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The Marco Island City Council approved a difficult budget Monday evening, and in so doing both reduced the tax rate and continued the quality services of the city.

On Oct. 6 the city staff will present recommendations to council on ways to reduce the expenses of the city by almost $1 million to support this lean budget, and every service and cost remains “on the table” for possible reduction, including employees, services, maintenance and repair, and capital improvements.

The new millage rate has been reduced, and now absorbs the electric franchise fee as well. The new rate is based on the rates approved by the state legislature. The legislature established a rollback rate as the property tax rate that will bring in the same amount of revenue as property values change. When values are increasing, the rollback rate is the rate that the city’s tax rate should “rollback to” to keep from taking advantage of the increase in value, and of course the same applies when values decline.

The state has taken this a step further by recognizing that cities and counties do need to apply inflation to the rollback rate, or the rollback plus the rate of growth in personal income. In Marco Island, rollback plus inflation equals a millage rate of 1.3917, and this results in a budget reduction of about $620,000 below the city’s charter-mandated spending cap. City Council adopted this rate and added the criteria of absorbing the $350,000 cost for streetlights within this tax rate. These two steps will result in a decrease in the city’s proposed budget by $970,000, and on Oct. 6 the City staff will present recommendations on ways to decrease expenses to fit within this new budget.

The spending cap both controls spending and limits options. The cap has served the citizens well in times of rising property values to protect against large increases in government spending by limiting increases in spending. Unfortunately, the spending cap does not work well when the economy and our residents are struggling, and we will continue to see the problems in developing a flexible and responsive budget to address the city’s needs in the future. As city manager, I do not support or oppose the spending cap, and instead emphasize that it simply is a factor to consider as we prepare the budget. On the other hand, the spending cap is not the salvation from liberal spending that many of us want it to be – it binds or restricts the ability of the elected City Council to respond to the economics of this area, and puts the members of council in the difficult position of raising taxes during an economic downturn. I expect this to be a continuing discussion item in the future as we struggle with the changes in needs, expectations, and personal economic condition.

Marco Island remains an excellent value. The new tax rate is still far below the 2.1112 mil tax rate in 1998 and the 1.7436 mil tax rate in 2001, and the tax rate outside of the city, in the unincorporated section of Collier County, is the equivalent of 2.041 mils. Even with the new rates, and including the voter-approved debt for Veterans Park, it remains much more expensive to live outside of Marco Island and to receive limited services than it is to live in Marco and receive the comprehensive services of the city.

In this city we have good people on all sides of the budget issue working to keep Marco Island affordable and moving forward, and after the budget is resolved we will continue to address opportunities to provide the highest quality and most cost-effective services possible.