It will be another tight budget year for the city of Miami Beach.
Growth of property values in Miami Beach has slowed since the few years post-Great Recession when property values skyrocketed.
According to Miami-Dade County’s property tax appraiser, Miami Beach saw a 3.1 percent growth this year in overall taxable value of property, a little less than last year’s 4 percent increase. Overall taxable value for the city included $302.5 in new construction, an increase from last year’s plummet to $186 million.
The city anticipates a $5.2 million increase in property tax revenue for the upcoming fiscal year, starting Oct. 1, from fiscal year 2019. Although the city still saw growth in the taxable value of property, the amount of growth compared to regular inflation has put the city in “reduction mode,” said John Woodruff, the city’s chief financial officer, in regards to next year’s operating budget.
For Miami Beach, the long-term growth in the taxable value of property averages 5 to 6 percent a year, he said.
“So when we’re below that — last year’s was 4, this year is 3.1 — we tend to have tight budgets because our rate of inflation tends to be a little more than that 3 percent.”
Mayor Dan Gelber said he doesn’t expect to see a dramatic increase in property values over the next couple of years predicting a more modest uptick, citing upcoming projects such as the city’s convention center hotel, 500 Alton Road and development within the North Beach Town Center.
“I don’t think we can expect property values to skyrocket anytime soon,” Gelber said at a city Finance and Citywide Projects Committee meeting last month. “I don’t think it’s going to plummet either, I think it’s just going to be a flat line for a little bit with maybe a slight increase.”
Proposed spending for the next fiscal year currently exceeds projected increases in property value, meaning the city will have to trim next year’s budget by about $4.4 million. The city’s fiscal year 2019 operating budget is $345 million.
To address the shortfall, the city is targeting service efficiencies, rather than cutting positions from services, Woodruff said. Specifically the city is looking at leaving some positions vacant if it won’t affect services.
Officials have brought up automatically tying city fees, not including building fees, to the consumer price index to help support general operating revenue. The index takes into account the change in the prices of consumer goods and services over the years.
Property tax revenues make up over half of the city’s general fund revenues, which go toward services such as police, fire, public works and parks and recreation.
PROPOSED PROPERTY TAX RATE
Miami Beach residents will see a slight increase in their property tax rates in the next fiscal year under the tentative tax rate approved by commissioners this week. (That’s in addition to any tax increases caused by an increase in the value of their home.)
City leaders are proposing an overall property tax rate of $6.02 per $1,000 of assessed property value, which is a slight bump compared to previous years when the city saw a historically low property tax rate. The overall property tax rate consists of an operating tax rate, set to stay the same as last fiscal year, and the debt service tax rate.
An increase in the overall property tax rate can be attributed to a proposed increase in the debt service tax rate, which goes toward paying off general obligation bonds. Last November, Miami Beach voters approved $439 million in general obligation bonds to pay for 57 capital projects, such as parks and fire stations. This new debt tax rate would go toward the first portion of those bonds. It would also help offset increased personnel costs.
The proposed rate passed 5-2 this week with commissioners Joy Malakoff and Ricky Arriola, chairman of the city’s Finance and Citywide Projects Committee, voting against it.
Arriola wanted a higher increase. He suggested increasing the proposed rate for a fund to pay for sidewalk and street repairs.
“By slightly increasing our millage rate and dedicating that mill to repair and replacement, we can keep our city looking brand new at all times,” Arriola said.
He also brought up another possible reason for a bigger increase — funding homeless programs. The city has resisted pleas by Arriola to impose a 1 percent tax on restaurant bills, which is what most of the rest of the county pays toward the Miami-Dade Homeless Trust.
“I mean who is going to step up here?” he said.
Other commissioners opposed increasing the overall property tax rate beyond the debt service tax rate increase.
“The voters voted for the [general obligation] bond, and they’re going to see that increase because they voted at the poll,” Commissioner Michael Góngora said. “We actually have a lot more money than most commissions have had in the past because of this huge influx of [general obligation] funds so I would not be in favor of any millage increase at this time.”
According to a city memo, assessed homestead properties with the preliminary taxable median value of about $195,500 would pay $1,177 in property taxes, an increase of almost $30 from this year.
Wednesday’s action by city commissioners set the ceiling for next fiscal year’s property tax rate ahead of September, when municipalities normally finalize their budget for fiscal year. Commissioners can still decide to decrease the rate during the budget process, but cannot increase the rate without giving proper notice to property owners, a process that makes a further increase almost impossible.
Property owners will receive a notice of proposed property taxes in late August from the county appraiser, detailing how the proposed rate would affect them. The city will have the first public hearing on the proposed tax rate and next fiscal year’s budget on Sept. 11 at 5:01 p.m. at 1700 Convention Center Dr. in city commission chambers.