More on the Coral Gables Budget: Property Taxes as an ATM Machine

It is interesting to look at the historical budget and tax revenue data supplied by the city in the latest Estimated Budget, 2010-2011.

• City property tax revenues rose from $29.5 million in 2000 to $66.4 million in 2009.  Let’s say that these property taxes had risen just by the inflation rate from 2000 to 2009.  How much would it have increased?  It would have increased from $29.5 million to $36.8 million in 2009, not $66.4 million.  In other words, property tax revenues have increased by more than 80% above the inflation rate.
• Assessed values increased from $5.5 billion in 2000 to $13.0 billion in 2009.  The equivalent inflation rate would have seen values increasing from $5.5 billion to $6.85 billion.  Thus assessed values increased by 90% more than the inflation rate level.  That was the abnormal real estate value.
• We can conclude that Coral Gables increased taxes as fast assessed values increased.
• Like many families in Coral Gables, the city used its property taxes as an ATM machine–spending as fast as the money came in thinking that assessed values would keep rising.  Unfortunately, even today the city keeps increasing taxes as if property values were increasing just like the good old days instead of adjusting to the economic realities that may continue for years.

Coral Gables Taxes and Staffing: Much More to Do

Take a look at the last few pages of the 2010-2011 Budget Estimate where there is some historical information.

Some salient facts there are

• Property values increased 2.44 times in the period 2000 to 2009.
• Property taxes increased 2.25 times from 2000 to 2009.
• In the period 2000 to 2006 (during the most rapid property value increases), property values increased 1.93 times.
• In the period 2000 to 2006, property taxes have increased 2.19 times.
• In the period 2000 to 2006 total staff in Coral Gables declined as follows:  871 ( 2006), 875 (2007), 868 (2008), 808 (2009) and  791 (estimated 2010).

In short, on average, property taxes have followed assessed values in Coral Gables since the year 2000.  Rapid increases in property values were used by the city to raise taxes and increase staffing and spending as if this phenomenon was to continue without limit.  And following the stagnation and decline in property values, the city has increased taxes faster that assessed values.

The city has reduced the number of staff, but many of them are at the lowest  grade salary levels. Operating expenses, closely capturing staff salary and benefit expenses, have remained stable at $131.3 million (2007), $136.0 million (2008), $132.0 million (2009), and are expected to decline to $127.7 million (estimated budget 2010).

The number of staff has been reduced by 9.6% but the city’s operating expenses only fell by 3.1%.

This indicates that a much greater effort is needed to increase city efficiencies and reduce salary and pension costs.  When will the Commission get around to do this–this doesn’t seem to be the year.