanced every bit of debt they could to take advantage of lower interest rates, cut departmental budgets, delayed buying equipment, dipped into reserves, restricted overtime and sold surplus land.

Moreover, Buckhorn said, the city has not raised its tax rate since 1989. (That said, city tax bills have gone up in that time as the value of property has risen.)

"I think we have been far more conservative in our budgeting, far more prudent, than many in the business community," he said.

Buckhorn requested a higher increase in the property tax rate, but the council voted 4-3 Monday night to scale back his request. At the first public hearing on the budget, no one from the public spoke against the idea of raising taxes.

Buckhorn has said the city needs to raise its tax rate and use the additional revenue to:

• Expand fire service, particularly in New Tampa, where the city is building a new fire station on Trout Creek Drive.

• Improve parks, including the New Tampa Community Park Center and Vila Brothers Park, and to hire new parks employees for Julian B. Lane Riverfront Park, which is scheduled to open in the spring.

• Prepare for several hard budget years ahead. City officials expect three factors to make future budgets tighter.

First, the costs of health care and employee pensions are expected to rise, even as revenue from interest earnings and a tax on home telephone service falls.

Also, the Legislature has scheduled a referendum next year on expanding the homestead exemption. If that passes — and city officials expect it will — it would lower city property tax revenues by an estimated $6 million starting in 2020.

Finally, the city has to repay two debts taken out in the mid 1990s but deferred for two decades. One is $6 million owed to the federal government for a loan to help develop Centro Ybor. The second is a 1996 bond issue used to buy and renovate Tampa's police headquarters, build two substations and buy new fire equipment. It will require several payments totaling $13.6 million annually for several years starting in 2019.

"We recognize the challenges facing the city resulting from previous debts but feel a tax increase to pay for them sets a dangerous precedent," Rohrlack said.

Thus, after "considerable review," chamber chairman Mike Griffin said in a statement, "We do not agree that there is sufficient justification for the proposed tax increase on residents and businesses.

"We hope that City Council and Mayor Buckhorn will use their upcoming deliberations to find a solution to our city's debt challenges that does not raise taxes on residents and businesses and works to maintain our designation as one of the most affordable cities in not only the state but also the country," he added.

At its final public hearing on Sept. 28, the City Council can lower the tax rate but cannot raise it.

As proposed, the rate the council set Monday would result in an increase of $105 to the property tax bill of a home-owner who lives in a house assessed at the city's average of $166,579. In South Tampa, where home values are higher, the average residential tax bill would rise by an estimated $205 next year.

But residential taxpayers with homestead exemptions have a tax advantage that businesses do not: Florida's Save Our Homes constitutional amendment protects homeowners from increases in their property assessments of more than 3 percent per year or the Consumer Price Index, whichever is lower.

Increases in assessments on nonresidential properties, including commercial properties, are capped at 10 percent a year. That won't benefit commercial property owners this year in Tampa, where growth in taxable property values was a little under 9.3 percent.

Buckhorn said the chamber probably won't be the last group to oppose the tax increase.

"I'm sure there will be other special-interest groups that will weigh in," he said. "I know that the City Council is meeting with the Realtors and the Realtors are predictably knee-jerk on this."

Contact Richard Danielson at [email protected] or (813) 226-3403. Follow @Danielson_Times. Contact Malena Carollo at [email protected] Follow @malenacarollo.

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