Budget Crunch: KB Could Lose Up to $700K in Tax Revenue

Key Biscayne budget photo stock (Adobe)

Key Biscayne’s Village government is staring at a potential loss of up to $700,000 in future tax revenue due to slipping property values, according to figures released by the Miami-Dade Property Appraiser Friday.

“It’s disappointing, but not unexpected,” said Key Biscayne Mayor Mike Davey, who noted the Village has dealt with real estate market downturns before. “We’ll bounce back.”

“It’s more budget pressure,” agreed Village Manager Andrea Agha, who is preparing for her first budget workshop June 18. She did not dispute the potential revenue dip.

Key Biscayne, like all other municipalities, gets most of its revenue from property taxes, which in turn are based on the appraiser’s figures. Countywide, property values went up 5.9 percent, but in Key Biscayne, Property Appraiser Pedro Garcia projected a 2.8 percent decrease — the largest decrease for any of the 36 municipalities in Miami-Dade County.

“New construction is dominating the real estate market,” Garcia said in a statement. He said dips in Key Biscayne and Sunny Isles Beach were due to “market corrections.”

But unlike Sunny Isles Beach, where $918 million in new construction will more than offset a 4.4 percent decline in values, Key Biscayne is only projected to show a relatively paltry $19 million in new construction. Overall, the appraiser said the island’s value will shrink to $8.2 billion from $8.5 billion the year before, a decline of 2.8 percent.

Property tax revenue accounts for $25.1 million, or 71 percent, of the current $35.5 million Village budget. Were the 2.8 percent decrease to apply to that number, the shortfall would be about $700,000.

For the 2020 budget process, Agha said she is confident that a new “zero based” financial analysis will identify savings. The goal of a new financial approach, she said, is to compute a “level of service” for various government functions, and then present options to Village Council members, not unlike a set of bronze, silver and gold service tiers.

“I don’t think the dip is so big that services will be taken away,” said Council Member Katie Petros. “My guiding principle will be to make decisions that not only are good for now, but for the future.” She added, however, that the reduced property tax revenue will require the Council to be as “creative as possible.”

“We will make the difficult decisions necessary to operate the Village within our means,” said Council Member Luis Lauredo.