Town Manager’s Corner: FY 2009/10 budget message
Few things in life get us as frustrated as taxes. Well, maybe my wife’s Honey-Do-List gets me more frustrated because it never seems to get any shorter. But the subject is taxes not my never ending list of chores.
Rarely is the budget process transparent enough that we can easily understand how the tax rate was established. We wonder if we are paying too much. Also, are we getting our money’s worth? I know when I get ready to buy a refrigerator, for example, my foremost consideration is value. When it comes to the Town’s taxes, I think you’re getting good service at a fair price in other words good value. In order to illustrate my point I’m going to use my own Truth in Millage (TRIM) notice I recently received.
The TRIM notice lists all of the taxing authorities on the left hand side of the notice. These are the separate and distinct governmental bodies that all together make up your tax bill. The Town can only affect its own tax rate, not that of the other taxing authorities. You, the taxpayer, are the only one who has any sway on these other taxing authorities.
On your notice you’ll find three columns of interest. Column 1 shows the taxes you paid last year to each taxing authority. Column 2 shows the taxes you’ll pay next year if the proposed tax rate of each authority is approved. Column 3 shows the taxes you’ll pay to each taxing authority if NO Budget Change is made by the taxing authority.
This is where it gets confusing! So let’s talk about this for a minute. We often hear the term Roll Back Rate and assume that generally means the tax rate is decreasing. Well, not always. Sometimes it is really the Roll Forward Rate; this will become clear in a minute. If the taxing authority makes no budget change (same expenditure amount in the general fund as last year) you’d expect to pay the same amount in taxes next year as you did last year.
However, that is not what generally happens. The Property Appraiser doesn’t look at each individual property when establishing the Roll Back Rate. The Roll Back Rate is established on the entire taxable value of property in Town (excluding exempt property such as Bay Oaks). Last year the taxable value of real property in Town was $3,422,119,910 and the tax rate was 0.7093 per $1,000 in value. The result was $2,427,310 collected in ad valorem taxes. This year the taxable value of real property in Town has decreased to $2,964,904,781. In order to collect the same amount of taxes as last year, the tax rate would need to increase 0.8187. This way, the Town would collect the same amount in taxes as last year ($2,427,310). In years when the property values increase, the tax rate rolls back and in years when the taxable value decreases the rate rolls forward, assuming no change in general fund budget requirements. Now here’s where the Taxable Value of your property found on the bottom right corner of the TRIM notice comes into play.
I’ll use my TRIM notice to get the general idea across. The taxable value of my property increased from $306,150 to $310,380 because of some minor improvements I made last year. So, looking at the Municipality or MSTU section of Column 3 we see that $254.11 will be collected by the Town if No Budget Change is made. This is an overall increase of $36.96 based on a Roll Forward Rate of 0.8187. In the alternative, Column 2 shows that I’ll pay $269.10 based upon a proposed tax rate of 0.8670, an increase of $51.95. Remember no two properties will increase or decrease the same in a given year with the possible exception of condominium units, so the change in your tax bill will vary. Even if you experienced a slight decrease in your property value the Roll Forward Rate may increase your tax because the rate is based upon the Town’s entire taxable value of real property not just yours.
Reviewing Column 2 of my TRIM notice and the tax bite from each of the taxing authorities I find that $269.10 is just 4.79 percent of the total proposed tax and this 4.79 percent is all that goes to the Town of Fort Myers Beach from my tax payment.
So now let’s talk about value and what I get in return for that $269.10.
When I consider the many services I receive from the Town such as general government administration, capital improvements, transportation, parking, community development services and cultural and recreational opportunities, the $269.10 is a bargain. But, more importantly, what the Town Council and Staff do for me with that $269.10 is remarkable. We utilize that small amount of money to leverage millions of dollars in federal, state and county funds to enhance our beach and shoreline parks, to maintain the beach and beach accesses, manage and maintain the pool, implement the North Estero storm water and road reconstruction project. Next year we’re going to bring you the new and improved Bay Oaks Recreational Campus and make it your community center, not the County’s. The list can go on but I think you get the point.
The Town’s total budget is $24,080,099 and is made up of the Town’s General Fund and a number of other special revenue funds. The General Fund is the Town’s major operating account. The total General Fund budget is $8,461,201, and it is comprised of the proposed property tax collection of $2,607,920, other general fund sources such as sales tax, licenses and fees, charges for service etc. and fund balance (money saved from all general fund sources). The proposed budget will allow the Town to leverage an additional $15,618,898 to conduct the activities I mentioned above and allow us to set aside reasonable reserves for future years. That’s a nearly 2-1 return on investment.
In the end the difference between last year’s total ad valorem tax proceeds and next year’s is $180,610. The difference will provide the funding needed to ensure the success of the Bay Oaks Recreational Campus. As you know the County is transferring ownership and management to the Town as of October 1, 2009. Previously the Town provided approximately half of the cost of operations approximately $300,000. Next year we will be responsible for all costs. After October 1, I invite you to drop by Bay Oaks and talk to the staff and discover the gem you have here in Town. I trust you will agree the benefits of local control of Bay Oaks far outweigh the additional costs.
My goal here was to take out some of the mystery of the TRIM notice and to show the value you get for your taxes and I hope I’ve done that. If you have any questions let me know; the number is 239-765-0202, extension 133 or send me an email at Jack@fortmyersbeachfl.gov. If I’m in the office you’ll reach me because I answer my own phone.
submitted by
Jack Green, interim Town Manager
Fort Myers Beach