It’s hard to fault the Jacksonville City Council’s reticence to once again raise property taxes — not with election season around the corner, not after hiking the tax rate by 14 percent just last year, not after Mayor Alvin Brown handed them a pension agreement that calls for a $40 million annual commitment with no definitive funding source, not with Brown continuing to oppose any new taxes, leaving them on a political island. And so it was that the same City Council that by a 16-2 margin approved the 2013 increase last week rejected another tax-hike proposal, which would have generated $40 million a year, 12-6.
Instead, the Council turned its attention to a one-cent increase in the sales tax, which, if you’re a politician, has one distinct advantage: Voters have to approve it. To that end, next year’s primary election will probably share ballot space with a referendum on a sales tax increase, with the extra $68 million it would raise indirectly allocated toward the Jacksonville Police and Fire Pension Fund. (Indirectly because, under state law, sales taxes can’t go toward the pension fund; instead, that money would go toward infrastructure and fire and rescue services, then Council would put the existing money for those things toward the pension. Yes, it’s a little confusing.)
This is, on the merits, a very bad idea. Not because City Council doesn’t need the money — it does, especially if JEA can’t cough up that $40 million, as Brown has suggested. While it’s not at all certain that Council will approve the deal Brown struck with JPFPF executive director John Keane earlier this year, any real solution will involve additional revenue. (Sorry, folks, but you don’t get halfway-decent cops and firefighters with lackluster compensation packages.) And we do need a solution.
The problem is, sales taxes are horribly regressive. While, yes, they spread the burden farther throughout the community — not just to homeowners, but everyone who buys things — they also disproportionately impact the poor and working class, much more so than property taxes (which, of themselves, are less regressive than graduated income taxes). Low-income families spend a larger share of their incomes on taxable items. In Florida, the poorest quintile of the non-elderly population pays 9.1 percent of its income in sales taxes; the richest 1 percent, on the other hand, pays just 0.9 percent, according to the Institute on Taxation & Economic Policy. Increasing the sales tax only increases this inequity. Property taxes are much fairer.
And let’s be honest: Last year’s tax hike was no big deal, and another small increase wouldn’t be either. Jacksonville still has one of the lowest tax burdens of any city in the United States, often to its own detriment, and the increase worked out to less than $12 a month for the median homeowner.
The alternatives — soaking the poor or forcing the city to scramble to ameliorate its pension deficit or praying that JEA can find loose change in the office sofa — are much
And here’s the other thing, as Clark pointed out last week: The pension reform, no matter how necessary, may not be popular, especially when we ask voters to tax themselves to pay for it. If Council ultimately approves the pension deal, and if voters subsequently reject the sales tax increase, we’re back to square one. It’s better to get it done now.