Making Sense of Budget Numbers: Context Matters

Making Sense of Budget Numbers: Context Matters

Numbers. Some of us love to play with them, reveling in our ability to do mental math or to work through complex proofs. Some of us avoid them like poison.

Love ‘em or hate ‘em, numbers have power. Simply putting a number on something makes it feel more real, more true.

Numbers in isolation, however, actually tell us much less than we sometimes imagine. Even if they are “true,” they can be very misleading.

In my years of parenting, the best example of this was the child’s report of his/her score on a test. It could cut both ways:

Child (with evident frustration): “I GOT FIVE WRONG!?#%!”

Me: “How many questions on the test?”

Child (with a “what difference does that make?” look): “One hundred!”

Me: “Ummm, so that’s 95% right . . . that’s an A, and a pretty darn good score.”

Child (brightening): “Oh . . . oh yeah, you’re right.”

Or it could go this way:

Child (with carefully crafted “pride”): “I only missed five on the big test! Pretty good, huh?”

Me: “How many questions on the test?”

Child (more subdued): “Umm . . . 10.”

As cities are moving toward the finalization of their budgets for the next fiscal year, this is a truth I wish everyone would understand and embrace. Because, taken out of context, budget numbers are as likely to mislead as to inform.

Property values are coming back, if somewhat unevenly. Most of our cities, if they choose to leave their millage rate unchanged, or even if they reduce their millage rate somewhat, will see an increase in property tax revenue. That increase can be large in dollar terms, and it can be large in percentage terms.

Those added revenues can mean resources for restoring service levels that had been reduced during the Great Recession. It can mean giving raises to employees who managed to do more for the public with fewer members on the team, while not receiving any pay increases for several years. It can mean repairing and replacing facilities and equipment that have been carried along with bare-bones maintenance. It even can mean the provision of services citizens have sought that the city, until now, has been unable to afford.

The reaction, however, to a significant increase in property tax revenue often focuses on that overall large number or the overall percentage increase in property tax revenue. We’re not looking at our own actual property tax levy when we have this conversation; that will come later, in the new fiscal year.

So we imagine that the percentage increase is our percentage increase . . . and we react.

Except . . . it’s not.

Homesteaded properties are protected from annual increases in property tax above a modest rate of increase. The system is sufficiently complicated to keep folks in the property appraisers office very busy every year. Suffice it to say that an increase in property tax revenue of 10% does not translate into an increase in the homesteaded property owner’s taxes of 10% . . . not even close.

Other property owners, such as vacation home owners and owners of commercially zoned property, may bear a heavier load, to be sure. At the same time, much of Florida’s historic pattern of increasing property values has to do with sales of existing property (when the taxable value can “catch up”) and with development and redevelopment.

So yes, property tax revenue in many cities will increase this coming fiscal year by a meaningful percentage. That’s good news; cities have been struggling to meet the service demands of their residents over the last several years. Because, unlike the cap on how much the taxable value of homesteaded property can appreciate, there’s no restriction on how fast and how far it can fall . . . and fall it did.

The important task of effective communication with our citizens is to give them a real sense of what those increases mean, both to their pocketbooks and to their quality of life.

 

One Response to Making Sense of Budget Numbers: Context Matters

  • sam gipson

    i get monthly retrement,i want to see, infrr.