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Cape Council split on property tax rate

Mayor takes city manager to task

By CHUCK BALLARO - | Jul 20, 2022



Cape Coral City Council left its first joint budget workshop with the Budget Review Committee on Wednesday hung regarding the property tax rate for the 2023 city budget.

Four members of Council supported the recommendation of City Manager Robert Hernandez that the city tweak its millage rate back a bit but not as far as the rate at which existing property owners would not see an increase.

Four council members supported considering a budget that keeps property taxes flat by adopting the full” rollback rate — a bone of contention for Mayor John Gunter who said Hernandez failed to present a budget with the rollback rate he thought he was going to see.

Hernandez and Finance Director Mark Mason presented council with five options: the rollback millage rate, at 5.3694 mills, a “fallback” rate of 5.4631, the city manager’s proposal of 5.5568 mills, a “halfback” rate of 5.9034 and retaining the current millage of 6.25.

One mill is equal to $1 for every $1,000 of taxable property valuation. These ad valorem taxes constitute 50 percent of the funding for the city’s General Fund and pays for city operations.

With preliminary valuations released July 1 showing $500 million more than the estimated number and value growth of 23 percent, the rollback rate dropped from the initial estimate 5.4212 mills, which Hernandez said made it a little more difficult to pinpoint everything.

The rollback still would bring in $7 million more in revenue year over year due to the construction boom in the city. The city manager’s proposal would boost the coffers by an additional $11.1 million.

Gunter expressed disappointment over what he saw as the city manager dangling a carrot (of a rollback rate), only to pull it back.

“The information we got today was information we should have gotten two meetings ago. We met with the city manager this week with this presentation, but for whatever reason the information was taken back,” Gunter said. “I didn’t appreciate this approach. This happens for two reasons. Either you don’t want us to have the information or you’re trying to manipulate the direction we go in.”

Hernandez took umbrage, saying there was nothing nefarious about what staff did and that they can’t set a budget until the property appraiser issues the final valuations on July 1.

“There was no time when I or any member of my staff engage in any behavior that would remotely be called unprofessional. I object to that,” Hernandez said. “When we presented this to you individually, we said upfront that Mr. Mason did not have everything complete. I didn’t have the full version until this morning.”

Council was split on whether to go with the rollback rate or the city manager’s proposed tax rate and budget.

Councilmember Jennifer Nelson said she wanted to give the residents a break with a possible recession looming.

“I never want to tax residents at a higher millage to pay for things. We’ve had overflows in budgets in recent years and I feel like we should reward residents now. Now is the time to go to the rollback rate before a recession comes.”

Councilmember Gloria Tate said she doesn’t want to see places like Punta Gorda and Charlotte County offer all the perks of living there while a city of 200,000 people lacks such desired quality-of-life amenities.

“There are things we want but aren’t willing to do it. I want Cape Coral to be better than Charlotte County, and we can’t do that with the rollback rate. We make all these lists, but if we don’t give the citizens what they want, we aren’t doing anything.

Councilmembers Gunter, Nelson, Dan Sheppard and Keith Long said they wanted the rollback rate, while Tate, Jessica Cosden, Tom Hayden and Robert Welsh supported the city manager’s proposed millage.

Mason warned that going with the rollback rate, could impact what the city can do down the line in terms of hiring first responders, growing its reserves or creating large deficits.

“If you’re hoping for another 20-percent increase in valuations, it might not happen. You might not be able to hire more police or handle other needs,” Mason said. “We could make the red numbers green, but we would have to make cuts with the rollback rate.”

Council reached a consensus on setting reserves at 2.5 months, building up to three months over time; on water and sewer rates increasing 3 percent, and looking at a budget at the rollback rate, with Cosden and Hayden saying they wanted to see the proposed budget at 5.5568 and work backwards to see if they can get to the rollback with all Council’s enumerated wants and needs.

The Budget Review Committee favored, slightly, the rollback rate.

While Hernandez got 4-4 split on the budget, he said he knows what his ceiling is and can work from there.

“We have the 5.5 rate and the council can make changes whether they want to go up or down,” Hernandez said. “When you put together a $1 billion budget, there are a lot of wants, needs, distress, politics, and sometimes emotions can get the best of us.”

The next budget meeting is set for Aug. 9, but before that, Council must set its first not-to-exceed millage rate at the July 27 City Council meeting.

Once the not-to-exceed rate is set, Council can lower the tax rate, but cannot increase it.