SEBASTIAN — Property owners in the City of Sebastian might see their tax bills go up between $28 and $50 if the Sebastian City Council ultimately decides to raise the property tax rate. The council agreed to set the maximum tax rate for property tax notice purposes Wednesday night but has not actually set the final rate.
“It’s not set in stone,” Councilwoman Andrea Coy told the audience at the meeting. She explained that the council has to set a rate for notice purposes, then publish the proposed rate, then discuss it as a council and take public input, and then finally vote it up or down.
The council, however, appeared willing to accept a higher tax rate that would overcome the estimated 6 percent decrease in property values. The maximum tax rate would generate an estimated extra $147,419 in tax revenue for the city.
“I think we’ve known this was coming for a few years,” Councilman Richard Gillmor said.
He pointed out that the city has cut nearly 100 employees and has yet been able to maintain the city’s level of service.
“We’ve done everything creatively” that the city can to cut costs, he said.
Ed Herlihy, chairman of the city’s Budget Committee, pitched to the Sebastian City Council the committee’s recommendation to increase the property tax rate to 3.7166 mills – essentially a 40-cent increase per $1,000 of tax assessed value over the city’s current rate of 3.3041 mills.
Millage is the rate paid per $1,000 of tax assessed value on property. An average Sebastian home – one with a tax value of $135,000 – could expect to pay approximately $501.74 if the tax rate were increased and did not see the estimated 6 percent tax value decrease.
That same property, if the value decreased by 6 percent, would pay approximately $471.64.
By comparison, the same property – with the decreased value – at last year’s tax rate would have an assessed tax of $419.29 – a difference of $52.35.
Herlihy told the council that the committee has “big concerns and issues” with the upcoming fiscal year.
“Revenue is down materially,” he said, explaining that not only are property values down, but also the city’s revenue from utility franchise fees – particularly from Florida Power and Light – are dramatically down.
The city is looking at a nearly $380,000 drop in revenue from FPL, due to the plummeting cost of natural gas.
In the past, the city has covered such losses by tapping into the city’s general fund reserve.
Herlihy strongly advised against doing so again, telling the council that the city’s reserve is getting close to the $4 million level the council has tried to keep the reserve above.
He said that if the council were to not raise property taxes, the city’s level of service would drop. There would be no funds for road repairs, services would have to be cut, or the city would have to dip into its reserves.
“We don’t like the consequences,” he said.
City Manager Al Minner told the council that along with considering the higher tax rate, the council would need to discuss whether or not to raise the stormwater fee by $1 each month.
The stormwater fee did not garner discussion from the council.
Vice Mayor Don Wright told his fellow council members that part of their discussion needs to include public safety – in particularly the Sebastian Police Department.
He pointed out that in 1998, public safety consumed 70 percent of the city’s generated property tax revenues. This year, public safety took up 150 percent of the ad valorem taxes.
He called the issue “unsustainable” and issued a challenge to Minner to bring the percentage down to 100 percent in the next five years.
Wright said the city can no longer defer maintenance and forgo allocating resources to the city’s various departments because public safety takes the available funds.
The council unanimously approved setting the maximum tax rate of 3.7166 for the purposes of having the Tax Collector of Indian River County send out property tax notices. The council will have several meetings to discuss the budget and tax rate between now and the time it must finalize the rate.
