Editorial | The bottom line
Cape Coral City Council gave city staff some direction Wednesday on where it wants to set the property tax rate as the budget process continues: The bounce for the millage is between the current rate and the rollback rate, the rate at which revenue from property taxes, excluding new construction, would remain the same.
The current rate is 5.1471 mills — $5.1471 per every $1,000 of assessed taxable valuation.
The rollback rate is 5.1988 mills — $5.1988 per $1,000 of assessed valuation — an increase this year because existing property values in the Cape dropped by a collective $318.8 million.
Council consensus is for city staff to aim for the current rate as it continues to tweak the operating budget for Fiscal Year 2027 as council weighs in and formally sets the numbers in the weeks ahead.
As developed by the city manager, the working budget for day-to-day operations next year is $285,012,674 using the rollback rate of 5.1988 mills.
The budget submitted by City Manager Michael Ilczyszyn does not include “program modifications” requested by staff for such things as additional personnel, equipment and vehicles — yea-or-nay decisions that council must make as it balances the tax rate against what department heads say are needed to best serve our community.
With council directing Mr. Ilczyszyn to hold the line on the millage rate, does it mean no tax increase and either cuts elsewhere or the asks go unanswered?
It does not.
Property taxes are not the only funding source for the operating budget. Taxes paid via the millage levy are not even the only property-based tax on our tax bills.
The city of Cape Coral imposes two additional levies to pay for operations.
One is a public service tax of 7% that residents pay monthly on their electric bills in addition to the city’s 3% franchise fee.
The other is a fire services assessment that allows the city to recoup most of the cost of providing that service, currently set at 81% recovery. The FSA is among the taxes and fees on property tax bills.
Increases to both are options council has at its disposal as it “holds the line on property taxes.”
This scenario is something we urge property owners to keep in mind as the state’s tax relief proposal, Amendment 3, comes to voters on the Nov. 3 General Election ballot.
If 60% of voters agree, Florida’s Homestead Exemption for owner-occupied homes would increase to $150,000 in 2027 and to $250,000 in 2028.
Sounds great but let us circle back to those other taxes and fees which council will discuss to fund the bigger budget proposed: There are few controls on such levies which governing bodies call “revenue diversification” and realists like us who are digging deeper into our wallets call an end run around Florida’s millage cap.
Case in point:
The city of Cape Coral imposed its fire services assessment in the bottom of the real estate crash in 2014.
The “cost recovery” method was passed by the state legislature specifically to keep small, independent fire districts afloat when property values plummeted.
Here in the Cape, fire services are provided by a city department. Its funding was part of the overall General Fund operations budget.
Following a legal challenge of its methodology which it won, the city shifted most of the funding for the Cape Coral Fire Department to this new tax, excuse us, “fee,” on properties within the city — the FSA, which allows the city to “recover” the cost of operations, whatever they may be in any particular year.
In 2020, the city “recovered” 62% of operations, about $26 million. In 2025, council bumped the recovery rate to 70% and brought in about $51.3 million.
In 2026, the recovery rate was bumped to 81%, bringing in just shy of $64 million. At that same rate of recovery, Cape Coral taxpayers will pay a collective $67.77 million in FY ’27.
If council approves the department’s “program modifications,” that number will jump to about $73.93 million next year because there are no caps on operational costs and “recovery” is percentage based.
Note the timeframe.
Note the numbers.
A couple of things.
As budget talks here in the city continue through the various workshops and hearings, including a key one next Wednesday, July 22, when council will set the not-to-exceed millage rate, pay close attention to the other levies you pay — the taxes, the fees, the assessments, the levies.
See where the revenue side slides.
Look at the bottom line, the overall impact on your pocketbook.
Then when you see Gov. Ron DeSantis’ much-touted “tax relief” amendment on the ballot in November, remember President Ronald Reagan’s famous line: “The nine most terrifying words in the English language are: I’m from the Government, and I’m here to help.”
Cape Coral’s “revenue diversification” effort is a cautionary tale.
There’s no real tax relief in sight with Amendment 3 if tax-on-property assessments and levies are not also addressed.
There will just be new taxes, fees or assessments with no end in sight, all exempt from the Homestead protections upon which many rely.
Breeze editorial