"Why do our three islands, with 10 percent of Clearwater's population, pay 40 percent of city property taxes?" asks a flier being distributed by the Islands Independence Initiative, the group exploring whether Clearwater Beach, Sand Key and Island Estates should secede from Clearwater.
The answer to the question is simple: Because property on the islands is more valuable.
The question, which is plastered across a flier going to island residents, implies that some sort of inequity is suffered by the island residents. There's no inequity. The definition of an ad valorem tax is that it is a tax tied to worth. Owners of property that is worth more pay more in property taxes, no matter where they live.
Presumably, those who purchased property on Clearwater Beach, Sand Key and Island Estates knew the value of that property, wanted to live in pricey waterfront communities anyway, and were prepared to pay their share of property taxes based on their property's worth. If not, why did they buy there?
It would be incorrect to infer from the question that the residents of the islands pay 40 percent of the cost of running the city of Clearwater. City property taxes provide only slightly more than a third of the city budget. The majority of the revenue that supports city operations and services comes from other taxes such as sales taxes and utility taxes, fees, grants and other revenues.
Property taxes aren't the only taxes raised as an issue in the flier written by the Islands Independence Initiative. The flier also asks, "Have the three island communities received their fair allocation from the proceeds from the Penny for Pinellas tax?"
The Penny for Pinellas is a sales tax, not a property tax. It is one penny on the dollar, and it is paid by everyone who buys taxable items in Pinellas, whether they live here or are just visiting. (In fact, visitors contribute about a third of the penny sales tax collections.) The penny sales tax was approved by all Pinellas County voters to pay for public infrastructure projects such as roads, bridges, libraries, recreation centers and drainage. Once the tax is collected, it is distributed to local governments under an agreed-upon formula that is based on population. The elected officials of those local governments are authorized to decide how the money is spent.
Note that the tax proceeds are distributed to governments, not to residents or neighborhoods. So what does the Islands Independence Initiative mean when it asks whether the island neighborhoods have received their "fair allocation" from the tax? The tax is not allocated to neighborhoods, and projects are not doled out by neighborhood. Imagine the chaos if the Penny or its projects were distributed in that way.
Yet some of those who have joined or support the islands initiative are upset because Clearwater officials have refused to use the Penny for Pinellas tax to bury utility lines underground in Island Estates. Many Clearwater residents might wish that unattractive utility wires could be buried in their neighborhoods, too. That is not an appropriate use of the limited Penny for Pinellas funds when there are so many other infrastructure projects that could be done and would benefit more people.
Some Island Estates residents have contended that their neighborhood has "never had a Penny project," implying that residents there pay sales taxes but get no benefit from doing so.
Yet the island communities have benefited substantially from numerous Penny projects, including the new Memorial Causeway Bridge, upgraded beach streets, a new fire station on Sand Key, new parks on the islands, a pool on Clearwater Beach and a beach police substation. They also have benefited, as have all Clearwater residents, from the improved quality of life in the city generated by Penny-funded flood control projects, new libraries and recreation centers, Bright House Networks Field, new fire stations throughout the city, widened roads and improved sidewalks, new parks and pedestrian trails.
The flier mentions a few other issues important to the group — traffic, zoning issues, code enforcement — and then gets down to the business of asking for money.
"It will cost money to examine the legal and practical consequences of de-annexation from the City of Clearwater and to incorporate into our city," the flier states. "Give what you can. But give something. As our efforts progress, it will be critical to demonstrate a large base of citizen support. Please. It's vital that you send a check today. It is urgent."
Before residents contribute, they should understand the full context of the Islands Independence Initiative's questions about tax fairness.