Editorial | Taxes & levies: A trip down memory lane
Revisionist history seems to be a common trait of late so we’ll not overly fault the city for its explanation of its Fire Services Assessment.
The tax, excuse us, assessment, indeed was intended to support the operations of the Cape Coral Fire Department as well as the cost of infrastructure required to assure protection throughout our growing city.
The taxpaying public, though, was told — assured, in fact, — that the “assessment” wasn’t going to be an additional tax but a component of a new and more equitable plan that would make Cape Coral less reliant on property taxes for government operations by moving some of the burden to those who enjoy city services but don’t own property here.
It was the brainchild of former city manager John Szerlag, who worked in conjunction with a consulting firm to formulate a plan that would bring in $20 million more in much-need tax dollars without a big bump to the city’s then near 8% millage rate.
This was back in 2013 went the effects of the real estate collapse put local governments in dire straits.
In April of 2013, Mr. Szerlag painted a picture that was bleak: Do nothing — i.e. no tax increase — and the city was looking at the issuance of 749 pink slips on Oct. 1 putting 232 full-time workers and 517 contract employees out of work; shuttering Special Pops, displacing more than 180 adults and children with developmental and physical disabilities; closing the Yacht Club and its pool; closing Four Freedoms Park; closing the Tony Rotino Center; closing the Art Studio; closing Sun Splash Family Waterpark; closing the Lake Kennedy Senior Center; closing the Youth Center, the Skate Park and either shuttering athletic programs for kids and seniors or raising user fees $100 per participant, per program and more.
For those who were not here for the collapse of our city’s primary economic driver — construction — those were shaky financial times for all of us.
Desperate times do call for desperate measures and Mr. Szerlag proposed a plan of tax diversification he referred to as a “three-legged stool” upon which Cape Coral could balance its finances.
The city would, of course, retain property taxes, its main funding source for city operations.
It also would add two new supplemental taxes that would be paid by everyone — yes, residential and business property owners, but also the owners of undeveloped properties and renters who used city services but did not kick in what the city said was a fair share.
A public services tax — essentially a tax on electric bills — of up to the 10% maximum allowed by law, was approved after much debate, as was the fire assessment that would shift up to 60% of that department’s cost of operations into a new revenue fund.
Taken together, Mr. Szerlag said the plan would provide the best, progressive “spread” of taxes, benefiting those at the lower end of the financial scale a bit better than those at the higher end and it was estimated that the city would raise $11 million per year from the public service tax, and $17 million per year from the fire services assessment.
That was $28 million — $8 million more than the city said it needed — so property taxes, collectively, could be shaved by that much. The city, though, did need a number of projects so, yes, those residential property owners still would pay a bit more, initially — $150 more for the average homeowner. Some, particularly businesses, were going to pay more. In some cases a lot more.
There was much wrangling on the amount of the levies.
The city landed at 7% for the new tax on electric bills, a measure that had failed a few years before.
A recovery rate of 38% was set for the fire assessment, the methodology of which got challenged, making its way to the Florida Supreme Court before the city actually saw any money.
The tax rate ticked down a quarter point — less than the 1 mill proposed — to 7.7070 mills.
We were among those who pointed out that homeowners were going to get banged thrice and we were pretty skeptical despite the assurances that the new levies weren’t going to 1) evolve into just new taxes and 2) as taxes, were going to increase.
Which has, in fact, happened.
The property tax rate did drop.
It is sitting now at 5.5188 mills or $5.5188 per $1,000 of taxable valuation.
However valuations are up — way up — from the Great Recession days.
Keeping the current rate for Fiscal Year 2026, as Council has tentatively agreed, means property owners will again pay more in property taxes.
They also will pay a pretty good bump in their fire services assessment apparently on the road to 100% recovery — i.e. a separate tax for fire protection services which was wholly included in our property tax bills a dozen years ago.
Cape Coral City Council on Wednesday increased the “cost of recovery” from 70% to 81%, — 11 percentage points — with Councilmember Keith Long being the lone dissenting vote.
According to the city, at 81%, the levy is $529.76 for an average single-family home, up from $438.48 at the current recovery rate, which is double the original rate.
Those same homeowners are also paying more for power as a result of the city’s 7% tax on electric bills in addition to the 3% “franchise” fee assessed to LCEC and passed on the customers. The city eliminated its original exemption for the first 500 kilowatt hours back in 2021 so it could pay off debt for its municipal charter school system.
Which, for those who are keeping track, taxpayers were told we would never subsidize as the schools would be self-sustaining.
Here is our point as Cape Coral City Council weighs the proposed mobility fee, new rental registration fees and other levies to make “growth pay for growth” or pay for “readiness to serve”:
Call them taxes, call them assessments, call them fees, government levies tend to grow: The government bear is always hungry.
It’s the nature of the beast and those we elect cannot blame bureaucracy for its propensity to fatten.
When it does, neither Council nor staff can rewrite history.
Much as they may want to because it’s much easier than keeping the beast that we, the taxpayers, feed lean.
Breeze editorial