MCTPA tries to provide a balance between in-depth analyses of specific

taxpayer issues broad  overviews of local government operations and

costs.  Most of our work focuses on  Martin County government and the

School Board, because they are the largest consumers of local tax

dollars.

 

In this column we focus on the City of Stuart.  The Citys budget and

operations are of obvious concern to residents of the City, and of

general interest to County taxpayers for several reasons.  The City is

the County seat.  It is the locus of state and county government

operations in Martin County as well as the center of municipal

government provider of essential services.  Our County and Schools

administrations and Martin Memorial Hospital, the three largest

employers in Martin County, are all headquartered within the City

limits.  So are many state and regional agencies.

 

The City of Stuart provides essential services within its boundaries to

all entities, public and private.  These include water and sewer, police

and emergency services, stormwater management, streets, parks and

landscaping maintenance, among others.   These must be provided for its

residents as well as the businesses and government entities within the

City.

 

A dilemma is presented between the obvious economic and social benefits

provided by major public agencies, and public agencies’ exemption from

paying property taxes within the City.  The City must provide services

to government and non-profit entities with budgets far larger than its

own, but pay for these services without the benefit of property taxes or

direct budgetary supplements from those entities.  A surprisingly large

amount of valuable real estate within the City is occupies by public

entities.

 

Review of the Citys budget history provides an example of how the

municipal government has met these challenges over the years.  Through

the 1970's and most of the 1980's, relatively rapid growth within the

City increased property tax revenues faster than the demand for

municipal services.  In 1988 alone, ad valorum revenues increased 12%.

During the 1980's the City accumulated about $8M in excess revenues.

 

But as the City built out, the rate of annual increase in property taxes

declined while demand for municipal services increased.  When the

1989-90 recession took hold, total City revenues went flat and then

declined for three consecutive years.  Many residents recall that

downtown Stuart in 1989 was dilapidated and declining, with 70%

commercial property vacancy.

 

The City spent its $8M of savings for downtown revitalization and on

operating costs, but eventually hit the wall in 1992.  The savings were

gone, revenues were more than $1M short of expenses, and downtown

revitalization was just beginning to show promise.

 

Between 1988 and 1996, the City increased property tax rates from 2.47

to 4.21 mills.  Other revenue sources were expanded or created,

including utility taxes, impacts fees, and stormwater fees.  The City

also annexed County property, much of it commercial land, as private

property owners fled the County due to perceived anti-development

policies in the County in the mid to late 1990's.

 

Between 1997 and today, the property tax millage in the City has been

stable at about 4.1 mills.  The past five years have also produced

average annual property tax revenue increases of 7.6%.  This rising tide

of real estate value and accompanying economic benefits such as fees for

services are floating the City budget.

 

Much of the revenue increase is due to far-sighted City policies such as

investment in urban revitalization and careful annexation.  The benefits

of increasing City budgets are obvious, the City of Stuart has never

looked better or been more prosperous.  The Citys appearance and

prosperity attract additional private investment, support our other

government headquarters and services, and add to our overall sense of

well being in Martin County.

 

However, the City’s history illustrates the danger of complacency when

relying on increasing revenues from growth and development to operate a

rapidly expanding City budget.  Some recent expansions of services, such

as the City’s Anchorage, are running substantial deficits in revenues

versus expenses.  The City’s insurance expenses are increasing much

faster than anticipated.  With the national economy in stagnation, there

are good reasons to anticipate the past five years may not predict the

next five years in terms of revenue growth.

 

The City uses annual rolling five year projections of future revenues

and expenses to guard against a reprise of its early 1990's budget

problems.  We support this practice, and recommend caution and

moderation in City spending despite the obvious prosperity the City

currently enjoys. It seems an especially good year to save for that

inevitable rainy day.