Manatee County has come up with a compelling idea for a tax swap that brings major property tax relief should voters approve a half cent sales tax increase. County Administrator Ed Hunzeker pitched his plan to commissioners on Tuesday.
The proposal accomplishes a number of advantageous goals, not the least of which is making Manatee a more attractive place for economic development and investment thanks to a low property tax.
But the immediate pocketbook issue for residents is a sharp decline in the millage rate, with property taxes falling 26 percent for municipal home and business owners and 13 percent for property owners in the unincorporated sections of the county.
For a property taxed on a $150,000 valuation, the cut equals $245 in savings in the cities and $135 out in the county.
That should help sell voters on the sales tax increase, from 6.5 percent to 7 percent -- the same rate that Sarasota and Pinellas counties currently charge.
This comes as a result of a pending county budget crisis should the status quo be maintained.
Manatee County stands at a crossroads on the inflexible issue of paying for indigent health care as medical costs continue to balloon. The $45 million sale of the county-owned hospital to private interests in 1984 yielded a $45 million fund that covered some of those uncompensated costs, but that money will all be spent by the end of 2015.
Even today, property taxes come out of the county's general revenue fund to cover a major portion of those medical bills. In fiscal 2012, general revenue soaked up $16.5 million of the cost while the Health Care Fund contributed $8.7 million. An average of around $9.5 million will be spent out of the fund annually over the next three fiscal years.
Commissioners must plan today to secure a future funding source to cover this obligation, else property owners would be forced to pay the cost.
By approving the sales tax increase -- dedicated solely to health care -- voters would in effect be shifting a good portion of those costs onto visitors. A third of Manatee's sales tax revenue is estimated to be collected from out-of-county residents. Even the indigent would be contributing some to their health bills.
Overall, the higher sales tax is projected to generate $23 million annually, which would cover the combined county general fund and Health Care Fund allocations as currently forecast in the future.
Hunzeker's plan calls for a June special election with implementation in January 2014 if approved. The other two options are untenable: property tax increases to pay for mounting indigent care or basically doing nothing, a reckless and irresponsible path.
Under the proposal, municipal property owners will receive greater tax relief because of the more equitable way the county budget will be composed. Those taxpayers will no longer be held responsible for paying for a service they do not receive; the line item for the Manatee County Sheriff's patrol division will be shifted over to the portion of the county budget that only unincorporated residents pay. That would end an indefensible policy as city residents already pay for police protection.
But the sales tax increase, the patrol division budget change and the property tax reductions are all inextricably linked, and one without the other two won't work.
With Manatee hospitals already writing off millions of dollars in uncompensated care annually, Hunzeker also hopes to steer indigent patients out of expensive emergency rooms and into cheaper clinics to try to contain costs. His plan calls for a community education program to achieve that goal and promote preventive health care.
The county administrator's proposal accomplishes yet another goal -- namely, it helps shield the county from further legislative assaults on home rule, by forcing additional property tax cuts upon local governments. Greater diversity in county revenue sources offers that protection.
The tax swap does not grow government but simply shifts fairly equal amounts of revenue sources around. This is a reasonable and prudent way to solve a looming fiscal crisis and provide property tax relief.
County commissioners should approve an ordinance to allow voters to decide this issue.