Council Considers Ian’s Budgetary Implications

by SC Reporter Wendy McMullen

With property values down 31 percent over last year, Sanibel’s share of property taxes may need to increase to achieve the same budgeted amount as last year, Sanibel City Council heard at their first budget meeting Tuesday.

Gross property value on Sanibel had risen to nearly $6.358 billion in July last year. This year, as a result of the devastation wrought by Hurricane Ian, values are down to $4.283 billion.

The millage rate jumped 44.6 percent after Hurricane Charley and has been declining since.

These estimates were received from the Lee County property Appraiser on June 1 and could change as more information is received, particularly about beachfront condos which generally suffered greater damage than single family homes.

“We did not receive any kind of detail about what had been assessed, what has not been assessed and what was in the process of being assessed,” commented Finance Director and Deputy City Manager Steve Chaipel. Condominiums make up around 32 percent of the housing stock on Sanibel.

If Lee County’s estimate and the city’s millage rate remains at 1.975, the same as last year, this could mean a decrease in tax revenue for Sanibel of $3.8 million. Some of this shortfall will be covered by grants from the Florida Department of Environmental Protection, refunds from the State of Florida and Federal Emergency Management Agency grants. There are also interest free federal and state loans that could be used to fund emergency management.

The tax appraiser’s value of Sanibel property now is about the same as it was in 2014 during the recession.

Nevertheless, city staff and managers have discussed balancing the city’s immediate emergency needs and staffing with projects that can be delayed until the city recovers normal operations. These changes will be discussed at the city council meeting on July 18 and the budget workshop on Aug. 22.

Sanibel’s millage rates had been steadily decreasing since 2005 when Hurricane Charley forced the city to increase its millage rate 44.6 percent in order to meet its obligations. The increase in property values since the recession of 2014 helped lower the millage rate.

Council unanimously decided to ensure the city had sufficient reserves to continue operations in an emergency and directed City Manager Dana Souza to investigate options and how other municipalities handle reserves.

The city had $5.9 million in general fund reserves which sustained the city until the end of December last year. Chaipel said that it would not have lasted that long if FEMA had not agreed to pick up debris clearing.

“We should at least attempt to replace the general fund reserves at $5.9 million,” suggested council member John Henshaw. “If we believe we’re going to get more frequent storms, the likelihood of having the state come in to help us will get less and less only because it may be more difficult for the state to do that.”

Council members agreed with replenishing or even increasing reserves suggesting that state and federal agencies will be more inclined to help municipalities with healthy reserves.

“I think it’s really important that when we’re going out to ask for money, that they see that we have money,” propounded council member Holly Smith, “When the state looks to see we have those reserves in place, we take it seriously. We want to take care of ourselves.”

All reserves have now been fully expended in fiscal year 2023.

Even with a higher city millage rate, the impact on Sanibel taxpayers depends more on Lee County expenditures.

The decrease in property taxes was not the only source of revenue that plummeted after Hurricane Ian: toll revenue is down 74 percent, sewer fees reduced 45 percent, tourist development council funds decreased 97 percent and beach parking dropped 88 percent.

The City of Sanibel’s budget amounts to only 15.5 percent of the total property taxes paid by homeowners. By far the largest percentage (41.4 percent) goes to the Lee County School Board, followed by 27.9 percent to Lee County and 16.5 percent to independent districts. The Sanibel Fire and Rescue Department and The Sanibel Public Library are funded as independent districts

The first public budget hearing will be held Sept. 11 and the final public budget hearing will be Sept. 27.

Comments (1)

  1. Thank you for the article on Ian’s effects on the Sanibel budget. It was a concise explanation of decreases in housing values and user fees, assessments and the percentages given to the entities within our property taxes. It is so important to know our current financial situation as residents. It was first rate.

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