Cape Coral holds tax rate steady in $1.44B budget

Cape Coral officials held the line on the city’s fiscal 2027 budget and property tax rate, reflecting a cautious approach as tax revenue slows after several years of rapid growth — even as costs to maintain city services and employment levels keep rising. 

At a final budget adoption hearing for the fiscal year beginning Oct. 1, City Council voted 7-1 to approve a $1.44 billion spending package. 

The overall cost is less than 1% higher than last year but maintains service levels for public safety and capital improvement programs, including a long-term utility expansion project. 

“While the fiscal year 2027 proposed budget is structurally balanced and preserves essential services for the upcoming year, it has been developed under conditions that warrant caution,” City Manager Michael Ilczyszyn wrote. 

Rising inflation and elevated costs for interest, labor and construction have put pressure on the budget, Ilczyszyn wrote in his introduction to the fiscal 2027 budget proposal. 

Officials also considered a potential loss of revenue if 60% of Florida voters approve Amendment 3 in November, a tax relief measure for homeowners that would increase the nonschool homestead exemption to $150,000 beginning Jan. 1, 2027, and $250,000 in 2028. 

The Florida Office of Economic and Demographic Research estimated that approval of Amendment 3 would cost Cape Coral $31.1 million in 2028 and $56.9 million in 2029. 

Property taxes are the major source of revenue for the city’s general fund, which supports essential government operations, including public safety and parks. 

The fiscal 2027 budget includes $284.5 million in general fund spending and revenue. That includes reserves of $62.8 million, or about 2.9 months of operating expenditures. 

To support the 2027 general fund, City Council approved a 5.1471-mill property tax rate, the same as last year. 

The city also adopted a 0.15544-mill rate for parks and recreation general obligation bond debt service. 

The rates equal $5.1471 and about 15.5 cents per $1,000 of taxable property value, respectively. The general fund rate is 1.35% below the rollback rate. Council member Derrick Donnell, who cast the sole dissenting vote, has argued during previous budget discussions for keeping the rollback rate, which would generate more revenue. 

The adopted rate is expected to generate nearly $164 million in general fund revenue. The amount is based on the citywide estimated taxable real estate value of $33.1 billion from the Lee County Property Appraiser. 

That value has grown rapidly in recent years, allowing the city to continue lowering its millage rate, but growth slowed sharply this year. 

Cape Coral’s property tax rate fell during the last decade from 6.7500 mills in 2017 to 5.1471 last year, where it remains. 

The lower rates reflect rapid growth, especially during the last five years. The city’s estimated real estate value grew by 10.66% in 2022 and 22.91% in 2023 before beginning to slow. The growth rate fell to 3.31% this year. 

The city’s other funds include debt service, capital projects, internal services and charter schools. 

Its $747 million enterprise fund, which includes major utility projects, is the largest. It includes funding for ongoing utility work, including the North 3 Utility Expansion Project and expansions of the North Cape Coral Reverse Osmosis Water Treatment Plant. 

The city’s fiscal 2027 investments include public safety, parks and recreation, infrastructure and environmental sustainability projects.