July 28--Orlando Mayor Buddy Dyer will recommend raising property taxes on Monday, but he wants everyone to know one thing: The tax hike has nothing to do with the big projects he has championed.
The initiatives that started under Dyer's watch -- more than $1 billion for a new NBA arena, performing-arts center, and rebuilt Citrus Bowl; the SunRail commuter train; and an upcoming soccer stadium -- did not contribute to the $29 million budget gap Orlando now faces, he said.
"Less than 1 percent of our general fund has gone to anything related to what you want to call the marquee projects," Dyer said Friday. "We're just talking operational funds."
Dyer will ask the City Council to approve raising the property tax rate by $1, bringing it from the current $5.65 to $6.65 for every $1,000 of taxable value. The owner of a $200,000 house with a homestead exemption paid $847.50 in city taxes last year. The owner of a $200,000 homesteaded house would pay $997.50 under the new rate.
The Dyer administration has pushed big-ticket sports and arts venues, but those have mostly been funded through tourist taxes, revenue collected from a downtown taxing district and state taxes.
There are relatively small exceptions: About $1.3 million a year in loan payments on the construction of SunRail train stations, and annual payments on a $15 million loan to fund the city's share of a new Major League Soccer stadium.
Instead, Orlando leaders blame the Legislature and voters, who approved caps on how much property valuations can increase -- decisions that prevent cities from taxing a home's full value.
"We have revenue caps, so even though property values are coming back, our ability to grow our tax base is not," Dyer said.
The city's tax rate had been $5.69 for a number of years, but a tax-reform package adopted by the Legislature forced the city to lower it to $4.93 in 2007. The next year, the city raised it to $5.65, where it remains.
For the past six years, the city has cut expenses to balance its budget each year. Cuts have included filling fewer potholes, mowing and picking up litter from roadsides less often, eliminating holiday bonuses for employees, cutting contributions to community organizations, reducing hours at some community centers and public pools, and leaving vacant positions unfilled longer to save on personnel costs.
City officials say the cuts saved a cumulative $123 million over six years.
"The cuts we have made since 2009 are massive," Chief Financial Officer Rebecca Sutton said.
Rising property values and new construction will bring in $6.5 million more in property-tax revenue next year, a 6.3 percent increase. But Chief Financial Officer Rebecca Sutton said the city's personnel costs, fuel costs and other expenses are increasing.
In addition to raising the property-tax rate, department heads will be told to cut 4.5 percent from their budgets to save another $15 million. And the $2.5 millionOrlando pays to put police officers in city schools will now be funded with assets seized in criminal cases.
The Orlando Utilities Commission also pays the city a sizable transfer fee every year, and it will increase by $5 million next year to $81.4 million.
Orlando isn't the only local government facing budget troubles. A proposal in Miami-Dade County would eliminate more than 600 jobs, including 228 police positions, to plug a $64 million shortfall.
Even so, most other Florida cities don't plan tax increases this year. Orlando officials argue that many already did at some point over the past five years.
"A lot of cities went ahead and raised their millage rates during the recession," Dyer said. "We chose not to do that during the toughest times for our residents, but now that the economy has bounced back, we're going to make the tough decisions to make sure that our city continues to be in a good operating position."
With the tax increase, the city would bring in $128 million in property-tax revenue -- still less than the $137 million collected in 2008, when property values were near their housing-boom peak.
Orlando won't adopt its budget until the City Council holds two public hearings in September. But commissioners have talked about a tax increase at several workshops already, and the majority have said they don't want to cut deeper into city services.
"I'm convinced at this stage that we've done a really good job of managing our expenses," Commissioner Jim Gray said. "I think it's probably inevitable that the millage rate will go up."
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