Low property values, low tax revenue

Local governments are trying to survive with lower property tax revenues.

For the first quarter of the 2009-2010 fiscal year, the city of Avon Park's departments managed to stay well below budget. This is great news but the city is not out of the woods yet.

Property taxes account for 25 percent of the city's general fund budget. This money goes toward paying for services like police, fire and road maintenance. In 2008 they collected $1.4 million in property tax from residential and commercials properties.

This year they expect to collect an estimated $50,000 in delinquent property taxes.

Declining property values and the $50,000 homestead exemption has decreased Avon Park's tax roll, and it is not alone.

Sebring has also had to handle a lower tax roll, said its Finance Director Mike Eastman.

"Our current intention is to provide the same level of service.Who knows what the future will bring," said Eastman, in an e-mail.

The lower property values and homestead exemption impact all municipalities within the county but hits Avon Park the hardest because it has the lowest average property values for single family homes.

The Highlands County Property Appraiser's office estimated the average property value for a single family home within the city limits of Avon Park to be $55,976.

Lake Placid's average is more than twice that at $142,742. In Sebring the average is $96,293 and the county is $107,857.

Lower property values means lower property tax revenues for local governments. In Jan. 2008, the homestead exemption doubled to $50,000. That brought the taxable value of some properties throughout the county down to less than a couple hundred dollars. For example a property owner with a home valued at the Avon Park's average, $55,976, with homestead exemption would pay $164.42 in taxes to the city, without homestead exemption it would be $328.83.

It saves property owners but cities have to come up with ways of making up that lost revenue.

Although they can't change the homestead exemption law, Amendment 1, they can impose other forms of taxation to increase their revenues.

Kraig Conn, legislative council for Florida League of Cities, said cities facing hardships could consider ways of increasing their revenues like increasing their millage. They can also impose other forms of taxation like utility tax and communication service tax, he said. Both these taxes fall under utility service tax, which is already imposed by Avon Park. The city estimates $939,075 will be collected in utility tax this fiscal year.

Avon Park's Finance Director Renee Green said the city has not considered increasing their tax rate at this time.

Millage rates for municipalities in Highlands County

In Florida, municipalities are not allowed to increase millage more than 10 mills (1 mill equals $1 per $1,000).

Avon Park: 5.875

Sebring: 5.4965

Lake Placid: 3.8100