ST. PETE BEACH — By a narrow margin, commissioners increased the tentative property tax rate for next year in an effort to make sure city revenues do not drop because of falling property values.
Mayor Mike Finnerty and Commissioner Christopher Leonard opposed the move, arguing that in tight economic times taxes should not be increased.
"I wonder if we wouldn't work harder through the budget process if we didn't change the millage," Leonard said. "I do not support a millage increase."
However, the approved tax rate of 2.6714 mills — a 0.295 hike over the current 2.3764 millage rate — will not raise actual tax bills for most property owners.
The higher tax rate actually represents the "rollback rate" required to raise the same level of tax revenues as the previous year. In past years, when property values were increasing, the rollback rate was lower than the current tax rate.
Elaine Trehy, the city's finance director, told the commission that if the city left the property tax rate unchanged, there would be a budget shortfall of $212,711.
Finnerty said he would support "a minor millage increase," but not the amount proposed by the city administration. He proposed dropping the proposed tax rate to 2.5714 mills, he received no support from the commission.
A special citizen's committee with the task of reviewing the proposed city budget recommended the higher tax rate to ensure that in the 2009-2010 fiscal year, the city would receive the same amount of property taxes as the current year.
Most of the millage increase (0.2 mills) is needed to more fully fund the city's pension plans. The balance of the increase will cover the projected budget shortfall, Trehy said.
"I like the recommendation from the budget committee," said Vice Mayor Al Halpern. "I just don't want to close any doors or have us not be able to do anything we need to do."
Commissioner Jim Parent said the commission "made a mistake" last year when it lowered property taxes, which forced a cutback in city services.
"The library is now closed on Mondays. How does this benefit the residents?" Parent asked.
Leonard argued that the city's level of service to residents "is phenomenal" and said he was confident it would remain so.
"In these economic times I just cannot support a millage increase," Leonard said.
"I am not looking forward to raising taxes for our citizens at all," said Commissioner Bev Garnett, urging the commission to "keep the door open" for possible cuts during upcoming budget discussions.
"If this were a vote to raise people's taxes, I would say absolutely not. But this is not the case," she said, acknowledging that those residents whose property values dropped would not get a corresponding drop in their city property taxes.
She did propose, however, dedicating a tenth of a percent of the property tax increase to help pay for the city's legal bills.
The commission has the option of lowering the tax rate during final budget discussions, but cannot, by law, raise the rate any further.