TAX REFORM PART ONEPart one of the tax reform package requires cities and counties to cut their tax rates. (The legislature also provided a method for cities and counties to exempt themselves from the requirement, but most local governments felt that the exemption was not feasible.) The formula for the tax rate cut results in a property tax reduction of 12.89% for Lake Wales --from 8,44 mills in the current yeaar to 7.3521 mills in the new fiscal year starting October 1. (A mill is $1 of tax per $1,000 of taxable value.)
Because Lake Wales is growing, even with the rate reduction next year, the tax revenue proceeds will increase by $16,251 in the General Fund over the proceeds from the current year. But to put this in perspective, had there not been tax reform, at the current 8.44 millage rate, the General Fund would have realized $921,276 next year in additional revenue over the current year.
The problem with this relatively small increase in tax revenue next year is that other revenues are also down, and expenses continue to climb. For example, revenues other than property taxes in the City's General Fund, which include state revenue sharing and other intergovernmental revenues, are down to the same level as six years ago; and the County contract for City fire services to the unincorporated area around the City has been cut 40% below what it was two years ago.
At the same time, the City has had alarming increases in some expenses. Insurance categories in the General Fund other than health insurance have increased 31.2% in the past six years! This expenditure now tops $1 million annually. Health insurance costs have risen drastically --over 20% from the current year adopted budget. Recently the City went to bid to provide other options. Other expenses gave grown to ensure that City services are adequate to cover the growing areas of the City. Furthermore, the City is still re-building reserves from the reduction in General Fund balance in the 2000-2001 fiscal year.
Tax Reform Part One had had a severe effect on the City's proposed budget, eliminating 12 positions (one person serving in a part-time position is the only actual lay-off), and not funding $487,450 in capital outlay requests including the purchase of replacement police vehicles and a fire department truck.
TAX REFORM PART TWOThis part of the program will be voted on in a statewide referendum on January 29. If approved, the General Fund would lose an estimated $683,000. When coupled with the cuts already made in Part One, there would be noticeable reductions in service.
Part One of the Legislature's tax reform package did not include schools. Taxes supporting schools will be included in Part Two.
Judy Delmar contributed to this article.