Fee vs. tax.

Both words are normally considered taboo, but both were mentioned recently by the Town Council when it started talking about next year’s operating budget. A fee or a tax are alternatives to increasing Town revenues, but both have different impacts on residents.

Without a vote of the people the Council can set a “fee.” But because it is a fee, it is not tax-deductible. On the other hand, voters are the ones who must approve a property “tax” (the Council cannot do it) and a tax is a deduction on both state and federal income tax returns. Big difference!

Another difference is the Council can earmark a “fee” as to where the revenues will be spent, but it is not set in stone (the next Council could change it). However, revenues derived from a primary property “tax” must, by law, go into the general operating account. The big difference is trust; trust that the Council will spend all funds wisely, regardless of how they are obtained.

With a “fee” all land owners will pay the same amount, which means a vacant lot, a $100,000 condo, a $1M home, and a shopping center will pay the same amount. With a property “tax” all parcels will pay a different amount based on property values.

The recent Council discussions were either a giant step forward in addressing the financial future of our community or the dialogue was nothing more than going through motions of rearranging deck furniture on the Titanic. Only time will tell which it was.

Obviously there are pros and cons to both approaches. If you have a preference, let your voice be heard. Town Council meetings are open to the public and just maybe your opinion will help the Council decide which approach has the most appeal.