City clears way for property tax increase

Apr. 18, 2013 @ 05:01 AM

In response to Monday’s decision by the Lee County Board of Commissioners to change the county’s sales tax distribution method, Sanford City Council advised the city manger to increase the property tax rate — possibly by five or six cents — for the upcoming fiscal year.

During a morning-long city retreat Wednesday, council members reviewed a variety of potential options for the 2013-2014 fiscal year. Among them:

• Maintaining the current property tax value at 51 cents per $100 valuation by cutting 22 staff positions, not providing a cost-of-living adjustment for staff and not funding for street paving.

• Increasing the property tax value by 5 cents by freezing staff positions, seeking voluntary retirement for staff, not providing a cost-of-living adjustment for employees and not funding for street paving.

• Increasing the property tax value by 9 cents to cover the full revenue shortfall.

Council agreed for City Manager Hal Hegwer to seek an increase of 5 or 6 cents and attempt to cut positions through voluntary retirement during his budget preparation.

Sanford Mayor Cornelia Olive said cutting back on maintaining buildings and streets will only hurt the public and the city in the long run.

“One thing has been made clear is this is a strong government and [has] been a strong government for years,” Olive said. “Sanford is not a wounded bird that is crippled because of the actions taken by another government.” 

The Lee County Board of Commissioners voted to change the sales tax distribution method from the current per capita method to ad valorem during its Monday meeting. The change will increase the county’s coffers by $1.4 million, but cause a decrease of $1.3 million and $100,000 in sales tax revenue for Sanford and Broadway, respectively, in the upcoming fiscal year, which begins July 1.

The change also results in a decrease of $200,000 for Sanford and $20,000 for Broadway for the current fiscal year, an item disclosed to the three boards for the first time last week.  

Several council members said Wednesday that they were uncomfortable with trying to raise taxes to cover the full revenue shortfall, and a combination of cuts and tax increases would be the best option.

Councilman Walter McNeil said he would prefer not to increase taxes and increase fees because people would be hit “in the front pocket and the back pocket.”

“They are going to have to pay extra because of the revenue switch,” he said. “They need to understand the position we are in because of the county’s change in the tax structure.”

Councilman Samuel Gaskins said the city could lose an additional $1.6 million if the state moves forward with a bill that would impact the city’s utility tax.

“None of this takes into account if we lose $1.6 million in utility,” he said.

Several cities are fighting the proposed change, Gaskins said.

The combined property tax rate for city residents is now $1.26 per $100 valuation — with the county tax rate at 75 cents per $100 and the city’s rate at 51 cents per $100. Under the present rate, the combined property tax for a home valued at $150,000 is approximately $1,890.

Lee County Manager John Crumpton said he would not make his recommendation on the property tax rate for the county until shortly before his budget presentation to the the commissioners on May 20. The four commissioners — Andre Knecht, Charlie Parks, Kirk Smith and Jim Womack — who voted for the sales tax distribution method change said they intend to lower the property tax rate with the money saved by the county.