Sumter County may spend $64,000 to refund about $1.5 million in fire department property taxes after the Florida Department of Revenue found the vote to enact the taxes violates a state stature.
The taxes twice were approved by a 4-1 vote, but the revenue department requires a unanimous vote to enact a new property tax for the first time.
The average refund is $17 to $20, but much less in The Villages.
The county also has filed a lawsuit against the Department of Revenue, seeking a declaratory judgment that a unanimous vote is not required plus cost reimbursement.
Instead of refunds, the fire tax money could be held in escrow and applied to next year’s taxes.
A Nov. 26 letter to County Administrator Bradley Arnold from a revenue department official stated that the department “is notifying and directing the tax collector to hold in escrow any ad valorem revenues collected from the millage in excess of the millage rate adopted at the new final hearing. The tax collector must hold these escrowed amounts in reserve until the subsequent fiscal year and must use them to reduce the ad valorem taxes otherwise necessary.”
A “no” vote by former commissioner Oren Miller on Sept. 17 and at a second hearing on Nov. 13 put tax revenue for both the Villages Public Safety Department and the Sumter County Fire Department in jeopardy. The public safety department provides fire and rescue services in The Villages while the Sumter department covers the rest of the county.
At the second hearing, commissioners unanimously approved a levy of zero for both departments, a move that may have saved the county a penalty of losing an estimated $9.5 million in sales tax revenue.
The statute involves the rolled-back rate, which is the property tax rate needed to collect the same amount of revenue as the prior year excluding new construction. The new fire taxes would have boosted the county’s tax rate above the rolled-back rate.
The lawsuit contends that the Department of Revenue requirement for a unanimous vote is based on a “mathematical impossibility” for meeting the rolled-back rate when new taxes are introduced.
Arnold said other counties have faced similar issues, but none has stepped forward to challenge the revenue department.
Sumter County established new taxing districts for both fire departments in this year’s budget.
Outside The Villages, property owners would have paid 29 cents per $1,000 assessed valuation to support Sumter County Fire and EMS. Villagers would have paid about 3 cents per assessed valuation to support the Villages Public Safety Department.
Loss of property tax revenue strains the budgets of both departments trying to recover from the significant loss of expected fire assessment fee revenue last year.
The county increased fire assessment fees this year after the fees were limited to $125 per household last year.
Four lawsuits have been filed challenging this year’s fire assessment fee increases.
