Cities raise taxes to cover debt

When Orange County residents open their mailbox this week, they may find some interesting numbers inside. Orange County Property Appraiser Bill Donegan is sending out notice of proposed 2011 property tax rates for all Orange County cities, and for many, the numbers are going up.

Winter Park and Maitland residents could both see higher overall millage rates next year if current proposed tax rates go through, Donegan said.

Maitland Mayor Doug Kinson said that thanks to cuts in spending, the operating millage has stayed the same, though the debt service millage — used to pay back borrowed money — has risen slightly.

"Our efforts to create efficiencies in government have allowed us to protect the taxpayers to the point where we've been able to hold the line on taxes," Kinson said.

Overall, he said, homeowners should see a decrease in the property tax they pay in the coming year because of declining property values.

Taxable values of homes have been plummeting in the past few years, Donegan said, and cities have raised millage rates to compensate or have cut their budgets severely.

Winter Park and Maitland are among the eight Orange County cities with proposed millage rates that are above what they were last year, but both cities' operating millage rates have remained constant.

Both cities' proposed rates are substantially lower than the roll-back rate, which is what the cities would need to charge in order to break even on their revenues compared to last year.

In Maitland, the current proposed rate is 4.3800, up from 4.2850 adopted in 2009. That amounts to a $10 increase for a home appraised at $100,000.

The rise in the tax rate is to cover bond debts necessary to pay for the fire department and city hall replacements. Four members of the City Council voted to increase the debt service millage.

Maitland City Councilman Phil Bonus was the lone dissenter.

"It's to set the stage for borrowing even more money," Bonus said. "That's where our swords crossed."

The proposed millage raises the debt service millage to its cap — .5 mils or 50 cents per $1,000 of taxable value. The increase would cover the hole left by falling property values and also keep the window open in the case the city needs to borrow more money for the projects.

The fire station budget is $3.3 million and city hall's budget is $4 million. The funds to pay for the two buildings plus the recently completed police station came from a 2005 tax referendum in which citizens approved the borrowing of $8.5 million.

The city is re-engineering both buildings to cut down on costs, saving $1 million so far.

"That's going to knock off $1 million in borrowing," Bonus said. "I didn't think this was a great time to take on new debt." Bonus said he'd like to see the projects' costs lowered so that a higher millage isn't necessary.

The current millage rate in Winter Park, including debt service, is 4.3980. Winter Park's proposed rate for the upcoming fiscal year including debt service is 4.4336, according to Donegan's compiled report. That amounts to a $3.50 increase for a home appraised at $100,000.

"The city could raise its rate higher," City Manager Randy Knight said at a budget discussion in July, pointing to the potential roll-back rate, though he indicated that such a move was unlikely.

Donegan said it's likely that most cities' proposed rates will fall before they're adopted.