Key West finances need significant boost in upcoming fiscal year

BY PRU SOWERS

KONK LIFE STAFF WRITER

 

The party’s over.

While Key West property owners have generally seen unchanged tax rates in seven of the past 10 years, the upcoming fiscal year beginning Oct. 1 isn’t going to be so pleasant, according to preliminary budget estimates presented at a series of city commission workshops last week. As of now, city Budget Director Mark Finigan is estimating a relatively small annual tax increase of $38 for a house valued at $488,888. But the finance department is also recommending a series of new and higher fees beginning in October, including charging for evening parking at the currently-free county courthouse on Thomas Street and at Smathers Beach. The new fees will generate an estimated $1.9 million in new revenue and represent a different way of managing the city’s finances.

“Most of the time we spend a lot of time on expenditures and looking for ways to cut back” on spending, Finigan told city commissioners. “This is probably the first year… in which we really concentrated on new revenue opportunities.”

Calling the draft fiscal year 2019-2020 city budget “highly dependent” on finding new sources of revenue to pay for the rising costs of running the city, Finigan proposed 12 areas of either new charges or increased fees for existing services. Those include $534,000 in new revenue from charging for parking at Smathers and the county courthouse. Another $300,000 in new revenue is projected from charging a “convenience fee” for using a credit card to pay the rent on city leases, parking and fuel. Currently, the city absorbs the two percent hit credit card companies charge.

Other new fees include charging to use public spaces, such as weddings on city beaches, and creating a delinquency penalty for late fees on city-owned property. Finigan is also proposing to increase fees for fire plan and inspections, parking at Mallory Square, residential parking permits and employee assistance parking.

“You have to find new revenues. You’re not going to do it on the back of expenditures year in and year out,” Finigan said.

Over the past decade, city commissioners have made stable taxes their priority. While politically advantageous, spending cuts have resulted in poorly-maintained roads and sidewalks, which are now drawing loud complaints. Other city services have also suffered, as new staff could not be hired to handle increasing service demands on several city departments, including building permits, resulting in long delays. One of Mayor Teri Johnston’s campaign promises was to improve the quality of life for residents and, as was clear in the budget workshops, that takes money.

“I don’t advocate a huge [tax] increase but I certainly advocate increases that get us back on track slowly and surely,” she said.

“It’s a double-edged sword,” Finigan acknowledged. “If you want new parks, then we have to provide the people to man those parks.”

The preliminary budget, which Finigan will revise and present for public comment on September 3, calls for 10 new staff positions, including a new rights of way coordinator, four non-commercial licensed bus drivers, one maintenance tech, two janitors and one part-time administrative assistant. That drew concern from some commissioners.

“Personally, right now, when we want to raise the taxes, I can’t see any sense in making any new positions,” said Commissioner Billy Wardlow. “I don’t see where it’s necessary now.

Commissioner Clayton Lopez said that the finance department has been preparing the commission for higher taxes by saying it would help avoid layoffs of existing staff. Now, the proposed new positions are “contrary to the whole dialogue,” he said.

But Finigan responded that only two of the 10 proposed new staff positions would be paid out of the general fund, which is the primary fund supported by property taxes. The others eight positions would be paid out of self-funded departments such as the city marina and city transit, both of which are so-called “enterprise” funds, where bus fares, boating slip fees and rents paid on city-owned buildings along the historic seaport pay for maintaining those areas.

Commissioners sat through two days of budget presentations, asking questions but largely leaving department requests unchallenged. However, several commissioners asked that additional new positions be added to the draft budget, including a new inspector for the Historic Architecture and Review Commission, a parks and recreation coordinator and reinstating a request for a sustainability intern.

“With so much direction on environmental issues that we have been giving to the sustainability director, we probably ought to rethink that intern,” said Commissioner Jimmy Weekley.

Police Chief Sean Brandenburg had requested three new police officers but was turned down in preliminary budget discussions. He went before commissioners at the budget workshop to lay out his case, saying all current officers are assigned to patrol the streets, leaving detective positions unfilled. That caused concern on the commission.

“I think you’re an essential service,” Mayor Johnston said.

“We can add as many bodies as you want in any department you want,” responded City Manager Jim Scholl. “As long as you’re willing to pay for it.”

The city’s share of the annual property tax bill accounts for 25 percent of that charge. The remaining portion is made up taxes levied by Monroe County, the mosquito control district, public schools and three water districts. Budget discussions for the upcoming fiscal year are ongoing in those areas but are expected to increase, as well.

Currently, the property tax millage rate in Key West is $2.21 per every $1,000 of assessed value. Finigan is proposing a FY ‘19 millage rate of $2.15 but that will apply to an increase in property values. For example, a home valued at $460,000 in the current fiscal year will jump to $488,888 in FY ‘19

The total property value in Key West rose 6.9 percent in FY 2018 to just over $7.8 billion. That represents an increase of $504 million over FY ‘18, due primarily to new construction, Finigan said.

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