Cape Council can’t reach compromise on tax rate
City Manager Rob Hernandez told a deadlocked Cape Coral City Council Tuesday that the budget process is not just an exercise in balancing revenues and expenditures one year at a time but is strategic in nature, encompassing a multi-year financial plan.
“That involves conflict, resolution, competition for scarce resources and developing alternatives and compromises,” Hernandez said with emphasis on the word “compromise.”
“This is all part of the budget process. It does not point to dysfunction. This is how it’s supposed to happen,” Hernandez said.
After the third joint budget workshop between Council and the Budget Review Committee, there still wasn’t much in the way of compromise as Council remained deadlocked between the proposed budget with a 5.5568 millage rate and a budget using a rate of 5.3694 mills.
A mill is $1 for every $1,000 in taxable property valuation.
Both rates under discussion are lower than the current rate of 6.25 mills but, due to a large increase in taxable valuation year over year and new construction, each would bring in more property tax revenue.
At 5.5568 mills, the rate Hernandez has recommended, the city would receive about $11.1 million more in property taxes.
At the rollback rate — the rate at which property taxes would essentially remain flat for most property owners — the city would still see an increase of more than $7 million.
Council also could not agree to a way to resolve the $4.1 million gap between the budget proposed and lesser revenue the rollback rate would bring in.
They did agree on one thing, though.
“We agreed to come back for another meeting. That’s about it and that’s not a bad thing,” Hernandez said.
The compromise may be in between the debated tax rates, or 5.4391 mills. That millage was among the original five presented by the city manager, but got little or no attention.
“It’s worth a shot. I don’t know if I can get them there, but it’s worth a shot. I don’t know if I can get them away from rollback, but it’s worth a shot,” Hernandez said.
The 5.4391 rate would split the difference and close the gap between the proposed budget and projected tax revenue to $2 million, which could be more easily found.
Mayor John Gunter, and council members Jennifer Nelson, Keith Long and Dan Sheppard favor the rollback, while Jessica Cosden, Tom Hayden, Gloria Tate and Robert Welsh favor the proposed budget with its 5.5568 millage rate.
Even the Budget Review Committee is split. During citizens input, member Tom Shadrach, who is challenging Gunter in the upcoming mayor’s race, made several suggestions on how to find the $4.1 million, including a freeze in Parks & Recreation staffing and a reduction in the maintenance budget, internal studies and design work done in house and reducing reserves to 2.25 months.
Tate shot the latter idea down in a hurry.
“I’m not prepared to take the risk doing that, even though we have survived many disasters in the past,” Tate said of the idea of lesser operational reserves.
Council members remained dug in. Tom Hayden expressed dismay over what he perceived as a city being depressed.
“We’re in a position to do things the right way and you’re not doing it. I wish I could find a way, but no way am I moving from 5.55,” Hayden said. “The future of the city is more important than what you see. What future will we have with the rollback?”
Finance Director Mark Mason has warned that going to the rollback rate now would result in funding problems down the road. An $8 million deficit is forecast in five years even as they save money in the beginning. The proposed rate would result in an $11 million surplus.
There was also discussion on using one-time funding to make up the deficit, which the proposed budget supporters rejected.
In the end, they agreed to come together next Tuesday at 2 p.m. and see if they could come to a compromise or if the only thing they could do is agree to disagree.
“If we’re still deadlocked, it’s not the end of the world. We still have two bites at the apple in September (Sept. 8 and Sept, 22). They compromised the last two years,” Hernandez said. “As I said, all of this is part of the process. It doesn’t show that the Council is at each other’s throats. It shows they have having a deliberate process.”
To reach CHUCK BALLARO, please email news@breezenewspapers.com