PORT ST. LUCIE — City property owners may be able to avoid a proposed 26 percent increase in their property taxes.

During a special meeting Wednesday, the City Council unanimously agreed to use half of the city’s general fund reserves to keep the property tax rate at its current rate of $4.22 per $1,000 of taxable value. The council will formally vote on setting the property tax rate during scheduled 7 p.m. public hearings Sept. 14 and Sept. 28 at City Hall.

Using the city’s median home price of $112,000 with a $50,000 homestead exemption, an average city property tax bill using the current rate would be $261, excluding taxes from other agencies, such as the school and fire districts.

Under a previous budget proposal, council members suggested raising the city’s property tax rate by 26 percent to offset a more than $12 million budget shortfall.

However, mindful of reactions from residents angry over the proposed rate hike, Vice Mayor Jack Kelly and Councilwoman Michelle Berger suggested the city explore other options, including keeping 4 percent of the city’s general fund in reserves instead of 8 percent. Reserves are generally set aside for emergency disasters and unexpected expenses.

Kelly said considering today’s economic climate, it’s not the time to increase taxes by 26 percent.

“It’s an election year (next year), so be it,” he said.

Additionally, City Manager Don Cooper told the council the city would no longer need to raise utility rates by 3 percent on water and sewer.

City Hall spokesman Ed Cunningham said the city wouldn’t need the utility increase because the city restructured an agreement with its investors on interest rates, which gains the city $1.5 million.

Cooper said leaving the property tax rate at its current rate and other cost cutting measures officials made, would provide stability for one year, but the city would probably have a $10.5 million shortfall in the 2010-2011 budget year.

“(Years) ’10-’11 will be extremely difficult,” Cooper said, “assuming we can keep personnel costs static.”

Cunningham said the city would continue with proposed layoffs, but union employees would now get their scheduled cost-of-living and merit raises in the 2009-2010 budget year, and there won’t be any additional layoffs.

Though Councilwoman Linda Bartz supported using reserves, she said after the meeting it was not without concerns.

“What scares me is what’s going to happen next year?” she asked. “But if we can buy (residents) time to find jobs and modify their mortgages and hopefully something to help them along, but there’s no doubt I’m still concerned about next year. It’s not going to be a walk in the park.”

Cooper said after the meeting if a catastrophic hurricane were to hit Port St. Lucie next year, the city would have to borrow more money than it normally would during a disaster because of the depletion in reserves. He said debris caused by hurricanes Wilma and Jeanne cost more than $20 million to remove and interest on the borrowed money is not reimbursable.

Alexi Howk

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