TARPON SPRINGS — By maintaining the same property tax rate as this year and pulling some money from reserves, Tarpon Springs will be able to maintain services and not cut any city jobs, City Manager Mark LeCouris told commissioners at a workshop Tuesday.
His message: Stay the course.
But at least two city commissioners want to lower the property tax rate and could point to a growing reserve fund and a lower rate in a neighboring city as reasons.
By policy, the city must maintain a reserve account that is 20 percent of its general fund used for operations. With a nearly $20 million general fund budget proposed for the 2012 fiscal year that begins in October, the reserve account would need to be around $4 million.
But in 2010, the reserve fund was at almost $11 million. The pot of money, which the city calls its "unassigned fund," has grown steadily each year: $8.5 million in 2007, $8.7 million in 2008, and $9.2 million in 2009.
Commissioner Chris Alahouzos asked LeCouris to revise his proposed budget with a 5 percent reduction in the current 5.45 millage rate, which would lower it to 5.18.
A mill equals $1 of tax for every $1,000 in assessed real estate value. A property owner with a home valued at $125,000 who had a $25,000 homestead exemption would pay $545 in property taxes under the current tax rate. At the lower rate, the bill would be $518.
Alahouzos noted that the tax rate in nearby Dunedin, a bigger city, is 3.55.
"Why do we have ours at 5.4?" Alahouzos questioned.
Commissioner Townsend Tarapani agreed that a millage rate reduction could help Tarpon Springs compete with surrounding communities.
But Commissioner Susan Slattery said the city should leave the rate as it is.
"I am not in favor of lowering the millage rate," she said. "I think this year we might be safe to keep it where it is. Revenue is decreasing and I think it's going to be another three to five years before we see an increase in property values."
The value of properties in the city has been declining during the recession, which results in lower tax collections.
LeCouris said that he will complete Alahouzos' request but warned that a tax rate reduction would come at a price.
"If you are going to reduce the millage rate, positions are going to have to go," LeCouris said. "The budget is pretty bare bones as it is."
The $19.971 million general fund budget LeCouris presented to commissioners already reflects $488,126 in up-front cuts he required of city departments. The budget also takes into account an expected 4.5 percent, or $334,895, decline in property tax revenue.
To help balance the budget, LeCouris wants to pull $1.59 million from reserves.
Also at Tuesday's workshop, commissioners discussed a way to give city employees a 1 percent bonus or cost-of-living increase. Because they are concerned about the recurring cost of a cost-of-living increase, much of the discussion focused on the idea of a 1 percent bonus.
The cost of a bonus, estimated at $153,198 if given to all the city's employees, would be paid out of reserves. The city currently has 263 full-time and 56 part-time employees.
"It's to say we appreciate them," Mayor David Archie said of the proposed bonus. "We understand everything is going up except for wages and this is an opportunity to defray some of the additional cost that they have since we haven't been able to give them a raise."
Contact Demorris A. Lee at email@example.com and (727) 445-4174.