The booming real estate and construction industries are expected to boost Port St. Lucie’s tax base by more than $800 million, or about 9 percent, in the 2019-2020 budget year.
The city issued construction permits for projects worth an estimated $807 million in 2018, city records show. That’s an increase of $479 million, or about 146 percent, compared to 2017. Single-family home construction led the way with 2,148 permits in 2018, an increase of 671, or about 45 percent, compared to 2017, city records show.
The City Council would be able raise an extra $4.3 million in property taxes in the upcoming year if they keep the tax rate at $6.30 per $1,000 of assessed value, said Management and Budget Director Jeff Snyder.
Sales tax revenue is projected to increase by 4.5 percent to more than $8 million in 2019-2020, Snyder told the City Council on Feb. 22 during its winter retreat. “Growth is the major driver of the increases,” Snyder said. But, he warned, “an economic slowdown is inevitable.”
City Manager Russ Blackburn said he plans to give the council his 2019-2020 budget proposal in late June. The council would set the budget and property tax rate at workshops in July and finalize them during public hearings in September.
Several council members said they want to continue the trend of lowering the property tax rate by at least 10 cents for the new budget year, which starts Oct. 1.
“I’m not interested in raising it at all,” Vice Mayor Shannon Martin said about the property tax rate. “I want to make sure we’re meeting our growth needs.”
Martin said she wanted to see what would be left out of the 2019-2020 budget if the property tax remained stable, or if the rate was trimmed by 10 cents, or by 20 cents.
Mayor Gregory Oravec indicated he could support a 10-to-50-cent reduction in the property tax rate, but “flat wouldn’t be good enough for me.”
The council lowered the property tax rate by 10 cents in each of the last three years after raising it by $1 in 2015-2016 to cover new expenses from failed economic development initiatives.
Each cent in the property tax rate generates about $110,000 in property tax revenue, Snyder said. And each $100 million in new construction adds more than $450,000 in property tax revenue.
While property and sales tax revenue has been increasing, declines in gas tax revenue can be expected in the future as vehicles become more fuel efficient, Snyder said.
The council should also brace for an inevitable downturn in the economy, Snyder said. “We know a recession is coming at some point,” Snyder said. “There’s a lot of talk about 2020 being maybe a recessionary period. That remains to be seen.”
