ST. PETE BEACH — Because of declining property values, the City Commission plans to increase next year's property tax rate just enough to bring in the same amount of revenue as this year.
Before property values began to decrease, the rollback rate was an actual decrease in the tax rate. Now, because of lower values, guaranteeing an unchanged revenue stream means cities must actually increase their property tax rate.
The 2.6718 mill rollback tax rate proposed by the commission last week will be debated in two formal public hearings scheduled for Sept. 15 and 28. The final approved rate is what will appear on property owners' tax bills.
"Unfortunately, when people look at their trim notice, they will say 'Oh my goodness, they raised my taxes,' '' said Commissioner Al Halpern, who opposed the commission's 3-2 decision to set the tentative millage rate higher.
By going to the "rollback" millage rate, the commission effectively cuts the 2.9612 tentative millage rate set just a few weeks ago — but still raises the tax rate from the current 2.4834 mills.
If the rollback rate is approved, the effect on property owners will be considerably mixed.
Many property owners with homestead exemptions would see a 3 percent increase in their tax bills, no matter what rate is set by the city, if their taxable evaluations remain below the just market value set by the property appraiser.
Property owners whose assessed values remain unchanged and equal the just market value will see a higher tax bill.
Other residents whose property values decreased would see differing tax bills, depending on the amount of loss in value.
And those rare properties that increased in value will see higher tax bills — both because of that increase in value and because of the effective increase in the city tax rate.
One mill represents $1 in property tax for each $1,000 in taxable assessed value after all exemptions.
The commission decided on the rollback rate in order to fund the budget as proposed by City Manager Mike Bonfield. It also wanted to add $10,400 to reopen the city library on Mondays and $50,000 for undesignated special events.
The events would benefit the city, commissioners said, by drawing people to the city and therefore boosting local businesses.
The proposed budget does not include $30,000 for Christmas decorations, despite many complaints from residents.
"Spending on holiday decorations now is just not going to work," said Mayor Mike Finnerty.
Commissioner Jim Parent said the decision reflects the commission's desire to be "good stewards of taxpayers' money."
Commissioner Bev Garnett urged those residents who want the city to spend money for decorations to "come in and tell us."
Perhaps the biggest single spending decision in the proposed budget is to put $410,760 into savings.
Finance director Elaine Edmunds said the city's $1.6 million in reserves represents 11 percent of the operating budget and is only enough to cover city expenses for six weeks.
She said the city's auditor recommends at least enough to cover three months.
"We hope to be at the 25 percent funding level by 2013," Edmunds said in an e-mail to the commission.
In contrast, Madeira Beach has 11 months of operating expenses in its reserve account.
"Our reserves are dangerously low," Parent said.
Commissioner Marvin Shavlan said the commission could not afford "to stick its head in the sand anymore" by ignoring the potential financial needs of the city if a hurricane or other disaster were to occur.