Saturday, August 5, 2017

Time to Swallow a Tax Increase?

When are tax increases justified?

Never, says my wife and many of my Republican colleagues agree. We're overtaxed as it is, and we should make do with what we have.  Prioritize expenditures and live within our means.

That may be the prevailing mood in Collier County. It certainly seems to be with the County Commissioners, who recently bowed to political pressure and scrapped a 0.25-mil property tax boost  to fund Conservation Collier.

A tax increase is always a tough call, particularly with the federal government sucking more and more money out of our pockets. But the time might be right to consider a limited, directed and temporary tax hike in Collier County. Here's why.

Unmet needs are piling up, many that have been deferred for years.

  • Vital infrastructure projects are stalled. The existing county budget simply can't keep up with current needs, let alone support growth occurring to our east and south. We're talking about $150 million in backlogged road and sewer construction, delayed bridge repair and long-promised neighborhood parks.
  • Affordable workforce housing is almost non-existent. An infusion of money will be needed if any real progress is to be made, including beefing up the local trust fund and extending infrastructure to new housing sites.
  • Workforce training, a priority of the Greater Naples Chamber of Commerce, will require capacity beyond what Lorenzo Walker and Immokalee Tech can provide. One or more additional training centers for the trades are needed.
  • There is a desperate shortage of mental health and addiction treatment facilities, beyond what's  available at David Lawrence. A second priority, no less important, is rehab housing for patients once they have been treated. That would relieve pressure on our county jail, now shamefully the major center for housing the addicted and mentally ill.
These unmet needs, says Chamber CEO Michael Dalby, could be addressed by a temporary boost in the sales tax. A 1% increase would generate an estimated $68 million a year. The tax would sunset after 4-5 years, whenever the projects were completed, returning the tax rate to 6%.

This is not a new idea. Sixty-one Florida counties have some form of local sales tax. It's widely used to bridge revenue gaps and fund special projects.

To be clear, the Chamber is not proposing a tax increase at this time. It is proposing the county staff estimate the cost of backlogged projects, determine which could be carried out within the existing budget and estimate the cost of those remaining. The unfunded projects, prioritized, would form the basis for a temporary tax. 

The proposal has a number of good features. It addresses specific needs, imposing upfront limits on expenditures -- so much for roads, so much for affordable housing, so much for mental health facilities. The tax would be capped at purchases of $5,000, and there would be exemptions for groceries and other essentials. Based on past experience, visitors would pay 25-30% of the tax, reducing the burden on permanent residents. An oversight committee would monitor the program to ensure compliance. And, most important, the tax would be temporary. 

To proceed. the commissioners would have to decide what items to include in a referendum, specify  project-by-project funding and craft language for the November 2018 ballot. The voters would then make the call.

There are a good many unanswered questions. A particularly knotty one is whether to include money for Conservation Collier. The environmentalists say no. They don't like the bundling, preferring instead a stand-alone referendum to increase the property tax. The issue, of course, is whether voters would go for two tax hikes on the same ballot.

These are early times and the debate is just beginning. But the infrastructure needs are real and in many cases critical. It's not too early to start considering how to deal with those needs.

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