COMMENTARY

MARK SCHUMANN

After four days of budget workshops, the City Council will meet again today to set a property tax rate for next year.

The Council has spent a week alternately making a case for cutting jobs and services and then restoring at least some of the proposed budget cuts.

All of this was easy enough to predict, for early on in the discussions about selling the city’s electric system, Councilman Jay Kramer accurately predicted the sale would inevitably lead to a choice between tax increases or diminished city services.

At the time, Councilwoman Tracy Carroll accused Kramer of “fear mongering.”  As it turns out, Kramer was right.

One arguments offered for selling Vero Electric is that the city is too dependent on income from its utilities. Rather than replacing utility transfers with additional tax revenue, the Council majority of Craig Fletcher, Tracy Carroll and Pilar Turner is pushing for cuts in city services.  Turner prefers to call this a process of “rightsizing” city government.

Hacking away at city services in the name of “rightsizing” is certainly the option now being advocated by the “limited government” crowd, though they earlier promoted the concept of selling the electric system by assuring the public any necessary tax increase would be more than offset by Florida Power & Light’s lower electric rates.  When Glenn Heran, Dr. Stephen Faherty and company were going around the community presenting rosy financial scenarios for the sale, no one was talking about cutting back on city services.

Now that city leaders are at the decision point on next year’s tax rate, at least one “limited government” advocate is suggesting only “socialists” would advocate replacing 14 percent of the revenue to be lost from the electric system with a tax increase.

To put a possible tax increase in perspective, the average tax bill for those who own property in the city is approximately $17 per thousand on assessed value, with $2 (or 2 mills) being the city’s property tax. At 2 mills, the city raises $4 million in property tax revenue.  To be clear, a 25 percent hike in the city’s property tax rate (from 2 to 2.5 mills) would only increase the overall property tax bill by approximately 3 percent, and would raise the additional $1 million needed to avoid cutting city services and laying off another 43 city employees.

In the first three years after the sale, the city will need to trim expenses or raise taxes by $1 million in order to avoid further cuts in services. I say “further” cuts because the city has already reduced its general fund budget by 25 percent over the past few years, and has cut its employee head count by approximately 100.

So, the basic question for the residents and taxpayers of Vero Beach is whether they want the Council to make what Councilman Richard Winger has described as “draconian” budget cuts, or would they prefer to pay three percent more in property taxes in order to maintain the current level of city services?

To put the city’s 2 mill tax rate in perspective, many comparable cities in Florida assess property tax rates of 3.5 to 5 mills, yet no one is accusing the leaders in those communities of being socialists.

For decades, dependence on electric system revenue has kept the city’s tax rate artificially low. No one disagrees with that, and certainly one way to eliminate the city’s dependence on revenues from the electric system is to sell Vero Electric. That is simple enough.

The more complicated question is how to deal with that loss of revenue. The choices are to further cut services or to raise taxes, or to employ some combination of the two.  What is called for now is perspective, foresight and stewardship, for how this question is resolved will in no small way affect the quality of life in this community for years to come.