County Commissioner, Heather Carruthers, has proposed a new sales tax, the Emergency Services Surtax (ESS). She describes it as a “tax shift”. Emergency services are currently paid for through property taxes. Unfortunately, this proposal is being supported with some very questionable claims.
The “white paper” claims that tourists contribute nothing to property taxes. This makes no sense. What about hotels and tourist attractions? Are locals paying their property taxes for them? Or do they derive their income from tourists? What about seasonal homes and vacation rentals? Are locals paying the property taxes on those, too?
This claim is far-fetched, to put it in the politest possible terms. According to my calculations, locals actually pay about 47% of the property taxes. I didn’t figure in the effect of the homestead exemption, so its probably a bit less than that even. County staff didn’t bother to try and substantiate this claim when asked. I’ll assume they know they’re busted and have conceded the point.
Presumably, the bogus claim about property taxes was made in order to mislead the voters into thinking there’s a huge benefit in this for them. If there is a benefit at all for local property owners, it is definitely not huge. The major benefit accrues to out-of-county property owners, who also tend to own the higher-value properties. They will pay nothing for fire services, thanks to this “tax shift”.
The “white paper” also claims that the average local family will only contribute $125 more per year to the additional sales tax. The math supports a number of over $400. Additional data corroborates that number. Staff is clinging to this one like stink on poop. I’m sure they will repeat this debunked claim over and over again, hoping if they say it often enough people will actually think it’s true. It isn’t. And every time I see that number repeated, I will challenge it. Sales taxes are regressive taxes. That is, they have a higher financial impact on lower income households.
Staff was able to substantiate one claim. There is a study that supports the notion that tourists contribute 60% of the sales tax. Glory be!!! I don’t know what came over them, but I like it. I guess if they find a number they like they use it. Otherwise they just make stuff up.
There’s some other mumbo-jumbo that needs to be looked into. I’m referring to the excuses for the excessively high cost of Monroe County fire rescue. Are they really so much higher in the Lower and Middle and Keys because it’s a “rural area”? And what about this “insurance discount”? Are areas that spend frugally out of economic necessity being forced to subsidize those who spend carelessly? It would seem that this “tax shift” ensures that they do. These questions are important but they are going to take quite a bit of research.
What I want to concentrate on today is this table found in the “white paper“.
When I first glanced at it, there was nothing that really caught my attention. I guess I was too blown away by the other outlandish claims. When I took a second look, there’s one number that jumped out at me. Marathon spends 70% of what it collects on fire service? Really? Is Marathon really that flammable?
I actually did a bit of my own research on the cost of fire service for the various entities. I discussed a bit of that here. My table is presented below, and here are the notes.
While I took a different approach than county staff did, we should be able to reconcile our numbers. The language in the 2015 Local Government Financial Information suggests that the tax will be distributed based on actual spending, so I based my numbers on actual costs. Here’s the specific language below.
The legislation provides that surtax proceeds will be distributed to all participating entities providing emergency fire rescue services in the county based on each entity’s pro rata share of spending on such services in the county over the five preceding fiscal years.
County staff compared actual millage rates. Because of the way the language is worded, I took actual and budgeted costs and converted those to a millage rate. For the County and Key Largo, we came up with similar numbers. The big difference is in the municipalities.
Key West: Key West budgets Emergency Medical Service (EMS) separately from fire service. I left that out in my initial run-through. When I add that in I get pretty close to what the county came up with. What’s interesting about this is that Key West apparently had no budget for EMS in years prior to FY 2014-15. They budgeted about $950,000 that year and over $2 million for FY 2015-16. That’s a very large increase all of a sudden.
Islamorada: Islamorada combines fire and EMS costs in its financial documents. The latest information available in the Loger database is for FY 2012. The number in Loger matches the number I obtained from Islamorada’s CAFR. Therefore, until additional information becomes available I’m more confident with my number than I am with Monroe County’s.
Marathon: Marathon also combines fire and EMS. Again the numbers I gathered from budgets and CAFR’s match up very closely to what I found in the Loger database. I don’t know where the county got their numbers, but I know where I got mine. So I’m more confident in mine for now.
When I put all this together I came up with this table.
We’re pretty close except when it comes to Marathon and Islamorada. County staff’s numbers are much, much higher than mine. The best way to resolve that is to go straight to the entities involved. I would also love to know why Key West’s costs suddenly increased like they did.
What we know so far:
- Locals pay 100% of property taxes. FALSE. It’s more like 46%.
- Local households will only pay $125 more per year because of this additional sales tax. FALSE. The county’s own numbers and available data support a number of over $400.
- The statute governing the Emergency Services Surtax (ESS) was suddenly changed in 2015 to advantage wasteful entities like Monroe County in the allocation of that tax. It also removed the requirement for an interlocal agreement with affected entities before that tax could be imposed.
- Also in 2015, Key West suddenly increased spending on ambulance service by almost $1 million. In 2016, an increase of over $2 million was budgeted.
- County staff’s calculation of the proportion of fire and rescue costs for Marathon and Islamorada is not supported by data available on the websites of those two entities or from the state’s LOGER database. Verification ongoing.
So yeah, this ESS is looking very shady so far. The county is telling some real whoppers right off the bat. Voters should proceed with extreme caution.