Understanding your city taxes

Submitted by Suanne Z. Thamm
Reporter – News Analyst
January 22, 2018 5:15 p.m.

Many people pay little attention to their local tax bills, leaving the payment to escrow funds administered by their mortgage holders. Those who do pay attention, often just look at the bottom line, which conflates county, school district, city and other smaller tax bills into the total amount due. Some people, whose mailing address is Fernandina Beach, assume that the total amount is paid to the city of Fernandina Beach for city operations. This article will look at the issue of city taxes to help readers understand who pays city taxes, the size of tax bills, and what ad valorem, or property, taxes pay for.

Last month Fernandina Beach City Manager Dale Martin covered some of this in his weekly column. [See https://fernandinaobserver.com/uncategorized/weekly-comments-from-dale-martin-80/] But we’ll take a deeper dive into city property taxes (excluding personal property taxes) to see what percentage of property owners pay taxes and how much they pay.  Note that for the purpose of this article we have concentrated on land taxes, excluding tangible property taxes.

There are 9,575 land parcels recorded in the city of Fernandina Beach. Of those, 8,175 pay residential or commercial property taxes. Bills range from twenty cents to $230,000 (Rayonier). The median city property tax bill is $913.81, and that is for a commercial property.

Let’s try to demystify a tax bill for a residential property in the City of Fernandina Beach. The bill presented below was selected at random as a residential property bill for an improved site with a just value of $225,287 and a taxable value of $119,521, after exemptions.

Tax bill for a residential property in the City of Fernandina Beach. Note portion owed to county in red box, school district in green box and city in blue box. Orange arrow points to total tax due.

If you choose to compare this with your own property bill, the first thing you should notice is the blue box. Those are the taxes paid to the City of Fernandina Beach. If you don’t see these lines on your tax bills, you have a Fernandina Beach mailing address, but you are not a resident of the city.

In this particular example, the total bill, payable to the Nassau County Tax Collector, is $2,547.08. But of that amount, the money owed to the City of Fernandina Beach is only $742.19, or 29.1 percent of the total bill. Nassau County reaps $797.09 (31.3 percent) and the School District collects $953.55—the largest slice of the pie at 37.4 percent.

The portion of the bill going to the city includes a fee of $25.06 to cover voter-approved debt to authorize purchase of land for the Greenway. This means that the actual property taxes paid to the city are reduced to $717.13.  This money goes into the General Fund which funds those city activities not funded by enterprise funds.

Table from City of Fernandina Beach FY2017-18 Annual Budget
Also taken from the city’s FY 2017-18 Annual Budget

This particular property owner really pays under $2 per day for city services: public safety ($1.17), general government ($0.41), culture/recreation ($0.22), and transportation ($0.19).

Of course this resident pays additional fees for services that are not covered by taxes, such as water, sewer and trash removal. S/he will also pay various recreation fees, if participating in city programs, and impact/permitting fees for new construction.

Property tax exemptions

The homestead exemptions, along with the Save Our Homes legislation, have resulted in property owners who live in similar homes in the same neighborhoods paying dramatically different amounts of property taxes, based on whether they are homesteaded, when they purchased their home, and how old they are. (Although county and city ad valorem taxes are affected by exemptions, school taxes are not.)

This year it appears that the voters will get to decide whether to approve one more exemption for local property taxes. According to the website Ballotpedia.org, the “Florida Homestead Exemption Increase Amendment” will appear on the November 6, 2018 ballot (if not before at a Special Election) as a legislatively referred constitutional amendment. The measure would provide for a homestead exemption on the portion of home values between $100,000 and $125,000, meaning the $25,000 between $100,000 and $125,000 of a home’s value would be exempted from property taxes other than school district taxes.

Given that most referendums to lower taxes have no difficulty mustering the required number of votes to pass, the result of this latest one will mean that local governments will have even less money to spend on safety, infrastructure, recreation and other government services.

State pushing more costs to local government

Florida legislators, absent an income tax to use as a source of revenue, have increasingly turned to fee based services as revenue generators at the state level. In turn counties and municipalities, which are primarily funded from ad valorem (property) taxes, have been encouraged to do the same. In recent years there have been two additional strategies at work at the state level: preemption (the state reserving for itself decision making formerly left to local government) and issuing unfunded mandates (passing laws that bind local governments to certain courses of action without also providing the funding to pay for those new requirements).

This legislative session, for example, one bill under consideration would increase pension benefits for those public employees covered by the Florida Retirement System and mandate that local government fund the largest portion of the increase. If this measure passes, Florida counties will be required to contribute an additional $66M to the state budget fund for the Fiscal Year beginning October 1, 2018.

While lower tax bills are an easy sell, the problem of trying to make local government work with decreasing revenues is a challenge. How much more can we reduce that $2 per day, for example, and still provide valuable services to meet community needs?

Local governments around the state are trying to develop means other than property taxes to fund their operations. One idea that is gaining currency is treating the funding of fire services more like a fee than as part of general taxes. The idea has intriguing possibilities. Property owners might pay more equitably for these services, regardless of their homestead status and number of exemptions.

Fees could be assessed in a variety of ways. But however the final formula would be determined, ad valorem taxes would be adjusted downward because fire protection would no longer be funded from taxes.

Information has been provided by the Nassau County Tax Collector’s Office for the year 2017, but the author of this article assumes all responsibility for computational errors.

Editor’s Note: Suanne Z. Thamm is a native of Chautauqua County, NY, who moved to Fernandina Beach from Alexandria,VA, in 1994. As a long time city resident and city watcher, she provides interesting insight into the many issues that impact our city. We are grateful for Suanne’s many contributions to the Fernandina Observer.

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Doug Adkins
Doug Adkins (@guest_50361)
6 years ago

Nassau County is ranked #12 in Florida in per capita property taxes according to Florida Tax Watch. It is ranked #14 in per capita municipal government property tax levies at $144 – it is ranked #13 in Florida is per capita for school board taxes. When you consider the millage rates you can see Nassau County is #41 at 16.974 yet might Saint Johns County is at #60 at 14.033. The growth in property taxes from 2012 to 2016 gas been 13.6% – #27th in Florida. http://www.floridataxwatch.org/Library/howcountiescompare.aspx

Michael Harrison
Michael Harrison (@guest_50362)
6 years ago

What is your point, Doug?

Dave Lott
Dave Lott(@dave-l)
6 years ago

Suanne, excellent article with lots of great information. So 15% of the parcels are not taxed. I presume the vast majority of those are city, county, state, federal or other exempt agency (port authority) owned. Are there any privately held parcels that are exempt for one reason or another?