With real property values way up, the Indian River Shores Town Council has a choice to make – roll the tax rate back to keep tax bills flat for residents, or store up funds in case the barrier island gets hit with a major hurricane and the town needs ready cash for immediate storm recovery.
Residents will have a chance to weigh in on this decision at two public hearings in September, but based upon the emerging consensus at last week’s town budget workshop, council members seem to be leaning toward beefing up the emergency reserves.
Keeping the millage rate at $1.33 per $1,000 of taxable value will bring in 13 percent more tax revenue, or about $790,000. The town operating budget is set to increase by $450,000 to $10.5 million, most of which is going to road improvement projects, employee raises and a substantial hike in insurance premiums.
Mayor Brian Foley said he understands that inflation has hit people very hard, coupled with added expenses for insurance premiums, and for condominium fee increases needed to comply with new state laws.
“We are an affluent community, but no community is immune from some people feeling a pinch,” Foley said, noting that several people have approached him asking about the proposed budget and tax rate.
“So the question was, with the increase in property values and keeping the mill(age) rate the same, why wouldn’t we do a roll back in order to give some relief?” Foley said. “In looking at the numbers, and balancing that against putting money in reserves, it’s a $600,000 difference.”
The “roll-back rate,” means the property tax rate that would bring in the same tax dollars as the previous year. In a year with double-digit gains in taxable property values, the roll-back rate would be substantially lower than the previous year’s tax rate.
Spread among all the town’s property owners, Foley said, “It’s not an unusually significant amount of money to go back into somebody’s pockets. It is, however, a significant amount of money to build up our reserves.”
The town has been gradually drawing down cash it got and tucked away in 2017 from the sale of the oceanside parcel on which the Surfsedge community has been developed, Foley said.
“I think we’ve dodged some bullets with weather impact. I think we can be mindful of the fact that we’d be well-advised to prepare for the worst,” Foley said, adding that the cumulative impact from even distant storms beating up the town’s beaches is about as bad as he’s seen in recent memory.
Former councilman Michael Ochsner, who still leads the town’s finance committee,
said he is concerned about placing all or nearly all of the additional revenue from increased property values into the reserves, instead of reducing the tax burden on residents.
“The fact is it’s their money, it’s not the town’s money,” he said.
Ochsner shared his experience dealing with the aftermath of two major hurricanes, Frances and Jeanne, within a few weeks of each other two decades ago.
“You talk about weather impacts and I think back to Jeanne and Frances, which was the biggest one we had. We had about a million dollars of out-of-pocket costs, but most of it was reimbursed by insurance,” Ochsner said. “And so the whole notion was that you need cash when you need cash, but most of it is going to get reimbursed, so the reserve doesn’t need to be that big.”
At the time Ochsner was on council, he said they decided that about $2 million in reserves for emergencies was plenty. “So anything beyond that, you should just give it to the citizens regardless,” he said.
But Foley respectfully disagreed. He pointed out that it can be two to three years before the town gets expended funds reimbursed from FEMA. If the town lacks the reserve cash, it may need to go out and try to borrow money, potentially at a high interest rate.
“Just in the back of my mind I always keep thinking Mexico Beach, Mexico Beach. I mean, that was a town that thought they were in pretty good shape with reserves and they got obliterated,” Foley said, referring to the Florida Panhandle community hit by Hurricane Michael. “I appreciate your comments, but that’s just where I come out.”
Councilman Bob Auwaerter said he agreed with Foley on bolstering the reserves. “Last fall I drove through Fort Myers Beach. We all know about the waves that came crashing through there and so forth. It sort of reminded me of Tokyo after being bombed by B-29 bombers.
There was nothing left,” Auwaerter said.
He raised a sore subject, the county’s delay in getting sand on the town’s beaches, and the state’s reticence to declare the town’s strip of oceanfront as “critically eroded,” a designation necessary to speed up the process of beach replenishment.
“It may come to the point where we’re going to need to spend town money on sand. It’s a constant struggle to get the state to do the right thing,” he said. “I could see a situation where we have to pay to dump sand on the beach and you’ll have those who will say you’re just protecting the oceanfront houses. But it impacts everything in the town. You don’t want to be the oceanfront when those get washed away.”
Auwaerter agreed with Ochsner that it is the peoples’ money, but hopefully the council is using the money wisely for the good of the town.
Vice Mayor Sam Carroll and Councilman James Altieri concurred with Foley and Auwaerter about the town reserves. Councilwoman Mary Alice Smith was not present at the meeting.
Hurricane experts have predicted an 85 percent chance of an above-average 2024 Atlantic hurricane season.
The finance committee also questioned the proposed 6 percent across-the-board salary increases for town employees, noting that 4.8 percent would be more realistic in terms of where other governments in Florida are headed on raises.
“There were some recommendations that were put through. We do read the letters. We do read the recommendations and consider them very carefully,” Foley said.
Foley explained that the town is demanding more of employees these days, and he also clarified that the 6 percent was not automatic, but would be at the discretion of the town manager based upon individual employee performance.
