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A question of cost vs. benefit

A revolt rolls from property taxes to a sales tax that the county counts on. Environmental and antitax groups criticize its use.

By WILL VAN SANT
Published March 11, 2007

ADVERTISEMENT Special Report: Penny for Pinellas A question of cost vs. benefit State officials split on Penny Two sides of the Penny tax Resources: What is Penny for Pinellas? Past and future projects Pinellas County Web site The financial underpinning of Bayside Bridge was voter approval of the Penny for Pinellas tax in 1989. [Times photo: Skip O'Rourke] [Times photo: Douglass Clifford] Women inmates housed in 2C4, Central Division, gather for lunch in their pod at the Pinellas County Jail in November. If it passes, about $225-million of expected Penny revenue will be earmarked for jail expansion and court improvements. [Times file photo (2004)] A cyclist rides on an overpass that crosses the intersection of Tyrone and Bay Pines boulevards. The tax has been used to expand the trail. If approved, it will continue to fund improvements. [Times photo: Willie J. Allen Jr.] The county wants to spend about $7-million in future Penny funds for camping upgrades, improvements to the fort structure, dune walkovers and various facility renovations and improvements at Fort De Soto.

When voters decide the Penny for Pinellas sales tax Tuesday, more than just $2-billion in revenue hangs in the balance.

To Penny backers, the county's quality of life is at stake. County and municipal officials believe the tax's defeat would force crippling reductions in services and hobble local governments.

To disparate groups of Penny critics - which grew distinctly more vocal last week - a defeat of the tax would be a measure of their influence, as well as an indication of the extent to which voters have rejected the vision elected leaders have for Pinellas.

The Penny bashing, 17 years after the tax took effect, has caught Pinellas officials off guard.

Now they face the possibility of waking up Wednesday to what they consider a barren financial landscape that's unable to sustain a desirable community. Tuesday's vote would extend the 1-cent-per-dollar tax from 2010, when it is set to expire, until 2020.

"We are not just blowing smoke," said County Administrator Steve Spratt, who runs a government that uses Penny money to build 70 percent of its public projects. "That's the reality of our world."

Last week, antitax crusaders protested at the County Courthouse, and the Catholic bishop of St. Petersburg faulted the county's Penny spending plan for failing to aid the disadvantaged.

Months earlier, the chief critics were a group of area environmentalists who charged county officials had misused Penny money that had been slated for the purchase of endangered land.

They found millions of dollars had been taken to pay for park upgrades, not land purchases.

"They never do what they tell us they will do with our money," wrote environmental activist Lorraine Margeson in an e-mail sent to the media, elected officials and others.

The county admits to having taken $11.9-million from the endangered lands fund and using it for other purposes. But it did so, leaders say, because Penny funds were used to leverage a greater amount in state environmental grants. Those grants were used to replenish the land fund, they say.

It's not a lone instance. Penny money has often been shuffled and mingled with other streams of revenue to pay for the kinds of projects that, by law, the tax must fund: public buildings, roads, parks and other infrastructure.

A failure to fully disclose this practice got the county in trouble in 2004 when the clerk of the circuit court released an audit of how Penny tax money was spent between 1990 and 2000.

The audit found that promised Penny projects often didn't get done; projects that were completed were often over budget; and the public was led to believe that certain projects were paid for wholly from the sales tax, when other sources of cash were involved.

Spratt said oversight of Penny projects and money has improved, but he rejects the audit's findings, calling them exaggerated and ill informed.

"Multiple funding sources come to bear," he said. "I don't think it should be an issue. That's frankly a good thing."

Critics see 'fat'

A second wave of Penny critics has its origins in September's property tax revolt, when local officials trimmed property tax rates after irate residents filled public hearings.

These Penny critics accuse local governments of irresponsibly spending record property tax windfalls of recent years. They say it's time to starve governments of income, even when it comes in the form of the Penny sales tax, which is paid not only by residents, but also by visitors to Pinellas.

County leaders say a full third of the tax is paid by those passing through.

St. Petersburg neurosurgeon David McKalip of the group Cut Taxes Now fits this mold of critic.

"Our governments have gotten fat," McKalip told TV cameras on the steps of the County Courthouse Friday. "It's time to put our governments on a diet!"

Rather than being reckless, Pinellas' spending of property tax revenue has been responsible, said County Commissioner Ken Welch.

The county contends analysis of spending found that of the $163-million in additional property tax revenue Pinellas has received since 2003, 67 percent was put in reserves to prepare for a catastrophe, 17 percent went to cover costs imposed by state government, 13 percent paid for new services and the rest was eaten up by inflation and maintenance costs.

"The dollars that we have received from property taxes have been invested to address real needs in the community," he said. "They are not frivolous expenditures, and I'm certainly willing to stand on our record."

Bishop weighs in

The most recent threat to the Penny's passage came from the Catholic Church Wednesday. Bishop Robert N. Lynch, who heads the Roman Catholic Diocese of St. Petersburg, wrote to pastors scolding county officials for not spending more on social welfare in the Penny plan.

Lynch told the St. Petersburg Times he was spurred to act by St. Petersburg's homeless crisis. While his message to parishioners is clear - that they should use the ballot box to advance the cause of social justice - he stopped short of explicitly telling his flock to vote against the tax.

The decision deeply disturbs Spratt, a practicing Catholic. He insists the Penny's funding of infrastructure projects has freed other county money for increased social welfare spending, from $40-million in 2002 to $67-million this year.

This argument often is used by Penny backers. They say some projects - like building new jail space and replacing old and unsafe bridges - simply must be done. Without the Penny, governments would have to issue bonds. Repayment of bonds would come from local governments' general funds, which are fed by property taxes.

Raising property taxes is politically unlikely, so the debt payments would have to come at the expense of other things, Penny backers argue, such as affordable housing and indigent care.

"It's not a scare tactic," Spratt said. "Some of the same stuff that the bishop is concerned about would likely be impacted."

Will Van Sant can be reached at vansant@sptimes.com or 727-445-4166.

[Last modified March 10, 2007, 20:01:01]