When preliminary tax rolls rose this July to around $200 billion countywide, most of Miami-Dade County’s government agencies embraced the prospect of finally having more dollars to spend after years of making do with less. But there’s some uncertainty to go with the celebration.
Because sending out a tax bill is one thing. Collecting on it is another. And the agencies that rely on property taxes are finding the payments a little light these days.
The city of Hialeah, for instance, expects to receive only about $9 of every $10 billed for the fiscal year that will close at the end of this month. Miami-Dade County expects the difference between collections and billings to be $20 million. And last month, the Miami-Dade school district scrambled to shore up its books after learning that the $45 million shortfall it already expected for the prior school year was about 50 percent too low.
The issue isn’t new: Miami-Dade taxing authorities have found collections problematic since the real estate bubble collapsed and the number of tax appeals soared. But there’s a consensus that this year the predicament has been particularly pronounced.
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“It’s something we’re losing sleep over,” said Judith Marte, the school district’s deputy chief financial officer. “We’ve got to get our hands around it.”
Government agencies like municipalities, counties and local school boards rely heavily on property taxes to fund their operations. Each July, the Property Appraiser’s Office certifies preliminary tax rolls, which taxing authorities use to set their tax rates and the coming year’s budget.
But tax payments are not due until March, and often bills are tied up in appeals for a year or more. For that reason, agencies don’t actually budget 100 percent of what the property appraiser tells them they are owed. Usually, it’s more like 95 percent, the lowest percentage allowed by state law.
Historically, however, tax collections in South Florida struggle to hit that mark. And this year the Miami-Dade school district says collections came in at about 92 percent. Hialeah is expecting the number to be even lower.
“This year we’re budgeting 90 percent,” said Budget Director Ines Beecher, who said the city expects shortfalls that are typically around $1 million to reach $3 million by year’s end. “That’s huge in a city that needs it.”
So why are collection rates coming in so low this year?
For one thing, the tax rolls remain volatile. While appeals are not as numerous as they were in the trough of the recession, when they numbered around 175,000, Miami-Dade Property Appraiser Carlos Lopez-Cantera said more than 70,000 were filed in 2012. About 64,000 are still pending before the county’s Value Adjustment Board.
But budget gurus point specifically this year to a bottleneck: The Miami-Dade Tax Collector’s Office recently switched to a new electronic system, and Tax Collector Fernando Casamayor said his office has filed and processed a slew of appeals and refunds to try to get current.
“We’ve had more than 12 months worth of refunds happening within the last fiscal year,” said county Budget Director Jennifer Glazer-Moon. “This is a problem this year.”
Compounding and spurring the influx of cases this year, said Casamayor, every refund is now actually two refunds.
A change in state law forced property owners appealing their cases to pay 75 percent of the bill into escrow, whereas before they didn’t have to pay at all until the appeal was resolved. The difference between what is paid up front and the final bill is then handed to the victor in the case, along with a separate interest payment, based on that difference, that accrues at 12 percent annually.
Casamayor said his office has doled out $8.5 million in interest related to lost appeals, mostly to high-value commercial properties (the MET II mixed-use development in Dadeland last month was paid $63,000 interest alone). Overall, total interest payments are likely to hit $16 million by the time all 2012 appeals are resolved, he said.
Meanwhile, Casamayor said, his office has been forced to downsize due to funding cuts.
“It’s not that we lost money or misplaced millions of dollars. That’s not the case. These are factors we had to deal with this year,” he said.
The consequences have been shared across bureaucracies. But a confluence of issues makes collection woes especially exasperating for the school district, which, according to Marte, watched property tax shortfalls spike from a non-factor before the recession to $34 million two years ago, and $65 million this past school year.
Part of the problem: While the state forces cities and counties to budget collections at 95 percent, they recently forced school districts to calculate them at a rate no lower than 96 percent. In Miami-Dade, each percentage point equals about $12 million, Marte said.
Also, while cities’ fiscal years end in September, school districts’ years end in June, allowing far less time and latitude to deal with substantial collection shortfalls. School districts also comprise the largest single chunk of property tax bills.
The issue appears far worse in Miami-Dade than in Broward County, whose schools have dealt with only about $20 million in combined collection shortfalls over the past five years, according to a district spokeswoman.
In presenting his budget to the Miami-Dade School Board this summer, Schools Superintendent Alberto Carvalho said the uncertainty of how much tax revenue will actually come in is the “biggest liability” currently facing the school district, and needs to be righted by the county.
“We’re so concerned about how well they’ll do their job that we fund positions in the tax collector’s office,” he said. “That’s insane.”
The district budgets for shortfall expectations by setting aside a special reserve and monitoring collections, so the issue hasn’t left the School Board unprepared. But, Carvalho said, the state and county have put the district in a terrible position.
“It’s terribly unfair.” he said. “It puts the district in a position where we’re navigating an unstable economy but we also have to deal with something that is out of our control and isn’t announced to us until the fiscal year has ended.”
Casamayor and the school district say they are working together to improve the situation. And Lopez-Cantera said he has tried to give homeowners better options than appealing since he took office in November.
“There’s definitely been a big issue with appeals in Dade County. By far and away, we’ve had the most number of appeals and the most reductions in the roll,” he said. “We’ve been doing everything possible in my first seven months to make it easier.”
In the meantime, the School Board is likely to go to Tallahassee when the Florida Legislature reconvenes next year and urge lawmakers to return the minimum collections rate to 95 percent — though there is little hope that will happen.
“If they say we have to do it, I’ll consider it,” said state Rep. Erik Fresen, R-Miami, who heads the House Education Appropriations Subcommittee. “But hopefully they can figure it out locally.”
Miami Herald staff writer Joey Flechas contributed to this report.