The Penny Sales Tax – To Pay or Not to Pay?

Balancing the residents’ expectations for quality communities against a low tax rate is a budgetary struggle that local leaders deal with on a regular basis. Enter the Penny Sales tax.

Elected officials in Lake County want their constituents’ neighborhoods and communities to be well-appointed, with serviceable sidewalks, parks and roadways.  Maintaining the infrastructure that Lake County has built, as well as adding to the choices for recreation and leisure, are factors indicating the state of the local economy and its financial health.

Quality schools, libraries and athletic opportunities are as important as jobs when it comes to attracting young families. Quality of life is consistently ranked in the top 5 considerations when choosing a place to relocate.

Enacted in 1988 and ratified in 2001, the 1% tax on items purchased in our county is set to expire in 2017. In November, voters will have a decide whether to continue the tax, which piggybacks onto the state sales tax of 6%. Over the next 15 years, this additional penny could create close to half a billion dollars to be split into thirds among the School Board, the county and Lake County’s 14 municipalities.

One of the selling points used to promote the tax is that collection of the money is not specific to the residents of Lake County. Proponents of the tax remind voters that the money spent by visitors – especially at large Lake County events like the Leesburg Bike Fest or the Mount Dora Art Festival goes into the fund. Those visitors from outside the county add millions to the discretionary sales tax fund as they spend their way through Lake County.

Mount Dora’s slice of the Penny Sales Tax equals roughly $1.14 million dollars per year.  To Mount Dorans, that lost revenue would be similar to city coffers being depleted by 1.5 mils worth of property taxes on each home, annually.

The money is collected by the State when sales tax is charged on goods and services.  The amount is 1% over the standard 6% on purchases made within the county. The  money is then distributed by the State directly to the County, School Board and the 14 cities of Lake County.

Michael Sheppard, Finance Director for the City of Mount Dora explains, “In the past roads (including downtown), utility relocations, public safety, parks, and technology enhancements have benefited.  Without this source of funding the City would have had to defer many of its projects or not completed them at all.”

Oversight is a crucial component to the success of the penny sales tax. A group of nine people meet bi-annually to make sure that the funds are allocated and used for capital projects and infrastructure projects only.  Adversaries of the tax complain that not enough safeguards exist to ensure the money is appropriately spent only on carefully pre-specified, delineated projects.

The Lake County School Board is slated to spend about $340 million dollars on new schools over the next 15 years. School officials says they have no choice, population is rising at a steady rate. More children, more desks, more black boards and more teachers will be needed.  They say that half of that budget needed for building those schools will be covered by revenue from the tax.

Central Florida is ranked one of the most treacherous areas for pedestrian traffic in the country. That’s an issue that the Lake-Sumter MPO (Metropolitan Planning Organization) would like to see addressed – in part through funding from the penny sales tax.  The MPO recently hosted a forum in Mount Dora, focusing on the need for sidewalks, and other improvements, to get children to school safely.

Revenue for new sidewalks is one of the potential projects funded through the Penny Sales Tax. Without it, Lake County and its municipalities will be forced to significantly shorten their public works projects list to meet the shrinking stream of revenue that would result.

“The infrastructure sale tax is the one of the only funding sources we have for building sidewalks to our schools.  Without the infrastructure sales tax as a funding source; creating and enhancing safe walkable,  bikeable routes to our existing schools will be very challenging.” Says Michael Woods, Transportation Planner for the Metropolitan Planning Organization.

In November voters will have the opportunity to decide. Do we use the extra penny to build and maintain county infrastructure or do we opt for it to go back in our pockets?

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Joe Runnels, Writer (joe@mountdoracitizen.com)