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Increase in Hernando County property tax rate just the beginning

The pledges in the spring gave way to the fiscal realities of the summer Tuesday when a Hernando Commission majority correctly sought an increased property tax rate to help close a $4.5 million budget deficit for the next fiscal year.

At a May budget workshop in which the county announced workers' layoffs, park closings and other cost savings, commissioners and staff all but ruled out increasing fees and taxes by noting nearly 30 percent of the county was considered housing distressed, meaning at least half of a family's income was eaten up by housing costs. But that was before commissioners learned: The decline in the property tax roll value was nearly twice as large as forecast; they would need to refund $1.4 million in tax payments to property owners who successfully challenged their 2011 assessments; and their expectations of budget savings from constitutional officers were too optimistic.

If anything, the commission majority of Jeff Stabins, John Druzbick and David Russell settled too low. Russell's compromise tax rate increase of 3.5 percent — offsetting the exact tax reduction from the water management district — will generate just $1.3 million and still leave the county with a $1 million budget hole even if the commission later agrees to again borrow $1.8 million in reserves to cover the tax refunds and other unanticipated expenses.

Commissioners Wayne Dukes and Jim Adkins failed to see the wisdom of advertising a higher tax rate to give the commission greater flexibility. The advertised tax rate can go no higher, but can be lowered between now and Sept. 30, and Adkins wondered aloud if setting a higher tax rate would kill the motivation to seek additional cuts. Hardly. There is still a $1 million shortfall that could grow to $2.8 million if a super-majority fails to authorize the reserve fund borrowing.

Adkins offered no specific spending cuts, and past unsuccessful suggestions from Dukes about cutting salaries and withdrawing from the regional water authority board amount to just tens of thousands of dollars.

The true political courage came from Druzbick, the only commissioner facing re-election next year who pushed for an ever higher advertised tax rate. He and Stabins, who is not seeking re-election, advocated for something closer to the so-called rollback rate, a 62-cents-per-$1,000 increase that would have set the proposed tax rate at less than $6.09 per $1,000.

The staff leadership team made similar recommendations. And, therein lies one of the problems. Had the staff preached a need for greater flexibility in May, perhaps their plea in July wouldn't have received such disdain from the commission majority.

As it stands now, property owners with falling values will still see a reduction in their general fund tax bills come November, while the commission cuts more than $1 million more in planned spending and considers continuing the undesirable trick of using reserve dollars to balance their budget. Dipping into the savings account must stop.

The county has cut its general fund by 24 percent over the past five years amid four consecutive years of double-digit declines in property values. The status quo tax rate of past years has meant staff layoffs, furloughs and fewer services in libraries, parks, mass transit, code enforcement and other departments.

At some point, matching spending with revenue will require more than just whacking the spending side of the ledger.

Increase in Hernando County property tax rate just the beginning 07/27/11 [Last modified: Wednesday, July 27, 2011 8:29pm]
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