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Jax Daily Record Wednesday, Aug. 6, 201412:00 PM EST

Sales tax increase remains possibility

by: David Chapman

A day after the idea for a property tax increase faded, the possibility for a sales-tax bump took center stage.

Fourteen City Council members took part in the discussion Tuesday, weighing options on how an increased sales tax could pay down the city’s more than $1.6 billion in unfunded public safety pension liability.

The three options: implement a never-before used increase meant for fire rescue services and facilities; increase the tax for infrastructure purposes; or lobby the Florida Legislature for a specific tax for paying it down.

The fire-tax option would require a millage increase, which later would be dropped if voters passed a referendum on the sales tax. No other Florida municipality has tried it. The intent was for it to be revenue neutral. And it’s “completely complicated,” city attorney Stephen Durden told the group.

With so many moving parts, no council member showed support — it was out.

The specific tax, they determined, might take too long. It meant lobbying Tallahassee and waiting for a legislative session next year when immediate help is needed. It, too, was given no support.

The infrastructure tax was the best of the three options, council members determined.

It wouldn’t raise millage rates or affect the city’s annual budget. Instead, it would simply add revenue, with what’s raised offsetting infrastructure costs. The displaced dollars could then be used for pension payments.

Yet, there were catches with any sales-tax plan.

Durden told the group that regardless of intent, financial decisions made today can’t explicitly bind future councils. Even though the goal and intent today is to pay down that liability, future mayors and councils can’t be forced to do the same with that money.

Any half-cent sales tax increase is estimated to raise $68 million. The latest pension deal before council has the city paying an additional $40 million each year to pay down the liability.

Under this scenario, council member Bill Gulliford suggested whatever remains could be used for paying down the pension liability of general employees.

Council member Richard Clark also talked about another possible key flaw in the plan: there’s no guarantee voters pass it. The Better Jacksonville Plan, which raised the sales tax for local infrastructure projects, took a “Herculean effort” by leaders and “the most popular mayor” the city has had in John Delaney, Clark said. It only passed with 53 percent of the vote.

Clark led an effort Monday to raise the tentative property-tax rate next year. It failed, which led to the sales tax talks.

“I think it’s a matter of how you sell it,” Gulliford responded. “I don’t have a great answer … we are in a box. We are in a heck of a box.”

Durden will now do more research on the intricacies of the sales tax being raised for infrastructure and provide a report back to council when complete.

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