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HomeMy WebLinkAboutDocumentation_Regular_Tab 10J_7/23/1992 11* VILLAGE OF TEQUESTA , Post Office Box 3273 357 Tequesta Drive � ' Tcquesta,Florida 33469-0273 • (407)575-6200 Fax: (407)575-6203 CN couto DIEMORANDLIM TO: Village Council FROM: Thomas G. Bradford, Village Manager / DATE: July 15, 1992 SUBJECT: Voter Control of City Taxes; Resolution; Agenda Item At the Village Council Meeting of June 18, 1992, the Village Council requested that a resolution be prepared for their consideration at their July Council Meeting concerning the subject of voter control of city taxes. The Florida League of Cities has been soliciting municipal and citizen support of this endeavor to provide for a Constitutional amendment that would enable cities to provide a taxing format commensurate with their community needs. Also, attached, is information regarding this issue, provided by the Florida League of. Cities. . I would recommend that the Village Council adopt. Resolution No. 24-91/92, in that it grants fiscal home rule authority to local communities and lets the people play a direct role in deciding how and how much they should be taxed for city services. TGB/krb Attachments Recycled Paper .... Tell Me More Voter Control of City Taxes For two decades, city officials votes rejected the new tax struc- between the new tax proposal have been asking the Legislature Lure, the city would retain the and the existing one.The pro- to review,update and change existing tax structure. No inch- poe�al would not allow a change in their tax structure to provide vidual or group could place a state laws regarding uniform more flexibility at the local level proposal on the ballot except the assessments and uniform mlflage for revenue sources. Currently. city council—by ad••ting an ordi- rates. state laws provide only three tax nance.This • • ••. : does not Basically, this proposed con- sources to all cities and each is affect state ; • • • revenues, nor stitutional amendment would do capped or frozen. Cities are reli- does is affect a city's authority to what city officials have been ask- ant on a property tax that over 75 levy and collect fees. It does not tng the Legislature to do for two percent of the public believes Is affect taxes paid by people or decades,with the added provi- unfair.And, frankly, it is hard to businesses to counties, schools. Won of referendum approval. argue with themi the state.or any other taxing Recent polls show that 80 per- Regardless of the reasons, the authority. City officials would be cent of Florida's citizens support Legislature has refused to ad- dented the opportunity to use the . this concept.There is not even dress the problems of the muffid- following taxes in their new tax majority approval for any other pal taxing structure. So, the stricture:personal income tax, in government tax Florida League of Cities'Board of tax on estates or inheritances. structure. Directors put together a proposal taxes on the sale of tangible This proposal includes the to solve the financial problems of goods (similar to the current state long-time goal of city officials Florida's cities. Like the man- sales tax), or taxes on the profits wanting fiscal home rule and the dates amendment, this proposal of corporations (corporate profit post-megatrends move by the was born out of frustration from tax). public to have a more participa- the Legislature's unwillingness to Would this create a hodge- tory democracy.This is the only deal with funding public services podge of tax structures in differ- tax proposal that will work and provided to citizens by govern- ent cities across the state?Yes. It generate public support. meats other than the state. would probably replace the cur- City officials provide services We call this proposal, a pro- ' rent hodge-podge with another that are very visible to citizens, Vpoesd��of amendment, one.Remember, cities levy differ- and this gives them a tremen- City Taxes. City ent property taxes.utility taxes does advantage in a campaign to officials want the Legislature to and occupational license taxes, sell voters on the level of service abandon the uniformity philoso- not to mention the diversity in they want and the method of fi- phy and allow them more flexibil- charging and collecting different nancing that service. Remember, sty in making local tax decisions. types_of"fees. if one lives in Florida, one pays Voter Control of City Taxes would This proposal would not dilute taxes to the state, the county and allow just that with a newly de- the effect of the recently adopted the schools,but one only pays signed tax structure that would constitutional amendment re- taxes to the city if one chooses to be subject to approval by the city 'Larding unfunded state mandates live there.If one wants the advan- voters. If placed en the ballot in and city officials would have the taxes of what urban life brings November by the Legislature. or authority to increase or decrease (culture,public transportation. the Taxation and Budget Reform the homestead exemption.if their jobs,police protection. street Commission. and approved by a citizens approve.Tax structure Is lights. etc.), one pays for this majority of Florida's voters.each intended to provide authority for higher quality of life.Why not let city in the state would be given cities to review this as an overall those people play a direct role in the option to design a new tax package and not as each indl- deciding how and how much they . structure and place it before their vidual tax idea comes along. F a- are taxed?Some people might own voters. If the municipal vot- tore city councils could rewrite pay higher taxes if they thought ern approve the new tax struc- the tax structure and place it on the tax structure was fair. tore, it would become law;if the the ballot,and citizens would vote n QUALITY CITIES —MARCH 1992 State Of The Cities The financial problems in many Florida cities are serious! The property tax in Florida, given only to local 1 governments by the state constitution, has reached its political maximum in most cities, even though the constitution authorizes a limit of up to 10 mills. Professional opinion surveys now reflect that the property tax is considered the most disliked and unfair tax. With the two remaining tax sources presently available to cities being either capped or frozen by the Legislature,cities are being faced with substantial cuts in services IXand program order to balance their budgets. Necessary services which may be cut include police and fire protection, road improvements and maintenance, garbage collection, parks and recreation, and code enforcement, to name just a few; These budget problems stem from both population growth and rapidly increasing costs. . 1 The population of Florida continues to grow at a phenomenal rate, almost 1,000 new residents per day. This rl growth causes the state to become more densely populated, resulting in cities that are confronted with new and additional service requirements due to higher levels of urbanization. Since larger and larger numbers of new residents and visitors create infrastructure and other problems for government in geometric proportions, these new service demands equate directly to substantially increased costs. State and federal governments and the judiciary also impact city budgets by mandating programs and services and they rarely provide tax dollars or funding sources to pay for these mandates. 1- The days of federal revenue sharing programs and federal grants have long ended. As a way to control their own budget deficits both Washington and Tallahassee have directly or indirectly forced local governments 1 to provide and pay for programs and services at the local level. In the past, the federal government paid 75 percent of wastewater construction costs. Now local governments are required to pay the full cost of all construction and improvements, and incorporate substantially higher environmental standards into these systems. Other federal mandates that carry new cost requirements for local governments include,but are not limited to: the Clean Water Act, Safe Drinking Water Act (which includes stormwater management requirements for all cities), Clean Air Act and the Resource Conservation and Recovery Act. Federal involvement with cities has,however, increased in the areas of disabled-access requirements for the mobility 1 impaired,increased reporting requirements for housing programs,and mandatory inclusion in Social Security and Medicare tax payments. Another federal mandate that was handed down without funding is the expanded Fair Labor Standards Act provisions which eliminate government exemptions for higher-level .-. managerial employees. This federal decision will cost local governments billions of dollars. The Florida Legislature, through unfunded state mandates, has continually placed demands on city budgets by implementing new cost requirements on a year-by-year basis. The most familiar of these programs in • • recent years has been recycling and the complicated requirements associated with the Growth Management j Act and State Comprehensive Planning Act. It is not that city government feels that these activities are not warranted;it is the_manner and process in which they are imposed. Mandated programs and requirements require that monies be expended outside the normally approved budgetary process. These state mandated programs and requirements compete with other necessary services and use up the limited revenue sources available to the city. Other requirements handed down by the state include substantially increased pension benefits and other benefits to city police and fire personnel,more stringent landfill and solid waste handling requirements,employee standards and numerous reporting requirements. In 1987, the Florida Advisory Committee on Intergovernmental Relations, a joint legislative management committee, estimated that local government is facing a net revenue deficit of $34.7 billion to construct, maintain and operate necessary infrastructure associated with local comprehensive plans through the year 2000. These projections proximate other independent studies, including the State Comprehensive Plan Committee's $17.9 billion estimate to implement local comprehensive plans from 1987 to 1997, excluding L` operating and maintenance costs. ' • The Florida Taxation and Budget Reform Commission is expected to receive information from their consultants on September 25, 1991 showing that excluding costs relating to infrastructure backlog in the cities of Florida '�° will be facing deficit financing by 1996 (unless services are cut or taxing capacity is increased). Their projections are expected to show that the accumulative deficit in taxing capacity between now and the year 2000 will equal $1.3 billion and the annual deficit for fiscal year 2000 will be over$500 million. They are also expected to project that over 25 percent of Florida's cities will be at the ten mill cap by the end of this decade if no changes are made. Cities have been required by state and federal governments to expend a larger and growing portion of their tax dollars on various programs, benefits and other functional areas. These actions seriously limit the local elected official's ability to fund necessary municipal services which are being demanded or required by the rf>; public and the local business community. Uncontrollable costs, increasing servicing demands from a growing population, and reduced funding of necessary services and unfunded mandates by state and federal governments have created, to a large extent, 11. the budget problems facing our cities today. Since balanced budgets are required by state law, only three options are available: continued reductions or elimination of important and necessary services, additional ti taxing options granted by the Legislature, or a greater commitment from the state in sharing its own fiscal resources. Municipalities in Florida, by virtue of the state constitution, have general home rule authority in all areas 'Etj except taxation. A municipality is allowed the discretion to perform any public service or to enact any ordinance unless specifically prohibited by the state. However, when it comes to taxation,municipalities do not have home rule authority. The constitution requires that municipalities may only levy taxes that the r. Legislature has specifically authorized by general law, with the exception of the property tax. The property ; tax is-the only.local tax source which is authorized by the constitution and it is capped at 10 mills. The property tax is the most well-known and debated revenue source available to cities: It is also the most Nt,.. ` _ unpopular! The reasons are that it is so visible and it is billed on a lump-sum basis each year by the County Tax Collector. The property tax,represents the tax levy of all local government taxing authorities in the x county. P:1 The property tax is based on the value of real and personal property. Each year, the county property T appraiser determines the total value of each parcel of property in the county. The value of residential property represents only the value of the real estate,which includes land,buildings and improvements. While � .: commercial property includes these values,it also includes relevant personal property such as equipment and c furnishings. After subtracting all lawful exemptions (i.e., $25,000 homestead exemption) from the assessed til value, the remaining value is referred to as "taxable value." It is on this value that property taxes are calculated. The property tax is computed by multiplying the taxable value of the property by the rate of taxation,commonly called the millage rate. A rate of one mill is equivalent to$1 per$1,000 of taxable value. If your taxable value is $50,000, a tax rate of one mill would'equate to a tax bill of$50. ti '` • Although many people have a different perception, the revenue from property taxes only provides about 16 percent of an average city's total revenues. In many cities,the money raised through the property tax is equal ''� to the expenditures.in the police budget. The remaining 84 percent of total revenues is other taxes, shared revenues, user fees and other miscellaneous revenues. ji The municipal utility tax is a tax which is levied by a city on specific utility services.and is collected and ..,,,,,..---] remitted by the utility provider. This tax is incorporated into the utility bill,based on relative consumption, and is paid in small portions on a monthly basis. State law authorizes dues to levy this tax on the�purchase of electricity,local telephone and telegraph service,water,and heating fuels(natural and LP gas,propane,fuel oil and kerosene)at a rate not to exceed 10 percent. Cities have the option of applying this tax to a selection of other telecommunication services at a rate of 7 percent if they reduce their local telephone tax rate to 7 8 ti. • percent. This tax source represents approximately 6 percent of all city revenues. The municipal utility tax is the only other major tax source available to cities which they themselves may levy. The occupational license tax may be levied by cities on any business, profession or occupation within its city • limits. Occupational license tax revenues, prior to 1972, contributed a greater revenue stream for cities than at the present time. This tax generally comprises less than 1 percent of a city's total revenue. Up until 1972, cities had some discretionary flexibility with this tax. •After 1972, the state rewrote the occupational license law and froze all rates following a Supreme Court decision. In 1980, the state allowed specific percentage increases in tax rates that varied depending on the dollar amount of each particular classification. The rates have remained frozen since. These actions have not only restricted revenue collections,but have also created tax inequities that cannot be corrected without losses in revenue. Franchise fees generate revenue from private utilities for the privilege of doing business within the city limits and/or for using city rights-of-way to perform their business. These fees—from private providers of electricity, telephone and cable television—account for almost 4 percent of all city revenues. • Since the major shift in policy at the federal level during the 1980s, federally shared revenue fund approximately 3 percent of city revenues. Prior to 1980 it was 10 percent. As those revenue reductions took [ . place,Washington suggested that cities cut social services. This was unrealistic because cities in Florida were not and are not providers of social services. In the area of state shared revenues, city governments presently receive approximately 8 percent of their r.:1 revenues primarily from the municipal revenue sharing program and the local government half-cent sales tax proceeds. The Florida Legislature,in 1972, eliminated a city's"point of collection" tax authority on cigarettes taxes and started providing state revenue sharing. It formed a trust fund which generated its monies from '.{: two unit-based sources: eleven cents per pack from cigarette taxes and one penny per gallon from motor fuel '" taxes. In that first year, the fund generated $132 million, and it was divided among cities based on a non- controversial formula. Today, almost 20 years later, the municipal revenue sharing program is presently estimated to be only$196 million. Had this fund kept pace with inflation, it would be well in excess of$400 million. Is it possible.to surmise that the negative real growth in this fund is one of the reasons that Florida is near the bottom in terms of state revenue shared with cities. Since cigarette and motor fuel taxes are unit- based,they do not grow with price. Over the years, the fund has shown a stagnate rate of growth for several r: reasons. The Arab oil embargo of 1973 brought huge increases in the price of fuel, causing gas sales to be -Iii ` - depressed and more fuel-efficient cars to be built. Likewise, cigarette sales have been decreasing over the years due to health considerations, tax breaks on sales made on Indian reservations and military bases, and t increased bootlegging from nearby states that have substantially lower cigarette taxes. • In 1982, the'state responded to a property tax crisis that was precipitated by several years of high inflation, • an increase in the homestead exemption,and the first round of cutbacks of federal funds to local government. The Legislature increased the state sales tax to 5 percent and shared half of the increase with cities and counties. Cities receive only 17 percent of that penny. In order to receive that money, cities were required ' ,IF:s),1 to roll back property taxes than amount equal to 40 percent of their projected sales tax receipts. The revenues derived from fines and forfeitures collections amount to approximately 1 percent of all ' . h revenues. . The state has provided several Iocal option taxes to be used by local government however, none of these special taxes may be implemented by city government. This authority is granted to the county government and, in most cases, requires a voter referendum. Furthermore,the use of this revenue can only be spent for specific purposes such as transportation, tourist development,or specific capital projects. The state law that governs these taxes(excluding tourist development taxes)contains provisions for a county to share a portion of the proceeds with its cities based on the terms of an interlocal agreement..In cases where an agreement cannot be reached, the law establishes a formula to share these monies. Since the formulas were written in a way that provides substantially greater negotiating authority to counties,cities generally receive only a small ,.A- : ja 9 j •° portion from these sources. ti ' Every other source of revenue available to ddes are user fees and charges for services, such as arg city-provided garbage collection, water and sewer service, recreation, building inspections, parking meters, and a variety u} of other services. Individually, they play a lesser role in the budgetary process because they cannot generate more revenue than is needed to provide the service, but collectively they provide the largest portion of city revenues, approximately 40 percent. These fees and charges are voluntary payments based on direct, measurable consumption of goods and services. Since the 1970s, user fees and charges have substantially increased as a proportionate share of the budget as taxes reached legal and political maximums; however, there appears to be a general leveling off In recent times. For some services, fees are charged at rates below actual cost and are partially offset by taxes. This is necessary for some services, such as public transportation, tlibraries and recreation,so that low-income residents are not excluded due to high prices. For other services, fees and charges generally cover the full cost of service delivery and many of these are referred to as enterprise operations. These operations are maintained completely outside of a city's general government budget. NI t . poi V • L • .---c,j . • Yx '...4. . - . • ?•t dt� 10 • RESOLUTION NO. 24-91/92 A RESOLUTION OF THE VILLAGE COUNCIL OF' THE VILLAGE OF TEQUESTA, PALM BEACH COUNTY, FLORIDA, SUPPORTING A STATE CONSTITUTIONAL AMENDMENT WHICH PROVIDES FOR VOTER CONTROL OF CITY TAXES. WHEREAS, the tax sources of cities are strictly regulated and limited by the State Constitution and/or the State Legislature; and WHEREAS, the Legislature has required cities to implement and comply with inequitable property tax procedures, to operate with narrow and restrictive tax sources and to suffer increasingly inequitable formula allocations of State Shared Revenues; and WHEREAS, the severe financial problems facing Florida's city governments are well documented and remain unchallenged; and WHEREAS, the Florida Taxation and Budget Reform Commission Studies show that cities have exhausted most of their discretionary taxing capacity and will be confronted with • substantial financial shortfalls during this decade; and WHEREAS, the cities of Florida have consistently and diligently sought expanded and flexible taxing capacity from the Florida. Legislature without success; and WHEREAS, federally shared dollars with cities have all but disappeared and remain a low national priority; and WHEREAS, previous decades have provided major shifts for program costs from the federal and state government to city governments through innumerable unfunded mandates; and WHEREAS, cities' citizens should be provided an opportunity to evaluate and implement the tax sources most appropriate to their community needs; and WHEREAS, many citizens believe they no longer can influence public decisions and believe the political process deprives them of strength and influence; and WHEREAS, most citizens believe they -should have a direct say in how they are taxed; and WHEREAS, this is an appropriate time to review the unlimited power of the Legislature to authorize and control all municipal taxing policy and carefully consider returning taxing authority to the voters of the cities. NOW, THEREFORE, BE IT RESOLVED BY THE VILLAGE COUNCIL OF THE VILLAGE OF TEQUESTA, PALM BEACH COUNTY, FLORIDA, as follows: Section 1. The Village Council will support a Constitutional amendment that would provide for each city government to secure the taxing powers their voters authorize by allowing city officials to design an ongoing tax structure that is compatible with their individual community goals and place it on the ballot for their voters to express their preference for the existing tax structure or this new proposed tax structure.- Section 2. The Village Council will work with all cities in Florida and the Florida League of Cities to ensure that this Constitutional amendment is placed on the earliest possible general election ballot. Section 3. The Village Clerk is hereby directed to send copies of this Resolution to all members of the Palm Beach County Legislative Delegation and all municipalities of Palm Beach County. THE FOREGOING RESOLUTION WAS OFFERED by Councilmember , who moved its adoption. The motion was seconded by Councilmember , and upon being put to a vote, the vote was as follows: FOR ADOPTION AGAINST ADOPTION The Mayor thereupon declared the Resolution duly passed and adopted this 23rd day of July, A.D. , 1992. MAYOR OF TEQUESTA Earl L. Collings ATTEST: Joann Manganiello Village Clerk