TARPON SPRINGS — City Manager Mark LeCouris is recommending Tarpon Springs increase its tax rate by half a mill and withdraw more than $750,000 from the city's reserves to balance the city's budget for the upcoming fiscal year.
But Commissioner Chris Alahouzos has what he thinks is a better idea: City commissioners and city staff members paid the highest salaries should take the brunt of the cuts.
"Everybody knows salaries are the biggest expense," Alahouzos said Monday night at a budget work session. "I'm in favor of a salary reduction. Start with management employees and with us, the commission. Reduce our salary, perhaps 25 to 50 percent."
Alahouzos said if cuts are going to be suggested during these tough times, commissioners should look at their salaries.
City salaries make up more than $14.4 million of the proposed $19.7 million budget.
But Alahouzos' idea fell flat with Mayor David Archie and the other commissioners. They said cutting salaries was not the right direction for the city.
"I don't buy into that," Archie said. "Right now, while it seems symbolic and a great thing, at some point, we have to tackle" the idea that a charter change in the 1990s "did a lot more damage than people could foresee."
The charter amendment he was referring to allows only a half-mill increase in the tax rate each fiscal year.
"It was a tough political decision last year and may be again this year," he said of the half-mill increase. "I don't think that (cutting salaries) is going to get us where we need to be."
Commissioner Robin Saenger agreed.
"I don't think it's a sustainable solution to ask management to take a reduction," Saenger said. "That's going to take us in one direction. I don't think the city needs to go down that road."
Because of property value declines, the city would have to raise its tax rate to 5.6167, about 0.66 mills more than allowed by the city charter, to collect the same amount of taxes as it did last year.
Monday evening, LeCouris presented a 2010-11 fiscal year budget that already had $1.08 million in reductions from its first draft. The proposed budget calls for a tax rate increase from $4.95 to $5.45 per $1,000 of taxable property value. Even with that increase, the city still would have to withdraw $764,132 from its reserve fund.
"It's a conservative and responsible approach in an uncertain economic climate," LeCouris said. "It maintains the level of service without jeopardizing the unassigned fund balance. Some residential and most commercial property owners will pay fewer taxes."
For fiscal year 2010-11, the city's assessed property values declined 11.5 percent. Because of that decline, some residential property owners and many of commercial property owners will see a decrease in their taxes, even with a tax rate increase.
Finance director Arie Walker said that if a commercial property is worth $200,000 and has a $25,000 exemption, with the current 4.95 millage rate, $175,000 would be the taxable value. The owner would pay $866 in taxes.
But with the property value decline, Walker said the property is now worth $160,000. Add the exemption and the assessed value is lowered to $135,000. With the proposed 5.45 rate, the owner would pay $735 in taxes.
Walker said it's difficult to determine the effect on residential property because there are many variables.
Demorris A. Lee can be reached at email@example.com or (727) 445-4174.