Council Rejects Proposed Amendment To Local Option Gas Tax Agreement

The Sanibel City Council voted Monday, Sept. 12 to reject the proposed amendment (1st Amendment) to the Local Option Gas Tax Interlocal Agreement between Sanibel, Lee County, and the other municipalities of Lee County.

The agreement prescribes how local option gas tax revenues will be distributed to Lee County, the City of Bonita Springs, the City of Cape Coral, the Village of Estero, the City of Fort Myers, the Town of Fort Myers Beach, and the City of Sanibel. Funds received from the local option gas tax are used to maintain the transportation system in each jurisdiction. The current interlocal agreement was approved in 2019 and expires at the end of 2022.

Prior to 2019, the City of Sanibel received 5 percent of local option gas tax revenue generated in Lee County. The 2019 agreement proposed a new blended distribution based on the population and centerline road miles of each jurisdiction, which would have reduced Sanibel’s distribution of gas tax revenue from 5 percent to 1.42 percent.

After negotiations, Lee County and Cape Coral agreed, for the three-year term of the agreement, to supplement the decrease in revenues the new formula imposed on Sanibel, Fort Myers, and Fort Myers Beach. Sanibel’s revenue distribution increased from the proposed 1.42 percent to 3.5 percent (still a reduction from the 5 percent previously received.)

In April, Lee County officials proffered a draft five-year amendment (1st Amendment) to the interlocal agreement. Pursuant to the distribution formula proposed in the draft amendment, the city’s share of local option gas tax revenue would decrease from 3.5 percent to 1.35 percent, which would reduce Sanibel revenues by an estimated $600,000 in Fiscal Year 2023 and an estimated $800,000 in FY24.

After objecting to the funding formula utilized for the gas tax revenue distribution, which does not consider the impact growth in other parts of Lee County has on Sanibel, the City Council voted to reject the proposed amendment to the interlocal agreement.

The City Council subsequently voted to request that all incorporated jurisdictions in Lee County collaborate to develop an alternative distribution formula that would stabilize revenues in all jurisdictions, for use in successor amendments or new gas tax interlocal agreements.

Despite the vote to reject the amendment, the City of Sanibel will be bound by the amended interlocal agreement and receive a distribution of 1.35 percent of local option gas tax revenue collected in Lee County, as cities representing more than 51 percent of the population in the incorporated areas of Lee County have approved the agreement, which is the statutory standard for an interlocal agreement to be imposed upon all municipalities in a county.

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