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Orlando Floats Higher-Taxes Idea to Help Ease Deficit
SOURCE: Orlando Sentinel
Rich McKay
May 24 2005

City leaders raised the idea Monday of increasing property taxes to ward off a potential $27 million deficit, if another source of money isn't found soon.

Short of raiding the city-owned electricity and water utility -- a proposal fraught with legal and political hurdles -- higher property taxes may be the city's only option.

At a budget workshop Monday morning, City Commissioners Patty Sheehan, Betty Wyman and Daisy Lynum suggested increasing property taxes for the 2005-06 budget year, which starts Oct. 1.

"I know this isn't going to be popular," Sheehan said.

Sheehan and Wyman said the city should restore the tax rate to the level it was before 2001. That year, then-Mayor Glenda Hood dropped the rate from $6.066 for each $1,000 of taxable property value to $5.69 per $1,000, which is where it has stayed.

For a house valued at $225,000, the tax bill is $1,138 after a $25,000 homestead exemption. The tab would go up $75.20 to $1,213.20 if the millage is raised to $6.066.

"I know this will be perceived as a tax increase, but it's just restoring the millage rate to what it was," Sheehan said.

Mayor Buddy Dyer said it's too soon to consider raising taxes.

"We just want to get this out in the open for the residents," Dyer said.

Since December, city staffers have warned that a deficit in the city's budget is looming. The biggest culprits are rising health-care costs, employee salaries and pensions.

For instance, four years ago, employee health insurance cost the city $8.2 million. This year, it's expected to be $20.8 million, a 154 percent increase, budget director Deborah Girard said.

The city also is paying more for fuel, with gas prices rising 13 percent and diesel increasing 21 percent this year.

Lynum suggests taxes should be raised even further than discussed Monday.

"I would suggest that this [deficit] forecast is conservative," she said.

But Commissioner Ernest Page said he's not ready to talk about raising taxes until all other potential sources of money are explored.

"The taxpayers are taxed to death," Page said. "That [raising taxes] has to be our last resort."

One proposed option is to turn to the city-owned Orlando Utilities Commission for quick cash to get the city through this shortfall and perhaps future budget deficits. But OUC is governed by a five-member commission, and the city receives money from the utility through structured dividends and fees, so it's not as simple as asking for money from a rich uncle.

OUC Chairman Tommy Boroughs said the city has asked for help and OUC's financial staff is going over the books to see if there is more money to give to the city.

"We're looking to see if we can help and give the city [an additional] $10 [million] or $15 million next year," Boroughs said.

He added that he isn't sure where that money would be found.

The city expects to receive $52.4 million in dividends and other payments from the utility this budget year, OUC spokesman Sheridan Becht said. The $52.4 million has already been figured into the budget.

Orlando officials are looking at the budget months ahead of the July budget workshops.

"It's good that we're looking at this today," Commissioner Phil Diamond said.

~end~