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Tax rates likely to hold steady

It's budget time for local politicians in the Tampa Bay area, and for most taxpayers the news is good, at least for now. Property tax rates likely will stay about the same, maybe even go lower.

Although politicians never like raising taxes in an election year, this hold-the-line approach to governing is part of a trend that began about five years ago when elected officials in Florida started responding to the taxpayer outrage of the 1980s.

However, some officials aren't sure how much longer this trend can continue. "If taxes don't rise soon, we all know that it will be difficult to maintain our current level of services," said Ed Hunzeker, the assistant Hillsborough County administrator for finance.

Hernando County isn't waiting. The County Commission voted last week to raise property taxes 13 percent rather than reduce services.

"For the last four years, we've been telling commissioners that if they didn't raise the taxes, we would have to start closing libraries and eliminating entire programs," said Hernando County Administrator Charles Hetrick. "We are over $3-million in debt, and higher taxes is the only way out."

Hernando has resisted raising taxes for the past five years. So have Hillsborough, Pinellas and Citrus counties. Cities such as Tampa and Clearwater have frozen their tax rates since 1991, even as they experienced more demand for services such as fire and police protection. St. Petersburg has chopped taxes by 17 percent.

Pasco County, however, has bucked the trend until now, raising tax rates by 13 percent in the past five years. This year, though, Pasco commissioners plan to keep the tax rate the same.

Still, other local governments have managed to keep tax rates level because of growth.

"Across the state we're seeing taxes stay at the same level because governments are learning to live off growth," said Kurt Wenner, a senior analyst for Florida TaxWatch, a nonprofit research institute.

Over the past five years the value of property that bay area governments can tax has increased enough to generate more revenue, even as tax rates stayed the same.

Citrus leads the way, with the value of taxable property rising by more than 20 percent in five years. Hernando also has enjoyed double-digit increases in taxable value, while growth in Hillsborough, Pasco and Pinellas has comfortably outpaced inflation. A county's tax base increases two ways: when market values of existing property increase and when new taxable properties are built.

But if tax rates continue to fall and growth doesn't increase faster, Hillsborough's Hunzeker said, elected officials in the larger counties might soon find themselves mired in Hernando's unpleasant dilemma: drastically cutting services or raising taxes.

"Today we're making small cuts in everything except public safety to keep the budget in line," Hunzeker said. Cutbacks include less transportation for the disabled and fewer staff in the county's social service offices, he said.

Over the past five years, Hillsborough's tax rate has increased less than one-tenth of 1 percent. With the county's population growing at 4 percent a year and revenues increasing by less than 2 percent a year, it doesn't take a bean-counter to see that taxes won't stay flat forever, Hunzeker said.

"It's clear that county governments will need to diversify their sources of revenue if they don't want to raise property taxes," said Mary Kay Cariseo, the deputy executive director of Florida's Association of Counties.

That's exactly what's happening. User fees help pay for services that once were financed with tax dollars. Today, trauma victims in Hillsborough County pay a minimum user fee of $310 to be transported in an ambulance, plus $20 for oxygen.

Impact fees, a one-time charge levied on new construction, and consumption taxes, like the county gas tax, also help cover the cost of expanding infrastructure needs, delaying the need to raise property taxes.

The sales tax has become a favorite way for counties to raise money without tinkering with property tax rates. In 1989, Pinellas voters approved a 1-percent sales tax increase. Since then, the Penny for Pinellas has netted $228-million for the county, with most of the money earmarked for roads and transportation.

Hillsborough voters have twice rejected higher sales taxes and will have another referendum Sept. 3 on whether to raise the tax by a half-cent for roads, schools and a new stadium for the Tampa Bay Buccaneers.

"Tourists help pay the sales tax," said Bob Stewart, a commissioner for Pinellas County. "That's why voters here want more sales tax, not more property tax."

Cities also are moving away from relying on property taxes. Indeed, property taxes, which once covered 70 percent of city budgets, now often account for less than 40 percent, said James Nicholas, a professor of urban planning at the University of Florida.

In St. Petersburg, property taxes, responsible for 38 percent of the city's revenue, don't even cover the $190-million it costs to run the police and fire departments each year, said Tish Elston, the city budget's director.

Susan MacManus, a political science professor at the University of South Florida, said it is political poison for any local official to try to squeeze out additional revenue through higher property taxes.

"No matter what office you're seeking or what party you represent, no matter how much money you need, you have to run a tax-cut campaign these days," MacManus said.

Politicians in Pasco are doing exactly that. Since 1991, Pasco's property taxes have steadily increased by 13 percent, but this year promises to be different, said County Commission Chairman Ed Collins. The reason: politics.

"We have more county officials up for re-election this November than I ever remember," Collins said. "And they all are promising smaller budgets, which might mean the first tax cut in a long, long time."

The tax cut the commissioners are proposing is less than 1 percent.

The tax trend might not last forever, but analysts of all sorts are counting on no tax increases this year _ except in Hernando.

"I moved to this area because of low property taxes," said Kevin Williams, a welder who moved to Tampa from Chicago two years ago. "And if I have to pay more taxes for my home, I'm going to move right back."

Total taxable value of property

Citrus Hernando Hillsborough Pasco Pinellas

1991 3.414 3.084 24.12 6.892 29.75

1992 3.584 3.118 23.88 6.962 29.57

1993 3.664 3.285 24.89 6.998 29.85

1994 3.989 3.364 25.49 7.106 30.45

1995 4.142 3.536 26.22 7.33 31.24

1996+ 4.302 3.649 26.90 na 32.21

Percent of change 1991 to 1995

up up up up up

21.3% 14.6% 8.7% 6.4% 5%

Note: Values expressed in billions.

Source: Property appraiser offices

Millage rate for selected Suncoast areas

Citrus Hernando Hillsborough Pasco Pinellas

1991 8.803 7.958 8.156 8.151 5.495

1992 8.788 7.958 8.216 8.151 5.417

1993 8.772 7.958 8.214 8.780 5.429

1994 8.545 7.958 8.209 8.810 5.585

1995 8.059 7.958 8.168 9.234 5.514

1996+ na 8.958 na 9.173 5.510

Percent of change 1991 to 1995

down No up up up

8.5% change 0.1% 13.2% 0.3%

Millage rate for selected Suncoast areas

Clearwater St. Pete Tampa

1991 5.115 9.017 6.539

1992 5.115 9.017 6.539

1993 5.115 8.734 6.539

1994 5.115 8.449 6.539

1995 5.115 8.207 6.539

1996+ 5.115 7.462 6.539

Percent of change 1991 to 1995

No down No

change 8.9% change

Note: +1996 millage rate is proposed and not all rates are available.

Percent of change is for 1991 to 1995 only, does not include 1996.

1 mill = $1 of tax for every $1,000 of taxable property.

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