By Michael Van Sickler, Times Staff Writer
Thursday, March 22, 2012
ST. PETERSBURG — The economy may be improving, but next year's city budget looks bleaker than ever.
City officials are estimating next year's deficit at $15 million — higher than previous projections and roughly $2.5 million more than last year's cut.
A combination of depressed property values, slumping sales tax revenue and rising costs in health insurance, fuel and pension contributions are to blame for what City Administrator Tish Elston says could be the biggest one-year shortfall since the 2008 financial crisis.
Mayor Bill Foster and the City Council met Thursday to mull ways to bridge that gap.
Foster's paradigm of government has been an austere one. Since taking office in 2010, he has applied a binary sensibility to budget questions that have led mostly to cuts. Is a line item a need or a want? Needs get money, wants get cut.
But City Council members increasingly say they are resistant to that approach, arguing that cuts endanger future growth by eroding St. Petersburg's quality of life.
"We are on a path that will not lead to a better city," said Karl Nurse.
Thursday's discussion of new revenue comes just days after a local activist group called the People's Budget Review promised it will survey 10,000 residents about what they want in the city budget. The group says the effort is aimed at the continued cutting of city services.
During a three-hour meeting Thursday, Foster and council members discussed three ways to find new revenue: raising the property tax rate, which hasn't been done in at least 20 years, and imposing a fee on all property for firefighting or street lighting.
Not discussed, but something that Nurse has long pushed, is dipping into the city's reserve, or "rainy day" funds. Foster mentioned his staff would look at naming rights for parks or trails if that was something council members wanted to consider.
So far it's not clear which, if any, new source council members will agree to tap by the time they give final approval to the budget in September. This could be a problem because while a majority of the council favors raising new revenue in principle, finding consensus on an actual method has yet to happen.
Property taxes
Plunging real estate values have decimated the property tax, which brings in $33 million less a year than it did in 2007. Just by keeping the rate at its current $5.9125 per $1,000 of taxable property — which would mean a $37 drop in taxes for the owner of a $100,000 home — would cost the city $4.2 million.
The city would recoup those losses if council members were to increase the rate to $6.2983 to match the projected decline in property value. Such an increase would cost the average taxpayer no extra money. A rate increase that would wipe out the entire $15 million deficit would cost the average homeowner $100 more.
Yet Foster has long opposed a rate increase. At least until this year, the City Council wasn't asking for one.
In January, however, a Foster ally on the council, Jim Kennedy, said he would strongly consider a rate increase. Nurse, Council Chair Leslie Curran and newcomer Charlie Gerdes also say they support a look at raising the rate.
Only Nurse, however, sounds like a sure vote for it.
Fire assessment fee
This one keeps coming back.
Two years ago, at the behest of fire Chief James Large, council members discussed assessing a fee on all parcels in the city that could be used to pay for fire service. A $5 monthly fee could raise $5.7 million a year, a welcome addition to a fire budget of more than $30 million.
But Foster opposed this as well, and the fee didn't get enough backing from enough council members. It came back last year but didn't get as far.
This year it's being looked at again and has support. But it still has resistance on the council.
"I'm not there yet," said Steve Kornell. "I'm not convinced we've done everything we can do to save money in the budget."
Street light assessment fee
Similar to a fire fee, this would assess a fee to all property owners in the city for street light maintenance. Last year, the city spent $5.3 million on street lighting. If each property owner is charged $5 a month, that cost would be covered.
"I like this because it's sustainable," Kennedy said. "It leaves $5 million to do something else with. This makes budgetary sense."
But the response to this was mixed at best. Jeff Danner said neighborhoods with canopied streets that block street lights may wonder what they're getting for their fees.
Reserve funds
Elston said the city has $40 million in reserves, which is required in case of an emergency.
But Nurse said he believes the amount is much higher. He said he hasn't been able to get an accurate estimate from the city on money that would be suitable to use because of the dire times.
Curran opposes dipping into the reserves. "If you put reserves in operation expenses, you might as well be flushing it down the toilet," she said.
Council members will meet again in April to review more detailed information about the revenue sources, but not one has emerged as a favorite.
Foster deferred to council members during the meeting. If they want to support a revenue source, he made clear, it was up to them to decide. He didn't champion any potential revenue stream. He did say, in agreeing with Kornell, that he can find more savings by consolidating services.
That the city hasn't come up with a general strategy yet for finding needed revenue, midway through one of the worst recessions in the city's history, distresses Curran, who has yet to champion a solution either.
"At least the administration is finally putting things out there," she said. "That's where our leadership void has been. We waited until we can't cut anymore. I wouldn't want to be a city employee now. People are worried about this upcoming budget year."
And from the looks of it, help isn't on the way yet.
Times staff writer Michael Van Sickler can be reached at mvansickler@tampabay.com or (727) 893-8037.