Cape Coral residents could see their property tax rate rise 63 percent in the upcoming fiscal year, according to a proposed budget released this week by City Manager Terry Stewart.

To make up for a 32.8 percent drop in property values, the millage rate is slated to increase from 4.769 to 7.776, or $7.78 for every $1,000 in assessed value.

The proposed 2010 fiscal year budget stands at $380 million, of which $135.3 million is the general fund.

The millage rate hike assumes that city council members will not adopt any of the three new tax increases discussed as part of budget talks this year.

A public service tax that would add 10 percent to electric bills, an increase in the communications services tax that appears on cable and phone bills from 4 percent to 5.22 percent, and a fire services assessment are all aimed at diversifying the city’s tax base.

“I think its going to be a question of do we use the millage rate or some of these other revenue sources,” Councilmember Tim Day said.

If all three taxes are implemented, council members could reduce the millage rate to 4.515.

That appears unlikely as at least one of the new taxes, the fire services assessment, failed to garner the necessary support among council members during a workshop meeting Monday.

Councilmember Bill Deile has spoken out against all three new taxes. He believes that once implemented, the new revenue sources will not receive the same scrutiny as the millage rate.

“(The millage rate) is a figure we have to revisit every year. (The new taxes) won’t be on your TRIM notice,” Deile said.

Other council members point to the need to diversify the tax base in a city that relies on property taxes for 65 percent of its revenue and is subject to a fickle housing market.

“I think diversification is going to be the key,” Day said.

Given the recent outpouring of anger in response to the assessments and fees related to the controversial utilities expansion project, it remains to be seen whether new taxes are politically viable in a period of economic contraction.

Councilmember Gloria Tate favors a more methodical approach to the new taxes, if they are implemented at all.

“I don’t feel comfortable at this point moving forward until the public gets more information and the council gets more information,” she said.