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Vero council increases taxes and boosts utility transfers


Rather than make tough decisions about priorities, the Vero Beach City Council has decided to balance its budget through a 10 percent increase in the tax rate, while also voting to boost the cash it pilfers from electric, water and sewer customers by $200,000 more than initially budgeted.

Savings expected from the shuttering of Big Blue and trimming the utility staff by 13 people reduced the electric fund budget in the coming year by $5.1 million. This lower budget figure would have reduced the amount of money transferred from the utility to the city’s general fund, but the council during Friday’s budget talks voted instead to “stabilize” the transfer amount at $5.4 million.

While the rake off is down from a high of $5.6 million back in the days when Vero’s rates were 58 percent higher than Florida Power & Light, the city’s electric rates are still more than 30 percent higher than FPL rates and Vero is still heavily dependent on utility subsidies paid by non-city residents.

Vero collected $5.3 million in property taxes this year, but more than three quarters of its overall $22 million budget came from other sources.

The transfers make Vero electric a “cash cow” for the city, according to critics, but for the majority of the Mayor Jay Kramer-led city council, the transfers are a reasonable rate of return that city residents glean as a benefit of owning the utility.

“We’re still coming down on the transfers, we’re just not coming down as fast as the rates are dropping,” Kramer said, in an attempt to put a positive spin on the decision.

The extra money from utility bills will fund 1.5-percent salary increases for city employees, with Councilman Dick Winger calling those raises “a good investment” of the money.

Should it survive upcoming public hearings, Vero’s property tax rate come Oct. 1 will go up from $2.38 per $1,000 of taxable value to $2.51 per $1,000 of taxable value. That is 10 percent over the “rolled-back” rate that would have netted the same tax dollars as 2015 tax bills brought in.

In real dollars, the increase will bring in an extra $13 per $100,000 of taxable value, so the owner of a property with $500,000 in taxable value will pay $65 more on the municipal line item on their tax bill.

With a bonus infusion of $329,000 in property taxes, Vero will begin to sock money away to cover what’s called “Other Post-Employment Benefits,” which means perks it has promised municipal employees who finish their careers and are eligible to cash-out large banks of unused sick and vacation time.

The banking of that time is limited going forward, but the city is honoring commitments it made to long-term employees who have for decades been carrying over hundreds and sometimes even thousands of hours of paid leave time like a savings account. Should they retire voluntarily on good terms, employees receive a lump-sum payment for those unused benefits.

Indian River County, as a standing policy, has banked money to pay out these parting gifts to county employees, but Vero has paid them as they go, as employees decide to retire, out of the current budget year with no designated fund to draw upon. In years when there are several high-level retirements of people who might have $50,000 to $80,000 accumulated in banked leave time, those unbudgeted payments can require some financial maneuvering.

This burden to taxpayers and ratepayers is above and beyond the employee pension plan, which the city pays into annually in attempts to fill a nearly $40 million hole of underfunding. Recently, cities and counties have had to start noting the commitment for Other Post-Employment Benefits on their balance sheets.

The obligation is viewed as a contingent liability – to be paid only if an employee never uses accrued time and stays on the job long enough to retire with benefits – so it doesn’t have to be booked in its entirety on the city’s balance sheet. Of the nearly $35 million in unused paid leave compensation owed to employees, the city shows $15 million in unfunded liabilities on its books.

Recreation spending became a huge bone of contention during the three-day budget workshops, with the council telling Recreation Director Rob Slezak to sift through the $420,000 of capital improvements he’d asked for and identify only those repairs that are absolutely needed to protect the health and safety of the users of recreation facilities and the employees who work in them. Aesthetic projects will most likely get pushed off until next year or beyond – council members saying they want that money for other things, namely for scheduled road repairs and repaving.

Councilwoman Pilar Turner voted for the changes to the budget, but did lodge her concerns about the plan to add nine positions to the city staff. The total payroll will go down by a net four positions due to the loss of 13 electric utility employees let go in the closure of Big Blue, but the budget opens up new public works, marina and clerical positions, as well as adding a third attorney to the staff.

“I think it’s poor management for us to be expanding the size of our government when we can’t afford our infrastructure,” Turner said, noting that the city still has needed road projects and stormwater projects it does not have money to fund.

The public will get two chances to weigh in on the proposed budget before it becomes final, with hearings scheduled on Sept. 6 and Sept. 20.