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Posted on August 2, 2015
The local budget debate, over the proposed property tax increase, has taken many twist and turns and final approval is still more than a month away.
The recent 3-2 vote to tentatively approve a 23% increase in property taxes leaves the door open for more debate.
The City has gone to great lengths to justify the increase.
The City has tried to couch the increase as a “public safety” tax even though the tax is needed for general government pay raises and other expenditures not related to public safety.
City leaders tried to persuade the local police union to endorse the increase, they said no!
Now comes another PR move that is even more misleading than the “public safety” tax line.
During the vote to set the tentative property tax rate, City Commissioner Nancy Miller said “we have raced to the bottom of millage rates of cities in Florida.”
Take a look and listen.
Her message to citizens is clear: we have the lowest millage rate in the state of Florida, so be grateful and accept the tax increase.
But here is what no one in the City of Tallahassee will tell you during this debate: The City of Tallahassee has the lowest property tax rate because the city uses zero property taxes to pay for fire services, a core service.
On page 2 of the most recent annual report to the City’s bondholders, the City informs the bondholders of an important qualifier when talking about millage rates:
Property taxes can significantly impact the citizen’s perception of economic success. The City’s millage rate of 3.7000 mills is the lowest of the ten largest cities in Florida. However, not all of the comparable cities have implemented a separate fire service fee to cover the cost of fire protection as the City of Tallahassee has done. (Emphasis added)
The City informs the bondholders, but will not inform their own citizens.
Some cities have a fire service fee that augments property taxes that funds fire service. But Tallahassee pays for the total cost of fire service with a fee. TR could find no other City that finances fire services with only a fee.
This is why we have the “lowest” millage rate and why any comparison with other cities is not valid and misleading.
However, what would happen if we convert the fees collected for fire service into an equivalent millage rate and add that rate to the current property tax rate so we could have a valid comparison?
How would Tallahassee compare to other cities in the state?
TR requested copies of budget documents for five other cities, one of the cities had a fire service fee, the others did not. We also called and talked with staff in each of the cities.
The chart below shows the results of our analysis.
When you include fire service fees (column 2) in the calculation of the millage rate (column 3), the City of Tallahassee moves from the lowest millage rate (column 1) among the six cities to the second highest (column 4).
Only Orlando has a higher rate.
The above analysis is before the proposed increase in property taxes and fire service fee are implemented on October 1, 2016.
What happens if we change the chart to include these proposed increases?
We called the other cities and confirmed no other city is considering a property tax increase for 2016 – this could change, but as of today no increases are planned.
Like Tallahassee, Gainesville is considering an increase in the fire service fee. Those increases were taken into account in our analysis.
The chart below is the results of our analysis and shows where Tallahassee will rank if the proposed tax increase and increase in fire service fee takes effect.
Suddenly, we have raced to the the top in property tax rates!
Column 1 shows Tallahassee’s recently passed tentative rate (4.55) and column 2 shows the conversion of Tallahassee fire fees to a millage rate of 3.05. Adding these rates together gives a property tax rate of 7.60, the highest in the group of six cities and one of the highest in the state.
There’s no other way to say this, the millage rate that Commissioner Miller is celebrating (3.70) is fictitious and amounts to a Big Lie.
And it’s a lie that has consequences, because having one of the highest tax rates in Florida impacts the business climate and makes it harder for the economy to grow and provide jobs. A high tax rate makes it difficult for new companies to start and existing ones to expand.
Now you can call it a public safety tax and you can try and hide behind fees, but do you think a chief financial officer of a company that is looking to move to a city in Florida is not going to figure out this shell game?
The facts are this proposed property tax increase, with the increase in the fire service fee, will make us one of most taxed communities in the state of Florida.
Notes on calculations
Conversion of fire service fee to millage rate:
2015 Tallahassee: Tallahassee fire service fees for city residents are $21.539 million. One point in millage rate equals $8.885 million. Therefore, the equalvalent millage rate would be $21.539 million divided by $8.885 million, which is 2.42 mills.
2015 Gainesville: Gainesville fire services fees are $5.184 million. One point in millage rate equals $5.454 million. Therefore the equalvalent millage rate would be $5.184 million divided by $5.454 million, which is .95 mills.
2016 Tallahassee: Tallahassee fire service fees are projected to be $28.094 million. One point in millage rate equals $9.200 million. Therefore the equalvalent millage rate would be $28.094 million divided by $9.200 million, which is 3.05 mills.
2016 Gainesville: Gainesville fire services fees are projected to be $5.400 million. One point in millage rate equals $5.586 million. Therefore the equalvalent millage rate would be $5.400 million divided by $5.586 million which is .97 mills.