The City of Vero Beach has shelved road projects for the past few years as other funding priorities and concerns over property tax hikes left elected officials with tough budget choices, but this coming year a surge in assessed property values will provide a quarter million dollars for needed road repairs.
Governments across the county are benefitting from increased real estate values that translate to more property tax revenue and are weighing their options, deciding whether to spend the extra money or to hold the line on budgets and reduce tax rates.
“We did have an increase in the taxable property value from last year of 7.7 percent, so based upon that increase, we have a $454,000 higher budget than we did last year,” Mayor Laura Moss said last Monday at the start of the city’s three-day budget workshops.
“We kept the tax rate the same as last year, living on the assessed value, the increase in the assessed value,” City Manager Jim O’Connor said. Vero’s tax rate is expected to remain flat at $2.51 per $1,000 in assessed value, the maximum tax rate that the City Council unanimously approved last week. For comparison, that rate is up from $1.93 at the end of the real estate boom of the late 2000s.
City Finance Director Cindy Lawson said a slight upward revision of assessed values released after budget materials were printed show a 7.9 percent increase, giving Vero another $11,000, still without increasing the property tax rate.
In addition to making road repairs and paving possible, Vero’s quarter million in extra revenue will fund the city’s share of a 15 percent hike in healthcare premiums and a 2 percent across-the-board salary increase for city employees – should all those expenditures make it into the final budget in September for the fiscal year commencing Oct. 1.
Indian River Shores is also basing its budget on increased assessed value. Like Vero, the Town is expected to keep the tax rate the same, or possibly reduce it as budget talks continue this summer.
The tentative tax rate voted on by the Shores Town Council last month was $1.71 per $1,000 of assessed value, the same as 2016.
The latest numbers show Shores’ property values increasing by 6.73 percent, but after reviewing those projections, Stabe said Monday, “We’re setting the increase in property values at 5.36 percent over the prior year values from the same time frame. At this point we are holding at the 1.7186 maximum millage rate since the budget meeting will take place after the required date for TRIM notices.”
As far as how the upward shift in property values and anticipated tax receipts will affect the Shores expense budget, “We just need to see how the discussions from the budget workshop go later this month,” Stabe said.
Property values in the Town of Orchid rose 5.69 percent from 2016, and now total $414.2 million in assessed value. Sebastian property values rose 12.2 percent, in part due to nearly $36 million in new construction. Fellsmere property values rose 6.7 percent over 2016.
Indian River County government is looking at taxing property owners based on projected assessed property values of $16.3 billion, an increase of 7.6 percent over 2016. But County Administrator Jason Brown noted graphically in budget documents that the county still lags $2.3 billion behind peak property values in the 2007-2008 fiscal year, when total value topped out at $18.6 billion.
That year’s number was based upon sales figures during the 2006 calendar year near the height of the real estate “bubble.” Assessed property values began to decline in the 2008-2009 fiscal year, dropping to $17.4 billion and bottoming out at $12.7 billion in the 2012-2013 fiscal year based upon sales in 2011.
On top of the increase in assessed values, the county plans to raise taxes, increasing its general fund millage rate nearly 2 percent, from $3.36 per $1,000 of taxable value, to $3.42. Still recovering from drastic cuts, and still 30 percent under budget levels in the peak of the real estate boom, county departments want to add a total of 65 positions, bringing staffing up to 1,442 people, inclusive of the “constitutional offices” like the sheriff’s department and jail.
None of the published or approved tentative tax rates are final until each government holds two public hearings – at least one that must commence after 5 p.m. to accommodate residents who work during the day but might want to attend or speak – and final votes are taken in late September and reported to the property appraiser and to the state.
The best overall look at property values comes from preliminary budget documents published by the Indian River County School District, as school assessments span both unincorporated areas and all the municipalities across Indian River County.
In the document dated May 23, the school district estimated property values would rise 6.79 percent from $16.4 billion in 2016 to $17.5 billion in 2017 when tax notices go out in August. Updated numbers released last week stating property values of $17.6 billion, or a 7.19 percent increase over 2016 for school district tax assessments, will be presented later this month.
A bar graph in the School Board budget packet shows property values forecast to increase each year out to 2021, when assessed values are expected to reach $21.2 billion, citing the August 2016 Ad Valorem Estimating Conference as the source of the projections.
Assessed values can be nearly a year and a half behind real estate sale prices in reflecting upward (or downward) trends in values. Sales for the calendar year 2016 are used in projections for taxes billed in the fall of 2017 and paid during the 2017-2018 fiscal year. So a very hot market during the recent Winter 2017 season will not be reflected until next year. There is also a lag time before taxes assessed on new construction hit the tax rolls.
Sissy Long of the Indian River County Property Appraiser’s Office said “Truth in Millage” or TRIM notices will be mailed out on Aug. 14 showing property owners their worst-case scenario tax bill based upon the maximum property tax rates approved by the various local jurisdictions. Then actual tax bills are sent out on November 1.
