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Pinellas Park may raise tax rate, tap into reserves

PINELLAS PARK — Council members have scheduled a time to discuss a proposed operating budget that could increase the tax rate and possibly dip into city reserves.

The budget workshop is scheduled for July 22 immediately after the 7 p.m. Community Redevelopment Agency meeting on the second floor of City Hall, 5141 78th Ave. N.

The draft of the 2008-09 budget takes advantage of a loophole in Amendment 1, which voters passed in an effort to decrease property taxes.

Amendment 1 increased the homestead exemption from $25,000 to $50,000, but it failed to change other areas of the property tax laws.

In particular, it did not change the ability of cities to alter their "roll" rate.

The roll rate is the tax rate, or millage, that a city would charge to get the same amount of dollars from property taxes that it got the preceding year.

It works this way: If property values stay the same from one year to the next, and a city wants to get the same amount of money, its millage, or tax rate, would not change.

If property values go up and a city does not want to collect more money than it did the year before, it would decrease its millage, or tax rate. That's called a rollback.

If property values drop, the city would have to increase its millage rate to get the same dollar amount it collected the previous year. That's called a roll forward.

Because property values dropped this year, Pinellas Park would get less money than last year if its current tax rate of 4.5478 mills is retained.

But the city wants to collect the same amount, so it may increase the millage rate to 4.615.

Officials would also tap into Pinellas Park's reserves in order to balance the proposed $50.8-million operating budget, which represents a 2.3 percent increase in spending over the current year's $49.7-million operating budget.

If passed later this summer, the new budget would go into effect Oct. 1.

Pinellas Park's proposed budget shows an estimated $1.2-million out of the city's $11.2-million in reserves being used to balance the books.

Pinellas Park may raise tax rate, tap into reserves 07/12/08 [Last modified: Sunday, July 13, 2008 7:54am]
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