Wednesday, April 25, 2018
Opinion

Column: Diversify tax base to dodge annual budget crunch

The numbers are depressing.

Hernando commissioners heard a lot of them the other day in a presentation of their proposed 2014 county government budget. Some highlights:

The county tax roll lost 37 percent of its value since 2008.

The number of employees answerable to the Board of County Commissioners has been halved since 2006 and the annual personnel costs are down to less than $9 million from $16 million six years ago.

And even with a proposed property tax rate increase of nearly 25 percent, spending in the county's general fund will grow just $52,000 in the coming year because the county will no longer supplement the general fund by raiding reserve accounts.

So, commissioners are correctly trying to devise a more palatable property tax rate. The staff is now looking for an additional $2.5 million worth of cuts to lower the proposed tax rate increase by almost a third.

Of all the numbers in that budget message, however, the most imperative figure came courtesy of the Hernando Property Appraiser's Office — residential property accounts for 69 percent of the county's tax base. Commercial property makes up just 11 percent of the tax base, according to figures provided to the state Department of Revenue.

Commissioners griped about sinkholes — Hernando has lost more than $280 million from its tax rolls over the past decade because of reported sinkhole damage. But that angst, though genuine, is misplaced.

Sixty-nine percent is a much bigger problem. The dismal figure illustrates the county's over-reliance on residential home construction as its economic engine and it saddles single-family homeowners with a disproportionate share of shouldering the cost of local government. It's also not exclusive to Hernando County. In neighboring Pasco County, residential property (primarily single-family homes) account for more than 70 percent of the tax roll. Commissioners there recognized the inversion four years ago and set a long-term strategy of trying to equalize the ratio of homes and non-residential properties on the tax rolls. Commercial property accounts for 12 percent of Pasco's tax base.

I excluded Citrus County from this exercise because of the ongoing dispute over the value of Duke Energy's property. But, other area counties, and Hernando's competitors for business, are much better positioned. Single- and multi-family homes are 62 percent of Hillsborough County's tax base which also has a significantly larger share of commercial property (20 percent) on its tax rolls. Similarly, Polk County's tax base is 18 percent commercial property.

The challenge to Hernando commissioners goes beyond shrinking a property tax rate increase for the coming year. They must invest in a long-term business development strategy to diversify the local economy and broaden the tax base or else they will face these inevitable budget squeezes on an annual basis.

The foundation has been laid by the departing business development manager, Mike McHugh. He encouraged commissioners and business leaders to consider aggressive tactics including improving the educational standards of the workforce, acquiring land for a higher education site, setting up a fund to pay for economic incentives, and reserving privately owned land for industrial development. The vocational training is just getting started and other ideas became the precursor to the strategic plan unveiled recently by County Administrator Len Sossamon, a key component of which is enhancing economic opportunities to better the quality of life offered to Hernando residents.

Commissioners, however, must be willing to implement it. Stimulating the local economy goes beyond waived impact fees, being shortsighted on transportation needs, giving preference to local vendors on government contracts and turning a blind eye to criticism at the county-owned airport. Absent a more diversified tax base, Hernando commissioners are staring at more of the same: the politically unpopular position of asking homeowners to swallow a greater share of government costs.

Talk about depressing.

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