Groves Ponders Tax Rate Hike To Cover Property Value Dip

The Town of Loxahatchee Groves could increase its property tax rate next year to make up for a decrease in the town’s property valuation. Loxahatchee Groves experienced a 3.8 percent dip this year in its taxable value.

At a budget workshop July 2, the town’s management firm recommended a rate increase from 1.2 mills to 1.5 mills.

The Loxahatchee Groves Town Council will set next year’s maximum tax rate at its meeting July 16, although the rate could then be lowered before the budget’s final adoption in September.

Under the manager’s proposed budget, with a 1.5 millage rate, a property owner with an assessed value of $200,000 and a $50,000 homestead exemption would pay $225 in town taxes next year, compared with $180 under last year’s rate. The solid waste assessment would remain the same at $343.25.

Highlights of the proposed 2014 budget include $100,000 for town road surveying, $943,630 for road improvements using open-graded emulsified mix (OGEM) on Collecting Canal Road, $220,000 for a traffic light at Okeechobee Blvd. and E Road, and $100,000 for future OGEM road paving.

Town managers recommended that the Capital Improvement Program include $50,000 for research for a new town hall location and $600,000 from the town’s transportation fund for a portion of the CIP to cover more than half of the money needed to apply OGEM to Collecting Canal Road.

“Unlike this current budget year, we are not able to recommend a contribution from the general fund to the solid waste fund,” Town Manager Mark Kutney said.

The total CIP budget recommended was $1.96 million through fiscal year 2018.

Necessitating the 0.3-mill increase is a 3-mill equivalency required by state statutes, which means the town must produce $1,140,752 in revenue, Kutney said.

“There are a number of revenue sources that make up this 3-mill equivalency, but it is important that we do it every year or there are ramifications,” he said.

Underwood Management Services CEO Bill Underwood, head of the town’s contracted management firm, said the town has four funds it will draw revenue from in 2014: capital improvement, proposed at $1.43 million; solid waste, $428,000; general fund, $1.1 million; and transportation, $962,000.

“Those four funds make up your total budget,” Underwood said. “The reason that we had some issues is property values were down about 3.8 percent this year, which is not as bad as it was in prior years. We were hoping it might level off or increase a little bit, but it has not done that.”

In the case of Loxahatchee Groves, one mill in the tax rate brings in about $164,000, Underwood said.

“Your property taxes are a little shy of some of the other cities around the state, but you get about 22 percent of your total general fund revenue from property taxes. There are areas of the state where that comes up to as much as 50 percent. It’s not uncommon for it to be 30 to 40 percent,” he said. “We’re recommending a rate of 1.5 mills, which would generate revenue of over $246,621, primarily to make sure that there is sufficient cushion to provide that the town gets all of its state-shared revenues.”

Underwood brought up the state-shared revenue issue because when the town incorporated, the property appraiser set a value on the town, and the town has to meet certain millages pursuant to the 3-mill equivalency.

“In my career, I’ve never had an issue with the 3-mill equivalency, and I’m going to do a little more research, but that $1.1 million can actually affect roughly $700,000 or $800,000 of total general fund revenue,” Underwood said.

The financing sources for the general fund include ad valorem taxes of $197,297; fire municipal services tax revenue of $568,561; business tax receipts of $5,000, as well as utility taxes including an FPL tax of $203,000 and a communication services tax of $125,446.

“Those four, when you add them all up, you have to produce $1.1 million,” Underwood said. “There is no requirement to have a millage rate at all if you can produce that number through those four sources.”

He said it was his understanding that not meeting the $1.1 million target could result in the state withholding portions of state revenue sharing, totaling almost $800,000. “I’ve never been in this situation, so I don’t know,” Underwood said. “I would have to rely on somebody at the state to tell me if they’ve ever seen it. I’ve not been with a city that has been this close.”

The 1.5 rate will generate about a $20,000 cushion, he explained.

Councilman Jim Rockett said it was unfortunate that the town’s total property value was set at the height of the housing market. “We kind of got the short end of the stick,” he said.

Rockett asked whether assessments from the Loxahatchee Water Control District could be included in that number, and Underwood said he was not sure.

Town Attorney Mike Cirullo said there are still many questions to be resolved with the Florida Department of Revenue. “They ultimately decide compliance with the statute,” he said. “We’ll have time to do that before your hearings in September.”

Cirullo recommended setting the millage at the higher rate to be safe, and possibly lowering the rate later when the numbers are more certain, explaining that the maximum millage would be set at the council’s July 16 meeting, but could then be lowered.

Expenditures are similar to the current year, with $147,000 for general governmental services, $280,000 for law enforcement, $103,000 for legislative, $285,000 for executive, $104,000 for financial and administrative, $170,000 for comprehensive planning and $120,000 for legal services.

No money was budgeted for horse trail development, which did not make Mayor Dave Browning and Councilman Tom Goltzené happy.

“The part I really don’t get is how we can talk about, in the same type of easement, spending a million bucks for a road but we can’t for a horse trail where the horse would walk on the existing surface,” Goltzené said. “That we can’t get that done just amazes me.”

Underwood said what complicated building horse trails was actually acquiring easements to put the trail on.