By Maria Iannucci
There’s been much discussion about Amendment 3, which proposes an increase in the homestead exemption, and a lower cap on increases for non-homestead property assessments.
As part of our series regarding the upcoming vote on Amendment 3, I recently reached out to and sat down with Lake Wales City Manager James Slaton to discuss what the outcome of the vote could mean for local citizens.
Lake Wales City Manager, James Slaton
What should local voters consider when voting for or against Amendment 3?
Firstly, Slaton wants every citizen to have a good understanding of their tax bill.
“Hopefully, they understand their tax bills. I’ve talked to several citizens about this very issue that did not understand what they’re actually paying and to whom they’re paying it on their tax bills.”
Recently, a resident attended a commission meeting to “complain about their tax bill, not understanding that the city only collects around 1/3 of the taxes on their tax bill, and the rest goes to other taxing authorities, whether it be to entities like the county or the school board.”
“Understanding your tax bill, particularly county residents (who live outside the city limits), is extremely important, because you see all of those non-ad valorem special assessments that you pay each year with your property taxes that aren’t property taxes. So you’re paying for a fire assessment, an expensive one at the county; you’re paying for the recreation MSTU’s (Municipal Services Taxing Unit) and other non-ad valorem special assessments.
“My concern for people is that…to make up for the loss of ad valorem property taxes, those non-ad valorem special assessments are going to increase. Government has to continue to operate. We’re like every other business. I’m afraid that there are a lot of voters in the state of Florida that are going to end up paying more at the end of the year than what they’re currently paying. And a big part of that is that I fear people don’t realize that the Save Our Homes Act has been in place since 1992. This act limits the increase in assessed value on every homesteaded property to only 3% annually or CPI whichever is lower. So the end result, if you’ve been in your home for a while, people are already paying very little in property taxes.
“In most cases, even though the market values have gone up, most of the assessed values have not. So I’m just afraid that there’s going to be a lot of people that are going to pay more at the end of the year and they are going to feel misled by their legislature.
“I also want people to know that the state legislators, including the Polk legislative delegation, did no research. They did not talk to any of the communities that they represent, they didn’t talk to the cities, they did no research, they did no financial impact analysis on what eliminating the property taxes would actually do. In my view, that is irresponsible governance. You can’t make decisions like this with such far reaching impacts without doing your homework. And that’s exactly what they did.“
Do you know what the financial impact will be for the citizens in the City Of Lake Wales if Amendment 3 passes?
According to Slaton, the City collects approximately $12 million in property taxes each year.
“$5 million of that goes to our CRA; half of that is County money anyway, so it’s not even used by the city. So we only collect approximately $7 million a year in property tax revenue to pay for all of our city services. They already don’t cover our city services by a wide margin.”
“People think and have been told that this bill is going to protect public safety, and that is absolutely not true. Our public safety costs for just this fiscal year, for fire and police, is $20 million. (Since we) collect $7 million in property tax revenue, we are running a $13 million a year deficit for public safety already today.
“Once the homestead exemption reaches its full potential after the second year, it’s going to wipe out about half of our usable property taxes, which will be about $3.5 million of the $7 million that we collect.”
While public safety accounts for part of the budget number, other services could be directly impacted.
“Other city departments include fleet management, information technology, human resources, payroll, and accounts payable. Many support departments support the entire city.”
“The point is, there’s very little property tax money to go around as it is.”
Slaton wants people to understand how the system currently works and how it could work in the future if the amendment passes.
“We’re able to pay for all of our city operations, and general government operations, because of the fees and assessments and intergovernmental revenue and other revenue streams. Property taxes don’t fund everything, but we need to use every bit of them, But they are already insufficient to cover our services. There will be impacts. And if we’re going to continue to operate at the levels that we are operating at today, that money has to come from somewhere.”
Slaton says the State of Florida has the means to preserve local government funding, but hasn’t taken action to do so.
“All this bill really does is cut revenue for local government. Meanwhile, the state budget has grown $30 billion over the last eight years, and you don’t hear the state voluntarily writing checks or giving money back to the citizens or lowering any of their fees or costs.”
“Something that particularly bothers me is the high cost of insurance, whether it be homeowners insurance, auto insurance, or anything else, and the legislature is not doing anything about that. As a matter of fact, the state is making money off of it. There is an insurance premium tax in the state of Florida that is assessed against every insurance policy written in the state. It is a percentage-based tax that the insurance companies pay per policy, and it increases the rates. And because it is percentage-based, the higher the insurance rates, the more money the state collects.”
Slaton says it’s concerning that the state is pointing the finger at local governments and really trying to defund the critical services that the people need every single day.
What might the average citizen in the city see change as a result if Amendment 3 passes? what might they expect to see change?
“There are important policy decisions that will have to be faced, And decisions will have to be made. If there is less money coming in, there has to be less money going out. So we’re either going to have to account for that money, in other ways, or we have to reduce services. That’s it. It’s that simple.”
Slaton says, “If the city loses about 50% of its ad valorem property taxes, it’s about $3.5 million. Same goes for the CRA. CRA is up to about $5.2 million; we’ll lose about half of that as well. So we will keep moving forward on a lot of the redevelopment projects, but it makes that Walesbilt redevelopment a lot more challenging if we’ve lost our revenue stream.”
The city manager adds that current fire assessments only pays for a fraction of the cost of operating the fire department.
What are other potential sources of revenue if we lose property taxes as a source?
“Well, there are two things. There is the option of further increasing the mileage rate. And there are other special assessments that can be increased.
“The money has to come from somewhere. Just shutting down government services is certainly an option; I think it’s shortsighted. You want high-quality service to build a desirable community that people want to live in.
“The money we spend is really an investment. We invest that money into the community, so we create a high-quality of life. Once we create that high-quality of life, then you create the desirability to live in the community. When you have that desirability, people’s property values go up, and understandably, they then have to pay more taxes, but their home is worth more.
“We don’t collect the property taxes that people think we do. If we lose it, it’s going to create a gaping hole that we either have to make up with other revenue streams, or we’re going to cut services. I’m telling you, cutting $3.5 million dollars of our city services pretty much wipes out just about everything the city does except public safety.”
Ultimately, Slaton says that the city is prepared to continue to serve the citizens of the City Of Lake Wales regardless of the outcome of the vote.
