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Tardy tax pitch leaves county shortchanged

Hernando County commissioners are staring back at the short-sighted view of their predecessors.

More than a decade ago, a different commission declined to set a tax rate on retail telephone and cable television services, opting instead for the minimum under a 2001 state law. That decision is having real implications now as the county figures out how to pay for $4.5 million worth of new communications equipment for its public safety departments.

The 2001 state law, which aimed to equalize tax rates across competing communications technologies, did not, however, make things much simpler. Across the state, there are 122 communication services tax rates — based on location — that provide revenue to both state and local governments.

It should come to nobody's surprise that Hernando County's communications services tax rate is near the bottom of the list. Only Hernando and two other counties used the minimum state tax of 1.4 percent and charged permit fees when telecommunications companies needed drive-way cuts for right of way access. It means the county has missed out on revenue for the past 11 years — money most other counties and cities made sure to collect.

"Everyone else went to a higher percentage and no fee. We were losing revenue all this time,'' county budget chief George Zoettlein told commissioners last month.

Both neighboring Pasco and Sumter counties charge the state's maximum communications tax, 1.84 percent.

Last month, Hernando county staff recommended commissioners raise the tax rate to 1.84 percent and forgo the permit fees. The proposed rate increase, the equivalent of 44 cents on a monthly telephone bill of $100, could generate as much as $400,000 a year for Hernando, Zoettlein said.

The new, higher tax rate increase is being looked at because the county has already spent the anticipated proceeds. The revenue is earmarked to pay off a line of credit tapped for a $4.5 million upgrade of the county's emergency communications system. Commissioners authorized that acquisition in December.

The higher tax rate "is the norm. It's there to provide money to keep this equipment,'' said Commissioner Wayne Dukes. "Maybe we wouldn't have to buy so much (radio equipment) now if we had been doing this all along.''

It was a remarkable acknowledgement from Dukes of a perspective that too frequently goes missing in debates on the commission dais: Procrastination on spending issues usually leads to higher expenses in the long run. The public would be well served if Dukes resurrects that same logic during the next discussion on impact fees for roads or schools.

Regardless, when it came to the higher communications tax, the commission did what it usually does. It failed to act. It put off further discussion until August after Commissioner Jim Adkins said he wanted to try to avoid the tax rate increase by asking public safety departments to kick in more money from their own budgets. Good luck with that.

It also must be pointed out that studying the communication service tax isn't an exercise exclusive to the Hernando County Government Center.

State Rep. James Grant, R-Tampa, introduced HB 303 last month to end the communications services tax entirely and replace it with a higher state sales tax.

That has caught the attention of the Florida Association of Counties, which wants to ensure any tax swap remains revenue neutral so local governments aren't taking another financial hit after losing $3 billion in property tax revenue over the past five years. The communications tax produces up to $300 million annually to the 67 counties.

Grant's apparently thinking about this from the other direction. The bill includes a provision to ensure local governments don't benefit financially from a sales tax increase. If a higher state sales tax, proposed to increase from 6 percent to 6.75 percent, produced more money than the communications tax, local governments would be required to offset the gain with a corresponding cut in property taxes.

That could be problematic for Hernando County. Just how is it supposed to afford a property tax cut if it already pledged higher communications tax revenue for better public safety?

It's a question that might not need answering if Hernando had acted differently in 2001. As it is, county residents have enjoyed a tax benefit foreign to most of the rest of the state of Florida for 11 years. That's 44 cents a month residents are going to have to do without if they want deputies and firefighters outfitted with something other than unreliable, antiquated equipment.

Tardy tax pitch leaves county shortchanged 02/16/13 [Last modified: Saturday, February 16, 2013 9:38am]

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