Key West property owners facing a 13 percent tax hike in new fiscal year

BY PRU SOWERS

KONK LIFE STAFF WRITER

 

When it comes to the new Key West City budget for fiscal year 2016, the bad news is that if nothing changes, property owners are looking at a 13 percent tax hike.

The good news is that there is a pretty good chance that rate will come down, according to City Manager Jim Scholl.

After two days of budget hearings with the city commission, the tentative tax boost approved by commissioners on July 21 was $293 per $100,000 of assessed value. For a home assessed at $460,000, that translates into a $13 per month tax increase, or $156 for the new tax year.

The tax hike in fiscal 2015 was five percent, to $277 per $100,000 of assessed value.

Usually the budget hearings are a way for commissioners to go department by department looking for places to cut proposed expenditures. But instead they added $300,000 to the $49 million total budget to increase the amount of money allocated to road repair – adding $250,000 – as well as hire a full time permit technician in the building department for an estimated $50,000.

But Scholl said after the budget hearings that he was confident staff could reduce proposed spending before the budget goes through its final hearings and adoption by commissioners in September.

“The odds are good. We will continue to refine the numbers,” he said.

Still to come are final revenue numbers for the current fiscal year, as well as expenses. Hopefully, Scholl said, higher than expected revenues will materialize, as well as lower than anticipated expenses. However, if that doesn’t work, Scholl said he is willing to delay some major equipment purchases slated for FY ‘16 as a way to bring down the proposed spending plan.

And, as a final option, the city can dip into its reserve fund like it did last year, when commissioners voted to take the equivalent of five days’ worth of reserve monies to help reduce the projected tax increase. The city currently has enough money in reserve to pay for 91 days of government operation. Taking money out of reserves and adding it to the general fund would lock the city into using money set aside for emergency spending. For example, the city spent two days’ worth of reserve funds repairing damage done by Hurricane Wilma in 2005.

Using reserve monies is risky, Scholl said, because it artificially lowers the tax rate. But so far, the city has been able to do that on occasion without too much difficulty, he said.

“It’s not a desirable practice to keep doing that,” he said about dipping into the reserve balance. “You’re sort of borrowing against yourself.”

The proposed tax rate for FY 2016 was approved by a 4-3 vote, with Commissioners Tony Yanitz, Billy Wardlow and Mark Rossi voting against it to protest the 13 percent increase.

“I don’t even want to start at that level,” Wardlow said.

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