Marco council to weigh several tax rate options Monday

Chairman Larry Magel speaks to the committee. Wednesday, July 27, Marco Island's City Council Budget Sub-Committee met for the last time before presenting their recommendations to the full council. Lance Shearer/Special to the Eagle

Photo by LANCE SHEARER

Chairman Larry Magel speaks to the committee. Wednesday, July 27, Marco Island's City Council Budget Sub-Committee met for the last time before presenting their recommendations to the full council. Lance Shearer/Special to the Eagle

Marco Island City Council’s meeting is scheduled to begin at 5:30 p.m. Monday in the Community Room, 51 Bald Eagle Drive. There is a 3 p.m. budget workshop before the meeting.

— Settling on a final tax rate appears to be a taxing proposition for the Marco Island City Council, as several options remain on the table for Monday’s final budget hearing.

Despite some difficulty in agreeing on the best approach, council members already have looked to eliminate a proposed 6 percent utility rate increase and are considering eliminating a long-standing 6 percent utility surcharge. The surcharge was created to pay for street repaving when the city took on the Septic Tank Replacement Program, designed to convert the island from septic tanks to a sewer system in phases.

However, eliminating the utility surcharge could come with an increased tax rate.

Council members initially set the tax rate at about $2.07 per $1,000 of taxable property value. However, council members expressed their intent earlier this month to lower that fiscal 2011-12 tax rate to $1.89 per $1,000 of property value. That’s one of at least two proposals to be considered at a meeting scheduled for 5:30 p.m. Monday.

“If we can get to 1.89 (mills) then we did a great job,” Councilman Larry Magel said. “I think it will be a great result for everybody.”

The rate of $1.89 per $1,000 of property value would be the same rate that property owners were taxed this year. Holding the line is something Collier County and Naples officials have expressed a firm commitment to do in their budget discussions.

A tax rate of $1.99 per $1,000 of taxable property value also is among the options for Marco council members, along with a switch away from charging the city-operated utility customers a 6 percent surcharge on their water and sewer bills. Money from that surcharge, if it’s collected, would be set aside to pay for road resurfacing.

The rate of $1.89 per $1,000 of property value would be the same rate that property owners were taxed this year.

If road resurfacing were to be paid for using property taxes, it would increase the existing rate to about $1.96 per $1,000 of property value.

A tax rate of $1.99 per $1,000 of taxable property value also is among the options for Marco council members, along with a switch away from charging the city-operated utility customers a 6 percent surcharge on their water and sewer bills.

“The 6 percent surcharge in the water and sewer fund may be reduced, however, it cannot be eliminated entirely,” Finance Director Patricia Bliss wrote in a memo to council on the issue.

The utility surcharge could be reduced to as low as 2 percent rather than eliminated, according to the preliminary figures that Magel said he received.

“So we would split the baby,” Magel said.

He said he’s eager to see the financial data that is to be presented during the budget workshop, scheduled for 3 p.m. Monday. The council’s final budget hearing is to follow at 5:30 p.m. Monday.

During budget subcommittee meetings this summer, Councilman Wayne Waldack initially broached the idea of eliminating the surcharge.

Waldack saw it as a way for everyone to share the cost, because there are more property taxpayers than there are utility customers.

However, money that comes into the utility budget cannot be mixed with the city’s general operation fund budget. So there is an argument to be made that all or some of the resurfacing charge needs to be on the property tax bill, Waldack said.

That’s why 2 percent may need to stay, he said.

One benefit of paying through property taxes instead of a surcharge is that it becomes tax deductible for many residents, Magel said.

The $1.89 rate supports a $20.5 million budget using $722,745 in reserves.

If road resurfacing were to be paid for using property taxes, it would increase the existing rate to about $1.96 per $1,000 of property value, Bliss wrote in a memo to council.

If council members choose the option of $1.99 per $1,000 of property value, then add in road resurfacing, the total tax rate would be about $2.06 per $1,000 of taxable property value and there would be no need to use reserves, Bliss reported.

The city’s total budget is about $105 million, including the utility department’s budget, which is supported by water and sewer rates rather than property taxes.

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Comments » 3

GFonda writes:

This is sooo confusing to us resident taxpayers (God know how the non-resident taxpayers can figure it out). The property taxes should NOT be raised higher than last year - whatever the millage rate turns out to be. In fact they should be lower to compensate for the worsening economic situation Marco Island taxpayers are facing. I've never understood the rationale for tying road resurfacing to the STRP. I thought there was always a line item in the operating/capital(?) budget for road resurfacing and that the schedule of its completion be tied to the STRP zones being torn up.

marcofriend writes:

Unfortunately this has been an ongoing shell game since Marco Island became a city. It just is a little more refined. The problem is that if they really show us taxpayers what they are doing with the money, it will show that they've co-mingled so many funds and paid for budgeted items with fund reserves that were assigned to other areas, that down the line, we'll be left with a deficet and no way to pay for it unless we tax everyone much higher and/or sell more bonds to pay for older bond covenants. We already have one bond fund where we pay interest only for 13 years (nothing on principle). Unfortunately no one can get detail information from the city because they don't want anyone to know about it......and we thought Harrison was playing games???
What a mess! And the City Council with their bobble heads just sit there and say yes, yes, yes, without asking the hard questions. I was for the city and not an anti city person, but now I really wonder.

seasonala writes:

in response to islandeye1#236971:

(This comment was removed by the site staff.)

To Marcofriend's claim of comingling funds, I will forcast the spending of Oil Spill Reserve Fund for non-oil spill spending going forward. And then you can ask yourself if that was just a temporary fund which can now be used for general day-to-day operations or expansion of services/facilities.

Or I am misinformed and the Oil Spill Fund will be used specifically for what it was intended?

And bear in mind, there are some on the Council that believe we should bolster reserves! Will that be called - a Reserve Fund to simply bolster reserves.

In my ascent to fiscal responsibility, I was told as a youngster, to have a 6 month expense reserve. What is Marco Island's reserve specification? To just come up with new reserve fund names?

And I listen to some who serve on Council who do not pay property taxes through protection of bankruptcy laws. But I guess this is representative governance, truly representing current economic planning and execution through no fault of their own, or is it? And in essense, demonstrates a lack of reserve fund capacity? So how much reserve is enough?

Well for starters, let us not define reserves for specific situations and then let them sit there. They belong to the taxpayer if they are no longer required. And lastly, expansion of reserves just for the sake of increasing reserves is not a thoughtful plan. Unless, the ulterior plan is to spend it for expansion!

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