As tax rate falls, revenue rises
The mayor of St. Petersburg is proposing another cut. But it won't mean much amid rising property values.
By AARON SHAROCKMAN
Published June 10, 2006
ST. PETERSBURG - The trend seems contradictory: The city's tax rate has fallen 19 percent since 1993 but taxpayers pay almost twice as much.
Mayor Rick Baker wants to slash the tax rate an additional 5 percent for next year's budget. But his plan requires taxpayers to contribute $12-million more, an analysis of the mayor's proposal shows.
The seeming discrepancy - lower tax rates, but higher taxes - is part of a state climate turned upside down because yearly property values increase 20 percent or more.
A bullish market - happy news for homeowners - is great for cities, too, and not even aggressive tax cuts can keep the money from pouring into Florida's city halls.
In all, St. Petersburg taxpayers next year would pay a record $103-million in city property taxes. And the city tax rate cut, the largest in 22 years, will only slow the government's take.
The typical single-family homeowner, whose taxable value increases are capped at 3 percent thanks to the Save Our Homes amendment, would save less than $10 in city taxes next year.
And businesses and second homeowners, who do not enjoy a cap on their property values, would actually see city tax bills increase 12 percent or more.
St. Petersburg has cut its tax rate 10 times in the last 14 years, while Tampa's tax rate has not been lowered in almost two decades. Tampa's taxes remain lower by 0.411 mills, a difference of $41 on a home with a $100,000 taxable value.
Tax rates in St. Petersburg skyrocketed to among the highest in Florida in the late 1980s and early 1990s to make up for budget shortfalls to help finance construction of Tropicana Field and to purchase the land that now is part of BayWalk.
The trend has reversed since then, Baker noted. The tax rate has dropped 11.5 percent over the past 10 years. Baker is proposing to lower it another 5 percent in 2007, to $6.60 per $1,000 of taxable property value.
The city controls about one-third of a homeowner's property tax bill.
"We have, really over the past several years, brought it down a little bit at a time, whenever we can," Baker said. "Some may argue it's not a huge saving this year or the year before, but cumulatively, it has had an impact."
Despite the cuts, however, St. Petersburg would still likely have the highest tax rate among municipalities in Pinellas and Hillsborough counties and among most major Florida cities.
St. Petersburg's tax rate is now $6.95 per $1,000 of taxable value. By comparison, Tampa charged $6.54 per $1,000 of taxable property value this year. Clearwater's rate was $5.75 per $1,000 of taxable value.
But St. Petersburg's rate is now at least comparable with those of its neighbors, Baker said. That, he said, can attract new business into the area.
The rate cuts will also help entice homeowners to annex into the city, spawning even more tax revenues, said City Council member John Bryan.
"It's not necessarily that you need to be the lowest around," Baker said. "Businesses, and residents for that matter, want to know what the philosophy of government is, what the trend is.
"That creates a lot of comfort."
But at least one council member questions if at least some of the tax cut money couldn't be better spent by the city.
The median taxable value of a home last year in St. Petersburg was $61,200, which translated into a city tax bill of $425.34, according to property records.
That same home this year will have a taxable value of $63,036 after adding in the 3 percent maximum Save Our Homes increase. The annual tax bill under the mayor's proposal for that house would drop $9.26, to $416.08.
City Council member Rick Kriseman said the savings from such a tax cut might be better spent on enhanced city services. He's fearful, however, that any attempt to keep the money in the city budget could be interpreted as a tax increase.
"Let's make sure we can pay for what we got and what the people expect," Kriseman said. "Let's get the city we all want, then maybe we can do a more significant reduction, one that has a real impact."
Several council priorities are not funded in the mayor's preliminary budget, Kriseman said, including increased funding for neighborhood grant requests and traffic calming programs.
Baker said the city is already collecting record revenues, and new construction downtown is likely to continue the growth for at least a few years.
At the same time, the mayor said he is unwilling to siphon money from any city services or mortgage the city's future for a larger tax rate cut-- and a commensurate political victory.
Some $12-million has been set aside in the event of a natural disaster, Baker said. Another $5-million will be spent to offset additional fuel and insurance costs, and $2-million is earmarked for future insurance premium hikes.
The mayor's final proposed budget is due to the City Council on June 29. Council members will then hold a pair of public hearings, one in August and one in September. The budget will go into effect Oct. 1.
Times staff writer Matt Waite contributed to this report.
[Last modified June 10, 2006, 07:31:56]
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