This Emergency Sales Surtax (ESS) proposal is pretty typical of the way Monroe County operates. They float some half-baked idea and make a bunch of vague promises about how it will reduce the burden on the locals and place it on the tourists. This is how they get the voters to bite.
As we know, Monroe County absolutely botched the wastewater projects. The Cudjoe Regional project is a shameful example of waste and incompetence. The project started out at $147 million. It now stands at $196 million. Not only that, the Board of County Commissioners (BOCC) approved a $10 million assessment reduction for customers in the Cudjoe Regional area in a cheap attempt to silence their questions. That’s a $59 million increased burden on county-wide taxpayers.
But don’t worry, somebody did benefit from all this waste – the contractors and subcontractors. The Cudjoe Regional fiasco was made possible by the extension of the Infrastructure Sales Tax, which was approved by voters in 2012. Sadly, the BOCC simply could not handle the responsibility. Worse yet, they are oblivious to their short-comings. Sometimes I wonder if they really are this incompetent or if they get a thrill out of scamming the taxpayers.
Now Comm. Carruthers is pushing this Emergency Sales Surtax scheme. I’ve already written about it here and here. At this point, it appears that large out-of-state property owners will benefit the most from this tax “shift”. I intend to get my arms around the true impact and quantify it.
In this post, I’m going to take a look at the county’s “white paper”. As is typical, it’s sloppy, slap-dash and full of holes. It’s a tacky, poorly-done sales brochure. They’re hoping nobody will look at it too closely. Here’s a link to the item on the January 20 BOCC meeting agenda.
On page 1 of the “white paper” is this statement.
Insurance discounts favor all properties that are within 5 miles of a fire station. With Monroe County’s geography and population densities, this results in relatively few properties supporting the cost of each fire/rescue facility.
This generates a few questions. If you look at the county’s capital project history, you see that quite a few fire stations have been built in the Lower Keys in recent years. Were these stations built to provide the necessary level of safety or were they over-built to secure an insurance discount for property owners in that area? If they were over-built, was there a cost-benefit analysis done to see if this was a wise use of taxpayer money? Does the cost of building and operating the stations outweigh the insurance discount secured by these property owners?
It is estimated that in excess of 60% of all Monroe County sales tax revenues are generated by tourists and visitors.
Citation needed. This statistic was used to justify the Infrastructure Sales Tax extension and that didn’t work out so well. The county owes it to the taxpayers to substantiate this number.
Adoption of the Emergency Fire Rescue Services and Facilities Surtax will shift the cost burden of funding fire/rescue services from the current status of essentially 100% residents / 0% visitors to a ratio of roughly 40% residents / 60% visitors.
This is 100% false. There are about 475 properties that cater almost exclusively to tourists – hotels and timeshares. In fact, I demonstrated in my last post that 17 of the 20 highest dollar properties in the Keys are hotels and timeshares. There are 18,310 seasonal or vacation rental homes according to American Fact Finder. These are not occupied by locals.
Obviously not every property is owned by a local. Does the county really think we’re this stupid? In my last post on the subject, I mentioned that 50% of Carruthers’s campaign contributions in 2012 came from the lodging industry. How much those donors actually benefit from this will be the subject of an upcoming post.
This table from the “white paper” actually looks sort of accurate, but I need to check into it some more.
I saved the worst for last. Please have a barf bag handy.
The final piece of the financial impact on the residents of Monroe County by the adoption of the fire/rescue surtax is the added sales tax burden. The IRS publishes tables showing the average sales tax paid per wage bracket. Using the median household income for Monroe County of $54,000 as an example, this household will pay approximately $125 in additional sales taxes per year as a result of the adoption of the surtax.
This is monkey math at its worst. There is an IRS calculator that you can use to determine the amount of sales tax you’re allowed to deduct on your federal income tax return. Now do you suppose this is a real number? Or do you suppose the IRS might try to keep that number artificially low?
Let’s revisit some things the county said earlier on in the same “white paper”. They said they anticipate collecting $34 million from the additional sales tax. They said, without any documentation whatsoever, that tourists pay roughly 60% of the sales tax. So that would mean about $20.4 million would be collected from tourists and $13.6 million would be collected from locals.
According to the Census Bureau’s American Fact Finder tool, there are 32,629 households in Monroe County. So $13.6 million has to come from 32,629 households. That amounts to almost $417. That’s a huge bust in the math. If the county is assuming every single property in the Keys is owned by locals, which is ridiculous, it would throw their math way off.
Since the sales tax is regressive, it will impact lower and moderate income families to a greater extent than wealthier families. Property taxes are also somewhat regressive. However, that effect is offset by the homestead exemption. There is no homestead exemption for the sales tax. Here’s some reading on the impact of tax structure.
With all the talk of affordability and multiple jobs, I find this proposal beyond inappropriate. The false statements and misleading numbers don’t do much to inspire confidence either.