Commissioner Heather Carruthers has been spamming us with one idea after another lately. First it was light rail. Then it was the logo contest. Now it’s this emergency services surtax, which thankfully hasn’t gained much traction. It won’t be upon us until 2018, according to this news story. But it will be interesting to see if the county continues to push it, and if so how they will try to spin it.
Carruthers and her friend, the iPhone Bandit, claim that if emergency services are paid for with a sales tax instead of property taxes, the cost burden will shift from local property owners to tourists. I’m not convinced. At all. Unlike the county, I actually ran some numbers. I’ll tell you where I got those numbers and walk you through my reasoning.
You’re invited to pick apart, find fault, and do your own research. The point is to punch through the spin and get to the truth. Consider my stuff a starting point.
What’s Really Going on Here?
As discussed here, county-provided fire and emergency services are the most expensive by far. I haven’t dug into exactly why that is, but I assume it’s the same reason that county sewer systems are the most expensive by far. Waste. Corruption. Administrative incompetence.
In general, properties located in incorporated areas are subject to lower millage rates than those located in the unincorporated areas. One exception to this is Layton, which is very tiny and which is served by the Monroe County Fire Department. The other exceptions are Key Largo and Ocean Reef. These two areas are unincorporated but provide their own fire service. They can operate at a much lower cost than the county can (or will) and so property owners pay lower taxes.
Basically those communities that could get out from under the bubba system did it, and they are benefiting financially from the resulting efficiencies. But the bubbas don’t stand still if their revenue stream is threatened. (They only stand still at their cushy government jobs.) If they see the gravy train pulling out of the station, they’ll run to try and stop it. That is what I believe is happening here.
I think the folks in Tavernier inadvertently set this Emergency Services Surtax idea into motion when they realized they could pay two-thirds less for fire service by ditching the county and going with the Key Largo Fire and Rescue District (Fire District). As a matter of fact, the street I used to live on is right on the border between Key Largo and Tavernier. The dividing line runs right down the middle. My neighbors across the road pay three times what I did for fire service. As a result, they pay some of the highest property taxes in the Keys and I paid among the lowest. Whacky! But true!
I’m sure the BOCC has been hearing from those citizens who haven’t been able to shake county fire service. Now the BOCC is once again looking to siphon off money from more efficient areas in order to subsidize their excessive spending in others. The more efficient areas also tend to be the moderate income areas (Key Largo, Key West, Marathon). It’s the sewer projects all over again. The county is nothing if not predictable. When they find something that works, they stick with it.
Fire and Emergency Services – Who, Where and How Much?
There are several entities who provide fire and rescue services throughout the Keys. The map below illustrates who does what and where. My understanding is that the City of Marathon provides fire and emergency services to Key Colony Beach.
The incorporated areas don’t break out which part of their millage rate applies to fire and emergency service. To make an “apples to apples” comparison, I determined the costs for each entity over the last few years per thousand dollars of taxable value. Here is the resulting table and here is a link to the notes. The taxable values came from a Property Appraiser file dated August 2014.
I highlighted the two extremes – Monroe County and Key Largo. Monroe County’s costs are far higher than the municipalities. Key Largo’s are somewhat lower than the municipalities but not terribly. Basically, Key Largo voted with its feet by forming its own fire district. Same with the municipalities and Ocean Reef. That independence paid off with lower costs. Tavernier may soon follow.
The danger of the Emergency Services Surtax is that it is allocated based on the average expenditures of each entity over the last five years. That means an irresponsible entity like Monroe County is rewarded, while the more cautious spenders are penalized.
Key West and Key Largo combined generate about 70% of the sales tax. Under the Emergency Services Surtax scheme, they would receive about 38% of the revenue generated. Unincorporated Monroe County, excluding Key Largo, only generates about 10% of the sales tax but would receive the largest share of the Emergency Services Surtax. It’s a plan that enables Monroe County’s spending problem by shifting the burden to the largest sales tax revenue generators. Like I said, it’s the sewer projects all over again.
Why is Carruthers pushing a plan that is so detrimental to her own district? If Carruthers supports it, I’m sure Kolhage won’t be far behind. He’s probably waiting to see the public’s reaction before he sticks his head out. I think they both know this proposal sucks for your average citizen. They’re just looking to see if people will let them get away with it.
Who Really Benefits?
We are being led to believe that this tax “shift” will transfer more of the cost burden to tourists. But, as far as I know, the county hasn’t released any verifiable numbers to back this up. There are a few figures mentioned in the press:
- Tourists pay about 60% of the sales tax. That number is usually softened up with phrases like “may pay up to”. So I think it’s safe to assume that the number is actually somewhat lower.
- The county expects to collect $34 million in the additional sales tax.
- The county estimates that will cost local families an additional $125 per year. I really have to wonder about this one. According to American Fact Finder, there are 32,629 households in Monroe County. That figure includes one-person households. So if locals contribute 40% of that $34 million, their contribution will be $13.6 million or about $417 per year. What am I missing? I’d love to know where that $125 came from.
I thought it would be interesting to take the top twenty properties by taxable value to see how they might be affected by this “shift”. Here is that list in table form.
These properties combined will save about $989,000 per year. Since I’m using a file from 2014 it could actually be substantially more. What’s even more interesting is who these property owners are. Nearly all are foreign limited liability corporations. All but six are headquarted outside Florida. Only one is local to the Keys. That would be Spottswood, a supporter of Kolhage and Toppino. Three are owned by the same folks who wrote that nice letter of recommendation for Richard Toppino.
What is Carruthers’s Angle?
It’s plain to see why Kolhage might support this, but why would Carruthers? I know she’s a free-spender. When it comes to spending taxpayer money, she can’t say “no”. I also know she’s not so big on basic fairness. Maybe she just likes spending money? Or maybe, like Kolhage, she’s tied in with the people who stand to gain the most from this tax “shift”.
As I said above, an additional sales tax is more likely to hurt moderate-income areas the most. Carruthers’s own district, Key West certainly qualifies. Median household income there is $54,306. Key Largo and Marathon have median household incomes of $56,809 and $48,125 respectively. I would think the folks in Stock Island would be especially hard hit. The median household income there is $41,799.
Carruthers first ran for the BOCC in 2008. Here’s a link to her 2008 page at the Monroe County Supervisor of Elections website. An excerpt from her “comments” section is provided below.
I’m running to bring fiscal responsibility, transparency, representative democracy and positive change to the Commission.
Fiscal responsibility is certainly out the window. So is transparency. As for representative democracy, I guess that depends on who she actually represents. Who exactly is that?
There are links to campaign treasurer’s reports on the right hand side of that same page. In 2008, the Keys were definitely ready for change and Carruthers had a wide range of support. She raised nearly $66,000 in campaign contributions from a diverse cross-section of the Keys and beyond, including folks in the Upper Keys. I think we all had high hopes because of her work with FIRM.
She ran unopposed in 2012. It was after that election that spending on Cudjoe Regional really went wild. The county had already squandered plenty of money on Big Coppitt. But that was a much smaller project ($36 million as compared to $196 million) and so the crazy spending was less noticeable. These days, it’s very hard to ignore.
The wonderful thing about the candidate information from 2012 is that you can actually download it. I did just that and put this table together. About half of Carruthers’s contributions came from the hotel industry. No surprise. Carruthers ran a successful guest house. Like Kolhage, the amounts aren’t large but they do constitute a significant proportion. These contributions aren’t “wrong” or illegal. But it is good to know where Carruthers might actually be coming from. When she talks about a tax “shift” that will help property owners, she’s not talking about the guy who bags groceries at Publix. She’s talking about the guy who owns a profitable hotel or two (or three) and lives out of state.
There’s a lot more to look at on this issue. Hopefully, it will go away since it wasn’t received well. It seems people are seeing through the spin. And that is very good news.