Sales Tax Increase – Are the intended uses lawful?
As you probably know, the County Commission voted 5-2 to proceed with a 1% sales tax referendum for the November election. Ballot language is expected to be voted on at an upcoming meeting.
Under the terms of the proposal, the $270M annual proceeds are distributed as follows:
| 48.0% | $130M | School District |
|---|---|---|
| 27.5% | $74M | County |
| 18.5% | $50M | Municipalities |
| 4.5% | $12M | Cultural Council Projects |
| 1.5% | $4M | Economic Development |
A sales tax can only be imposed under the rules established by Florida Statutes 212.055 “Discretionary sales surtaxes; legislative intent; authorization and use of proceeds”, which spells out how proceeds may be used.
Specifically, it says in 2(d): “The proceeds …. shall be expended … to finance, plan and construct infrastructure; to acquire land for public recreation, conservation or protection of natural resources ….”
Section 2(d)1 provides a definition of “infrastructure”, which includes construction and improvement of public facilities, acquisition of public safety vehicles and equipment, etc.
Then in 2(d)3, it says “a local government infrastructure surtax … may allocate up to 15 percent of the surtax proceeds for deposit into a trust fund within the county’s accounts created for the purpose of funding economic development projects having a general public purpose of improving local economies, including the funding of operational costs and incentives related to economic development.”
It is probably safe to assume that the school district, county and municipalities can easily identify their intended projects as “infrastructure”. The Cultural Council projects though, as they are privately owned, do not qualify. Therefore, to be able to spend money from the sales tax, the museums, theaters and other entities would have to be considered “economic development” projects.
Are they really? Do they have “a general public purpose of improving local economies”? Is improving the outside appearance of the Norton Museum really in the same category as offering an incentive to a company to move its headquarters to the county?
What about the argument that these projects encourage tourism, and thus bring jobs and economic activity to the county?
On the WPTV show “To the Point” last Sunday, Tourist Development Council Executive Director Glenn Jergensen spoke of the drivers of county tourism – specifically beaches, baseball, and the convention center. He never mentioned theaters, museums or the zoo.
The statute also says that the “economic development” money needs to be put in a trust fund, presumably to be allocated for projects that are prioritized by some process. How can it be lawful to designate a fixed 4.5% of the proceeds to the discretion of the Cultural Council – an unelected board representing private interests?
The Cultural Council itself gets money from the bed tax and provides grants to the museums, theaters and other entities who typically have their own endowments or sources of private funding, and are not totally dependent on public money. Many of the projects intended for sales tax dollars were already in the pipeline and would happen with or without public funds.
It would seem that allocating 4.5% of the proceeds to these cultural projects may violate the letter of FS212.055, making the entire proposal subject to legal challenge. As such, we think the county should seek an opinion from the state Attorney General before proceeding with this ballot initiative.
As the municipalities are in the process of deciding whether to sign an interlocal agreement in support of the package, they too should be concerned. If any of you plan on attending your city or town’s meeting on the subject, consider bringing it up.