City property taxes to rise 5 percent

 

BY PRU SOWERS

KONK LIFE STAFF WRITER

The cost of paradise is going up five percent.

That was the 6-1 vote at the city commission meeting Tuesday, Sept. 16, finalizing the municipal tax rate for fiscal year 2015. The final millage rate will be $277 per $100,000 of assessed value. For a house assessed at $428,000, it will mean a tax increase of $4.79 a month or 5.09 percent, according to Assistant City Manager Sarah Spurlock.

It could have been more. Spurlock and Interim City Manager Jim Scholl had recommended a higher millage rate that would have meant a $6.33 monthly increase on a home valued at $428,000. But commissioners rejected that plan and used additional money from the city’s reserve fund to reduce the proposed tax hike.

The reason for the higher costs in the next fiscal year were laid at the feet of two new programs, one to bring emergency services in-house instead of using an outside ambulance company, and the second to give pay raises to dozens of city government staffers who are underpaid, according to a recent salary survey.

In addition to taxpayers digging deeper into their pockets to pay for these new costs, city staff recommended taking money from the city’s reserve fund to help reduce the tax increase. The city currently has enough money in reserve to pay for 91 days of government operation. Scholl and Spurlock recommended taking out funds equivalent to three days. But City Commissioner Billy Wardlow proposed using six days’ worth of revenues to get closer to “roll back,” the term used for a budget that is the same as the previous year’s with no accompanying tax increase. Mayor Craig Cates also supported the move to help lower the proposed tax jump for next fiscal year.

“Who do you think is going to pay that,” he said about the tax increase. “The renter. Sixty percent of the homes here are non-resident and they’re going to be paying for it.”

But both Scholl and Spurlock strongly advised commissioners not to use additional reserve funds to pay for on-going expenses, which would lock the city into using money set aside for emergency spending on recurring operational expenses. For example, the city spent two days’ worth of reserve funds repairing damage done by Hurricane Wilma in 2005.

“Using reserves to balance the operating budget is not a wise budgeting choice because they are recurring costs. What that will do is artificially suppress the millage rate,” Scholl warned.

After rejecting Wardlow’s proposal to use six days of reserves, commissioners voted 5-2 to use five days.

“A good part of my constituency are struggling just to stay here,” said Commissioner Clayton Lopez, who represents the Bahama Village area. “There’s a lot more to this than just the mathematical part of it.”

Once the millage rate was set, with Wardlow and Commissioner Teri Johnston voting against it, commissioners then moved to approve the fiscal 2015 budget, which will total just under $155.8 million. Wardlow and Commissioner Mark Rossi were the lone votes in protest.

“I think some more can be cut out of this budget. And I won’t support it,” Rossi said

In addition to the 5 percent city tax hike, Key West property owners will also pay a 2.7 percent increase in county taxes. Monroe County Commissioners voted unanimously on Sept. 11 to set a tax rate of $394 per $100,000 of assessed value. Ironically, that rate is down from the $400 per $100,000 of assessed value charged in the current fiscal year, but tax bills will increase almost 3 percent because of higher property valuations.

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