The Emergency Services Surtax (ESS) proposal is supposedly “in the freezer“. But I don’t expect it to stay there for long. County staff’s misleading analysis claims that this new tax will shift the cost of emergency services from locals to tourists. Those claims immediately fall apart under scrutiny. To make matters worse, the county commissioner who proposed the “tax shift” stands to benefit from it and so do her campaign donors.
As it stands now, locals pay less than half of property taxes. The county’s “white paper” claims they pay 100%. Obviously, hotels and tourist attractions derive most of their income from tourists. The county’s “white paper” claims that tourists pay about 60% of sales taxes. To my amazement, county staff was actually able to produce documentation that substantiates this claim. For that reason, I assumed that businesses other than those that cater almost exclusively to tourists, derive 60% of their income from tourists and the rest from locals.
To determine the local share of property taxes, I used information from the Census Bureau’s American Fact Finder tool. This data takes the numbers of renters into consideration. The county’s “white paper” negligently ignored the impact of Carruthers’s “tax shift” on local renters.
In most cases, owners of high value properties are based outside of Monroe County. They will pay zero (or nearly zero) for fire and emergency services under Carruthers’s ESS scheme. This is where the true “tax shift” comes in. Somebody has to make up the difference. Tourists will pick up some of that. So will low-moderate income locals.
I’ve discussed the impact on each major geographical area within the Keys. But there are two sub-areas that I think need more attention. One of those is Stock Island. Stock Island has the lowest median household income in the Keys. Sales taxes, as we know, are regressive taxes. Lower income families spend a larger proportion of their income on sales taxes than do higher income families. In Florida, this effect is balanced out somewhat by property taxes. Because of save-our-homes provisions and homestead exemptions, property taxes are closer to a flat tax. See this report for more information.
These property tax provisions will help property owners but they won’t help renters in the Keys. The demand for housing is so strong that landlords have zero incentive to pass along any savings from the property tax. And Stock Island has the highest proportion of renters – 59%. The only other area that comes close is Key West at 53%. Marathon comes in a distant third at 38%. In most other areas, the proportion of renters is below 30%.
Stock Island’s median household income is around $42,000 – below that of Monroe County’s overall median household income of $55,000. For that reason, I’m not going to use the $417 sales tax number for Stock Island. I’m going to use $322. As I already mentioned, the rate of home ownership in Stock Island is very low. By my count, there are 349 homesteaded properties in Stock Island. According to American Fact Finder, about 519 homes are owner occupied, 676 are occupied by renters.
A homesteaded property in Stock Island will need to have a taxable value of $150,446 to benefit from Carruthers’s “tax shift” – assuming a typical household in Stock Island will pay an additional $322 in sales tax, rather than $417. Here are the calculations for Stock Island and Monroe County:
Stock Island: ($322*1000)/2.1403 = $150,446
Monroe County: ($417*1000)/2.1403 = $194,833
By my count, only 126 homesteaded properties out of 349 will benefit – 36%. The typical homesteaded property will save about $190 in property tax, but that will be swamped by the additional $322 paid in sales tax. They wind up paying an additional $132 per year in order to subsidize out-of-county property owners, who will pay zero. Households occupied by renters, of course, will pay the whole $322.
The Affordable Housing Angle
Carruthers claims to be very concerned about the affordable housing issue. So why would she make this proposal which imposes an additional financial burden on low-moderate income households who are already struggling to remain in the Keys? And why did staff issue the “white paper”, which attempts to hide that fact.
My theory, discussed here, is that affordable housing projects have the potential to divert taxpayer money into certain pockets – as was done with the wastewater projects. I suspect that’s where her “concern” over affordable housing really comes in. As mentioned above, it’s abundantly clear that Carruthers and her associates stand to benefit from this “tax shift”. Why wouldn’t narrow self-interest be front and center on the affordable housing issue as well?
I expanded the housing cost burden summary chart to include Stock Island. Percentage-wise there’s more housing pressure in Stock Island than there is in Key West, Key Largo or the county in general. While Carruthers’s “tax shift” is especially damaging to her own district of Key West, it will hit Stock Island even harder.
People need to be armed with accurate information to counteract the inevitable spin. The county habitually distorts the facts in order to further their aims. As obvious as those distortions may be, it still takes a lot of work to debunk them. I’m sure county staff is busily looking for some new angle even as I write this.
Let’s say that this ESS nonsense is thrown into the trash where it belongs. And let’s say that neighboring Key West is willing and able to provide emergency services to the Stock Island area at the same millage rate they charge their own citizens. This would provide a clear benefit to all Stock Island property owners, including the locals.
Monroe County’s millage rate for fire and emergency services is 2.1403. Key West’s is around 1.4249. (County monkey-math makes it hard to pin down, but it’s in that neighborhood.) Assuming these numbers are accurate, Stock Island’s millage rate would decrease by 0.7154, which would save them about $72 per year per $100,000 of taxable value. Not a king’s ransom, but way better than Carruthers’s alternative. A typical homesteaded property in Stock Island would save $63 per year rather than paying an additional $132 per year as Carruthers would seem to prefer. It’s a $195 improvement.
If the county is truly concerned about the taxpayers, then they need to look at providing services as efficiently and cost-effectively as they can. Right now, they seem more interested in squeezing the taxpayers to their own benefit.