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Rising fees may cancel tax cut

St. Petersburg Mayor Rick Baker calls the proposed water, trash and sewer rate increases a “necessity.’’

By AARON SHAROCKMAN
Published August 28, 2006

ST. PETERSBURG — Whatever money most city residents may save in property taxes this year will likely be spent paying their utility bills.

Water, sewer and trash rates could rise as much as $4.15 a month for the average St. Petersburg customer in 2007, according to a new rate plan proposed by the city.

The annual increased costs -- $49.80 for customers with reclaimed water and $36.60 for everyone else -- would gobble up most if not all of the 5 percent cut in the property tax rate proposed for 2007.

The utility rate increases are necessary to keep up with rising fuel, insurance, chemical, and water costs, city officials say. The increases are less than proposals in other county municipalities, including Pinellas Park, Clearwater and Tarpon Springs, officials say.

In a memo to City Council members, Mayor Rick Baker called the rate increases a “necessity.” Council members will consider the rate increases at two meetings, Sept. 7 and Sept. 21.

The new rates would take affect Oct. 1 and appear on customers’ November bill. Customers also pay a 10 percent city tax on utility costs.

“Although it’s an increase, it’s very modest, in terms of some entities,” said Patti Anderson, the city’s water resources director. “We are being very frugal.”

The city’s utilities are financed by money collected from customers and not property tax dollars.

Under the latest increase, city water and sewer services would rise $1.33 a month for a person using 5,600 gallons a month, from $49.82 to $51.15, Anderson said. It would mark the ninth straight year with an increase to city water rates. This year’s increase would be smaller than the rise in the consumer price index for the utility, Anderson said.

Additionally, rates are proposed to increase 3.5 percent each year through 2011 for drinking water and 2 percent for wastewater. The flat fee for reclaimed water also would rise by $1 next year, to $14.36.

“We want to look at multiple years. To have one big increase is tough on our customers,” Anderson said.

The city will also raise rates to other places it sells water to – Treasure Island, Gulfport, South Pasadena, Pinellas Park and Tierra Verde – meaning rates are likely to rise there as well.

All of the increases come despite the city having set aside $96.5-million in its “Water Cost Stabilization Fund.” The money, the proceeds of the sale of the city’s water well fields to Tampa Bay Water in 1997, was to be used to help limit rate increases. The city is currently only using the interest made off the fund – $4.1-million next year – to lower user rates.

The cost of garbage pick-up, meanwhile, would increase 6 percent next year, following last year’s 22 percent increase, under the plan. Those two rate hikes are the first for the city since 1987. The city actually lowered its garbage rate in 1996.

“I hope this is the last big one,” said Lynn Arthur, manager of sanitation administrative services. The department had to make up for the rate decrease in 1996, as well as replenish its empty operating reserve.

The city will still provide cheaper service than Tampa and Clearwater, though those cities offer curbside recycling.
Future increases are likely to be smaller, Arthur said, and more in line with inflation.

Together, the proposed utility rate increases would suck up all of the city tax savings most residents can expect next year.

A person whose home is worth $250,000 this year would save $29.28 in city taxes next year under the current proposal. The average homeowner will likely pay at least $36 more in new utility fees.

“I don’t like it, but we have to do it,” said City Council chairman Bill Foster. “That is why I always push for a tax rate decrease – it’s the only thing we have any control over. We can’t control our utility rates. We can’t control that cost to provide services to the public.”

[Last modified September 3, 2006, 12:00:30]