Last year, voters approved a ½ cent per dollar tax increase which would benefit local schools. Assistant County Attorney Jon Jouben explained a proposal for a referendum to impose an additional ½ cent tax for the next 15 years, which would be used to pay for infrastructure needs. A $30 million dollar government expansion project was approved by the board for requests for proposals earlier this year. Discussion of partially funding the project through a half cent sales tax occurred at the meeting when they approved the proposal requests for the $30 million project.
The Hernando County Space Needs Committee, after its January 26, 2016 meeting, made the recommendations for a new Criminal Court Complex and an adjoining parking garage be constructed on the property east of the existing Courthouse and Annex. Additionally, the committee recommended new offices for the Supervisor of Elections, Tax Collector and Property Appraiser at a new facility near the Brooksville – Tampa Bay Regional Airport. The estimated cost of these projects is $30 million.
Below is a rundown of how they propose to fund the project- which relies heavily on the half cent sales tax.
Proposed funding for the Space Needs project would come from a bond issue. The Criminal court complex would be partially paid from Court Improvement Fund (1481) an amount of ($20,000,000) ; While the airport office complex ($10,000,000) would be paid by the General Fund. With the County pledging sales tax and based on a 30 year issue at 4.25% interest, the annual payment including interest for the Court Improvement Fund would be $1,200,000 and $600,000 for the General Fund. However the court improvement fund would only be able to pay the full debt service for seven years. After which they would only be able to pay an estimated $600,000 toward their debt service payment with General Fund assuming the remaining $600,000 per year. This amount is in addition to the General Fund’s portion of $600,000. So for 23 years the general fund would be assuming a $1.2 payment.
The sales tax referendum is for 15 years, but they have 30 years worth of debt payment tied to the sales tax revenue. Therefore after 15 years, they will have to find $1.2 million per year for the debt payment if voters don’t approve the tax again.
At the May 10th BOCC meeting, each of the board members spoke in favor of the tax, which would affect everyone, including those just passing through the area. Commissioner Jeff Holcomb stated one important use of the tax will be to fund the building of sidewalks for children who have to walk to school because they live within two miles of their school. He advocated dedicating half of the money for sidewalks and roads. The rest could be divided among other departments such as public safety (fire/sheriff), environmental use, economic development, county beautification and cultural/recreation in parks (such as a monument for veterans). Commissioner Nick Nicholson advised that the sheriff’s department needs to purchase radios and will need a building for operations, something the county does not have the money for at this time.
Commissioner Diane Rowden reminded the public that when purchasing a one dollar item, she does not pay $1.065, she pays $1.07. The other half of the penny benefits the state, and the money is not kept in the county to help local residents. Rowden stated that estimated income from the ½ cent tax could be as much as $8 million per year. Divided among needs in the county, that money would have an impact. “Let’s keep that money in Hernando County; that’s already being spent,” Rowden said.
Rowden’s argument is a rare occurrence. This argument could have been made against the half cent school sales surtax.
There is a 1 in 200 chance that having the half cent as opposed to a full cent will cause you to spend an extra cent to the state in sales tax. If you follow this argument further we should have a 10 percent sales tax since this would more often be an exact amount by a factor of ten. Meaning that more money would stay local, but we would pay much more in taxes. Talk about pennywise and pound foolish.
Holcomb stated a strong selling point for the tax would be to offer a property tax reduction beginning with 2017. He noted that there are some residents who do not pay property taxes; Chairman Jim Adkins clarified this by stating that some pay reduced taxes or are exempted due to meeting certain conditions. Some areas of the country do have lower property taxes but pay eight or nine cents per dollar in sales tax. Dukes noted property taxes were not increased by the BOCC, but if property values go up, so does the tax on that property. Lynn Gruber-White, who sits on the fence on the issue, felt compelled to voice her agreement with Holcomb’s comments regarding property owners who do not pay taxes.
Other public comments were strongly opposed to the tax, stating those on fixed incomes and the poor would be affected most. Others drew comparisons between Hernando and Pasco Counties and cited the success of the “Penny for Pasco” tax as well as the prosperity Pasco County seems to have even with impact fees.
Richard Ross noted that the BOCC made a mistake when they ended the impact fees for builders. Reinstating the impact fees will encourage builders to develop close to schools, he said, as Pasco County has impact fees and they have numerous building projects and many jobs. By advocating for the sales tax increase, Ross stated the BOCC “has reached bottom and started digging.”
Pat Miketinac expressed opposition to the proposed tax, citing the amount of money and investments the county already holds. BOCC reasons for not spending the money (i.e., to use for bonds, to loan to the federal government) make no sense to him. Rather, Miketinac would rather see the money given back to the taxpayers, providing a boost to the local economy.
Shirley Miketinac reminded the BOCC that Dukes had previously suggested four ways to increase revenue for the county: gas tax (which the county now collects), ad valorum tax (also collected), sales tax and impact fees. She stated she liked Holcomb’s idea of a trade-off by way of lower property (ad valorum) taxes and would love to see that in writing. The use of the revenue appears to be too broad, more like a slush fund, and suggested listing specific items. Adkins and Rowden agreed with this.
Anthony Palmieri stated the Tampa Bay area has seen four transportation initiatives fail, including one in Hernando County. The proposed sales tax increase, over 15 years, could generate between $128– 135 million. The ballot available in the packet includes a list of prospective uses (items) which was proposed two years ago. Palmieri stated that language regarding the County Administrator’s office and staff being used to provide information may be legal but he said that it just means “You’re going to use my tax dollar to convince me to tax myself,” a statement quickly rebutted by County Attorney Garth Coller.
Barbara Bartlett was “overwhelmed” by the BOCC’s stance that taxing the citizens was acceptable because the money would be used for good things, but they could not keep the clock outside the courthouse working. She referred to five tax increases and projected that the BOCC would “get your hands slapped” by the voters.
Chuck Gordon is concerned with being able to meet his own needs as his income has not increased, but the BOCC wants to use the tax for infrastructure. Eliminating impact fees, Gordon stated, cost the county a significant amount of money (approximately 24% from the $80 million project, or $19 million) on the SR 50 and Mariner construction project. With some pensions decreasing as much as 60%, those on a fixed income will have a difficult time making ends meet, let alone pay an additional tax.
Linda Prescott recalled that Hernando County voters rejected the whole cent increase in 2014, but Pasco County’s “Penny for Pasco” initiative has yielded some significant improvements for that county since 2004 and was renewed in 2014. “Sometimes you have to spend money to make money,” she stated, noting that improvements made to schools, roads, and increased job opportunities will bring families to the county, and that will be the best marketing tool.
Commissioner Wayne Dukes responded to comments about impact fees. Builders pass those costs onto the purchaser. Impact fees are collected by district and must be spent where they are earned, meaning that Spring Hill would receive a larger amount of money than the northeastern section of the county. Dukes voted for the gas tax, which everyone pays. Comparing Hernando County to another county is unfair, he stated, and urged the public to share a better idea for increasing money for the county. Voters who are unhappy with the BOCC can choose new commissioners in the upcoming election.
Dukes motioned to approve placing the surtax referendum on the ballot, seconded by Nicholson. A roll call vote was called, and the motion carried 5-0. The referendum will be placed on the ballot in November. If passed, the additional sales tax would take effect January 1, 2017 and would continue for 15 years. However after 15 years there will be much pressure to continue the tax, since a portion of it is tied to the proposed $30 million government expansion project.