CLEARWATER — City Manager Bill Horne's proposed budget would increase the property tax rate next year, but many residents would actually end up paying lower city taxes than they did this year.
That's because property values are down, thanks to the slumping real estate market and bigger homestead exemptions created by Amendment 1.
So a slightly higher tax rate would not increase tax bills for many homeowners.
Nor would it generate as much money for the city as this year's lower rate.
Now factor in dropoffs in sales tax and communication tax revenues.
A 2008-09 fiscal year budget totalling $377-million — $21-million less than this year's.
And the city's general fund, which relies heavily on property tax revenues to help pay for things like police, fire and parks, would take a hit.
To offset some of the loss, the Parks and Recreation Department would increase fees for sports tournaments and camps. It also would cost more to get a play pass, which provides discounts on camps and access to city pools.
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One of the big issues Monday when City Council members meet to talk about the budget will be the proposed property tax rate hike.
Horne proposes to raise the rate from 4.6777 to 4.955 mills. A mill equals $1 in taxes for every $1,000 of assessed, nonexempt property value.
For example, in 2007 the owner of a home with a taxable value of $150,000 — the city's average — paid $701 in city taxes.
In November, even with a higher tax rate, that homeowner would pay an estimated $683 in city taxes.
Some City Council members are wavering about whether to approve the rate increase.
If they don't, however, the city will have to cut another $2.7-million from the general fund.
"I'm still uncomfortable raising the millage rate, but if we can provide the services that the citizens want and they're willing to go along with that increase, then we'll see how it plays it out," Vice Mayor George Cretekos said.
Council member Paul Gibson said he's "not in favor of raising taxes and neither are the voters."
Gibson also said he is against subsidizing the Harborview Center for $340,000. He would rather see it closed.
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Horne's spending plan for fiscal year 2008-09, which kicks in Oct. 1, eliminates at least $3.2-million and the equivalent of 11 full-time positions from the general fund.
This fund pays for the equivalent of 1,204 full-time positions.
The proposed $123-million general fund pays for most of the city's day-to-day operations, like public safety and leisure services. Property taxes comprise roughly 37 percent of it. The rest comes from a variety of sources, including fines, fees and sales taxes.
The city's police, fire, parks and recreation, and library departments account for more than $86.7-million of the general fund's spending. Personnel costs account for 65 percent of the fund.
The general fund's $123-million matches the current year.
But that's only because Horne budgeted a one-time allocation of $2.1-million into it to pay for new energy-saving equipment and an exhaust dehumidifier system for the pool at the Long Center.
Another $200,000 from the fund would go toward building four new lighted clay courts and related amenities at the McMullen Tennis Complex.
The proposed budget calls for raises or step increases that could mean employees making an additional 2.5 percent to 9 percent depending on the stipulations of their union contracts.
And although city officials have talked a lot about eliminating services, some of the ones at risk earlier this year would be saved.
The proposed budget doesn't eliminate any libraries, recreation centers or the beach lifeguard program. And it would still fund the Jolley Trolley beach transit system and C-VIEW, the city's television programming.
"My reading of the general reaction from the public is that citizens want the city to continue to provide the current level of quality-of-life services," Horne said.
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Although the city manager proposes to increase the property tax rate, it's still less than the so-called rollback rate.
That's the tax rate the city would need to generate the same amount of revenue next year as it took in this year.
The current rate of 4.6777 mills this year brings in $50.1-million in property tax revenues. Horne's proposed 4.955 mills would bring in $48.5-million for the upcoming year.
Still, taxable property values are expected to fluctuate over the next year or two, so determining just how much someone will pay in the future is not an exact science.
Some residents will still end up paying more, particularly those with houses worth more than $300,000.
And although Clearwater property values on average fell an estimated 8.7 percent from last year, the drops vary from street to street and neighborhood to neighborhood, so different individuals will see different results.
Additionally, the Save Our Home cap allows a 3 percent increase in tax assessment, even if a home's market value falls.
"I do not want to raise the millage rate; I want to keep it where it currently is," Mayor Frank Hibbard said. From "what I've heard from citizens is that they're clearly ready to reduce services. … Until I hear otherwise, that's where my leaning is right now."
The City Council will pick through Horne's proposed budget Monday and set a preliminary property tax rate Thursday.
Several public hearings are set for September.
Mike Donila can be reached at firstname.lastname@example.org or (727) 445-4160.