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Hillsborough goes on spending diet

By BILL VARIAN
Published February 7, 2007

TAMPA — With a citizen revolt over property taxes raging across the state, Hillsborough County is putting itself on a spending diet.

County commissioners voted 6-0 Wednesday to limit the increase in annual spending to the rate of inflation plus the county’s population growth, rather than reaping the spoils of rising property values. The cap takes effect with the next budget, set for a vote in September.

“There’s got to be a time where we draw a line in the sand and say enough is enough,” said Hillsborough Commission Chairman Jim Norman, the architect of the proposal. “This may be the boldest and most landmark decision any government (in Florida) has made.”

The cap is believed to be among the first that any major local government in Florida has agreed to place on itself. It comes as Gov. Charlie Crist is pushing a property tax plan aimed at forcing local governments to rein in what he has characterized as profligate spending.

This has local governments grappling with a potential fiscal squeeze and warning that it could threaten popular programs.

The St. Petersburg City Council meets today to discuss its budget. The city estimates it could lose between $18-million and $24.2-million if Crist’s plan becomes law — up to 23.5 percent of what the city will collect in property tax revenues this year alone.

The governor wants to double the homestead exemption, limit tax bill hikes for businesses and renters, and let homeowners take a tax cap with them if they move to another Florida home.

Pinellas County Administrator Steve Spratt said Crist’s homestead proposal could cost his government $45-million. Even so, he said he opposes a local cap now, with so much uncertain.

“There is a clear direction from the commission to minimize and look for areas to decrease,” Spratt said. “That seems to be a better path in my eyes than trying to peg a number.”

Hillsborough County budget officials estimate that they could lose $64.9-million from a doubling of the homestead exemption. It  currently lets people who live in a home they own to knock $25,000 off of its value, for purposes of calculating a tax bill. Crist’s proposal could raise the exemption to $50,000.

Those same officials roughly estimate  that other facets of Crist’s proposal could result in as much as another $100-million hit to county coffers.

Norman said Wednesday that his plan allows the county to get ahead of whatever the legislature approves this spring. By agreeing to limit its own spending, Hillsborough will not have to fear cuts to its revenues as much.

“I’m impressed,” said Sen. Mike Haridopolos, R-Melbourne, who co-chairs a legislative panel that will travel the state taking testimony on property taxes. “Our goal is to listen to the people, and it appears they’re listening to the people in Hillsborough County.”

Haridopolos’ committee will hold a public hearing in Tampa next Thursday, Feb. 15.

The cap adopted by Hillsborough commissioners applies only to the part of county spending that comes from property taxes, which cover the cost of most day-to-day operations and some building projects. It does not apply to sales, gas and other taxes that help pay for other county services.

It exempts property tax spending for the operations of constitutional offices, such as the Supervisor of Elections and Sheriff, over which commissioners have little control.

It also excludes money previously set aside for certain building projects, such as new firehouses, and taxes collected in blighted areas designated for redevelopment.

Commissioners passed the cap as a policy that can be suspended on a vote of at least 5-2 to deal with emergencies.

Like other parts of the state, Hillsborough County taxable property values have climbed by double-digit margins every year for the past five years, or about 60 percent all told. Average values went up a whopping 21 percent just last year.

Even after Hillsborough commissioners significantly cut the tax rate in the fall, county spending that comes from property taxes, excluding what was given to constitutional officers, still rose 15.6 percent. If Norman’s proposal had been in place, spending would have risen by only 11.8 percent.

That would have eliminated about $36.5-million in spending. It might have forced commissioners to forgo earmarking $1-million toward a sound barrier along the Suncoast Parkway near Cheval or $2.5 million toward luring biotech companies to Hillsborough, among other pet projects of commissioners.

While each of the commissioners at Wednesday’s meetingbacked  the cap, some warned of unintended consequences. Al Higginbotham was absent due to illness.

Commissioner Ken Hagan, who heads a task force on  transportation needs, is hoping to ask commissioners for a sizable increase the amount of property taxes set aside to ease congestion. He expressed concern about doing this with a spending limit in place.

Other commissioners have similar priorities that may come with large price tags, such as a possible incentive package for the expansion of Moffitt Cancer Center and Research Institute, or construction of a new emergency operations center.

“We’re considering this policy as if we’re acting in a vacuum,” Hagan said. “I support a spending cap policy. But we need to be aware of what could happen down the road.”

What could happen down the road, countered commissioner Brian Blair, is that Hillsborough homeowners and small business owners could be forced to sell in the face of property tax bills they cannot afford.

“We have got to look out for our people who are living here right now,” Blair said. “That’s the bottom line.”

Staff writers Aaron Sharockman, Will Van Sant and Steve Bousquet contributed to this report. Bill Varian can be reached at (813) 226-3387 or varian@sptimes.com.

[Last modified February 7, 2007, 21:05:39]