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Cape Council begins talks on FY24 budget

By CHUCK BALLARO - | Feb 1, 2023

The Cape Coral City Council winter retreat is the unofficial kickoff of the budget season, which will culminate with the ratification of the 2024 budget for the city in September.

On Friday, council heard from Finance Director Mark Mason on the budget process and, with all that is happening in the city and elsewhere due to Hurricane Ian, it was obviously the first inning of a nine-inning game. Maybe even the first at-bat.

Numerous things impacted this year’s budget, especially inflation, housing affordability and energy costs. Mason said inflation seems to be cooling down and energy costs aren’t quite as outrageous though they have risen again recently.

Interest rate volatility, the cost of labor and increased operating costs are other impacts that influenced the 2023 budget and is expected to do so again.

Another impact was the hurricane. State Senate Bill 4A will appropriate more than $751 million from the General Fund toward disaster relief in areas affected by Ian and Nicole.

As is standard, the three biggest questions council will face is at what level to set the three primary city tax rates — ad valorem, public service tax and fire service assessment.

Currently, the property tax rate is 5.3694 mills, or just shy of $5.37 per $1,000 of taxable assessed property valuation. The tax on electric bills in the city is 7 percent. The fire assessment is 62 percent of the cost of operations.

Mayor John Gunter said he would rather reduce the millage and taxes on all residents, but there are so many unknowns that need to be answered.

“This is the starting point. The information we have needs more clarity and needs to be revisited,” Gunter said. “I don’t want to do anything prematurely.”

Councilmember Bill Steinke, who works in the real estate business, expressed concern over the inevitable drop in property values caused by the hurricane and the tax break homeowners are getting from the appraiser’s office.

“If we keep rolling back the millage because of property values, we need to be careful in case values go down,” Steinke said.

The budget picture will get a little bit clearer once the summer retreat happens in June or July, when the Tax Appraiser’s Office releases its estimated and then final property valuations reports.

Until then, council gave city staff the direction to use the current rates for the three taxes as a starting point. Council and staff will then adjust the figures accordingly after the council gets its questions answered.

Gunter said everyone needs to recognize the city was hit with a near Category 5 storm and that there will continue to be expenses there, even if the city will ultimately be reimbursed.

“Hurricane Irma was in 2017 and we’re still waiting for reimbursement for that. That is something you have to be aware of,” Gunter said. “Also, because of a few bills that passed, there could be a reduction on ad valorem taxes. We don’t really know the magnitude.”