| | | |

Manatee County: Budgeting for Inflation

As President Ronald Reagan famously stated, “The nine most terrifying words in the English language are: I’m from the government and I’m here to help.” For the past 18 months, the Federal government has been printing money as fast as their printing presses can pump it out. The plan to “fix” the perceived short-term problems has fundamentally broken a once thriving United States economy. We are all now left to deal with the consequences.

Across Manatee County, families are sitting down at the kitchen table to assess their budget. The newest Consumer Price Index (CPI) just came out reflecting an increase of 8.6% in the past year. Considering the more modest wage increases being received, real average hourly earnings has decreased 3.9%. The price-wage spiral throughout the country will stoke the risk of recession and cause these family budget talks to turn to a serious debate of “needs versus wants”.

As your Board of County Commissioners sits down at our proverbial kitchen table to start our budget talks, the same debate will be held. Each year, our single most important task is to set the following fiscal year’s budget with your tax dollars. These budgets not only reflect the revenue needed; they reflect the policies and priorities of the Board in any given year. The BOCC will be presented with proposals for the budget, property tax millage rate and capital improvements this week. We then must look at our priorities and determine the county’s “needs versus wants”.

Last week, to kick off the budget discussions, we were presented with the proposed budget and millage for fiscal year 2022-23. It is a $1.025 billion (yes, with a “b”) net budget. This is an 11.2% increase over the current fiscal year. A portion of this increase is funded by the seemingly endless stream of federal dollars trickling down to local governments. While this seems beneficial, the above-mentioned inflationary impacts of these same dollars quickly erode the purchasing power over the entire budget in exchange for a fraction of the funds. It’s not inconceivable to envision a time when these funds reflect a net-negative on local government spending and services due to a loss in spending power.
To rectify this inflationary expansion of the county budget, we have two options. One is to increase our revenue (i.e. your taxes). The other is to lower our spending.

The recently presented initial budget is reflecting a millage increase of 0.15 over last year. This increases the millage ($1 per $1,000 of property assessed value) from 6.3826 to 6.5326. Last year, your Board lowered the millage to ease the burden of what was then thought to be transitory inflation. As proposed last week, however, the tax burden would be increased next year at your expense.

Assessed values are also going to increase tremendously which will magnify the impact of higher millage rates. Homesteaded properties will increase by the maximum 3% for the first time since 2012 (the increase was 1.4% last year). Non-homesteaded properties, including multifamily properties that will pass increases along to already stretched renters and commercial properties which will pass it along to tenants and small businesses, will see their values increase by a crushing 7%. This will be the largest annual increase since 1981! The reality is that these assessed values are increasing faster than the need for services. They are increasing organically due to inflation and demand; not due to anything our government is doing within our expanding budget.

The proposed millage, coupled with increased property values and tax base, would result in $38 million in additional taxes from households and property owners in Manatee County. This reflects a 13.1% increase over last year and I’m positive this estimate is extremely conservative and will actually result in over $50 million in extra taxes once the final tax rolls are submitted in early July. This tax hit is an added expense the homeowners simply do not need. With gas over $5/gallon, home insurance skyrocketing and everyday expenses getting more and more burdensome, sticking taxpayers with yet another inflated bill is bad fiscal policy. The Manatee County government must live within its means. We must not take advantage of historic, inflationary property value increases to transfer funds from citizen pockets to government coffers.

To avoid burdening taxpayers with higher property taxes, the other alternative to counter an inflationary budget is to adjust spending. This will be a budget year in which we must separate the required needs of our community from the perceived wants. Our goal should be to leave as much in the pockets of the taxpayers as feasibly possible. Those dollars will help offset your own inflationary pressures and, in turn, allow you to reinvest into our small businesses and community. The Board can’t save for a rainy day at the cost of each of you saving for your own.  Some have stated that they want to “Build Back” our reserves Better. That’s essentially saying we should take $100 of your money today and, in turn, provide you with $80 in government services down the road after inflation further weakens our purchasing power. Holding excess cash, beyond what is absolutely necessary, is a poor economic policy in the current climate. Believe me, I trust you with your hard-earned money more than I trust any government.

If you need proof of poor oversight of your funds, look no further than the Capital Improvement Plan presentation this week. Manatee County is budgeting $1.16 billion (again, yes, that’s with a “b”) over the next five years. This total is inclusive of outsized, although prudent, inflationary growth contingencies to ensure we’re budgeting for inevitable increases in the cost to provide you with long overdue infrastructure and capital improvements. If your county growth needs would have been responsibly overseen by past boards, we wouldn’t need to spend heavily into these inflationary headwinds. Over the past five years, the markets offered historically low interest rates coupled with sub-2% inflation. Manatee County, with its much-touted AAA bond rating, could have massively borrowed and built over this past half-decade and we’d all be enjoying the benefits of adequately built, safe roadways today. Instead, we sit in traffic, burning our $5/gallon gas, as we wait to overpay for roads and improvements with your tax dollars because past decisions have left us with no viable alternative. This is not the way you want your money looked after in today’s economic environment, or ever.

As your Board of County Commissioners proceed through this fiscal year budget season, we will, just like all of you, be keeping an eye on each dollar. We will focus on the needs and requirements necessary to maintain Manatee County’s high quality of life like public safety and infrastructure and avoid hoarding your dollars to inevitably lose value while going unfunded. I anticipate an interesting year of discussions and trade-offs but I’m hopeful the current Board is up to the task.

To close with more wise words from President Reagan: “Simple fairness dictates that government must not raise taxes on families struggling to pay their bills. Government does not tax to get the money it needs; government always finds a need for the money it gets.”

Commissioner George W Kruse
Manatee County, District 7

Similar Posts