A Vote for Lower Taxes May Be a Vote for Higher Taxes

When Florida voters approved Amendment 1 to the state constitution with the perceived promise that everyone would pay less in property taxes, most of them failed to consider the economic concept of tradeoffs and the reality that government services must be adequately funded. Amendment 1 essentially allows more of the assessed value of all property to be excluded from taxation. For example, a home valued at $150,000 previously would be liable for taxes on $125,000. With the new provision, only $100,000 is subject to the property tax. Yet, another provision of the amendment allowed the wealthy to exclude as much as $400,000 from taxation when they sold a house and moved. So the benefits of the amendment went overwhelmingly to the rich.

But with more property excluded from taxation, revenues to fund local government services have declined significantly. Marginal tax rates may increase over time in an effort to recoup the lost revenues. In the meantime, however, other taxes and fees are being raised to generate funding for the government services citizens expect. An early response to the amendment from the city council in Jacksonville was the implementation of a new household tax to fund garbage collection. As the article below explains, city leaders want to increase that tax. Property tax savings for people of moderate means have been more than offset by increases in other taxes and fees. The overall tax burden for residents of Florida is being increasingly shifted from the wealthy to everyone else.

So some of the people who voted for amendment 1 in the expectation of paying less in overall taxes are now paying more. Their vote for lower property taxes has increased their overall tax burden.

In the April 24, 2010 Florida Times-Union article "Proposal to double Jacksonville's garbage fee up for vote Tuesday," Matt Galnor reports on the higher garbage fees:

When the City Council first passed a new garbage fee three years ago, it outlined gradual increases to try to cover the actual costs by 2014.

On Tuesday the council is expected to vote on a bill that would blow through that schedule and more than double the fee come Oct. 1.

The fee proposal is part of Mayor John Peyton's plan to bring city fees closer in line with how much the city spends providing the service.

If all of the new fees are approved Tuesday, it will bring in about $25 million to city coffers - and more than $20 million of the new dollars come from raising the garbage fee.

The annual garbage fee would go from $72 to more than $150 - contrary to the 2007 bill that would bring the fees up no more than $12 each year.

"We're catching hell paying this, how we going to pay more?" Southside resident Robert Blackshear said, sitting with friends in a lot off Old St. Augustine Road. "But they don't see it that way downtown."

Council Vice President Jack Webb helped lead the charge for a closer look at all city fees - some of which hadn't been changed in 25 years.

The analysis looked at everything from building permits and facility rentals to zoning change applications and the cost to rename a street.

The increases are tough, especially the garbage fee, Webb said, but added to the reality is the city has to try to capture its costs.

"It's bitter medicine, but we've got to do something to get our financial house in order," Webb said.

Councilman John Crescimbeni said Friday he's preparing an amendment that would change some of the fees.

For example, the fee to apply for a Planned Unit Development is now $1,500, but it costs the city more than $3,500 to process. The proposed fee is $2,000.

"The premise that this thing is being sold on - recovering costs - should be for everybody or nobody," Crescimbeni said.

The garbage fee would cover the cost of collecting residential waste, but there's another $28 a year per household in disposal costs that won't be covered by the new fees, Peyton spokeswoman Misty Skipper said.

The proposal passed two council committees last week - including a narrow 5-4 vote in the Finance Committee.

Crescimbeni was among those voting against it, as were Don Redman and Bill Bishop. Both Redman and Bishop said they were against it because of the original 2007 plan to increase the monthly fee by $1 every year.

"It's going back on our word," Redman said.

Peyton is proposing a $58 million shortfall for the budget that will begin Oct. 1. The mayor says the primary cause is rising employee costs and the city has so far been unsuccessful in getting unions to agree to a 3 percent pay cut and a less lucrative pension for new hires.

matt.galnor@jacksonville.com, (904) 359-4550

Links:
[1] http://jacksonville.com/sites/default/files/JacksonvilleNews1_9.jpg

Consequences of Florida Amendment One: Jacksonville Leaders Admit Need to Raise Property Tax Rates

In the September 10, 2009 Florida Times-Union article "Jacksonville council majority ready to raise taxes," Tia Mitchell reports that Jacksonville city leaders finally admitted the need to increase property tax rates as a result of the 2008 passage of Amendment One to the constitution of the State of Florida. The amendment allowed most property owners to exclude some of their property from taxation, with large benefits going to wealthy homeowners who move. Proponents of the amendment failed to explain sufficiently that other taxes would need to be imposed or property tax rates would need to be increased to compensate for the decreased revenues. The overall effect of Florida Amendment One has been to shift the tax burden from the wealthy toward the middle class and the poor.

As the deadline for a balanced budget looms, the Jacksonville City Council appears poised to raise the property tax rate, though members are quick to point out that other options — from tapping reserves to slashing even more spending — are still on the table.

The council’s Finance Committee spent several weeks whacking away at Mayor John Peyton’s proposed billion-dollar budget, hoping to cut $53 million and avoid the first property tax rate increase in 17 years. But when the hearings ended Wednesday, the panel found itself far short of the goal.

Official figures haven’t been compiled, but the committee found an estimated $30 million in cuts, the bulk of which would come from slicing all departments’ operating and salary budgets by 3 percent.

With most city officials convinced that finding an additional $20 million to cut is unlikely, the discussion now has shifted to whether to raise taxes. And if so, by how much.

Thirteen of 16 council members polled Thursday by the Times-Union said they’re open to increasing the millage rate, including several who voted in July to keep the maximum millage unchanged, at 8.48.

Even then, many qualified their positions, saying if the hoped-for spending cuts didn’t materialize, they’d be open to raising taxes.

Council President Richard Clark said the top options now include setting the millage as high as 9.27, the maximum allowable this year, or drawing down the city’s rainy-day funds to balance the books.

“I don’t know where it’s going to land,” he said Thursday.

Clark cautioned that until there’s a budget accounting by the council auditor, it’s impossible to say for sure how low the millage rate can be set and still bridge the shortfall.

Council members will work with the mayor’s office to discuss their goals and the cuts that have already been made, Clark said. A balanced budget must be approved before the fiscal year starts Oct. 1.

At a special council meeting Thursday, Clark expects some members will seek to restore some of the money cut from certain departments.

Clark said he is willing to live with all of the cuts recommended by the committee. “I offered up 90 percent of them.”

The full council may reconsider some of the committee’s cost-saving measures, such as scrapping the Inspector General’s Office, eliminating special events serving veterans and seniors, and forcing the sheriff to cut his budget.

Now that the budget panel’s work is done, Councilman Michael Corrigan said he’s ready to vote for a tax increase.

“I don’t have a choice, so yes,” he said.

Council Vice President Jack Webb is looking into ways to increase revenue other than raising taxes, such as increasing the fee private haulers pay to dump trash at the city landfill. That could bring in an additional $4 million this fiscal year, he said.

Webb is still researching the idea and wants to meet with the mayor’s staff, but he said he is leaning toward proposing the fee hike next week.

Councilman Art Shad, a vocal supporter of raising the millage rate and a vocal critic of some of the cuts, said he supports also tapping reserve funds.

“Reserves are there for emergencies,” he said. “This is a once-in-a-generation recession. Certainly you can make the case this would be a valid use of reserves.”

Shad said other Florida cities have raided their rainy day funds during the economic crisis. But he isn’t sure there are 10 council members who would support such a move in Jacksonville.

Setting the property tax rate at 9.27 mills, the “rollback” rate, would ensure that revenue stays consistent with the current fiscal year. Usually, the rollback rate is lower than previous year’s tax rate, but in Jacksonville and around country declining property values have changed that.

Peyton proposed setting the millage at 9.5, a 12 percent increase. The council rejected that idea, keeping the maximum millage at 8.48. That decision was vetoed by Peyton, a move that prohibits the city from setting its tax rate any higher than 9.27 this year.

If Peyton had not exercised his veto power, the council would likely be required to spend about $250,000 of taxpayer money to send amended notices to property owners about the maximum millage rate, Webb said.

Councilman Johnny Gaffney, who voted to set the maximum millage rate at 8.48, said he sees no other choice but to support raising taxes now.

“Unless there’s some other alternative areas we can cut, and I don’t think there are, we have no option but to raise taxes,” he said. “Not at the expense of jeopardizing quality of life and safety of our city.”

Gaffney is also lobbying to restore funding to the library system’s budget so that branches in his district and others won’t have to reduce hours so drastically.

“You take two libraries in the Northeast quadrant, you leave people with no option but to go where? Downtown?” he said. “Most socially disadvantaged people don’t have transportation.”

City still waiting on homeowners to pay new fees

City still waiting on homeowners to pay new fees

City still waiting on homeowners to pay new fees
Residents with overdue or late solid waste and stormwater bills will get notices soon.
BY ADAM AASENSTORY UPDATED AT 1:22 AM ON MONDAY, AUG. 17, 2009

Jacksonville is waiting on thousands of property owners to pay at least $24 million in new stormwater and solid waste bills and late payments, city officials said.

This year, the city has collected 61 percent of its expected stormwater bills, for a total of $20.8 million, and 60 percent of its solid waste bills, totaling $7.8 million, according to city spokeswoman Kristen Beach.

Late payment notices will be mailed out in October, Beach said.

At a time when the city is facing a major budget shortfall, 287,562 bills have been issued for a total of $53.2 million. That amount includes past-due amounts and late fees.

Likely slowing down the payments is the number of people with questions about the fees or who have applied for exemptions or adjustments.

From May 25 to Friday, the city's hotline - (904) 630-CITY - received 19,728 inquiries about fees. Jacksonville has received 2,180 applications, affecting 4,940 parcels, for credits, adjustments or exemptions.

The city has charged for only a year and half of fees so far - just two bills, one in 2008 and one in 2009. But the city is now considering taking legal action to collect delinquent fees, including placing non-foreclosable liens on properties.

"We certainly plan to pursue those options," Beach said.

The next step is for the city to evaluate the makeup of its delinquent accounts, whether residential or commercial, and then discuss how much it would cost for the various collection methods compared to what the city might expect to collect.

The City Council approved the fees in 2008 to soften the blow from state property tax reform and bring in extra revenue. The solid waste fees help pay for a portion of garbage collection costs, while the stormwater fees now completely fund the city's stormwater management system.

Solid waste services cost the city $14 per residence per month, but the fee is $4.25 per month on average.

The funds generated by these fees cannot be used for other services.

Minus the stormwater money, the city won't have as much money to help pay for inspectors and capital projects to help meet certain environmental requirements for the St. Johns River.

"Our collection of the fee will directly impact our ability to make the improvements needed, both from a flood-control and water quality standpoint," Beach said.

adam.aasen@jacksonville.com, (904) 359-4247

Jacksonville's Mayor Lobbies for Solutions to its Budget Crisis

Mayor John Peyton presented his proposed budget to the Jacksonville, Florida City Council in July 2009 and faced strong opposition, primarily because it called for increases in the property tax rate. Peyton, a conservative Republican, advocated the tax increase because Florida citizens voted on January 29, 2008 to increase the amount of property excluded from taxation. (With less property subject to taxation, the tax rate needs to increase to generate the same level of revenues.) This seems to be part of a broader issue in which U.S. citizens clamor for tax reductions, yet do not want government services reduced either.

A Message From Mayor John Peyton

Dear Friends,

Jacksonville is facing a financial crisis. Cuts from Tallahassee, global economic instability and an unsustainable pension system have created a $170 million budget problem. On July 13, I presented my proposed fiscal year 2009-2010 budget to the Jacksonville City Council.

It includes a three-part plan to solve Jacksonville’s budget crisis by making $40 million in operational cuts, taking on important pension reform and implementing a modest revenue increase. A millage rate increase of 1.02 mills will simply bring the property tax rate back to where it would’ve been before Tallahassee meddled in local government affairs.

As part of this year’s budget process, I will be hosting a series of community conversations about city finances. Please visit the Bulletin Board section of this Web site to see dates and times of town hall meetings, brown bag lunches and live media appearances.

I encourage you to explore this Web site, read my budget address , and ask yourself what kind of city you want to live in. Is it one without cultural events, museums or recycling? Is it one that lacks vital services for the most vulnerable members of our community like the hungry, homeless and those who are crime victims? I don’t want to live in that kind of city, and I don’t think you do either.

If you support my budget plan, I urge you to make your voice heard. Join the Fix It Now! movement and make your City Councilmembers aware of the kind of city you want for yourself and your children.

John Peyton
Mayor

For an in-depth analysis of the city’s finances, please read a report recently released by the Jacksonville Community Council, Inc. (JCCI). The report is called “Our Money, Our City: Financing Jacksonville’s Future” and provides a comprehensive overview of our current budget crisis.

Jacksonville's budget crisis

Across the United States, federal, state, and local governments are struggling to generate sufficient revenues to fund the services citizens expect. Jacksonville, Florida is struggling to pay for city services after state initiatives to reduce property taxes have lowered revenues.

The Jacksonville Community Council, Inc. (JCCI) published a study, "Our Money, Our City: Financing Jacksonville's Future" that reports:

the City of Jacksonville is facing significant financial issues which threaten its future financial sustainability. Managing these problems is particularly difficult because Jacksonville lacks a shared community vision of what the proper role of government should be… Jacksonville has not defined the core services citizens expect our local government to provide.

Solutions include building community confidence in local government by increasing transparency and creating benchmarking and measurement systems to assess our effectiveness. You can’t manage what you don’t measure. Increased public involvement in the process is important as the city faces the hard choice to increase revenues and/or cut services. These decisions must be made in an environment in which Jacksonville already spends less than the state average on nearly all services…and Florida ranks near the bottom nationally on its funding of services.

Click here for the full Spring 2009 pdf report.

We do not want government services cut, but we do not want to pay for them

According to the July 16, 2009 article "Town hall sends message to City Hall: Don't raise taxes and don't cut essential services, city officials are told" in the Florida Times-Union, Jacksonville residents do not want government services cut, but do not want to pay for them either. The budget crunch is a direct result of lower tax revenues because of the 2008 passage of Amendment 1 (which increased the amount of property that could be excluded from taxation) and the ongoing recession.

Though the people attending Wednesday night’s town hall meeting on Jacksonville’s budget crisis fell into two distinct camps, together their message was clear: Balance the city budget without cutting necessary government services and without raising taxes.

There were those who attended the meeting at Florida Community College at Jacksonville’s Deerwood Center to insist that the City Council not support Mayor John Peyton’s proposed property tax increase. They said the budget could be balanced by eliminating waste, including trimming the police and fire department budgets, and all non-essential spending.

Scott MacNaughton, who lives on the Northside and is a member of the Concerned Taxpayers of Duval County, said his family recently decided to use its Christmas savings to pay the city’s stormwater and solid waste fees. Just like he is making tough decisions, so should the city’s elected officials.

The focus should be on public safety, infrastructure and parks, what he considers core services.
“If it doesn’t fit easily into these categories it needs to be examined to be cut or be eliminated,” MacNaughton said.

He and others said the city’s books should be balanced without a tax increase. Some went further to say that even funding for nonprofit and social service agencies should be cut if a shortfall remains.

That conflicted with the views of the other half of the crowd who attended to urge the council to do whatever it takes to preserve money for the arts, education programs and crime prevention.

Leon Baxton, chief operating officer of Communities in Schools, said programs like these should be considered economic development.

“All of these programs produce young people who become adults who become taxpaying citizens,” Baxton said.

He said he supported paying higher taxes if it meant preserving after-school sites, summer camps and scholarships that help children succeed.

The town hall meeting was the first of four organized by City Council President Richard Clark to allow residents to weigh in on the city’s next budget and give their own ideas on how to balance it.

For more than two hours, residents that packed the meeting room weighed in on the budget crisis and either touted their support of social services or their opposition to the mayor’s tax increase proposal.

In addition to Clark, council members Stephen Joost, Clay Yarborough, Don Redman, John Crescimbeni and Bill Bishop attended. Alan Mosley, the mayor’s chief administrative officer, was in the crowd, as well as Duval County Supervisor of Elections Jerry Holland.

At the beginning of the meeting, Yarborough warned that issue isn’t as black and white as Peyton has outlined.

The mayor wants to raise the property tax rate 12 percent, the first rate increase in 17 years. The revenue increase would be added on top of $41 million in cuts Peyton has already proposed to fill a roughly $100 million budget hole.

If the tax rate is not increased, Peyton says fire stations and libraries will close and funding to nonprofit agencies will be severely decreased.

Not so, Yarborough said. The council can balance the budget any way it decides, and the cuts the mayor warns of are not even on the table right now, he said.

During Peyton’s budget address Monday, he challenged council members to find a way to balance the new budget — which includes $22.4 million in additional spending than the current budget — without raising taxes but warned he does not think it can be done without drastically affecting quality of life.

Several speakers at the town hall meeting expressed opinions that both camps could agree on.

Barbara Clingenpeel said that belt-tightening across all city departments, including police and fire, should be the first priority. She praised Joost, chairman of the council’s Finance Committee, for saying previously that the council should not consider a tax hike until it studies the budget and finds any possible cuts.

“Please continue to find savings and efficiencies before raising taxes,” said Clingenpeel, who lives on the Westside.

But she also expressed support of social services, including the Jacksonville Journey anti-crime initiative.

“We need to support public services, the arts, everything that gives our city a good quality of life,” she said.

tia.mitchell@jacksonville.com
(904) 359-4425