Gardens $3M, 6.5% Tax Increase – is it Justified?

At the last Council meeting on the budget, with the big jump in property valuations providing a windfall in city taxes, several members of the public suggested that some of it should be returned to the taxpayer in the form of a millage reduction. On the Council, only Mayor Premuroso acknowledged that the outlook is favorable, and the city can afford to do so, proposing that $500K be taken from the “budget stabilization fund”.

Is this appropriate?

Several on the council objected on the basis of the city’s “5 Year Plan”, which calls for the millage to remain at 5.74 for the next 5 years. The Plan is really about revenue and expenditures though, not millage.

Three years ago, in the 2012 budget, the “5 Year Plan” forecast ad-valorem tax revenue in 2015 to be $45.6M. Today’s budget, is in fact $49M, up $3.4M or 7% above the “5 Year Plan”. When including revenue from all sources, it is up $8M or 12.5% above the “5 Year Plan”.

More to the point, in 2012 the “5-Year Plan” projected the 2015 undesignated fund balances (ie. reserves) would be 22% of expenditures – instead we are at 32% – relatively flush with cash.

So it seems that the Mayor is correct – the city certainly has the ability to reduce the millage by some amount.

If you believe that growth in the size of government should be only undertaken with careful consideration, then any increase in spending above what is dictated by population growth and inflation (currently about 1% and 2% respectively) requires an explanation. Holding to that measure would suggest that half of the windfall should be claimed by the city, the other half returned, resulting in a millage of about 5.56.

Any increase above that level should be justified on the basis of specific needs that are immediate and cannot be deferred until future years.

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