It’s time to think out-of-the-box about revenues, Anna Maria Mayor SueLynn told commissioners at their July 16 budget discussion.
The major revenue stream for the city is ad valorem taxes, the mayor said, but that and the city’s other revenue sources are not enough to accomplish what’s needed in the city.
And ad valorem taxes place an unfair burden on city residents to pay for services and improvements that everyone — including visitors and part-time residents — enjoys, the mayor noted.
SueLynn said she asked city clerk Diane Percycoe to call the Florida League of Cities for information on revenue streams.
Percycoe said the league’s revenue expert, Ken Small, told her one major step for the city is to take a hard look at reinstating the occupational license tax.
The city imposed the business tax until November 2003, when city attorney Jim Dye advised commissioners that the 1995 commission had missed a state deadline to raise the tax, although it had been back-dated and approved.
As a result, the city was ordered to halt collections and cease the occupational licenses.
Dye, who was not at the work session, has said previously the city can reinstate occupational licensing if it adopts the tax rate from 1971.
Commission Chair Chuck Webb said it’s time to look a lot harder at putting the tax back on the books.
“Times have changed,” he said. Even if the city adds only $20,000 to its revenue from an occupational tax, that’s a bonus, he said.
Webb and Commissioner Dale Woodland said they remember when they had to pay the tax to the city because they worked out of their homes.
Now, with an estimated 600-plus vacation rentals in the city, an annual occupational license tax of $20-30 could generate more than $30,000, Webb said.
He added that nearly every Florida government jurisdiction has an occupational license tax. After reading the Florida statute on the tax, Webb said he’s “positive there is a way we can bring this back.”
Small suggested other sources of revenue, such as increasing the local services communications tax.
Anna Maria’s local services communications tax is 5.7 percent, Percycoe said, and she’s budgeted $94,000 in revenue from that tax for the coming fiscal year. The maximum rate for the tax set by the state is 9.5 percent.
Webb said he really didn’t like increasing the taxes homesteaded residents pay, but Percycoe noted vacation rental properties have telephone, Internet and cable television service. And vacation home property owners pay taxes, too.
“Those would be hit harder than homesteaded properties” by the communications tax, she said.
Other suggestions from Small to increase revenue were to implement a tax on propane and natural gas, increasing the utility tax on electricity and water, raising stormwater fees and placing an impact fee on new construction.
Commissioner Carol Carter agreed to head a volunteer committee to research possible new or increased revenue sources and to invite Small to make a presentation to the commission.
Carter said she’s looking for three residents to volunteer for the committee and anyone interested should contact city hall.
SueLynn planned to ask Dye to update his research on the occupational license tax.
Most of the potential new revenue streams could not be implemented in time for the Oct. 1 start of the 2014-15 fiscal year, Webb said. However, if the city resumes the occupational license tax and handles collections, not the county, the tax could begin on adoption.
Building official Bob Welch said that while there’s not a lot of vacant land left for new construction, remodeling in the city has increased significantly in recent years. He raised the revenue estimate for building permits from $400,000 to $440,000.
Percycoe raised estimates on other projections for revenue, such as parking fines and variances, after reviewing them with staff. She projected the increases to be $75,000.
She removed the estimated $2,500 per month in revenue from the operation of the planned cell tower, but kept the $350,000 lump-sum payment due the city from Florida Tower Partners on completing the cell tower in the budget. She said she’d rather wait until the monthly revenue is a reality to budget income and spending.
Percycoe said she and city treasurer Maggie Martinez will have more exact figures on new or increased revenue streams for the July 23 budget work session.
For commissioners, however, the major drive for the proposed $3.38 budget is to lower the current 2.05 millage rate.
Percycoe said the rollback rate is 1.8685. The rollback rate is the millage needed to generate the same amount of revenue as the 2013-14 budget. Any rate above the rollback is considered a tax increase.
The rollback rate declined because revenue from taxable property increased, Percycoe said.
Commissioner Dale Woodland noted that retaining the 2.05 millage rate is the same as increasing taxes for residents.
If a homeowner’s property value increased and the millage rate remains at 2.05, that owner still would pay more in taxes, even though the millage rate didn’t go up, he explained.
“I really think we need to lower the millage. I can see that an increase in revenues, such as $75,000, will allow us to lower taxes. We need to do something for our residents,” Woodland said.
Webb agreed, saying he was “not excited about tax increases for our residents.”
Other commissioners agreed that a lower millage rate might be possible if revenues meet the forecast of Percycoe and Martinez.
Commissioners will review the line item expenses July 23, as new revenue figures become available.
Without revising revenue, the proposed budget represents an increase in spending of 10.88 percent.
Percycoe reminded commissioners that only 11 percent of a property owner’s ad valorem tax is returned to the city as revenue.
The remainder goes to Manatee County government, the school district, Southwest Florida Water Management District, West Manatee Fire Rescue, West Coast Inland Navigation District, mosquito control and various government entities and assessments.
An ad valorem millage rate is the percentage of the taxable value of a property that the owner pays in annual property taxes.
With a millage rate of 2.05, an Anna Maria homeowner with a house valued for tax purposes at $500,000 would pay $1,025 in property taxes for one year. If the city adopts the rollback rate of 1.8685, that property owner would pay $934.25.