BALANCE SHEET BLOG – HOLLYWOOD, FL


Property Tax Squeeze: 2010
July 25, 2010, 6:43 PM
Filed under: Budget, Taxes

July 25, 2010

Property Tax Squeeze

Background

Our annual property tax bills include the taxes we must pay not only to the City of Hollywood but also to numerous other entities including the county, public schools, water management district, children’s services council, etc. This article concerns only the portion of our tax bill that is determined by the City.

The Hollywood City Commission is responsible for setting how much tax we pay each year to help fund city operations. The city also assesses each property owner a proportionate share of the annual repayment owed on the voter-approved General Obligation Bond (GOB) for parks and public safety.

City Property Tax Rate

The City Commission took a big step on July 21 by setting 6.7100 as the maximum rate we can be taxed to fund city operations in FY 2011 — the fiscal year that begins October 1, 2010. This is the so-called “not to exceed” millage rate.

Before the commission makes a final decision on the rate, it will hold two public budget hearings in September. The first one is set for Wed., Sept. 15, 5:30 PM, at City Hall. While the Commission could adopt a lower rate, it is not likely to do so because the “not to exceed” rate is insufficient to cover projected expenditures.

City Millage Rates 2010 – Actual Rates 2011 – not final
Operating 6.0456 6.7100 – ceiling
GOB debt 0.2919 0.4268*
Total Tax Rate 6.3375 7.1368
*The debt millage must cover the annual GOB repayment which has not substantially increased. The need for the higher debt millage rate in 2011 is based primarily on Hollywood’s plummeting property values.

Impact on Tax Payer

Whether your 2011 tax bill will be higher than last year’s bill depends on how much the Broward County Property Appraiser has lowered your taxable property value. The greater the loss of your property’s taxable value, the more likely your tax bill for 2011 will not exceed last year’s. The higher millage rate multiplied by the lower property value could hold the line for your taxes.

How to Calculate Your Tax Based on a Millage Rate (Mill Rate)

The millage rate is the tax rate applied to the value of your property in order to calculate your property tax liability. One mill equals $1 for every $1,000 of taxable property value.

Hollywood has two types of millage: one for city operations and one to cover voter-approved debt. The example below is based on the “not to exceed” tax rate for operations plus the estimated debt millage rate provided by the city budget office.

If the combined operating and debt millage rate is 7.1368* then your tax would be approximately $7.14 on each $1,000 of your property’s value. For example, if your property’s taxable value is $125,000, your tax would be $892 ($125,000/$1,000=125 x $7.14= $892).

*Note: Our actual 2011 city tax rate will not be finalized until after the budget hearings in September.

Impact on City Staff and City Services

We have a big problem because the 6.7100 ceiling will not generate enough revenue to cover projected expenditures. In order to balance the last two annual budgets, the City Manager used a variety of cost saving techniques including departmental consolidations, positions frozen or eliminated, unpaid furlough days, fire fee increase and more. What will he recommend this year? He told the Commission he does not recommend raising the fire fee again. But roughly $1 million more must be trimmed from the 2011 budget which is bound to be stressful for staff. The City Manager will be seeking more union concessions to make up the shortfall and/or taking a knife to funded positions and services in order to balance the FY 2011 budget.

Why, and What Next ?

Why are we in this dire position? First, according to city staff, property values in the City of Hollywood have plunged downward by over $1 billion over the last three years. Second, for a variety of reasons, Hollywood has not managed to create and maintain the kind of “rainy day” reserves that could help us to ride out the hard times. Balancing Hollywood’s budget this year is truly a high wire act.

In September, the city commission will have to decide what services to cut, what jobs to eliminate, and what our tax rate will be for the coming year. If you have recommendations or concerns, you should definitely make them known. The best way is to attend the public budget meeting on Wed., Sept. 15, 5:30 PM, at City Hall. At that time, you will be able to speak directly to the Commissioners. Also, you may e-mail your suggestions and concerns to the City Commission. To be most effective, any e-mails should be sent well before the Sept. 15 meeting.

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