Key West tax hike trimmed to 3.6 percent from 13 percent

BY PRU SOWERS

KONK LIFE STAFF WRITER

The good news is that the proposed 13 percent tax hike in the upcoming fiscal 2016 Key West City budget has been tentatively reduced to 3.6 percent over roll back. The bad news is that city officials have another half a million dollars to cut from the budget if they want to keep revenue at the same level as last year, thus avoiding any tax increase for property owners.

City Commissioners approved on first reading Sept. 8 a millage rate of 2.6843 per $1,000 of assessed value, which translates into an annual city property tax rate of $1,191 a year – an increase of $3.56 a month – on a home with a taxable value of $460,000. That was down from the initial budget estimate approved by commissioners of $1,348 on a similarly valued home. Monroe County has yet to set the millage rate for its portion of local property tax bills.

“That [updated millage rate] is significantly less than where we were when we had our budget workshop” on July 21,” said Key West City Manager Jim Scholl. “We’ve transferred some monies back and forth, found some savings, did some reduction to try to reduce the burden for this year.”

Commissioners will set the final tax rate at a special meeting on Sept. 22. Between now and then, Scholl and city staff will try to find another $532,000 in spending cuts and/or revenue increases to put the city at rollback, which is the millage rate that produces the same amount of revenue as the prior tax year.

Commissioners suggested a variety of ways to reduce the budget by that $532,000, including eliminating one of the two assistant city manager positions. Both Commissioners Clayton Lopez and Tony Yaniz questioned whether Assistant City Manager Sarah Hannah-Spurlock’s position was needed. Spurlock was hired in June 2014 to oversee the financial side of city operations. However, Scholl recently hired a new city finance director, Mark Finigan, who has taken over some of Hannah-Spurlock’s budgetary responsibilities.

“We’ve become top heavy in administration. We’re paying really significant salaries. I don’t think we need it [two assistant city managers] anymore,” Lopez said.

Yaniz, who has publically criticized Hannah-Spurlock’s $124,800 annual salary in the past, said that Scholl effectively now has three assistant city managers, Finigan, Hannah-Spurlock and Greg Veliz, who is in charge of operations.

“Why do we have four managers,” Yaniz said, referring to Scholl and the three top administrators. “You’re top heavy. You’re absolutely top heavy.”

Scholl, Mayor Craig Cates and Commissioners Teri Johnston and Jimmy Weekley disagreed with that assessment.

“The reason we’ve been successful, at least fiscally responsible…. Is because we have a span of control that works,” Scholl said.

Another option to further reduce the proposed tax hike would be to dip into the city’s reserve fund, which currently stands at 92 days of operational expenses. Last year commissioners voted to use five days’ worth of reserve funds to reduce what ultimately was a five percent tax increase. But Scholl and Finigan warned against dipping into reserves, cautioning that if a hurricane or other unanticipated disaster hits Key West, the reserve fund may be the only thing standing between a functioning government and no government.

“I would not recommend that you do it on the back of the reserve fund,” Finigan said about bringing the $48.2 million budget down to rollback levels. “I would say let’s find additional expenditure reductions.”

It would take approximately 3.5 days’ worth of reserve funds to eliminate $532,000.

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