Coral Gables Residents May Face An Upto 19 Property Tax Rate Hike To Help Balance Budget
Written by Jacquelyn Weiner on July 9, 2009
By Jacquelyn Weiner
Coral Gables residents could be hit with an up-to 19% increase in property tax rates in the upcoming fiscal year to balance the city’s budget.
The city’s current tax rate, 5.25, is to face an increase to at least 5.69 — and possibly as high as 6.25, depending on financial steps the city takes over the next few months, City Manager Patrick Salerno said in his budget summary to commissioners.
"We will continue to monitor events and make necessary adjustments as 2010 unfolds," he wrote.
Mr. Salerno did not respond to interview requests.
It could be necessary to add up to .4 mils to the proposed new base of 5.69 mils to generate $4.8 million to "replace the loss of estimated revenues or increases in budgeted expenditures" after tweaks to the budget, Mr. Salerno wrote.
An additional increase of .16 mils to generate an added $1.9 million could be necessary in the event of a "possible non-payment of the rent and fees under the Biltmore Hotel lease and Biltmore Golf Course Management Agreement," according to the summary.
With those issues yet to be resolved, commissioners can only consider their options.
Among the most drastic proposed by the manager: a full percentage-point jump in the tax rate.
However, an additional increase to the millage is "pretty much the last thing" the city will do to buoy the budget, said Don Nelson, city finance director.
"We would possibly have to adjust in other areas," Mr. Nelson said.
The commissioners were to have their first public crack at the numbers at a budget workshop this week.
Commissioners must agree on a tax rate and submit it to the county for distribution to residents in the annual Truth in Millage, or TRIM, notice.
From there, commissioners can later lower the rate but cannot raise it.
Two hearings are to be held in September before the final budget is adopted.
The proposed budget is usually approved with only minor changes, Mr. Nelson said.
This year, he said, it’s even more important that the budget stick as close to the proposal as possible.
"This is such a difficult budget, and there’s so many components … I hope that it would be approved as recommended," Mr. Nelson said.
Based on a 5.69 millage, projected revenue is estimated to rise by $12.7 million, from fiscal 2009’s $137.5 million to a projected $150.2 million for fiscal 2010, according to the summary.
This increase is mostly due to anticipated capital-improvements grants of $3.5 million to be received in 2009-2010, $6.2 million in new debt proceeds, and an unanticipated $1.3 million more in property tax revenue, according to the statement.
Without those grants and debt-service proceeds, the city’s financial situation could have been much worse, Mr. Nelson said.
"The proceeds and grants are capital," Mr. Nelson said. "If you took the capital out, you’d have a huge decrease in our budget."
And although the unexpected increase in property tax revenue "represents a portion of the value of new construction," the city still faced drops in its property values, according to the manager’s summary.
The gross taxable value in Coral Gables fell 8.4%, or $1.1 billion, from last year’s $13.4 billion, bringing the 2009 total before new construction to $12.3 billion, Mr. Salerno wrote.
Softening the blow, new construction adds $321 million.
Even with the boost, this represents the city’s "first property value decrease since 1992 as a result of Hurricane Andrew," although it’s a smaller hit than expected, he wrote.
While grants and bonds added revenue, other revenue streams are down.
"Revenues in general are down in pretty much everything," Mr. Nelson said. "If you really look, there’s a huge reduction in operating costs."
In total, the city projects $150.5 million in expenditures in the upcoming year, up $880,012 from $149.6 million budgeted in 2008-2009.
But operating expenditures are to be cut by $8.8 million, from $138.7 million in 2008-2009 to $129.9 million.
The largest cuts are to be to salary, a nearly $4.4 million trim from the last fiscal year, followed by overtime and employee benefits.
Although these cuts to personnel costs are aimed at retaining employees, 43 full-time positions and 16 part-time posts are to be eliminated, the manager’s summary says.
"This was necessary to offset, among other factors, a significant decline in revenues attributed to the current economic conditions."