The New Port Richey City Council has been stung by Florida's recapture rule. Unfortunately, it also captured the council's collective foot in mouth. Seven days ago, the council got to work on the difficult task of trying to balance the city budget for the coming year by establishing a property tax rate that will at least bring in as much money as the city collected this year. The plan called for a jump of 23 percent to $8.18 per $1,000 of taxable value, an increase rationalized by falling property values and dwindling sales tax and revenue sharing receipts. The alternative is cutting city services, notably six employee positions including members of the Police Department who could be gone even with the higher tax rate.
Trying to balance the wants of the citizens with the available revenue is never easy, but the council hasn't helped its cause by its erroneous spin. The mayor and most of the rest of the council presumed incorrectly that assessed property values fell universally and proclaimed a tax rate increase would not necessarily translate into a higher tax bill. Mayor Scott McPherson and council member Ginny Miller even challenged journalists to report their mistaken belief as fact to help them overcome anticipated public reluctance.
Let's be clear: The council did not mislead intentionally. But the ignorance from the city's elected leadership is disconcerting, as is the staff's failure to correct the repeated inaccuracies coming from the dais.
As Times staff writer Isaac Arnsdorf reported, the taxable assessments on 80 percent of the city's parcels did decline. Those would include commercial property and rental housing, the nonhomesteaded properties that do not fall under the Save Our Homes tax break.
But one in five parcels increased in assessed value, including more than 60 percent of the residential housing stock. Those are the owner-occupied houses across the city — the residences of people who live here permanently, make extensive use of the city services and are eligible to vote in municipal elections.
Their assessed values — including those of the mayor and three of the four council members — inched up less than 1 percent, matching the increase in the Consumer Price Index, even though the market values of their homes declined. That is the recapture rule, a Florida Department of Revenue provision that requires a taxable assessment to be adjusted upward each year until it meets the market value.
The little-known state edict from 1995 is intended to help local governments recapture some of the revenue lost to the substantial tax breaks accorded homeowners under Save Our Homes. The provision had been mostly irrelevant over the years because of annual escalation in real estate value, but the recent declines meant the recapturing began in earnest last year. The jump in individual assessments in 2008 left homeowners peeved, but the new $25,000 exemption included in Amendment 1 mitigated the financial implications on their wallets or escrow accounts. There is no new exemption in 2009 and owners of homesteaded property will see an increased city tax bill even if the property tax rate remains status quo.
That being said, the status quo would be unwise. The council still must set a proposed property tax rate by July 28. It should acknowledge its misstatements and set a reasonable increase (Pasco County settled on 19 percent) that can be lowered, if need be, as the budget adoption deadline nears.
The big-ticket items of a city police force, fire department and library are not cheap. However, residents, over the years, have indicated their preference for maintaining those municipal services even though consolidation would have brought cost savings.
The council then shouldn't hesitate to set a proposed property tax rate that will finance them accordingly. Likewise, the council should be up-front about asking the public for a greater investment in maintaining the quality of life offered in New Port Richey.