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Taxable property value growth helps city balance budget amid COVID-19 impact

Growth in taxable property values helped the Marco Island City Council offset the impacts of COVID-19 as the council approved the city's fiscal 2021 budget this week, said Guillermo Polanco, finance director.

The city budgeted for a 20% reduction in activity-based revenues like sales and gas taxes and user fees because of the pandemic, but property taxes — the primary funding source for the city — are expected to continue growing next year, according to the city's budget approved unanimously Monday. 

"The city is fortunate to have strong property tax revenue which accounts for 73% of the city’s total operating revenue," City Manager Mike McNees wrote in the city budget.

The reduction will result in an overall 3% decrease to the city’s total operating revenues but to compensate the city will employ short-term fixes such as cutting spending for travel and training and using reserves, McNees wrote.

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The taxable value of properties within city limits is estimated to grow from $10.799 billion in the current fiscal year to $11.314 billion in the next one, a 4.8% increase, according to the city's budget.

City Council also voted unanimously to lower the city's tax rate for the fourth consecutive year. 

The rate of 1.76 mills for next fiscal year — or $176 per $100,000 of appraised property value — represents a 2.5% decrease compared to the current fiscal year, which ends Sept. 30.

Higher property values, though, mean the lower tax rate will raise the same amount of property tax revenue the city brought in this fiscal year.

The city estimates its total operating expenses will increase 3.9% from more than $21.7 million in the current fiscal year to about $22.6 million.

The highest percentage increases are in the police and general government funds, the budget summary shows.

The police fund increased 9.3% from more than $4.7 million to more than $5.3 million. The general government fund increased 8.7% from $1.1 million to nearly $1.2 million

The fire fund increased 3.5% from more than $6.7 million to nearly $7 million.

These and other funds were impacted by an anticipated 10% increase in health insurance premiums, as stated by the city's budget.

The budget also includes funds reserved to provide a 3% wage increase to non‐bargaining employees and a 5% wage increase for bargaining units to fulfill the police and fire union’s collective bargaining agreements, Polanco said.

City Council Vice Chairman Jared Grifoni wrote in an email it is important the city continues to look "for ways to keep money in our citizens’ pockets and for local government to be small and efficient to meet the needs and priorities of our community."  

"I am proud that for every year I’ve been on City Council we’ve been able to reduce our property tax rate to rollback," he said. "Over the last four years our property tax rates have now been reduced by approximately 14%." 

City Councilor Larry Honig wrote residents should be proud of their City Council.

"The FY 2021 budget is built on the lowest property tax rate in a decade," he wrote. "It includes substantial increases in first-responder compensation, road repair, water-quality funding, and money to get started on Veterans’ Community Park and Fire-Rescue Station rebuilding."

Grifoni wrote he supports amending the approved budget to finance the sidewalk takeover project if "the actual revenues come stronger than anticipated."

"The sidewalk program should be one of the top items we look at adding into the budget," he wrote.

Honig and Grifoni both wrote they would have preferred to include the sidewalk project in the approved budget.

On Marco Island, most homeowners are responsible for the maintenance of the sidewalk in front of their property, according to the city's code of ordinances. The project would transfer that responsibility to the city.

"I think that is one item (the council) can agree is desirable if we can find the money," City Council Chairman Erik Brechnitz wrote.

Contact Omar at omar.rodriguezortiz@naplesnews.com, and follow him on Twitter as @Omar_fromPR. Support his work by subscribing to Naples Daily News.