INDIAN ROCKS BEACH — The city will keep the property tax rate flat for the sixth consecutive year, but will need to dip into reserve funds to fill a budget gap.
Despite a 4.3 percent increase in property values, the proposed budget for the fiscal year starting Oct. 1 is slightly smaller than the current year's budget: $3.08 million compared to $3.20 million.
Over the last four years the city's general revenue and reserve funds had been bolstered by debt repayments from an intracity loan to the sewer and solid waste utilities. Rates were then adjusted to better reflect the operating cost of the services.
Over the last four years, the repayments added more than $1.2 million to the city's general revenue with the majority filtering into the reserve fund. The last of those payments was made this year, leaving a budget shortfall.
In order to balance the 2014 budget, the city plans to draw approximately $169,000 from the city's reserve account.
Former City Manager Chuck Coward said he believed the city could maintain services and staffing levels by relying on the reserve fund until property values increase further. Finance staffers expect this to take three years, leaving more than $1 million in reserves. The reserve fund by the end of this fiscal year is expected to be slightly less than $2 million.
In a letter to the commission, Coward called it a "very doable three-year plan to return to full financial health and complete a nice recovery from the days of 2008."
In the fiscal year starting in 2006, the city's taxable assessed value hit a high of $1.2 billion. It bottomed out at $743 million in 2012. As property values rapidly increased as much as 30 percent in one year during the real estate bubble, the city reduced the property tax rate to a low of $1.47 per $1,000 of assessed, taxable property value in 2006. It was increased to $2 in the fiscal year starting in 2008 where it has remained since.
After setting the tentative rate, the city can lower, but not raise, the rate prior to final approval in September.