No Tax Increase Budget Is Really A Doubledigit Rate Hike
Written by Michael Lewis on July 15, 2010
By Michael Lewis
"I have prepared a no tax increase budget." Those are the first words in the budget message Mayor Carlos Alvarez sent to Miami-Dade commissioners a week ago.
But that "no tax increase budget" in reality would cause a double-digit jump in the property tax rate.
The mayor did in fact tell the truth — just nowhere near the whole truth.
He’s talking about tax revenues, which indeed would not increase were his budget adopted.
But because property values in this county fell 13.4% in a year, property owners would pay far higher taxes per dollar of property value under the mayor’s budget.
Fortunately for beleaguered taxpayers, commissioners, not the mayor or manager, set tax rates. And commissioners occasionally respond to taxpayers, who have lost massive property value in a recession but in return are being asked to pay massively extra to government.
That’s not fair. It’s not right. It’s not smart. But it’s certainly county government.
The budget proposal signed by County Manager George Burgess takes pains to say that some people may pay more than last year, some less if the county adopts the budget as written.
But that’s in absolute dollars. He never addresses the tax rate they might pay, and under this budget it must be far higher for everyone — up from this year’s $9.7405 per $1,000 of property value to about $11.
At some point the county will have to spell out that number, though the 57-page budget message never hints at a tax rate for the year ahead. Could that be because the rate’s increase will be so staggeringly high?
Don’t forget: this is a tax based on value. So if the average existing property fell about 15% this year (new construction helped cut the fall to 13.4% overall) and taxpayers as a whole will pay almost as much to government as last year, their tax rates almost certainly will rise in double digits.
From the county’s perspective, this translates to no tax increase.
But from the perspective of the owner whose property is worth 15% less yet who must pay about the same tax on it, it’s a huge tax hike. The taxpayer owns far less value, is taxed on that holding and pays the same in total dollars.
A parallel might be the income tax. If you earned $40,000 last year and paid $10,000 in taxes, then this year you earned 15% less, $34,000, and paid $10,000 again, you had a very real tax hike.
When you have less and you’re being taxed on what you have, paying the same as before is a very real, very painful hike.
Only not from government’s perspective — which is the problem.
The mayor and manager acknowledge, as they must, that everyone’s property holdings have taken a hit. But the mayor says "residents have told us what programs and services are important to them" and he plans a double-digit tax rate hike to maintain those services.
But were you asked if those services were important enough to you that your tax rate would soar in double digits? Was anyone asked?
"We… cannot allow our government services to be compromised," the mayor writes in his budget message. How about compromising the economic health of the county’s 2.4 million residents with a hefty tax rate hike when they can least afford it?
Mr. Burgess aggressively defends the utility of his large administrative staff. And he notes that the county has added many new services. "There can be no doubt that Miami-Dade residents receive more service and better service for their tax dollars. Of that we should all be proud."
That may be. But how about taking pride in defending taxpayers?
And, could it be that in painful economic times, a vastly expanded government branching out into new service areas may be less important than protecting the wallets of the taxpayers served? Do we really need all those new bells and whistles?
While the two main buckets of county property tax revenues are budgeted at 98.86% of last year’s level, the property being taxed to fill those buckets fell to 86.6% of last year’s value, according to the county appraiser.
So every taxpayer, having suffered the loss of holdings of every sort in a recession, is being asked to pay a far larger percentage of property values to maintain an expanded county.
County operating spending in this budget would actually be $210 million more than in 2008-09. Paying for that spending falls on the back of the taxpayer.
Commissioners setting the coming year’s budget should make a simple one-word addition to the mayor and manager’s plan. Instead of "a no tax increase budget," simply make it "a no tax rate increase budget."
That’s fair, right, smart — and the whole truth.