So just what can the County Council do anyway? Increasingly, this is the question I am getting from friends and neighbors. Frequently it is preceded by “I know they are responsible for balancing the budget, for setting property tax rates, and that they regulate land use, but what does that mean and what can they actually do?”
These three areas of responsibility (and others) are granted to the County via the State constitution.
The short answer is the County Council can do the basics and live essentially within the status quo, or they can think “outside the box” (but within their constitutionally granted authority) in pursuit of solving the problems and challenges facing our community.
A responsible Council ideally will do a little bit of both.
Balancing the budget means establishing priorities. For example, historically the County has provided far more support for the tourism industry than they have for agriculture. The purchasing choices made by the County also are essentially public policy decisions with significant potential implications.
Regulating land use means the County has the authority to determine just about EVERYTHING when it comes to what specific parcels of land may be used for (hotel, residential, agriculture, commercial, etc). This power includes what exactly may be constructed on the land, where it may be constructed (setbacks etc), and more.
Today and in future columns, I will explore a collection of “out of the box” alternatives to setting public policy utilizing these three areas that the County clearly has the legal authority over. I will start with the power of the County to regulate property taxes.
The primary source of funding for the County comes via the property tax. The Council sets the tax rates, and the overall structure governing the collection of property taxes. With some small exceptions, the State retains all other taxing authority. For example, the County cannot implement an income tax, sales tax, airline tax, car rental tax, or a hotel room tax, etc.
However, there are “workarounds” if the Council, with support of the Mayor, was inclined to expand the scope of their taxing authority.
For example, while the County does not have the authority to implement a “hotel room tax,” the County could significantly increase the property tax on hotels/resorts and achieve a similar outcome. The hotel/resort will pass-on all tax increases to the visitor so the net result would be similar – the arriving tourist is taxed more.
Similarly, the County does not have the legal authority to tax rental cars directly however it does have the authority to tax the land upon which these cars are parked and/or rented out from. An increase in property taxes on these lands would also be passed on to the renters of these cars, thus effectively simulating a tax on rental cars when it is actually a tax on the property upon which the rental cars sit.
Since the County taxes owner-occupied residential property at a preferred rate, it is reasonable to believe that they could tax locally owned businesses also at a lower rate. And since the County also takes into consideration the income of some property owners when calculating the taxes owed, it is also reasonable that the County could do the same with business, commercial and industrial property.
In other words, the County has the legal authority and taxing mechanisms in place to establish a tax structure that benefits small locally owned business while shifting the burden to large off-shore owned corporate enterprises (think Walmart and other large enterprises).
Yes, there are “workarounds”. If done thoughtfully, the County budget could benefit substantially from very targeted tax increases. In addition, such action could create and support other positive societal impacts, like reducing the number of rental cars on the road and supporting locally owned small businesses.
There are many variables used to determine the amount of property taxes ultimately due by a property owner. An owner-occupied home, a market-based residential rental, a residential property used for commercial purposes – all pay a different amount. Resorts, vacation rentals, industrial, and commercial properties also have varying tax rates. Similarly situated agricultural lands, depending on many factors including what they grow or do not grow, will pay different amounts.
Most importantly, the existing County property tax structure utilizes a property’s “use” as a primary factor in determining the appropriate tax rates and classification for individual properties. This element of “use” could be structured in any number of ways to achieve budget objectives, to incentivize or dis-incentivize various “uses” and activities, and to ensure a progressive property tax structure.
Those who live here full time, those who choose to rent their properties at “affordable” rates, and those whose businesses are based here and whose profits remain here – should pay the least. Those who have more should pay more.
While at first glance it may seem that the fundraising capacity and County regulatory authority is limited. Remember: There are always, “workarounds.”