Vero city council opts for tax-rate hike

VERO BEACH — Rather than make tough decisions about priorities, the Vero Beach City Council has decided to balance its budget through a 10 percent increase in the tax rate, while also voting to boost the cash it pilfers from electric, water and sewer customers by $200,000 more than initially budgeted.

Savings expected from the shuttering of Big Blue and trimming the utility staff by 13 people reduced the electric fund budget in the coming year by $5.1 million. This lower budget figure would have reduced the amount of money transferred from the utility to the city’s general fund, but the council during Friday’s budget talks voted instead to “stabilize” the transfer amount at $5.4 million.

While the rake off is down from a high of $5.6 million back in the days when Vero’s rates were 58 percent higher than Florida Power & Light, the city’s electric rates are still more than 30 percent higher than FPL rates and Vero is still heavily dependent on utility subsidies paid by non-city residents.

Vero collected $5.3 million in property taxes this year, but more than three quarters of its overall $22 million budget came from other sources.

The transfers make Vero electric a “cash cow” for the city, according to critics, but for the majority of the Mayor Jay Kramer-led city council, the transfers are a reasonable rate of return that city residents glean as a benefit of owning the utility. “We’re still coming down on the transfers, we’re just not coming down as fast as the rates are dropping,” Kramer said, in an attempt to put a positive spin on the decision.

The extra money from utility bills will fund 1.5-percent salary increases for city employees, with Councilman Dick Winger calling those raises “a good investment” of the money.

Should it survive upcoming public hearings, Vero’s property tax rate come Oct. 1 will go up from $2.38 per $1,000 of taxable value to $2.51 per $1,000 of taxable value. That is 10 percent over the “rolled-back” rate that would have netted the same tax dollars as 2015 tax bills brought in.

In real dollars, the increase will bring in an extra $13 per $100,000 of taxable value, so the owner of a property with $500,000 in taxable value will pay $65 more on the municipal line item on their tax bill.

With a bonus infusion of $329,000 in property taxes, Vero will begin to sock money away to cover what’s called “Other Post-Employment Benefits,” which means perks it has promised municipal employees who finish their careers and are eligible to cash-out large banks of unused sick and vacation time.

The banking of that time is limited going forward, but the city is honoring commitments it made to long-term employees who have for decades been carrying over hundreds and sometimes even thousands of hours of paid leave time like a savings account. Should they retire voluntarily on good terms, employees receive a lump-sum payment for those unused benefits.

Indian River County, as a standing policy, has banked money to pay out these parting gifts to county employees, but Vero has paid them as they go, as employees decide to retire, out of the current budget year with no designated fund to draw upon. In years when there are several high-level retirements of people who might have $50,000 to $80,000 accumulated in banked leave time, those unbudgeted payments can require some financial maneuvering.

The public will get two chances to weigh in on the proposed budget before it becomes final, with hearings scheduled on Sept. 6 and Sept. 20.


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