Mayor Peyton has floated the idea of a property tax increase. And a pretty healthy one. 8.4 to 9.6 mils, or about 14%. The impetus is a $60 million gap in the city budget. City, police, and fire pensions have an enormous unfunded liability, and and we spend less per capita on almost every major service than any other major metropolitan area in the state.
The millage rate has steadily declined since 1992, and has only increased in three years since 1972. The rest of the time, it’s either declined or remained flat. Mayor Delaney was famous for his long string of millage rate cuts. As property values rose, the millage could be cut and revenues would still increase. Add to that the (non binding) referendum that passed in 1991 that capped property tax increases at 3 percent. Coincidentally (?) 1992 was the last year that property taxes actually went up, and then only .09 mil. So the 1.2 mil increase proposed would be the largest property tax increase since Jake Godbold bumped taxes 1.75 mils in 1983 … and the rate had dropped 2 mils the previous year. Not surprisingly, property tax revenues peaked in 2007, after the huge run-up in property values in 2006, and even then Mayor Peyton was telling us how tight the budget was going to be. The past two years, the decline in property values, and by extension revenues, has be steep.
The JCCI budget study said very clearly that revenues had to increase, or spending had to be cut. Since we are required to have a balanced budget, those are the choices. Property taxes were not specifically mentioned, but given the headroom that’s available in our millage rate, the state allows up to 20 mils, and the fact that property taxes can be used to replenish the general fund where fees often have strings attached, that’s most likely the easiest place to go.
There are so many factors to be considered. Unfunded mandates from the state are also and issue, and it doesn’t even touch the levy for schools. It is a very deep, complex, and frankly ugly issue. When they talk about watching the sausage being made … welcome to the meat grinder.
Interestingly, The Florida Times-Union is reporting that it interviewed 18 of 19 council members, and they all said that while a property tax increase was not their first choice, they could be convinced. There will be enormous political pressure to not raise property taxes. And with a campaign coming up, not only for Mayor but for the council seats as well, the debate should be spirited. Particularly since there are two or three members of the council who are eyeing the office at the other end of the 4th floor at City Hall.
Property owners are understandably concerned. Adding a tax during a recession, when people are struggling to pay their bills anyway, makes people who own property nervous. In an unscientific poll in “The Jacksonville Observer”, the responses are overwhelmingly in favor of cutting spending rather than raising taxes, or a combination of both cuts and revenue increases. On the other side of that coin, many of the local non-profit organizations who depend on money from the city to survive and provide a certain level of service are breathing a cautious sigh of relief.
There are no easy answers, nor even particularly politically palatable ones. There’s an old saying about a rock and a hard place. After sitting through most of the JCCI meetings, I’d have to say we’re pretty much there. The quote from JCCI’s Ben Warner in the T-U pretty much sums it up. “Business as usual won’t work and doing nothing is not an option,” he told the paper. “There are no non-painful choices.”
Mayor Peyton holds a news conference on the topic tomorrow morning at 10 at the T-U Center downtown. I have to be here in the morning, but I’m hoping I can get away in enough time to get down there for some of the news conference. Whether I’m able to get there or not, the debate begins tomorrow, and the Mayor’s budget is due in a couple of weeks.
Everyone who owns property, and probably those who rent (because landlords WILL pass along a tax increase to their renters eventually) should be watching.