The central question for the governing body of any local government is about taxes. What level of taxation is needed to fund the services expected by the community? Interpreting the shared values for 2.5 million people is not easy, but representative democracy requires our Miami-Dade County commissioners to make an honest effort.
The annual taxation decision is the essential ingredient of the entire budget. For a complex, metropolitan government like Miami-Dade County, with four separate taxing jurisdictions, setting the tax rates is a decision that demands extraordinary attention, careful reflection and the utmost care.
This year, the process has been fraught with hiccups. One day after releasing the proposed budget, the recommended countywide tax rate was changed to eliminate the full funding for the Pets’ Trust. Seven days after the release of the budget, the recommended ceiling on tax rates for the Fire and Library districts was changed — the night before the commission was scheduled to hear from the public. Who knew? A slim majority of commissioners adopted the revised rates.
Tax policy and millage calculations are difficult enough without being complicated by a late-night switcheroo in the recommended budget. Such erratic shifts in policy fuel doubts about the county’s financial stability. Businesses in the United States choose where they want to operate. To keep recent graduates, new-start entrepreneurs and footloose companies in Miami-Dade County, it is critical that the government stands by its pledge to provide quality services and amenities.
What message does it send about our commitment to research and innovation when we are closing libraries? Why would a white-haired CEO move to a community with sporadic fire-rescue service?
To remain a desirable community for economic investment, tax policies must be thoughtful, deliberate and defensible. Tax policy should not be set during the heat of a political campaign. Two years ago, the bumper-sticker pledge to repeal tax rates, while property values were still dropping, led to a $200-million loss in funding for county services.
While the stockholders of FP&L, the largest property owner in Miami-Dade County, surely appreciated the windfall tax break of more than $6 million in 2011, our electric bills did not go down. Landlords in Miami-Dade may still be smiling from their unexpected profits. Rents were not lowered after the 2011 tax break. Since the tax break, the average rent for a two-bedroom apartment in Miami-Dade County has steadily increased, from $1,386 in August 2011 to $1,613 in May 2013 (Reinhold P. Wolff Economic Research, Inc.).
For the working people of Miami-Dade County, the $200-million tax break of 2011 has meant a reduction in public services, an increase in service fees and no relief in rents or utility bills. What happened?
According to the Florida Department of Revenue, the owners of homestead residential property in Miami-Dade County pay 27.2 percent of the property taxes. What does that mean? For every $1 of county property tax paid by a local homeowner, other property owners pay another $2.68. In effect, any increase in property tax rates for a homeowner in Miami-Dade County leverages a substantially greater contribution from the snowbirds, foreign investors, national retail chains and corporations that pay the bulk of the property tax bill. Conversely, a tax rate reduction provides greater monetary relief for nonhomestead property owners. For every $1 reduction in a homeowner’s tax bill, the county forfeits $3.68 in revenues. A lot of that money simply leaves town.
There are numerous economic-development arguments for keeping property taxes low. But, from a community perspective, a decision to lower property taxes, with commensurate service cuts and fee increases for the residents, is self-defeating. And what business wants to locate to a community that closes libraries, cuts fire services or routinely kills stray pets?
The voters need to let the county commissioners know we will accept thoughtful tax rates in exchange for a respectable level of efficient services.
Terry Murphy is a government-relations consultant in Miami. His clients include public-employee unions.